creditworthiness but about need for it so the institution and the case, the oakland of the house deserves to have the same kind of rigorous analysis applied to it. and today we sort of have an all or nothing approach when we are looking at institutions as to whether they are worthwhile and basements and one look to it plays in california, a school that has revenue of $1.7 billion, 83% comes from the programs that you run. and yet they have the full rate in the neighborhood of 36% and prices that are wildly out of step with other competitors in the area. so when they ran afoul of the default rate rulescome in the way that they got back in compliance with to call their

borrowers on average 110 times per month to convince them to seek more deferments and forbearance and actually didn't do much about the degree or the quality and they just convinced students to push their obligations out further. there are other models out there, which involve more of a risk sharing module. having higher than average default rates and low graduation rates, it would share more of a burden of the outstanding loans rather than just hanging if you don't meet a certain threshold you aren't eligible for federal aid. so do you think that the current method by which we charge institutions capabilities, giving students a quality degree, if you think it's

working and what you think about these other models imax remapped i think that some of the other models are promising, as we have the rest. and we would be ready to run compliance and can put that in terms of our operation. right now we look at default rates, as you know. as to some extent there is a utilization of forbearance that can be manipulated somewhat. but the forbearance and affirm and under the program entitlements, however, the services are ultimately the ones that can put people in deferment or forbearance. so they also have to have a conversation work with them to get that is the best option for them at that time versus income-based repayment or something like that. so the other thing is we are making progress with unemployment and i will also have an impact with the

proprietary schools. in terms of a wholesale way to address those issues, we are open to operating modes. >> i'm glad. the idea that we are spending in this institution's institutions case, $1.4 billion in taxpayer money, offering the benefit of getting a 40% default rate and graduation rate covering under 10% of this institution, it is mind blowing and we have legislation that i hope to take a look at in the context of the reauthorization that will give us some new tools with which to hold these accountable when they are making decisions on how to allenby is each year. >> thank you, mr. chairman.

i want to talk about a tool that students can use early on in the process of looking at colleges and i am going to introduce some legislation on not to prove it. .net price calculator allows us before they are even deciding upon whether to apply to college, how much it is actually going to cost. now, we have a free net price calculator available. some are better than others. you know. i think about a recent survey in more than half of students get stuck on sticker price without considering the full effect of

unventilated. and many of them chose to attend other colleges that they were qualified for. because they incorrectly believed that they were priced out of the other schools. some wondering if you have any loss of bowel that, then that calculator and for the department of education can view to incentivize colleges to make these calculators more user-friendly for students. >> we have been very just on financial literacy to make sure that students are in a position to make good investment decisions. and there have been a number of items that we have put out this

includes those across institutions and students make decisions and they don't have a sense of what the crisis. and it's something that we could do better and we could work with institutions to make the calculators a little bit more user-friendly and transparent. >> i can't be completed until january 1 in which the student seeks to enroll in the school. by january 1 you basically all over.

as you are considering. you can look at this if you have the right calculator there and it has a real idea what the real not cost of this is going to be. but the aid would cost and etc. when i go around the roundtables and talk about affordability to student, very often i hear that i wish i would've applied to the school or that school or i didn't fully realize how much this was going to cost. so financial literacy is a tremendous part that we need to have eyes wide open when they are doing it. and i don't want them foreclosing better options for themselves because they didn't realize that some schools will give a full ride to students and

other kids will say i don't want to apply to harvard because i couldn't possibly pay for it so much and to find a way to let kids know well beforehand, after they have already applied, after they have been admitted or not, to let them know what the next cost will be. >> we would love to work with you and look at how we can make it better. >> thank you. >> thank you, senator. thank you very much for being here today and thank you for

your testimony. i am sure that we will have some follow-ups. >> thank you, chairman. >> turning to our second panel. >> him and how you do thisãand . so first we will go from left to right and what is introduce you and then we will start our test money today. i would like to introduce michelle cooper. of the higher education policy. promoting access for students in all educations. most recently leaving the development of the new policy agenda enhancing affordability and accountability in consumer awareness. she received her bachelor's degree from cornell and the

university of maryland. >> at the national consumer board, we teach them legal services and private consumer lawyers and other advocates and the problems with the program are addressed. i have worked with these women for many years but what i made this career shift. and i just want to say that her work is first-rate. >> thank you. >> or next witness is roberta

johnson. iowa state university, a land grant judiciary. with a two decade history, she has significant firsthand experience in the administration of loans to both the federal family education loan program and the federal drug loan program. in 2013 she was appointed vice chair of the advisory committee on student financial assist in, which provides counsel for college access for students of lower to middle income families. she has a bachelor's degree in education and a master's degree in counselor education. >> thank you, mr. chairman. we welcome maryann malone. director of financial aid in cleveland, tennessee. the only thing that would've been better is if he would've brought the lead singers with you. i hope that you will give them our best wishes.

she is membership chairman of the southern association of student financial aid administrators. she has been assistant director for financial aid at tennessee wesleyan and she's a first-generation college student and a recipient of title iv, so she has a broad view of the subject we are talking about. >> thank you all for being here. your testimony will be made a part of the record and i would like to start with doctor cooper. if you could just am of your testimony in five minutes, we will certainly appreciate its we can get it to russians and answers. >> welcome and please proceed. >> chairman harkin, ranking member out and are, good morning and thank you for this opportunity. like you have heard, i am the president of the institute for higher education policy and at

our organization we focus on issues surrounding populations of students. as president of ihep, just a few decades ago i was just a kid from south carolina had the opportunity to finance my college degree. so i can save that financial aid and the ability to access it made a difference in my life and i firmly believe that it still can make a difference in the lives of today's students. but the reality is of today's students are different than those of other generations and earning a college degree or credentials much harder now. when we examine it, i encourage you to be mindful of the realities of today's students. we should recognize that a one-size-fits-all approach probably will not work and neither will layering policy

ideas over old outdated once. so when turning to the issue of student loans, oracle must be to help the millions of student loan borrowers that we currently have managed the debt levels and affordable and easy manner. we have recommended that there are three types of improvement. improvements that will result in more informed choices and more simplified options and improvements that will lead to better accountability. we have to recommendations and one is about information and the other is about student loan counseling. when it comes to the issue of better data information, i'm sure you've heard that people believe that there is more than enough information out there. but there certainly is information out there but it's not always of type all of you. and it doesn't always allow students to use it in a productive consumer friendly

way. it is usually not always helping them to make good informed choices. in our written comments we recommend some detail but straightforward existing data with the national student own data system that would better help students gauge the quality and the outcome that they could likely experience at other institutions. we suggest improvements to the information around debt repayment and about student outcomes in particular. we also hope that this information can be made available for students for multiple years and multiple cohorts. we also believe that student loan counseling needs improvement. so i am assured that we have good conversation about that. and we agree that there needs to be counseling on student loans and financial literacy and we have some federal programs where we can easily incorporate

financial literacy and student loans into that structure. also we believe that existing scores and the net price cut to later and financial aid should be made to be more applicable and more accessible and in some cases even mandatory. certainly believe there is much that can be done to improve the college loan student loan counseling. it should be more than a checklist and we can make some improvements to the timing and content and frequency of the content. and we can't include a lot more throughout the students career. our second category represents options for loan repayment. at present there are many options that we have outlined and we believe that the number of options of payment should be reduced and we believe that they would minimize complexity and help to make this more

transparent and accessible. and we suggest having a single repayment plan as well as its angle income-based or planet tan and the final category of recommendation is shared accountability. the state appropriations decline has been taking on more debt and as a result they have an increasing proportion of that. there are some responsibilities with the institution. so when thinking about this we recommend options that would lead to more meaningful accountability, such as risksharing. while the specifics of this model need to be tested with institutional leaders, we would not have to start from scratch as there are proposals that already exist. so in closing i'm happy to talk more about these recommendations in greater detail, but i do want press do we really want to have

real long-standing change we want to do more than just tinker at the margins and i encourage you to remember that the student loan issue must be looked at was in the broader issue of costs, which we have are even begun to do. including how this is symptoms of a bigger college cost problem. >> thank you very much. >> thank you, chairman and other members of the panel. thank you for inviting me to testify here today. i'm here today of loan compliance. we reflect the broad situation and it's important to keep this in mind. because the idea of an 18-year-old finishing at age 21 is actually more of an anomaly now what happens in the current environment where nontraditional

students divide today. but they all sincerely wanted to go to college to better the lives of themselves and their families. it may not have been the outcome, but that is their hope. and the great advantage of our system is the opportunity for us all to get a college education. but it should be about investing in students most of all, not about government and private coffers. schools may be poverty and tradition with private services and collectors and even the government appears to be profiting. but it is on the back of students to take on all of the rest. we can do better than we can do it within the structure of the direct loan program. the structure is not a problem. the problem lax management and

misaligned incentives. and i believe that we need a multifaceted approach and not just one solution to all of us. and i just want to mention a few and i have more details in my testimony. as doctor cooper mentioned, the best way to prevent this is to help the students succeed. and we also want to look at simplifying the student loan system and focusing more on borrowers. the servicing, which we have are to talk about, focuses more on private contractors with the easiest options and my clients much of the time don't know about the optimal options for them. and there are ways to include streamlined servicing. perhaps some competition is healthy.

but we need to put borrowers first, not ensuring that private companies can promote their brand. i also discussed questions in my testimony, but in a nutshell the government has given the private collection industry a dispute resolution and in my experience the collection agency is extremely violating the protection laws of borrower rights. it doesn't work for borrowers and taxpayers, and i ain't it is time to end this with a private collection agency. we have been giving examples for years to government agencies, but we haven't had much response. and if he mentioned the department keeps renewing contracts even for those services or collectors where there has been evidence and the problems are now more public and i believe that we can fix them.

