away is beside the normal type of services that provide infrastructure and education. those tight of issues you are really competing and two levels. tax competitiveness which has

two part still in. what are you willing to give? sign retain companies or attract companies and what is the tax environment for that company once it is there for them and for their employees who will be asking a fair moving into their states to relocate from one state to in new jersey. that is the reason tax reductions are still important in our state in the current environment? we are competing with other states with significantly lower rates and some instances like pennsylvania and delaware and we are not competing well in that regard because of the atmosphere created over a period of years. i have not seen across the board in income-tax cuts. i have a seat with a great sense of humor. not just because of native sons like john stuart but also because our voters elected a conservative republican governor and retain the democratic legislature. so i think they wanted to see

what would happen. we will talk about that this morning. state senate president came back with a counterproposal which is an income tax credit of 10% but against whatever property-tax he paid our stage of to $1,000 per taxpayer. there were certain limits that were put on it in terms of income eligibility etc. and so as we move along through the spring i began conversations with him about finding some way to compromise to be able to bring a tax cut package to the people of the state. we came to agreement in late spring of this past year on a 10% income tax credit that would be capped with folks with incomes under $400,000 a year and exempt any business income

that they made from a federal return and would apply equally to all those people and would increase spending from tax credit increased from 20% above the federal level to 25%. this was going to mean everybody. $400,000 a year underemployed would get tax relief and to be fiscally responsible over three years so the hit to the budget would not be significant. we had an agreement until normal politics setback in. and when the senate president went back to his caucus and the assembly to the lower house they decided it is more important big loss sensibly new jersey was that it was more important for me not to go to the republican national convention in tampa and say that i got a tax cut from people of the state that it was

to give the people of our state a tax cut. unfortunately this was a reversion to old politics that had been seen relatively infrequently over the last two years in new jersey and we're going to fight about this and i am looking forward to it. i called it back into special session because they were leaving on june 28th and ready for summer vacation. our constitution allows the governor to call the legislature back in special session and i did on july 2nd, gave a speech about the importance of trying to reach a bipartisan compromise on this issue making the state more competitive and giving taxpayers -- what is extraordinarily important and more important than the politics today especially for a speech i was not invited to give that answer that convention i know i will attend but have no knowledge whether i will be speaking at the convention. they are real concerned about

that. i offered my hand at compromise to the democrats on the issue of taxes. the question for executive leadership at that moment is what do you do? there are two options. option number one is to go into corner and hold your breath and say i am working with these people and they are mean and not nice to me and don't want to compromise and i will ask press releases about them and tell everybody how rotten they are, or you can shrug your shoulders and say the job you were given is more important than your ego or the policies of the day and continue to try to fight to get compromise. evidence of the last two years will show you that i have consistently along with a number of leaders of the legislature ladder rather than the former. important to review that to get context to the current

discussion. where was new jersey when i became governor in january of 2010? let's start with the fact that a week into the job my chief of staff and state treasurer came to my office and told me if we did not cut $2.2 billion from the current fiscal year budget that we were seven months into within six weeks that we will not make payroll for the second page period of march. imagine new jersey, second wealthiest state per-capita in america was going to have to give out by do yous to save please to the second pay freeze in march. don't know how you define broken but that looks like broke to me. we could make clear it could happen with tax increases,

retroactive tax increases or because new jersey's constitution is the most powerful governorship in america. george will calls new jersey's a governor america's caesar. i really like that a lot. i could act by executive order and essentially in pound funds by executive order equal to the amount of cuts that are necessary. for those who watch for the last two years, if you will be by pick option number one you did not turn your invitation. there's no chance i would think of option number one. of that option number 2 and went through 2400 lines of the state budget and found $2.2 billion in cuts and made those cuts by executive order, went to the state legislature and presented them in a joint session speech. after i was done the speech he

sensually was 40 minutes long, to 15 seconds. you left me with this huge problem, i needed to fix it and you needed to raise taxes and i am not going to so i made $2.2 billion in cuts by executive order. i signed it and fix the problem you and thank me later, have a good day. on the floor of the legislature, things like napoleon bonaparte and julius caesar, the senate president, and the democrat, to eliminate the most powerful democrat in the state of new jersey and he is president of the ironworkers in new jersey. i would like to meet a shy and

retiring guy. i saw steve on the way in, you have turned me around. you guys can fix it. you tell me about new jersey politics in the next two years. don't overreact. come on. it is politics. politics. we inherited a huge problem. what caused that huge problem? 115 tax increases before i became governor. 115 tax increases at the state level in eight years before i became governor. dirksen senate office building 5 days. if you want a definition how to kill the goose that laid the golden a look at new jersey's economy in the 80s and 90s, look what happened when we began to do that in eight years before i

became governor. another was over ten -- other 10%. lost under the previous administration. highest tax burden in the country. worst climate for small business growth. highest number of government workers in the country. quite a distinction. and all those things were dropped in our lap when we came into office. the democratic legislature, you have to make some specific and difficult choices and we moved into fiscal year 2011 which had a projected deficit of $11 billion out of a $29 billion budget. 37% deficit. largest budget deficit of any state in the country. once again there was a call for higher taxes. seemed to me this data set least in part in trouble in the first

place. we propose a budget that cut every department of state government. everyone without exception and had to make significant cuts to close the budget deficit $11 billion but we did. folks in the legislature sent me -- become in vogue in other parts of the country. send me a millionaire surtax surcharge. you got to understand before we go too far down the road, we already have a millionaire surtax but it is new jersey, we have special new jersey that you ought to be aware of. new jersey the millionaire surtax applies to all individuals or businesses which have $400,000 in income. it is a good name but they couldn't get enough money so they lowered 400,000 because if

you try to market your state around the country it raises difficulty. how do you market your state? i would going around the country saying come to new jersey. if you are not a millionaire but you like to feel like one come to new jersey because i will tax you like one. you can tell your friends i say the millionaires' tax, i paid a millionaire's tax. we already had a millionaire's tax which brought us up to 8.7%. this proposal was for a surcharge on top of that to raise it to 10.75% which will then place us only below hawaii before california caught up quickly. i vetoed that tax increase because i thought it was not good. you know the senate president

came down before with the bill delivered to me, cameras following him and gave it to me and said here it is and they call it something. they always have a name for it. they never called it a tax increase. the justice for all act. that sounds good. just sign right here. so i said wait a second. i don't want you to waste your time. i took out my pen and handed it back to him and we went ahead and continue to push for our budget which they said would be dead on arrival without the tax surcharge and that june with democratic votes, 99.8% of the line items as i present them, i tell you those stories to set up the idea about what executive leadership can do. if you set out your principles but also show that you are willing to compromise where appropriate.

they were testing me in the first six months of 2010. i was a new governor. they were legislature in charge for a decade. they were veterans of trenton. i was the newcomer. legislatures will always test executives and see how much they can get away with. how far they can push you. i you willing to stand up for your principles for are you not? some people say when you stand up and fight for your principles your being obstructionists and that becomes true only if you are unwilling to compromise to get things done. the story of new jersey is broken up into two parts. that first six months and the two years since then. the first six months they were testing and to in two years afterward let me go through some of the really bipartisan accomplishments that have been put forward by this governor and the democratic legislature which

could be a model for what is happening across the country. after we pass that but i call them back into special session again for fourth of july weekend because we have the highest property taxes in america and needed to cap property taxes and after a lot of negotiation we passed a bipartisan way at 2% in new jersey. a hard cap with only three exceptions. it is already working. last year property-tax is rose with the program not already faced in, only 2.5%. that is the lowest increase of property taxes in new jersey in 20 years. we then moved to reform interest arbitration system that drove enormous increase in public sector salaries. 5%, 6% increases and kept all the arbitration award that no greater than 2 presenting created a rocket docket to cap the amount of money arbitrators could pay.

they no longer have incentives dragging things on and get paid a fortune and a great deal of money. they had a brief period of time to hear the case and make a decision and they were capped at 2% to economic gain. we then moved to deal with the biggest problem for any state in the country and the federal government. that is the entitlement costs. in new jersey that is represented by our defined benefit pension system and public-sector health care program. when i became governor our defined benefit pension system was underfunded by $54 billion. our public-sector health care system was underfunded by $67 billion. thome 120 one billion dollars is four years of budgets of every nickel of state spending in underfunding those programs so it -- september of 2010 i put

forward a very straightforward program how to deal with pension and benefit reform and it was this. raise the retirement age. increase contributions made by employees to the pension system and until the funds are solvent, over the next 30 years and increase penalties for early retirement and insure that the state would be making its payments into the system. secondly on the health care side when i became governor most new jersey public employees paid nothing for health insurance. for full family medical and dental coverage. those programs ran anywhere from $15 to $19,000 a year for employees and they were hired until the day they died. we need to do something there. we put forward a simple test.

