[inaudible conversations] >> the joint committee met today with less than a month to put together a proposal for reducing the bet dignity $1.2 trillion over the next decade. that hearing is next on c-span2. .. ç z(j(

>> now the giant deficit reduction committee meets to discuss discretionary federal spending and reducing the debt. we will hear from the director of the congressional budget office, douglas elmendorf. the committee's final proposal is due by november 23. this is the committees for the public meeting and is about an hour and 40 minutes. >> people are being urged into this committee. [inaudible] >> this committee will come to order. before we begin let me remind all our guests that the manifestation of approval or disapproval including the use of signs or placards is a violation of the rules which do govern this committee so i want to tangle of our guests in advance for their cooperation in maintaining order and decorum. first of all thank you to my cochair, representative

hensarling, all of my fellow committee members and dr. elmendorf for joining us here today as well as the members of the public here in person are watching at home. this committee has been working very hard over the last few weeks to come together around a balanced and bipartisan plan to reduce the deficit and reign in the debt. we have heard from our colleagues, we have heard from the standing senate committee's from groups around the country and close to 185,000 members of the public through our web site deficit reduction.gov. we continue our work now today with the hearing on discretionary outlays security and non-security and i'm glad we are talking about this today because it is important for us to understand how these policies fit into our overall deficit and debt. nondefense discretionary spending represents less than one fifth of total federal spending. listening to the debate here in

d.c. over the last few months you would think that small piece of pie was a whole lot bigger. and i expect to hear more about that from dr. elmendorf today. congress has gone to this relatively small pot with cuts and spending caps again and again while leaving many pieces of the budget essentially untouched. including the law that created this joint committee which cut roughly $800 billion in discretionary spending. all the focus on this one area is especially striking given we are spending about the same on nondefense discretionary programs in 2011 as we did in 2001. meanwhile, mandatory programs increased, defense spending increased, and revenues plummeted. so as this committee work together on a bipartisan plan to reduce the deficit, we need to keep in mind the cuts that have already been made, the role discretionary spending place in our overall deficit and debt

trouble in and the impact irresponsible cutting could have on families across the country. as we all know these aren't just are just numbers on a page. they affect real people in real ways. food assistance for women and infants is cut, that means greater challenges for struggling families. when infrastructure investments are shelved, that means fewer jobs and more crumbling bridges and roads. and when research education and student loans are/that means fewer opportunities for our businesses and the next generation of workers. which is really no savings at all since we end up paying for it in the future. so while we richard make salmon every piece of the budget to see where we can responsibly make additional cuts, it doesn't make sense to simply keep going after one small part of the budget is disproportionately affecting middle-class families and the most vulnerable americans. there has to be balance. today dr. elmendorf will be discussing discretionary

security spending which has grown significantly in the year since 9/11. this is an area where the states -- stakes are high from national security as well as budgetary perspective. we have got to get this right. as many of my colleagues have noted over the past few weeks this is an area that would be hit especially hard at this committee doesn't come to a deal and we move to sequestration. i am looking forward to a robust conversation today with dr. elmendorf about these critical pieces of our federal budget. before i turn it over to my cochair, just want to say that over the last few weeks this committee has been working very hard to find common ground and a path towards a balanced and bipartisan plan that can pass through this committee, through congress and get signed into law. we aren't there yet but i am confident that we are making progress and i'm hopeful that we are moving quickly enough to meet our rapidly approaching deadline. as i said from the start of this committee is going to work, and

i believe that it must, we all need to be willing to make some decisions and real compromise. i am willing to do that and i know many of my colleagues are as well. everyday we hear more and more about the effects of failures that would be our nation's long-term fiscal health and creditworthiness. over the next few weeks it is going to be up to all of us to demonstrate to the american people that we can deliver the kind of results that they expect and that they deserved. with that i would like to recognize my cochair, representative hensarling, for his opening statement. >> i thank the cochair for yielding and i want to thank her again for her leadership on this committee and the spirit of negotiation that she brings. there is no such thing as an unimportant hearing when it comes to dealing with our nation's structural debt crisis.

certainly within our nation's discretionary budget, are contained many challenges and frankly many important priorities that have to be debated and negotiated. not the least of which as with many of us view as the number one function of our federal government, and that is to protect us from all enemies foreign and domestic and specifically our national defense budget, which continues to shrink as a percentage of our economy shrinks, as a percentage of our budget as we continue to live in a dangerous world. when i look at the totality of our discretionary budget, i do find some common ground with my cochair and again although there is no such thing as an unimportant hearing or an unimportant section of the budget, in many respects, today we may be debating the pennies,

nickels and dimes in a debt crisis that is demanding half dollars and dollar bills. there has been huge run ups in our discretionary spending since the president has come to office. this is not the forum to debate the policies but i think the numbers speak for themselves. without the stimulus brogue ram, the commerce department has increased from oah to 210,100 -- %. without the stimulus epa has increased 35.7% per subtracting the stimulus, housing and urge them -- urban development decreased. the state department without the stimulus of 132.2% and the list goes on. again, does not in this forum form to debate these particular policies, but it is important to note the numbers that when these particular budgets are growing,

the family budget which pays for the federal budget has unfortunately contracted and it is the family budget that has to pay for the federal budget. it is in order of magnitude we know the discretionary spending of our nation is roughly 40% and shrinking. are entitlement spending is roughly 60% of the budget and growing. we know outside of interest payments on our national debt that are mandatory spending is principally driven by our health care and retirement programs and are simultaneously starting to deserved their beneficiaries and driving the nation broke as they grow at five, six and 7% a year were unfortunately our nation over the last few years have actually seen they could have economic growth. to put this in an even larger context, under the budget control act, we collectively have a goal, goal of $1.5 trillion deficit reduction but we have a duty, a duty to

provide recommendation and legislative language that will significantly improve the short-term and long-term fiscal imbalance of the federal government. thus, the challenge before us remains that we must find quality health care solutions, quality retirement security solutions for our nation at a cost that does not compromise our national security, does not compromise job growth in our economy and does not mortgage our children's future. everything else we do, including dealing with the discretionary budget, will be helpful. nothing else will solve the structural debt crisis or allow this committee to meet its statutory duty. only these reforms. proving stewardship of our discretionary budget is going to be helpful. it alone cannot solve the crisis. it continues to be an important matter and i look forward to hearing from our witnesses and with that i would yield back

madam chair. >> thank you very much. with that i will turn it over to director elmendorf for your opening statement and we all appreciate your taking the time out of what we have given you is a very busy life to take time to come today and answer questions of thank you very much dr. elmendorf. >> thank you senator murray, i and the other folks as cbo are happy to try to help this committee deal with the challenging task. my comments today will focus on four questions that are addressed in the written testimony. first, what does discretionary spending comprised? second, what has been historical trends in discretionary spending? third, how will discretionary spending if all over the next decade under current law? and forth how might the path of discretionary spending be altered? before digging into the substance though let me clarify some the terms i will use.

when i talk about discretionary funding, the budget authority that is appropriated for those programs in the the so-called obligation limitations that govern spending for certain transportation programs. those two types of funding provide the authority to spend money. in the funds are actually dispersed, they become outlays. also through the testimony i will focus on defense and nondefense discretionary spending rather than security and non-security spending. defense spending is a traditional category that includes all the spending on military activities in the department of defense plus spending for the department of energy, atomic energy defense activities and defense related activities of other agencies. nondefense spending is everything else in the discretionary category. the budget control act sets caps on discretionary spending for 2012 and 2013 using different categories, security and

non-security. security includes most but not all of defense and also includes appropriations for the department of homeland security, the department of veterans affairs and international affairs budget categories. however in 2014 and beyond, the budget control act specifies a single cap on discretionary funding. there is an entirely different set of caps in the law that would come into play if legislation from this committee does not generate sufficient deficit reduction. in that case the further cuts in spending will be required based on the traditional defense and nondefense categories. although to make the situation truly confusing the act labels those security non-security as well. we thought it would be most useful for this testimony to focus on the familiar defense and nondefense categories. that they now turn to the first substantive question which is what discretionary spending comprises. in fiscal year 2011 total funding for discretionary programs was about $1.3 trillion

of which more than half went to defense and less than half went to nondefense programs. turn out to the second page of the handout in front of you and you will see a defense discretionary funding for 2011. of total defense funding for 2011, 43% the biggest piece on the right of the doughnut went to operation and maintenance, which pays for the day-to-day activities of the military, the training of military units, the majority of cost to the military's health care program and compensation for most of dod civilian employees. another 22% of defense spending went to compensation of military personnel including pay and housing and food allowances. procurement representing 18% funds the purchase an upgrade of weapon systems. appropriations for the war in afghanistan and iraq and related

activities accounted for about a quarter of total defense spending. they were distributed across the categories shown here included in the amounts reported. if if you turn to the next page of the handout it shows the comparable picture for nondefense discretionary funding for 2011. seven broad categories accounted for 80% of the total. education, training, deployment and social services programs together claim 16%. transportation programs received 15% of the total with about half of that going to highway programs. income security programs mostly for housing and nutrition assistance represented 11%. that amount does not include unemployment compensation, food stamps or temporary aid were needy families because they are all part of mandatory spending. discretionary appropriations for veterans benefits primarily for the veterans health

administration were 10% of total nondefense discretionary funding last year. health was 10% with half of that amount devoted to the national institutes of health. international affairs and administration of justice were each about 9% and the collection of smaller categories makes up the remaining 20%. looking at nondefense discretionary spending as a whole, about one third is dispersed in grants to state and local governments. of those grants about a third are devoted to education and training programs and a quarter to transportation programs. with the remainder going to mental protection law enforcement economic development and various other purposes. let me now turn to the second question in the testimony which is the historical trend in discretionary spending. this is depicted on the next page of the handout. discretionary spending declined noticeably as a share of gdp.

from the early 1970s to 2000. mostly because of defense spending declining relative to gdp. from about 18 -- make a person in 1971203% between 1999 in 2001. defense spending then climbed again. outlays for nondefense discretionary programs have averaged about 4% of gdp during the past 40 years. with considerable variation as you can see, but no evident trend. bess on average such outlays increased during that period roughly in line with the income of the population. nondefense discretionary outlays were elevated in the past two years in part as noted because of funding from the 2009 recovery act. altogether discretionary spending amounted to about 9% of gdp in the past few years. higher than a 6% in 2000 but lower than the 11 or 12% of the early 1970s. the third question addressed

this testimony is how discretionary spending will evolve over the next decade under current law. to illustrate potential impact of the caps on discretionary appropriations set in the budget control act, and automatic enforcement procedures contained in that act, we projected appropriations under several different assumptions including the three listed on the next page of the handout. i apologize for those who don't have the handout. i think the members of the committee should have it in front of them. for other people i'm referring to figures and tables that are in the written testimony and there are a couple of slides also from the written testimony. the largest numbers that we looked at him about $12 trillion over the next decade, would come from extrapolating funding for 2011 adjusted for inflation. that is the way cbo constructed

the baseline projection in recent years before the caps in the budget control act. the next set of numbers i will talk about assumes funding is equal to the new caps set in law. about $11.3 trillion over the decade. for illustrative purposes i will focus in a moment on the scenario under which the caps are met through proportional reduction in and defense and nondefense spending but many other combinations are possible in the written testimony offers a range of possibilities. a third than smallest numbers i will talk about totaling $10.4 trillion in corporate they sequestration and reduction in caps that we estimate would occur if no savings resulted from the work of this committee. the next page of the handout is table 3 from the recent testimony and deals with defense spending. i will focus on just the two rows of numbers near the bottom highlighted in blue. i will emphasize that the cap on defense spending could not contain appropriations for the

war in afghanistan or similar activities and the automatic enforcement procedures would not affect funding for such purposes either so what you are seeing here in numbers for the basic defense budget. the upper of those two blue rose shows the reduction in defense spending. moving from the path where the amount of funding in 22011 has grown with the rate of inflation, to a path of proportional reductions in defense and nondefense spending funding to meet the cap. between 2012 and 2021, such reductions would total 445 alien dollars. the number shown at the far right of the loop bar or about 7%. the lower to row shows the larger reductions in defense funding and moving from the path where the amount of funding jumps off 2011 including in inflation to the path that would occur if this committee resulted in no savings. between 2012 and 2021, the king

king that if reductions on this total $882 billion or 14%. in 2021 alone, defense funding excluding war funding would be $110 billion or 16% lower than it would be of such appropriations kept pace with inflation. if you skip to the next page of the handout which is a continuation of the table, the figure beyond that shows defense spending as a share of gdp. the light blue light on the left-hand side shows the history of funding for the base defense budget. the middle line on the right with a short dots shows how projections assuming proportional cuts in defense and nondefense spending meet the caps. the lowest line shows the projection at the maximum automatic reduction. under those two assumptions in 2021, funding for defense asked looting war funding would

represent 2.7 or 2.5% of gdp compared to an average of 3.4% during the past decade. the next page of the handout is table for from the written testimony and deals with nondefense spending. again i will focus on the two rows of numbers highlighted in blue. the upper of the two blue row shows the reduction in nondefense funding again moving from the path for 2011 funding with the rate of inflation down to the path that would result if the caps were met through proportional reductions on the defense and nondefense side. between 2012 and 2021, such reductions would total $418 billion or 7%. the lower of the two blue roles again shows the larger reduction and this time and nondefense funding. moving from the inflation-adjusted path to the path that no savings result from the work of this committee.