the administration was able to implement this to full direct lending and now they can put the same levels in the collection system and use all the resources available to them, which very much includes a complete system, and congressional oversight as well. also giving students the best chance to succeed in recognizing that some to work out the first time around. we need to give borrowers another chance. more than one chance at rehabilitation and consolidation in the programs that we now have to get out of default. instead under current policies we hammer some borrowers until they die. it takes earned income tax credits and we have basically

eviscerated this as we do much better for borrowers. it's not just for borrowers before society so that clients like mine who want to go back to school can go back to school and repay their loans and enter the workforce. i believe that we can do better. >> thank you. ms. johnson, welcome back. >> thank you. chairman harkin, ranking members, thank you for inviting me to testify. as has been mentioned, i attended i was at university for a number of years. i have had experience with many programs at iowa state university, it was a number one school in the direct loan program and i have had the experience of it prior to 100% and post that timeframe. so i can talk with both sides of that issue. to help you better understand that experience, i want to start

with the applications process, which senator alexander talked about. it cannot be completed until january 1 of your senior year in high school. for many students that is when they are emotionally invested in the institution. so because many institutions use a deadline for making decisions of institutional dollars, students are often getting the application and by march 1 and then what ends up happening is that they don't have their taxes filed until april 15 and the information is incorrect and schools are going back and forth several times to try to rectify the situation. i would suggest that some of the recent studies on the prior year using that tax information would

be something that bears consideration. primarily because it would allow the information to go to students in the fall semester others in her year, potentially so that they have opportunities to think about savings and they would know their costs and they could potentially make other plans before they are emotionally invested in that institution is sometimes financially unfeasible for them. i was state university is using this as their official award to students. i was very skeptical about using this initially, but the feedback that we have viewed from a men's and their families is that they are appreciative of this information. it's clear to understand this provides them with a definite picture of what the costs will be prior to borrowing money loans. however, it does not work well for graduate and professional students because the metrics are

all tied to undergraduate performance indicators. so we need to think about how we can change that. also there are a number of consumer information wire disclosures, college navigators and a scorecard, we need to think about utilizing the same measurement points so that they are truly helping families to compare their school choices rather than adding to their confusion. once a decision has been made, the students are directed to the department of education's website, student loan stock up, to complete the promised her a note and they will ultimately utilize the site for entrance counseling and they all go go through financial awareness counseling which was discussed. the financial awareness counseling tool is very robust red our institution uses it to help students explain the repayment plans and understand

what the repayment amounts will be once they complete the degree program. the upfront processing of loans known as origination works very well with electronic transmission of information that goes through as the department works for them. and this year we will be providing additional information beyond grade levels as we need to also provide program information so that when students have received 150% of their programs that they will no longer be able to borrow under a subsidized stafford loan. after the loan is dispersed, things are now more challenging for the borrowers. when the program was first implemented there was a single service or and all were branded as the federal direct student loan program. now they are cobranded with the name of the service or an

oftentimes it is my experience that the name of the service or as part of the department of education's information. so it's difficult this is coming from the direct loan program. and i would suggest that student loan knock out needs to be the single point of contact for borrowers to be able to log back in to access your student loans. currently has to go to that individual servicers went right and suicide in which is very confusing and can lead to a lot of challenges with containment because students have to take the extra step. so if we can streamline the, i think it will help. i think because of this the department has the opportunity to think about how contracts need to be awarded and do they need to come from a previous environment or are there

servicers that are working in other financial sectors are just credit card agencies that may do just as good if not a better job. the student loan repayment plans can be confusing and we need to think about that. finally, i would say in response to comments about the cost of loans that there is some substantial revenue and we need to look at things like origination fees as well as the capitalization of interest to see if we can streamline those processes. so in conclusion it works well, but there are definitely areas that we need to fine tune and find efficiencies on. thank you. >> thank you very much, ms. johnson. we now welcome the next best to thank you. chairman, ranking member, members of the committee. thank you for inviting me to testify today.

currently we are located in tennessee with an enrollment of almost 5000 student. in 201365% of our students anticipated in the federal direct loan program and the average indebtedness was just over $29,000. today i let you view capital insight for my experience traveled by my comments into two parts. first, focusing on student success strategies and second focusing on simplification of nonessential in the strait of loans. student success strategies. currently the federal government prohibits schools from requiring additional loan counseling by statistical indicators appear it risk for defaulting. physical indicators may include academic performance or borrowing beyond direct costs. also limiting part-time students

are borrowing a full-time rate. based upon the research i submit the following recommendations. number one is institutions should be allowed to require counseling for students to identify the risk factors before anytime, not just at the first. an additional counseling would reinforce key responsibility. educating this borrower while they are still in school is key to success. institutions need the authority to wire such training to come of this success and to reduce default rate. number two is institutions should be allowed to limit borrowing based upon broad categories of students. for example those that are enrolled part-time but can still file the annual loan amount. in doing so, they can exhaust their aggregate limit prior to

completing half of their academic program. as an aid administrator, the is alarming. yet we have no authority over borrowing and no practical tools stop us from occurring. this over borrowing pattern can have severe consequences for the students in the institution and federal programs. number three is parent plus loans. currently approvals are based solely upon creditworthiness and are blind to the ability to be repaid. odds are the drastic increase can be a part of it. i recall this on various forms of public assistance. the mother was approved. she didn't have bad credit. she just had no credit. and she said to me, what are they thinking? i cannot pay this back. number four, income-based

repayment should be considered the automatic repayment plan for borrowers. this will provide a simple by process and ensure that no borrowers would ever exceed their ability to repay and reduce the probability of default. next, i believe that there are contractual twist that would reduce the unnecessary administrative burden. number one, congress should mandate this were institutions and students can go with all federal private and institutional loans. the nonprofit organization clearing house currently provides this with the capacity to meet the objectives. the department wants to achieve reporting of all student loans. number two is the department overhaul to provide clear and concise information need for

legislative requirements. this is dependent upon social media and the counseling tool fact is well-designed and students from it. but it doesn't satisfy legislative arm. this resource needs to be enhanced to meet that. number three is the primary responsibility that should shift back to the federal services. this responsibility includes direct lending schools are now faced with the need to hire additional third-party services or risk the penalties of the rising default rate. we do not have the resources to conduct this with the community. finally, i hope that my testimony provides insight into how the current student loan policies can be enhanced to

better serve our students. thank you for your time. i'm happy to answer questions. >> thank you all very much. you have touched all the elements of what we are trying to grapple with your on student loans. every aspect of it. so we have two things here. doctor cooper, you have said that discussed the need to streamline current repayment options and the recommended also to maintain this which allows borrowers to benefit if they experience extended financial hardship. and you go on to note that the single plan extended protection of them in need. i think that the income-based system is basically everyone in on this. am i wrong? >> i am suggesting that the

students be allowed to opt into this repayment plan. >> he said that we should maintain the standard. >> we do. >> so why would you disagree with this? >> so the issue about making this automatically is sometimes used interchangeably and it's an interesting concept that we have actually recently studied in depth with other organizations and so in the conclusion of this, we came out of a believing that while we should study at but it might be viable, there's too many things about it but don't make it ready yet. so some of the problems are that students can borrow more and we don't want that. some will pay longer than they

would under the rendered repayment plan we don't want that either. and the third thing is about the proper institutional reforms in place. .. so it appears that most of those are ours will be paying their loans so if that's the case why would we, because that's the

current default system right now. why would we want to change it? i'm trying to figure this out. i don't have a dog in this fight one where the other. >> my goal is success not just in the classroom but once they graduate from the classroom and by allowing the income base repayment to be the initial, the automatic prepayment plan it insures that no student would have a loan repayment that would exceed their ability to repay. therefore reducing the default rate. it simplifies the process. it makes it more user-friendly for the borrower and it insures their ability to repay. >> this is something we will have to take more to look at. i like income base repayment but should it be the default or should just be one and an arsenal of different things? the problem i have with that is sometimes people take the

easiest course out which means they lower their payments even though they could pay more and they stretch it out and over period of time they wind up paying more in interest charges rather than on the principle and that's the only problem i personally see with it.

the collection agency writes one letter and they get to keep 18 to 20% for doing almost nothing. i know that's the thing we got into earlier today but it seems to me it's an outlandish kind of thing and plus the -- that goes on with these collection agencies. my time is run out. senator alexander. >> thanks mr. chairman. i won't bring it up again. [laughter] just an observation and this is a debate we had in 2013 when by

81--18 passed a law which put a new market taste interest rate formula on the student loan program. our goal there was for taxpayers neither students to profit on each other and so we ask congressional office budget to tell us us how can we get as close to zero as we could and those of us who voted for that felt we did and not change what was already happening according to the congressional budget office. it's true that if you take the way the law says, you count whether students are paying back over 10 years it is $185 billion based on what we are already doing. on the other hand if you do what the congressional budget office says we should do which is called fair market accounting which is the way we did tharp

the trouble the relief asset program than the students would pay $85 billion more. in other words the students are profiting off of the taxpayers. that's a debate where likely to have this year between the two different ways of accounting but our goal is not to have one profit over the other when we impose that new rate on loans that cut in half the graduate rate to 3.6%. i thank you for your testimony today and your specific suggestions. ms. johnson your comments about early notification about the money you can borrow. we have heard that before and we are taking that into account stealing with a fast than trying to simplify it. all of you suggested ways to simplify. you could count h. different options of forbearance and other things so available to a student in terms of repaying loans. i would like to specifically ask you which we asked her earlier

witnesses about the application form if you could although some of you have done it in your testimony if you would like to give us very specific suggestions in a letter about how you would rewrite this five page, these five pages which is very small type that would be very helpful to me and i suspect to others. this is not an ideologically required. this is just a simplification and craig and i think you used the word layering new over old. we don't want to layer new over old. if you were starting from scratch and saying you mentioned a single standard repayment plan the single income base repayment plan what would you include on this five-page form if you were starting from scratch? that would be very helpful to me and i suspect to others. finally, i would like to ask you

or anyone else, you mentioned skin in the game. one of the problems with over our wing which is not really the subject of this hearing that several of you have commented about it on -- mrs. dill comment on the things we should be alluded to. we shouldn't be up tomorrow as if you were at full time student if you're a part-time student and that's one suggesting. second there may be some -- we could change the law and the regulations that prohibit institution from counseling or limiting the amount of money that could be borrowed for a or a good idea as the skin in the game idea that some institutions at some point if they lend more money to a student would have some responsibility for repaying that. what do you mean by skin in the game and have you got recommendations about that? >> so in terms of addressing the

issue of skin in the game we believe that skin in the game when it comes to higher education and the cost of it and how to pay for it and a shared responsibility. it's one that goes to the state institution and the government so we believe that everyone should be involved in that particular endeavor. when it comes to the issue of over borrowing specifically. >> but how would you do skin in the game as an example? what would you say to the university of tennessee? how would the university of tennessee put skin on the game game -- skin in the game on borrowers. >> one that what recommends a risksharing model. there are some risksharing models are already out there. we participated in what i just talked about. speak in you give me an example? i'm just very interested. >> we could have the institution pay into a fund a proportion that is -- they could pay at

proportion equivalent to their lower default rate for example so if their default rate is 20% they could put 20% and that fund. >> 20% of the amount. >> students who are in default or in repayment. it's really a way of trying to better protect students from institutions that have a history of causing the issue of over borrowing and not just over borrowing and over borrowing of a student not getting a high-quality degree and a student not being able to pay back. >> i time is up. if any of you would like to respond in writing abedin appreciate that mr. chairman. i think one of the things we have to examine is how to get the institution more involved either to have some say in how much money they loaned or a responsibility for paying it back.