everybody should pay a third of the cost of your premiums. that seems to be fair for the government to pick up two thirds and you pick up the third and somewhat in line with what is going on in the private sector as well although many people would jump at a program like that. when did i announce this plan? i went to the firefighters' convention in wildwood, new jersey on a friday afternoon. it was quite something. at 2:00 in the afternoon much had been liquid and those firefighters were ready for their governor and when i got introduced they were booing like crazy. i got to the stage like this. come on. you can do better than that and they did. decided to eliminate the speech i was going to give and this is what i said. i understand you are angry and feel betrayed. and the reason you should feel the trade is you have been betrayed. you have been betrayed by

governors of both parties who got behind the podium over the last 25 years and told you they could give you increasing benefits you wouldn't have to pay for. they made those promises to get you to vote for them and you voted for them. i understand why you are angry and you feel betrayed. why are you booing the first guy to tell you the truth? but ten years from now if we do this program and your pension is there to be collected you have health insurance to take care of your family in retirement, looking for my home address to send me a thank-you note because we did the right thing and we did it together. i probably got 30 audiences to cheer after that which is a monumental achievement. i got out of there as quickly as possible. and then i went around the state next nine months. over 30 town hall meetings and

campaign for that plan. and ultimately with thousands of protesters on the front steps of the state house and in the galleries of both voting sections in a bill sponsored by the senate president and the speaker of the assembly, will lead eight of the 24 democratic members of the senate only 13 of the 47 democratic members of the assembly voting yes, those reforms passed in the assembly and the senate and were signed into law by me and save over the next 30 years $132 billion for the taxpayers of new jersey and return those fundss to solvency. it took not just gubernatorial leadership but courage on the part of democratic leaders in the legislature. to move them forward without a majority going forward. they knew it was the right thing

to do. that is the environment we have created in new jersey but would not have happened if the executive didn't lead first. try to go after the firefighters' convention and run around and campaign it would not have happened. legislatures don't lead to. executives lead. legislatures can be persuaded if you are willing to sit down at the table. this year we have been able to pass a number of important initiatives. i put forward in the state of the state address that the war on drugs while well-intentioned has been a failure and we are warehousing people every day in the state prisons in new jersey giving them no treatment. send them back on the streets after incarceration and wondering why recidivism rates go up and they don't get better. why they commit crimes again. they commit crimes to support

their addiction. you can make the argument that no one should try drugs in the first place and i am in that camp. tens of millions of people in our society do every year. for some people they can try it and walk away from it but for others the first time they try it they become an addict and they are sick and need treatment so i said what we need to do this for all first-time non-violent drug offenders we need to make drug treatment mandatory. because if you are pro-life as i am, you can't be pro-life just in the will. every life is preciou . every life is precious. every one of god'somb . every life is precious. every one of god's. every life is precious. every one of god's creatures can be redeemed. and not of we ignore them.

this program which was passed by the legislature faced over the next five years with out every person in the criminal justice system in new jersey with a drug addiction to get a year of mandatory drug treatment in house. i believe the results will show after this is fully implemented that we will start them because people can be treated. miracles happen every day at these facilities and the lives are restored. mothers and fathers are restored to heads of their families. brothers and sisters and sons and daughters are restored to the families, return fabric to our families by doing this. for those who are concerned about economics it costs $49,000 a year to warehouse a prisoner in new jersey state prisons last year. a full year of impatient drug treatment costs $24,000 a year. it makes economic sense also but to me that is just a collateral

advantage. the real reason to do it is we have an obligation to understand addiction is a disease and we need to give people a chance to overcome that disease and restored dignity and meaning to their lives. that is not a republican or democratic issue. it is bipartisan issue we accomplish this year where we organize our higher education system in new jersey in a way that three previous governors tried and they beat down every year. housing executive -- a deadline of july 1st and if we don't i will never let it happen during my entire time as governor. the press waited. arbitrary and rushing and terrible. like watching sausage being made. but it got done by june 28th. it wouldn't have gotten done a fine set a july 1st deadline.

it will happen now. that motivated the legislature and to a large degree intimidated the special interests who believe they can always defeat a legislature that divides them much harder to find defeat in a committed executive. also for the first time in 1 hundred years have reformed our teacher tenure laws. new jersey teachers' union is if not the most powerful one of the most powerful in america. the jersey teachers union, its $130 million in dues every year. they don't spend a nickel and teacher salaries or pensions or health care. all of that money is used to support their political operations and face the end in their first two years i was proposing tenure reform over $20 million in negative ads against me on new york and philadelphia television to say my proposals for a teacher

tenure reformer anti teacher and anti student. we continued to press on and move on and guess what happened? the teachers union came to the table and we negotiated new jersey's tenure of which is over 100 years old, the oldest tenure law in the country has been reformed to say if a teacher gets two years of partially effective or ineffective ratings they lose tenure. we're putting accountability back into the system. students have force that must be accounted for in the evaluations as well as peer review. and now principals and superintendents get the opportunity to manage their school systems in a way which allow them to put the students first by putting the best possible teacher they could find in front of the classroom and not tolerating failure. imagine that.

that was accomplished also in a bipartisan way with republican and democratic votes. it took the two year fight but we accomplished it two weeks ago. i said around the state you have to compromise or find what you want. the boulevard of compromise is sometimes narrower and sometimes brodeur but it is in my experience always there if you're willing to push to try to find it. i would not ask anybody to compromise their principles. they're too much of that in politics today to begin with but i have to get everyone to acknowledge you won't get everything you want. once you get acknowledgement on both sides of the equation you can find and force compromise as an executive. i can walk and chew gum at the

same time. i can fight with democrats publicly and privately over issues of principle where we can find a compromise and at the same time hold conversations to force that. this illusion you see in this count that somehow it can't happen, it is not possible, is just an excuse. an excuse of failed leadership by both parties. you have to be able to walk and chew gum at the same time. you have to be able to find compromise. people send us to these jobs to get things done. people in new jersey are noticing? i say this. the last public poll before election day 2009 when asked that question do you think your state is moving in the right direction or on the wrong track 19% of new jersey thought the state was moving in the right

direction. that is why i am here. incumbent with 19% right direction. in the last public poll 53% of new jersey believe their state is moving in the right direction. in the same poll 36% of new jersey believe the country is moving in the right direction. they are discerning between two approaches the government. the federal approach and the new jersey approach. what i just outlined is but new jersey approach. doesn't make every day a happy day. doesn't make every day an easy day for sure. but what people in new jersey are seeing is the government is getting things done for them and the state is getting better. 85,000 private-sector jobs. the best year in home sales since 2007.

our best job growth since 2000, we had a decade of jobs in new jersey. we had zero net job growth in the private sector in new jersey. 2,011 was our best year of job growth since 2000 and 2012 is outpacing 2011 already. people are noticing and things are happening in our state. in the end my message is leadership is the only thing that will make a difference. if you -- the only thing that will make a difference. leadership is not just about obstructionism. leadership is also not about caving every time you get pushed. leadership is about this and about understanding and communicating to people. here's what i stand for and i will not be moved but on other

issues leaving room for discussion and accomplishing principled compromise where it can be. that is why i bring perspective. sheila oliver, democrats, we agree on a lot of things and work together. ..

you find a way to get the compromise. not every issue. some there will be impossible to find compromise but my expense more times than not you can find it. and so i hope new jersey is setting an example. i trusted is for the rest of the country. states across the country i think you are seeing more and more of this and hopefully this infection of compromise will eventually spread here. i'm not nearly as hopeful about that as in that it will spread to the other states, but we need to continue to talk about it. and that's why i'm here. im coming to this place, not meetings brookings, but washington, d.c., because i want people to know that the government can work for them. they need leaders who are willing to take risk.

