regularly you can live an additional 55, 50 years. so to go from knowing that 50% of people are going to die in a month to knowing that if you take your medicines you could live essentially a normal lifespan just a few years less than a normal lifespan that's a huge advance. ..

five section four of the wisconsin constitution the joint convention of the legislature will come to order for purposes of receiving the governor's state of the state address. lieu lieutenant governor rebecca clayfish is our first guest. [applause] >> attorney general brad shemo. [applause]

>> state superintendent of public instruction tony ebert. [applause] >> chief justice shirley abheransom. [applause] >> justice an walish brantly -- ann -- [applause] >> justice patrick crook. [applause] >> justice david proser.

[applause] >> justice pat rogansac. [applause] >> justice annette biegler. [applause] >> and justice michael gabrielman. [applause] >> okay the joint convention both stand and formal arriving awaiting the governor. the joint convention shall come to order. the chair recognizes the

assembly chargeant arms. the governor of the great state of wisconsin, the hornable scott walker. [applause] -- hornorable -- >> hey, congratulations. [applause] [applause] [applause] [applause]

[applause] >> at this time it is my honor to introduce the governor of the great state of wisconsin, the

honorable, scott walker. [applause] >> thank you. speaker vosse president, majority leader minority leader shilling and barka members of the supreme court, constitution officers, tribal leaders, members of the cabinet, distinguished guest members of the legislature, and most importantly fellow sit zins of the great state of wisconsin is it is on honor to appear before

you tonight -- citizens -- before we get started i would like to introduce the first lady of the great state of wisconsin. [applause] >> also in the gallery is our sons, matt and alex and my parents lou and scott walker as well. [applause] >> sitting next to my wife is the general of the wisconsin

national guard, major general donald dunbar. [applause] >> last friday general dunbar and i saw 522 members of the 115th fighter wing here in madison who answered the call of the nation's commander and chief while still being prepared to respond to the needs right here in wisconsin. this is the strength of the national guard. [applause] >> when all of you here and those of you at home go to bed, ask i that you keep these men and women, as well as each of had other units deployed from wisconsin and their family in your prayers until their safe

return. [applause] >> and how about those packers? [applause] >> that is even better than last year's wall eye initiative. that is pretty good. if there is one thing that can bring democrats and republicans together here in wisconsin it is the green bay packers. forgive me i am a bit horse, but like most of you in the state we spent a lot of time cheering on sunday and i had fun hugging owners in the stand as lambo

field. [applause] >> best of luck to the man who should be the league's mvp aaron rodgers and to the rest of the team this sunday. [applause] >> much like our military and our packers, tonight i am proud to report to each of you here that the state of our state is strong. the source of our strength is our people. i see it when i tour factories, farms and small businesses. i see it when i visit schools and hospitals and places of corp all across this great state. the sitcitizens of wisconsin are decent smart, hard working and they are strong. we have put the power back in their hands and in turn wisconsin is more free and prosperous. [applause]

>> if you remember nothing else remember this: more people are working while fewer are unemployed. state government is more effective, efficient and accountability and the state's financial condition has approved. budgets are set on the public's ability to pay instead of the government's hunger to spend. school scores are up and more students are grnlg waiting and we are helping more of our fellow citizens transition from government dependence to work. the wisconsin comeback is working. [applause] >> according to preliminary numbers from the department of workforce development, there are now 7600 more private sector jobs in wisconsin than there were before the recession. the unemployment rate is at 9.2 percent in january of 2010 is

now down to 5.2 percent. trends show it will continue to drop this year. while december job numbers for the state come out next week the preliminary data for wisconsin shows we had the best monthly private sector job growth in more than two decades. [applause] [applause] >> specifically, the year over year numbers show a creation of 51,000 -- 51,000 proofed sector jobs which is the best since the end of the 1990's. [applause] -- private -- >> budget reforms over the past four years reduced the burden on

the hard working taxpayer of the state by $2 billion and we will continue to reduce that burden every year i am in office. [applause] >> in particular, i am proud to say property taxes were $141 lower in december of 2014 than they were four years ago. that is right. prompt taxes are lower than they were in 2010. how many governors can say that? property --

[applause] >> if property taxes have grown over the past four years over the rate they did between 2006-2010 a typical homeowner would have had to pay $385 more in property taxes this past december. over the last four years combined the difference is more than $800. that is real money. [applause] >> we heard you loud and clear and thanks for all of the the nice notes, e-mails, and calls to tell us how your property taxes went down. we heard from mike and sherry clint, and tammy and john and christine from milwaukee and karen from portage, dale from jeffer son and lewis from

marshville. me pledge to you was that property taxes four years from now will be even lower than they were in 2014. [applause] >> we reduced income and employer taxes, too. and we started taking less out of paychecks from withholding last april so you could keep more of your hard-earned money. on top of the economic success we empowered local school borts to hire and fire on merit and pay on performance so they can keep the best and the brightest in the classroom and it is working. [applause] >> over the past four years graduation rates are up. third grade reading scores are

up. act scores are up. and wisconsin now ranks second in the country. [applause] >> we credit each year with a surplus and we will again this year. [applause] >> wisconsin's pension system is the only one fully-funded in the country. the state's pension and debt ratio is one of the best. our bond rating is positive and the rainy day fund is the largest in state history -- 165 times bigger than when we first took office. [applause]

>> while the state of the state is strong we want it to be stronger in the future. tonight i will lay out plans for part of the legislative agenda for the future of this great state. our plan will help people get education and skills they need to suck sed and we want the opportunity to be as equal as possibility with the outcome left up to each and every one of us. in other words, our plan is to help more people live their piece of the american dream right here in wisconsin. [applause] >> we will build off of our successes and worker training through the blue print for prosperity we announced last year. so far we have helped out nearly 5,000 more students get into classes that are 16 technical colleges throughout the state some of them are with us here tonight. one of those is amber meeks.

