that's out there and hopefully increased research at nih, doubled nih funding between 1995 and 2005, i'd like to see it doubled again, and nih funding and other research can make a tremendous difference in how we deal with people's health care challenges, howie prevent challenges, and from becoming as big as they otherwise might be, what we can do can make this really a great decade and great future for health care and for those who provide health care and, clearly, at the front of all of that argument, we're going to see hospitals and the changing role of hospitals. i look forward to being part of that as your role changes, but i look forward to being part of the immediate challenges faced by trying to be sure that trying to start a new program we don't make it impossible to provide

the quality health care that american hospitals have been providing and hopefully continue to provide. thank you for letting me come this morning. thank you, all. [applause] [inaudible conversations] >> okay, our next speaker is cms administrator in the obama administration. i now would like to introduce someone whom many of us know and consider a dear friend for many years. she may have the most challenging job in washington. there's an 800 billion dollar agency, and insurance coverage for roughly a hundred million, a hundred million americans.

additionally, she's responsible for the coverage expansion under the affordable care act. marilyn as you know served as secretary of the department of health and human resources for the state of virginia, before that, she enjoyed a 5 -- 25 year career at hda, as a staff nurse, hospital add administrator, president of the central atlantic division, and ultimately president of outpatient services at hda. she knows health care delivery. she knows health care finance. she knows how bureaucracy works and how to get things down -- done in a bureaucracy. that's why she's ideally suited and qualified to be in charge of an agency like cms. you know, the intent partisan divide may be the new normal in washington.

she's highly admiredded and republicked on both sides of the aisle. last year, the senate approved the nomination with a vote of 91-7 #, the first senate confirmed cns administrator since 2006. today marks her third executive appearance in the annual meeting, but, for me, it's a distinct honor because it's the first time i can introduce her as the cms administrator. we are grateful she's here today and look forward to her remarks. please join me in giving a warm welcome to cms administrator, marilyn. [applause] >> good morning, so i don't see the piggy bank that's supposedly

up here? uh-huh, i got it. first of all, thank you to jeff. it is always a pleasure to be here at the federation. most importantly, let me say you've got a great leader. he takes me to breakfast on a regular basis, and, of course; i always pay and he always pays. he's smart. if he gets me early in the morning before i get pre-occupied # with the day's events, he can actually present slides, overhead, and it's never an easy breakfast, but helpful. this is my third appearance here. it's hard for me to believe. i also just celebrated my fourth anniversary at cms, and it's certainly been a very busy four years, and the part that is amazing to me is that i still have many consul at that

particular at that particular time -- consultants come forward and say, how can i help you develop a strategic plan? the answer is the same. it's a major pushback. the work that president obama and the congress put in place in 2009 and 2010 set the stage for cms, and four years later, it's still part of the strategic plan, and, in fact, i would argue that most of the work some say almost all the work and reimbursements for quality that started in 2003 and more older have given us the frame work for the past four years and the frame work extends into 20 16, 2017 and beyond. where are we in the strategic plan? we continue to deal with one issue that is near and dear to my heart, which is called access

to care. we have certainly made significant strides since october, and we've made some strides prior to october. we currently have over 4 million enrolled in the market place, and you may have seen the recent blog or report about 8.9 million in medicaid, and we have to be careful with that 8.9 million because it's obviously a function of reenrollment as well as new enrollment, but if you read some of the other reports, somewhere probably between two and a half and three and a half are new enrollments in medicaid, and that's with 25 states in dc expanding, so our work is hardly done. in fact, many of you in this room have done exhaustive work for the remaining 25 states that have yet to expands, and what i want to offer today is my assistance with those 25 states in any way that i can. sometimes it's better for me to

stay out of the way. sometimes it's better for me to meet with governors and members was -- members of the legislature. i just want you to know how important this is to me and to cms and i'm available on a moment's notice to help anybody i can. fixing the health care system is not just about access, and it doesn't stop with guaranteeing that everyone has coverage. we still have to deal with the rising costs of health care. this is where you guys have stepped up each and every day, and i want to pause here and thank you for that because the work that we're doing around quality and time quality of the payment, the work we do around the ten and work around meaningful, you are leaders in the work, and i know it's been exhaustive work, hard work, but it's important work. i understand the piggy bank

well. let me talk a little about what we're doing, and there's a rising rising cost of health care. it's the way it's administered, and you know that, and you took bold advancing of getting that done. we cannot avoid quality over quantity or think about building new dlefer ri system. we've stepped up and stepped up solidly for the past 40 year, and that's a note that i keep making to hhs to my colleagues, across town, and to my colleagues on the hill, and i will continue to make that, and we've seen significant progress so let me pause for a minute and talk about progress because it's been with you all that we made progress. you have seen the report that

national health care spending group in 2012, slowest four years on record, and i tell the chief ac rare every day that at some point we have to stop saying this is about the economy and start saying this is about the hard work of hospitals, providers, health systems, and others. health care spent last year dropped from 17.3 to 17.2 of gdp. i can go on and on with examples, but i think you get the idea. health care outcomes are improving, and adverse events are decreasing. in 2012, as you know, we finalized a program that ties reimbursement for hospitals to their readmission rates. the percentages of patients of 30 day discharge and dropped in

2012 to 18.5%, and that's after being at 19% or slightly greater for the past five years. this trend continues, and i know you are seeing it, and in some cases, you are feeling it. this translates to 130,000 fewer admissions. also, thanks to the leadership of many folks in this room, early deliveries are close to zero meaning fewer at risk newborns and fewer admissions to the nicu. this is the work that many of you not only have done, but many of you have led, and then i can switch from that to hospital engagement networks of where each of you are a leader. we have 26 networks today, and they have shown results in the past two years such as decreased in central line inspections by more than 22%. early elective deliveries by more than 50%.