risk with their own parties, and the risk with a public vote for them. because in the end, here's my philosophy of why i have this reputation around the state, around the country i guess now about being pretty blunt and direct, people wonder where did that come from. it's simple. will come from our parents, right? means we are all products of our parents whether we like it or not. for good and for bad. i have an irish father. he is 79, if you here today, he'd be sitting right up in the front, greet all the outward, tell you all about his grandchildren and whether you want to or not he would be hugging you at the end of the conversation. on the other hand, i had the sicilian mother. now for those of you who have been sicilian relatives, you know this is entirely different kettle of fish. in the automobile of life, my father was a passenger. my mother was the driver. my mother was judge jury and

executioner. she particularly like that last job. she set the rules. around our house. she was the person who set the tone, set the rules. i said i had a sicilian mother because she passed what about ages ago. she was a lifetime smoker. at the end of her life i was at a u.s. attorney's national conference in san diego. and my brother called me and told me that she was back in hospital and really in great condition, if i want to see her i needed to get home right would. so i took the redeye home that night and flew back to new jersey, got in the car and went to the hospital. and i got there she was sleeping so i waited so i waited by the bid for a little while, and finally she woke up. without saying hello to me, she looked at me and said what day is it? i said it's friday. she said what time is it? i said 538. she said go to work. and i said mom, i decided to take the day off to spend with you, so i'm going to stay here. and she said christopher, this

is a work day, you go to work. i said are you afraid you're not getting the taxpayers money with today? i will make at the time, don't worry about it. she reached over, grab a hand and said go to work, there's nothing left unsaid between us. she was giving me permission to let go. and it was the last great gift she gave to me. but that's more important not just for that moment but for what it says about the way she raised us. my mother taught us in a trust relationship that there's should be nothing left unsaid between you and those people that you love and trust, that you shouldn't wait for the deathbed moment to get everything out because you might not make it. and that you need to tell them when you're happy and we are angry, you need to tell them when you feel great and when you filterable. you need to share everything with the people who trust you. and i know that if my mother was still alive to see this circus that my life has become, that

she would be saying the same thing to me. she would be synchronous, these people trusted you to give you the most important job, to make them their governor. tell them what you think. tell them how you feel. and i think that's what leadership means to be about the special in the difficult times like we are today. we shouldn't be listening to consultants whispering anarchy or to tell us, say as little as possible. we shouldn't be listening to those voices who say, just use the party doctrine, and don't stray. you're telling people how you think and how we feel and let the other suffered a. at the end of the day, listen, i love this job but i've got plenty of great titles already. i was u.s. attorney, and most importantly husband, father, son. if it means that it is, if i choose to run for reelection, so be it.

but at least i'll be able to tell my children that the time i spent, i spent trying to do something significant i'll be able to say to the voters when you go to the voting booth the next time, if i'm on the ballot, you won't be able to say i wonder this guy is and i wonder what he really thought. they will have a bellyful by that the time fidelity to be their cup of tea or i won't be, but i won't be a mystery. can't leave by being a mystery. you can't lead by being an enigma. you can't lead by being aloof. you can't lead by being program. i think you have to lead by being yourself and who you are. and then people will trust you. when they trust you they will follow you. and so that's the experience of new jersey. i'm happy to take some questions with the time we have left. thank you all very much. [applause]

>> thank you, governor. thank you to coming to brookings today. we really a pressure visit to quibble a bit of time. i love the theme of your speech, the lessons of new jersey. especially as her but he knows, the problem we face is whether fiscal and sustainability. so clearly any guidance for your speech, the question is most present. i did want to ask you, you stated, the first job is to set out your principles. i want to focus on little bit on taxes because i think that's where a lot of this is coming from. i'm curious what we think the republicans principles are on federal taxes. we had to compromise a company years ago, a proposal from the simpson-bowles commission which i thought had some pretty good principles, lower marginal tax rate but pay for by raising capital gains taxes, and

dividends tax, getting rid of some our deductions, some of our popular deduction, charitable deductions, so, you know, this has the spirit of principle and the spirit of compromise. i'm curious what you think republican principles are when it comes to federal taxes. are republicans willing to pay for the reduction in marginal tax rates, capital gains are reducing sugar production or other deduction? >> first off i don't think there's one republican position first off. and so i think, and i think that's a game that both partisans in each party try to play because they do when he thing to happen. and at times the press tries to place will. i would say this, that i think simpson-bowles, why don't agree with every element of that i think should have been pursued. and i think it was an absolute mistake of leadership, a lost opportunity not to push it. you've got republican and democratic votes on the commission. you got bipartisan support for

the. i think the lowering of marginal rates both the elimination of loopholes and the means testing of other deductions is absolutely -- in the current concept. i think you also get the spending side as well. and that's where you get democratic opposition. i don't think that you can just deal with the tax system to get this under control. we have to deal with entitlements. if we don't deal with entitlements in on his way we are never going to get there. no matter what we did in texas we are never going to get there. so yeah, i agree with many of the general principles laid out in simpson-bowles, and to believe that lower marginal rates both on the personal and the corporate side makes sense, but only in the context of a limited loopholes and means testing other deductions in order to make sure the jury system that every preseason operates in a fair way.

but that has to be combined with entitlement restraint. because we don't have entitlement restraint we are lost if you talk a little bit about your budget, and interest in whether or not, as you like of which are with the supreme court ruling on obamnicare and if one talks about the mandate, the mandate is a tax. i would welcome your comments on that, by the other part of the rulings on the medicaid expansion that this has direct impact on the state in that you can now not, opt out of the medicaid expansion without losing your current medicaid funding to is this something you decided in think about your current, your upcoming fiscal year budget or is this a wait and see for new jersey? >> directly it's a wait-and-see. i just found out about that won't affect our fiscal '13 budget. we have to look at fiscal '14 and '15 is when it would have an impact. first of all, does supreme court ruled that distortion is still illegal in america. because obamnicare on medicaid for states was extortion.

essentially said you spend your program to where we tell you, and if you don't we're taking all the rest of your money away. that's extortion. it was in whole bunch of nice words but it was extortion. so i'm really glad a majority of supreme court still support the proposition, that extortion isn't illegal and the country even when done by the president of the united states. secondly, it seems to me that -- a place like me to do with the second most expensive medicaid program in the country behind new york. and to our question is going to be how much more do we really need to expand the program. because with some of the most generous benefits already. so that's the analysis we're going to make. we also ethnic analysis on the exchange issue as well. because it will either be state laws or let the federal government run these things. all the single be be in two things. make it better for the people of our state in which the most efficient and effective way to do it for cost perspective.

so i've our folks working on the now that we and, i have my policy folks working on. spent what's the timeline do you think? >> i would think that we'll probably have some kind of decision by the beginning of 13. in order have enough time to plan. but i don't know what other deadline is being put on as well so there's going to be, i'm sure a vigorous back and forth on that between the governors and the administration. >> take questions from the crowd. say your name and please make it a question. >> david. i'm not a resident of new jersey. >> my condolences. >> yesterday on the new jersey turnpike i thought i might become one. >> sunday in new jersey, evil coming from the jersey shore, that's the way it goes. >> my question had to do with the federal-state relationship. i just wanted to see if i can get a few comments from you and views from stateside.

here in washington we seem to see things deadly, typically in areas like education or health care insurance in some sense, is the federal, call it intrusion come into areas that were more traditionally state responsibilities helpful or hurtful for the state of new jersey? >> i think it is generally hurtful. i would say on issues like health, the idea that the federal government is going to get a one size fits all health care program and think it's going to work just as effectively in new jersey as a will in montana, just we know that doesn't make any sense. it makes no sense from tuesday got perspective, that the health challenges that face in the most densely populous state in america, a .8 million people in that size of landmass with that kind of urban population, i faceup extraordinarily different

health care challenges than brian schweitzer does in montana. and so why is it that anyone down here, and this is the arrogance of the federal government, that they believe that down here they can craft a program to work for everybody. and i just think that you've got to leave more of this to the states. medicaid should be block granted because the way that i can administer medicaid program in new jersey is significantly different than than wait haley barbour was able to negotiate a medicaid problem in mississippi, or rick perry in texas, or andrew cuomo in new york. and the idea that, i heard the president say to us one time, we are afraid you will take health care away from children. well, what makes you think i would do that? what in my record tells you i might do that? there's a suspicion that exists, which i think drives some of this intrusion. on education that i think secretary duncan has tried to do some positive things to empower

states. to do more. i think overall trying to manage broad education policy from washington, d.c. for a school district in jersey city, a school districts in tyler, texas, that's a bit of a challenge. you've got to have quite the ego to think you can do that and do it quite effectively. >> governor, i'd like to know is, well, you mentioned 85,000 new private sector employees in your state. but as you know, throughout the country there have been massive job losses in the public sector among states localities that has led to higher unemployment in this country than would normally be the case. would you support a request by governors to the u.s. congress that would request additional federal funds so that states and localities can hire back some of

these essential employees they have been forced to let go? >> no. >> and why? >> because it's always a temporary band-aid. we saw this with the stimulus plan. jon corzine use $1 billion of funding to quote unquote rehire teachers. you suppose use over two years but the use of india because the year before his reelection and i was left with a billion dollars hole afterward. and i had to cut $820 million for my k-12 education program in fiscal year 2011 to balance my budget. and the fact is that unless we're going to do is federalize the states, that you're going to pay for everything, you continue to give us this money, we spend and hire people for a finite period of time, and then these localities and the states are on the and to pay for them beyond the time of the subsidy. where's that money coming from? you know, i of the highest property taxes in america to begin with, and nowhere is this money go to come from to pay these folks afterwards?

