>> that means you're going to raise taxes $300 billion, does it not? >> those are one time transitional revenues. >> they will come from increased taxes, so you couldn't afford this spending? >> they are one time. and that is why we have chosen to the infrastructure. >> with regard to the interest on the debt, it's astounding to me, your own budget projects, all in these numbers projects, that we would -- we spent last year $223 billion on interest which is a huge sum for which we get nothing. your budget projects that we would go to $812 billion in one

year annual interest payment in 2024. does that not threaten the financial future of american? >> i agree with you, interest payments are not the most impactful way that we can use our dollars, our tax dollars for the nation. that's what we need to be on a path to a decline debt to gdp ratio and a decline deficit to gdp ratio. >> not a way of raising money but it gets no real benefit, right? to pay interest on the debt. >> our budget decreases the amount of interest we will be on the debt by $236 billion. >> the baseline budget that cbo gave us projected that interest would be $880 billion in the 10th year. you project 212. the reason you project less, i assume come is because you've got a trillion dollars in tax increases. >> in addition -- >> but either way, doesn't this

mean we've got to their financial house in order because our future is threatened financially as dr. elmendorf told us a few weeks ago? >> i think as we talk about our fiscal matters we need to connect them to why we care about our fiscal matters and that is to do with the help, the economic health of our nation. in terms of economic growth and jobs. we think in the president's budget we've laid out the path that is the right path in terms of what the nation needs to encourage growth. and at the same time, meet our fiscal responsibility. what has happened in the numbers you're a proponent reflecting, those numbers have grown over many, many years. there is a deep hole. there is a deep hole. >> when the president leaves office he will have doubled the amount of debt of the united states of america, and he will be primarily responsible for at least half of it. the president said in a statement a few days ago, this budget that you prepared for us it quoted come his to the

spending principles members of both houses of congress have already agreed to. that's ryan-murray. it does not, would you agree to? >> i'm sorry, our budget does not adhere to ryan-murray? >> right. >> we do because the documents that have been put up shows for how we will meet those -- >> it does not agree with the ryan-murray, forgive me. >> senator baldwin? >> thank you, chairman murray and ranking member for holding this -- welcome, director burwell back to the committee. as i begun to study the president's fiscal year 2015 budget, i think there's a strong acknowledgment on the half of the administration that we are facing deficits on several fronts and have several varieties. while we are making our way to stabilizing our fiscal deficit, we are also facing and infrastructure deficit, and

education and workforce development deficit, and for research and innovation deficit. and addressing these other deficits will help us out of our fiscal deficit because it sets the foundation, in my opinion, for long-term economic growth. for this reason i am encouraged by the opportunity, growth in security initiative in the president's budget which i think makes the very investments that we need in order to move our economy forward. i do want to actually focus on a couple of issues that are important to me as a senator from the state of wisconsin. some of which we've communicated about in the past. on the positive side, director burwell, as you know i spoke too late last year requesting that the president's budget include coming you plan to address, a chronic problems of siphoning

off funding that is intended for force management and for fire prevention. and instead using them for wildfire suppression. i am encouraged that the president's budget treats our biggest fires as the true disasters that they really are by separating them out from the rest of the force servicemen is bound budget. and i think this is a good first step and i look forward to continuing a dialogue on this issue. it has particular relevance to the state of wisconsin at our northern force did area. on a different note i also want to make a comment of an issue that i was in communication with the administration about, budget was developed, that relates to a specific naval acquisition, littural combat ship. the secretary of defense has

talked about a new vision, a pivot to facing the current day threats and the threats of tomorrow. i frankly believe that this particular ship is very in tuned with that change in direction, that pivot, that we must take as a country. and while i have overall support of the direction, i believe the proposal to truncate the purchase of littural combat ship ships is shortsighted, especially given the direction of this administration. questions, the president's budget states that the race is on to ensure that the next wave of high-tech manufacturing jobs are created and happen here in america rather than overseas. the president's budget calls for the continued transformation of regions across the country into

really global epicenters of advanced manufacturing by funding five new manufacturing innovations this year. i strongly believe in this effort, and i know that in my travels around the state of wisconsin, i can tell you that this is an effort that's been given strong support by private industry as well as public research universities. so can you tell me how the president intends to roll out these next five institutes? how this election will occur and how these institutes fit into the president's overall manufacturing strategy to? >> the institutes that will be coming online, some are in different categories, the defense department has done one come and usda will be doing one. to different areas will be supporting the effort. they will roll out one by one. in the president's budget proposal, you mentioned the opportunity for the security initiative, that is where we would actually expand the number