between 2012 and 2021 the cumulative reductions would total $794 billion. in 2021 alone and nondefense budget authority would be $99 billion or 15% lower than it would be if such appropriations kept pace with inflation. the next page of the handout shows the nondefense funding as a share of gdp and it can from written testimony. the line on the left side shows the history of such funding. you can see that nondefense discretionary funding spiked upward in 2009 and then fell back sharply in the past couple of years to roughly its average share of gdp during the preceding decades. the upper line on the right shows our projection assuming proportional cuts in defense and nondefense funding to meet the caps. the lower line shows our projection as the maximum automatic triggers. in 2021 and nondefense funding

represents 2.8% of gdp compared to an average of 4.1% during the past decade. the fourth and last question address the testimony and how the path of discretionary spending might be altered or collecting make two quick points which are summarized in the last page of the handout. first, for some programs reductions may be particularly challenging because funding increases that are greater than the rate of inflation would be necessary to maintain current policies or plans. or example implementing the administration's multiyear defense plans would require nearly $500 billion more defense funding over the coming decade ban would occur if the current funding increased at the rate of inflation. other examples were an extrapolation of current funding would be insufficient to fund current policy including veterans health care and pell grants for higher education. moreover some of -- believe current policies in some areas are insufficient to make the nation's future needs.

for example many analysts believe the current national spending on infrastructure is inadequate to provide enough roads bridges and other capital assets to maintain the current level of services or to fund all the projects for which benefits exceed cost. of course the spending on certain programs is allowed to grow faster than inflation and even less under the caps will be available for discretionary activities. secondly cbo assumes baseline projections funding subject to the caps will be equal to the amounts currently specified in law for those tasks. that means legislation that reduce the funds available for a particular discretionary act to that he or she savings undertaking a particular activity would only reduce projected total appropriations if the legislation also lower the caps without a reduction in the caps funding board discretion activities would probably fill the gap created by any savings. i hope this information is helpful to you and i'm happy to

answer the questions that you have. >> thank you. >> thank you very much and thank you for being here and taking our questions. as you know this committee is working very hard together to try and find a balance plan to reduce our deficit and reign in our debt. it is not an easy task. we'll believe it is necessary. over the past 10 years, domestic discretionary spending has remained essentially flat after adjusting for inflation and this spending has remained stagnant despite the growing need to have investments to spur job creation and assistance for those in our country have been hit the hardest because of this recession. in your testimony you mentioned that discretionary outlays during the past decade increased primarily due to the increase in security spending after 9/11 so let me start by asking you a few questions about the impact of past and potential cuts to discretionary spending on our overall budget picture.

would you agree that with negotiations on the fiscal year 2011 appropriation bills and discretionary spending caps in the recent budget control act that congress has already made significant efforts to reduce discretionary spending? >> yes, senator. the current path of discretionary spending under existing law is a good deal lower than it would have been without the actions you have described. >> and is not the case that even if we completely eliminated discretionary funding, everything from nih to elementary and secondary education, military base construction, national parks, processing social security checks, all of that, we would still face deficits of hundreds of billions of dollars because we have not addressed entitlement in revenues? >> i've not done that precise a precise calculation senator but you are most definitely right that discretionary spending as congressman hensarling noted a shrinking share of several

outlays over time and entitlement programs, mandatory spending as a growing share in some cases growing rapidly and without addressing that path of spending it would be extremely difficult to put the budget on a sustainable path. >> given the discretionary spending cuts that congress has already made, can you talk about what the economic impact or effect of further efforts to cut discretionary spending both and fiscal year 2012 budget process and the committee's final product? >> so, overtime cuts in discretionary spending reduce in general the services the american public receives, services and protection against foreign enemies, services and the highways they can use in the national parks they can visit or other sorts of programs. those have a variety of cut backs and therefore aided human cost and they can also have economic costs depending on on the nature of the cut back. even in infrastructure spending

many analysts think the country should probably spend more on some sort of projects. other projects could have a very low economic return, so the nature of the economic effect depends on the particular changes in policy. in addition in the short term, given the large gap between our economy's potential to produce output and the level of goods and services being demanded and being produced cutbacks in government spending and increases in taxes in the near term would reduce the level of economic activity and employment relative to what otherwise would have been and that is in effect for more than medium-term and long-term and depending on the nature of the program being cut. >> i will let the committee know we need to address the longtime federal budget, but i also

really believe that we have to take steps to strengthen that economic recovery and address the jobs crisis we are seeing today. now according to cbo's rule of thumb regarding economic growth and its relationship to budget projections, cbo states, and i quote, stronger economic growth improves the budget's bottom line. weaker growth worsens it. cbo's projections for economic growth are weaker for 2011 and 2012 than cbo projected earlier this year, correct? >> yes, that's right. we have not written formal projections but it would be weaker than in august. >> nearly all the economists are telling us the growth and continues to suffer from a significant weakness in demand and many are warning against pursuing overly aggressive measures of austerity in the short-term. i wanted to ask you, do you agree that a lack of demand is one of the key factors holding back our economic recovery? >> yes, think it is a widespread view among analysts that lack of

demand for the services is the key factor holding back recovery. the further question of course is the source of that lack of divan. >> okay so how does a reduction in government spending generally affect demand on the economy and during an economic downturn? >> reduction in government spending will generally reduce the demand for goods and services either because the government is buying less itself or because it is providing lower transfers to individuals to purchase goods themselves. >> does tax increases or spending cuts have a larger impact in reducing that demand on economic growth? >> depends on the specific tax increase or spending cuts you have in mind, senator. certain forms of government spending we think have a large bang for the buck in terms of demands. others have lower effects. certain kinds of tax increases would restrain demand by more than other kinds of tax increases. it depends on the nature of the spending change often on the recipient of the spending of or the payer of the tax.

>> thank you very much. i appreciate it. represented hensarling. >> thank you senator. >> thank you dr. elmendorf and again on behalf of the committee i want to thank you and thank your staff. we know that you are sorting through a number of homework assignments if you will, from various members here and again we want to thank you with the diligence and professionalism you bring to that task. >> thank you congressman. >> again, when i look at the statutory duty as opposed to the statutory goal of this committee, our duty is to frankly offer recommendations in statutory language to address both the short-term and the long-term imbalance. with respect to the short-term imbalance, is it not true that the stimulus bill with interest

amounts to over a trillion dollars of spending which accounts for a large temporary growth in our discretionary budget? >> yes, and as you know congressman only a part of the recovery act was about discretionary spending. it also increases reductions in taxes. in total, it a little over $800 million it did lead to a bulge in discretionary funding and then to an attenuated olds in outlays because all the money gets spent right away. >> i don't know if you have at your fingertips numbers with respect to agency growth. i had quoted a few and now that i look down i'm apparently the source of your office so i hope i am quoting her office crackly. >> i don't have that the congressman if they are numbers from us than you can certainly trust them. >> i can trust them.

well than i trust that when you add in the stimulus the commerce department is room 219% from 08 to 2010 and with the stimulus epa has grown 830.8%. the energy department has grown 170.7% with the stimulus. education has grown 180.6% at a time when the economy has actually seen negative economic growth and family paychecks have shrunk. unfortunately again this is not the forum in which to debate the stimulus but i think it has to be noted when we are talking about areas of the budget, where savings could be had, that the american people certainly deserve the facts. i want to follow-up on to some point that my co-chairman was making and i believe i have this right. correct me if i'm wrong.

under your alternative fiscal scenario which essentially is a current policy baseline, i believe it is that 2024 that all federal revenues will simply be used on the mandatory portion of the budget this is essentially our entitlement and interest. is that correct? >> i'm sorry again congressman, you have a better hand on the facts and i have but the qualitative point you are making is certainly right that the mandatory spending just dominates the government but did and in an increasing way and the rapidly increasing way overtime. >> this came up in our earlier hearing with you and i think i have this correct. under your alternative fiscal scenario usm a growing revenue base, do you not? you not assume revenues increasing to their historic level of roughly 18.5% of gdp? >> yes that's right.

speed to also assume in your alternative fiscal scenario the tax increases that are contained within the patient protection and affordable care act? do you recall if -- >> what we do in our extended baseline scenario we try to follow current law. the alternative fiscal scenario meant to attract more current policy, what we do for revenue in that scenario simply to hold them at the historical average share beyond 2021. without trying to specify ourselves what combination of specific tax policy that congress might enact to hold revenue at that level so there is no specific answer to whether any given tax is in or out of an alternative scenario beyond 2021. lee said that at the average to provide what might happen if that set of policies were to continue. >> i have a question about the overseas contingency operation

the oh funding. i believe that you have recently readjusted your baseline but we all know the president announced that our military engagement in iraq will end this year. and the president plans to completely reverse the surge in afghanistan i believe by this time next year, but i still think you are showing a pretty hefty sum in the overseas contingency operation line item, so can you explain to us the assumptions underlying this occo number? >> yes congressman. with -- what cbo does for any discretionary spending not capped under laws to take the latest funding that has been provided by the congress and to extrapolate that over the decade to grow with inflation.

so when we estimate the effects of the caps under the budget control act in the end of july in early august we compared those caps not with the baseline projection we published in march but with the later level of funding that the congress had enacted at the end of march and the rest of the fiscal year so similarly now our latest baseline projection was published in august. we would focus the estimating and any caps that one might impose on overseas contingency operations and the difference between those caps in the level come the latest level that has been appropriated by the congress. that latest level is $119 billion on an annual basis. if one extrapolates that $119 billion with growth for inflation, 1.3 gillian dollars over the coming decade. and for that as further discretionary spending we don't

make the evaluation about how those numbers air with a likely demand for funds in any particular evaluation of the appropriateness of spending. it is a mechanical extrapolation. if you thought we spend less than that over time that one could -- >> if i could.herr i see i'm over my time but i guess it is fair to say under your protocols and your rules, the president's recent announcement that this money is essentially not going to be spent anyway does not come into your calculation? >> not until congress and ask enacts different appropriations. >> thank you very much. can i just ask, how closely has that extrapolation stretched over the last five years? >> well, the written testimony shows the pattern of funding congress has provided for the past several years. the annual funding was in the order of $160 billion, so this new level is about $40 billion

prevailed and six fiscal years 2009, 10 and 11. >> thank you. we will now move to each of our committee members were six minutes and we will begin with representative sarah. >> dr. elmendorf thank you for being here and thank you for the work you are helping us to over these last several weeks and hopefully over the next few weeks as well. let me just try to pose one question row quickly. one of our major problems is the drop in revenues we have seen over the last several years and we are trying to tackle the issue on how to best increases revenues. one of the ways we do that is their economic growth. if folks are back a work unemployment rates go down and that means you are you are paying less in unemployment benefits which is an outflow of money and you are also increasing your revenues because people are paying taxes again. my understanding is that if you increase the level of employment by a certain amount, you will see a commensurate decrease in

the level of deficits and of course the commensurate increase in the gdp. can you give us a real quick synopsis of what happens if we put people back to work? >> so the stronger the economy is as you say congressman the more the federal government and other governments correct -- collect governor rendell as is the as a base of the benefits of certain source. the biggest response on the revenue side. if one is looking for a rule of thumb, people often say that the federal government effective tax rate on the margin for an extra dollar earned is collecting 25 cents of that in federal revenue. so an extra dollar of gdp might induce another 25 cents or so of extra revenue. that is course is a rough rule of some and the actual number would depend very much on the way in which the economy improved in and who receive the income and how it was tax and so on. >> so the more you put those 50 million eric is back to work even if it is an average

american salary, that is thousands of dollars per worker, that effective a quarter of that dollar 50 each of those workers earns could be revenue to the government which would help us decrease these deficits? >> it depends of course on what policy one one above some of the economy back closer toward full employment. >> that's where you invite -- we invite you to be part of his 12 person panel. let me move onto another question with regard to discretionary spending. my understanding is that your projection she showed us on some of these charts. what you think might happen if the reductions in some of these outlays and investments would occur both in defense and nondefense over the next 10 years, as a result of the caps and then if we are not able to come to some agreement as a result of the triggers and sequestration? my understanding is under the caps, there are firewalls which separate the savings that we would extract from defense, from nondefense but that those

firewalls exist for only two years. your projections go out for 10 years, so are you saying that the savings you show in defense are guaranteed or that is what we presume that the projections continue forward that half the savings will come from defense and half of the savings in the caps will come from nondefense? >> so with a budget control act establish a separate caps on security and non-security funding for fiscal years 2012 and 2013 insecurity funding is both defense funding and from other pieces of funding as well. but you are right beyond the first two years capital overall funding what we look at in britain testimony was three alternatives one of which the reduction from the inflated former baseline with inflated amounts, one which that was taken up almost entirely through cuts in defense spending and one which is absorbed through nondefense funding and one where it was met for a combination of proportional cuts in defense and on the dunce spending.