obviously, there's much more work to do, but you all have been the leaders in this work. another area is the health care condition, a secondary area of focus, but over the past two years, over 400,000 events avoided at a savings of 44 -- $4.1 billion. we can talk about acos and millions are acos or pioneers. we have over 360 organizations serving over 5 million beneficiaries, and medicare acos participate, and generated 128 million program trust fund today. the pioneer ideas, much smaller group, as you know, also saved 155 million at a growth rate of .3 #%. if l the rest of medicare grew

at .3%, our health care system would be in a much more financially sustainable place, and all of this, while each of you continue to perform and out perform a quality standard we put in place. there are literally over a dozen programs underway in cmmi, and i know each of you feel that in some days and participate in more than one program. i can talk about the examples that we've seen, but the progress is really been remarkable. all models follow similar things, link quality data reported to payment. a theme embraced since the modernization act of 2003 now called the hospital impatient quality program, and as you know, this program started with you all as things do and moved to out patient, hospice, long term care, ect., and the next

step in the journey, value base purchasing, and it is the next link of payment to quality where we link payment to performance, cost reduction, and patient health outcomes. hospital purchasing, which began in 20 20* # 12 is an example of this, and to date, over 80% of the quality measures improved substantially across the nation. i just want to stop and say thank you to that. [applause] we will next move into the position modifier quality incenter programs an others. for me, one of the more exciting projects is what's going on in maryland today with the all payer model. there is a state look at where we are, and many of you are

aware, what is new is that under cmmi authority, we've changed how that looks. it's tied closely to acos, outcomes, and strive for the population health. we also spend a lot more time with beneficiaries today. beneficiaries, baby boomers, once again, of which i am one, are now entering the medicare program at close to 3 # -- 300,000 enrollees a month. they are much more active, engaged, and maybe what we've seen in the past and certainly much more computer literate, and so we are spending a lot of time trying to figure out how to engage these beneficiaries in our works. some of that goes on in the ma programs and there's a lot of quality improvement in the medicare advantage programs, but i will stop for a moment because i want to say i think the theme will not change, and the theme

will progress over the next several years, and we'll continue to emphasize quality and payment across settings, systems, and we will pull in more long term care, pull in more outpatient, and i am not -- i still think, in many areas, need for service makes sense, and in some areas, it may always be fee-for-service, but there's a larger and larger commitment to outcome based payment, quality based payment, and i think that's exciting, and yet it's challenging as we go through the next few years. as we continue to talk about these things, i want to talk about the ehr incentive payments, more than 62% of the health care professionals and more than 86% of hospitals qualify, and that's most of you, if not all of you in the room. to date, we have paid out about

$21 billion to hospitals and provider, and in the pqrs in prescribing programs, more than $500 million paid to 78,000 practices. thanks to patrick and team at cms, we align quality measures in a way that makes sense for each of you, less emphasis on the number of measures, more emphasis, pardon the pun on the quality of the measures, more everyonetous on outcomes, but a single system so whether you are participating in 2014, and despite successes, we have many projects underway in 2014. i know you all think it never ends, and sometimes i think it never ends as well. the first one is position

sunshine, second icd10, third 1 continued work in the state and federal marketplace, and fourth is ongoing progress and commitment. let's take it in that order and conclude with a few thoughts around racks, alj's and the rule, i cannot leave the podium without having that conversation for sure. position sunshine is a system designed, as you know, create a public usable tool or public file that discloses the financial interest or arrangements between most physicians and suppliers. we are in the early stages, but this system will be operational in the fall of 2014 and while it's a much more targeted i.t. system and platform, i wanted everyone to be aware of the timeline. i think by now folks understand, and i spoke last week, that there will be no more delays and

system will be operational october 1st. cms began installing and testing the system changes to support back in 2011, and as of october 1st of this past year, all fee-for-service systems were ready, but there's been a lot of talk about external testing lately, and so i want to talk a little bit about that. cms is taking a three-prong approach to testing. first, the internal testing that i just described of the claims processing system; second, we will be doing beta testing with this site and with tools for the provider community; and, third, end-to-end testing occurring over the summer into the fall. this week and next week, we are holding medicare testing week, allowing all providers, billing companies, clearinghouses, and others the opportunity too determine whether cms can accept

claims. later this movement, we'll solicit volunteers to have end-to-end testing and the goal is to select 500 volunteers and test claims working were the max this accomplished. a lot of work will continue in education and training around this as well. most of you are aware, most of you have volunteers working with both state and federal based exchange, so as of enrollment comes to close sure on march 31st, we're already engagedded in work for next year. this includes work around the shop and also we'll be continues to make improvements in the site for open enrollment next fall. we have certainly appreciated your support, your interest, and your hard work on the project. whether you are working with the federally based exchange or state based exchange, many of

you in the room, personal efforts in your community and in your settings to make sure that the program was successful. obviously, over 4 million people is fantastic. we'll have a very hard hitting march, and i look forward to picking those up in the fall. this work is certainly changed as the look, the feel, and the ability to obtain health insurance for millions in the country. stage two means we -- you will not be surprised to hear me say that all the clinical programs that is talkedded about can't go anywhere without stage 2. particularly without exchange of data among the systems with beneficiaries, the interoacialtability is key to moving forward. i know there are many concerns and last, also announced that we would be doing what i will call hardship exemptions for individuals who have legitimate

concerns about meeting stage two. we do understand that some of the providers may potentially struggle with the whrish established stage two reporting deadlines, which is why we percent flexibility and how hardship exemptions are determined for the 20 # 14 reporting year. we will have more information on that and the upcoming week, but i wanted to make you aware of that, and that's also something i announced at hand last week. while we're glad to offer flexibility, i want to stress to you all that we do need stage two and all of you to push hard for stage two to fully meet the requirements in 2015. this also, stage two certified products, help better manage the transition to icd10, and, obviously, all work in the delivery system. i'm asking each of you to help us get there, help us expand the messaging, and help us reach providers who need more help to make sure we all get to the starting line together.

okay. so now i want to talk for a moment, switch gears entirely, and talk about aljs two midnight rule and racks. i met last week and i told him this is an area where we're in the midst of taking a look, and we may not connect, but in some ways, they are deaf in thely related. so you've asked us to take a looking and we have, and it's not been a quick process, and i know that many of you have been frustrated about how long it's taken to get somewhere on this issue, so let me tell you a little bit about what we're doing at cms. we are trying to take a multipronged approach to address concerns at the racks, and with the corresponding appeals. we are into the beginning stages of recompeting our current racks to ensure we have a smooth program transition and reduce providers' confusion. cms is pausing any new document

requests for the existing rack program. you'll get that information, so as we wind down one rack and move to new, in some cases, new racks, we would want for you not to have to deal with one system and then into another. we'll pause any new program requests. additionally during the pause, taking a period of months, we'll be using this time to refine and improve the program. some of the improvements that we're contemplating and discussing including allowing the rack auditor has to allow more time for the provider to respond to denial. at this point, we're looking at 30 days. rack auditors cannot receive contingency fees small until the second level of appeal is exhausted. rack auditors receive records from now within three days. we will broaden the review beyond in-patient claims.