amber is 24 and was on a waiting list to get into a welding program. our wisconsin fast forward grant opened up a spot for her starting in the fall semester. amber knows she is getting the training she needs for high paying career that will support her and her 5-year-old daughter cheyanne. both of them are with us here tonight. [applause] >> last year we announced the new program called a better bottom wine has came prom an idea of my friend jeff cell who

was the chair of the governor's association. it is about helping employers unique ability to people who are defined by some as having a disability. today i will recognize some of the people i meet through a better bottom line. spencer is here from dick man manufacturing. heriot who uses skills with vision computers. and dan bloomgren who i met at a pharmacy. let's give them each a round of applause. [applause] >> as part of better bottom

line we expanded programs helping transition people with disabilities into the workforce in a way that matches their skills with the needs of perspective employers. for the first time in more than a decade and with the help of senator shilling and shankland, the division of vocational rehabilitation eliminated a list for employment services for people with significant disabilities. we will continue to expand these programs in the coming year. [applause] >> in addition to worker training we will ensure that every child regardless of background or birth right has access to a quality education. we will continue to empower

families with the choice that is right for their sons and daughters. tonight i call on members of the state legislature to pass legislation enshuring objective information is available for each preschool receiving public funds in the state providing information and allowing parents to make the choice. i don't trust politicians to make the choice. i trust parents. [applause] >> as you can see we are having problem with the video from madison. we apologize. the state of the state address with governor scott walker -- if we are able later to get a clean version of that we will show it to you later in the program schedule on the c-span networks. >> tonight on c-span2, the house weighs and mean committee looks at the state of the united

states economy. and then a house foreign affairs committee on north korea. and then the state of the state address from the indiana governor mike pence. a member of the homeland security talks on the bhs funding bill and the amendments to block president obama's immigration order. and then freshman arizona representative, a former combat marine and member of the armed service committee discusses immigration and veteran's hilary clinton on washington journal. it is live at 7 am eastern on c-span and you can join with calls and comments on twitter. talk to anthony fowchee who is on the frontline battling against diseases. >> we have drugs when given to

people who are hiv infected. in the early '80s if someone came into my clinic with aids their median survival would be 6-8 months. half of them would be dead in eight months. now, if tomorrow when i go back to rounds on friday and someone comes into the clinic who is 20 plus years old relatively recently infected and i put them on the combination of three drugs, i could accurately predict and look them into eye and say we could do modeling to say if you take your medicine regularly you could give an additional 50 years. so to go from knowing that 50% of the people are going to die in eight months to knowing if you take your medicine you could live a normal lifespan just a few years less than a

normal lifespan that is a huge advance. >> director of the institute of allergy and infectious diseases. >> wisconsin congressman paul ryan became chairman of the house, weighs and means committee. members heard from three economist about the state economy and how it will affect tax reform health care and financial regulations. this is three and a half hours. >> the committee will come to order. first of all, i would like to start off by saying what an absolute privilege and honor it is to chair this committee.

i served with many of you for quite a while. 14 years for myself. i came into the this congress with a number of you. i see mr. larson there. i came with kevin. it has been an absolute pleasure serving on this committee and i just want to tell you how i feel gratified and honored to be in this position. second of all announcement we are obviously nat in the weighs and means room. as you know the ways and means room is being rewired for sound reasons because it is also the alternative floor location. that rewiring and reworking of the room is supposed to be completed by april 16th. so hopefully if all goes well we will stop having meetings and hearings in this room and resume it in the ways and means hearing room in mid-april.

i have also seen this committee run very well and sometimes not so well. this committee deals with some of the toughest issues our country faces i want to lead this committee so that we have a full debate on the issues. a full respectful debate on the issues. i want to treat each other with respect and conduct debates in a civil manner. i will work with the ranking member mr. levin toward that result. i would like to welcome all of your new members and returning members. to the returning members, i am glad to have the opportunity to serve with you and to the newest members i would like to introduce you by name. we have pat mean from pennsylvania. christy knome from south dakota and jason smith from missouri.

welcome to our new members. last week we noted the hearing titled moving america forward. today we will hear from three experts about the economy. but as a technical matter and for the time being we are not going to be calling this a hearing. as discussed the minorty staff the house hasn't elected committees and they cannot organize until e -- voted by the house. we will run the briefing under the rules of past congresss where members are recognized according to the gibons rule. it is unique to the ways and means committee. the rule provides that members present in the time of the gavling in will be recognized by

senority and after the gavel you will be recognized in order. we will ask for the transcript from this informal briefing to be included in the next hearing so it is in effective a hearing. the fact mr. levin worked with us out of the gate to make sure we could meet and talk about the economy is the example of the accom accom accom accomdy it takes to make the committee run well. i thank the ranking member for that. let me start with the panel. we have the president of the american action forum and the former director of cbo. professor feldstein is from the president reagan era and peter johnson is from the institute of economics. i want to thank you for sharing your time and we look forward to your testimony. we wanted to hold this hearing

because the way i see it is our mission this year is to move america forward. this committee is going to be command central. we are going to lead the charge in some of the biggest issues facing our economy. tax reform trade agreement, health care, and our thinking is let's get the lay of the land. before we can set things right with the economy we have to understand what is going wrong with the economy. so how are we doing? well, we just got some good news. jobs are up. but this bit of good news looks good only because the rest of the news has been so bad for so long. there is no getting around the fact this is the worst economic recovery since the great depression. if our economy had grown at the pace of the average post-war economy gross domestic product per person would be about $5 700 more. paychecks haven't budged and

more people have given up looking for work. in fact there have never been more people out of the labor force than today. over 92 million people. as one person in a recent focus group told nbc news if you want to make $9 an hour you can get a job. but if you want to make a wage that can support your family good luck. in other words, this latest report is the nicest car in the junk war. this administration's policy has pushed people off the field. what we need to do is take team off the sidelines and get them back into the economy working, learning, building creating and we will expand opportunity for all-americans. and that is the second reason for this hearing. we want to start laying out solutions. this committee is already doing a lot of work on that front and this year we are going to build on the gains. the fact is we know what it will take to turn things around. we need to put those ideas to work.

