the build america of bonds and those were great - - quite well. after pointing out there are many avenues of agreement given the history in massachusetts, we can also in acknowledged the proposal that has been offered on a graduate has been a great deal. . .re receiving it now. but i would carefully suggest that that is a huge plus for

america and helps us set it aside in the pacific northwest as boeing and microsoft and those of us have graduate medical education and i hope the administration will treat it with the same regard as they do other initiatives that have been proposed, i think $16 billion in terms of the cuts are a bit over the top and i hope that you will have due consideration for the proposal that you're offering and to really set it aside to be the next few minutes to talk about the proposal as i had talked about. >> let me talk about the tax credits and the bonds you have talked about, we have agreed very much that they have made a huge difference. and we are honestly considering new market tax credits, which is also a bipartisan

administration, so we can do things together in a bipartisan basis to create real opportunity obviously the issues regarding this is always difficult in this includes proposals from past budgets were we have the savings in medicare and as always we look forward to working with congress to develop a path forward and it's part of a comprehensive approach to deal with our fiscal challenges. and i think that it will deal with the entirety of the package and it is an issue that i know is a particular concern in boston and massachusetts and new york. >> thank you.

sir? >> thank you, mr. chairman thank you for your time today. you are commenting on the president's budget and the agency that will collect the money to enact our next budget. it is the internal revenue service requesting over $3 trillion as you know. we made an argument that one of the things they needed was more resources and let's set that aside for a moment. the other thing that they need is a reputation as calling balls and strikes, and also as being a fair agency. so the resources and reputation are at the foundation for any tax collection that is going to have integrity. i thought it was interesting that in your written testimony even talk about the reputation of the internal revenue service and the damage that has happened in the past couple of years. back in the summer of 2013 when you were asked on national

television, you dismissed it you were fairly dismissive and that you characterized it as a phony scandal. now this committee made a referral to the attorney general last year and i assume you have read the referral letter and the supporting documents, having you remap and then lied about you would not characterize this as a phony scandal, would you to . >> i'm happy to discuss the reputation of the irs on these issues. i believe that the rs is doing extraordinarily effective jobs and the difficult circumstances where they have been underfunded and not given the resources to do. and i have acknowledged from the beginning that the actions they took place have concerned me and they involve a small number of people at the irs and we took

immediate action to discipline the people involved to make sure that the supervisors who are responsible are no longer there and we have i think, if you look at the way they have managed under very difficult circumstances, with less resources and we don't have people to answer the phones and we are answering this in a timely way. >> dismissing this down, you know there were some bad actors and here's my question. what have you done to prevent a lois lerner 2.0 situation. if you think about it, she was the person that put together a panel of three senior career employees it had to be the threshold before an audit could happen and she was the person that went around that very

safeguard that she structured and she said in an e-mail where she was really quite aggressive with one of her employees. this is after two times this three-person panel said look we are not going to understand. so we are wondering why we haven't done something with this. i don't think the your guys get it. >> mr. secretary, what is it that you have done other than calling this a phony scandal on national television? what have you done to make sure that lois lerner 2.0 is not possible? >> they said political employees were behind this and that's just handing the answer. one is a director.

>> i think that if you look at the inspector general report that came out we have made clear that the behavior was unacceptable. we have a new commission and senior officials who are very much aware of this. so we have been dismissed it. it is one thing to take action in response to what happens with a small number of people and a large agency and it's another thing to condemn the agent we which is what i believe many are doing. >> i think that when the administration is essentially coming around us don't you understand how that is corrosive >> that his dismissal.

>> there is nothing more dismissive. >> thank you. >> the gentleman is recognized. >> thank you, mr. secretary thank you. you've heard it already. the earned income tax credit, many of us do that. as the middle class continues to get squeezed, they see everything that has worked in the economy for worker profit and that wall street. but they haven't seen their paychecks grow in the way that they would like. thank you for speaking to those families who have been working hard. they have been more productive than american workers in the past and they just want to see their paychecks grow. the earned income tax credit for those families is going to be for working families that have

kids, who aspire to have them go to college, can i just applaud you and the president are focusing on child care. my daughters are there, but i know there are a lot of individuals back home who are wondering how they're going to get there and they have to make sure that their kids are taking care of. and that includes those that are working. to thank you for what you're doing there in that regard. so how will the president talk about this with -- are we talking about thousands or millions? >> i don't have the exact number, but it's many millions. those millions who are striving to gain the middle class ultimately go beyond the middle