we are going to have quality standards for racks about overturn rates, particularly at the first level, and in the meantime, we will continue to use the results of the rack program thus far to make changes so when i asked you that i need each of you all to give me feedback, i was serious. now is the time to give us feedback about what we want as we disengage from one contract and enter into the second stage. the two midnight rule is another one. i think i heard loud and clear there's things you don't like, but the question is, what do you want on a go-forward basis, how can we improve, and what changes would be helpful? hhs, the third area, area of appeals, hhs recently convened a cross agency work group to look at the appeals process. we have much to do. we need your help. we urge you. i ask you to please give me feedback in the areas.

you guys have been fantastic partners with us. our cost trend would not be where they are today without the work you've done. our quality would not be where it is today without hard work in the organization, and now i ask for your help in improving the rack process and any other areas you think we can benefit from. thank you for today and, chip, happy to have a question or to if that's helpful. [applause] >> she'll take two questions, but we have questions from the audience. >> i'm okay with no questions. [laughter] >> okay. oh, i see one. if you could please give your

name, serial number, where you are from, and your company. >> absolutely. i'm allen with medela. the continuing care,ed providers rely heavily on the dmv network and program of competitive bidding. a lot of talk around that. your thoughts on a move forward plan. >> yes. i understand that we need to keeped adequate networks, part of what we do in round two in competitive bidding, and competitive bidding, obviously, continues, expanding into the markets, and we sent out advanced notice of rule making to get feedback from individuals including folks in the room on what's working around competitive bidding and how, if we're going to take this nationwide, what are the advantages, disadvantages, what would you like to see improve, what do you like, and, so, please, give us feedback on competitive bidding, but, yes,

it will be continued work, and dme and a lot of the part b services. okay, thank you. [applause] >> thank you, marilyn. [applause] [inaudible conversations] >> well, i appreciate everyone's patience, and now for the final speaker of the morning of. we have in the house, senator patrick toomey from pennsylvania. the senator is one of the leaders on economic financial services and budget policy. he was elected to the united states senate in 2010, earlier, he's served in the house of representatives, currently, he sits on the senate finance committee and the senate budget

committee. he's in the midst of medicare, medicaid, and health care policy in the senate. many months ago, he served on the bipartisan supercommittee back in 2011 sought to come up with a deficit reduction plan similar to republicans', democrats', and the administration's. during that time, he reached across the aisle to try to make the supercommittee work, to help it meet its mandate. he offered a compromise that included spending cuts in exchange for tax revenue. unfortunately, his compromise and the other compromise discussed did not make it through. the committee, in a sense, failed to come to conclusion to propose to the senate and the

house a compromise that could be lived. .. >> i want to welcome the

senator from pennsylvania senator to me. >> toomey. >> excuse my voice it sounds worse than it is. think you for having me today and for his kind introduction and from universal health services it was allen's idea that i'd be invited to speak with you this morning and i appreciate that but i was a little surprised to be honest because allen knows about my notorious weaknesses with the public speaker and invited me any way. i say notorious for meet --

for be the department of public speaking made clear by only a smile -- of small child. i have three little kids into are not so little but my eldest is a little girl when she was in the second to parade the school had a program where you are invited to come into the class to explain what you do for a living. i stood up in front of 257 year-old kid explained what i did. dedicated to promoting economic growth and prosperity through democratic capitalism and limited government. [laughter] i thought i had done a pretty good job. when i finished a little girl walked up and looked up

to say mr. toomey? i just want you to know that is so were speech i ever heard in my entire life. [laughter] my daughter was standing right next to us and over heard this and she's said daddy, don't listen to a word she said she just repeats of all the other kids are saying. [laughter] >> you have been warned but i will talk with icy to fundamental challenges that we face and i will warn you right now these are very serious challenges in not addressing them as they should the first is the of

sustainable fiscal path that can only end in disaster if we don't change the course and the weak economic growth we have been tolerating which is inexcusable. first where i see where we are of the first of these with the fiscal policy, we had a series of years with disaster is deficits that actually reached 10% of total economic output. we had a recent improvement of those levels but they are on their way back to growing deficits and larger deficits, the temporary reprieve should not put us into a sense of complacency and it is already doing

damage in my view. when they borrow the money now to lend this government money about 75 percent of our total economy is growing. this is satisfied reid have been with the debt to gdp ratio is around 40 percent while it argues 75% not so much looking at the history of the country i know always occurred when we were fighting very expensive for us.

and to cause these bikes the revolutionary war, world war i, a world war ii, the civil war era and also in recent years but they have not been comparable in van terms of cost. in the past, we have run up significant debt and of those haven't hit the return to the budgets usually a modest deficit and that then debt would decline. so they would go back down. what's driving our deficits

today what causes the projections to look so gramm is the entitlement programs that drive'' we have today in their fundamental facts of the big program social security, medicare and medicaid growing faster than the economy. they have been and may accelerate but indisputably growing faster than the economy cannot grow faster for long since it has to fund the economy. so they will devour everything in their path of we don't do something. how much the composition has changed in recent decades. in the '50s from world war

terror total defense spending was 10 percent of gdp. if you add that the entitlement programs together that accounted 2.5% gdp. the ratio of defense spending is four / one. in 2010 defense spending declined 4% of gdp if you add up the transfer programs it was 13.5% gdp. defense and entitlements plus transfer a ratio of four / one a massive change in the composition of the federal government with nature of spending.

with the implications of the work ethic and incentives to work it is not sustainable. it is simple arithmetic. the social security program all by itself and mandatory health care and interest on our debt with those three things in the current budget window will consume about 80 percent of all revenue based on decades of historical numbers. this is just not possible. what are we doing about it? what about washington? we refuse to address this in any serious way as the government but i would ask you not to paint everyone with the same brush.