>> i grew with that. i have some thoughts on that. i recognize senator murray since senator murray didn't have a chance last time. >> thank you very much mr. chairman. this is such an important hearing that you are having and i appreciate all the thoughts and the discussion on this. it's so telling when we have so many people in our country today who are spending all of their extra income paying back the student loan and they are not buying clothing, houses and cars and contributing to our economy. it is really prohibiting young people i'm even thinking about a future in college. i think it's extremely important and i appreciate all of you for being here. one of my priorities during the negotiations last winter on the bipartisan budget act was to maintain our investments in student aid and not ask our students to contribute even more towards deficit reduction. unfortunately as you know congressman ryan and i were able

to work together to provide release to struggling borrowers and the wiele did it was by reducing the collection fees that guarantee agencies charged on defaulted loans. i'm really glad you were here in our want you to talk a little bit more about how these guarantee agencies collect fees on student loans and you have any estimates on how many struggling students will save because of the changes that wielded put in place? the changes we put in place because of that budget agreement? >> thank you. it's an idea among many to save money and i believe the new america estimate of that particular reduction in the amount of guarantee agency collection fees as well as both the amounts that goes to the government would save $2.5 billion and specifically on

that point of reducing the 18.5% that is frankly automatically, guaranty agencies automatically put that onto the lawn balance so it's capitalized. a borrower coming out of rehabilitation actually has a very much higher balance which makes it harder for them to repay the loan and as was mentioned earlier it's not tired at all to what sort of amount of time or work the collection agency has put into that account so i actually very briefly have a client right now for example. i can't get the collection agencies to call me back to two early rehabilitation. i've been working on it for the last couple of weeks and offices than above. i'm going to do the most of the work and i think we'll get that rehabilitation done because the borrower really wants to work read she has had a stroke and is doing her best but that collection agency will automatically put 18.5% on two of 40,000 other ballots. describes a we'll understand how these guarantee agencies collect

these fees on student loans. >> most of them use third-party collection agencies just like the department of education does as well and then the fees are actually charged to the borrower as payments are made so it's on the commission system essentially whether a borrower makes a voluntary payment or as in this case post-rehabilitation >> how much is guaranteed? >> again it's the third-party debt collector and it's not tied to how much work is actually done pro bono. >> thank you very much. mr. chairman the other issue that i'm extremely interested in is this issue of financial literacy and something i have talked and worked a lot about involving legislation to help ramp up some financial and economic education efforts for students beginning a lot younger than when they get to college but i think the more you know the more you can make reasonable decisions and we just do a very bad job in this country of doing financial literacy.

several of the panelists have talked about strengthening loan counseling and i want some of you to comment on how much long counseling is done right now. is it done by colleges or do the servicing agents do it? how do most students get the information about the interest-rate that they are paying or how long they are going to have to pay it off for what all this means to them? anybody? >> so what are institution, this happens for a variety of mechanisms and primarily we started this because our average was $30,000 for bout that last five years and is a large public institution i'm continuing questioning why is a public institution debts as high as it is. there are variety of reasons but we implemented some counseling. the first primary mechanism for counseling is the entrance loan counseling that borrowers can do prior to completing the promissory note.

they are required to do it. they are required to do it so if they haven't done entrance counseling. >> is this the university requirement? >> no, this is the this is the federal requirements so they can do the master promissory note and then do entrance counseling all is one process on student loans.gov. we put a hold on the disbursement of funds until that entrance counseling has occurred the challenge with the entrance counseling is that like many other things that are internet -based its text heavy and you can just scroll throughe you very long to do the send it through the process. >> without really reading it. >> without reading it. anecdotally we hear there are parents doing this on behalf of their children that make us shudder because the borrower is not getting that information.

we are utilizing a financial awareness utilizing tools to her. we are mandating that they come and visit with us in person before they borrow from her private loan program and use that tool to assist them to make sure that they understand things like interest-rate. we have been very successful in reducing or even diverting some of their private loan borrowing that has occurred. one of the pieces we are most pleased with is five years ago 71% of her students who graduated with dead were undergraduate students graduating with debt. we have dropped back to 61% so over a five-year period of time 10% fewer students are leaving are institution with debt. those that are borrowing are still borrowing the same amount of debt but there are fewer of them that are borrowing so we are making some progress we think. we also --

exit counseling is mandatory for borrower so prior to their departure from her institution they must go through the exit counseling but you don't have a lot of teeth in that because if a student does not do their exit counseling you don't withhold their diploma or put a hold on their transcript for getting a job so we tell them it's a requirement that they may not do it. >> i think this is a really important area and again mr. chairman thank you to you and senator alexander. >> i think if there's one thing that definitely cuts across party lines here and that we all agree on there has to be better loan counseling. senator alexander has talked about even going into high school and getting at that level which i agree with. i think the central thesis of that we need to have better counseling and there may be some differences on the edges but that's a common theme that runs through all of this. senator wyden.

>> thank you mr. chairman. ms. loonin you recently wrote a report on sallie mae that is doing both servicing under the tracks to bomb program and still has outstanding old federal guaranteed loans. sallie mae touts its status as the loan service or with the lowest default rate so i recently sent a letter to sallie mae asking for more information about its default prevention strategies because i think it's important to understand the default aversion programs the our worst use whether it's a deferment, forbearance, income-based repayment for something else and i asked for data on all of the federal loans including federally guaranteed in the direct loan program. sallie mae recently responded to my late letter but it did not respond to the extensive data requests. instead sally mason three pieces

of data related only to to the direct loan program. it's direct default rate in its income-based repayment rate. ms. loonin i wanted to ask are these data sufficient to build an accurate picture of sallie mae's default retention strategies? >> thank you and it's great that you are holding sallie mae more accountable and i'm really sorry they have here today. it's excellent that they revealed some information because we do want to have more data but that's very incomplete. first of all by not including the fell information it does not give a complete picture and surely sallie mae has control over its fair -- fell with no worries not to release that information. that would be extremely useful information and you would get more historical data because the program has gone on for longer. also within default prevention is helpful to see what there is to take six are but prevention

is about more than this cliff of who falls into default. we have to parse that out and see by the times in delinquency is for example, look at similar programs like the camp program or the mortgage programs how many people inquired and what was the acceptance rate in what was the end retention rate. that would give you a much deeper picture. >> thank you very much. i am very disappointed that sallie mae did not come today and that they can support me take a closer look at how all of our services are performing. but we need accurate data to be able to do that. thank you. i want to ask a second question about the student loan program. our student loan program runs from 2007 to 2012 are now on target to make $66 billion in profits for the united states government. just that small cohort and let's keep in mind these are the best

data we have available. these are government data. these are not data anybody else made up. the gal the cbo and the fed are all looking in the same direction on what's happening to students that are loading up on student loan debt. right now s. estimate we have is the interest rate we are going to charge next year to her students is nearly double the rate that undergraduates would have to pay in order to have the program break even and as much as triple for graduate students and for plus loans. i think it's obscene for the federal government to be making profits like this. measured in billions of dollars off the backs of our students. the question i want to ask is with 1.2 billion -- $1.2 trillion in outstanding student loan debts and a third of our worse, more than 90 days to link went on their student loan debt, this is crushing our

young people and i just want you to talk about what the implications of this are for young people who are trying to start their lives. dr. cooper could you talk about that please? >> absolutely. i think we definitely in to keep these things in mind because it was we extend the repayment options to 20 or 25 years that we have to recognize that delays the student's ability to make life choices like buying a home and saving for retirement and things we have all heard about i'm sure in various articles and reports. we need to be mindful we want our students to be active and effective parts of our economy. >> thank you very much. i see that my time is up. what it he already if we had a couple of more responses on tha. i won't ask another question. >> thank you and i want to say what i see with my clients many of whom as i mentioned did not succeed the first time around the debt is really crushing their opportunity to try again. they really are trying again and if we looked at the cost that

when the long-term it would cost us less to have them actually succeed. >> i would answer from the perspective of having a number of new young staff in my office as well as the students that we serve and yes they are delaying those life choices. they are utilizing the income-based repayment plans just to assist them but homeownership, all of the things that we contribute all of the successful economy and we want to have happened to drive our economy towards more health are being deferred or delayed because of the debt. >> i would just say that it is a burden and i concur with what the other individuals have said and i appreciate what this committee is doing to help our students be successful not only in school but the repayment process. >> i appreciate all of you coming today and i appreciate the work you are doing day in and day out and thank you mr. chairman and ranking member alexander for having this

hearing today. there is no problem that is more urgent in our economy and our country. we don't build the future if we crush our young people of that and don't let them have a fighting chance to get a start. thank you. >> senator warren. none of you and your testimonies touched on something that i also look at and that is the lack of any limits on graduate student loans. prior to 2005, the kids going to graduate school could borrow stafford loans of up to a certain amount. in 2005 a new program started so long plus program so today a student going into graduate school can borrow up to the next month or stafford loan and then they can go to this new program

created in 2005 that has no limits. i'm just amazed at this and i'm wondering, i've seen a lot of these loans with grad students that has really accelerated since 2005, huge. i am going to get more data on that. it has happened there. i have two questions. one, should we be looking at again establishing limits on red plus loans and secondly how much does the fact that these graduate loans are going up to 100 or $200,000 raise the average national loan indebtedness that we see of all students? i have said before i think the average is $29,000. how much of that is boosted up because of the grad plus loans that are out there are?

can we put limits on it? ms. johnson? >> first of all the statistic about the average indebtedness when schools are required to report their indebtedness on common dataset etc. the question has always asked what is the average indebtedness of your undergraduate students? i have never been asked to report on the indebtedness of my graduate students. >> do you have that data? >> no. we have been trying to do a study on our campus because we did get a grant to study this. it's difficult because you have to sort it out. many students come to you later after having done their entered graduate study and have already consolidated some of their loans which are then in a big balance and trying to figure out what is graduate of what is undergraduate is a difficult prospect but now we have never been asked to do that. >> are you telling me we don't really know?

the indebtedness of these grad plus loans? is that affect? >> senator harkin what i can say to that is i don't know the indebtedness but i do know graduate student borrowing has increased between 2008 in 2012 which does suggest we may want to take a closer look at grad plus loan policy. >> but the grad plus loans comes through the department of education direct loan per gram, right? >> that is correct. >> we really don't have a handle on how much is going out there and how much students are borrowing? i find that very disturbing. maybe some of it is an total about 200,000-dollar debts and things like that kids go to graduate school and they have huge debts and they may not get jobs after that it go into teaching. and they can pay that back.

am i missing something here? >> it would also be worthwhile looking at how much of that is grad school debt versus how much is undergraduate debt and sometimes ended totals we are not able to disaggregate but belongs at the undergraduate level courses what's at the graduate level but as i said before it has been for the grad plus loan program that we have seen increases in the number of borrowers in that program. >> just a moment. i want to hear from the department of education and i want to asem and find out from this committee will kind of data they have on these grad plus loans. how much is outstanding. how many are being defaulted on and suffered from the regular stafford loans. this is amazing. love last thing i would say is i have a bill s. 546 called the smarter borrowing act to

strengthen loan counseling create more requirements and schools. i'm going to ask each of you, have a lot of co-sponsors. i ask you to take a look at it and tell me what needs to be done to it. what else do we need to do to change it and modify it? one more question i have. ms. dill you said something that again startles me. current federal regulation schools are prohibited from requiring additional loan counseling for students who appear to be over borrowing or who by statistical indicators appear most at risk of defaulting. is this so? >> yes, sir. thank you mr. harkin. absolutely. the federal regulations require entrance counseling is a prerequisite to disbursement, the initial disbursement but after that institutions are not allowed to require additional counseling for disbursement. we can offer it but we are not allowed to require it and without the ability to require

it there is no teeth in it. .. >> $57,000 in 2012.