class. because you will get good childcare if the two of you were, you will have an opportunity if you're still doing it the way that we want people to do it. just touching briefly on something in regards to security today there are about 160 million americans were paying social security and they have the deduction. the federal income contribution allocation that is deducted and it's part of another act as well. old age survivors and disability insurance. that is what this is. if you work in the retirement age, you get social security. he paid in. you get it even though you are disabled or your family does. if you die but you pay into

social security, your survivors did social security. it's insurance to the family. i don't think anyone works and pays into this and says that i only want my money going to retirement or i know i'm in a risky job and i only want my money to go into disability. in fact, 11 times this congress, not this one today but over the years whatever administration we work to make sure that we always have the money allocated for the disability side of social security and the survivor side of social security or the retirement side of social security and none of it can be made available for those who have become disabled for their families. eleven times over the years congress that the administration -- they have work to make sure

that we always make sure that the money that is out there goes out to those americans who work and pay into this fund. and so i hope that we don't upset those 50 million americans were receiving social security. 11 million of them disability insurance under social security, for them to say that we can't make that available because some technical glitch here in washington is preventing us from moving forward to do what we have done in the past 11 times on a bipartisan basis where there is retirement social security, disability social security, or because you died and now you survivors need social security. i hope that we don't play that game. and finally i just want to mention that we don't leave out currency manipulation is

something we attack. the last thing we need to do is send a signal that we are going to allow government this. >> the time of the dumb and has expired. >> a yield back. >> the job and is recognized. >> i want to thank the secretary for being here today. i mentioned to you earlier the number one issue in our district, and that's a lot in florida, is the idea of this functionality where we serve a lot of our constituents and that is the biggest thing that they are passionate about. so one of the things that i hope i am hopeful for in the next six months, that we can work together on a bipartisan basis for the importance of an american people. i'm concerned were we are looking at raising taxes with

more debt of another 8.5 trillion and a budget that never balances. we are an aspirational society, anything is possible in america. i don't want to punish one group over another group. president kennedy mentioned that this -- when you talk to various experts they talk about if we could focus on growing the economy growing at four or 5% if we get back we can fix a lot of challenges that we got in america. >> still any of these policies we are putting forward, does this grow the economy? how would you respond to matt.

>> congressman, on your point about working together in a bipartisan way, i could not agree more that would be a good thing for the country and we would feel this is it was working well. i saw in the 1990s when we had a divided government and you talk about the growth in the 1990s and we will make important policy decisions in a bipartisan way for much of that time. and ultimately our goal has to be growth because it becomes a question of how do we cut our way to prosperity. there's no answer for any society. >> let me ask and be clear that you're committed and the administration is committed to working with us this year to get tax and trade ideally done. >> that is correct.

>> the second thing was in your comments that some people need to pay more their fair share in the taxes now for medium or small businesses when you add together it's almost 50%. ..

>> >> suggesting that while tax havens had 5% of the world's population that almost half of american's corporate earnings claim to have been heard offshore were from those five countries where in 2013 is suggested somewhere between 55 and $1,303,000,000,000 of profits surged in the united states were shifted abroad and over half of these profits were located in six tax savings isn't it true that a substantial amount of these alleged offshore earnings were actually from operations that occurred here within the united

states? >> it is hard to comment on individual circumstances but to take it up one level the issue of legal tax avoidance has led to the erosion of the tax base and it is enormous concern worldwide. it is wrong for countries to have a race to the bottom with zero tax rates to be a magnet for these types of activities it is also wrong to have a tax system with the highest a tory rate in the world to drive businesses to look for these havens we need to reform the broken system and other countries need to change their system to raise their standards. it is hard for us for countries to do with they need to do if we don't do what we need to do. it will empower us to get other countries to do the right thing as well.