we looked at the range because in fact it will be up to future congresses to decide. >> that is the point i was hoping you would make for good really depends on what congress does, where we will see the savings occur. >> yes, absolutely. >> another quick question. total of all that discretionary spending whether it is for the pentagon, whether it is for education, environmental protection, clean water, clean air, food safety inspection, total that out. how does it compare to the amount that we spend through the tax code through what are known as tax expenditures, the tax earmarks. >> we have been published an estimate of that. i've seen estimates of the sum of tax expenditures is about a trillion dollars a year. is it mentioned the total funding for discretionary purposes last year is about $1.3 trillion. >> so we spend almost as much through the tax code for certain constituencies as we spend for

the entire appropriations allocations process through the regulator -- regular budgetary process. that is the type of spending we are not talking about today, the tax expenditures that you did discuss it some the last time you were here. >> appreciate that very much. >> final question. i want to thank you for the report you just issued on the distribution of income in america and a comparison over the years. i think you highlighted some pretty startling numbers about the disparity in and calm and wealth in america today where the top 10%, 20 are sent of americans actually the top 1% of americans have really seen a concentration of wealth as opposed to essentially the very middle of america. can you give us a quick synopsis of what you found? >> so, we found congressman very pronounced widening of the income distribution in this

country with reductions in the share of national income going to the bottom for percentiles and a very large increase, roughly a doubling in the share of national income going to the top 1% of the population. >> thank you and i see my time is about to expire so i thank you very much for your assistance. >> thank you. senator kyl. >> thank you dr. elmendorf. let me read to you an e-mail that was sent to interested hill staff by the associate director for legislative affairs at the congressional budget office on october 17. the subject of the e-mail is hhs class announcement on cbo's baseline. on friday, the secretary of hhs announced that the department does not plan to implement the class act, long-term care insurance program under current law. therefore, in its next baseline, budget projections which will be

issued in january, cbo will assume that the program will not be implemented. unless there are changes in law or other actions by the administration that would supersede friday's announcement. furthermore, following long-standing procedures, cbo takes new administrative actions into account when analyzing legislation being considered by congress even if it is not, even if it is not publish new baseline projections. beginning immediately therefore legislation to repeal the class provisions in current law would be estimated as having no budgetary impact. now this says your long-standing policy is to take new administrative actions into account and as you testified in response to representative hensarling's question, this would suggest that you wouldn't necessarily wait for congress to act. the president president is commander-in-chief. his troop announcement that representative hensarling talk

about is tantamount in effect to the congressional action. he has the ability to withdraw the troops down. what is the difference between his announcement that we will have no presence in iraq after christmas and his previous decision and announcement that we would withdraw in stages to troops from afghanistan over the ensuing years? what is the difference between that announcement and a class act announcement in terms of cbo baseline decisions? >> i think the difference senator is the difference between a tree that mandatory spending and discretionary spending at least by 1985 in the balanced budget and emergency deficit control act and followed since then by cb on conjecture and -- conjunction. for mandatory spending, the program certain rules and parameters within which administrative actions can be taken and we are always trying to provide our latest estimate

of the effects of that senate authorization on the federal budget. if there is news in the form of a very distinct announcement that some program has been abandoned then we adjust the scoring base for those mandatory programs. but for discretionary spending, our projections don't respond to that particular sets of programs or objectives because the congress can choose every year how much to provide. >> but if i could interrupt, this is a distinction without a difference. the president is the commander-in-chief. he is the person that deploys troops, not congress. so are you saying that difference requires you to wait until congress acts even though the commander-in-chief has already made his announcement and become the program for withdrawals? >> in theater there making plans as we speak on how they're going to withdraw the troops from iraq. >> but senator with respect to

think it is a distinction with a difference. we are not equipped to reject what defense funding the president will request in the future would funding the congress will enact in the future. so this news from the administration is a factor that will presumably affect the funding they request in the funding congress enacts, but not necessarily in in a one-to-one way that we could analyze. >> so this memorandum that was and should have distinction between mandatory and discretionary spending when it talks about cbo's policy. cbo will assume the program will not be implemented unless there are changes in law by the administration that would supersede the announcement following long-standing procedures. it takes new administrative actions into account. so, they should have distinguished between mandatory

and discretionary? >> i think you are right senator. i should put that in per diem but the things i'm describing on the discretionary and mandatory cider procedures to go back at least a quarter-century. >> so than with regard to the so-called savings of the president included in his alleged budgetary savings it all depends upon whether the defense appropriations legislation is passed or when that legislation is passed as to whether you would change your baseline? is that correct? >> yes. congress enacts a different level appropriations, at any point, anything after that point would respond to that level of enacted appropriations. >> if we are able to get the appropriations bills completed before the december 23 deadline for this committee to act, but to the alleged occo savings would no longer be available because of an adjustment in your baseline projections. >> adult now senator.

it depends on -- >> would it not cut that amount of? >> that has already been inactive for this fiscal year. that is a good deal lower than a $159 billion from last fiscal year if in fact the congress decided to enact appropriations for the rest of the fiscal year that were below $119 billion for overseas contingency operations and that would bring down our projection of those in that base against which we would estimate for the reductions. >> thank you very much. >> certainly. thank you. be senator baucus. >> thank you madam cochair. i would like to just focus a little bit on that spending. is it true that our current level of defense spending including occo, otherwise known

as overseas contingent operations in otherwise known as war funding, is hiring out in historic terms compared with any other time in american history except for world war ii recs that is, is the current level of defense spending including war funding, greater now than during the korean war? >> yes i believe that is true senator. as i showed it in my testimony as a share of gdp -- >> i'm not talking about share of gdp. >> in dollars adjusted for inflation? >> dollars adjusted for inflation. >> in dollars adjusted for inflation the spending is about $240 billion during the korean war and in 2011 it is nearly $700 billion. >> so we are spending more dollars than we did in vietnam? adjusted for inflation? >> yes senator. >> and more than we did during

the reagan administration adjusted for inflation and more than the cold war average? >> yes, senator. >> which is the highest since world war ii? is that correct? >> so, by i think during the reagan administration it was higher than the vietnam war and the korean war. >> the budget control act as you mentioned had two separate caps for what is it? >> 2012 and 13. >> but no separate caps for security and non-security thereafter? which means that the appropriations committee of congress can decide to spend more on security than is allowed under the caps for the first two years? >> yes. under the total caps that it chooses. yes. this committee doesn't receive any additional savings

enforcement procedures established separate caps for defense and nondefense discretionary spending but under the basic caps you are right senator. >> so the base caps in the act, are there any caps for war spending? >> no, senator. >> there are no caps on more spending? >> technically the caps would be adjusted upward by any amount designated by the congress. >> that is a technical point. the main point there are specific caps for security and non-security and no caps in subsequent years and no caps whatsoever on -- >> that's correct senator. >> now, the appropriations committee has sometimes gone to occo.

that is an extra pot of money to use and if there are no caps on it. has that ever happened? >> senator i can't speak to the motivations of the appropriations committee. certainly there will be inevitably some ambiguity in any efforts that allocate costs and what costs are fully attributable to the wars in what costs are not will be a matter of judgment. >> did the senate appropriations committee moved to -- to this account? to think over the past year senator there has been some movement of money that used to be designated occo into base budgets and i think some movement in the other direction as well. i'm afraid i don't have an overall assessment with the numbers involved. >> what about -- there were reports that obviously have to be double checked.

migration and refugee assistance for places like kenya and pakistan. >> i'm sorry, senator, i don't know. >> but we do know there is no limit on occo account and let me ask how is it defined? what are the definitions of what constitutes and is not constitute spending out of the war account? >> so in our presentations we follow the labeling provided by congress and it is up to you and her colleagues to decide what you support under various categories. >> that kind of sounds like what congress wants to do. >> yes, senator. >> that sometimes happens around here. but you are saying there are no scoring rules under the budget control act that would restrict migration base defense spending to occo in the future? >> future? >> got us up to the congress as

i said to designate what it views as related to those operations and what it views as part of spending that would happen anyway. >> and at this committee were to say dollars cannot be spent on a certain program, my understanding is that would not be scored by your office? >> certain discretionary programs. senator kyl talking to be careful about that. changes in the mandatory program we do estimates of the changes in individual discretionary programs we would not take account of because we are relying on the overall level of the caps rather than squeezing one particular program without a change of the capital we think would be filled -- >> what if this subcommittee established caps? what if there was a cap on occo? >> at the committee established caps on occo that were below the level of funding based on extrapolation of increases for inflation from the latest enacted appropriations and we would estimate savings. >> you are suggesting about what

did you say? >> about $1.3 trillion. >> $1.3 trillion on caps? >> that is $119 billion recently extrapolated for inflation. >> moving forward. but if we were to set a cap, that would be scored? >> would estimate the effects, yes senator. >> thank you. >> thank you senator baucus. >> thank you madam chair and again dr. elmendorf we appreciate your testimony today and i just want to take us back to a question from earlier today and that is this committee worked to try to get them raymond, a solution, what is their real date you want us to give you the information that your worker bees can turn out a reasonable number for us? >> as you i see no congressman,r skilled analysts are working

very hard for this committee already. no congressman, we have a trip to the hard-working group as you know. as i said last time i was here you had a set of proposals that would make changes across a range of anatori spending programs. and that would apply some weeks to work with legislative council and the staff of this committee and refining legislative language to accomplish the objectives you are setting out to accomplish. ♪ ..

just those to wherever we go in terms of a percentage of the debt as a percentage of gdp ten years on the road? >> these numbers of the table are comparison of the sequestered inflated inflation not the amount of the sequestered with the person itself.

the baseline projection for august incorporated the $1.2 trillion that is under the current law to be achieved either through the actions of this committee or the enforcement procedures. so whether the committee hits $1.2 trillion or filled in to the enforcement as long as you will save more than $1.2 trillion you are putting yourself back to the baseline projection from the summer. under that projection, allowing for the expiring provisions of the tax code to expire and the payment to doctors to be cut very sharply and the other features of the current law deficits by the end of the decade or 1.5% or so of gdp. the debt is actually declining relative to the gdp but that changes critically on the revenue rising above the historical average share of gdp. the discretion falling below its share of gdp in order essentially to make room for the great increase in social

security and major health care programs. >> i don't know if you saw the gao report released earlier this week as related to if this committee failed the trillion dollars in savings is not sufficient is the words they use, for stability and they predict in essence a credit downgrade. have you had a chance to look the report? >> i glanced at it. >> you have any comments? i know it just came out this week. >> one technical plight they offer to scenarios, one of which is close to our alternative scenario dever is current law nonetheless they do in that scenario was to limit the increase in the tax revenue as a share of gdp or extend the baseline scenario of the rise in revenue relative to gdp that

persists and go on beyond the next decade. will work better in the scenario and the policy assumption about tax revenue, tax policy. but we certainly agree very much with the underlying point of the analysis under the current policy of the u.s. government is on a sustainable fiscal half and the magnitude of changes the will be needed from the current policy is very large and as i said when i testified here if we want to consider the expiring tax provisions and of limiting the reach of the alternative minimum tax and adjusting medicare payments to doctors the deficit over the coming decade becomes $8.5 trillion rather than the $3.5 trillion under the current law it would be rising to the gdp to levels we've almost never seen in this country.