but he said the average indebtedness, you don't have a grudge with programs? you do but most undergraduates. >> darr reported data is the undergraduates of $29,000 sinecures is 30,000 for undergraduates? >> yes. is that the maximum a student can borrow? what i am trying to get to are they simply because the interest rate is 3.8 percent are they bar wing all that they are allowed? why are your numbers about the same? the mcfadyen is a and interesting question the aggregate limit is $31,000.

for the independent student is 57,000. >> so they could borrow more. is it your judgment that if he were allowed to students were required with each disbursement to have fretted to counseling that would be good for the student or just another federal regulation to caused college administrators to do unnecessary work? >> i think that it would be allowed but not required because you do have the statistical indicators of those that are the most capable a and will prepay you don't want to create the necessary administrative burden but i am advocating for the ability. >> we have done prior to disbursement we require the student to say yes i wanted to or no i don't with the link to repay but if you

take this here is how much it will cost. >> you have slid around its. [laughter] >> but you do it do that with private loans. >> you would like to have it as a tool. >> five would not make it mandatory but i would permit >> that changes department regulation. correct? >> yes. >> the only other thing up with like to end up paralyzed started out i cannot remember anyone to say it was easy to pay for college. but i think it is important

to make the boat has been called as a back we had good testimony. please tell me what we need to do to modify changes. i appreciate that and to our witnesses with the expertise and i request the record remains open until april april 10th to submit'' it answers to the record. >> thank you for wearing red and gold of the cyclones and i will take a vintage of the fact mr. murphy is not here to say tomorrow night go cyclones.

[laughter] >> just a minute. [laughter] >> 7:15 p.m. tennessee will play michigan. >> we will all be to you. [laughter] [inaudible conversations]

mr. wyden: mr. president? the presiding officer: the senator from oregon. mr. wyden: mr. president, as the new chairman of the senate finance committee, 16 working days on the job, it is humbling to be parachuteed late into the issue of reimbursing doctors for medicare services, and i intend to be brief here at the outset of this debate. mr. president, all sides agree that the current system for paying doctors known as the s.g.r. doesn't work well for seniors, the many gifted physicians who serve them or

taxpayers. devised in 1997, the grr sets an annual cost target for medicare physician payments, and it is honored more in the breach than in the observance. when the s.g.r. isn't met, the congress says that's okay, we'll just apply a patch and we'll punt. patch it up and let that s.g.r. limp along just as it has year after year after year. mr. president and colleagues, there have now been 16 of these patches, 16, and every senator that i talked to says that that just deifies common sense, and it seems bizarre even by beltway

standards. the cost of the patches now resembles the cost of the full repeal. now, to his great credit, the majority leader, senator reid, has repeatedly said that his first choice for dealing with this issue is to finally repeal the s.g.r. mr. president, now is the ideal time for repealing s.g.r. the cost of full repeal is far less than anticipated. thoughtful bipartisan work has been done in the house and the senate on repeal and replace and leading advocates for seniors and their doctors want to replace the status quo with real reform. so as an alternative to the flawed status quo an s.g.r.

patch number 17, this afternoon i will make two unanimous consent requests so that the senate is allowed to have a choice. specifically, a vote on a proposal to permanently repeal and replace the s.g.r. and also to fund the health care extenders. now, i will wrap up by briefly describing this proposal. its essence, mr. president, is to close two chapters of federal budget fiction. since the s.g.r. is just pretending that congress will hold the line on medicare spending, i believe it's time to end this fiction and wipe s.g.r. off the books. and for balance, i'm going to propose ending another piece of budget fiction.

specifically, the overseas contingency operations known as o.c.o. and the spending on wars that are winding down. this, too, mr. president is fiction. as former republican senator jon kyl said, a conservative by anybody's calculation, senator kyl said during a previous s.g.r. debate let's use war savings for one last time to wipe out the debt congress has built up by overriding reductions in payment to doctors, and from that point on, war savings would only be used for defense. so there you have my proposal, mr. president. truth in budgeting all around. wipe the slate clean on medicare so you can support seniors and their doctors and move forward with real reforms along the bipartisan lines the house and senate has already agreed to. i would add that if the congress took the action i just proposed,

mr. president, it could go further and address the health extenders. unlike the s.g.r., these are real programs, helping, for example, vulnerable low-income seniors, rural communities and seniors who need a variety of their -- therapies. each one of those has strong bipartisan support. this, too, can be addressed in a fiscally responsible manner, a big chunk of the cost of ten years' worth of these extenders could be addressed with savings of the one-year patch. so, mr. president, here's my closing. a lot of good work has gone into a bipartisan, bicameral reform plan that finally repeals and replaces the s.g.r. i would just say to my colleagues, doesn't that deserve a vote? if my unanimous consent is accepted, we would have that

vote. and at this time, mr. president, i ask unanimous consent that notwithstanding the previous order with respect to h.r. 4302, following disposition of the owens nomination, when the senate resumes legislative session, the senate proceed to the consideration of calendar 336, s. 2157, that following the reporting of the bill, the bill be read a third time and the senate proceed to vote on passage of the bill with no intervening action or debate, and that upon disposition of the bill, the senate resume consideration of h.r. 4302, as would -- as provided under the previous order. the presiding officer: is there objection? mr. sessions: mr. president? the presiding officer: the senator from alabama. mr. sessions: reserving the right to object, i want to express my appreciation for senator wyden for his leadership. he is doing a great job as chairman of the very important finance committee. he is active in all the issues before our senate. but regretfully, a number of

members on this side object to proceeding with his legislation at this point, and i would note that budget experts tell us that paying for this through o.c.o. is a mother of gimmicks. i guess i just spoke about the passing of senator jeremiah denton who was a prisoner of war in vietnam, we could use the savings from the vietnam war that we're not spending today to pay for this bill. so i would object, mr. president, and hopefully we can figure out another way to make this happen because you are correct, senator wyden, it's time to get this matter a permanent fix. i would ask consent that the s. 2122, calendar number 330, be

proceeded to for immediate consideration. it would repeal the medicare sustainable growth rate offset by repealing the obamacare individual mandate. i ask consent that the bill be read a third time and passed, the motion to reconsider be laid upon the table. the presiding officer: the unanimous consent request from the senator from oregon is on the table. is there an objection? mr. sessions: i did object, yes. the presiding officer: objection is heard. mr. sessions: and i would ask that -- that -- consent that the senate proceed to the immediate consideration of calendar number 330, s. 2122, a bill to repeal medicare sustainable growth rate offset by repealing the obamacare individual mandate. this is proposed by senators hatch and mcconnell and cornyn. i ask unanimous consent that the bill be read a third time and passed, the motion to reconsider be considered made and laid upon the table.

the presiding officer: is there objection? mr. wyden: i would object, mr. president. the presiding officer: objection is heard. mr. sessions: mr. president, i thank the senator from oregon for his leadership and hopefully something can work on this because it is important, but it is frustrateing that there is no intension it appears to -- frustrating that there is no intention it appears to allow this provision, this to be brought up, and without that kind of concept, i think it is unlikely that we'll get a unanimous consent to move forward with senator wyden's fix. mr. wyden: mr. president? the presiding officer: the senator from oregon. mr. wyden: mr. president, before my friend from alabama leaves the floor, just to highlight where we are, i think he knows how strongly i feel about always trying to tackle these issues in a bipartisan fashion. and i would just assure the senator from alabama the reason that we took as our underlying

repeal and replace bill the good work that was done by senator hatch and chairman camp and champ upton is that i felt that extended the olive branch in terms of trying to bring the parties together, and i intend to do that consistently on the finance committee, pretty much just the way i did when i supported george w. bush on part d of medicare. the challenge, of course, here is that this would be the 51st attempt to essentially try to make changes in the a.c.a. that would end up particularly shifting costs to so many vulnerable people. and it seems to me particularly today, as we have thousands and thousands of people still trying

to sign up -- i note the "wall street journal" saturday stated that the c.b.o. said the original target for the affordable care act had been met, i think it would be particularly unfortunate to go forward with what would be the 51st effort to try the same kind of approach that particularly would cause so much cost shifting in american health care on to the backs of a lot of folks who are already walking in economic tightrope. i know a number of my colleagues, mr. president, want to speak. as the manager of the time, it is my intention to try to alternate with colleagues at various points of view with respect to this issue. i'm sure that will be done as well on the other side. i note my friend from virginia here on the floor. he is going to be the new chairman of the senate finance subcommittee on cisco

responsibility. and i think he brings extraordinarily important credentials to this job, and his support of the kind of approach that i have advocated this afternoon highlights that this will have support in both political parties from members who have strong credentials in terms of promoting fiscal responsibility and i would yield and look forward to my colleague's remarks. mr. warner: mr. president? the presiding officer: the senator from virginia. mr. warner: mr. president, i want to, first of all, thank the chairman of the finance committee for his efforts in this endeavor. i'm disappointed that there was an unwillingness to at least have a vote on this important issue. mr. president, i've had -- very lucky individual. i've had the opportunity to have a career in business. i've had a career as a governor.

in each of those cases, i had to learn business practices and accounting practice, business accounting practices are different than government accounting practices. state accounting practices are somewhat different as well. what i have to tell you, mr. president, what takes the cake is what passes for rational accounting and scoring practices in the federal government and how we maintain these fictions about what are costs, what are expenses in a way the vast majority of americans don't have the slightest idea what we're talking about. s.g.r., o.c.o., terms that we throw around in this body that have no relationship to the bottom line but prevent us from taking action to at least start the process of getting our balance sheet right, a balance sheet that is $17 trillion in debt that goes up $4 billion a

night. now the chairman of the finance committee outlined very well how this process came to be. the sustainable growth rate, where congress now 17 years ago said they saw at that point the cost of medicare will rise, the cost of our entitlement programs were rising. they put in place at that point what they thought was a rational solution to slowly, slow the rate of growth. the challenge was congress immediately punted and as opposed to resolving at that point, we maintain this legal fiction and this accounting fiction that no one under any kinds of traditional standards of accounting would accept where we've built in this cost increase and each year we come back and so-called patch it.