so you can try to do 45 of these throughout the period of the next 10 years. we think that encouraging this type of innovation which brings together the private sector, academic community and our communities themselves to encourage economic growth is an important part of how we focus on growth and opportunity and jobs for the future. so that's how it is a different broader strategy. >> i know side a couple of seconds left but i want to note that the department of commerce has been an instrumental partner in the growth of water technology cluster in the milwaukee area known as the water council. i hope we can perhaps have a visit from you and others in the administration to see the fine work that's being done there. i'm going to be submitting some additional questions for the record as my time has expired. >> absolutely. >> senator crapo. >> director burwell, welcomed a

couple just in my time to get clarity on some of the numbers as we move through analyzing the budget. first of what is returned to the $56 billion in discretionary spending that senator sessions was discussing with you. i understand the discussion you and senator sessions had. the question i have is you indicated that $56 billion is fully paid for. i just would like to know, to be sure we're clear how it's paid for. is that in the text of increases that are in the budget? >> there are specific revenue areas in terms of what we think are loopholes, as well as mandatory spending cuts. so it is paid for both by spending cuts as well as revenue changes. >> with regard to the revenue changes, the overall totals are missing from the analysis we've got is that if you look at the total number of revenue increases that are included in the budget, what i'm seeing or calculating is about one point a

trillion dollars over 10 years of new revenue, is that correct? >> would not agree with the things that are included, anything could go back and forth on what is included in that number. for instance, things like immigration are counted on the revenue side and has because of the increased economic growth and productivity that is happening. so the revenue immigration is counted i in the numbers but that's not what i think he would consider a policy -- >> is still roughly over a trillion dollars? >> yes. around a trillion. >> would you agree that leaving of immigration revenue, that there's roughly at least a trillion dollars -- again roughly, of new tax revenue in the proposed budget? >> yes, and we would say that some of that we believe is revenue that relates to closing tax loopholes, that there's been bipartisan support for. >> i understand there's a lot of room for reagan discussed. i just want to get the numbers

right. by the way with regard to the projected growth in the immigration reforms, i call the dynamic revenue. in other words, growing revenue as a result of growing the economy rather than just a straight tax increase. would you agree to? >> no. in a way that cbo actually scored immigration. what cbo did was they scored a title of the bill, every specific title of the bill that had growth and population. while they did not, they did supplemental efforts in terms of the scoring that would be ready to what you would call dynamic scoring. i think it's a distinction. >> something i want to get into with congress and with the administration and get to using dynamic scoring. but that's not what i want to use the rest of my time on. you also said you had in terms of the offsets, mandatory spending cuts. i believe your number there is $402 billion in reductions in spending, correct? >> that is only for health care

changes. so that number does not reflect other mandatory changes such as those that are used to pay for the opportunity for growth and security initiatives, things like crop insurance and other things. >> do you have a rough estimate of what the total would be for all mandatory programs you are accounting? >> i think what we're trying to do is put together, i think the way we think about these spending numbers which is what you're getting to in terms of the cut is what we think about is in terms of, there have been $3 trillion in deficit reduction from 2011 tonight as a baseline, baseline referred to in a number of others comments. when you add hours, the number goes to 5.3 trillion. when you take that number, the revenues to spending ratio is about to the one. >> thank you. i appreciate that. i want to go back to the 402 billion for health care mandatory spending. i have a problem seeing hate it there but i think i figured it out. i want to be sure i understand.

did you not assume that if not assume that if the was admitted to doc fix in the baseline? >> we did assume that sgr is in the baseline. >> in my opinion that's $110 billion figure approximate the in my opinion, that's an assumption that is not valid or at least it ought to be paid for or offset in the budget. and would reduce that $402 billion claim you're making for health care savings. and in addition does not the budget proposed to turn off the medicare sequestered from the budget control act? >> we do turn off the sequester. >> that's another $140 billion in new spending. it seems to me both the cost of the medicare doc fix and the cost of turning off the sequestered in the budget control act are expenses that we will have that are not offsetting against the $402 billion figure you're talking about. am i saying that ron? >> the way we think about those numbers is in terms of the

overall. i think what we're all talking about is trying to get to decline deficit. i think that's the point we've made, and made continually. when you get to those overall numbers, the deficit as a percentage of gdp goes down to 1.6%, and as a percentage in terms of the debt of gdp we see a decline. in 2015 we stabilize in the we decline to a number of around 69%. >> my time is up but i just don't see the $402 billion figure being acrid in terms of health care reform if you offset the other expenditures but we can talk about that at some of the time. thank you. >> thank you. senator warner. >> thank you, madam chair. thank you for the opportunity. director burwell, good to see again. i'm going to move the discussion over to an area that he think we're all going to have to grapple with.

i commend the president are making a request $450 billion over four years. how we do that, whether it is installed in rebate region or another item we'll talk more about. i believe that a permanent funding source of infrastructure, we are still struggling. we rely on a declining revenue source in the gas tax and there's not a lot of appetite to grapple with that but it's an area think needs a lot more examination. one of the things the president mentioned in his budget i want to try to share with my colleagues is with record low interest rates, it is i think would be a real mistake if we didn't take advantage of trying to leverage private capital to help support infrastructure. while the president in previous times had proposed an infrastructure bank, that didn't go too far.