>> thank you. >> representative clyburn. >> thank you madam share. dr. elmendorf think you very much for being here again today. you may recall in the first hearing i discussed a little bit of the growing wealth the act that exists and did that with unemployment numbers. now your recent report indicates over the last 28 years in my estimation that is a generation. of the last generation we seen an increase in income of 1% of households in america 275%. at the same time we see an increase in the top 20% of 65%

the bottom only 18% over the same period of time for the 6% we have seen in come has grown over 40%. that indicates to me that the middle-income is shrinking relative to the rest of the country. now if we were to extrapolate that as we talk about, i would assume that we are where we are because let me put it this way, to the extent the government policy has allowed this gap to exist, if we continue current

policy, then it's fair to say that we are going to experience that kind of continued widening of the wealthy in america in the united states. >> congress and, one of the issues we wrestle with in our projection is the evolution of the income distribution. the study that we did as you know ends with 2007. what's happened during the past few years of the recession and financial crisis is not clear all the what you look at the study from past recessions they've shown a narrowing of the income gap particularly because the higher income people collect a relatively larger share of the capitol income which tends to be more cyclical so where things stand precisely today i'm not sure. projections to incorporate some ongoing widening of the income distribution. the last 30 years continue that

pace to that extent but neither do we see force is at hand that would cause that to be reversed. >> it's not for the effect of the recession we don't have data for but looking from here on we don't see those underlying factors reversing. i would assume then that this, i have seen a lot in the media in the recent days about who is in fact paying the taxes in the country. i'm assuming as my dad used to tell me don't argue about taxes because if you really owe them that means you need something. so i'm assuming that these people are not pay because they don't owe anything. they don't allow anything because they have not made any thing. so that is an assumption on my part.

let me look at the economic ladder that we talk about a lot. if we are going to see a shrinkage in that gap it would seem to be that it would start looking at how we would prepare people to assume tax paying responsibilities in our society, and we do that by investing in the education to the extent things like pell grants and the stock pile for this all of these things are designed to prepare people of to their for the taxes and not be on the government dole as we like to see down south. and i to believe that if we dramatically reduce the investment then we would

dramatically reduce people's abilities to assume these responsibilities and to become taxpayers. >> you are raising important the difficult questions, congressman. the people's ability to earn income comes for a variety of forces on their lives federal government policies one of those forces and of the federal policy would change in any way that provide significantly less support from people in the education marketing skills that could well affect their income in the future. but it depends on the specific programs. there's a very large research literature and experimentation in the world about training programs for example and some seem to work well and badly and the ones that work well are difficult sometimes to expand to a larger scale is a much study

question is influencing people's ability to earn income as you say to that and pickaxes. >> my time is expired. >> senator portman? >> thank you for being with us again and for all the hard work you and your team are doing in responding to our many increase i expect my to be prioritized we prioritize everybody first. >> thank you we have a short period of time and a lot of work to do you talk a little about the economy earlier and my

colleague, clyburn raised this issue importance of jobs which is after all when you get people pay in taxes is to make sure they have the opportunity to urge enough money to pay the taxes if the demand is the key issue and the source of that lack of demand is the tough question if you could comment on the unsustainable fiscal path that you outlined repeatedly including today and that we are increasing the debt anywhere from $3.5 trillion to $9 trillion over the coming decade depending whether use the current law or policy baseline reminding us that never cut here is to reach 1.5 or 1.2 to avoid sequestering. of course isn't even close to the increase we are likely to see from $14.5 trillion debt. what impact does have on the

reinhart study and others that have commented on the impact of this unsustainable fiscal situation on the current economy? >> i think the unsustainable path matters in the short run from various ways. partly the borrowing in the government has done in anticipation of government borrowing can crowd out private investment to some extent. at the moment with investment in any way the magnitude of the crowding out is less clear in fact we see treasury interest rates being very low there can be crowding out of the investment. i think beyond that, the uncertainty about fiscal policy is probably weighing all households and businesses. they can recognize there will have to be the of arithmetic spending to the current policy but i don't with the changes will be and the uncertainty is going to inhibit the factor and

the decisions particularly commitments of money over time to invest in factories and equipment to invest by hiring people from households to invest in housing and durable goods to be added that uncertainty is a piece i think of the broad uncertainty about government policies there are different policies up in the year in a way that is part of the broad uncertainty about the staff of the economy and the income households and they will have in the future for the goods and services to businesses think they will have in the future. >> i appreciate that and as an economist, i appreciate you giving us a sense of the importance of the task because it's not about cutting spending. it's about the economy and jobs and although we are not called the jobs committee, what we do affects that sense of certainty and predictability going forward not in a substantial way as we

would hope but it would take us of a different direction and we talked about it today as well. if we don't do our work what impact that could have to make the economic growth more negative to read some figures here you may not trust because you're from the office of management and budget, and you said earlier that you trust the figures but i think they are consistent with yours. let me start by saying i totally agree with what you said earlier, and mandatory spending dominates the federal -- mandatory spending dominates federal spending. that was your quote a few minutes ago. co-chair hensarling has made that point in different ways and i totally agree and this committee doesn't get the issue which is the biggest part of the budget, over 50% of the budget was 60% if you include interest on the debt and the fastest part of the budget is roughly from 25% of the budget in the 1960's

to over 50% today. if we don't get that the testing part of the budget we will not have accomplished our goal. having said that, let me give you some statistics on the discretionary side since that is the topic of the hearing today. i will give you some numbers from 1990 until today. non-defense discretionary has risen during that time by 95% which by the way is nearly double the 52% growth in defense spending. so 52% growth in defense spending from 1990 until today, 95% of the non-defense the defense spending is not at the time because the increase as we have seen have been more recent from 2001 which reflected the increase from the cuts in the 1990's on the defense. so if you use the last decade it would be higher. let's look again at 2001 to 2008 the level -- 2011 up from 16% in

the last ten years. international spending up 102%, federal spending up 100% and spending that 71%. health research and regulations to dig up 56% and so on. we need to keep both of these in malida. if we don't deal with of the spending issues it is the cunego and we have seen substantial increases in the discretionary spending understanding that the bca proposal under more constraints do you agree with those numbers? >> i would not argue with your numbers. thanks for helping us achieve the goal we talked about today and we look for work to working with you. >> thank you, senator. senator kerry? >> dr. elmendorf, things you very much for being. for the terrific work your doing. we appreciate it. it's my understanding cbo keeps regular estimates on the number

of jobs that have been created by the american recovery reinvestment act; is that correct? >> we are required to publish estimates once a quarter. >> i don't want to spend too much time, is it not correct without the policies of the american recovery reinvestment act that gdp would be lower and unemployment would be higher? >> yes, senator. >> so it has had a positive impact on gdp and reducing unemployment? speed those are estimates, senator, yes. >> with respect to our work in the kennedy, talked to you last time you were here about going big, about 84 trillion-dollar total target it to include the money already cut, 3 trillion if you don't. it's my understanding you already have in your baseline and accounting for 1.2 trillion deficit reduction by this committee. is that accurate? >> yes.

>> if all we do this 132 trillion we are not reducing the deficit below the current levels or rates. >> that's right that's because of the automatic enforcement procedures if you don't take explicit action there is a backup plan which is the further cuts in spending that i've outlined here. >> with respect to the bigger deals so to speak, would you tell the committee or share with the committee the perception of assuming you had a 3 trillion-dollar reduction, which included something along the ratio we have all heard about either from some symbols or the gang of six summer in the vicinity of 3-1 of the cuts to revenue, and assuming that the revenue were to come exclusively from the highest in the people that 275% increase of income can you make a judgment as to what the impact would be on the

market place and perceptions of deficit reduction or job growth that come from the 3 trillion versus just achieving the $1.2 trillion gold? >> just looking to the aggregate deficit reduction and think it is clear that larger reduction coming from the work of the committee would have a positive effect on the current spending and kernan the output and employment and conversely that failure of the committee to reach agreement for the congress to enact all the agreement reached by the committee would have a negative effect on confidence and thus on spending. >> if we do 1.2 trillion or 1.5 which is the goal and that is all we do, is it a fact that we are going to be back in a year or two or three in a maximum dealing with the same issues on the plate now about the and sustainability of the budget? >> yes, senator and that is certainly right. >> so in terms of the duty that

the co-chair hensarling has talked about to provide language to significantly reduce the most important message to the marketplace i told comes if you achieve a 4 trillion-dollar total which is the only way to begin stabilizing the debt is that not accurate? >> yes, the amount needed depends very importantly on how you view the expiring tax provision and others of the current law that would take us away from current policy to which people have become accustomed. if one extends all or a large share of the expiring tax provisions over the next ten years, then the gap in spending revenue over the coming decade becomes much larger and much more of your action is needed to achieve any given objective for the path to read >> can you share with the committee would have a greater negative impact on growth? the failure of the committee to come up with 1.2 or 1.5 and the

marketplace signals that would spend the continued plight of the country, or inability to come up with a three children and or 4 trillion-dollar level that had that three period one, 2-what the ratio that i talked about with any revenue coming from closing tax loopholes or from that 275% increase in come earlier which would have the greater negative impact on the economy? finding revenue from those folks and getting a deal or having no deal and not having that revenue? >> i'm afraid i can't analyze the kind of policy proposals you are describing in my head and the packages that you've described. >> but you can analyze -- you have told us that if we fail to come up with anything that deals with the on system devotee, we are sending a bad message to the marketplace, aren't we?

shy >> in terms of the amount of the deficit reduction, the more the committee can achieve over a period of time, the bidder that would be for the current competence, but i can't wait off against the effect of a hypothetical combination of specific spending and tax changes. >> leave the hypothetical out. can you tell us what for instance the expiration of the top end of the bush tax cut if it went from 35 to 39.6 and there was part of a 4 trillion-dollar deal with that have a negative impact on the growth in the economy? >> we did last fall for the senate budget committee provide estimates of the effect on the economy of different ways of extending the tax provisions, and extending them had a positive effect of reducing the deficit, the negative effect of reducing the deficits and the positive effect of keeping marginal tax rates lower and

encouraging work and saving. in our estimates with a negative effect of the extra debt was larger than the positive effect of lowering marginal tax rates for those particular policies we looked at, and again over the medium and long for term, the that is why the answer depends on the specifics of the policy to this bixby for. i appreciate it. >> thank you, co-chair. mr. elmendorf, is their anything in the budget control act that would prevent the congress from changing how this sequester would affect the defense spending? >> the congress could enact a change in the wall that could override the budget control act. six of their stuff in the budget control act that would prevent that? >> nope. in the congress could reverse the action of the previous congress. >> i appreciate your response to a question by senator marie that you believe that your projections on gdp growth or too

generous and they will be lower which mean the deficits are worsted you've projected in the past. but under your projection you are assuming a 40% cut to the positions of medicare, are you not? and assuming taxes go up $3.8 trillion cut everybody's taxes go up and certainly would have a detrimental affect on the economy, yet you are assuming there is a cut in the discretionary spending. so as you project in the answer to mr. upton's question the deficits are going to decline as a percentage of gdp it's based on all of these assumptions which frankly what impact that number particularly in one way. >> we are following the current law. >> but these are assumptions that are baked into your proposal and testimony today. i just trying to point out. under either of your long-term fiscal projections, spending on the entitlements or mandatory

health programs, social security, etc., will increase between 15 to 17% of gdp of the gross domestic product and the net interest cost will increase between four to 9%, and under either of those scenarios that crowds out discretionary spending even if assuming the highest level of revenue the country has ever seen. so i guess my question is under even the best of assumptions, total discretionary spending under that sort of longer-term scenario is about 1% of gdp versus the 9.3% that it is today. and i guess i would say to you does your response to that suggestion or calculations to the sound correct to you? >> i don't have a long-term number of hand. we extrapolate from the projections over the long term

also we extrapolate discretionary spending according to a simple rule of thumb. what the congress ultimately did when it reached the unsustainable point we can't predict. >> assuming my question that if under the rosiest of assumptions given those long-term projections the discretionary spending is just 1% of gdp has that ever occurred? it hasn't occurred in the recent history. >> so we've never been at that level and the question is can we operate in the government just 1% of discretionary spending of gdp? >> nothing like the government we are now accustomed to eating either defense or non-defense programs. >> and again, with your testimony that mandatory spending as you said dominates the government budget i think was your coat. you also said it's a growing share of spending growing rapidly. does this illustrate as part of what we are trying to do the need to read and mandatory spending is obviously one of the