>> if all elements are adopted and strong with any abuse provisions are included but i know that is considered onerous by some of those multinationals that need to pay the treasury than the lobbyists to have that they are that they don't have any responsibility from which they benefit so much. but it seems selling corporations to pay less than a nickel or a dime on a dollar of profits that were really earned in the united states is generous better than the nickel in 2004 all metal higher than the $0.9 that was recommended last year but that should be the

issue of looking at bill whole issue in all these corporations if they pay taxes a broad they are entitled to a credit for that. that has been hidden from taxes every where that is an example of corporate tax avoidance that we need to put a stop to and not reward >> i totally agree we need to make sure we end up with a toll charge that is set at a reasonable level. we propose 14% i know that is higher than others but i think the credit for taxes overseas brings effective rate down considerably. we propose a pullout opprobrious credit because it is so reduced so 40 percent of the taxes paid if a firm has a billion dollars of accumulated earnings paying 100 million

then they would get a $40 million credit and would pay that 10 percent so even the 48th centuries the impact on most firms. >> thank you for being with us today. day believed the estate tax is double taxation? >> no. >> in april 2013 we had a thoughtful exchange on a comprehensive tax reform and at the time we went to work together on the individual side as well to make it simpler. we have universal agreement it is just too complicated. i certainly want to raise

concerns from constituents of the estate tax. it is obviously no secret we have fundamental disagreement on the estate tax i believe it is double taxation. and i actually prefer a higher a state's tax but while dealing with the estate tax is challenging it is nowhere near the administrative nightmare to remove the allowance on the stepped-up basis. sova in a family passing on to calculate capital games the face -- family faces multiple challenges finding that the purchase value from multiple tracks purchased at different times to determine

if it is sold prior to inheritance so such a proposal is the opposite of tax reform and only because compliance more difficult. has anyone looked at the compliance time and cost of this provision would be? >> i am happy to get back to with the estimates of compliance. but the design of the provision in our budget was to make it easier for taxpayers, not harder to comply. there are exemptions that are quite generous and 50 years to make the tax payments and we think for the vast majority which are subject to a stock -- stock databases is simpler to answer. with real-estate we have a

system you have to know the basis in real-estate. i don't know why it is more complicated but i am happy to follow up with you. >> that was our in a at a the complexity. >> have they studied the effects will let it have on the availability. >> we have looked at what it would mean as the very small fee with the total bases and it is to be complementary with reforms to make our system safer.

right now we have the system heavily weighted to leverage of exposure. it would make it more costly but not prohibitive and we think that will lead it to raise a for financial system. we also think looking at the context of overall of tax reform is a fair and good policy. >> talking about the extenders and the temporary extenders two years at the time is that accurate? >>. >> often not. >> but i state did say good idea of a permanent basis would that be more intellectually honest to

make them burgonet plan to permanently extend on a temporary basis? >> that is what we propose. with the tax policy in various ways for 35 for 40 years it is hard for those that have deadlines that past to make it hard for businesses to expect out to plan. that when mated a rational way. and that is the basis as part of the conversation. >> mr. secretary thank you for being here. i want to add my appreciation to you and the president for syndicating a budget that attempts to focus on the middle-class. weld businesses across this great country are very important and do a great

service with great products the truth is it is those consumers of the middle-class who are the job creators in this country if there is no middle class there is nobody to buy all the great things our businesses sell and manufacture. then it all goes out the door. it is important to refocus on the middle-class. gilmore better place is investment and infrastructure. so that means to investor critical infrastructure to keep everything going across the country. i have a couple of questions of with like to ask. one is on what has come to my attention which is the cash rich split off and your smile means you know, what i am talking about?

a cable to light with the purchase of alibaba of. mandate take the asset stock jewish stage for a line of business in cash to avoid any gain of appreciation. and that looks like that legal tax avoidance of the great big huge loophole. does that new legislation to close that door is that something that can be done administratively? >> i cannot comment on what a specific company may or may not do much to split off on component parts there is an active business the beach party. but if there is a spinoff the firm would be liable for capital gains and i don't

all of the top of my head if there's any administrative issue. >> that is something to look into to better understand a of how we close that loophole. also i agree with my friend from massachusetts had to give it any thought of the status with those 2015 applications it is important to recognize it has been responsible for a lot of areas with severe economic downturn.

with the close military bases added to positive economic growth. i would think the market would be a great place to go. >> i would have to go back to looking at it. >> with lasted, first out the proposal of the budget is a little disheartening. in which his theory disruptive in general but specifically we have a retroactive provision so if enacted it would go back decades it was generated through tax policy on the

books it not only small family businesses that they employ today but this has shut businesses down. if you were very well aware of. is there a reason for the retroactivity? for word i've understand by going back seems unfair and destructive. >> congressman there is a discussion of proper accounting standards for some time and that is part of tax reform. i am happy to look at what you are concerned about it is not to cause undue burden