i appreciate the fact the president has restructured part of this proposal and is talking a more infrastructure financing authority, that, for example, i've got some legislation with us by republicans and cosponsors, another three looking at quite a bit. it would recognize that we ought to leverage private capital and infrastructure that would not include energy it would focus on road, rail, bridges, water, transmission. it would have private capital take first dollar laws that would require that any project it would be financed would have to be investment, a more conservative version of what it would put out proposed early. and again i mentioned start with five republican cosponsor, five democratic cosponsors, a number of folks were interested in it. this would not replace to the. it would be a supplement.

we've got a major project in virginia that just received kids yet financing. it took a year for dod to make that assessment to the challenge i'm trying to leverage private capital into infrastructure is, one, tifia is a great initiative but it's not a career path. we need long-term capital that is taking capital. with lots and lots of american pension fund dollars are going abroad because there's not enough projects or to finance. there's no financing mechanism. number two, we need that backdrop that lowers the interest rates, 200 basis point interest rate saves 30 or $49 on a 20 year, 30 alone. three, unique expertise to concentrate to be would have on the public sector cited billy to go toe to toe with wall street. there's lots of public-private initiatives out and around the states these days. some are good, some are bad deals perhaps.

this is more commercial than a question. i apologize, but say that as we come upon highway trust fund challenge, around labor day, that ever sucked a financing authority that would be initially capitalized at $10 or only scored 7 billion, it becomes self-funded because of the keys that are charged. and while not a solution, i don't want to oversell because it doesn't replace the need for a permanent funding source. but let me also make clear that this is also something that is extraordinary viable to smaller states because even if you have a $39 water project, you still might have a college, private financing that could be part of that. i would similes i am glad the president has included decided in his budget, and just wondered if you might want to comment on the? >> i think probably the biggest comment i would have is the

overarching importance of infrastructure. this is one piece of an overall approach to ensuring that we defindofund our infrastructure. i think funding for infrastructure has a number of dimensions to it. in terms of in the short term, the job creation it can cause and create right now in terms of projects that are ready, moving does. and actually fixing things on the ground that are in need of repair across all sectors. you mentioned across all sectors which i think is also very important. he other thing important is us investing in our economy for the long-term. a strong infrastructure, our manufacturing base, these are the kinds of things i think we have to think about. not just today but they are the investments we need to put in place so that 10, 15 years from now we have the things in place that we have an economy that is competitive having come from the private sector and the company that uses those roads every day, the wal-mart fleet is out every

day. so these are important issues for the overarching economy. i would just second and emphasized the importance focusing on this is an important issue for jobs today but it's also an important issue for us to think through the water. >> if i could have 10 more seconds. i want to say i concur because i believe this adds to our deficit. it will cost us more later than today and not to take effect of these record low interest rates and to add to what senator sessions said i want to commend chairman murray for her good work on the budget. we bought ourselves a couple years but 17 from the and that, at $120 billion a year of whether you view it as taxation or mandatory spending, that's the creation of two homeland security departments each year with a 1% interest rate. one of the things we do, have to come back to after this to your budget is entitlement reform and tax reform. thank you, madam chair. >> senator johnson. >> director burwell, welcome back. thanks her testimony and also

thank you for spending some time over the last year trying to work with us, with me, trying to find the problem and trying to look at areas of agreement. i want to focus, understand a little more about the difference between discretionary and mandatory spending in the proposed budget. i want to focus on 2015 just so i get this, a good understanding. the figures i have is you are proposing in $2153.920 of spending were as the cbo baseline would be about three points $78 trillion. we are increasing total spending, total outlays by the $118 billion over the cbo baseline, is that about right? >> i think one of the things that we want to look at in terms of why and what this increase are or how things are care for whether those are fees or its big which is always a problem. so anyway, i guess the question i have, $118 billion, 56 billion

increase indiscretion or spending, leads about $68 billion in some way, shape, or form of scoring and mandatory spending. the question i have is, is the president or are you addressing the two-thirds of the budget looking out 10 years in terms of mandatory spending, in terms of reforming any of those types of programs? what i'm seeing is an increase in mandatory spending bill your claim $400 billion savings over tenures in health care spending. >> the mandatory savings do, as one, when they grow. those savings in terms of those types of mandatory savings when they are structural as we've had the opportunity to discuss versus the ones you want because they grow -- >> so what structural changes are you proposing? >> in terms of the -- just the implementation of the affordable care act when the cbo scored those numbers, in the second decade of those number's would be a trillion dollars. you're starting to get into that in terms of that we moved from