priorities we need to address? still gets up to the committee to choose what changes in the policy it wants but the growth of the mandatory spending particularly for health care and also social security is the feature of the budget that makes the past and repeatable. it's the change under the current policy because of the aging of the population and the rising cost of health care that pushup that spending and a substantial way that requires us as a country and you as our elective leaders to make choices, to make the future different in some way from the past and whether that is changes in those programs or tax revenues or other government programs is up to you. seabeck thank you. i yield back, madame chair. >> the committee will -- >> [inaudible] petraeus to back all of this with a percentage of the gdp is trying to confuse the issue. speed the chair wishes to remind

all of our guests -- >> [inaudible] >> -- in the history of this spending on the war -- [inaudible] >> thank you very much, representative. you can continue. >> i had yielded back, madame chair. >> we will turn to the representative van hollen. >> thank you [inaudible] thank you, dr. elmendorf for

your testimony. to be clear if the congress were to take action to repeal the defense portion of the sequester, all things being equal, that would make the deficit worse, correct? >> yes. >> thank you. let me go back to the overall fever here which is that as a share of gdp under current law non-defense discretionary spending is shrinking the dramatically the next ten years is that not the case? >> yes, congressman. >> it goes below 3% in your chart figure six which is a percentage of the economy have upped about the lowest level since the eisenhower administration. there have been many questions that relate to the level of non-defense discretionary spending during the 2007, 2008 period which is a component of the recovery act. to be clear in your response to senator kerry's questions if you indicated very clearly that that spending has a big part of the

over all affordable care act helped prevent the economy from getting worse, correct? >> the recovery act in 2009 and 2010a and this year and we believe the kutz of the taxes and increase in the government spending to that act increased output and employment relative to what would have occurred otherwise. >> that's right. >> and as we look forward in this committee and i have received a letter from you i think the calculation of the congressional budget office is a little over one-third of the current deficit that we face is a result of the fact that the economy is not at full deployment of is the right? >> yes, the congressman. >> even though we prevent things from getting worse more quickly, clearly we have a long way to go, and i wanted to follow-up on a remark you made with respect to infrastructure spending where you said, quote committee analysts continue the country should spend more in the area of

infrastructure. cbo i know has looked at infrastructure investment. do you believe that is an effective way to try to boost job growth especially given the fact that we have over 14 per cent unemployment in the sector? >> yes, congressman. we think a variety of government spending programs have increased or government tax revenues have produced would spur economic activity in the next few years. >> i know the cbo has also analyzed different forms of investment to see which would be more effective. there are a lot of folks out there that are the unemployed through no fault of their zero door are continuing to look for work. as i looked at your analysis, one of the most effective ways to boost consumer demand which of course is a big soft spot would be to expand support for people out of work through no fault of their own. >> yes, congressman. >> and another issue that is legal the horizon is as of the

beginning of next year, the current payroll tax holiday which is in effect for all working americans would collapse unless congress takes action if that were to lapse that would mean working people have less disposable income especially this point in time and that will also dampen the demanded the economy, would it not? all of that demand would mean less economic growth and fewer jobs, what did not? >> yes. >> thank you. >> i'm going to -- a lot of ground has obviously been covered here. i just want to pick up on the question, comment really, that the congressman baby and i think we are very aware that the clock is ticking. we have to accomplish an awful lot in a short period what type deutsch in your constraints. and i hope that this committee is able to complete its mission

and come up with a package that serves two purposes. one is to try to get the economy moving again and put people back to work, and you have described some ways that could be done in response to questions and as you also indicated that can also help reduce the deficit over a period of time because the sooner you get people back to work the more the economy gets back into gear the more revenue that will come and we need an act to put in place a long-term credible deficit reduction that does that in a study we without harming the current jobs and economic growth and we need to do it in a balanced way like every other bipartisan group that's looked up this challenge recently. and so i hope we can complete that mission as you indicated in your testimony today before their two big components as an

interesting result of the baby boom retirement rising health care no doubt about it and there are smart ways to do it and then there are ways i think would impose a lot of unnecessary pain on americans but we need to reform the health care system so we focus more on the value of care and the volume of care and more on quality and quantity the revenue issue and we all know that in the last past decade when folks at the top or paying a little more, the economy reforms just fine. 20 million jobs were created the economy was booming and it seems to me this is a time for shared responsibility to address the country's needs, so i think your testimony made that very clear. as a think you, dr. elmendorf and madame chair.

>> thank you, dr. elmendorf, a couple of quick follow-up here. i know it is your view that the reason huge increases in spending and the corresponding big deficits have generated more economic growth and more job creation than we would have had in the absence of those things but surely you would agree that adds to the counterfactual and as such is completely impossible to prove. >> yes, that's right. >> i would urge us to consider there is another theory which is the government can't really create a demand on balance. it can substitute public demand for private demand but it's a loser to think the government can step in and make up for what is perceived to be a shortfall of private sector demand and by the way i would suggest there are governments such as greece and italy and portugal and spain and a lot of demand domestically for their excess of spending

it's not working out so well for them. i want to follow one something i might have misunderstood this but i want someone to suggest non-defense discretionary spending has been essentially flat for about the last decade. i want to be very clear in fact by any reasonable measure non-defense discretionary spending has grown dramatically i would say the numbers i have in 2000 would spend about to under 84 billion in the ball defense discretionary spending 22 we spent 550 billion with a slight reduction 2011 but this is growing obviously in the model terms and growing inflation-adjusted terms and faster than inflation plus population growth its growing faster than gdp in fact is that true? spy the thing that is correct but outlays. >> the issue we are pointing to

is funding a meeting of the new budget authority that it's providing for the non-defense discretionary purposes is actually back dalia already in the fiscal year 2011 as a share of gdp to roughly what it was over the few decades and you can see that in the figure six of the testimony. you are right in terms of model dollars or in terms of the real and fleeced adjusted dollars is certainly up as a share of gdp there is a sharp distinction between the level of outlays in 2011 which depended on the previous year from the get the level of funding in 2011 which is the jumping off point for the future appropriations. >> we have seen huge growth in the non-defense discretionary spending. the last point i would like to ask is i think it's your view but i would like to ask is it your view that if we were to pursue revenue neutral tax reform that would have the effect of broadening the base on which taxes are applied and lowering marginal rates it is

true with respect to such corporate reform or individual reform that would have a pro-growth effect on the economy which would generate more income for the government. >> it would depend on the specifics. >> to the extent we pursue that we would be generating economic growth and jobs and revenue for the treasury. thank you for coming today and testifying and i want to thank all of the members for being short and concise and we have a lot of work to do it shrinking the amount of time to finish it with dr. elmendorf think you to you and your entire team for the tremendous amount of work that we are putting forward and i appreciate all of that. i do want members to know they have three business days to submit questions for the record and i hope the witnesses can respond very quickly to that some members can submit their questions by the close of business on friday october 28th.

i would also like to inform everyone that we are going to have another hearing on the vendor first the topic would be an overview of previous debt proposals. from alice rivlin and former senator pete domenici. without objection, the joint committee stands adjourned. >> thank you, senator. [inaudible conversations]

[inaudible conversations] the joint deficit reduction committee will meet again next week. the committee will hear from former senator alan simpson and erskine bowles who hit up the deficit commission. we will be joined by alice rivlin and former senator pete domenici who offered mike another debt plan for the bipartisan policy center. that hearing is next tuesday and get started at 1 p.m. eastern.

now homeland security secretary janet napolitano testifies about u.s. immigration policies and the administration federal gun program known as fast and furious that was run by the atf. the house judiciary committee is three hours. the judiciary committee will come to order without objection the chair is authorized to declare a recess of the committee any time.

this morning we welcome secretary janet napolitano to the committee for an oversight hearing on the department of homeland security. the department of homeland security was created to protect the country from terrorist attacks and force federal immigration laws and provide disaster response and assistance. dhs also performs important law enforcement and related to intellectual property and child pornography. as we begin with i would like to pose two questions first affect the half dhs secure nabors. the nonpartisan accounting office has found only 44% of the southwest border is under the operational control of the border patrol. nearly 450,000 illegal immigrants enter the u.s. each year. meanwhile mexican drug cartels are out of control and threatens to spill over into the u.s.. the administration needs to do more to secure the borders and protect the american people.

some have claimed what are supposedly the largest number of renewals in history however even president obama said the statistics put out by dhs r. kunkel, a little deceptive and a study by "the washington post" found that the administration has inflated its removal numbers. my second question is how effectively has dhs protected jobs for american workers with the unemployment rate over 9%, jobs are scarce and millions of american families have been hurt. according to the pew hispanic center come 7 million people are working in the u.s. illegally. these jobs should go to legal workers. and securing the jobs for american workers and legal immigrants should be a priority of the federal government. each time dhs deports a worker it creates a job opportunity for an american worker. worksite in force that actions open up jobs for unemployed american workers. unfortunately the work site in

force because of a comedy that under this administration. administrative arrests fell by 70% in 2008 to 2010. grinnell arrests fell by 60% and indictment by 57% and criminal convictions fell by 66%. with millions of americans unemployed it is hard to imagine a worse time to cut worksite the enforcement efforts by more than half. it is true that dhs has increased the number of companies, employment eligibility, verification forms. however these are questionable benefits. the gao found i.c.e. officials told us because the amounts are so low fines do not provide a meaningful deterrent. the amount of the fines bp in the opinion of some i.c.e. officials so low they believe that employers view them as a cost of doing business making the fines and an effective deterrent and what happens to the workers when it declines to arrest them they go down the

street and not on the door to the next employer and take jobs away from american workers. dhs also signaled it may grant administrative amnesty to potentially hundreds of thousands of illegal immigrants currently in the removal proceedings and many of yours that have yet to be placed in proceeding. but we know that when this administration issues illegal immigrants and grants 19% of them work authorization. how can dhs justify granting work authorization to illegal immigrants when so many american citizens don't have jobs? 23 million americans who are unemployed or can't find full-time work must wonder why this administration puts illegal immigrants ahead of them. citizens and legal immigrants shouldn't be forced to compete with illegal workers for scarce jobs. the administration should put the interest of american workers first. that concludes my opening statement, and the gentleman

from michigan, the ranking member of the full committee, mr. conyers is recognized for his opening statement. >> thank you, chairman smith and members of the committee. i join with you in welcoming the secretary of the department of homeland security. i wanted to start by reminding everybody on the kennedy that we have some hearings about all of these jobs that immigrants are taking what was it, in alabama and georgia, and nobody wanted jobs. they couldn't get -- they can't get anybody for the jobs. and if there is anybody on the committee that thinks among the millions of unemployed that they

are looking for labor, please see me immediately after this hearing so i can put that misunderstanding to rest. in the harbor this hearing from my point of view is to ask this one question. who would say that the immigration and customs enforcement i.c.e. that their time and resources are better spent reading kitchens and fields to deport busboys and farm workers who've been working here for years to support their families usually rather than targeting those convicted of serious crimes or repeat offenders, and i think within the resources of this very

important agency we will get the answer to that. now two months ago, the immigration subcommittee of the judiciary held a hearing on the chairman's bill, h.r. 2497. always loved the title of this bill. hinder the administration's legalization temptation act. acronym halt. two weeks ago that same subcommittee met again to conduct oversight with the director of immigration and customs enforcement john morton. both hearings my conservative

friends of the judiciary level essentially the same criticism that the president of the united states refuses to enforce our immigration law and is dead set on legalizing hundreds of thousands of undocumented immigrants with the stroke of a pen, and it was called back door amnesty strategy and i've been waiting carefully to see if i hear that phrase raised again. and of course this is incorrect. earlier this year director martin of spicy issued a series of memoranda identifying immigration and customs enforcement's priorities,

providing guidance on how i.c.e. employees should exercise discretion to carry out of those priorities. the minow is not surprising, and i hope they are not controversial to anyone. given the resources limited that he has, i.c.e. intends to prioritize, from my understanding of the hearing, the removal of people who threaten our safety, such as terrorists, such as criminals, before focusing on people who pose no such threat. and i will be carefully listening for any objection to that that might occur. no agency or department can do

it all. they have to make choices, and we will have some of these choices that the secretary has to make. the department of homeland security and the department of justice are working together putting these enforcement priorities into action on a department wide basis, and these actions couldn't have come soon be enough. our immigration courts are backed up. we know that. deportation hearings are being sent for, get this, for 2014, and the department of homeland security would act to alleviate this and there is it just makes good common sense.

so i close, mr. chairman, that asking us to look at this remember this is the judiciary committee of the house of representatives, and remember that and the two and a half years of this administration we have deported a record 1 million individuals, one over a million individuals, something that all i am not bragging about, don't get the long. increased worksite enforcement and targeted employers who break the law by conducting on a nine of its, levying a fine, bringing criminal charges pushed for the national expansion of secure communities despite some

opposition from some state governments or local law enforcement and even some advocacy groups, and finally come increased criminal prosecution as immigration of france's so much that the illegal immigration after deportation is now the most prosecuted federal felony in the country. so, i am happy to see ms. napolitano here and welcome her as does all of us on the committee for the discussion that will follow this morning. thank you, mr. truman. >> thank you mr. conyers. our witnesses janet napolitano, secretary of the united states department of homeland security. sorted january 21, 2005, janet napolitano is the third secretary of dhs.

prior to becoming secondary common is the public, was in her second term as governor of arizona. while serving as governor she became the first woman to chair the national governors' association and was named one of the top five governors in the country by "time" magazine. ms. napolitano also was the first female attorney general of arizona and served as the u.s. attorney for the district of arizona. ms. napolitano was born in new york city and grew up in pittsburgh pennsylvania and albuquerque mexico. she is a 1979 graduate of santa clara university where she won a truman scholarship and was a university's first valedictorian. she received a doctorate from the university of va school law in 1983. before entering public office, mr. pellicano served as a clerk for the judge mary m. schroeder on the u.s. court of appeals for the ninth circuit and practiced law in phoenix. we welcome you today and look for what your testimony and please proceed.