>> thank you. >> mr. secretary taking for coming to you testify of the president's budget. i would like to draw your attention and to the proposal on page 53. >> eight don't have one in front of me. >> is where he proposes attacks of 529 college savings account when the president proposed to this tax two weeks ago i wish shot to see him targeted these very popular plants and relieved when he withdrew his proposal on tuesday but he changed course to late to remove it from the proposal than the next day the administration spokesman made a confusing statement that said he was eliot was drawing it due to political pressure and he still stands behind the attacks as good policy.

so could you please clarify to support the concept does he believe this is good policy and could he read -- revive this tax again? >> just to be clear the white house indicated clearly to be pushing for this provision there was obviously already in the budget. it was causing a lot of distraction on the tax issues to provide real opportunity for a middle-class families. if there wasn't a solid policy reason to largely

benefit more affluent people and how to make college education affordable is a basis. we're not pushing it he is not pushing it is not a key part of the plan it is not a huge dollar impact there should not be any confusion on the issues. >> so he still thinks it is good policy but he will lustral for political reasons. >> one can justify a policy grounds the don't go forward >> they keep for someone of a clarification. now have a bite to briefly discuss h.r. 529 that i introduced on a bipartisan basis last week. i have been a champion of 529 plans since the was the

state treasurer in kangaroos and this is the -- in kansas and this is making it more attractive to middle-class folks across the country to save for college education in the accounts -- enhancements would allow citizens to buy a computer in allows funds to be redeposited without penalty if the student was draws from school and takes out the administrative requirements so what is your take do you agree with these improvements and will the administration supports the bill? >> i am happy to look to the proposal and get back to you. obviously with 529 we would look forward to make sure their work effectively as possible.

i'm not as familiar with the details of the of the dissident proposal. >> and look forward to working with you. i yield back. >> [inaudible] proposed and mr. chairman your initiatives to keep with this committee open and on pace to have johnson angeles forums were reared by other members of congress

as the way to restore what we go individually is the great strength of this community to work across the aisle with one another. several issues were explored today in rapid order first with respect with infrastructure there are several letters sent last year with respect to make sure we have hearings on infrastructure and discussed the tax aspects of this as well. and i know that is that the core of putting people back to work. a whole week can't continue down the line may be that is the start of a discussion on infrastructure. also social security was brought up by mr. johnson. there is a proposal that has a tax cut debt is paid for.

i hope all members will consider the proposal to put this into the next century that is paid for. with the affordable care act the matter what comes on the floor tomorrow is long overdue recognize a proposal by the heritage foundation is adopted successfully by governor romney is something we can work together for the benefit of the american people. with respect to currency and trade the administration will hear concerns that were raised their. and lastly, i believe the question about dynamic scoring went to provide you with a few moments to expand upon your thoughts. >> thank you mr. larson. the question of how we score

legislation is technical and complicated. we have established practices that are meant to be as accurate as possible. and the risk that is known to be the most accurate and there is the shared concern to not paul whole and our budget to be wrong so asking if there is dynamic scoring with tax policy but if one goes further to make assumptions that drives the numbers in a way that turned out not to be correct we will be corrected it to after the bills are added up. at a lot there to be any misunderstanding. we have always been open into alternative measures

with the upside and the downside risk but to use those to make decisions that have consequences are different. >> he also makes the point on several different occasions and we have to make sure we're willing to apply that and maybe it is a very sound practice i am not an economist but what do we apply it to and the kkk and be applied equally in the last couple of weeks have spend painful with green bay but i to -- i didn't take it personal. [laughter] have this picture to provide you. >> i cannot see it from here. describing. >> it is the picture of tom brady.

>> objection. we shall not be included in the record. [laughter] >> time has expired. >> mr. secretary thank you for being here the federal deficit will expire march 15 do you know, what the debt limit will be when set to expire? >> i don't have an exact estimate right now. with two months of data away the challenge to fund the government to make decisions on the spending policies. >> has you edgers staff been able to use these extraordinary measures?