2010 saw budget when it starts to get those. the 400 doing is within the window. of changes we do to medicare, medicaid, in terms of reducing those overarching health care costs. >> we are getting really hard wrenching e-mails and letters from our constituents. their premiums are doubling and tripling. they are making hard wrenching decisions whether they have to quit a job so that income is low enough so they can qualify the because increasing premiums. specifically mentioned health care spending is coming down because of the affordable care act. can you point to one thing that is causing health care spending to decline because of the afford with direct which just kicked in? >> we've seen some the changes in terms of some the things have been put in place in terms of incentives and spending in the medicare space but also we've also seen both a call to measure but it is a cost measure, 130,000 fewer readmissions are

occurring because of some standards that have been put in. >> okay. as you are well aware, we were meeting over the year, i was with the concerned about a 30 year budget window because we really have a demographic problem of a given generation, retiring at the rate of 10,000 people per day. had to look any further in terms of your problems we're facing? i know we could have come to agreement in terms of what the 30th deficit would be. have you given any further thought to that? >> one of the things we think about those, one of the most challenging and you see in the kenya winter, the question of uncertainty when you get in the out years in terms of -- >> understand. >> one of the things i think that is most challenging about those out your numbers as we know what effects these dramatically by the underlying economics and whether it's the growth rate, interest rate, and the level of uncertainty. we'll focus our attention on trying to get the problem

contained in those tenure windows. continue to think about the after windows because that's when some of these very important costs, today. one of the things we do know is a demographic bubbly mentioned in terms of that social security, in the tenure windows we are in the middle, some of the height of that. hopefully that will start to combat. >> speaking of social security, that's probably the best map we have. we are looking between 13 13-$15 trillion. versus payroll taxes being collected. that's pretty tough numbers to look at in social security. the latest alternate fiscal center, when you take% of gdp and cover those $2, a 30 year deficit of $127 trillion. those are way larger than any projections we're talking, certainly in our discussions. talking about social security because i try to get you to answer this in your confirmation

hearings. the trust fund holds about $2.620 worth of bonds, you respond, right? >> in the treasury has to $.76 trillion liability because of those bonds, right? you consulted the federal government, what happens to the asset versus the liability? for the federal government that nets to what? >> i think the question is whether those numbers are numbers that is net. in terms of, if one takes a balance sheet and an income statement, you don't -- the numbers the way the numbers -- with the trust fund does is represents those claims in what has been taken. what the unified deficit does is represents what we owe. both of those are relevant, important part of transparent representations that are important. >> omb's publication process of that transaction nets zero.

i would refer you to dr. elmendorf jus test when wooy admitted he had an asset offset by liability and that nets 20. thank you, director. thank you, madam chair. >> senator merkley. >> thank you very much madam chair. talk about unified budget, i'm looking at the budget total chart that someone 63 of your book. do you have your budget? >> which table? >> it is a table s-1. just to be clear, this table includes social security trust fund embedded within it, right? so as we look at those numbers, there's not some separate liability or concerned that's on top of these. it's embedded inside these numbers? >> yes. >> as a look at 2015 and we projected a deficit of $564 billion, deny that compares to the simpson-bowles like path, the bipartisan plan that would have, what we would've had for

deficit in 2015? >> i don't know the specific number within simpson-bowles, but within simpson-bowles a number of the actual numbers and presentations are incorporated within our budget. one of the differences, and so much of it is embraced so i think they haven't scored there's against the new baselines we've seen so don't know the exact number. i think it's important reflect that there are places where we have a number of similarities. one place we do have a difference is the issue of defense. i think you know that in our current budget, we replace sequester on the defense and nondefense side in the out years. we have the growth initiative this year. >> i'll follow up and do those comparisons. it's helpful because we have a bipartisan. i don't think we're that far off from what was anticipated. if we look at your projection for year 2024 in that same

chart, we basically see the debt held by the public drops to 69% of gdp. this has been a conversation in this room for year after year since i came to the senate. the fact that we have to cap that debt as a percentage of gdp in order to avoid traveling into a decline spiral that would endanger our economy, particularly given the risk of potentially higher interest rates. what you're presenting here is a plan that has addressed that and started to bring us back down in terms of our data as a percentage of gdp. >> that's correct. and is in line with simpson-bowles. the numbers that simpson-bowles, rivlin to mention was about four trying dollars number in total but our budget produces but over 5.3 trillion deficit reduction so we're in that ballpark. >> do know interest rate is assumed for the 30 year treasury by the end of 2024 period?