>> thank you pachauri smith and ranking member conyers and members of the committee for the opportunity to testify this morning. today i would like to update the committee on the progress particularly with respect to the efforts to prevent terrorism and enhanced security secured manage our borders and in force and the minister the immigration law ways. and i think i will begin their. the obama administration's approach to the immigration enforcement has been widely discussed among those who like to be be the topic including members of this committee. our policies have been simultaneously described as engaging in a mean-spirited and effort to deport record numbers of illegal immigrants, and alternatively described as comprehensive amnesty that it bores our responsibility to enforce the immigration laws. these opposing views are both incorrect and it's my hope that voting for what we can have a

civil and at least dialogue about immigration enforcement. here are the facts. overall in the fiscal year 2011, i.c.e. removed or returned nearly 397,000 individuals. the largest number in the agency's history. 90% of the removals fell within one of our priority categories and 55% or more than 216,000 were convicted criminal aliens, and 89% increase in the removal of criminal aliens from fiscal year 2008. and this includes more than 87,000 individuals convicted of homicide, sexual offenses, dangerous drugs or driving under the influence. of those we remove without a criminal conviction, more than two-thirds of the fiscal year 2011 fell into the prayer the categories of the recent border

crossers or repeat immigration law violators. as part of the effort they continue to focus on high priority cases, i.c.e., in partnership with the doj and across the department of homeland security has implemented policies to ensure those enforcing the immigration laws appropriate use of the discretion they already have in deciding the types of individuals prioritized for the removal from the country. this policy will help immigration judges, the board of immigration appeals and the federal courts to focus on and adjudicating high priority removal cases more swiftly and in greater numbers enhancing i.c.e.'s ability to remove convicted criminals. it will also promote border security as its sharpens i.c.e.'s focus on recent border entrance and allows for the expansion of i.c.e. operations along the southwest border. we have also stepped up our efforts against employers who

knowingly and repeatedly hire illegal labor and have taken action to identify the overstays and enhance refuge she screening and also to combat human trafficking. additionally, since 2000 - we have carried out major reforms to the immigration detention system. these reforms assure the health and safety of the detainees in our custody and allow i.c.e. to maintain a significant robust detention capacity to carry out serious immigration enforcement. ..

now, at the same time our officers have the legal responsibility to remove up lawful individuals from the country. they will also do so according to our priorities but they will also do their job. this administration is committed to making sure that we have a southern border that is safe, that is secure, that is open for business. we are more than two years into our southwest border initiative and based on previous bench marks set by the congress, it's clear that the additional manpower, technology and infrastructure we have added are working. apprehensions have decreased

36% along the southwest border over the past two years and are less than one-third of what they were at their peak. we have matched decreases in apprehensions. apprehensions a rough way how many are attempting to immigrate. we matched decreases in apprehension shuns with increases in drugs caches of weapons. violent crime in united states border communities has remained flat or has fallen in the past decade. finally u.s. citizenship and services us, cis is continues to provide immigration benefits and services to those legally eligible in a timely and efficient manner by streamlining and modernizing our operations. our priorities are common sense. they enhance public safety, they help secure the border. they promote the integrity of the immigration laws. yet i think we all can recognize that more is

required to fully address our nation's immigration challenges. president obama is firm in his commitment to advance immigration reform and i personally look forward to working with the congress in a bipartisan way to achieve this goal and to continue to set prepare rap -- appropriate benchmarks for our success in the future. i want to thing this committee for its support of our mission to keep america safe. i want to thank the men and women who are are working day and night to pretech and defend our country often at great personal risk. and i look forward to a dialogue with this committee on these important issues or any other issues you wish to raise. thank you, mr. chairman. >> thank you, miss napolitano. i will recognize myself for questions and other members will be recognized. ms. napolitano, my first question is this. dhs declines to local jails. they are released into our communities. the congressional research

service says, that under this administration over half of the criminal emmy grants identified 300,000 plus have been released. yet when i ask what crimes these released criminals have been charged with, dhs responded that i.c.e. does not track this data. so we don't even know what crimes were committed by the criminal immigrants that dhs refused to detain. i'm just wonder if that's the case? do we in fact not determine what crimes have been committed and do we not know what crimes have been committed by those individuals that dhs refuses to detain? >> mr. chairman -- >> it seems so incredible we would be releasing individual without even knowing what crimes they might have committed but i hope there is a good answer? >> mr. chairman, i don't know, i'm not personally familiar with the crs study that you reference. >> right. >> but we detain and have beds at the number that the congress fund which is

roughly around 34 thousand beds. there are decisions -- >> my question wasn't about the number released or the beds t was about, do you know the crimes that were committed by those that you refused to detain? >> well, i will look into that, mr. chairman. i will assume, because of my work with i.c.e. and in this field over the past several decades that detention decisions are made just as they are made in normal criminal prosecutions based on public safety and based on risk of life. >> you don't know whether you know the crimes that were committed or not? >> i don't know exactly how they track but i'll find out for you. >> okay. my information incredibly enough is that you don't know what crimes were committed and these individuals are still being released in effect. second question this that i wrote you in august requesting to be provided list of immigrant criminals that dhs has declined to detain. your staff at i.c.e. and dhs have been cooperative and i

appreciate their assistance. i was told that dhs has generated a list of names that was being cleared before it was given to me. instead a letter i received yesterday from dhs's assistant secretary for legislative affairs contained no names whatsoever but simply summary statistics about the secure communities program. do me this was not a good faith response. so i'm just wondering what happened to the promised cooperation? i would like a commitment from you by 10:00 a.m. next monday i get the information that i was promise and i would like to be delivered by that time and can i get a commitment from you now that i will get that information? >> i'll look into that, mr. chairman? >> you will what? >> i said i will look into that. >> well, let me say to you it has been two months since i requested this information. we had a good relationship with your staff. i was told that the list was available, had to be cleared and now suddenly the list has apparently disappeared. and if i am not given that

list as i understood to be promised that list, i will have no choice but to issue a so i hope we can get that list. let me go on to my next question. you heard me mention this in my opening statement. worksite enforcement dropped 70% over the past two years. "ice age"ents are instructed not to detain or remove most illegal immigrants found working illegally in the u.s. these illegal immigrants can simply walk down the street, knock on the door of another employer and take another job away from an unemployed american worker. immigration suncommittee hearing two weeks ago, i.c.e. director john morton stated illegal workers not detained can obviously continue to try to find employment, end quote. my question is, why does the administration allow illegal workers to take jobs away from unemployed american workers? why do you allow these individuals to walk down the street? why don't you make an effort to detain them and remove them and send them home? >> well, let me if i might

address the numbers and go to the detention. first of all, if you only look at numbers in terms of percentages, you are right, the percentage has dropped in terms of workers who are being put into removal proceedings but the base number is very small. i mean, between 2008, before this administration to fiscal 2011, you're talking about reduction of from between around 5,000 worker removals to 1500. you have to look at that in con squngs with the -- conjunction with the increase in criminal alien removals which we increased almost 100,000 over the same period. >> again i'm not talking about criminal immigrants. i'm talking about -- >> i know you're not. but i'm making this point because we have prioritized and because we are removing more criminal aliens, you're going to see more of those in detention because they're more serious offenders. with respect to the

individuals who we find at work sites -- >> madam secretary, that was not responsive to my question. and you didn't answer my question which was why does the administration intentionally allow these illegal workers to washing down the street and take other jobs from americans? why aren't they being detained? why aren't they being removed? >> they are being handled the way they have always been handled, mr. chairman. >> no. the previous administration did a lot better job of worksite enforcement than this administration. >> well i would just have -- >> you admitted a while ago my statistics is right. down 70% since the last administration. >> that's right. as i tried to explain, let me say it again. if you actually look at the numbers, yes, you are right, if you only look at 70% but it's a small part of removal operation. and next change pour that 3500 diminution, we have increased the removals of criminal aliens who are danger to public safety and -- >> i understand that my time expired. still talking about thousands of individuals

taking jobs away from american workers. >> not necessarily but we can discuss that further. >> okay. the gentleman, from michigan, mr. conyers is recognized? >> can i yield to jerry nadler. >> the gentleman yields to the gentleman from new york, mr. nadler. >> thank you. madam secretary there are many serious problems with respect to immigrant detention. i want to focus on repeated transfers of detainees between heirs facilities. according to june 2011 report by human rights watch two million detainee transfers between 1998 and 2010. often over long distances require use of airplanes. half of all detainees were removed at least twice. these lead to inefficient removal hearings and cost $366 million in transportation alone, fact that should concern my friend on other side of the aisle among others. problems seem to be growing. transfers tripled between 2004 and 2009. now, moving detainees away from where they live impeeds

ability to retain counsel often on pro bono basis since they are often removed when removal hearings are underway the entire process bogs down. detainees lose access to evidence as well as friend and family which makes difficult to show to a court in bond hearing they're not a flight risk. this results sometimes in unnecessary and costly detention. now dhs and i.c.e. seem to recognize that a transfer policy needs reform. in august of 2009, i.c.e. director morton announced a series of changes including the creation of office of detention and policy and planning to revise transfer policy. in october 2009 special advisor to i.c.e. recommended that detainees represented by counsel should not be transferred outside the area unless there are exigent or safety reasons and when this occurs the attorney should be notified promptly. in july of last year i.c.e. locator system so counsel, friend and family could at least locate detainees.

despite these steps there still has not been comprehensive change to detainee transfer policy now my questions. madam secretary do you agree we need a change to policies that lead to repeated transfer of detainees to protect due process rights and improve the efficiency of our immigration courts? >> representative nadler, there are a number about of reasons why we want to limit transfers of detainees. the cost efficiency, access to counsel, access to family members. the practical problem we confront is that we don't always detention beds where we have detainees. and that causes there to be movement. one of the things we're doing, through our office of detention policy is trying to contract for more beds in some of our higher entinty areas so we -- intensity areas so we limit number of movement among our detainees. >> do you have any estimate new policies to appropriately limit transfers will be in place? >> well, it is our policy

now to limit transfers. i think the question really is when will we have contracts for more beds? as soon as we can get them we will get them. >> until you have contracts for more beds you can not really limit transfers? >> well we limit them as much as we can. >> do budget cuts negatively impact your act to adopt a more humane and cost effective transfer policy? >> the congress gives us a certain amount of money. we have to operate as efficiently as possible within the scope of that appropriation. we can not remove 10 million people from this country. we have to make choices. we have to prioritize. but in that conjunction, yes, if we don't have the money to move and if more importantly the justice department, marshals everybody else involved in the system doesn't have the ability to manage that, it is a problem. >> thank you. among many problems relating

to these transfers one has struck me was impact it has on detainees ability to be represented by counsel. a june, recent june report from human rights watch says, and i quote, the attorneys with decades of experience told us they had not once received prior notice from i.c.e. of an impending transfer. i.c.e. often relies on detainees themselves to notify attorneys but the transfers arise suddenly and detainees are routinely prevented from or otherwise unable to make the necessary call. as a result, attorneys have to search the online detainee locate for for their clients new location. once the transferred client is found challenge inherent conducting legal representation across houses of miles can completely sever the attorney/client representative. that is true when same person is transferred repeatedly. quote. that is problem. can you commit to my and the committee you will take whatever steps necessary to try to reduce significantly