for instance it is clear that our tax code is broken. we have the highest corporate tax rate in the industrialized world. we are one of the few companies that tax companies when they bring their money back home. and americans spent over six billion hours a year just filling out their tax returns it is so complex. there is no good reason for any of this. we need to make the tax code simpler, fairer and flatter so more people can invest and create jobs here in america. we have a good opportunity to expand markets for exports. we are negotiating several big trade agreement and the first thing we should do is pass trade negotiating authority. it would allow us to hold the administration accountability and get the best deal from our trading partners. as we all know 96% of the world's consumers don't live

here. they live in other countries. and united states manufactureerrs have a $50 billion surplus but the contrast was more than $500 billion. and i believe americans can compete with any country. we just need to give them a chance. break down barriers in america trade and american jobs will talk offer. we need to repeal and replace obamacare with patient reforms. it might take a new president to repeal the law. i know different people have different feelings on the subject but we need to dismantle it piece by piece replace with better reforms. the point is take the power away from the bureaucrats and give it back to patients. we have to get spending under

control. we have to get spending under control so that our country will no longer live under the threat of a debt crisis. and finally we have to get people out of poverty. we have to restore upper moability. we have to restore the promise and idea that the condition of your birth doesn't determine the outcome of your life. that is what we are taught and learned and that is what we lived but not enough people are living it. we need to get people from welfare to work. this committee has a real opportunity to help working families get ahead. and that is what this committee is going to be about: moving america forward. so i have laid out a few ideas to get the conversation started. some we will agree with and some we may not. i look forward to hearing from the members and witnesses. everyone is going to add new idea and we want to hear from

them. but building a healthy economy is the focus and mission because that is what the american people deserve. with that i would like to lead to the member from michigan mr. levin. >> thank you very much. and congratulations on your chairmanship, mr. chairman. that wasn't our first wish. let me also say as i express to you, if the lions beat the packers you would be clean shaved. >> and you would have a beer. >> i want everyone to know why paul ryan is growing a beard and if the quarterback's health doesn't resume i think you will be clean shaven at the next hearing. >> we shall see.

>> anyway good luck to the packers. let miley out a few views for us democrats as we proceed -- me lay -- our economy has experienced a major bounce back rebounding from the loss of seven million jobs in a single year beginning in 2008. and unemployment rate that soar soared to 10% in 2009. more than 11 million private sector jobs have been created in the last five years. as shown in the chart that i hope will now appear here with 58 straight months of private sector job growth leading the unemployment rate to fall to

5.6%. so i think reference to a junk yard is terribly misguided. i know something about cars. i think the economy of this country has been put back on its feet and it is moving ahead. you can see it in the stock market if you wish to look at it. it is climbing to record highs. and the deficit is a percentage of gdp and it has been cut by two thirds since 2009. the affordable care act, which the chairman and others continue to say should be repealed has helped to cut the percentage of americans without insurance. millions now have it who never had it before. and health care permitters

premiums are growing at the lowest rate in 50 years. this major reversal from deep decline out of the junk yard to economic growth occurred despite republican opposition to the president's proposal repeated gop threats to default on our debt obligations, and an incredible harmful 16-day governmental shutdown fueled by an unending opposition to the aca. this year must see a different environment. it must mr. chairman and colleagues, see bipartisan action on important issues. among the deepest challenges facing our economy today remains one that has persisted for decades starting in the 1980s,

stagnant middle class wage growth. and now this second chart a striking one from vti, shows the nearly flat line of wage growth that the bottom 90% of american workers has experienced since 1980 even incomes growing significantly and dramatically among the wealthiest. this chart is going back to 1980 and showing the bottom 90% has more or less had stagnant income but for the very wealthy it has spiralled. indeed in december the post chronicled the long-standing problems faceing the middle class and found the average wage in a quarter of counties is lower

today than it was 35 years ago. that is real stagnation in the lives of america's middle class. even immediate and much-needed steps the democrats have promoted to address this problem and they have encountered a road block from republicans. efforts to increase the minimum wage and to ensure that women earn the same as men for equal work and those have encountered fierce republican resistance. an administration proposal to require overtime pay for millions of additional white coller workers who are currently not covered has been met with strong criticism from some congressional republicans. and financing the long-term needs of our nation's infrastructure has taken a back-seat despite the fact we know investments in infrastructure create jobs and

make us stronger in the future. and this committee has not held a hearing on this topic in the last four years. i hope that in my further discussions with the chairman we can reach agreement quickly on holding hearings on the financing of major infrastructure legislation as you mr. chairman and i have discussed. tax reform must be a central focus of this committee. democrats believe that reforming the tax code should not be centered on rate cuts at the very top for the wealthiest americans and we have seen from the chart why that is true. but rather on creating a tax code that is fair for working families, promoting economic growth and eliminating loop holes for special interest and en

ensuring both individuals and businesses pay their fair share of taxes. under any successs and-- circumstances -- and we learned that for tax reform to regress it is essential there is serious open discussions on a bipartisan bases from the very beginning, mr. chairman, and throughout. i hope we can proceed accordingly. on pte negotiations are at a vital juncture with many of the key issues unresolved. this is the most significant negotiation involving nations representing 40% of the world economy and representing many new issues.

how these issues are resolved is central to rather we are moving affective trade policy forward. important challenge in trade is not just get it done. but get it right. congress must be a full partner and as we have discussed, mr. chairman, i suggest we organize on a bipartisan bases to work and discuss the substance of tpt. thank you. >> thank you mr. levin. for our witnesses, you will have five minutes to submit testimony with your full written submitted to the record. i will ask you to summarize for five minutes because a lot of members want to get on with the questions. >> thank you mr. chairman,

rapping ranking member and members of the committee. it is a pleasure to be here. you have my written statement and let me make three points before turning to the questions. first, policy toward economic growth are really important right now. mr. chairman outlining in the opening remarks, the economy is growing at something that looks like two and half or two and three quarters per cent. it generated 250,000 jobs in december but we continue to see very flat and sluggish real wage growth. we continue to see median household incomes fail to rise and there is an obvious need to do better than the two and three quarters. and there is hope that 2015 will show stronger economic growth and we should all welcome that if it happens. put it is important to remember

the congressional budget office pegs the long term potential growth rate of the economy at 2.3 percent. so if you take that at face value this is the boom. these are the good times. and the thought that is the best we can do i find quite troubling. i think we should look for opportunities to change the 2.3 percent into a rapid, long-term potential growth for the united states economy so we get more sustained living increase in the united states. we have to do much better over

the long term in order for americans to feel they have the opportunity for the american dream. that kind of growth comes from two sources. the first is to actually build up and accumulate your skills, your technologies the capital and the factories and equipment and means of production and incentives to accumulate those skills, technologies and capital are essential and riddled throughout the jurisdiction of the committee. and that is one thing to focus on. the second is greater productivity from things and workers in the economy. it comes from strong incentives and a minimal interference from policies that distort decisions and allow them to chose the means and production to the best of their ability and focusing on stripping away interference with