>> no, not the exact number because the interest rate assumptions are on an year by year basis. but those interest rates assumptions are in line with the fed and basically the blue-chip in terms of our interest rate assumptions. >> appreciate that. i would be interested in running some sensitivity to affordable interest rates because it's hard to predict. one of the things we've been concerned about is our exposure if interest rates do go much higher. some of the crises in the world have kept our interest lower than we anticipated but maybe the world will be doing better and we won't be so lucky down the line. that's why i was curious about that point. i want to turn to the investment in infrastructure, the inclusion of $302 billion transportation and rasterization and the natural -- national infrastructure bank. the multiplier is a high multiple or in an economy that has a shortage in construction projects currently. i just want to applaud that.

everywhere i go in my 36th town halls every year, folks are concerned about the state of infrastructure, whether it's the fact they are a local, small port needs to be dredged or local interchange needs to be expanded to get on the freeway were so on and so forth. it is strikingly of concern to me that europe is spending 5% of its gdp on infrastructure and we're spending about 2%. so thank you for including a vision for increasing our investment in infrastructure. and similarly the importance that's placed on manufacturing in this budget. which like to comment on that? >> yes. as we discussed before, the importance of manufacturing and promoting manufacturing institutes or hubs that will help develop economies in local areas as well as the technology that will help the u.s. are being a leader in this space. and so right now the plan is

hopefully through implementation of the 15 budget levels that you see presented in terms of meeting the ryan-murray level, we will have an additional four and then hopefully an additional one in 16 but as part of the growth initiative. we have proposed an additional funding that would give us to 45. in addition in the manufacturing space, the importance of the r&d tax credit is something we also thank the permit extension of it will be an important part of promoting the economic growth. >> you talked about manufacturing research and promotion center to how many located in the state of oregon? >> it is a competitive process as reflected earlier. >> thank you, director for your testimony. >> thank you, madam chair. thank you for your testimony. i'm going to be a bit more specific than some of the others have been because one area i have been interested in and worked in a lot was this area of preschool.

of course the president has proposed a preschool for all initiative to provide all low and moderate income for your old with access to high quality preschool. we all agree that funding invested in early education programs save the taxpayers later on. for a long time the federal government has been doing a lot to increase access to these important programs. and they begin the war and poverty in the 1960s and grew to 119 programs. i think at the present time there are 69 programs, and those programs have more money dedicated to them and we dedicate to kindergarten through 12th grade. now we are proposing another program. there's been a government performance and results act that isn't very well enforced. it's supposed to be enforced by the administration. that's what each agency in each

one of these programs says what the going to do and they evaluate how well they do it. many of them are failing. what it used to be education programs and we're paying for its education programs, are now often babysitting programs. there should be a difference in cost between babysitting an education. when i was chairman of the health committee, we studied these programs with senator kennedy and i were able to eliminate some of the overlaps and duplication, and change the course of some of the programs. there's still 60 programs out there. was there any effort in your budget process to eliminate any of these other programs with the

presence proposal be duplicative, head start or block grants or some of the other programs that wer were authorizn no child left behind? maybe even the dispose education act? was there an attempt to eliminate some of those funds? >> a couple of points. one is modernization which is something that also i do, and for that and i'm glad will be submitting as part of this budget cycle, the goals. this will be part of the imitation. when i was here before, since again backward looking back there's modernization. we will be submitting goals. cross agency goes as well as department goals. step forward, a lot of progress in that sense i was you before. need to continue on the. i believe it's important tool we need to make use of in terms of management. with regard to the specifics in the area you are speaking to in terms of head start, preschool and toddler and preaching, yes. some the things we have considered. one of the things we're doing to

improve, you described i think aptly that there are some childcare programs that are more babysitting, but not focus on learning and skill development. as part of this effort you will see these efforts not creating a new program that connecting to early head start, so you build off existing programs. so the issue of trying to make sure that we are outlining the work, the are a couple things we're trying to do. make sure you're not creating too many new things, do things with the existing authorities but also line with the state because much of his work is done in the states and we want to to make sure it's a topic we all spent a lot of time on. we have tried to consider those in our proposals as we go forward. with regard to the question of can you get in of cost savings to do that, i think you're familiar with the fact that even when done well, the programs, i don't know we could get enough but we are always looking for ideas and approaches to improve the way we do it.

>> i hope there will be some emphasis on the. my next question, similar to what senator warner said, the last -- expected increase by 5% to $4 billion, more than twice 2013 and medicare will rise from 585 to 1.1 trillion by 2024. over the next decade spending for social security and medicare and medicaid and other major health programs will represent more than half of the federal budget. how does the president proposed to make these programs sustainable in the long term when the bulk of the savings you proposed include reimbursement cuts and increased use of price controls on prescription drugs? it's not sustainable. >> i think we believe that many of the changes that we are proposing in that space, first of all we come back to the point i think part of the opening conversation was about, the importance of entitlement changes. entitlement changes are actually quite difficult.