>> i cannot use that with clarity until we get through tax season and made no our cash balance. >> that will be a problem because march 15 is the deadline and taxis in his april 15. >> with all public estimates from the cbo is shows we have a period of time. i know think we have a crisis on march 15 but i cannot tell you exactly how long it goes. it is the outer limit not the initial period. >> can you get back to us with a rough estimate? >> we will stay in close touch we think it is important to have clarity. >> following up on a letter to be cosigned by 17 members of the ways and means

committee i'm still having trouble understanding why it was to regulate the non dash value insurance? >> can you update members that signed the letter of the deliberations? >> our goal this has been adopted is to make sure the transparency from the tax authorities to seek behavior to get accurate reporting offshore accounts we believe those proposals we have made we're happy to follow-up on

issues you have described. >> your in in your out part of the framework is the desire to make the corporate tax reform more competitive. you've laid out a benchmark but when i am back in my district of frustration is not just employers with that complexity is really individuals. after it came out last year it was as individual taxpayers we are excited at the prospect that they could do to shake as standard deduction on a single piece of paper and be done. why is the administration not equally energize are motivated to insure that not

just the tax code is supplied is the administration willing to work with us for a tax reform? >>. >> a number of proposals to simplify them. there is always tension those to be reflective of the complicity you don't want to have a cliff in the tax code like through provisions. but the goal to simplify is one that we share. >> we both share the goal so

i would just point to the president's home state the we have raised the minimum wage four times in the last 10 years each time the percentage of the people living in poverty has gone up in the percent of an employee mitt and we need to look at a different strategy at the federal level and i would hearken back to the days of jfk for those living in poverty went down and a living wage went up and we could embrace that jfk strategy with this president >> teeeighteen they give for being here. so they could administer programs and also appreciate

the fact to know what a balanced budget looks like. with three consecutive years said you had unique authority to guide the conversations to get perspective as. on behalf of the speaker ordeal at a time there interesting policy initiatives encouraging the gap after speaker o'neill famously working together.

many of which we look forward to. i appreciate the administration continues to call for infrastructure investment i sincerely believe he is investing intellectually to renewing america. some of the policies that have come forward have been difficult to achieve. i read an op-ed from of my a colleague to a comprehensive fashion that these to be sustainable at adequate to cover the job to revisit with user paid principles so

president reagan in 1982 call that a challenge to americans with his thanksgiving day address calling congress to come back that more than doubled the gas tax because we have not raise that in 23 years and this was a user fee to deal with deteriorating american infrastructure to move us forward. is this a speech almost any of us can give today. zero though it is 22 years instead of 23. i was curious base dug your experience if speaker o'neill for able to come forward to deal with the serious problem with

infrastructure on a bipartisan basis and raise the user fee, if your proposal is not embraced unanimously by congress to be enacted into law if you have thoughts moving forward to support with a collation raised rating from business and labor to truckers to triple a. so there is something that could be done with the user fee adjustment. >> you and i have discussed infrastructure for many years. moving back at the 1980's

was 93 security reform and also in 1987 with a balanced budget agreement. i take what we have put forward with the one time savings to fund infrastructure has all of the ingredients to be a basis for a bipartisan agreement we have come up with an approach to provide that opportunity. congress has other ideas to find a way but we need to meet our needs because it is doing a disservice to future generations to leave behind a crumbling infrastructure the way to build the debt is to look ahead to build it today. >> thank-you. >> mr. paulson?

>> know he is not. >> mr. secretary i would like to discuss a couple of issues with you that i hear about when i go back home with a town hall meeting. in reading of the cbo projection of budget and economic outlook through 2024 it appears we will end 2014 with $492 billion deficit. then of the al less than that in 2015 but 22 through

24 we will be back at $1 trillion per year deficits. this is very upsetting to the people that i represent all of us on this panel. does this budget the president has prepared change that trajectory of the debt? with the size of government? does it do anything to return us to a balanced budget or does it end up being back at trillion dollars per year? >> looking at a percentage of gdp read ends up the economy is growing and it is a larger number but to make

progress said maine taken the progress. >> the goal of the administration and the treasury is not to balance the budget or diminish the debt we already have but to maintain a percentage of gdp? >> our goal is to grow the economy with the right balance between fiscal policies to keep alive a sustainable path to invest in the future to make sure we have a growing economy. i believe we presented a framework for doing that. if you look at when you look at the primary balance the only deficit is to servicing past debt in this period and they still need to focus on the future i am not saying