the productivity growth should be high on the agenda for the committee. trade policies are a great opportunity right now. the transatlantic trade partnership is important. this is as a historic spur of growth if you go back to the mid-90s we put a conductor agreement and we saw a boom and the ability of americans competing is very good. to get that done you have to give the president trade promotion authority and i think that should be a top priority of the congress. tax reform is a great opportunity. i will not belabor the pieces in my written statement but it is anti-growth and ours is

structured to be anti-competitive complicated and raises almost no revenue. the individual code is very complex. and the last is i would argue if affordable care act is riddled with anti-growth features. there is a lot of bad tax policies. put the need for revenue aside, the structure of the tax and health insurance fee are highly inefficient and ought to be looked at. it knows in the wrong direction from the long-term problems in the federal budget where we will need to control the spending and debt and reduce the threat to the long-term economic growth. so there is a lot of opportunities to the congress and there is a great need for better long-term growth. i congratulate the committee and look forward to your questions. >> thank you. professor? you have to turn it on.

yes, sir. and pull it close to you. very unit directional. remember that record? >> thank you both for the in invitation and the advice on using this complex technology. i am pleased to appear before this distinguished committee. tax reform can be the major driver ouchf faster gdp growth. luckily the tax code is better than it was in many ways before i first appeared. we have lower tax rates and capital gains among corporate profits and that improves incentives and contributes to faster growth and better jobs. but there is back sliding in tax rates since the tax reform of 1986. remedying this should be a goal

of tax reform. many can stregthen growth and reduce the fiscal deficit. because my time is limited i will focus on a few things that receive less attention than they should. let me start with tax reforms that can increase the employment of women and raise their after tax incomes. current tax and social security rules penalize married women more than others. the federal government taxes a wife's first dollar of earning at the same rate as her husband's last dollar of earnings. other countries tax each individual on their own earnings giving married women a greater incentive to work and work at jobs that pay higher wages. social security now taxes a woman on her full earnings.

the labor rate participation is declined to half that of 65-69. congress in 1983 raised the age for full social security benefits from 65 to 67. as a result the labor force participation rate among 65-69 went from 21 percent to 32 percent. let me turned to policies designed to raise the nation's

rate of saving and capital stock. house hold saving between 1960-1965 was 9% of after texas taxpayer income and now is about a third of that. these include the deductibility of mortgage interest and the level of unfunded social security benefits. automatic ira funds and a mixed system of supplemental based security accounts would increase nationtal security and raise incomes and create better paying jobs. unfortunately, most of house hold saving is now absorbed by the federal budget deficit.

the good news is that small reductions in the annual deficit can prevent the rising debt level and bring it back to lower levels. reducing the annual deficit from today's three percent of gdp to two percent would put us on a path of debt ratio of less than 50 percent. that should be a goal of congress over the years. it requires slower growth of government spending and increase tax revenue. because the annually appropriated spence for non-defense programs is being squeezed to historic low levels

controlling the spending requires slowing the growth of the middle class programs for seniors. tax revenue can be raised without increasing marginal tax rates by limiting the ability of taxpayers to use the tax expenditure features of the tax code to reduce their tax liabilities. these tax expenditures are a major form of government spending. i would say the major form of government's domestic spending. capping the use of these tax subsidies could simplify the tax paying process by inducing them to use the standard deduction rather than itemizing deduction deductions. my written testimony shows reference to a study on how such a cap might be implemented. finally tax reform can improve the way our nation's savings are used. a key element in that is the

corporate tax reform. reducing the corporate tax rate now the highest in the industrial world, and shipping to the type of international rule, the territorial system used by every other industrial nation. thank you for the opportunity to summarize my views and i look forward to the questions. >> professor johnson? >> thank you, mr. chairman. i am the former chief economist of the monetary fund. i would like to make three points in a comparative and global context. the first is about the recovery second about the stagnation and the third is about the gdp. on the recovery if we look at the united states experience with all of the counties

affected by this crisis and it was a global crisis and the biggest crisis the world faced, most of the countries have struggled to recover from the crisis. can you make it timely? appropriate? will it be temporary? and we have seen problems in other countries but looking at the united states we have done well on exactly these points including the fact the deficit came down and the level has increased as the professor said. it is better than other countries and it isn't yet close to any levels that would trigger a debt crisis. the problem seen comparatively in the united states experience is the lack of agreement on the

policy including the talk around the debt ceilings and the various issues that led to the government shutdown. these are damaged our trading partners and created uncertainty. and they have made the problems worse several times through this mechanisms. i wish we would stop and focus more on the issues you are emphasising. in that context, during the attempt to recover i think there are two important achievements. the first is dodd frank. and if you repeal that you will open yourself up again to another destabalizing global catastophre and the second is the affordable care act which contributed to holding down health care cost. it is absolutely essential we control our spending on social insurance programs as it was

emphasised. i agree and the affordable care act is taking concrete steps in that direction. it is still early days. i agree. but we need the programs to have a chance to work and be evaluated. on the longer term issue of stagnant incomes, we have to look back and say where do these come from. it has been since the 1980s. it is about technical changes, globalization which has had big affects on inequality. and this is nothing special about the united states. other countries are caught up in the process but the difference is in the way which public policy responds. you can work on improving human capital, education and stregthen health care and make it more available or you can prefer some sort of trickle down policy where you give advantages to people who are high up on the

income scale and you have seen they have done well and you get into redistribution. and help those people and assume it that is going to share the benefits more broadly. that has been a disappointing performance for 90% of americans since the 1980s. it is a 30-year problem. i think mr. levin is right. there is plenty of smoke for changing and improving the tax system keeping n mind the problems we have long standing problems, with the decline of the middle class. and finally on the trade agreements i completely agree these are very important issues. and tpt is absolutely center stage for this congress. however, i would urge all republicans, and of course democrats, to take the issue of currency manipulation seriously. there has been cheating by some of the governments with whom we

trade. it isn't the number one problem among the countries entering to the agreement. that is a good thing. now is a good moment to negotiate that and lock in the current more flexible currency regulations. but please don't think that just trade and more trade is necessarily good for the middle class. ...