and each year we go through a fire drill where lobbyists across town harangue and harass members of both parties on a universal basis and say oh my gosh, we can't allow this to happen. doctors and hospitals, which should be off spending time providing health care or finding cheaper and better ways to deliver health care, storm the halls of the capitol to make sure that we don't provide what would now be an unsustainable cut in their reimbursement rates. but it appears to me that we are about to now go for the 17th time one more year on a short-term patch and one more time kick this can down the road. what we are avoiding if we take this vote this afternoon and simply patch over an effort that

was brought over from the house, an effort from the house that i would remind my colleagues never came to a roll call vote, we will once again avoid the opportunity to really start to in effect clear our balance sheet, to make the size of our debt and deficit, and for those of us who have been involved in this issue to go ahead and get rid of some of the budgetary fakery that quite honestly makes so many of our other efforts that may be legitimate seem illegitimate because we can't even clean up our books. now, the chairman of the finance committee went through how this s.g.r. was created in 1997 and how we've gone through annual patches. the remarkable thing right now is that the total cost of these patches actually exceeds that we've already spent exceeds the

cost of repeal, repeal of s.g.r. at this point is roughly $135 billion. based upon previous budget estimates, this is the year to take this action. and what has been the challenge in the past is that while there's been agreement -- we've heard the senator from alabama, and others are coming -- bemoan the fact that tkpw-r is a fakery -- s.g.r. is a fakery, s.g.r. is budget gimmickry, we have this action taken on every years where others storm and say please don't do this and at the 11th hour we extend. what is avoided opportunities in the past to get rid of this issue is that there's not been a solution, not been a bipartisan solution. but this year, do due to the god work of the chairman and ranking member of the finance committee

and their equivalents in the house, there really is agreement on what a replacement to s.g.r. would look like. we would move to a system that would actually fix the problem but also improve the quality of service covered under medicare. we would move to a payment system which would reward doctors for focusing on providing high-quality care. doctors would actually be rewarded for talking to each other to make sure tests and services are unnecessarily duplicated. doctors would be rewarded for ensuring patients have access to care when they need it, like same-day appointments. doctors would be rewarded for spending more time with patients and genuinely talking about the patient's priorities and concerns rather than running off to their next appointment. these are all goals, regardless of what some of our colleagues

may feel about the affordable care act these are all goals that i think almost all of us would agree would actually improve the quality of health care in america, and for medicare start to help drive that cost curve back in the right direction. and if we would act on this bipartisan solution, we could make a real demonstration even in an election year that congress is actually working together to solve a problem. as the chairman of the finance committee noted, in the five years i've had the honor of representing virginia, there's no issue that i've been more passionate about, involved with than trying to find that common ground around our debt and deficit, sometimes to the chagrin of my own colleagues on this side of the aisle. i believe getting our fiscal house in order is absolutely the top priority that this congress faces and our nation faces.

i believe failure to do that will squeeze out any development in education, infrastructure, military, whatever our other priorities are. and part of that is getting our entitlement costs under control. if we're going to get ouren -- get our entitlement costs under control we've got to eliminate the budget gimmicks and fakery that now are part of the process, and the primary one on the entitlement side is the s.g.r. we have a remarkable opportunity to get rid of this budget fakery, clear the books and get rid of the system. i know there's been questions about the cost and i know the chairman of the finance committee will soon put up a chart which will quote a periodical that doesn't often say good things about those of us on this side of the aisle and that is the "wall street journal" which is called the budget gimmickry hides medicare

true costs by moving off future spending off the balance sheet. again, we have a chance to get rid of that today. and what i think the chairman of the finance committee has offered is we could actually get a two-fer here. we could get rid of replacing and -- repealing and replacing the s.g.r. and at the same time eliminate another budget gimmickry tool, the o.c.o. accounts. i just can't understand why we wouldn't take advantage of this opportunity to start down the path of cleaning up our balance shoot. into today, with the actions we take today won't get rid of that $17 trillion in debt, won't bring down our deficit itself. but it will allow future actions to be dealing with an accounting system and a budget that is much truer to reality. so, mr. president, the chairman of the finance committee has

called this the medicare migraine. i think it's time for this congress, this senate to actually take two aspirin, pass this replace and repeal, get rid of this migraine and at the same time show the american people that we can act in a bipartisan fashion even in election year. mr. wyden: mr. president? the presiding officer: the senator from oregon. mr. wyden: before he yields the floor, through the chair could i pose a question to the distinguished senator from virginia? the presiding officer: the senator may proceed. mr. wyden: the senator from virginia, as usual, has gotten right to the heart of the long-term challenge with respect to entitlements. and i've always tried to describe it as the challenge of protecting the medicare guarantee. because what seniors have is a guarantee. it's not something that is kind of up for grabs. it is a guarantee. it is inviolate, and protecting their guarantee means that in the days ahead we're going to

have to figure out new ways to hold down costs. what i've heard the senator from virginia talk about very eloquently is one of the key ways to do that is what the senator from virginia and i have sought to do, which is to start having medicare pay for value rather than just stay with this volume-driven fee-for-service system which largely rewards inefficiency. i think it's my sense that the senator from virginia believes that it is very hard to start the kind of real entitlement reform we need, where you protect the medicare guarantee and hold down costs, unless you make the kind of approach that we're advocating in this repeal and replace strategy with s.g.r. and, boy, we better get to it,

because until we have those changes, we can't begin to get on with another area the senator from virginia feels very strongly about, and that's chronic disease. diabetes and cancer and heart disease and strokes, which consume more than 80% of the medicare budget. we can't get on with that or any of the structural entitlement challenge until we do what the senator from virginia is talking about, by my calculation. is that pretty much the way the senator from virginia sees it? mr. warner: mr. president? the presiding officer: the senator from virginia. mr. warner: i would agree with the comments made by the chairman of the finance committee. in the replace -- repeal and replace proposal, we've laid out ideas that i think, again, cross the aisle there's going to be common agreement in. i know we've been joined by my good friend, the senator from oklahoma. no one knows more about health

care and has been a stronger voice on entitlement and reform than the senator from oklahoma. and we've spent an awful lot of time wrestling with how we get to that common cause. these commonsense reforms that move us closer to quality rather than quantity are a first step but also a first step is trying to relieve the annual or sometime every six-month fire drill we go through where health care providers across the country have to rush to congress to try to get a patch in place which at the end of the day they know we will put the patch in place and the way we put the patch in place month often than not is simply passing on -- more on which than not is simply passing on more costs to the providers in an outyear. this is the kind of budget gimmickry that, quite honestly, we tried to address in our so-called gang of six that would have put more constraints.

we didn't get it done. we've got another opportunity today not to solve the whole problem but by getting rid of s.g.r., by getting rid of o.c.o., removing two of the accounting and gimmickry obstacles that would help clear the decks towards the ultimate debate we're going to hav to hao have around tax reform and about entitlement reform. but the value here as well is that we would also by repealing s.g.r., put in place reforms that would move us towards a better quality health care system for our seniors. so, mr. president, i know that consensus here and kind of conventional wisdom is at moments like these, we'll always punt. we're going to have a chance to see this afternoon whether we're going to punt one more time or whether we will actually -- and

if it takes a few more days -- could wrestle this to the ground and come up with a common cause where we could replace s.g.r., replace it with a better system and perhaps at the end of the day get rid of not one but two gimmicks that that have made our budgeting so much more difficult. with that, mr. president, i yield the floor. mr. coburn: mr. president? the presiding officer: the senator from oklahoma. mr. coburn: i wanted to spend some time today talking about the bill that's on the floor. i want to thank my colleagues from both oregon and from virginia. i've enjoyed working with them. the bill we have on the floor is one of the reasons why i'm leaving congress at the end of this year. because here's -- and here's why the american people are disgusted with us.

we're going to put off to tomorrow what the we should be g today. we should be fix this go probl problem -- we should be fixing this problem instead of delaying the problem. i concur a lot with what my colleague from virginia said. but the fact is, is there's no courage, there's no guts, there's no intention to actions to do what is the best thing in the long term for this country in this body anymore. so we have a bill that comes to us. i appreciate the fact the chairman wants to try to fix it. but if you vote for this bill that's on the floor today, you're part of the problem, you're not part of the solution. you are part of the problem. there's four budget points of order that lie against this bi bill. why in the world where there be four points of order lying against this bill? we're only going to vote on one of them. it's because it's a sham. it's a lie. the pay-fors aren't true. it's nothing but gimmicks.

it's corruptible. there's no integrity in what we're getting ready to vote on in terms of being truthful with the american public, in terms of being truthful with the people that are providing the care for medicare patients. i have a little bit of experience, 25 years, of practicing medicine, and i can tell you what's wrong with the payment system. we have a payment system from the insurance industry and from medicare and medicaid that says, see as many patients as you can if you want to pay your overhead because we're going to pay you based on a code rather than how much time you spend with a patient. and the first thing a doctor's taught in medical school is sit down and listen to the patient. if you'll spend time with the patient, the patient will tell you what's wrong with them. and we know that's true because we have two sets of data now, both on the consequenc in the cs

and what we have seen in one of the great h.m.o.'s on the west coast, that they order 62% fewer tests when they're listening to the patient. one of the biggest costs for medicare, one of the biggest wastes for medicare is tests. why do doctors order tests? because they didn't spend the time figuring out what's really wrong with you so they order a bunch of tests to try to help them where. as if they would have spent another 15 or 30 minutes with you, most of those tests, which are most -- most are not without risk -- would have never been performed. so here we have the senate doing what we usually do -- we're putting off to tomorrow when we can actually fix the real problem now. and it comes to another principle of medicine. the principle of medicine is that you don't treat symptoms, you treat disease. when you treat the disease, the symptoms go away. if you just treat symptoms, you'll never find the disease. you'll cover up the disease.

that's exactly what we're doing. now, the s.g.r. was a great id idea. it started in 1995 in the ways and means committee in the house under former chairman bill archer. and had we followed it, we would have seen some significant reining in of the costs of medicaid and medicare. but what happened? we cut spending, we cut reimbursement rates one time, and instead of responding to the political clamor of the provider group, we fixed it, a short-term fix. and we've been doing that ever since 1999. short-term fixes. so we're not fixing this problem today. what we're doing is taking a big old can and kicking it down the road. and worse than that, we're not even being truthful about what we're doing.

one of the little gimmicks -- one of the little gimmicks is shift $5 billion of sequester from $25 billion to $24 billion, and say you save money. but we all know that this little red area here will go right back over here and we'll spend that money. nobody believes it. it's kind of the wink and the nod to the american public, "oh, look at us." that's why they're disgusted. there's no truth. there's no honesty about what we're doing. and that's just one. here's the other offsets. the sequester was the one i just showed. savings from future medicare cuts, $2.3 billion. they will never occur.

if you think they'll occur, you obviously think if they will occur, then we should have fixed the real problem, the real disease of medicare today. but we didn't. and so the actions will continue to be exactly the same. that $2.3 billion will never be materialized whatsoever. it's a falsehood. $4.4 billion to medicaid. it won't ever come about. that's in future. but we'll take the money now to pay for it. so we -- in this bill of approximately $20 billion, half of the savings that we say are there aren't there. and every member of this body knows that. so when they vote for this today and vote against the budget point of order, what they're saying is i'm dishonest, i'm

playing the game, i will not stand up for truth so the american people actually know what we're doing. i do not believe in transparen transparency. i do not believe that we ought to have to live within our mea means, that we ought to make hard choices, just like every american family out there does today. finally, some of this is very unfair to the very people that worked on this with the committees because they made some commitments for real cuts to them to get a long-term fix. guess what? the real cuts come, that portion that's actually paid for, comes to just pay for it for one year. so not only are we dishonest with the american people, we are dishonest with the stakeholders who negotiated this for a 10-year elimination.