when one looks at changes to medicare in order to meet the deficit numbers that we do, so even to get our 400 billion i think what you're probably reflecting is choices have to be made. we believe we've made those choices on best information and things like the gao and medpac's recommendations for where people are having overpayments. some of those issues are in coding, and a number of other places. that's what we're basing our choices on in terms of what we believe. with regard to the changes that have previously been done in a number of different areas, we still continue to see beneficiaries getting benefits in an appropriate way. >> i would like to point out those runtime settings so it isn't sustainable. thank you. >> senator coons. >> thank you, jerry. thank you, director burwell, for your hard work and for joining us here today. the administration and this

budget by several focused on economic growth and job creation. which i think is appropriate should be your highest priority as we find ways to achieve balance deficit reduction and to improve our overall balance sheet for the country. which of the proposals in this budget you think has the potential to create the most jobs and best jobs? >> i think in terms of the issue of job creation, it is about the entirety of the budget. in terms of their things happening in the short term and things happening in the long-term that are important to some of our fiscal responsible is in the long-term and certain things we're doing in the here and now that i focus on here and now question with regard to the infrastructure as an important place. i think we believe the emphasis is important. i think also we believe that research and developing is another place where that's a more interim. it is about the jobs it creates now but also the technologies that we develop and how that promotes economic growth is an important part in sort of the

medium term as well. >> i agree, and frank also want to draw your attention to manufacturing sector. creates a good jobs, hagel the jobs and brings secondary benefits to the committees around those entities. one bill that was brought up by senator baldwin as well where i've joined as a cosponsor, continued to defend the charge of taking are indeed in a skilled workforce and a growing manufacturing and export opportunity and pulls them together into a regional hub or institute. tell me if you want about how these incentives will be rolled out going forward and why it's important to have been authorized by congress. >> i think would live we believe congressional support in a bipartisan fashion as you just described is important from an authorization perspective. it will be important as an appropriations, in terms of how one finds these efforts over time. in terms of how they will be rolled out it is a plan to continue with the existing

resources that there are, to continue and fo four have been announced. there will be others that will be announced over the period of the next two years. i think at this point in time we are hopeful we can get nine of these done, but are hopeful that funding would, could you 45 because as you articulated we believe it's an important part of economic growth. >> germany current has 70 kabul manufacturing hubs or institute. if we could move from two to four to something like 40 i think that would be a great objective long-term. the long-term unemployed have difficulty in reaching the workforce and in transition back to work opportunities where they exist. manufacturing employment after significant, painful losses in the first nine years of the century have, stronger back. there's about 6000 manufacturing sector jobs created over the last four years. some studies suggest that are hundreds of thousands more that are currently unfilled because of the skills gap. tell me more about the

administration's strategy in its budget to make issue for the long-term unemployed to find meaningful work. >> there are a number of elements of that strategy, and it's a problem that we take strictly. it's a problem that is related to the long-term numbers with regard to productivity and growth. in terms of what we hope to do is the president talked about a workforce strategy and the vice president is actively involved in it. the are a number of elements that are important to the. first is ensuring that one pursues job training and skill training in a demand driven or job driven way making sure that the training is matched to the needs of employers so we get a better match there. then there's the question of doing higher quality training for those that are getting the training for those jobs and trying to put in place programs and best practices that do that. there are a number of steps that are part of the. credentialing is another element we hope will be important to getting people to match with the

skills. >> i know there's been great work done on the workforce investment act reauthorization streamlining and focusing. that is something i'll will move on a bipartisan basis. might last question, chairman camp released a tax reform proposal. this budget lies really heavily on tax reform in order to achieve both deficit reduction and new resources. too often around to we focus on our differences, not our similarities. on any areas of commonality between chairman camp's proposals and the presidents budget in terms of tax reform we should focus on? >> i think one of the similarities that is an important one is in a topic without a lot of discussion on this morning which is the infrastructure space. chairman camp uses a similar approach to paying for infrastructure that we do in terms of those one time transition revenues. i think that's the place to the other place i would highlight that there are some similarities in the proposal is the offsets

that chairman camp uses. there are a number things he proposes that offsets that you will see in the presidents budget. your deficit numbers are something that would concern us in terms increase in deficit. in terms of the difference. >> thank you. >> sundasenator portman. >> having sat i in the seat i kw it's not always fun. although you seem to be having a pretty good time this morning. i'm as you know bridges one in the budget and its for the very simple reason we are not addressing the fundament issue we all know exists. sitting in every seat on a couple weeks ago was the nonpartisan director of the nonpartisan congressional budget office telling us things are getting worse, not better. telling us the deficit and debt projection over the next 10 years is worse, not better, adding $10 trillion to the debt. one reason the debt went up

another trillion dollars is because of slow economic growth. he pointed out what is obvious which is the mandatory side of the budget, which is the part that's not appropriate every year is growing, and it's already about two-thirds of the budget. he said there would be 77% of the budget in the next 10 years. and he said basically the discretionary second part we do appropriate every year, the part congress wrestles with will be pretty flat as a percent of economy. revenues will go up, not devotees of revenues will be up above the store guys within a year or so and then continue at that level. he said the problem is on the mandatory side. is a specific with the health care in grow by over 100%. so you know why i'm disappointed, because this budget in a political year is a political document and of which the tough choices here takes a pond, choose to punt on these