to their credit in the house we have seen the idea after idea you don't have to agree but you do have to acknowledge that the house has managed to pass budget resolutions with profound reform proposals. but not the senate. i signed up for the budget committee because i wanted to try to participate to play a role to address this fundamental challenge. imagine my surprise rigo three years in a row without a budget resolution. routinely no appropriations process that which we can consider funding the government. the president releasing a budget today apparently. i have not seen it today but

the drops any pretense of reforming their recently we had made things worse if you include mandatory spending where most of the entitlement spending occurs. we quadrupled the spending in a little over 10 years. not because americans are not the principal driver it is to change the definition and change the eligibility. i don't think it is the case one out of six americans cannot feed themselves but it created enormous controversy when after quadrupling spending, we ended up with the farm bill that cut 1% from that level.

flood insurance is another example. $24 billion in the whole. we have a federal programs systematically subsidizes insurance for residents in flood prone areas. the idea of a few years ago was to reform the program to put on an actuarial basis requiring everybody to pay what it cost. the reforms passed and signed into law we would gradually phase in to be a sound footing progress soon as they were kicking in what has happened? the senate voted to walk away and stick the way it has been put there is serious danger the house will do something similar this is a fundamental act to

do with the central problem that we have. you know, what they say something that is unsustainable it cannot go on forever. this fiscal imbalance we're living with we're tolerating the question is how does it end? and i will continue to fight as aggressively as i can but we still have some time we still a have the luxury of a little bit of time and that allows us to implement the reforms that we need in a careful and gradual way to minimize disruption. that is one way. the weather is to keep pretended we don't have a problem. business as usual. then one day an outside

force whether a disruption in the bonterre currency market will force us or it will solve the problem itself. that will be a way that could be sudden, drastic sudden, drastic, very, very painful and disruptive. related to this is fundamentally all problems are easier to solve with strong economic growth. cultural problems, even international even if you deal with that in the context of strong economic growth. very meager growth and what of the most disturbing part is the steady decline because that has troubling

implications for future growth. >> one of the causes is the failure to deal with the fiscal problem. so at some level to have the fiscal problem is has not ended well for other countries so it has to have a chilling effect to take risks and growth the economy. but the more direct problem with stronger economic growth is the massive wave of regulations the avalanche that has hit us. nothing since the 1930's and as its effect. a few examples dodd/frank in my view codifies the problem we were suppose to be

addressing turning big banks into public utilities, stifles innovation, the burden is imposed on all kinds of banks. we are a country that used to routinely go to community banks to provide financing for small towns across america. it would not be unusual we would launch 100 or 200 community banks. we but five years without wanting a single new community bank. it is a problem when it does not occur to anyone anywhere in the country to launch a single bank? because this interest-rate environment and the regulatory burden is not viable.

the epa is causing enormous headwinds shutting down coal-fired power plants that shuts down the utility for our ability to produce with peak demand and shuts down coal mines and even if you are not in the coal-fired power business come on lot of folks are into heavy industry and they describe the epa policy is one step by 1,000 permits. in general we have too much subsidization of energy whether windmills or companies like solyndra we don't take advantage of free could or should of our natural resources. but the giant shining example of regulatory overkill in my mind is obamacare. it is fundamentally flawed

based on the notion in part of the payment system loaded with disincentives to work to implant and very problematic. if you take the combination of the regulatory avalanching and the policy i ask myself is a wonder the economy has grown at all. even at 2 percent we should be impressed considering what the economy is up against. now that i have so blatant your tuesday morning. [laughter] it is encouraging that despite all that we have done this economy manages to eke out some growth it shows an amazing resilience that is in the american dna and

in our nature for all the headwinds, that is why i think if we could get policy , economic growth would be amazing. we could be poised to have a terrific break out in growth and prosperity if we would get fundamentals right. look at the advantages compared to the rest of the world. for all the flaws our infrastructure is amazing the most creativity all the major industries we're the leaders and innovators. of the best trained work force, natural resources that very few others can compete with. importing natural gas ushers

in a renaissance of manufacturing of transformation of transportation. we have these terrific natural advantages that the us to a tremendous economic recovery of three strong growth. but the american people are increasingly viewing this experiment is huge transfer of power from the private sector and individuals to the government. they view this as a failing policy. that is because government is incompetent. if has been proven and the devil out of obamacare of you cannot run a website is this the government there should be trusted to a minister health care generally? i think that sends a powerful message.

i think sued we're likely to have a chance to give freedom another chance. a free market, a free economy and i am excited because i believe the historical cases, but in order to get that chance candidates to move in that direction will have to articulate how is it is an agenda of limited government and more freedom will improve people's daily lives. i think it is clear it will. think about the examples i mentioned freedom in banking means freedom to fail of government bailouts. we ought to reform the code so we can handle the resolution of a large financial institution without systemic problems. we ought to cut back on excessive regulations so

they can re-emerge to provide capital. freedom and energy means freedom to develop our own domestic energy. it will help the entire economy in geopolitically those who have more resources to spend on the other things you need in life than to move in a direction of health care. the government has to catch up with the private sector with value driven health care to better align incentives to richer we are rewarding ever better outcomes and costs. that is what we normally get to route our economy better than we have been. the government is an impediment and to be empowered to make informed decisions.

we can do these things and if we do we can take advantage of the great fundamental and advantage we have of other countries. i am extremely optimistic but we have not been able to get our act together because it is holding back the potential of the greatest history of the world but when i am frustrated reminding myself of the great winston churchill you can always count on the american institute get it right after they've exhausted every possible option. [laughter] we're in the process of exhausting all options. [applause]