is the end of the discussion on fiscal policy but we have done tremendous amounts to reduce a deficit of gdp. >> define primary balance. >> the question is what is driving would averred deficit you have? if you were building up new expenses to buy new say this and we hit that point where it is achievable to service saying prior debt, it is not the save as balance but it is a test of fiscal sustainability but it is under control if we're under primary. >> i am from texas and the

entire west believe the oil and gas industry is one of the most critical things that took us out of the last recession. now we open up this budget to find out with the oil and gas industry that admittedly had setbacks that will have a $95 billion additional tax bill in this budget. can you give an explanation why the administration would feel like that would be a great reward for its performance in this economy and how it can possibly handle that additional tax burden? >> energy revolution has done a tremendous amount to drive our e economy for word

as energy prices go up and down to have natural tendencies for them to grow more than others. we don't believe the tax code should drive activity in a way that makes investments in energy treated as it is under current law. we don't think it is necessary for profitable businesses obviously this is the moment where lower energy prices are creating pressures that we are sensitive to the regional impact but over time letting the market forces work it is better than having a tax code to drive investment. >> you probably misspoke. >> does that mean there ought not to be profitable

businesses? >>. >> if i misspoke let me correct. i was speaking to the tax provision. we support a strong and thriving energy wishing them to be profitable. >> it did not come up the right way. >> we have to watch with a twisted town how that comes out. >> i appreciate the opportunity to clarify. >> two years ago before this committee we talked about the budget and the balance as mccall they talking about balancing the budget that we're willing to increase spending by 2.$4 trillion over the next head years and will add $8.5 trillion in debt and i know you cannot tell us what that might look

like bread interested to see what that will turn out to be in increasing federal spending in just the next year. when you talk about your verbal comments he talked about a balanced fiscal approach. in my life with the parents teaching me it is to not have a lot of debt looking at the future of our children not having a lot of dead is important. i am concerned that was a big conversation that it did not ever come to a balanced but if we see the debt that we owe with interest-rate says we cannot sustain a matter how much growth we have purposely very concerned about that.

one other thing you said to increase job creation i wanted to paul harvey like the rest of the story i want to read of clip from market watch this said it is great that we're adding jobs and it fell but the hourly wages declined to more americans dropped out of the work force. soberly that is not the true number we should look at. the and the article by saying though labor work force participation rate in december was at 62 percent matching the post recession

again with a rate that we have seen so when we talk about having a good economy i'd think we do have to be very careful how we use numbers so they don't show was we have an increase to have decreased wages but we do have to be careful what is chronicled to say what the truth is. now to my final question that is the frustration with there children's future in the education and other retirement we have an opportunity to work across the aisle to work on the tax

breaks with the complicated tax code 90 pages of the irs instructions we put out a plan the last year and a half did not move forward in the senate and the little time the the you to respond, will you assure us that the president will work with us in this area because education is more successful with those proposals we put forward with those that allow the middle-class to use the tax code to help them to educate their children. 30 seconds. >> i am not sure but i will talk fast period we tried to be brewed in our assumptions

about interest rates in the budget this evening between 2020 and 2025 interest rates are roughly 4.5%. right now they are much lower salary have built into the forecast that interest rates will go up the challenge to pay down the debt will take a long time as long as we maintain the current deficit projection the we have the best chance to have that strong future. >> can he acknowledged he would work with us? >> we have a robust set of proposals we hope you will work with us i will work with you. >>.

>> the budget does talk about a lot of investments like i talk about the child tax credit to introduce legislation along those lines. with the improvements of education of tax incentives see you propose paying for the middle-class investments by closing tax loopholes for those who have been doing pretty well. now with the current recovery but over the past 30 years while wages have been stagnant if we had a stimulus package or the hca

as an example. my friends on the and the side despite the new-found commitment of income inequality to have class warfare our chairman mr. ryan who we are counting on to bring us to govern said something regarding the administration's budget what i think the president is trying to do is with the redistribution does not work we have been doing it six years. it may make for good politics but not good economic growth. son now teeeighteen serving in the clinton

administration to nearly '90s remember the big fight over the tax increase? we had fights over the policy all to tell the taxes on the wealthy were increased. read while at the beginning of the bush administration we had trickled down through a huge tax cuts from those at the very top. so that economic growth with those time periods following the implementation of the misstep -- respective tax policy between 1993 and 2002. >> along this period of uninterrupted growth in history. >> but which was 2.seven 9%? >> three has seen through

experiments and in the 1990's the tax policies put in place to destroy the country had the opposite effect and early 2000 we saw huge tax cuts that were promised to have the benefit to drive economic growth and ended up of the edge in the economic disaster with the tax policies. >> it did not pay for it. >> also a january 2013 we agreed to go back to the tax rates and our economy is growing now. >> you believe the administration's policies of the past six years have exacerbated income inequality?