tough issues. and i've talked about this but i think the president has a great opportunity to lead on this and he's chosen not to. there are a lot of tax increases, over a trillion dollars in new taxes. when you add that to the obamacare taxes and fiscal cliff, it would've added about $3 trillion in new taxes. you are probably going to tell me there is $400 billion in health savings. we can debate whether these are good policy or not. we've already heard from a lot of providers about those in medicare and medicaid less interested in providing the services because cuts to providers with already put in place. let's assume those savings, $400 billion are appropriate, that would change the health care entitlement spending from being 115% of growth over the next 10 years to 105% over the next 10 years, based on the numbers. this means you are seeing more

than of a doubling of these important but unsustainable health care entitlements. i think again, you're in a position to have to defend this but i think anybody would look at this and say it's just not responsive to the real problem we've had laid out time and time again. erskine bowles sat right where you're and said this problem of mandatory spending is the issue and if we don't deal with this we are facing the most economic crisis in our countries history. let me ask the specifically. social security disability fund skeptical bankrupt in 2017. nothing in the president's budget can say this program the social security old age program is expected to go bankrupt in 20 years. people who are retiring today was the trust funds will belly up. if the trust funds are not what they think they are, most having assets and will have to bore more or tax more or take spending from someone else. even though they go belly up. h. i trust fund is skeptical bankrupt in 12 years. nothing to save medicare for

generations, again anderson there is $409 on the providers site. i guess if this is the budget reflects the president's vision for the future as you said, what are the presidents plants reform and preserving these programs? >> as we have discussed a lot of this morning, at the root is the issue in terms of these numbers and they are growing, you have a baby boom is retiring. that is a point of fact. the room looks like it's about split in terms of people who are part of that. some people here will be the a to. >> i will ask you who -- >> i will not. you noticed i stopped. you noticed i stopped before i -- i quit before distinction between which chairs i looked around at our best not to do that spin we agree there are 10,000 baby boomers retire and

every day spent it is putting pressure spent why don't you address the? >> the other thing putting pressure on his health care cost. we a proposal we believe is the right approach -- >> which is having his programs increased by over 100%? >> the programs are going to increase because of numbers. the programs are going to increase because of rate of growth of cost. >> what happens when the trust funds go belly up? it's a 25% cut in people's social security benefits. >> what we're doing is proposing -- >> talk about beneficiary. you don't want to talk about beneficiary but you want to make sure they take the brunt of this because we refuse to do anything at this but. >> there are premium pashtun in our medicare budget there are number of different things.

in addition we believe revenues are a part of the solution for the long-term in terms of the building to meet the numbers. when one looks at the actual numbers -- >> so you would just continue to increase taxes, that's your solution? >> our solution is a combined proposal. if you look at the deficit reduction in our budget, right now the baseline, the cbo baseline since 111, about to return dollars in deficit reduction. if you look at the proposals we put in place, the number increases to 5.3. ratio of spending the revenue in that is about to do one. we that much more burden on the spending side than on the revenue side. >> we could have a longer discussion about the so-called savings because when you increase spending at the same time you do things like the ryan budget which i supported, i'll call it the murray ryan budget -- >> thank you spent your increasing spending and other places and the fact is again you can't escape this entry dollars of additional debt and cbo told

of sitting in that picture is going to occur and the fact that these programs are not sustainable in their current form. your answer today is will just continue to tax more and more. we already have taxes as a percentage of economy put up above historical levels. that's not me again. it's this third party, non-congressional party telling us that. i am disappointed in the budget as you know, does it surprise you. i do hope we can work together on some very small but positive aspects on the medicare means testing site. even though you to doctor social security reforms during a political year, but on -- >> we need to move along. >> sorry. i was looking at the time. i do hope we can work together on means testing which i believe is still in the budget. thank you, madam chair. >> senator whitehouse. >> thank you, chairman. welcome, administrator burwell. good to see you again. i want to ask about health care but before we do let me point

out as you evaluate my colleagues alarm about the debt and deficit, i think we should all bear in mind that those concerns seem to have an interesting characteristic, which is that they evaporate in proximity to billionaires and big corporations tax goodies. and if you raise the question of the low rates that hedge fund operators day, or off shoring tax schemes, or special interest loopholes, well, we've got to protect those at all costs. so when you hear these concerns about the debt and the deficit, do bear in mind that for a great number of my colleagues, the debt and the deficit is in practice much less important than protecting carried

interest, much less important than maintaining cayman islands offshore shelters, and much less important in keeping big oil subsidies rolling. i think that context is important, in the context of this discussion but i think we could get a lot done on the debt and the deficit if it was more important to protect the little, protect the big oil subsidies and offshore in the cayman islands on the part of some of my colleagues. you point out in your testimony that we have over a trillion dollars in baseline reduction in medicare and medicaid, cms. and when i look at your table s. three, the cuba to deficit reduction that adds up all of the different steps have been taken to reduce the deficit, i don't see that killian dollars there. would add to this in its practical effect on the deficit?