i just don't see it. new jersey today has fewer employees. we did without any less. we did it through attrition. while there've been some layoffs at the local level because of pressures on the local level i don't think that's a bad thing. it's incredible when anybody loses a job, factor the matter is i have more government employees per square mile than any state in america. please, don't sing anymore money to hire any more public employees. please don't. i don't need anymore. i've got plenty as it is and i don't need anymore. they are extraordinarily expensive, and extraordinary difficult to manage, and the idea that we continue to have to deal with some of these issues i think because of the federal intervention, if the president and the congress want to spend money on some of those two great jobs, then spend money on infrastructure. build private sector jobs. don't spend money on sending me

money to hire more public employees. do something phil levy multiply effect, a geometric multiplier effect to become if you're going to do. but don't do that, by the way, unless your going to do the other things that we talked about up here already. which is to do with the fitness of the tax system and structure of it into do with overall employment growth as well. >> him thank you. governor, i write the mitchell report and i want to ask you about, there were two sets of comments that you made that seemed to bring a large question about and governance in the country. on the one hand you demonstrated what can be done in new jersey with the right kind executive leadership. you said that there certainly other examples around the country like a john hickenlooper and colorado and elsewhere.

but you are, i don't think use the word pessimistic but you said you were not necessarily hopeful that that contagion will move in here anytime soon. given that, it seems to me it raises the question of rethinking federalism itself and the partnership between the federal government and the states, and, of course, the brookings, alice rivlin has written a book about the and is among those who were talking about what steps might be taken, what specific kinds of programs might it be possible for states to take either all response built or greater responsibility work, so that the federal government can concentrate on doing the things it does best, and states can take the lead. and i wonder what your thinking is about that, and to the extent that you specific thoughts whether you could share them with a?

>> first, what i say to you is that a think we have to have that type of examination. it gets to the point i was answering over here which is, do i think this continued intrusion of the federal government into areas that is helpful or harmful, that's why said it was harmful. i think we do not have that kind of conversation and would have to lower level of suspicions that some of states are going to want to do things that are injurious to publish and we all get elected, too. and so it's just the fact of the matter is we want to do things that are generally good for the population in our state, and we will make people feel good about wanting to live there, work there, raise families there. so yeah, i do think we should have that conversation. on specifics, i haven't given a lot of thought so don't want to contrary my reputation and i don't want to totally shoot from hip from a. but i do think it's worthy of a conversation and i think that's

part of what i hope will go out of a vigorous conversation of simpson-bowles. because that will force that conversation. because in an era where you're going to figure out what are your priorities, because really the question you were answering, asking is, what should the priorities of the federal government be and the priorities of the states be. and then have them divide response was based upon those properties. right now we're just saying everything is our priority. we're going to do everything. if you try to do everything, you'll probably do most of a lousy, and certainly it will cost a fortune. so let's figure out what are the priorities. seems to me at the federal level you start with a national defense, which only the federal government can provide in an effective way, and you work from there. and so state responsibility should not continue to be encroached on by large federal programs which then were those priorities even more.

which we don't have the money to pay for. >> time for one more quick question. over here in the corner. >> hi, i'm tracy. like you i also spent time in other newark, delaware. so i think these are very essential and important questions that we're talking about the is going to ask a slightly different question but it gets back to this, i think he became governor at the up so worst time to for six months of 2010. i wonder about that saying about crisis great opportunity and how do sustained these changes going forward. and similarly any kind of important topic like federalism how do you sustain that conversation, how do you keep people focused on the problem? >> listen, i feel like it was a much better time to become governor now than i did then. you know? i feel like at the time it was

an incredible burden because when you sit down and you are cutting over 24 lines in the state budget and every one of those reductions you know, like i can see those people in my mind that we're going to be effected by it. and that's a heavy burden to carry. and my wife could tell. when we were doing that over a about a period, we had three meetings a week, four hours permitting, which is about all we could take and then get back the next day to day. my wife could tell without looking at my schedule when i would come home that night when i would have those meetings. so it was a really difficult time but you are right, that that type of crisis led to opportunities because everyone knows that we have limited choices now. all the gimmicks have been played. all the gains have played in new jersey. we have bonded our tobacco money. we have borrowed for ongoing spending. i mean, every trick in the book

at could be played, extend from 20 years to 30 years to balloon payments from, just everything. so now there are no games left in the playbook to use. so you have to actually make the difficult choices. the sustainability of those is i think the possibility of the sustainability embodied in the right direction number i told you. like, what special interest will attend to do when you make tough choices and say this is the end of the world as we know it. he is throwing grandma off a cliff, you know? your children are going to be able to learn. you will not be able to get to a hospital. you know, the roads will be caving in. the bridges will be collapsing. and there's commercials for all this, 30-second ads for all the of what they've seen in "new jersey now" over the last two and a half years, the sun is to commit every morning. kids are still going to school.

test scores are still pretty good and a lot of the school districts. you know, our roads could be better but they are not awful. our bridges are being repaired. we are doing the things that government essentially needs to do. we're doing it with less employees than we have done it with 2001, we amended the pension and benefit programs, and you know, no one is visibly suffering from that. what people like to have more money? sure they would. but i can't justify it any longer to the union carpenter who's been out of work for two years who is trying to keep his house, his property taxes continue to go up because i think for 5% raises for teachers. i can't justify it anymore. guess what? neither can the union carpenter. and so the divide you see in our country, in one respect is the divide between the private sector union movement and the public sector and moving to the private sector union movement is

depend on a vibrant private sector economy to put people back to work during a down time like this, how can my people survive? and how come when our pensions go down, we have to put my and my income by the public sector work still? how come when my health care costs go up, i have to put more money into the public sector workers don't pay anything? i mean, this is an issue of fundamental fairness. and so i think what you're seeing is the sustainability of these changes lie in their common sense and fairness. that doesn't mean they are not hard. it doesn't mean they are not painful because they are. but they are also fair and they make sense. and so people are willing to accept that in the context of shared sacrifice. and so new jersey where the extraordinary progressive income tax cut. where the top 1%. new jersey-based 40% of income tax. so it's not like people are

saying people are getting away with something. we are the top 1%, 40% of income tax. your shared sacrifice. so we're trying to spread out across the entire spectrum. i think that's what you get sustainability. the last piece to getting sustainability is the last piece i talked about when using the example of my mom. have to talk honestly to people about it. you can't say to them, don't worry, it will hurt and you'll be fine. you will have to live with the. it's going to hurt, we're all going to work, we will hurt together. but in the end we will have a better day. i don't know if how exactly it will take him two years, three years, four years, but we will get there. and i think that's the thing that sustains it the candor with people what you're not trying to protect your own rear ends all the time, elected office. too many elected officials who are obsessed with reelection.

and if they're willing to do anything to keep their job. that's not the kind of person you want in the executive position, or any position for that matter, but given the challenges our country face. be where of the person who will do anything to get reelected. because that means they will do anything to get reelected. and it won't matter, won't matter what the long-term -- i had somebody tell me when i was talking about these pension changes and said why do you want to do this, this is a friend to i said because the pension system is going to go bankrupt by 2018. and he said, chris, if you're elected to do reforms you out in 2017. let the next guy deal with it. that's the mentality that has creeped into political consulting, and the politics of it. if it's not going to blow up on my watch, let it go. only deal with things that are absolutely on my watch.

that's what got us to this spot. and the next explosion coming is going to be exploding that be difficult to contain on the federal level if we don't deal with these issues. it's going to be, these people say europe will be your. forget europe. europe will be a picnic compared to what will happen here. because the entire world depends upon this economy. are going in that direction, then the ramifications for the entire world are going to be graver than anything you're seeing in europe right now. so sustainability, if you have to say to people, to say from behind podiums like this. to look at people and said, you know, guess what? social security? we have to raise the retirement age. listen, like you said i said listen, i just had -- i hadn't been vaporized to the carpet. i am still here. we need to be honest about these things. we need to look at wealthy

people and say some of these benefits need to be means tested. i know you bit into them for years, i know you aren't of the is what, we can't afford them. sorry. you got screwed. it happens. you have to say this stuff to people. and if you're unwilling to say it, my view, you are not worthy of having the position. and you certainly can't call yourself a leader. a leader is not just somebody who is whistling a happy tune. sometimes that's part of your job, but the grunt work as part of your job, too. you've got to sustain the reforms are putting in place. you have to sell them to people. and a way that they can believe and become a part of who they are. then they will support you. they kick you out of office, they kick you out of office. it seems to me it's not the end of the world. but for some people maybe it is. but we should keep those people

out of office. that was a long answer, i'm sorry. >> governor, thanks for your honest and invigorating comments this is a great way to start the week for us what hope everyone will join me in thank you for coming up on back. >> thank you very much. [applause] [inaudible conversations] >> [inaudible conversations]