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advisors discuss the details in the hour long briefing. >> good afternoon, everyone, thank you for being here. as you know, today we have the dgetentation of the president's >> having the presentationiefi of the president's budget presen director of the office of budget, sylvia burwell and jason furman, and cecilia munoz, the director of the policy and gene

sperling, the director of the economic council. each guest has an opening statement and we will take questions related to budget matters. i will try to direct traffic in that question and answer section. i will have time for a few questions at the end on other subjects, ukraine obviously included, but if you could hold questions on those subjects not related to the budget until after we are down. i turn it over to sylvia burwell now. >> the president's budget that released is a fiscal road map for excel growth, opportunity and ensure fiscal responsibility. fully paid for investments in --

infrastructu infrastructures and preschools. the budget shows the president's funding priority at the 2015 levels that were agreed to in the deal. we believe they are not sufficient in 2015 and beyond. the budget includes an opportunity, growth and security initiative that is fully paid for. it is split between defense and non-defense and it presents additional investments in things like education, research, and manufacturing. building on the model established in ryan-murray, it is paid for with spending cut

and tax reforms. it is deficit neutral. supporting what the president said in the state of the union, there is a series of programs to create jobs. it lays out $302 billion infrastructure proposal that is paid for with pro-growth tax. it strengthens the manufacture base and supports groundbreaking research to fight disease, protect the environment and develop new technology. it enhances the administration's management efforts to deliver a government that is more efficient and supportive of economic growth. and it will expand opportunity for all-americans. it doubles the maximum value of

the earned income tax credit to encourage people to enter the workforce. and makes high quality preschool available to every four year old. and drive workforce training. it will focus on the primary drivers of long term debt and deficits. it builds on the forms of the affordable care act and continues to slow health care cost growth while improving the quality. it will curb tax breaks that benefit the wealthiest. it calls for pro-growth

immigration reform. the deficit has been cut in half under the president's leadership. by paying for the new investments and tackling the true challenges, the budget continues with progress reducing deficits as a share of gdp to 1.6% by 2024. with regard to the issues of stabilizing our debt to gdp ratio that is in 2015 and we start a declining path. the president provides a responsible, balanced and concrete plan that can serves as a guide for congress in the upcoming year. thank you. >> my role is to present the economic forecast that underpins the budget. economic growth will strengthen as the economy continues to

return to the full utilization of resources. that will be aided by the shift of policy toward a neutral stance, gains in housing and stock market health, and further potential for home building. this is consistent with cbo who project a similar pace of growth over the next three years. we assume the growth rate converges to 2.3% growth rate of potential gdp. this, too, and consistent with other forecasters coming in slightly lower than the latest long run forecast by there blue chip panel. in the middle of the range of the federal reserves tendency and slightly above cbo's longer run projection. we project that inflation will

remain low, the unemployment rate will continue to fall, and interest rates will rise. i want to note the forecast was locked in late november in order to give agencies time to prepare. the economy strengthened more in the time since them. gdp in the second half of 2013 grew at 3.3% annual rate exceeding the 2.4% forecasted at the time. and 0.6 percentage points in the unemployment rate exceeding the blue chip expectations. as a consequence, we would be projecting a higher starting

offpoint for real gdp and a lower unemployment rate in 2014. overall, however, they would only have a small impact on the median budget control. we will have a review this summer that will incorporate the positive and negative surprises since the budget forecast was finalized. we will go to cecilia munoz with with that. it will not surprise anything in the room to hear that the child want to insure every child has access to a worldclass education. this budget is reflecting that starting with the president's vision of bringing high quality preschool to all four year olds. it is requesting double the mount for preschool development

grants to help states get started and enhancing the programs. the preschool initiative is paired with $650 million to support head start and it will boost toddler care for a hundred thousand children. and it included the race for the top which is a program that will encourage adopting an approach on closing opportunity and achievement gaps. it includes the high school redesign. an initiative for projects based on real life instances. and there is another initiative aimed to help teachers use

technology in classrooms affe. it reflects the president's vision with higher education particularly on access, affordability and completion. funding pell grants, launching a drive for reform and supporting invasion through a first in the world program that will reward colleges for taking on strategy that drives done the cost and drive ups the quality. i want to flag one additional issue outside of the educational space. this is the one of the elements of the growth initiative called the climate resillant fund. the president talked about it on his trip to california. we take seriously are state, local and tribal governments who

are engaged in work to prepare planning for the impact of climate change including the extre extreme weather changes. this includes investing in research and unlooking data and helping communities prepare and funding infrastructure that will help communities better prepare for the effects of climate change. with that, i turn to gene sperling. he is going to be greatly missed when he returns to los angeles, i would like to say that. >> this is a pro-growth and pro-opportunity budget. it creates more demand in job growth in the outset when we need it, makes more room in the budget for things that invest in the future and growth and

product and fairness. and it is a pro-growth budget it because it has sound initiatives that should be alive for consideration by those who want to work together for economic growth. the high school design is one. and one is, as you saw, the president is putting forward another significant expansion in the earned income tax credit. the proposal that you heard discussed that we put out details yesterday on would be the first major expansion of the earned income tax credit for people without dependent children since 1993. it would address so many policy issues people have raised from

how to encourage younger people to work, help people with disabilities get back into the workforce and ensure more people with the combination of the earned income tax credit and minimum wage don't work full-time and live in poverty or raise family members in poverty. the president says this is an important progression. 1.4 million americans were being pulled out of poverty because of the earned income tax credit 20 years ago. today it is 10 million. that is one of the major progressive achievements in which the president has furthered in the 2009 budget and extending them in 2010 and 2012 up for the next five years. he calls for them to be permanent in his budget. this would double the earned income tax credit for childless

adults. it would both increase the amount. it would keep the phase in longer so people up to $18,000 would be eligible for this. in term of impact, 13.5 million americans would benefit. 5.8 new million and 7.7 million would get a deeper credit. one specific example: if you are right at the poverty line for an individual, that is $11, 670 you would get $293 and under this proposal you would get $974. it would be four times larger for an individual right at the poverty level. this concept has bipartisan support. and for those who are serious about not just talking the talk,

but walking the walk on reducing poverty and helping low-income working families, they should support the president's initiative on the earned income tax credit. secondly, the president put forward a job compromise on corporate tax reform. it has the same elements. it is revenue neutral. 28% rate, 25% for manufacture, revenue tax. but has $150 billion in temporary one-time revenue that comes in. what the president suggest doing with that $150 billion is putting it towards the highway and transportation reauthorization. $63 billion to close the gap because the gas tax doesn't

cover everything and an additional $87 billion that would allow $22 billion more a year for jobs, fixing things for maintenance and investments in the future. this should be the type of proposal that is alive for discussion. chairman camp in his reform devoted a similar amount of resources to highway reauthorization. this idea should be live and well. and third, in addition to the proposals mentioned, the president puts forward in here on the job-driven skills agenda. the skills needed to get people the jobs that are open that they need that will be open. the proposals are based on solid evidence with bipartisan support. $2 billion on an aprinticeship