if not for the policies are the stimulus package. >> the problem of income inequality with the actions taken since 2009 if it is still in recession it would be way worse for working people a economy created bestead million jobs we have seen the tax cut of a revised we have seen benefits extended for working families and the child care credits we have taken important steps but we still have a very deep underlying set of challenges what the president embraces these issues with the program that will my solve all the problems it is an important time to make

decisions. >> thank you mr. secretary for being here and to open up and want to recognize the work we have done together to revitalize the act signed into law a the end of the river on a bipartisan manner working with the of the side and you because we have other hard-working families that my colleague from california articulated something that i have a lot of trouble with. talk about social security trust fund to talk about a manufactured crisis it surely is i find that offensive his comments to be

representative of the old school mentality so $3 trillion a social security many supposedly is the federal government's to raid a the bailout of the trust fund. i think that is wrong because it takes from retirees the money they put into the trust fund you and i both agree reading the budget as you said the administration will oppose any members that will weaken the system. hata is taking social security money that is already distressed to bail out another trust fund strengthen the retiree trust fund? doesn't that weaken it? been if there have been many transfers and in the 1980's. >> but now there is a new generation of leaders that said the cannot do old

school. because you have already waited the trust fund in have taken from that and put them in a position there on the path to benghazi and we need to do better than that. >> i will give you the benefit of the dow when i read the budget with the reform to the disability back to work to make sure those that virtually disabled to benefit there is a sincerity to get to. >> there is no policy to take effect fast enough with the disability insurance shortfall and if the way we've made is social security did not go bankrupt >> so you put on the table that there are other pots of money other than social security retirees money that

our edible for the into a fund transfer to be utilized ? >> those are kind of your options. >> the warehouse is not aware of any other fund? >> if you just reallocate the tax rate. >> rand and understand it is said is the status quo. >> other not new ideas? >> there are in terms of making sure the review process is done properly we have a program integrity but i do believe looking at the short term needs of the disability trust fund to have a solution not expecting things of long turn benefit of what is more closer than this to be in a position to be with the work

force did we share that commitment? >> we also have to except a large number of people are disabled and cannot work we need a system for those people. >> we would agree for the trust fund that is the intention and i would agree but to be in a position to harmonize that goal by an interested in your budget proposal to use evidence in the evaluation to drive the outcome. with a workforce development component better capable of going back to work what would you propose as evidence a revaluation criteria to utilize what is a mutual goal to work together? >> we need to have this system set up to encourage them to go back to work and

look forward to following up with you. >> i would be interested in your criteria. >> i applaud the president's budget with the air did become tax credit to the substantial assistance when i cochaired the family tax working group would the progressive policy experts to have strong evidence to alleviate poverty the central recommendation for

staplers of the non custodial parents that i promoted strongly these help those in chicago and illinois and america. also was a depressed communities to permanently reauthorize the every - - tax credits with public-private partnership and as well as chromosomes their critical infrastructure. line is the restoration experts predict through hundreds of thousands of jobs. also with the internal revenue service republicans have insisted by about

$1 billion of the last few years these are needed to provide services to taxpayers such as critical tax help to ensure that they fear a they're fair share to strengthen the middle-class but i've also concerned of what people call the working poor. they're perennially stock at the bottom and for generations for it they remain. what will lift them up into the coveted middle class? >> into entirely share the

goals the idea of the middle-class remains available to all and it is not one policy but a combination starting with minimum-wage and to make sure families add access with the child credit with the earned income tax credit with access to education to have the opportunity to get the middle-class jobs of the future. there isn't one simple solution. with a variety of other proposals to make a big difference with the way this is consistent with a fiscal policy and the time is up for debate on the issues.