>> [inaudible conversations] >> a live picture now here in washington, d.c., the associated builders and contractors legislative conference about to get underway. house speaker john bennett and senator rob portman of ohio scheduled to address the conference participants. we expect your speaker boehner who will talk about jobs and economy and provide his reaction to president obama's middle-class tax cut proposal

that the president announced yesterday. senator portman's remarks likely to focus on changing the tax code and job creation efforts. live coverage underway shortly right here on c-span2. [inaudible conversations] >> [inaudible conversations]

>> ladies and gentlemen, please welcome the 2012 chairman of associative builders and contractors, eric regelin. [applause] >> good morning. welcome to the 2012 abc legislative conference. this year's legislative conference program features distinguished speakers, educational sessions, most importantly, meetings with your elected representatives, on capitol hill. we are very excited that this year's legislative conference will be highlighted by speaker of the house john boehner, and

u.s. senator from ohio, rob portman. but before we get started i would like to thank all of the generous sponsors of this year's conference. when i call your name, please stand and be recognized. gold level and sponsor of the free enterprise alliance, fox, rothschild llc. [applause] silver level, mc team building intelligence. [applause] miller and long pc. [applause] nova group, incorporated. [applause] and red age digital advocacy. [applause] bronze level abc a marriage choice.

[applause] bradley, llp. [applause] caging industries. [applause] engineers joint contract documents committee. [applause] phelps construction company. [applause] skilled trades. [applause] almond public policy and federal relations. [applause] thank you to all of our sponsors. we truly appreciate your generosity. and now to officially open this year's conference it is my pleasure to introduce the abc chairman invite, greg, who will lead us in the pledge of allegiance and the invocation.

greg? [applause] >> good morning. thank you for all stand but may i ask you to bow your heads in prayer, please? heavenly father, we acknowledge your presence with us here this morning. we are thankful that your son came among us to be our savior as you have promised. look down upon those, giving their time working to keep this country shining star to all of its citizens. as we leave this room can look over our members when they go to see their registrations. we know there's no room in your heart for those who discriminate i just others. help us deliver the message that our government -- those of us who believe in america philosophy. father, please open the minds and hearts of others so that

they may hear our message. father, there are those who stand in harm's way allowing us to freedom and that is what one of our own has recently been injured in battle. father, we beg you use your power so that robert mcgregor recover from his wounds. he deserves to enjoy the freedom for which he fights. father, wrap your arms round the family of robert, give them strength, courage and comfort as they travel to be by his side. father, we give you thanks for all that you do, amen. i pledge allegiance to the flag of the united states of america, and to the republic for which it stands: one nation under god, indivisible, with liberty and justice for all. >> before i leave the stage, i would like to just remind those here that -- i know i mentioned this when but he is one of our

own. his wife and a four year old son, he was the executive director for nova, one of our major companies, one of our big supporters here at abc. he took a leave of absence we could be with his family prior to doing a tour of duty in a foreign land but he was serving his country, and his aircraft was shot down. they were in battle for two hours before he was rescued and airlifted out. i understand he is stable and doing well and on his way back to the united states, but it is those types of people than those are the people that make us a great country. those are the people that really deserve our thanks. and i know that we're going to be on capitol hill, and i know that we're going to try to influence our legislatures, but as we do that, we have to remember those who keep us free. thank you. [applause]

>> thank you, craig. i would now like to end it is our first speaker, the honorable rob portman. mr. portman is the junior u.s. senator from ohio. he was elected in 2010 after running a campaign focus on conservative values and reining in overzealous spending in washington. senator portman previously represented ohio's second district in the house for over a decade. before serving at cabinet level post as a united states trade representative, and later as director of the office of management and budget, he was one of just three senate republicans appointed to the joint select committee on deficit reduction, a reflection of the broad respect he commands on fiscal matters. born and raised a small business and become senator portman has been fighting for pro-growth, pro-jobs policies, to help get

ohio and our nation back on track but please help me in welcoming senator rob portman. [applause] >> eric, thanks very much, and good morning, everybody. it's good to have you in washington, d.c. we need you here. we need your message. this is a group that understands that hard work and risk-taking and investment is what it's going to take to get this economy back on track. get your business is back on track, help working class families in ohio where i come from, but also all around this country, to get things moving again. i appreciated arabs into. he mentioned small business backroad. -- eric's andrew. when my dad was about four years old, he was a salesman for a

bigger company. he left his job industry and the jafa sound health health care and had a retirement plan, and he started his own business. and that's the story of many of you because i know bunch of you from my home state of ohio. and i was about five usual at the time. and fight anything to say about i would've asked them not to do because it was a big risk. you know the story. mortgaged the house, borrowed money, couldn't be any money from the bank, does that sound from a? he borrowed money from my mom's uncle which is a big risk because my mom was the bookkeeper, and five employees lost money the first few years. you know, again, that was kind of risky living. your uncle supporting the effort, but they found their niche, as many of you have in your business over this. by the time my brother took the reins of the company, there were about 300 employees there. so not a huge company, but

that's 300 families in greater cincinnati that had some opportunity. it was prime example of the kind of american dream that we hope every person has the opportunity to achieve, if they work hard, take a risk. make the investment. unfortunately, that's at risk today, i believe. that's what iran for the senate and that's why continue to work hard and try to change the direction in washington is going. i'm very worried if we don't change direction, those opportunities will be there for my kids and my grandkids, and for yours. and i think we're at a point in our history right now where we have to make some pretty fundamental decisions, don't we? so it's great you are here, because you are here to talk about why free enterprise does work. and how we need to get back to the time honored principles that made this country, the envy of the world. not just the best economy on the face of the earth, the greatest middle class on the face of the

earth, and we become this beacon of hope and opportunity for the rest of the world. because of our free enterprise system, because of rewarding hard work, because of the kind of businesses that you will created and hope to be able to expand i getting this economy moving again. i appreciate the fact that you're involved in this article battle that while you're here you will be talking to people about it, and that this group stands firm and you stand tall. and i'm a little biased on this because about three years ago now, when i was first running for the united states senate, election was in 2010, but this was in 2009, the very first group to endorse me in the entire state of ohio was abc of ohio. [applause] and i appreciate the fact that some of those folks are here today. i haven't had a chance to find them yet but i know brian williams is here who is a good buddy of mine from ohio, and

several members of the chapter are here. i appreciate him for the find what they do throughout our state on behalf of free markets and free enterprise, promoting those interests. we now have a republican legislature, republican governor, and in ohio we are doing some good things. we are beginning to get the state back on track. we are doing it, dinner, because it's the right thing to do for the future, for the next generations, rather than the next election to some of these decisions are tough politically but they have to be me. ohio is a good model of what washington needs to do. balance the budget without raising taxes, $8 billion hole in the budget which for us in ohio is a big deal. bernie back jobs not just by raising taxes but also by reducing some taxes and some regulations. focusing on how to attract businesses. what we need to do in this country here in washington is being played out in ohio and some other states around the country. this is unfortunately a very difficult time in our economy. some of you saw the jobs numbers

on friday. the fact is, and i don't have to tell you all this, because you've been experiencing it for a few years now, we are living through the weakest economic recovery since the great depression. it's really sad, when you look at the numbers on friday, we had unemployment numbers come out of the should we only traded a 80,000 in this country. that's not enough jobs to account for people coming into the workforce. in other words, we are losing ground. when you add up the last three months together, it's the worst quarter of employment numbers that was added for two years. we also heard some bad news last week about manufacturing, and a bunch of you i know are involved in building things on the industrial side, and working with manufacturers. manufacturing actually dropped last week, for the first time since the month after the recovery began, since the first time in three years we actually

saw a dip in manufacturing. and yet the president is out there saying the private sector is fine. he needs to get out more. private sector is not fine. he needs to talk to the people in this room but he needs to go on the shelf or in ohio. he needs to talk to small businesspeople are struggling trying to make ends meet in an economy that is not doing fine. he did have a solution to it, as you know, which is that and more money to washington, higher taxes on you, washington takes its cut, and then we turn around after borrowing 40 cents, some of it from the chinese and others, borrowing 40 cents and then take that money and send it back to the states so the states can hire more government workers. does that sound like a good solution to you? i don't think it makes much sense. but that was a solution. he said the private sector is doing fine, it's just we need

more public sector jobs, everything will be all right. and folks, this is the fundamental difference in philosophy that the voters of america are going to face in this election. is about growing the private sector and doing the things here in washington, not too great jobs because the government can great jobs but -- which were talking about today, or are we going to great more government jobs? that's what state was was all about by the way. and remember in the stimulus the president said it would put more money into government we will create more jobs. in fact, he said the unemployment knows will continue to go down to the point that today based on the analysis the presence economic team we would be at 5.6% unemployment. the unemployment number today is 46% higher than what the president promised it would be if we passed is almost trillion dollar stimulus plan. don't you think it's appropriate to hold them accountable for that?