>> because it is incorporated in the baseline, these numbers reflect everything. so it is in the baseline and what s-3 reflects this in addition to the baseline. [talking over each other] it would be reflected in the upper bank of numbers. >> so it washes through this but and particle effects that trillion dollars does lower our out year deficits and our liability? >> it does. >> okay. you have proposed a variety -- the president has proposed a variety of reforms to medicare and medicaid disable over $410 billion -- that save over. most of that as i think we pointed out on both sides of the aisle here is in the form of reduced payments to providers and pharmacy companies and pharmaceutical companies and so forth. there are only two that appeared to be in the category of

delivery system for one is bundled payments for post acute care or $8.7 in savings, and the other is to have a nursing facilities readmissions problem at 1.9 billion in savings. so that's a little over 10 billion out of 400 billion proposed savings but i think the delivery system reforms have much more potential than that. the institute of medicine has set its seven and $50 billion a year, systemwide in potential savings. you've got rand with a new study that puts it somewhere between 700-900, at a midpoint depend on how much you adjust for fraud. and i understand there's a scoring problem with trying to get that into a document like

this. what concerns me is the administration has never set a goal. it's never set a target. it's never set a concrete desire beyond the end of the health care cost curve which to me is kind of accountability free and meaningless. so i would love to have the administration actually say, look, we can't predict exactly what is going to be, but we are in charge of this and we are going to direct these changes and we're going to force the bureaucracy to come up and try to meet a savings target. why would you not want to set a savings target in that context of such huge potential savings and such small, actually identified savings in your budget? aking the kinds of changes in the system in terms of health care delivery system, i think that something we are interested in. and you see some as you reflect, perhaps not as aggressive as you are indicating you believe we

should be. i think we're open to those ideas. with regard to the question of setting a specific goal, that would be some i want to have a conversation with secretary sebelius because i think the question of the delivery changes that you need and those savings and how that relates would be something that i would consider her more expert than myself in terms of what kind of impact it would have in terms of the delivery system, in terms of what it provides for, those in the system individual's receipt and care. >> would you agree -- rather than just operating without that? >> i do believe that targets and goals are generally helpful things in terms of disciplining mechanisms in this particular case, understanding the underlying changes in what it means to those receiving care is something i'm just not close enough to comment on this specific case. but in general, take your point. >> senator graham. >> thank you, madam chair. welcome. what percentage of gdp are we spendingon defense in the

president proposed budget? >> as a percentage of gdp, i know it in terms of the numbers were over $500 billion. in terms of our overall spending it's about 3 trillion as a percentage of gdp. i would have to get back on the exact number. >> could you do me a favor and report back to the com the historical average of gdp spending on defense in times of peace and the historical average in times of conflict? i know there are pretty wide variations depend on what people come with. and give me the number we are spending. and when you look at sequestration, in year 10 at sequestration if nothing changes, what percentage of gdp will be spending on defense? and compare that to circle averages. could you do that forced? >> i would be happy to get a. i think it's reflective of why

we put sequestration needs to be replaced because we do not agree that those with the appropriate levels over the 10 years. >> do you agree with me that if nothing dramatically changes, president obama will have added more debt held by the public on his watch and all presidents combined before in? >> because we don't analyze it in terms of those numbers, you know, have not done the historical averages in terms of adding all the numbers. when we think about this issue of the debt and the deficit, we think about where we are as a nation and where we need to go and the slope of that line. >> where are we as a nation? ow in terms of debt to gdp we are at a number that is in the 74 range, and this budget and policy take a stand to range that is about 69. so it's stabilized in 2015. and then we decline to those numbers over time. >> over time, does our deficit go up? >> the deficit to gdp number

actually goes down but it goes downo 1.6 at the end of the 10 year window in 2024. so goes down as a percentage of gdp, which most economists and markets believe are right spin when president obama came into office, there was 10.5 kilometer publicly held debt. 17 appeared at the end of eight years, this is all against me, could you get back to i us whetr of president obama's watch his administration has added more publicly held debt than all the previous presidents combined? could you report back to me and see if that's a true statement or not? >> be happy to. i think one of the important questions is why do we care about debt and deficits and how -- >> apparently we don't. none of us do. i'm not just beating on you. appearing on this care much about it. let me ask you about the deficit and debt. e we need to adjust the age of retirement for social security and medicare to sustain

these programs over time? ..