a. >> yes. >> what is the explanation for that? >> there are two pieces, one is demography and aging of the population, the retirement of older age. and the second comes from many sources and the cbo has over the past six years marked on the perception of the capacity of the u.s. economy. >> two of those areas this committee has an enormous impact on issues within the jurisdiction. demography getting people into the workforce. as well as capital stock and productivity. and that includes the treatment of that.

in 1996 to 2000, you had a republican congress and a democratic president. the result of that combination then produced welfare reform capital gain tax a reduction in spending a balanced budget deregulation of the telecommunications industry and he had already negotiated and got approval of bipartisan support. we saw very robust strong economic growth across the board. we saw people moving from poverty into the work force and into better lives. it was a good time. it seems to me that that kind of combination of reforms is what we need now. please give me your general sense of what could we best do to pull people from 92 million

people who are not at work what could we do to pull them into the workforce to help deal with a productivity issue and deal with the demographic issue that is giving us these lower standards of living. and what can we do on the tax front to help to increase our productivity. >> starting with the latter, you have to deal with the corporate tax code which is the single most potent anti-growth tax and we have the highest tax rate in the world. that is an invitation for bad growth performance and efforts are international component. i think that we start with that. and more generally i think that you have to be especially focused on the growth impact, dividends, capital gains, the taxing of corporations in that

regard. in the end it is quite simple that you give up something now in order to save an investment and every margin whether social security rolls you want to provide people with incentives and interfere with that as little as possible. but on the work front i think that in the united states the difference between being poor and not for his work. the difference between being successful in working and less successful when working is education and skills. at every juncture you want to have a social safety net and that is what welfare reform dead. you want to take social security and make sure that it doesn't discourage us. every every time you take up an issue in this committee, it asks order the work incentives and how can we do better and that is the recipe. and a lot of people think that growth is a bill.

you check the box and you go do other things. but the truth is that growth is a philosophy. you have to make tough policy decisions labor considerations versus others, you have to air on the side of growth. that is the job of this committee. >> you were around during two rounds of tax reforms. we had this where the top rate was brought down to 20%. capital gains when a was well and are there lessons that we derive from that? the next question is that was a different time where the global economy was far less integrated where it is today. the rates are the highest in the industrialized world where it sort of unlike other countries

in that we tax most of the businesses and individuals will recall passed through his and i think it's 44.6% effectively. we are taxing businesses at much higher rates and in this global economy how much of a difference is that making with respect to global competitiveness and what are the lessons that we ought to derive from the prop and trim past experiences and what mistakes did you make them do you think we should have avoided? >> well, i think that the tax reform experience in the 1980s during the reagan years is a positive one. we saw rates come down and we saw a significant increase in tax revenues as individuals shifted from tax shelters and

into reporting more income and so the revenue costs about was last then a pure static analysis would suggest. it also provided strong incentives for saving them for job growth. and the corporate tax has become a bigger problem, we used to have a much higher corporate tax rate and we brought it down, the rest of the world brought it down more rapidly. so we now see ourselves with a higher corporate tax rate than any other country in the world. that puts our companies at a disadvantage and raises cost of capital and making more attractive to invest abroad to invest in the united states and it raises the cost and therefore the prices of american products and that makes it harder for us to compete with imports and

harder to compete as we export to the rest of the world. and that is why there is broad agreement that bringing down the corporate tax rates and moving to an integrated system, the so-called territorial system would make a lot of sense. >> being respectful of other people's times, high yield over to mr. levin. >> thank you. first i would like to be two charts, if you would do it right now, please distribute. also the two or three witnesses. we are a little bit clumsy hair. please go ahead and distribute on this side as well.

[inaudible] >> just the old fashion way [inaudible] >> let me start -- let me just discussed quickly, i don't want to dwell on it except to say that i do think that it is a mistake to minimize the progress that we have made in the last years. we need to look toward the future and trying to degrade or describe what has happened is a serious mistake. these two charts show what you

have said. the first chart shows the net employment gain in the u.s. compared to the uk certainly canada and japan and korea as well as all others and you will see that more than half of the employment gain from 21022,014 was in the united states. this relates to other economies and it's very striking with what has happened in other countries compared to the united states. if we are going to move ahead it is important not to miss describe the past and i think it's also important for us to

look at the policies that we have been undertaking. if i might say so i hope that the republicans are take another look at the opposition to stimulate this policy and what has really worked, let me say that the other witnesses i think that we need to look at it and we need to also look at the effective tax rate. because it dairies dramatically according to sectors. in some sectors they are paying the whole thing. but in other sectors the tax rate is much lower and in some cases it is zero. and so i think that we need to take a good look at it. so going back to the first chart

that i put out there. actually it is the second chart, i would like doctor johnson if we could put that back, the second chart that i referred to which talks about the stagnant income for the bottom 90% in contrast to the top 10% and the top 1%. doctor johnson, you referred to this and describe if you would please, this goes back to the 80s. you mentioned a few of the factors trying to turn our attention as we must to income stagnation to the middle class please talk about the major

factors going back 45 years. if not please go ahead and proceed. >> it is important. it doesn't matter which way you break it down. you can do it for the lowered 70% or lower 20%. it's a similar story that people who used to be in the middle of the income distribution and people who are middle-class people that have a high school education, one or two years after high school, they have done relatively badly in terms of income growth and the research has been done by many people including david and his colleagues emphasizing the origins of technological change making it a way and what was administered as clerk all jobs before. secondly globalization and the trade that has developed, probably not as important as technological change, but something that has reinforced that and in addition.