we need to talk about this. this is a fundamental difference that affects families in ohio and all over this country. if we don't have the right policies in place we're not going to get economy back on track. we're not going to put people back to work. we're not going to get back to what we talked about at the beginning, risk taking a free enterprise investment, hard work that is rewarded. that's how we're going to get the economy going again. so we all love this country. i believe the president loves his country. i believe he thinks he is doing the right thing. but, frankly, i don't think he gets it. i don't to get a sense of the private economy works. to say it's doing fine and to say the real problem is public economy, needs to have more of a stimulus, indicates that the lessons have not been learned. we gave him the ball. the american people gave him the ball at a time when he was inheriting a tough economy, let's be honest, but in my view he fumbled the ball but it's time to give the ball to

somebody else who has a game plan, who's got the strategy to be able to throw things around and understand because he has the experience and the record and the public policy positions to do it. that's why i'm supporting mitt romney. [applause] some people say well, this is just a typical recovery after a tough recession. it's not. there's something else going on here. and i think it goes again to the policies that up and put in place that hasn't worked, and the policies we are not pursuing that we need you that you all are advocating here in washington today. in 1981 we also had a tough recession, a lot of you lived through it. you remember it. actually be an opponent numbers and 81 were higher than they were in this most recent recession. so in that respect it was a deeper recession than the one we are trying to recover from now. let me give you just one statistic that shows the

difference. at this point after the 1981 recession under ronald reagan's leadership with an aggressive pro-jobs agenda, we had gained back 7 million new jobs after the recession. 7 million net new jobs. think about that. today in the weakest recovery since the great depression, we are still down 4.9 million jobs. that's a pretty big -- remember the jobless recovery of 2001, two, three after the 2001 recession window jobs are coming back? at this point after that recession we had gained back over 400,000 new jobs as opposed to today where we are still down almost 5 million jobs. so something is not working. it's time to try something else. and again, i think it goes right to the policies that are making it more difficult to create

jobs. some people say the president is not do enough to create jobs. i think it's worse than that. i think what we are doing in washington with the president is advocating, what the democrats have asked is making it more difficult to create jobs, and -- [applause] need to follow ronald reagan's example, and when the to and ask an aggressive pro-growth policies to get us out of this mess. and that's not more government spending. it's not what president obama, the democrats have pursued, which is not just more government spending but more regulations, more taxes, more antibusiness rhetoric, more welfare. we saw again yesterday just right across the way here we are the president of the united states telling us again that the way to get out of the economic problems would end is to raise taxes on small business owners. and some of them are in this room. so look, i think we i to reform the whole tax code. we shouldn't be debating whether

to deal with the current code by allowing it to be extended or not. we should have a president who shows leadership and comes to congress as he says you know what? we need to reform this whole tax cut. we need to be sure the economy gets a shot in the arm by taking the code getting rid of a lot of the loopholes and lowering the rate, the marginal rate, not tax cuts, but a revenue neutral approach to tax reform that actually gives the economy a shot in the army. economists agree our current code is inefficient, and acquitted, doesn't work for the american worker. our corporate tax code is a mess. it's the highest corporate rate in the industrialized world now. we are losing jobs every day. i'm a beer drinker. there maybe some other beer drinkers in the room, and some of you look a little groggy this morning, that's why said that. but guess who the largest u.s. their company is now?

sam adams. who said that? raise your hand. there's a good bit to do. it's sam adams and i love sam answered we have a poor in cincinnati and the guy who started that was from cincinnati. i'm pretty proud of the. they have 1% market share but all the others are foreign market company. why? our partners, companies we compete with are more competitive than us, our tax code is driving jobs overseas. they can buy our companies at a premium because of their tax code. canada just lowered its corporate rate from 16.5 to 15, just right north here. and we are sitting at 35%. when you add up state taxes, closer to 40%. highest and dust are less -- when ronald reagan reform the tax code to enact decades ago he took the corporate rate down to 34%. bill clinton bumped it up one point, but 34% to he didn't deliver the blessing we want to get our corporate rate down where it's below the average of

the countries we compete with. in debt to enact decades, every single one of our trading partners call the oecd countries, the developed countries around the world, every single one of them as reform the corporate tax code and lowered their rates to be compared to attract jobs and capital and investment, except us. so presidential leadership is required. never in history of our country have we done things like tax reform or entitlement reform all which has to be done without presidential leadership, and it has been lacking folks but we don't have it. so this is part of my we need some new leadership it but we also need new policy. let's talk about those policies just for second because you all are here talking about what needs to be done and want to tell you what i think would help. i think it's consistent with what you all are talking about. first is taxes from as we talked about it. and again this is not just about the corporate rate. it's about individual become have a tax code, makes us competitive, makes it more efficient, gets rid of a lot of

the composite. that tax code is now nine times longer as the bible and not nearly as interesting. second is regulations. people say well, you know, what does that mean? welcome it means that small business people around america, including you all, have to look over your shoulder all the time, have to hire more compliance people. and literally can't do things that you want to do that makes us businesswise. we are about to shut down by the way probably 10 coal fire plants in ohio. other companies are telling me they are about to do it. now, wit with a heat wave we're experiencing right now, and the potential for blackouts because of the need for air conditioning, do we want to lose 10 power plants in ohio or pennsylvania or west virginia? it's all driven by the epa. and companies are doing a. it's happening. some of these regulations have been put off, but a lot of them haven't. by the way, those have been put

off have been put off into right after the election so watch out. look at what the nlrb is a big the nlrb tells a united states company they can't move from one state to another because one state is right to work and one state is not the does that make any sense? does that sound like an american approach? or does that some more like something you'd find in a country that considers itself to be socialist where the government decides where companies can move? and by the way, boeing also created more jobs in washington state at the same time which were union jobs, so this is unbelievable. across the board, this administration has increased regulations. it's just true. there is a way to get out of this by the way, just as there is a way that make sense, it is to force the government to go through a rigorous cost-benefit analysis, you guys are talking about this year, this year, hope you look at our legislation. we have bipartisan legislation that does this. use the least burdensome

alternative, which they don't have to do now, unbelievable, and independent agencies don't have to go through the cost-benefit analysis at all, and that's a bigger part of government under this administration. and then finally regulators should be subject to some judicial review, just like you are. so that they can be held accountable. so that the things we can and should do in addition to just taking some of these regulations as we try to do in the congress a couple weeks ago with these new utility back regulations, stop them and forced them to come back to congress because many of these regulations as you are being put in place because the administration has not been successful in getting everything through congress they want so they just use the administrative branch of government, which is what it is becoming. the executive branch doing what congress really has elected representatives ought to have a say in because we are accountable in. those things can all be done and can be done now getting with the debt and deficit. here's some interesting data

from just recently from the congressional budget office. you know, we have unparalleled spending in this country as you all know. record spending. the average spending over the last 50 years or so really since world war ii has been about 20% of our economy. average taxes, revenue has been a 18, 18.3%. what congressional budget office tells us if we just continued on the economy grow as they suspect it will out of this week recovery, the tax part of it will come back to the historic rates, about 18.3% of gdp. the problem is this been a part because the spin is not at 20% right now. it that 24%, or better. and what happens over the next 10 years, it goes out to about 30%. and the next 10 years about 35%. and so on and so on. so the gap here between revenues and spending is pretty clear. now again i'm for tax reform and

tactical is going to raise more revenue. by growing the economy. but our problem is not that our taxes are too low. our problem is our spending is too high. and if you look at it historically, that's what it is. [applause] the congressional budget office has asked to make estimates of the 75 year budget projection, it's an economic projection that they do periodically. and recently they tried to do this and they discovered that in the economic and fiscal models, they couldn't do it. ..