fund and making sure people can connect to jobs and have labor protections. and third, dislocated worker and long-term unemployment. we reformed the trade adjustment program and existing worker program into one simple program that is clear and reformed. he would increase from 533,000 to over a million to people that could get services trying to find a new job and a $4 million fund for private-public pa partnerships to the long-term unemployment. and also giving credits for

hiri hiring high-risk youth or native americans or other minorities. reform brings forth more resources to be used well. we are here for reform. >> we will go to questions now for our four pasticipants tod-- partticipants -- >> we are predicting lower growth after 2018 from the baby boomers and slack labor market. do you agree with that? >> i would describe our forecast as broadly in the same neighborhood as cbo's. the difference between the two forecast is much smaller than the uncertainty that both cbo and the administration face in

projecting future economic growth. if you look over the next three years, we are both projecting an average annual growth rate of 3.3%. after that, as you said, cbo is belaw us in terms of potential forecast. the blue ship is above us at 2.4%. federal reserve is 2.2-2.4% and we are at 2.3. so there is a range and the differences are much smaller than the uncertainty all of us face. >> question, zack? >> discretionary spending is implemented at the lowest rate in 50 years. i was wondering if you consider that an achievement or failure? >> we think the proposed

president's budget is the right level over the ten-year period. we believe they are the correct level. i think it is an argument per why the president's budget as proposed and the levels we proposed in discretionary spending. >> you listed discretionary totals and are those fund dollars or are those not included? >> the totals are what we would do under meeting the 15 level of the ryan-murray agreement. >> there has been debate on whether the affordable care act is bankable savings and health care cost over the long term. can you describe how you calculated the long-term

affected of the affordable care act and aca in terms of deficit? >> those estimates are done by cms. they are not estimates i have done. but we have done the advisors and that is consistent with the way the cbo and administration updated the baseline cost. you have seen three years of very low health growing. if you look on a per beneficiary bases, medicare growth has been 0.0 percent and medicaid has fallen and the economy doesn't have an impact on medicaid. people debated if the recession caused the slowdown and i think anyone would argue that is the major cause in medicare.

policies in the affordable care act reducing the cost and quality, and underlying changes in the structural system. and you have seen the health expenditures assume the effects will continue and result in lower spending in the future. >> the cbo is predicting the deficit, and how much health care factors into the that? >> policy is the biggest difference. you quotes policy. the president's policy reduced by 1.8 percent. the deficit is better with reduction and that is what we are showing.

if you didn't have deficit reduction, a budget baseline would show that. there are other differences, but on the revenue, not the spending side mostly. we include aca because it is the law of the land. >> this is for anyone: do know of the budgets very from occurring law apart from the tax provisions or extenders? >> well, obviously, we have a set of proposals in there. one of the places where -- that is assumed in our budget is that in the 2010-2012 budget, the president extended his increase for the refundability in the child tax credit, increases in

the earned income tax credit for families for three children or more, and the marriage penalty. and a portion was refundable as well. in the budget agreement, those were extended for another five years, through 2017 and we would expect extended permanently. we believe that would be a significant tax increase in those years, if they expired, for well over 20 million working low-income households. we have a range of tax proposals in the budget. many have been there before. there is a couple new ones. one of the way we pay for the earned income tax credit is to close a loophole where people in pass throughs who had materially

involved or work there try to take income to avoid payroll tax cuts, and that is becoming a significant way with carried interest of paying for the earned income tax credit increase. so that is a deficit neutral we we could provide that help. the 13.5 hardworking americans and do so in a way that is revenue neutral and we would be closing existing loopholes as opposed to adding new taxes there. but, of course, it includes the basic provisions the president had the last few years and that is part of a balance agreement in terms of reducing expending for high income individuals and

closing loopholes for overseas tax evasion and other measures. >> yes, sir? >> what would you say to democrats on the hill and federal employees complaining the 1% pay increase isn't enough coming off a three-year pay freeze and isn't keeping up with inflation. >> i would respond with the importance of the federal employees and workforce and the respect the administration has and the recognition it has been a challenge number of years as you and i discussed at o and b. we have felt that deeply. i would say there are provisions in previous budgets with regard to relationship to federal employee pensions and we are pleased we can do the 1%.

the last thing, is the budget levels agreed upon, the 14 and 15 levels are the same when compared to together. when you account for things with natural growth, such as veteran's benefit in the non-defense side, you see how tight the numbers are to produce a '15 bunnedget. we do this first and congress does it second. there are tradeoffs that have to be made and we believe the federal employees deserved an increase and one percent is what we felt we could do. >> could you discuss the

training and development for federal employees and reducing spending on conferences and travel? >> i don't think in terms of the relationship between the two things, the office of management and budget with gsa and others, have been a part of trying reduce conference spending and that has occurred over the last several years. with regard to training and the federal workforce is part of thinking about how the overall government does better management. you will see articilated in the volumes, a discussion of four major areas of emphasis where we want to build on and they are in affe effectiveness, efficiency and things like shared services

where you would see the department of housing and developing using services done at treasurery because they are the best. and the third is making sure we promote management of the government that promotes economic growth. and that is permitting. the forth area is people. we need to think about how we think about helping our workforce be the best it can be. so there are investments we are doing in training the federal workforce. that is how that piece fits into the broader picture. we don't consider it related to the conference part. we consider this a piece of a bigger overall management agenda that is emphasising -- emp sath.