>> as we talk about the importance of exports, relating to globalization we have to talk about the impact of imports. there is often a tendency to look at one side of the equation. clearly you have to look at both and that is your point. >> david and colleagues have some research on the effect of china's surge of exports to the united states and this includes the two thousands. they have mapped out in compelling detail the disruption of jobs in american manufacturing related specifically from that, which facilitated an episode of currency manipulation in which the chinese yan was kept below market value with government policy. so it's very important, they have destroyed jobs and then people go down. they can get a job again, they

go down in terms of the income. and that is a big part of what is behind the situation. >> we are having technical difficulties with the technology, when it comes to pay increases the top wage grew 130%. >> mr. johnson. >> thank you mr. chairman. >> i want to begin by asking you questions about the social security disability including in 2016 come in the last thing that should happen is congress

bailing this outcome of this is worse than kicking a can down the road, making this program wars without doing anything to fix it. do you believe that reforming disability insurance would improve economic growth? >> yes, in a couple of ways. first on the program itself we have a clear issue with people going on and i think that it is usual to have people in these concrete groups and work with a fluid reality out there and if there is a program out there providing this, there is a lot of water and come on top of that.

and so people go into di they never come out. many fine way to exit and we benefit from that. and so it that includes serious review. it's a great opportunity for the congress to look at a mandatory spending program and instead of just stealing money and financing it or just cutting it reforming it and costs less that would he a mandatory spending problem in the years going forward, we have tried things like cutting medicare and it doesn't work. we need reforms are not cuts and this is a good place to start. >> i am sure that most of my colleagues do as well. it can take a long time for a person to receive a decision on

an application for disability. for those that do not qualify for benefits how does this affect the earnings? >> in general this is bad for many people, we learned it in the downturn and we have a policy that has a bad incentive. >> sometimes workers take this before they stop working and medications that they need to keep and if they claim benefits and benefits are reduced based on how much they earn how can we better encourage this especially in a worker's career. >> there are a long list of things to do looking at the

normal retirement age and moving it to match the current life expectancies the taxation of social security earnings when people are working and having earnings and the program itself needs to be reformed. and this is a pension program that has promised to cut benefits 25% across the board for 20 years not a very good way to run a pension program so it ought to be reformed so will be sustainable for future. they can make their labor force decisions and all of that would be beneficial. >> tell me why you think that we should tax the earnings. >> i did not say that i wanted to. >> okay. thank you, mr. chairman. >> mr. lewis. >> thank you mr. chairman.

i want to take an opportunity to congratulate you in this committee in late the gentlemen i look forward to working with you. >> thank you. >> welcome members of the panel. doctor johnson please go ahead. >> this is an issue and a problem that we encounter in many crises. this is why preventing severe financial crisis is important. so many people are dumped into the labor markets and the gentleman said that you're overwhelmed and more people do end up with stress on disability because of what has happened. so that is why dodd-frank is so important and i urge you not to lose sight of the big picture.

this is why this was important also, getting people back to work making sure that they stay engaged with the labor force. and those are the circumstances in which we found ourselves at the end of 2008 and 2009. >> the budget passed would unfairly target low to moderate income americans, for significant cuts with at least 69% serving people of a limited means. so i would like you to tell us if you worry that cutting medical and education assistance might be counterproductive with

long-term economic growth? >> yes the human capital peoples ability to learn children's ability is affected by the access to nutrition health care it's a very sensible investment after future growth of the country and the fiscal sustainability, because those are the people -- when they grow up they can't concentrate or it is a family that has medical emergencies that mean that they cannot keep the children in school, all of this affects the rest of society as well and people responsible for it. >> are you concerned that this might increase inequality?

and it is already a growing concern across the country? >> and equality is an important issue and that is what you saw in this chart. i would say that it's not just about an alvey at this point and it is about people, it is about who are you helping when they are young and their family can't help them. but i think it is about immigration reform. this includes helping people come to the labor force that the huge advantage that we have relative to other industrial countries through legal integration, no other major developed industrial country has that kind of opportunity going forward. >> we thank you very much, sir. >> thank you, mr. chairman.

>> i have been working for several years on a proposal to get it out of the sandbox that we have been in and get us to a system and not only here but also offshore. to let that money go to where it is best used in the economy or entrepreneurs and investors want to invest. you are based off of this tax and what i do is converted it into taking that tax and just looking at it as an all business activity and created this to work under a chairman's camp and now chairman ryan trying to get this to a revenue neutral score. because it is a theory now and i'm trying to vet at and get it

out there so that all republicans and democrats, the american people have a chance to look at this and i know you are familiar with it. and i would like to talk about the positives and possibly the negatives in this. >> this is one of the greatest tax policy minds that someone has ever seen, i am a big fan and there are a lot of virtues on the point of view of effective tax rates of the economy, it's an important consideration and it can be paired with a kind of territorial systems that have been mentioned that would allow us to stop the practice of this offshore, the overseas earnings of companies. again, that is having this flow and do that.

it is taxing people on what they take out of the economy and what they consume as opposed what they contribute. the efforts and skills, the savings. and i think that that is the basis for taxation and a fair principle. it distinguishes as a result between high income individuals and those that put her back and who the economy and help the nation as a whole. thinking about fairness, not all people are created equal. the downside is is the affluence, i think that that can be addressed and how you treat the return to capital for those that are extremely successful. and so this basically are about

everything that is taxed as you come out when it is part of it. so that means if you end up being microsoft or an enormous startup, all of that gets taxed. and in all of them they look like rock style things so you have to pick at this point in time this policy that has better fairness considerations. this is a good candidate. >> it is fair because now we have entrepreneurs making their startup decisions based off the tax code, which is exactly what we don't want them to do. >> we only have a minute left and i don't know if you are familiar with guys, but i would love to get your thoughts if you

could. >> the idea is described as a kind of generalized ira in which individuals can save and pay tax only when they take it out as improving the fairness and saving incentives and groups. >> i look forward to sharing the proposal. it is a draft for now, but i would like to get your comments when you can. ..

now i supported stimulus got got up on the floor and spoke in support. and you we will have a moment to reject that if it is not true . how according to this undertaking we measure the effect of stimulus in terms of investment which i happen to believe is a pro growth economic undertaking. i am comfortable enough