>> it's immoral to do to our country. so the president is not going to lead on these issues. he had an opportunity, by the way, with the simpson-bowles commission. this was his own fiscal commission that he put together, and, you know, alan simpson and erskine bowles will tell you we're not dealing with our debt and deficit. and, you know, they had a balance three to one, spending versus taxes. you know, there's going to be at the end of the day, i hope, some agreement on this. but it requires leadership. the president rejected the proposals of his own commission. some democrats, as you know, again say this will all be solved if we just raise taxes under our current tax code on those who makeover $218,000, i think is the number now.

they don't recognize maybe that 85% of the small businesses in america pay their taxes as individuals. they don't recognize that most of you pay taxes as individuals. let's do a show of hands. how many of you are c corporations? how many of you pay your taxes as individuals? look around you. now, this is, this is how america works. i'm a small business owner. my brother and sister and i own a hotel and restaurant in ohio, and the recession's been tough. i grew up in a subchapter s company. this is how america works. i know it may be good politics for the president to play the class warfare card, but it's bad economics. and it's bad for the very middle class workers he says he wants to help. folks, our founding fathers helped us follow democracy. unfortunately, i believe the proposals we follow today are going to help us follow greece into bankruptcy.

again, i thank you very much for being here today, for working on regulatory relief, tax reform. health care we didn't even get into, but i will just tell you one thing about what i'm hearing back in ohio, and i'm sure that you are going to talk about it here. whether this law had been deemed constitutional or not, whether the penalty's a tax or not -- and, by the way, the supreme court deemed it to be a tax, a tax, by the way, that falls disproportionately on middle income americans, about 75% of the people it hits make less than $200,000 a year. >> is it a tax? yeah. the supreme court said the whole thing was constitutional because it's a tax. but the problem is it's unaffordable. it's unaffordable for our families. again, another promise the president made, we're going to see a reduction in premiums, couple thousand bucks. what happened? not a couple thousand bucks down, a couple thousand bucks up. it's un affordable for you, for

businesses. chamber of commerce recently did a survey, to small business other thans, is this an impediment to you? 75 percent of them came back and said the health care law's an impediment to hiring. do you agree with that? >> yeah. >> and finally, it's unaffordable for our country. we talked about the debt and deficit that awaits us. the congressional budget office has thrown up their hands saying this is unsustainable. this health care law, of course, makes it worse because it adds these huge, huge costs. the president says, well, it's deficit-neutral. well, if you add up the $500 billion cuts to medicare, not used to offset the huge problems we have in medicare because it's an unsustainable program in its current form, but used to create this new entitlement, if you add up the $500 billion in tax increases not even including the tax increases on the penalty -- by the way, 21 different tax

increases in there -- you could have made an argument that it was deficit neutral at one point. but now people have looked at the numbers, including the congressional budget office, and said it's not even budget neutral under those taxes. people gotta understand this dog don't hunt. i mean, it just don't work. there are better ways to get health care costs under control. we need to put more free market principles into health care, force insurance companies to compete for our business by vetting them -- letting them sell across state lines, do the kind of thing -- [applause] kind of things that are not done in this legislation. and by the way, they looked at all this. they looked at dealing with medical malpractice reform, these frivolous lawsuits. they hooked at providing more competition and transparency and giving us more choices as crers. they decided not to do it.

there are lots of things that you can do to get health care costs down. they looked at expanding health savings accounts, which is a good idea. what did they do? they made it less advantageous. they took away the tax advantages there, unbelievable. so there are things which can and should be done which would encourage wellness and dealing with our health care issue and, again, we need new policies for that. energy, in the area we've got an exciting opportunity. this administration has taken us the other way, blocking keystone pipeline. that seems like a no-brainer to me. by the way, it would create tens of thousands of construction jobs for our economy. wouldn't that be good for our economy? [applause] so there is hope. there is hope. we can get back on our feet. you know, we've been through a lot in this country. a revolution no one thought we had a chance of winning, we were the little guy. we were the david, they were the

goliath. a civil war that story this country apart, but then eventually brought it back together stronger than ever. a great depression which seemed like it was never going to end. couple world wars. my grandfather and father were world war i and world war ii veterans, and that kind of spirit that came out of that conflict, the horrible conflict i agains at the end of -- again, at the end of it brought our country stronger. we can do that again. we are a great country, and we're a great people, and we have that innovative, entrepreneurial spirit. i will tell you, we lost my dad about a year and a half ago, and before he died all this was going on with the health care bill and stimulus and dodd-frank and all the regulations, i did ask him, i said, dad, would you do it again? as we started off talking about a risk he took when he was 40 years old and told you that, you know, it was a bigrisk, and he almost didn't make it, but he believed in himself and in

america, and he believed in the fact that if he took a risk, it would create opportunities for families across southwest ohio. he said, rob, with what's going on, i don't know. and some of you may be wondering that. what are you going to tell your kids when they want to get into your business with you? and join abc and come to washington and promote these policies? are you going to say it's a risk worth taking, or are yo going to say, you know, maybe there's another job that gives you more security? maybe it's a government job, maybe it's in a big business. more entrepreneurial, less risk taking. if that happens, and some would say it's already happening in america, people are losing hope, that's when we are no longer that beacon of hope and opportunity for the rest of the world. i think the alternative is going to happen. i think we'll get back on our feet. i think the american people will make a smart decision this november. i think they feel like they gave the guy the ball, and it got

fumbled, and now we've got to go back to free market principles. we do need tax reform, regulatory relief and reform be, a new health care system. we do need to be sure we're using these energy resources in ways we never have. we do need to deal with this debt and deficit in creative and innovative new ways, but we can do that all. was we still -- because we still are that shining city on the hill that ronald reagan talked about. thank you for the role you're playing, good luck here in washington, godspeed. [applause] >> i would now like to introduce our next speaker, speaker of the

house john boehner. congressman john boehner serves as the 61st speaker of the united states house of representatives where he represents the eighth district in ohio. the son of a tavern owner, speaker boehner worked his way through college before embarking on a successful career as a small businessman. as a member of the gang of seven that presaged the republican revolution, the key author of the original contract with america, chairman of the committee on education and work force and, ultimately, as a member of the house leadership he has long fought to reform washington d.c. today he is focused on removing government barriers to private sector job creation and economic growth, cutting government spending, reforming congress and rebuilding the bonds of trust between the american people and their representatives in

washington. please help me in welcoming congressman john boehner. [applause] >> thank you. morning, everybody! [applause] thank you! let me begin by thanking all of you for what you do in the communities in which you live and what you do to help get the american economy going again. you're not going to hear this much in washington because most people in washington never had a real job. [laughter] and don't really understand that you have to risk your life savings, risk capital, take out loans to start up a business, to hire employees, to buy equipment and hoping that you'll find a customer, hoping that you'll find some business. and most people here in washington don't understand the

risk that's involved and what you do to help grow the american economy. but as one who took the same kind of risk that all of you did, i just want to say thanks for what you do for our country and what you do for the communities in which you operate your businesses. listen, as you know, i came here as a small business guy. i came here to fight for a smaller, less costly and more accountable government. but, you know, many in washington just haven't quite seen the light as yet. you know, the president and i, we get along just fine, but we've got some really different views about how our economy works. as a product of the free enterprise system, i'm a big believer in the free enterprise system and in limited government here in washington. the president's instinct is to meddle, micromanage, manipulate. just look at the stimulus bill. you know, what we're seeing with obamacare, again, is driving up

the cost of health care, and that's making it harder for small businesses to create jobs. so tomorrow the house once again is going to vote to repeal all of obamacare. [applause] and some in the media ask, well, why? you've already voted over 30 times to defund, repeal, dismantle obamacare. and of after the supreme court's ruling we announced that we were going to vote again. so, of course, the immediate yo goes, well, why, why, why? you know how they are, why? why? [laughter] it really boils down to one simple word: resolve. you know, we are resolved to get rid of a law that will ruin the best health care delivery system the world has ever seen, it'll bankrupt our country, it'll make it impossible to grow our economy. that's why we're doing it. [applause]

later this month we'll take another round of bills to the floor to rein in the regulatory nightmare that's going on here in washington d.c. it's not just obamacare with its 159 boards, commissions and mandates, it's the epa that's drive manager businesses out of -- that's driving many businesses out of america, it's the dodd-frank financial services reregulation that another 358 mandates in that bill, rules, regulations that are coming. and so we're going to bring another round of bills to the floor in addition to the over 30 bills that are sitting in the united states senate, all of which would rein in the regulatory night mauer in -- nightmare in washington and make it easier for businesses in america to expand and hire more workers. and all of this is our plan for america's job crirts. creators. now, listen, the president's got