>> can you comment on the balance between tax cuts and infrastructure jobs in that the congressional research report said direct jobs are four-time as effecive in creating jobs and the jobs act would create 1-2 million and drop unemployment so why value tax cuts versus infrastructure jobs? >> a lot of the budget isn't on short-run support and the types of multiplers you are talking about. but it is about how to expand the capacity of the economy. in that respect, infrastructure is important. on the revenue side, one of the

most important things for growth isn't something that cost money or raises money, it is what is neutral over the medium and long-term system. it will generate money in the short-term but it will help simplify the tax system and ensure that capital is being allocated to its highest rate of return. the other measures that include higher revenue by cutting back on tax expenditures. that is part of the reduction to help ensure the economic plan is sustainable over the medium and long run. >> gene, i wonder if, as a parting gift, you would give us your most candid assessment when

you think the most recent budget talks will take place after this? do you expect next year? >> you couldn't wait until thursday to ask that? [laughter] >> i think that what you see in the vision of the president's budget that he has put forward, and this is going to zack's question as well, is a lot of what is most important for growth and opportunity, isn't the level of deficit reduction, but the composition of how we get there. and you know, the vision of bringing the deficit down on a sustainable pace for long-term is to make sure we don't crowd out private investment. it was designed to make sure we

are not crowding out the public investment in the future as well. if you let the budget go at the levels it has with the sequester, your deficit goes down, but it does so at the expense of crowding out the investment and the things the president, and many people believe, are most critical for the future. you may not have the greatest group of people that will be better because they got early childhood education put i think that what you saw in ryan murray and what you see in the president's agenda is to see that we have to have a very important discussion about what is the composition of our budget in terms of how much we invest

in the future. and the president is putting an extra $56 billion above and fighting because he is recognizing it isn't just the level, it is the composition and that is what has made us great, which is investing in the young people and productivety of the fuc future. my hope is people on both sides of the aisle realize the importance of that going forward. >> there are $650 billion in revenue taxes. you talk about who is feeling the pain, who is spending more to put this in place? >> first, you do have in the budg

budget, tax relief for hard working families that will be continued. expanded for individuals who may not have dependents like in the earned income tax credit. there is a proposal to increase the dependent care credit for people with a child five years and under. the relief goes very much to working families families and in terms of where the revenue is we think they are reasonable efforts to decrease tax expenditures for the people that are the most fortunate. but there is questions, that many people raised, and that is

whether a middle income family gets a 15% deduction or credit when they do things, and then somebody who has significantly more income can deduct three times more than that. we may think of that as being upside down. the president's proposal to have there be a limit on tax expenditures for the most well off raises the most significant part of the budget. the president has long proposed that. if you can remember back to the winter of 2012, the speaker of the house said one could raise $12 million with this. making the tax code more fair and progressive will be better for people trying to invest in college and get up the ladder

and ask more from the most fortunate families. the budget is about tough choices and how we invest in the future that is good for growth, productive, and ends up benefiting everybody, including those with a few less tax expenditures. >> the only two brief things i would add, the bulk of the revenue would affect the top 1-2 percent of taxpayers. and that is proposed by a range of economist on both sides. all of them have talked about limiting the value as a way to

address the deficit. and the buffet roll is the second and that is only on households over a million a year. >> can you talk about how you get interest in consideration during something they feel like they have seen. >> there are two parts. one is what is new and the other is how do you get the ball moving. we brought the tax together in a way and we saw a republican bringing forth the camp tax and we saw that approach. that is new, but showing the

bipartisan. and something you have heard republicans, whether it is ryan or rubio discuss, it is work-based. the opportunity, growth and security initiative is new, too. one thing that is important to recognize in terms of the question what does this mean in terms of getting something done. i think it is important to reflect to the omni bus. if you look at that and tiger grants and administration proposals from last year, you saw double digit increases from sequester. you saw language put into the omnibus that will allow us to make progress on the state's

ability to start providing universal preschool. this budget is now in a place where we proposed what we would do, and now making sure it will influence the choices made throughout the appropriation process and forms the debate and i think those are two important things we tried to construct the budget. >> i would add there are some things that have been in the budget that were not passed but never rejected. they may not have gotten the attention. the high school redesign proposal is making the cover of national news magazines. there is increasing support with

the business round table and council for those proposals. the proposals for more job-dr e job-driven training. we had a debate on ui not going the way we wanted. but we saw republicans talking about connecting community college and how we should deal with long-term unemployment. the unemployment funds are new proposals in the budget. there are things in the skills part that were never rejected but there is a greater emphasis on them now. >> corporate tax reform is something you talked about. and how would you see the united

states companies foreign operations and overee -- oversea -- investors being effected by this? >> among job creators, there is great support for the combination of a new business tax reform as well as more infrastructure investment. it doesn't seem like a controversial issues when you hear from people making decisions on where to create and locate jobs in the united states. i think what the president's proposal, to reduce expenditures, have a lower rate, as low as 28% or 25% for manufacture, they have a minimum

tax on foreign earnings that would take away significant incentives to play the various shifting profits around the world. the game is going on and hurts public trust and also takes away a lot of activity that should be focused on adding value and jobs. people under there are provisions with higher savings. and there are revenues that come in the first ten years that are not sustainable. the idea of that being used for infrastructure investment, which has wide support, is one that is right. the time has come.

i think the fact chairman camp took the same approach should be a positive sign this is an area we as a country should come together. whether we do or, i will not try to predict. but we should. >> i would like to ask a question about ukraine and the situation over there when you get there. isn't there a budget question in that republicans are saying the administration should reexmine the budget due to the potential ukraine situation? >> i think it is important to reflect there is an agreement that set the levels for '15.

in the president's budget you see proposed today, the president suggested that the 050 account, defense department, and the opportunity growth and security initiative suggests we believe a better place is to have an additional $28 billion. we make choices about offsets about closing loopholes and we believe that is a choice we should make. and in a lot of out years of the budg, the president's budget has higher levels of defense spending than those that are law and those that have been supported and i think that is what we will see when we see the proposals as they come out. the starting point is great. let's all sign on to the president's budget in terms of getting the defense level to the

higher levels we believe are appropriate. as secretary hagel and dempsy pointed to, give us the flexibility so we can modernize the force, provide the training and readiness and the third point is give us the certainty. it has to do with equipment and what proportion of the entire defense budget has to do with people. so certainty is one thing. the president's budget is at hire levels and that is where we need to go. and we said what will the president's budget do and influence, we believe we should be buying back on the

non-discretionary side and the defense side and we should not operate at the lower sequester levels. >> if i could just add, it merits examining the logic of the republican critique you mentioned which says the president on one hand is spending too much, and on the other hand says the cut in defense are too deep when the spending they are criticizing is going half. so if republicans are serious, they ought to support the initiative that would add another $26 billion to our defense budget. >> there was a case you made for increasing the defense budget by $26 billion.