>> let me go back to the stimulus bill and 2,009. at that time interest rates were down at about zero and and i thought we did need a fiscal stimulus. i thought the design of that particular bill was not good. good. i thought in the end it provided some stimulus to the national debt than gdp. in the end it had a significant recovery introducing so-called quantitative easing, breaking down interest rates which led to big increases

in both home values and stock market equity values, household net worth rose $10 $10 trillion in 2,013 which led to increased consumer spending which led to more hiring by farms, more inventory accumulation and gave us the recovery that started in the 2nd half of 2013. so i think that as a more general proposition, when when you do tax changes or you do spending it is worth trying to calculate what it we will do to gdp. and historically on the tax side that has not been done. congress gets an incorrect view of what the costs are

of tax reductions and the benefits of tax increases. >> thank you. can we here from the other to quickly the mac. >> this is a big issue. very few bills are substantial enough in their impact to merit looking for the growth and packs of those bills. so, you know, a couple of bills and each congress will probably merit this consideration. i do not think he we will change most of the work of the congress much at all. this is not a new thing or a particularly exotic thing. every president's -- to drive every president's budget is dynamically scored. we have been doing it. the 3rd thing i will say it is no more uncertain or difficult than conventional

scoring. i had to score terrorism risk insurance the financial consequences of an attack at an unknown time with an unknown weapon. that is hard. i don't don't think any of that should stop the members of this committee should know it to of knowing those things which are better than those which are not. >> i agree we should consider the full implications but this is complicated, and so are these models. now assuming full employment is a little bit of a stretch it needs to be used extremely carefully. >> mr. chairman, i examined examined at the time the opportunity to apply dynamic scoring if that is the

embrace of the rules package passed by the house. >> it is in the house rules. >> the gentleman should review. >> we looked at it mr. chairman. >> spending as well. >> the gentleman's concerns have been addressed. >> but the language is different as to spending as to revenue. i suggest i suggest -- >> the gentleman's time is expired. we can relive this another time. >> thank you mr. chairman. doctor holt seeking, you mentioned trade creates jobs. in my home state of ohio home of the national champion buckeyes, by the way. [laughter] we are winning. well, never mind. >> champion of what? >> a lot of misconceptions a lot of rhetoric thrown around, particularly during

presidential campaigns. we have had presidential candidates talk about trade being bad but export being good. can you do trade with that export. it has been surreal to watch. international trade supports 1.4 million jobs. goods exported to our trading partners account for about a 48% a 48 percent increase over the last 12 years to our trading partners. our trading partners purchased 19 times more goods per capita for mobile than non- trading countries in 2012. canada is our biggest exporter, but nafta is bad and many people in ohio think it's campaign rhetoric

my dad was a steel worker. like many jobs that people in that industry has had those jobs to not go overseas technology change those jobs. often times we never hear about the advancement of technology and what that has done to our economy. the scapegoat tends to be these judgment elsewhere. manufacturing plants for the use to be 20 people on an assembly line in hours one. nineteen jobs gone because of technology. those cost jobs. as we move forward with respect to your testimony i think there is a huge opportunity for america.

whether you look at trade exporting, trade, exporting, the tax code we in the united states are doing well despite the fact we have one arm tied behind our back. whether it is corporate tax rate, fewer trading partners in many of our allies around the world. can you tell us why particularly on trade opening up additional markets and giving the president tpa is important. >> so it is important now because we are not fully employed and do not have everyone who wants to work at work and additional opportunities to access markets and sell our products are especially important right now. moving quickly is beneficial. the 2nd thing is we we

will be in and if you are on the sidelines waiting is not a good idea. ultimately we would expect us to get back to full employment but this is an opportunity to self parts of the world where we will see the greatest income growth which means better income better jobs, not just more and the 3rd is you get the opportunity to take advantage of technology, as you said. you can take advantage of that through trade. the biggest example of trade has been driven by advances in natural gas and oil exploration and has changed the global lay of the land permanently. you could not imagine the level of geopolitical risk we have in the middle east right now. it has changed our imports of those products which has been a change in trade.

>> but the displacement is not. >> it is not national trade committees interregional trade. this is part of an economy adjustment. >> thank you. mr. doggett is recognized. >> thank you, mr. chairman, i suppose i'm hearing on hearing of this topic of this import that is merely an oversight that i guess the leader of republican thinking on this in the senate at least sen. mcconnell began the session by noting that what he called the uptick in our economy resulted from the mere expectation of a

republican congress. it is good to no that after so many apocalyptic predictions about the economic recovery act, the affordable care act and almost everything else that over the last six or seven years this administration either has or has not done, that we have enough progress that some republican is claiming credit for all of the things that they said would hurt or hinder the economy that have in fact in most cases help to significantly. i guess that it does give new meaning to the old reference to the memory of an elephant. one of the areas that we have not seen the progress that we need to see is the fact that not all americans have shared and this is not by accident but the data is rather remarkable.

the widest wealth gap in three decades. the compensation for the chief executive officers at american corporations was about 20 times that of the typical worker back in the 60s but in more recent years it has become 300 times the typical worker's pay. since 1979 worker productivity increased by 65 percent but worker wages remained essentially flat. ceo pay grew by almost 1000%. i think that this income inequality has some of the same pernicious effects on economic growth in our country as discrimination against various groups, gender discrimination, for example claiming that we are not going to permit women to

participate fully in our economy. in this case we have treated one group of americans as really not having the potential to achieve -- not being able to fully achieve their god-given potential. i just wanted to ask you about that further the impact of decisions here in congress either through action or inaction to not have all americans participate in this and adopt policies like the american opportunity tax credit and increases in pell grants to assure that more americans can share and contribute to the economy. does that have an impact on future economic activity and growth? >> it has a huge impact. no one is asking you to be like

kink you and turn back the tide. there have been many things under the purview of this committee that could give people incentives and resources. we know what kind of skills we need. you need to have quantitative skills and analytical reasoning skills. we also no it is hard for many people to get those skills or any kind of post high school education. we should shift away from k-12 2 k 14. you need those two years post high school. >> as far as corporate taxes are concerned, it is difficult to see how you can lower the rate much more for

a company like general electric unless you begin to pay them for operating, which we have done in some years where corporation after corporation pays its lobbyists more than it pays the treasury. is it important to close loopholes at the same time we make changes to the statutory rate? >> if you are going to consider just corporate taxes you should stay on a revenue neutral approach. some of this would do away with accelerated depreciation. compare around the world and with other countries. the world bank does this. we are number seven in the world and are very close to five other countries in those rankings. >> thank you. >> thank you and congratulations. like my colleagues i support a robust trade agenda. i come from washington state.

40% 40 percent of the jobs created in washington are a direct result of our strong trade agenda not only most of the colleagues on this panel agree with the strong trade agenda but the president of the united states and our ambassador both agree that they are critical to doubling our exports and creating jobs in america. i happen to be a member of the pres.'s export president's export council and have been for the past six years and have been at almost every one of those meetings. the the president and the ambassador's wishes that the democrats recognize the importance as much as the president and ambassadors do

40% of the jobs in washington state, there was a little bit of talk about technology. technology. more on small business and how technology has helped small business. exporting goods like airplanes, airplanes, etc., but i have a son in law currently in china a small software producer. a son who is -- they had ten or 12 employees. they send products all over the world. how important is trade to the small businesses in the future and the expansion of their businesses? how important is trade to creating jobs in those small businesses and opportunities for people to migrate to small businesses for employment?