the budget points of order against this bill. just so we know what we're talking about, it violates paygo. plain and simple, violates paygo. it increases the on-budget deficit, this bill does. i dare somebody to come down to the floor and tell me it does not. it does. it violates the ryan-murray 2014 of the congressional budget act because it violates the top li line. nobody's going to come down here and say it doesn't. you won't hear one speaker come down here and say it doesn't violate that. it does. they know it does. but they won't speak the truth. this bill also spends money in

excess of finance committee's allocation, another point of order against the budget act. everybody knows that's true but they won't come down and say it doesn't. but they'll just vote for it. and it also has language in it within the budget committee's jurisdiction that has not been reported or discharged. so we're totally ignoring the process, like the chairman of the finance committee would like to have, so we can do the expedient political thing to take some pressure away. just like we did on the flood insurance bill. it got a little hot in the kitchen. instead of actually cooking the omelet, we threw the eggs in the trash can and ran out of the room. and that's exactly what's going to happen here. so we're putting off again the

hard choices. let me tell you why this is important. the senator from virginia outlined this a little bit. when i came to the senate, which was nine years ago, the individual debt each one of us held on the national debt was under $32,000. it today sits at $54,80 $54,800-and-some-odd. you can kind of get lost in that. what you have to think is, what's my family's obligation for what we haven't paid for within the federal government? let me tell you what it is. for every family in this america -- in this country whose average income is $53,000 per year -- as same as it was in 1988 now in terms of real dollars; we're gone backwards --

your obligations now are $1.1 million per family. and we're going to play this game again and we're going to add another $10 billion to $12 billion between now and april? we're going to say -- claim it doesn't add anything but we're going to add another $10 billion so we can get away from the he heat, so we can get out of the kitchen, so we won't be responsible. which is more responsible: to tell the truth about where we really are? or to actually profess an untruth to your constituents? i-- in this vote this sneeng becausis.mark my words. every senator that votes for this bill that came out of the house will be telling an untruth to the american people. because they know it's not paid for. they know it violates all sorts

of rules around here. they even violated the house rules as they passed it. all to meet a deadline. let me give you a little history. we've missed the deadline before on s.g.r. fixes. does it cause additional work in providers, hospitals, doctor's offices? yes. does it provide additional work for c.m.s.? yeah. do we eventually catch up on it? yes. so what's the hurry? why not really treat the real disease? and the real disease is we have a payment system that is not good for patients and is not good for providers. and you can't fix it over a weekend but you can fix it and if we don't fix it, as the chairman would like to see a long-term fix -- i don't

necessarily agree with everything he wants to do but i applaud his effort to get a long-term fix -- if we don't fix it, we don't deserve to be here. there's no credibility left. there's no legitimacy left, if we pass this bill. it's all a pack of untruths. untruths to the stakeholders, untruths to the american public, and, most importantly, untruth to that generation that's coming up that's going to pay the bill for our untruth. this isn't an unfixable problem. it's a problem that hadn't gotten the attention at that time it needs, and it reflects par leadership on the congress and -- poor leadership on the congress and the committees. we knew this was coming up a

year ago. the senator from oregon can totally be forgiven, because he wasn't in charge of the finance committee until a month ago. but there's no denying the fact that this problem was there. and doing a patch and even doing some of what senator wyden wants to do won't fix the ultimate problem. think about the interaction of you with your caregiver. the average time in a doctor's office when you go in, before you're interrupted by your physician, is now six seconds. you go in, sit down, why are you here today? you start to say it and the first thing you get it is interrupted? why? because that physician knows needs to get to the next patient to pay the bill because we're paying bills based on c.p.t. codes. rather than paying that physician based on the amount of time they spend with a patient

and including outcome measures. we got a system that's designed to be defrauded and create overutilization. we designed it. we can fix it. voting for this bill doesn't fix anything except a little heat in the kitchen. and when we come back the next time, the heat is going to be hotter. and hotter and hotter. this bill is a cowardly response to the problem -- the real problem that we have. it's time we quit being cowards. i yield the floor. mr. wyden: before he leaves the floor, i just want to -- the presiding officer: the senator from oregon. wide i would thanoregon. mr. wyden: thank you, mr. president. before he leaves the floor, i just want to say to the senator from oklahoma who says -- and always with a smile -- that he

and i certainly don't agree on everything in this debate. but i think the concept of what the senator from oklahoma is talking about, that physicians spend time with their patients, is certainly a concept that out to be incorporated into how we proceed in the days ahead, and i think that the other aspect of this that people ought to focus on with respect to what the senator from oklahoma is talking about is that time that the physician spends with the patient in the office, a pretty good chance some of those discussions that they have there in the office are going to help keep that patient out of the hospital. and i think all sides ought to see that as a ask unanimous aska constructive goal. so i want my colleague from oklahoma know that in the discussions he and i have had -- and i appreciated the way my colleague said with a smile we

don't agree on everything -- i think the concept he is talking about with respect to doctors and time in the office is and time in the office is

>> when you own a basketball team, it's not just basketball game. it's not a skill anymore. it's a management. >> you were once a chinese export are now you're importing -- are you importing management skills that you learned in the united states? >> well, there's some skill we can use in china, but after all you have to understand this is to different cultures into different countries. you cannot copy 100% to just move to their and hey, this is

model you use. you have to make some adjustments. i have to say that the management over there in china is a lot more different than here, it and, but at the very bottom the level from the people, basketball is still the same. the structure would be a little bit different. >> david was suggesting it does drop people and they did you enormous, if not power, and enormous opportunity to make contributions into society. i'm curious to hear how you think about and pick the topics that you choose to focus on, things like education or wildlife preservation or other causes. give us a little sense of your own priorities, how you came up with them, what got you interested in them. >> education, like david stern

just mentioned, we launched a game with steve nash, cornell anthony and baron davis. we played against team china in 2007 and we raised the first, we raised the money to get funds to support the kids education. we established a foundation at that time, so move on to today, we build a school already. also we are very interested about how can we help kids grow more healthy. right now the sports is a little lack in chinese school, because of testing, examination and also science is a heavy load for those kids. it's little lack of sports activity for the man we try to create some afterschool program for them and we believe, we put

sports come and particularly team sports like basketball, that would be beneficial for those kids. it's not try to select next basketball star, rising star or something. we are more focused on those character, personality and life skills, like chemistry, teamwork, leadership, and you could name a lot of those things. and also the animal conservation i think is a very good assembled to try to figure how china can see their own responsibility. a little bit of a story about this is because in 2006 we had a operation with the ngo organization that focuses on protection.

we launched a program, tell people stop eating -- which create huge marketing and also made a lot of shark been published in the water, and almost 70 million every year. sharks being lost in water. and after that, not long after that we reduced by 50% of the demand from marketing -- >> were their critics of traditional chinese cuisine culture that said, why are you coming in with newfangled foreign ideas about -- >> yeah, i got some letters. i got some letters. the first letter to me pretty shocked. actually the first protest letter directed to me, maybe my team got a few already.

it was a shock for me. you have to be pretty patient. >> one other thing. when the government of china decide that they really wanted to attempt to de- stigmatize hiv and aids and raise awareness about, who do they turn to? yao did a series of public service announcements with magic johnson, posters, promotions. we produce many of them. it was spectacular and it had a huge impact and the number of hits on the i guess it was the diamond foundation website practically took it off the charts. 's the train do is a much in demand spokesperson, and he has devoted his time spent accurately. >> david, you went through that here when magic johnson was probably announced he'd come down with aids.

and you've seen that issue, the stigma associate with a, but the stigmatizing process play out not only the united states and around the world. what is it that sports are the vehicle for that? can you reflect on the? >> they are because they're someplace away from the self where you can have these convenient conversation to go to engage the world on any subject, it's so which is sure to do it when there's a racist slur at an italian soccer game, or an american announcer says he's hiv positive, or even in the context of a player having graduated from college, football player and not being able to read. it's amazing how in addition to the exercise part, in addition to the team value part of that teamwork discipline sacrifice, you can go to the cultural part which allows people to these

conversations. magic johnson and his situation changed the debate on age, not only in this country alone but in the world because magic was a beloved figure and he was a sports figure. and sports figures have a completely different set of familiarity to their fans. >> i want to turn over to the audience were questioned in a minute, but one final question to you. as you reflect back now on the hard times of the first year when you come to the united states now and see people that may be in your first year were challenging. there was a whole taunting relationship between not so much you talking him that killed when the pumping of it before you played them. the initial barrier that you came up with. doesn't seem like a long time ago or does it -- to these people now seem like family, or do you still bear some scars from those based?

>> it's all good memories. it's all good memories. yeah, my first year, i facing a lot of challenges. challenges not only on court, also how you manage yourself off the court and deal with a different language and also the community that is there. but really -- >> did it help that you block his first two shots speak with you fans are all alike. let me say something. yao, he slips over it. imagine your average 22 year-old thrown into the situation, and then you have somebody really

dropped from on high who has to get a license, understand new culture, change, everything. all i can say is initiative to help them out of it, i remember hosting them for a lunch in my office during his first year. we had a very nice discussion, and i saved the only thing to note that i ever received from a lunch from a player, because it was delivered by yao ming. >> i want to turn over to questions but let's use that as a metaphor for reflecting on the broader use of china relationship when the relationship has gone through good and bad times in the last community, 12 years since he first came, or over the course of the last years. do you pay attention to the diplomatic, the big summits when they happen, diplomatic low points and sparring? does it affect you personally? how do you think about the high diplomacy as the to the people

to people that you engaged in? >> first of all, fortunately my time in nba, chinese relationship has always been good, stable. but i would like to mention another player who just came over to the states, i was, crisis was i think -- 2001 i think. he was given hard question on the first press conference. i remember he said, i think he, you know, i think he says, i cannot wonder exactly what he said. he said, you know, this difference understanding between each other and country to country, but i picked up a basketball and i will show

everybody how china people look like through sports. i think he said something like, let's be patient on those relationships. and sometimes time will take care of everything. >> you know, from our perspective when we really feel pretty good when then vice president xi was visiting the united states and one of the stops want to make was he wanted to meet kobe at the lake again, and then vice premier li came over with a delegation including ambassador and the health minister and his deputy minister of foreign affairs. and they met with my then deputy, now commissioner in chicago at a bulls game at a time when others having been in new york with the president of

their university. we take very sisley at a legal level the opportunities that are presented by people who want to talk about our sport, et cetera. and the level of knowledge of the chinese fans. when i did my first press conference, i was, six in the morning here and we hosted a dinner for the media. it was many years ago. and they wanted to know about the salary cap, the lockout, all the kinds of my name, intimate details. and that's when we knew we had something special going on. then we had yao which was elevated to another level. >> in so many ways. take questions from the audience. please tell us who you are. microphone is coming. >> scott film from the rand corporation but i would like to

first note that yao ming kind of broke a big very big these gentlemen played a role in basketball somewhat akin to breaking the color barrier and it's quite an art to be president and to see that happening but recently we had another major breakthrough in the nba with jason collins being the first gay nba basketball player, the first professional athlete in a major sport to come out. so i would like to ask your thoughts come in china this is very still sensitive topic that you attached yourself to great pathbreaking issues and i wonder if you think at any point in the future in the cba we're likely to see someone break that barrier? and for mr. stern come in china there's a big issue of intellectual property rights, the major challenge enforcing it. the nba has of course a major interest in making sure that issue is addressed seriously. i wonder if you could help us understand how the nba has treated that issue. thank you. >> go first, yao.