detainee transfers far away from counsel? in other words the location of counsel should be one of the major, should be determinant in who gets transferred or where? can this be a part of i.c.e.'s new policy on detainee transfers? >> i think it should be one of the factors taken into account. i do think, you know, the fact that we now have a locator when we didn't have one before, sound like a simple thing but given the number of people who run through the immigration system in a given year, it was a difficult i-t thing to get done because it is a fast-moving system but that will help counsel as well. >> and would you agree that it will abetter practice and policy to at least notify counsel when his or her client is transferred? not make them look around on online system? >> well, i think to the extent possible we should do that. >> chairman's time has expired. >> thank you. >> the gentleman from wisconsin, is

mr. sensenbrenner is recognized. >> thank you, mr. chairman. madam secretary no secret you don't like the real i.d. act and you've given numerous statements and speeches that you would like to see the real i.d. act repealed and in its place put something called pass i.d. on the books. that's not going to happen. the suggestion didn't get off the ground in the last congress. and it has not gotten off the ground in this congress. the current exemption or, extension that dhs has given on real i.d. to the states is now january 15th, 2013. are you going to extend it again? >> representative sensenbrenner, first of all i can not take sole credit for opposing real i.d.. when i was involved with the national governors association it was bipartisan and uniform amongst all the governors

that the line in the appropriations bill that was real i.d. did not appropriately incorporate concerns of state officials on how you actually implement and was an unfunded mandate. that being the case, we did work with the governors on pass i.d. unfortunately, for whatever reasons the congress decided they didn't want to take that up. it would have been better to do so. now we have a bill, the governors still are uncomfortable with implementing. they have budget constraints of their own you. but we agree with the goal of the bill and the goal of the bill of course is to have a more secure, particularly driver's license. so we're working with the states in a number about of them, think 22 now are almost at the point where they would meet real i.d.. others are along the way. >> are you going, are you going to drop the boom on the states that refuse to comply or can't comply as of january 15th, 2013, meaning that the noncompliant driver's license can not be

used to enter federal buildings, nuclear power plants, get on a plane during tsa inspection, or is there going to be further delay in this? >> representative sensenbrenner, i can't say right now. there's a year between now and then to work with the states. i think the governors generally agree with the goal of real i.d.. just how you get there. >> well, they're not going to get unilateral revenue sharing out of the congress on this. so they can increase the cost of driver's license as my state has. but, your real i.d. rules review in your shop only consists of three professional staff members and one administrative support person and as there are more documents that are submitted by the states that are not in compliance, how do you expect to get through that paperwork with just four people working on it? >> well, representative sensenbrenner, if we need to

put some more people on that project we will. i have not been informed that we need to do so. >> now, i'm getting back to the question that i asked and i don't think you anticipatesed. is that, if states are out of compliance on january 15th, 2013, are dhs personnel going to be instruct not to accept noncompliant identification to get into the federal facilities or to get on a plane? >> well, representative sensenbrenner, i really don't like to speculate on things that could happen over a year from now. i'm going to work with the states. we'll work with the states and bring them into compliance if we can. >> okay. when are you going to start informing the states of how and when real i.d. will be inforced? >> we stay in regular contact with the governors, primarily through the nga, about real i.d.. i suspect when they have their winter meeting here in january, that will be one of

the topics that we take up with them. >> well, the 9/11 commission was very firm in saying that we have to have secure i.d. after looking at the i.d.'s that the 19 hijackers were able to get for themselves and the longer this administration and the governors that don't want to do this delay this, the more risk the american public has on terrorists that wants to commit a major act of terrorism. and i spend a lot of time during my chairmanship to try to prevent that from happening. this is still a hole in the system that can be exploited. and it's not due to a lack of congressional action for once. it is due to a lack of implementation by dhs, and it is due to a lack of will by the governors in providing for the safety and

security of their driver's licenses. i'm not for a national i.d. card. but the longer this goes on, if there is a major terrorist attack because real i.d. has not been implemented for whatever reason, there will be a huge push here for a national i.d. card. so i think it's in the interest of everybody to make sure that real i.d. is implemented the way it was written and passed in 2005. thank you. >> thank you, mr. sensenbrenner. gentleman from virginia, mr. scott is recognized. >> thank you, mr. chairman. madam secretary, the alabama law recently passed allowed alabama to inquire into immigration status. is the department of homeland security working with alabama in helping them implement that law? >> representative scott, could you, your mike -- >> alabama, alabama's immigration law, allows

alabama officials to inquire as to immigration status. is the department of homeland security working with alabama to help them implement that law? >> not in that sense. we have been working with the department of justice on a challenge to that law. >> okay. is there any way that, and how would that law affect hispanic citizens? >> you know, i don't know the answer to that question right now. the law has just gone into effect. >> i mean you would have to assume that hispanic citizens would be adversely affected because they would have to be showing i.d. about everywhere they go. other citizens, a situation that other citizens would not have to do. >> i think that should be a real concern, you're correct. >> the prison rape elimination act, has that been applied to i.c.e. facilities? >> yes. we have a zero tolerance policy for sexual harrassment or misconduct by

detention officers, be they those who are actual public employees or contracted. >> and how are we doing on that? have there been any complaints of sexual harrassment and illegal sexual activity? >> yes, there are, there are complaints. and when there are, the instruction is that they are to be explored and they are to make sure if there needs to be corrective action taken, what every that may be, under the circumstance, that's to be done. >> how are we doing in that area? >> my understanding is that we are being very firm in this area. and that we are dealing with those complaints expeditiously. >> are you familiar with the front line expose' from a few weeks ago? >> yes. >> was that accurate? >> no. >> could you give an update on the tsa work with

religious groups as far as how people with religious stress can get through security? >> we are working, you know, the issue for us is what to do with those who wear, who have bulky clothing on and particularly bulky headwear. this can affect particular religious groups and religious beliefs. we have a process that we follow that i think has accommodated both religious group beliefs and our security needs but we continue to have on going dialogues as i think we should. >> within i.c.e. do you have detainees with mental illness that causes problems like people who are incompetent that stay in i.c.e., kind of limbo indefinitely? >> given the number of people that we have in detention at any given time and over the course of a

year, we, i'm certain we have some detainees who have mental health issues as well as detainees who of course who have physical health issues. >> what is done for those that kind of are in limbo, those mentally incompetent, that kind of sit there indefinitely? >> well one of the things we are trying to do by the prioritization process and by reviewing the cases currently on the master docket is to speed up the time by which those in detention can actually have their cases heard. that's one of the impetuses behind the case-by-case review. >> and, do we have people kind of in limbo that are there indefinitely? >> well, there are people in limbo in the immigration system generally. and the fact that there are people in limbo is one of the reasons why we hope at some point in time the congress could take up the

overall immigration system and immigration reform. >> thank you, mr. chairman. >> thank you, mr. scott. the gentleman from north carolina. >> thank you, mr. chairman. madam secretary, good to have you on the hill. good to have you with us. do you, madam secretary, agree with president obama's statement that removal numbers are deceptive and, do you know what he meant by that? i am thinking he may have been referring to voluntary returns. >> no, i think what he was referring to, if i recall, the context of that quotation, representative, was that overall removal numbers are up. as i said we removed 397,000 people last year. more than ever before. but he was explaining that you also have it look at what, what comprised, what

was in that number and he was referring to the fact that we have greatly increased the number of criminal aliens that are removed within the context of the overall number. >> well, so voluntary returns would not have been part of that statement? >> i don't know. >> okay. over the length of, madam secretary, of the bush administration i'm told that yearly removals went up in excess of 90%. will the current administration come close to this rate of increase? >> i would have to check those numbers. my understanding, i don't know where those numbers come from. >> and i don't recall my source. if you will get back to us i would appreciate that. >> yes, sir. >> yesterday, well strike that. last week, you told senator durbin that it cost in the neighborhood of 23,000 to $30,000 to annually remove one. earlier this year however

i.c.e. provided the judiciary committee with data indicating a total cost of removal of $12,198. so the disparity is significant. have you seen i.c.e.'s immigration enforcement lifestyle unit cost report? >> i don't know whether i've seen that report. the number i gave was what it cost to go you there entire remofl, including through the court system that is an estimate of course. i don't know whether the i.c.e. number was with respect to i.c.e., i.c.e.'s part of that only. so we'll get back to you on that as well. >> i would be appreciative to you if you do that. now again, and i'm drawing a blank on my source, i don't recall where i read this or heard it but i've heard that dhs might consider reopening

cases in which aliens with final orders of removal have already been removed from the united states. is there any credence to that? >> that would be news to me. >> okay. if you can check that out. >> yes. i don't, i don't think that's accurate. >> okay. might dhs reopen cases in which final orders of removal have already been removed? you say this, knot known to you? this is unknown to you? >> no. >> okay. last week, again, when you, during your appearance before the senate judiciary committee, that unusual, that absent unusual circumstance, cases with final removal orders will not be reopened. if you would, madam secretary, elaborate what would constitute an unusual circumstance.

. . on the front lines closest to the facts of the cases involved. let me put a two-part question to you. why did dhs and bureaucrats in washington have to do a double check on the work and expertise of those frontline mac law enforcement professionals? >> well, representative, i have left large prosecution offices many times both as a u.s.

attorney and an attorney general and it's important to the field for fairness, for consistency to have guidance as to what the prosecutorial priorities are and that's exactly what we've been doing. it's a big field, a lot of agents out there. you're right, they have a lot of expertise. their expertise and they like it, it puts their cases they know where they stand and where the priorities are, it puts them into an overall framework. >> thank you. i see that my red light has eliminated so i will yield back. >> the gentleman from california. >> thank you mr. chairman and madame secretary for being here with our committee. i want to touch first on a cybersecurity issue. bns, which is the domestic security extension was ordered deployed across the federal government in 2008 by omb and in

2010, the white house said the bns root zone was a major milestone for internet security. on the homeland security website de ns sec is quoted as being of critical importance to securing the federal internet domain. so here's my question. you think it's important that u.s. government policies towards the internet should preserve the effectiveness of the ns sec and other technology for cybersecurity point of view? >> thank you. >> thank you very much. i want to get into the immigration issue, the detention issue. last week aclu filed a lawsuit accusing i.c.e. failing to protect female detainees from sexual assault by a private

prison guard at the detention facility. naim women are specifically identified as having been sexually assaulted by a guard when he transported them out of the facility during a release process without appropriate supervision and countless others may have been insulted. in april this year the national immigrant justice center filed a complaint with your office for civil rights and civil liberties alleging seriousness treatment of 13 gay and transgendered detainee's, alleging sexual assault by guards and fellow detainees, denial of medical care, use of long term sali terrie confinement -- salter confinement. my colleagues brought this to your attention and the attorney general earlier this year and the understand it's still under review. going back to mr. scott's question about the present rate elimination act. it's my understanding the

department of justice explicitly excluded immigration detention facilities from their proposed rule. they seem to be relying on i.c.e.'s detention standards on sexual abuse, but those are not mandatory. they lack the force of law. so i'm wondering if by your answer to mr. space you are agreeing that that prison rape elimination act ought to in fact be imposed on detention standards and in i.c.e. detention. >> juan come i would obviously have to look at the act, but before making a blanket agreement, but going to the problem that we are trying to address which is if there is inappropriate wrong or criminal conduct it can be in some circumstances criminal by officers against detainees that needs to be dealt with and it

needs to be dealt with efficiently, firmly and quickly, and we have a zero tolerance policy for that conduct. >> you inherited an awful mess in terms of detention. when you came in there were a lot of stories in "the new york times" and "washington post" there were in detention and you brought in an expert to try to can't put some order to it. there was a report the was a pretty good report coming and it doesn't look to me that i guess this is a question that we have actually implemented in that report fully. can you address that? >> i would say we have implemented good measures of that report and we use it as our guide post. we did create a separate office within i.c.e. to deal with the tension. we eliminated a number of the contractors that we were dealing with -- >> let me do this, i see my yellow light on the. i don't want to be rude but i

know the chairman is going to gavel me down. perhaps i can follow up with detailed questions i have. i have a final question on how we are going to interact with the new alabama law. as you know, the new law makes it a felony for an undocumented person to engage in any business transaction with a government entity. what that means is if you have a mother who use on documented and she gets a library card from both of her u.s. citizenship from she committed to felonies. under our detention and removal priorities, the woman that got to library cards would be the worst of the worst to be deported. how are we going to deal with that alabama law and our priorities and the minow? >> the scenario you picked is not in our priority coming into the purpose of the litigation we

have undertaken is the number one in principle it is for the federal government to set immigration law enforcement priorities. so we will look beyond the mere conviction? >> we will get the cases individually, guess as other states as well not just alabama. >> thank you to respect the gentleman from texas mr. gilbert. >> thank you mr. truman and secretary for being here. just for my own edification, did the president get any information or guidance from you or anyone in your department before his decision to support for president mubarak and to assist the rebels and lydia? >> he did not get any information from me or my department to my knowledge. >> you didn't get any knowledge on that, nobody from the homeland security did that? >> no. >> okay.