would you accept a proposal in replacing sequestration and not doing the discreatitionary? >> it replaces one for one. defense and non-defense. we believe both are equally important. >> any others on budget related questions? >> sorry. director, i would like to ask you, the budget talks about the details on the wake of the website rollout. can you go to details in terms of what you are planning? i think you talk about more efficiency but any more details? >> we will speak to three

particular areas with reforming the way we do it precurement and delivery. we will focus on making sure the government has the best people as number one. as part of the conversation we had around the health care website and procurement and planning in the place and making sure we in the federal government are able to attract the best talent. and second is how do we attract the best companies in terms of the problems we are working on. and do your rules and approaches do that. that is the second area of focus. the third is the best process and they are both about how you attract. these are all interrelated. the companies that provide the services as well as the processes. how we think through the federal

acquiring. we are working in those three are are areas. >> how does the climate plan react to the initial plan? >> it is part of the common action plan deals with the range of internally policy like investments in clean energy, moving out greenhouse and being a local good governor as we prepare for the change. through fema to help state, local and tribal governments prepare and to include research data and unlocking information.

and making sure we are investing in the right technology that is help water systems for example. multiple parts to that. >> last question on the budget. the ryan murray deal for 2014, shows 1012, fwhbut the budget ss the 1030. can you explain that? >> there are parts that have different technical places. the wild fire proposal in how we do the wild fire proposals is one of the example of the

numbers you see in the budget. to go over the wild fire proposal, we believe the issue of wild fire financing in the united states isn't being done in the cost effective way. on an annual bases, when the wild fires start they end hollowing out the types of investments we need to make in the efforts in the space. they can't do planning and take money from other places. we should be investing. what happens is those monies get replenished at a later point. we think it is better to think about using the disaster relief fund that has levels above. the fund is above the caps. we would use space within that

for a portion of funding for wild fires. that is what one of the types of things that adds to the numbers. so the budget is built. there are things like that which is within authorized levels. >> okay. so we have time for a couple questions on other subjects. >> russia is remaining in cri a crimea -- [inaudible question] >> ukraine's territorial sovereignty must not be

violated. the action taken from russia is unlawful and inappropriate. it is in violation of the number of regulations they have and the 1994 budapest agreement russia signed off on. we don't find that to be acceptable is your answer. i think it is worth looking at what the president said, what the secretary said in kiev and what was said at the united nation's security council yesterday. the mobilization we saw russia undertake and the movement of troops we saw russia undertake, the closing of roads and surrounding of military basis in

crimea, was all done in response to an imageinary threat. there is no credible reporting of violence against ethnic russians there at eastern ukraine and the president or ambassador may clear if there is an issue and protection that needs to be provided to ethnic russians in crane ukraine, the need to go about it the probably way and with we would provide means of protecting the rights of ethnic russians in ukraine.

to use that as a reason to use military mobilization along the lines of russia isn't legit or lawful. >> what was the agreement to sign off for extended peace talk. if you look at the comments made to jeffrey goldberg, it doesn't seem like there is a meeting of mind? >> we are working with israel and you saw what the president and secretary kerry said about the opportunity to move forward and the necessity of the framework of negotiations and that effort continues. yes, mark?

>> putin said he doesn't think the use of force is necessary in crimea. what would you say? >> i would say we are monitoring the situation there and in the rest of ukraine closely. we stand by our support for ukraine's territorial integry and sovereignty. we support the ukraine government that is responsible in the handling of the events of in the last few days. secretary kerry announced a package we want to work on so ukraine and government can deal with their economic challenges. >> putin is denying the forces

in crimea are russian. what is the whitehouse response to that? does the president believe he is putin is being honest? >> the president is very open ability officials when we deal with them including putin. we workwer together and achieve national security aims. when we have disagreements we are blunt about them. this would be one. it is a fact that russian military forces have taken over ukraine boarder post. they have taken over all of the military facilities in crimea.

it is more difficult to advance pretext or threat and have that f fabrication stand. it is obvious the things russian officials are saying that are happening in ukraine are not happening. you, me and everyone has means to varify that fact. our focus is on making the point that russia has an alternative path to dealing with whatever concerns russia has about ethnic russians and russia's other interest in ukraine. ...

russia. is not contradictory. and we urge russia to utilize the path legallyugh available to its international organizations to address their concerns of the ethnic concerns gimmicky is pausing in reflecting taking his comments.p >> also what president putin said. nts. >> is the white house plan to issue any knew directives that will allow health care insurers some additional time to offer

plans that do not currently meet dca requirements? >> i do not have policy announcements regarding that. this time i would refer you to hhs. >> then loan guarantee package as a first order of business, can you expand on any commitments that the president that might happen and whether he has ex plan? >> i don't have any conversations between the president and members of congress to report out. i think that there is ample opportunities and so many members have been speaking about the ukraine for those that they have been speaking to, namely reporters to ask us in the plan to act on a package of assistance to the ukraine which would be an excellent use of their authority in time. thank you very much. [inaudible conversations] [inaudible

>> we do not have criminal investigation rule but to enforce the federal securities laws that wall street abides by the rules floor broker dealers and investment divisors. we don't have cavuto authority but the power to bring the approval of our

commissions against those that violate the social security law. we cannot send anybody to jail but we can assess civil penalties frankly the level of penalties is not as high as we would like him there is legislation to have higher penalties for the to require those to disgorge their ill-gotten gains with the profits that they make and the power to bar somebody from the securities industries so they cannot live another day to defraud again. is 50 minutes.

>> afternoon. thank you for a coming in a moment you will hear from three senior leaders. l of time e budget and quadrennial defense review under secretary of defense and comptroller bob hale who you all know very well. not want to remind you that the end of this mr. hale would like to have a couple of minutes after the briefing is over. deputy undersecretary of defense for strategy, plans, and forced development and from the joint staff and director of force structure resources to meet lieutenant-general mark ramsey. following briefings leaders from the army, navy, air force unmanned missile defense agency will provide further information on their respective elements of

the larger budget submission. last week you heard secretary hazel and chairman dempsey preview some of the key decisions contained within the documents we are releasing today. firmly believing that the key br represents the right strategy to a vin the united states and secure our interest during this historic transition from military. directing that that team define our goals and a fiscally informed manner which enables us to bill the budget that police supports our strategy. the analysis you will hear today the mysteries of the president's budget submission enables the department of defense to meet the strategic interest. this gdr makes clear that sequestration is an and the step will path to the problem of defense. when he and the chairman testified before the senate armed services committee