[laughter] >> i think it's a very good question. as soon as you say jason collier, assuming sport, basketball game or and sport team is just like platform right there. a platform you can put everything on their to measure and measure not only by vertical -- i mean. >> the vertical and horizontal. >> and also measure by the time. so i think this platform -- also can learn by public and let them going to judge and let them to help us to improve the entire community. >> we've come a long way. i think one of my early trips to

china i saw someone walking down the street with a bulls uniform on, and when you look at the back of the shirt it had the san jose sharks from the national -- i knew it wasn't legitimate. but with the help of the government, the customs bureau and with their own partner, which operates 2200 stores, there has been an increased respect for copyright trade laws and a demand in consumers for authenticity, which was actually our best weapon because if you don't have product in the market, you cannot effectively fight to keep out these other things. when there's a replacement product, you are much better off. we spe enormous sums of money to protect our rights. >> right here in the third row. >> thank you. i am from china embassy.

as a question for yao, you just mentioned that you are young but i think you still have at least five decades to go, or even six decades to go. i want to know next decade what is your focus, your plan? now you are so famous that only in china but also united states. you play a very particular role and not only public diplomacy but also sports. could you please tell us how you plan for maybe the next five years or one decade? >> i can tell you my goal for next year is trying to get my master degree. [laughter] next two years, hopefully i can succeed. well, my main focus deal will be sports, either on marketing and also on building relationship

area to area and also country to country. and also philanthropies where i focus on my own foundation, yao foundation and i have a little flirtation on that and focus on children's education and afterschool program, that kind of thing. and i also work with special olympics and yao aid on animal conservation. for next decade, i believe more, i wish i could report chinese people and, also america and to join our journey to achieve them make those achievements. thank you. >> the woman in the fourth row.

[inaudible] i'm working with the u.s.-china business council also a student from the university of north carolina. as a huge basketball fan, i'm impressed by yao ming's achievements of career and contribution to the bilateral relationship. censure retirement we haven't seen the chinese basketball player in nba as influential as you did. so can you talk will be about chinese basketball players featured in nba and do you have any advice for them? [laughter] >> i can give you any because i policy ba relation, but there's a few -- [inaudible]

>> exactly. >> doesn't want to talk about players on other teams he doesn't own. even in the cba. [laughter] >> there's a few guys are pretty talented, they had their chances to make nba. is the cba or nba are very challenging in today. they have to make step-by-step. take your time. i think you are seeing some surprise in few years. >> and i think that jeremy lin who is of chinese background, ethnicity, it was pretty interesting that someone who is 6'3" maybe because i think it's more encouraging of youth to participate. the emphasis on the national team starts with the age-old

slogan, you can't teach size. and so they go, players have come into the nba, one was seven to, another 6'6". 6'9", 6'10". there was a trend and we need to see different grouping of great plains because they have to be there. don't you agree? >> i agree. [laughter] >> this gentleman right here with the -- right there, fourth row, fifth row. >> rob warren. the subject today is public

diplomacy. we have another public diplomacy did in china that has been getting a lot of attention, and that's first lady michelle obama who has graciously agreed for a week traveling throughout and got a great deal of publicity. would you care to comment on that public diplomacy? thank you. >> first of all, i know it's late but i would like to say welcome to first lady visiting china. [laughter] probably i hope she and her daughter had a pleasant journey over there for a few days. and i follow the news on the paper, on the internet almost every day. looks like they had a good time over there. i think, this is, i'm not sure i

would call this is like, like a relationship or this is like a policy. i think this is more like a lifestyle. this is more like lifestyle. you know, when the presidents on both sides need each other, and because family issue that's first lady cannot come there and a couple months after that, the first lady visited china again, and the first lady from china side, they had a very nice meeting together. it's almost like walking to a neighbor's house saying how are you doing today? i made a pot i would like to bring to you. it's almost like that but it reminds me of my first house in

houston. asses are moving there, my neighbor to come to my house, welcome to the neighborhood. here's some -- i noted a tradition here. here is a guy. i remember she brought a pie to my house. it was very warm and. for those to country, for those people too close together. >> when you take in the other nba players for exhibition games in china, have some of those players come back? i mean, that sort of the same kind of thing, like they do like when you've gone with the rockets to china, to other rockets place, do they go back to china to visit from time to time? do they see that as a vacation place? >> i know tracy mcgrady is in china right now visiting and doing something over there. i know that there is other players who are playing in china in the cba.

>> forty nba players and retired players visit china this summer. >> that's terrific. the woman in in the white swear in the back. middle. >> my name is christina from aei, and when i first went to china i was so surprised to learn that students there didn't really have access to physical education, munich, sports. when i was growing up i played all kinds of sports in school but it was an everyday thing. and i learned later, often children are suffered in china in different schools that will do sports and that's their main focus. you mentioned all a bit about what you been doing for afterschool programs. i wonder if there's something more that can be done in terms of changing the way the schools work to include that? i feel sports is such a thing in terms of character building as you mentioned. that would be so beneficial not as a afterschool thing.

if you speak on that that would be nice. >> first of all, i don't know if you speak chinese -- yes. sports in china translates as to character. but as exactly translate into english they should be physical education, right? so physical is a strategy, but the goal is to educate, is to educate. like you said, i totally agree, that is, that is my idea, this is my goal to change the situation in china, particularly in the school. like you said, there's a part of the students, including me, being separated from the school into sports academy to develop on sports skippered so maybe one day like me i can play in the national team, and olympics or

something. but also education so important for both sides, you know, to help us understand the sports, why would play these games. the sports game is to teach us how to obey the rule and to compete, to work together and finally there was a leader will be created, creates among the people. and on other side for the school, i mean for school parts, as i just mentioned, all those kids from elementary all the way to the college, they are very heavy loaded by those exams and also does scientists studies. they don't have enough time and also they don't have extra energy to spend on courts to play. i think to change that situation that we have to, you know, we have to increase the public awareness to understand how that

we are hurting us in the next 20 years. not necessary next 20 years. we already feel, feel we are treating them wrong, applause all that right now. -- the flaws. last month when camino -- [laughter] not only one person, not a few persons mentioned that we have to reestablish sports system in the school and also reconsidered about how we train those kids in condition in their life, this is very positive. and not just, and i know that president xi jinping is a big

fan of football and i think that would be helpful, too. >> you just extracted or elicited from yao the brief why the nba yao school is starting small in terms of a retrofit, sort of unthinking of a nation of tiger moms which runs against physical activity. a little respect for sports in the process and yao is a wonderful spokesperson for that. >> towards the back, the jump in with a piece of paper in his hand. >> i am a grad student from johns hopkins. my question is for both yao ming and mr. stern. i found chinese and also big basketball fan, but i wanted to know your opinions about the situation that there's no chinese athlete in nba right n now.

>> my opinion about? >> yes. >> well -- [laughter] >> your comments on that. >> what are your comments about it? [laughter] >> your the man. >> there's always, i think there's always a wave of player who will come to china. i think the first wave start from the draft in 1999, and a third player come to the states. right now, yes, like you said there's a gap. i think there's a gap between first wave to second. like i just answered that lady's question, i think young talent in china, just have to be patient and i think nba has --

>> in answer to the question, i said i don't believe that yao ming is the last great chinese player. he is the first great chinese player or and the rest are coming. spent i think we're time for maybe one more question. the gentleman in the back with likelihood the kind of thing. >> hi. will summer. question for mr. stern how you can compare yao's impact of the nba as is becoming a global verse versus the owner of the brooklyn nets and his impact and how you deal with win two countries of russia in use are currently in international crisis. >> well, i would say that the whole issue of international ownership of teens is not a big deal. the our something like a dozen

non-english owners of, perhaps the most successful sport in the world, together with the nfl. so we just, and the owners of the seattle baseball team have been, have been in japanese hands for a long time. so the mikhail prokhorov ownership was just another iteration of that. stay tuned for the rest. there are going to be always changes in relationships between government and the like, but it may be that sports provides the basis for leveling things out of it and being able to engage in a certain conversations. i think that to this point, prokhorov ownership of a brooklyn nets has been a positive thing and something that we solicited and i tried to nurture. and we hope it will remain that way.

>> well, i really want to thank our two guests. as you could tell from the answers, their experiences, these really are giants in the world, not just a sport but in broad cross-cultural understanding, and they think we owe the both not just a big round of applause, but our thanks and hope that you come back to brookings, both. [applause] >> if i were correctly we take a break and come back at 3:30 p.m. for the panel of young rising scholars. [inaudible conversations] >> hello, everyone. i feel quite honored to host this session of the discussion

that u.s.-china relationship to commemorate the 35th anniversary of the most important bilateral relationship in the world. i am host a dialogue on cctv news, english channel of signed -- china central television. the history of our relationship goes back to the mid-19th century when u.s. measures first established their presence in china and the americans demanded open door policy of the dynasty and equal access to the chinese market. the first generation of chinese students returning thanks to the humiliating indemnity, the same time. i'm sorry, the process of china's modernization started from our devastating defeat almost the same time, and opening up to even go back to the dynasty when policies were very liberal or public opinions. today, china has become the fastest growing overseas markets of the u.s. and we have a top critic of u.s. when we look at commonwealth we

got to examine growing independence on the growing world and we look to see if a rising market challenge and antagonize u.s. world leadership. do we have a collective future based on the norms of a new model of major power relationship to address these and other issues i'm pleased to be joined in this panel discussion by center of american progress. welcome. mr. peter hays gries from university of oklahoma. thank you for coming. i know your main thing is better than my english. [laughter] >> and the national development reform commission. ndrc. my very first question actually

is about why millions from the west repeat the same question, if not their concern, a communist regime could run a successful economy because according to the classical theory in political science of the west, only a domination of a liberal democracy with liberal market economy could enable the success of such a major economy like china. how could economy's regime get this done? my first question goes to a lady at the other end of the spectrum. >> i have prepared a remark about -- u.s.-china economic

relations. now attention comes to me. it is very challenge for me to answer this question and just maybe a few minutes, a big problem for me. but i will try my best to answer -- >> if you can't speak english very efficiently i can be your translator. speak your mother tongue. >> and longtime i have no speaking english, but i want to speak english to impress my, what i want to say? china's economy most i think -- [inaudible] in my opinion, i think there are

different opinions about how to define china's economy slowed. i want to say i think thanks to globalization is the most important factor to boost chinese economy faster. sorry. for example, china has become the largest provider of the u.s. import. and the second -- meanwhile, u.s. has become the second largest resource of import. so i think china --

[inaudible] and i think u.s., i want to define the old consumption mode. i think someone a green with me but i think old consumption mode is mostly important task of u.s. economy. and what i want to say, another idea about economy is after 30 years, over the past 30 years, the united states has become the largest debtor nation, and that same time china being the largest u.s. creditor. so understand china and u.s. have patterns for each other. >> thank you very much.

you're not answering my question about why a communist regime could arouse such a successful economy, although at a cost of conditions. right, our prosperity is largely dependent on manufacturing, very cheap extraction of the raw materials. but i'd like to have a perspective from the american sense to whether you're surprised, shocked as to why one party, political system could put the technocrats together to fully mobilize our entrepreneurship and could outbid some of the major economies in the world. it is a big story, but if china is not able to tell the story. am i correct or do you think we are all listed the subject to self inflation?