did the president get any information or guidance from homeland security before his decision to pull out the troops from iraq or drawdown in afghanistan? do you assist in that at all in your department? >> and, these are not matters in the purview of the department of homeland security. >> so they were considered completely related to our own homeland security? >> homeland security covers so many fields that what i would say simply is if the question is where we involved -- was liable -- >> did you provide information that would of been utilized and any of those decisions? >> not that i know of. >> last year admiral mike mullen said the national debt is the biggest threat to security.

we have many people coming to the country on visas, some of them illegally who come and get health care and leave without paying. it's an ongoing problem. we are now seeing that there will be americans who are not getting health care as quickly as the need because it appears we are moving to ration care. so it should be a very important issue. we have inquired of the state department about the application for the visa. they tell us that there is no provision in the application that indicates whether they've been diagnosed with any condition, heart problems, cancer, pregnancy, needed surgery. on the application for the visa. so that isn't considered all when people come in. we are also told by the state department that even though the spouse's name is on the application, they don't normally

ever check the spouse's name on the terrorist watch list before deciding to improve the benefits of a visa. do you think there would be a good idea to check the spouse's name on the terrorist watch list or do you concur that it's not worth it? >> i haven't seen with the state department responded to our -- >> that wasn't my question. my question to you is would it be a good idea to check the spouse of a terrorist watch list? one of the things we've been a will to the past several years is unified the databases and search engines in such a way that those kind of security checks can be more easily done. >> if they don't do the checks it is a problem isn't it? >> it could be a problem but -- >> let me move on. do you make the final decision who is put on the counter and violent extremism working group?

>> we have an individual in the department who is the lead. >> are you consulted all on who is put in that working group? >> i have not been, mo. it's been a are you aware that the president is a member of the working group, correct? >> i can't answer that. i don't know whether that is an accurate statement or not. >> you can go look at your own web site and find the documentation. she has been on your working group that countering violent extremism. do you know how many of the members of your accounting violent extremism are members of muslim brotherhood? >> again since i'm not involved in the appointment but if i might -- >> my time is running out, sallai -- >> i have a very serious question that needs to be confronted.

are you familiar with -- >> i would like the ability to expand on my answer if that is all right with you. >> i don't have time. i'm running out, and i can't be filibustered. >> well, okay. >> let me ask you. mohammed was a member of the working group. you promoted him and i have articles here that say use for him and as a member now of your e -- the homeland security advisory group. he has apparently been given a secret clearance. do you know him? >> yes. >> were you aware that he had a secret clearance? >> i believe it for but on the homeland security council gets a

secret clearance. >> would you be surprised -- were you aware that he spoke at the big event in texas honoring of the ayatollah khomeini? >> i'm not aware of all the places he is spoken. >> of the time is expired. >> if i could have 15 seconds, this is critical. were you aware that a week ago today from his home computer he access to the slic database, got information off and has been shopping a story to national media on islamophobia at the governor of texas and the folks there in texas; were you aware of that? >> no. >> i'm telling you what

happened. do we need to appoint somebody or will you have that investigated yourself and if so, by whom? >> well, since i don't know the facts i will have to look into the facts. >> so you will be the one to make that call? >> we will have somebody -- it will be myself or someone. >> does it concern you at all that it happened? >> the gentleman's time is expired. mr. quigley is recognized. >> thank you, mr. chairman. thank you, madame secretary for being here today. as you know, i and the sponsor of the secure travel and counterterrorism partnership program act which would allow you to bring additional country into the visa waiver program by modifying the the primary qualifying criteria for entry. doing that with many others including mr. shavit from the committee. on wednesday october 5th, the house homeland security

subcommittee on counter terrorism and intelligence hold a hearing on with the dhs is doing regarding security and safety for international travel. at that hearing mr. heymann testified and spoke to the issue of the visa waiver program and said he thought it would be terrific to expand the visa waiver. he didn't have the technical specifications about the department capability. but he did say that any changes will be rolled over, roll out over a period of time and they would allow the dhs to meet the necessary requirements. what i've been telling folks about why i support this program is it's not you're father's weisel waiver program that your agency and others have been working hard to increase the security in this program and how it would perform under existing programs and an additional countries. i was hoping that you might speak out about what the department is doing to work on this data and what we might be seeing in the coming weeks and

months that would increase our knowledge about who is coming and going under existing programs and under countries like poland which i think should have been part of the program for a long time. >> welcome representative quickly, we would like to provide not only technical assistance on the review of that but support -- you know, poland has been an ally of ours for a very long time. we have a good relationship with poland. so, that is i think would be a good thing for the united states to do. with respect to the visa waiver generally, one of the things that i would explain earlier, we have been able to do over the past several years is to really make our data systems both biometric more robust in a way that gives us a lot of the security features of the old

visa without necessarily having a visa issued. part of it of course is what we have done to incorporate with respect to flights leaving for the united states. part of it has to begin with uniting cbp databases with the tsa databases in a way they were not united prior to 2009. >> i think you testified earlier to the senate about some of this, and you were stressing by a graphic information to the work you are doing but more important or feasible biometrics could you focus on that for a minute? >> it's looked at particularly for exit. it is extraordinarily expensive and what we have found is by greater use of the biometric

data we get to 99% of what you would have with a very expensive cliometrics system. >> in a notte shell can you explain to those new to the issue why countries that participate in the visa waiver program especially under this new information you will be requiring actually makes us safer? >> well because a part of the agreement to engage robie visa waiver program, part of that agreement is also the agreement to sign other agreements, for a simple, one called the pcsc to the criminal history database. so, in exchange for the visa waiver there are other agreements that we get from the countries in the program. stomachs very good. i yield back. >> the gentleman from texas is recognized. >> thank you mr. chairman. thank you for being here, madam

secretary. the gao has reported 40% of the border is somewhat secure, 56% is not secure. do you agree with that statistic? >> i don't think that's exactly what they've said and i've testified to this several times, representative. they were using the phrase operational control which is a term within the border control it's actually somewhat misleading because it doesn't capture not just the border patrol but the technology and infrastructure that goes along with it. >> so it's not an accurate statement? >> it is not an accurate statement, no. >> who controls the other 56% if we don't have operational control? >> no, we have the responsibility for that entire border, as you know. it includes -- >> so who controls -- >> -- manpower and technology and infrastructure we have put down at the border. it's a very different order than it was even three or four years

ago. >> i agree. it's worse. the iranians apparently think our border is less secure than we do. otherwise they wouldn't have gone to mexico or supposedly to smuggle explosives into the united states. what do the iranians know about the cross border traffic or the ever drug cartels that we are missing? in my opinion, the zetas have access to the united states and back to mexico so it seems like the iranians obviously knows something about the border than we do. the bureau of prisons as the 27% of the people of the federal penitentiary, 27% are for an chameleons. it means they are illegally in the united states would commit a felony. all of those 27%, a fourth of the population of the federal penitentiaries got here some way and they got here illegally to

the bureau of the statistics and if the borders so secure with me give you some evidence to the border where i have been numerous times in areas that aren't exactly as safe as you claim. the sheriff's on any given day we will call the sheriff's in the border jail and say how many people are in your jail that our nationals, not criminal aliens that foreign nationals? >> the most recent one is to have the border counties and the average is about 34.5% of the people in the texas border jail or from foreign countries. now these are cross border criminals. these are people who come in the united states. many of them commit their crimes and go back where they came from and to mexico unless they are caught by the local law enforcement. these are people in jail with immigration violations. based on your experience do you think 34% is a high number of

the foreign nationals in anybody's jeal? >> either you or you don't. >> listened. >> i am listening. you listen. answer the question. you know to answer the question and not just ramble so the time expires. do you think 34.5% of the people in jail from foreign countries is a high number or not? >> the border communities in texas, arizona, new mexico and california have either violent crime rates the same or decreasing in the last five years and dramatically so. they are listed in el paso, austin, san diego along the safest communities in the united states. we have -- >> reclaiming my time, sorry, reclaiming my time. i'm not talking about specific towns. el paso. the crime is in between the

ports of entry. it's not necessarily in brownsville were seen diego or in the city of el paso. it is in between. the jails are occupied by 34 per cent foreign nationals. my question is simple do you think that is a high number? either you do or you don't. >> well, if that's accurate -- and i don't know that it's accurate, if it is accurate, it's one of the reasons we installed secure communities in the border jail's first. >> let me ask you another question. the 20 points deferred prosecution and defense that came out mr. northen testified that there was white house and put on that to you agree with his statement when you testified before that there was white house and put on the 20 points deferred of the prosecution? >> i think it was prosecutorial discretion. because immigration involves the major agencies, dhs and the doj

it is entirely appropriate and there was coordination with the white house. >> do you know of statutory authority? not court authorities but statutory authorities for the deferred prosecution? >> congress is passing laws allowing for the deferred prosecution. prosecutorial discretion, sorry. prosecutorial discretion. >> for the contras, but to order: to, section 1 and three of the constitution. >> of course the constitution does say that the congress is to be responsible for the naturalization and begin the law on the naturalization not the executive branch. if you want to quote the constitution and read that section -- >> article 2, section 3 says the executive branch shall make sure the laws are carried out and that has been interpreted by the u.s. supreme court and by statute to mean -- the executive branch has prosecutorial --

>> i didn't ask about the case, you notice i didn't ask about that. i am asking about constitutional legislative such additional authority to allow the portions of law based on a level. is the statutory authority to do that? the constitution does say -- >> with a minute. i'm talking. the constitution does say the executive branch is to enforce all of the land carefully and forceful wall of the land and it seems to be the executive branch has given a path to a lot of folks under the guide of the prosecutorial discretion. i will yield back my time. >> mr. chairman, may i respond? >> please respond, sure. >> i would simply say prosecutorial discretion by prosecutors, by emigration has been enforced and then by republican and democratic administrations and it makes sense. >> okay. let me also add and say to the

gentleman from texas the gao study he referred to which found that only 44% of the operational control found only 15% of the border was under actual control. so it's a lot less than many people might think. the gentleman from california is recognized. >> thank you, mr. chair. madam secretary, i want to thank you for moving forward of what the guidelines for i.c.e. officers to use a prosecutorial discretion on these immigration cases, and i think in fact that it uses our available resources to target those which is serious felons, drug traffickers and others who would do america harm. this is just common sense. we sit be using our scarce taxpayer dollars not to deport students, but to primarily convict, to point those convicted of felonies to pose a

threat to the public safety and some say that you are doing something new i know that all law enforcement bodies set priorities and that the immigration enforcement agencies are not different. republicans and democrats have called for more discretion in your agency under both republican and democratic administrations have issued policies on and acquired the use of prosecutorial discretion, and in fact as a longtime prosecutor, you know better than most that you can't enforce the law and prosecute. our immigration court system is a credible the backlog at more than 300 cases, 300,000 cases are pending at any time and immigration judges are scheduling hearings for 2014. so it makes sense that you are now reviewing the backlog dhaka to sort through the cases and isn't it right that code directs

you to establish national immigration enforcement policies and priorities and in congress and the appropriations bills have we not directed you to repeat and prioritize the removal of serious criminal aliens and federal programs that specifically target such populations? and in fact in this effort can you tell me how it enhances your ability to remove people in priority to the agency? >> the answer is yes, congress has given such direction. i don't know the number of the citation, but i think that is accurate. what we are doing if you think about the immigration system in segments, the segment is who is being picked up for removal and that's where we are prioritizing our enforcement efforts see you get operations like a cross check where we pick up thousands of criminal fugitives just a couple of weekends ago.

then we have the 300,000 or so cases already on the master dhaka it and it turns out those aren't prioritized all so you get these never ending court states that get pushed back and back as you've referenced. what we are doing is going through those to make decisions as to which should come first in order to facilitate the movement of the detainee dhaka at through the removal process and it's one of the reasons why we are going to continue to see those numbers go up. >> why is this not amnesty and not a free pass? >> i couldn't hear you with the bell. excuse me? >> why is your effort towards the prosecutorial discretion not an amnesty of claim and not a free pass? >> it's clearly not. it's what law enforcement does on a routine basis which is to evaluate cases on the facts and make decis a