a different plan. he started talking about it yet again. for four years the president has been on this crusade to make those who make $250,000 or more pay higher tacks. taxes. he talked about it in 2008 when he ran, talked about it in 2009, talked about it in 2010. of course, at the end of 2010 he signed a bill that extended all of the current tax rates for two years. so here we are, we're back at it again. now, let's look at what the president wants to do. by raising taxes on those who make more than $250,000, half of those people who are going to be taxed are small business people who have pass-through entities just like many of you and just like i had. i had a subchapter s corporation. the earnings i made in my business i had to pay personally. and why would we want to tax the very people we expect to create

jobs in this country? it makes no economic sense. maybe he's going to do it because it'll have some impact on the deficit. congressal budget office looked at this, and the impact is negative glij bl, can't hardly even count it. so why is the president out there beating on this mantra? the president can't run on his record because his policies, his economic policies have failed, they've made things worse. and as a result he's turned to the politics of envy and division. that's what this is about, nothing but pure politics. listen, the american people vote with their wallets. and this is going to be a referendum in november on the president's economic policies. the house will vote at the end of this month to extend all of the current tax rates because it will help us give more certainty to small businesses in our country and help create more jobs here in america which is what the american people want. so we're going to -- you'll see us rise up and do it one more

time and send it over to the senate and hope that they'll take some action. listen, we can't raise taxes on the very people we expect to create jobs. listen, i'm a small businessman at heart. you know that. i don't feel one bit differently than the first day i got here about who i am or what i'm here to accomplish. it's about reining in the size of government here in washington so that we can allow the free enterprise system to grow, allow the free enterprise system to create opportunities that gave every one of us in this room is is -- in this room a chance, a chance at the american dream. listen, i came here because if we don't get government in washington under control, the future for my kids and your kids, my grandkids -- if i ever have any -- and your grandkids, not gonna be there. [laughter] because we are going to snuff out those opportunities. listen, i was born with a glass half full. i'm an optimist. and if i wasn't, i surely

wouldn't have come to washington, and i surely would not have stayed this long. [laughter] because you have to be an optimist to stand up for america's small business people and do everything we can to preserve those freedoms that we're all entitled to and, frankly, all accustomed to. god bless you, and god bless our country. [applause] [background sounds] [inaudible conversations] >> thank you. very much, for your remarks and being a good friend. i can't tell you how excited i

am to see all of you here in our nation's capital for this year's legislative conference. as our association's most politically-active members, i don't need to remind you how important it is for you to be here in washington during this challenging time in our industry. each of you play a vital role in making associated builders and contractors the voice for the construction industry, and i wanted to sincerely thank you for your participation. as business leaders in your communities, you serve as a source of information for your legislators. in fact, they often look to industry progressals like you for counsel -- professionals like you for counsel on how proposed regulations would impact local businesses and their employees. as you know, developing a genuine rapport is important. this relationship can be an invaluable resource to a company and can be equally beneficial to the legislators. especially when they come to

understand that abc members help create jobs and build a stronger economy. on that note i'd like to recognize the abc members and chapter staff who have taken up the challenge of banning wasteful and discriminatory government-mandated project labor agreements in state capitols around the nation. in total 14 states have banned these special interest handouts to some degree on taxpayer-funded work in their states, with ten states enacting their bans since january 2001. three -- january 2011. i'd like to ask abc members and chapter staff from the virginia chapter, oklahoma chant e the heart of america chanter and the san diego chapter to stand and be recognized. finish. [applause]

i would also like to recognize abc members and chapter from michigan and the inland pacific chapter for its work in idaho. [applause] both states reenacted their bans after two poorly-decided federal court decisions invalidated their 2011 laws. we strongly encourage chapters to continue working to guarantee government neutrality with regard to pl as in as many states as possible. this sends a powerful message to president obama and leaders in other states that pla mandates are something taxpayers do not want and cannot afford. the fight extends to the federal level where abc national, with the help of the open competition

committee and abc members, continues to defeat proposed pla mandates and preferences on federal construction projects think effective public relations, political and legal tactics. to date, abc is aware of only a handful of plas on federal contracts. this effort has opened tens of billions of dollars worth of federal contracts to contractors and employees while saving taxpayers billions of dollars. abc recently achieved a significant legislative victory with house passage of pla neutrality language in the national defense authorization bill. [applause] >> the senate meets at 0 -- 10 eastern. the legislation would lore taxes for businesses that hire new workers. senators also vote today on a

federal judicial nomination for tennessee. live coverage here on c-span2 at noon eastern on c-span, the house takes up a bill that would repeal the 2010 health care law. that law upheld by the supreme court in june. in addition, three house panels hold hearings on the law. republican presidential candidate mitt romney back on the campaign trail, he'll be in grand junction, colorado, today for a town hall meeting. c-span3 has live coverage at 12:35 eastern. c-span3 also has live coverage as president obama visits cedar rapids, iowa, this afternoon. the president plans to discuss his plan to extend tax cuts for households making less than $250,000 a year. that's scheduled to begin at 1:50 eastern. >> we have great threats to our existence today as a nation. and i would think, in my opinion, greater than any threat

we've ever faced whether it's been our civil war, our revolutionary war, whether it's been world war ii, whether it's been the depression. be and that threat comes to us because we've spent the last 30 years in this country spending money that we did not have on things we did not absolutely need, and the bill is due. >> colorado christian university held a western conservative issues summit featuring speakers from this country and the netherlands. watch the forum online at the c-span video library. >> the national security agency director says cyber attacks are increasing globally. general keith alexander says the u.s. needs comprehensive legislation in place to protect the nation's cyber infrastructure. the nsa director delivered the keynote address at an american enterprise institute event monday titled, "cybersecurity

and american power." it's about an hour. [inaudible conversations] >> well, i suppose i should say, first of all, thank you all for coming and braving this 83-degree cold wave that's struck washington. judging from the size of the crowd and the number of cameras here, i don't think anyone needs me to underscore the importance of this subject. it's testimony not only to the subject matter, but the stature of our speaker. but nevertheless, indulge me for just a couple of minutes to provide what i think is some useful historical context. and to think back to the beginning not of this century, but of the last one. the world today, you might say, is transfixed by the phenomenon of rapid economic growth in a

number of countries that is rapidly creating new major powers in the world. of course, the buggest are chi -- the biggest are china and india, but some others that would look fairly large in comparison to great powers in the past such as vietnam, russia, indonesia, brazil are becoming much bigger players in the world. one hundred years ago the rise of germany as a great power led to two catastrophically-destructive wars which also spawned a number of other tragedies such as naziism and bolshevism that turned the 20th century, which had begun with a decade of great promise, into the bloodiest century in history. we can't afford to repeat that history with the even more terrible weapons of the 21st century. so the challenge of managing emerging powers has become arguably the major challenge of our time. not that we're short on challenges.

success in that effort depends on many factors of which the military is only one, and perhaps not -- hopefully, one might say -- not even the most important one. but it is important and, therefore, it's worth recalling something else about the history of that last bloody century. what made germany a country that almost conquered the world in the last century was not only its economic strength, but also the way it succeeded twice in transforming economic power into military power, particularly with the mastery of armored warfare in the 1930s. it's worth recalling germans didn't invent the tank, germany didn't -- wasn't the first person to field the tank. in fact, the british and french fielded tanks and mobile artillery at the end of world war i. and, indeed, when the battle of france took place, the british

and french together fielded as many tanks as germany. it wasn't superiority in numbers that led to german victory, stunning victory, but rather superiority in understanding how that new technology could be exploited for military advantage. when we think about a technology that could have similar multiplier effects in our time, cyber technology stands out as an obvious, perhaps the most obvious candidate. and, unfortunately, it's not only a potentially dangerous tool in the hands of states, but in the hands of nonstate actors as well. and david sanger's rather, i don't know, famous, notorious but definitely much-discussed recent book, "confront and conceal," he describes an incident where senators invited by the white house just this march filed into a secure briefing room on capitol hill for a demonstration designed, as he puts it, to scare the hell out of them. for roughly half an hour, the

senators got a vid demonstration of what -- vivid demonstration of what it might look like if a dedicated hacker or enemy state decided to turn off the lights in new york city. among those who came to make the case was general keith alexander who runs the national security agency. sanger goes on to say that general alexander is, quote, one of the most important figures in washington that no one ever heard of. i guess that's not true anymore judging from this room. he also says that in rare moments when he talks in public, general alexander's pretty soft spoken about america's vulnerability to such attacks. but, said one senator, in a classified setting like the one the other day, it's very different. i don't know what that means exactly about what to expect from our speaker today, but i do know we could not have a better speak tore address this subject. be -- speaker to address this