>> i think the first thing we should a separate communist regime from single party regime. we heard today from the professor that mile president said calling the chinese commerce party something other than communist party. just because that such a loaded term. and i think that would become his party was trying to is trying to do what was best for china economically at the time as they saw. and that has changed over the years. i think one thing the communist party has proven that they can do very well is changing innovate to fit current times. and when what china mostly on the economic front was to -- what china most it was opening of the market, that's what they did. now we're hitting the point in time with the big question is whether the chinese communist party can do what they need to do next, what xi jinping and others have promised to do and taken on as their big job for the term is to actually shift towards a more law based, more

decentralized regular choices to economy that can not only provide big exports for the rest of the world but also increase consumption, bring the chinese citizens up that last wrong on living standards, and support and innovation economy. they been able to make it this point thus far because they had been stuck on the old communist model. they been willing to in a big up to the very edge of what they think they can do while maintaining that single party system. so that's why i think you see so many young people fasted with china today because it's a day by day change and decay but they struggle and all of us are on the edge of our seats waiting to see if they will be able to seed again for the next round. >> people are looking at the mode of chinese development, whether why we have been able to survive the first few years of a shock instead of a, the shock

therapy of the former or light russian president boris yeltsin. i'd like to get the floor to my chinese colleagues here about these comments. >> i will provide maybe a different perspective, mainly from my expertise in foreign affairs and dimensions for why i'm optimistic about the future development of china's economy and why it is achieve such an economic boom in the past few decades. we know that's a governance, provide good governance. and one of the features of the good governance is efficiency. and i think the chinese government can provide the very efficient and very good implementation of the decision which has been made by the central government. and i think it may be easier than the united states and for them, that is good to open up to

the world. there were a lot of opposition in china, but decided then we opened up and then we see what we have achieved. and also in the past few decades china has been helped by some foreign trade negotiations including fda. we know that's how difficult it is for the united states to negotiate and bargain and to reach the different kind of fta including even between china and u.s. and nafta. but for china, must to bargain and we can guarantee once the bargain finished it will be passed and it can be taken into effect. but look at united states. we know the president must get the trade promotion authorization from the congress and keep in mind, the senate

essentially have the great power, powerful weapon filibuster. so we can see from this perspective the chinese government can really provide a very strong dynamic for what the past decade which have been proved very successful exportation oriented economic development. that's my -- >> we will include your argument as our discussion continues. weblog to thank our american friends, american government, not only for establishing the diplomatic relationship act in 1979 during the carter administration. by the, president carter's birthday happens to be october 1, that is our national day. but we also ain't president bill clinton for supper and the issue of human rights, and that's very helpful, other than the landmark

in 200 2000 with the china enjoe frog leap by the way 2001 were injured, wto. so americans can blame you guys in china to defer -- pushing back terrorism, you enjoy very rapid economic development. that's the chinese grievances. let me go back to the issue, sensitive issue of ideology. go back, i'd like to go back to my very first question. president bush senior said teach-in, look, if you can change the name of the ruling part of an image of china would be a lot better. i wonder if tha that's still thy americans perceive image of a china? >> yes. i think that's absolute right. for most americans, probably one of the first things that comes to mind when asked about china is communism.

and as a country that is sort of a successor to the lightman tradition in europe, liberalism, defense of liberty and freedom camping center for our understanding of who we are, communism is a scary. and that's precisely why people like yao ming are so important because they create an image for china that is not about the chinese government, which is very fearful for any freedom loving american. just because of the communism. but yao allows us to think about the chinese people and the american people a very positive image of the chinese people, and i think one of the reasons for that is able like yao ming. >> and people also love r&b, right? it other than the big basketball that gets the ball rolling, the grove road, unlike the ping pong

diplomacy. this time it's the other way around, the big basketball. epitomizing how dramatic things have been since opening up. i would like to invite my chinese friend about how you look at internationalization of r&b. we break use of manipulating and because of outsourcing american jobs. did you think this is one of the major hurdles that prevents the u.s. of adopting a free trade politicians -- is that true? [speaking chinese]

[speaking chinese] >> excuse me, leading to a very brief translation. some of the listeners here are less -- which is the basis of a

limited margin for the internationalization of art and be according her years of research in this area. go ahead. [speaking chinese] [speaking chinese]

>> wait a minute. my memory is poor. [laughter] peter, you can help. >> maybe i can partially, partially, very brief. she says now that china needs to regionalize first, and most attended china from the biggest export state into one of the biggest imports states china is going to economic transformation. we should make more emphasis on domestic consumption instead of turning to the pollution of the environment. well, i think enough has been said about the imposition of renminbi because with other issues across broad-spectrum which is bilateral relationship.

there will be a single voice on this issue. basically there is, there has been deficit. matches the trade deficit or quit the, biggest trade according to -- trust deficit is actually something that has undermined the healthy development of the most important bilateral relationship. what are the fundamental reasons, do you think, are doing a strategy mistrust between our two countries, peter? >> i think from the american perspective it's largely what we discussed earlier, which is the fear of communism and the fear of the loss of liberty that i think drives american perceptions of communist countries. on the chinese side i think a major cause of distrust is a

different ideology, and that's a nationalist ideology that is anti-in their list, that is bound up in a narrative of the so-called century of humiliation which depicts china as constantly humiliated by western and japanese powers. and so i think that leaves many chinese to do the united states, japan, other western countries through a prism that is a very defensive and sensitive one, and that can contribute to mistrust just like american liberalism can lead to distrust of communist or red china. >> this morning and my presentation i said two-thirds of americans to live in the shadow of the last century, only another one-third could cast as you look at why china rises so quickly your i'd like to have your comments on whether the

label of ideology or ideological lens should be employed in examining the new rail is in the china. i saw my friend wade his hand when peter delivered his perspective of the why -- >> he was my teacher. >> then you are his poor student, i'm afraid. yes. >> i think we're really interesting situation between u.s. and china because we've never had two countries that are so dependent on one another and yet have so very different political systems. for many decades americans foreign policy is been basically in many ways we been trying to wait china out that many of our subject is that china is going to democratize eventually and so we should basically have a short-term situation for the current regime and be looking towards the future when they will be just like us. and now we've hit the point where we rrealize they are very close to us in economic might

these days, becoming very powerful and yet not just like us. we will have to have a new way of dealing with it. from a chinese perspective, beijing is rather smart and clever and have noticed that the u.s. has these assumption that eventually we'll all go away and we will begin with someone you. that dynamic doesn't really breed long-term trust or set a good stage for long-term cooperation. i think we are reaching a brand-new stage in u.s.-china relations where to go with the current generation of leaders, xi jinping, others, have a new rapport with their american counterparts. although i'm young and haven't seen much it's not something i've seen before. it's different than what we had in the past. i was very lucky to be in a meeting with my boss and young where he was teasing us about american politics. poking fun at all of it and it felt like we were dealing with someone back in washington. it didn't feel like he was so

different from someone across the political aisle here in town but i think we're finally reaching the point where we have a great rapport between jack lew and young, to a lot of our american leaders and their counterparts who are moving past that old structure may seem like we were crossing very big ocean but now i get to be our leaders like the current generation particular, these are people we can be doing business with. we don't have to wait for china to maybe change, maybe not change but there are a lot of things we can do under the current system. things are working pretty well and some i personally am really optimistic about the fact that ideology really isn't that big of a deal anymore for our grassroots level cooperation. of course, there are issues, principles we must continue to do with but we can do business in a way today that we might not been able to do before. >> diversity of opinions across the spectrum because two americans sitting next to me have different views about that

china should be examined in terms of its international image. i'd like to ask a very simple question. last year and in formal summit meeting in california. they walked freely. they chatted casually. unlike the gun salute of very ceremonial reception in south lawn of white house, as what the americans did before, how do you read into the symbol of it being in formal so that, like the first lady's diplomatic, i mean, people to people diplomacy this time around engaging. americans tried very hard and genuinely, sincerely, very hard to let people from both sides have any feeling towards this new model of major power relationship.

>> i think first, fully summit, it reflects a sort of the different styles of the leaders of china. president xi i think is different from president hu. in getting with united states. and third i think it also reflects two sides, president obama and presidency, they think that maybe the most important thing for the two leaders is to discuss substantial things instead of too much attention to those symbolic and ceremonial issues. why the two sides, they decided is been such a long time to chat, to discuss and establish mutual trust between themselves. one of the reasons is the mutual mistrust between the two countries, i disagree with peter, and i don't think that's

the so-called -- [inaudible] rooted in ideology conflict. but i think it is rooted in the interest conflict. take china, for example. if china is a country who will support just, you know, support independence of alaska or hawaii, and sell the weapons to the pro-independent guys on the islands in alaska, if china is a country who established missiles or missile defense systems in cuba and have allies with canada and mexico, will united states

joined you have mutual trust with china? it's impossible. >> can i respond to speak was go ahead, peter. >> you pretty much made my case for me, because take the example of hawaii, or i'm from oklahoma, so texas. say china decide to take texas from the united states. most okies don't have too many commercial interests, material interest in texas, and yet all oklahomans and all americans would reject that, would be angry and would fight over. and it's not because mr. interest. it's because symbolic politics, because of self-esteem. so i actually, i don't think we're disagreeing with one another in the sense that at one level you asked about trust and distrust and those are the things that are below the surface. so regular day-to-day working relationships are very smooth and improving. i complete agree with your analysis. it's when you have issues that

push beneath the surface that you see there is a lack of mutual trust which undermines stability of the relationship in times of crisis. if we care about u.s.-china relations, we need to be prepared for the next belgrade bombing, annexed by plane collision. if we allow the distrust to build up to the surface, then we could have serious problems, annexed i'm that kind of thing happens. >> thank you very much. i would like to open the floor for audience for q&a and you are encouraged to ask questions. all right. the lady who raised her hand. yes. go ah go ahead. >> thank you, and thank you, panelists, for talking about u.s.-china relations shift in the context of the international, the global

context. i'm from voice of vietnamese americans. i'd like to bring in the picture regional and global community. and of that we have vietnam and asean and japan and south korea and north korea and the whole asia-pacific, everyone. ..