>> a ballpark number. they are are small. the value of what they export is not large and they get dominated by boeing and microsoft. in terms of being engaged in international commerce small businesses do this as an important part to get to other countries and sell there. we also no that it is small and growing businesses that create the majority of jobs on an ongoing basis. fair access is intimately linked to our success in creating your jobs at higher pay and getting rid of the old less high paying jobs as a part natural economic growth. it is important to keep an eye on good ability of trade agreements that level the playing field. >> we are talking about 80 percent or more of the jobs created across this country are really created by small businesses. >> the small, growing

businesses. >> that creates trade and opportunity. not only in the united states but what everyone has described on this panel 95 percent of our market is outside of this country. >> and the advantages come in subtle ways that are hard to document. you see the kinds of competitive pressures that you face, the kind of technologies competitors are using marketing business models and those things get acquired and infused into american firms and make them more effective. there there is lot of advantage to being engaged in these activities. >> i would like to address my last question to you quickly. in in another area where we have the ability to boost our economy businesses large and small we will benefit from looking at our tax code and creating certainty and stability in

our tax code and the opportunity to grow and invest. what about passed through businesses? sole proprietorships they face a high marginal tax rate in addition to high compliance cost. how do you see the change in tax code specific to helping those small pastor businesses? >> i think that is a a major challenge that we face as a committee and congress. lowering the corporate tax rate for both the president and the republicans have said we have got to get down into the 20s we still the pastor businesses facing much higher tax rates. somehow that must be dealt with. by treating by treating the

business income of pass-through individuals differently from other things so that, in effect, they get the advantages of the lower tax rates is, corporate tax reform. >> i yield back. >> thank you. >> thank you, mr. chairman. echoing the sentiments the sentiments of the committee, congratulations on two fronts becoming chairman great success with the green bay packers. condolences. you guys was robbed. it was a catch. i do not want to create further controversy. >> how about the detroit lions? >> that is really dynamic scoring but it does get to the. i want to acknowledge there

is a floor of $16 per hour being announced by aetna in large part to the success of the affordable care act and coordinated care of pro-growth industry. i wanted to write knowledge that and return to the.of dynamic scoring not as related to the game but as it relates to the rules that are before us. with respect to infrastructure in general, something that this committee desperately needs to address in terms of our highway infrastructure but roads, bridges, sewage systems, broadband for schools, a quick schools a quick answer from the members, yes or no should dynamic scoring be included in major national infrastructure programs? it will start from left to right.

>> if it is really major i can see the case for it but as has been -- >> 70% of 70 percent of roads and bridges and deterioration and long neglected by the congress, it seems like this is a pent-up need that certainly would require that. >> it would be good to no what impact on gdp that kind of infrastructure program would have. >> if it is large-scale under the house rule it we will be scored. that is the rule. if it is extremely large-scale and possibly going to have macro impacts the committee chairs can designate legislation to be major legislation and have it be scored. there is nothing about this rule that tilts the field in one direction or the other. >> but can we include medicaid for children, the affordable care act and dodd frank reforms which are

scored back wards according to the cbo. you cbo. you're not going to save the budget anything. you will open yourself up to another financial catastrophe. >> let me yield to my colleague from massachusetts who i think was making the.of differentiating on those rules as if they exist. i yield to mr. neel. >> we will we are trying to get to hear is the idea that their are economic outcomes that come from significant infrastructure investments that are not only long-overdue but have been resisted by the majority in the house. the path forward seems to me to be one that would include, for example an investment in two huge union stations, putting a lot of an -- a lot of construction workers on the job.

children who live in communities that have first-class colleges have to go to the parking lot at the local library during the evening hours to connect to the internet. those are the sorts of measurements. if if we are only going to apply this to tax cuts it seems as though it is ill considered. if we decide to talk about long-term investments what better way to do it than improving rail term. that 1st train when we got to western massachusetts on the way to vermont vermont it got up to 79 miles per hour. how do we measure that accurately consistent with the.that mr. larson has made if we resist the idea that that does not count in terms of a long-term forecast economically?

>> i i think we should be considering broader economic impact. i worry about the uncertainty and it looms large. that is why you have to be careful with exactly the details of the models being used and the implications but of course you are right, there are positive growth implications for renewing infrastructure. >> thank you. >> thank you you, mr. chairman. here we are in your number six of the recovery. you really laid out the task of this committee very clearly. to accelerate long-term growth in this country beyond the paltry 2.3 percent we are seeing. as i have looked and read many things during the course of these past few years trade and energy have

been the two accelerants that have worked against the dragons we have seen in this economy as we have tried to climb out of the recession, and i want to.out in my state state, in louisiana we are now seeing 86 billion in new investment. exports now account for 25 percent of the state gdp. we have doubled exports in four years within the trade and energy space. chemical and petrochemical exports seen a resurgence in manufacturing. these are bright spots. what worries me in this are the macroeconomic threats from the slowing in asia clearly the problems in europe, they cannot get

policy straight, seeing many countries and insecurity in the middle east and elsewhere. what do we do about those things? there are many things that we can do within the jurisdiction of this committee. what can the united states do to mitigate these threats and lead to mac without us we we will not see this type of growth. i believe america's opportunity to lead, lead the catalyst for is trade promotion authority which opens the door and gives our negotiators the best leverage to move forward on these trade agreements. this is our opportunity for growth. we must focus on what we can do. with energy and trade and

the success story we are staying in louisiana, two things i want to.out. it is my my sense that these jobs related to exports and manufacturing exports as well as energy jobs pay significantly better than jobs unrelated to that. many folks back home with a high school education are making pretty good money significantly better than those unrelated to energy and we no of statistics that deal with trade or export related jobs. the figure is roughly 18 percent higher. would you all agree that these types of jobs pay better? >> i think that is a fact. >> as we deal with income inequality this is one of the potential solutions. embracing trade policy, opening markets, and embracing this remarkable energy revolution which we are seeing today, not penalizing it with taxes or

other things things, but embracing it as a truly revolutionary development that would put the united states in a role to lead. .. >> >>