>> mr. chairman i yield back >> what i want to redress is a budget in general. i've understand the private sector is a way to make sure they balance to have revenue of the intended expenses. there is a lie left fingerprints have you ever discuss the growing deficit? and it is his policy. over the years to show a determination of a fiscal path in to make more progress in the 10 year

window. >> the deficit. so with that $4 trillion spent? >> so when the zeros go off the chart like somebody who makes $30,000 a year spending $40,000 to state no problem because i will make 30 grant. but you told me last year to spend more because it would be all right. the annual deficit at a rate that is totally unsustainable. you cannot look at this to think of it as a real budget. it is a christmas wish list that nobody could fill. >> actually i don't agree. >> i will not be -- debates if you agree or not.

no way anybody can say deficit spending year after year after year makes sense. anyone eject the economy course keep spending money you don't have and it will be all right? so just the interest alone is $187 billion no way anybody would look at this to say this makes sense with the healthiest person in this accord did nobody can look at the way we spend money collectively globally to say we're on the right path. increase in the united states the only difference is the number of zeros of deficit spending and adding to the long-term debt that makes an unsustainable there is no argument for that my question is when you talk to the president know they

would present this budget with a straight face to say this is a path forward. >> looking at the improvement. >> you and i both know. >> order. >>. >> we continued have the ring around the rosie if we spend more money with no way to actually raise the revenue to pay it. there is no logic. >> i am happy easter try and offer. >> one minutes 16 seconds. >>.

>> i will not take second seat to anyone. where the budget was over the economy was it was in terrible shape now it is a healthy shape. now we have to look what do we have to do to build a foundation? >> want to point something out. >> we need to stop using the term a middle-class it reflects we have a higher class and lower class. to make $2,300 less with ahead of the young they are far worse. hispanic households it is up

but for single moms it has dropped those with three or more children we keep using the talking point helping the middle-class let's talk people who have to have more money. i don't think there is a rosy picture at the time they get for your service honest to god we have to get it fixed. >>. >> talking about tip o'neill with a time frame. [inaudible] as someone in the middle class so starting at a very young age was very important

to achieve the american dream and look back at the day's with the president to work together to get things accomplished i want to look at that 24 year-old to say you can do the same thing that actually gets in the way to lofted. there are some things in the budget that i hope we can work together. and then to the approach to tax policy changes. with hard-working middle-class americans that of the back to say that was me at one point in time. the middle class americans are still struggling to many

continue to find the paychecks are shrinking while cost rise. weld reducing toxic is for the middle-class i was surprised on the proposal published by the tax policy center. i ask the steady published by the tax policy center be included. with that analysis the middle quintile with household income of 60,000 is an increase of $7. 60% was see almost no effect as a result of the middle-class economics. can you explain the enclave of the policies to the middle class?

>> looking at the tax policy center frequently and over time they have done in good working of the analysis is not based on the best data available. >> looking at the few provisions interims of tracing how it will flow through to the middle-class families, technically it is not correct with the data that shows it is not correct. >> you disagree? >> i disagree with the analysis. and their effects what it will hurt the middle class families the way is to just.

>> s of results to barrault take on more acquisitions and more interest deductions. but then to close down the north carolina headquarters eliminating hundreds of u.s. jobs but this budget doubles down with the fed more inversion proposals to make it less competitive targets to competitors is this week intended to happen? >> i think the real answer is tax reform to do sayings that may be the goal but it is wrong to change your

address. we made clear at the time we did not have administrative capacity to address the version in issue and also the provision and we look forward to redress this. >> i do agree it would correct this tsa those anti-conversion rules are not working? >> they are partially they don't completely solve the problem. >> thank you for being here and i want to express my appreciation with medical education is not just what they do for regional economies bled to trade the next generation so it is mind boggling to think of

graduating three-year $400,000 of debts and when i talk to people consistently talked about increasing the ability to pay for education we keep finding ways to redistribute. >> i will ask a question there is a significant investment of nonprofit institutions and tax incentives. >> with such a critical role what is it you are doing to hold down the increasing cost of education? >> most of that is not in my purview as treasury secretary but i can tell you what we're doing to make it

clear with the cost of education and the track record to have that kind of education that leads to the options we all want our children to have. it is important not just deal with the student loan peace but also the structure how education is marketed to be made available to students. they should understand what the benefit of different options and also the cost to many don't even keep them into finished agree then they have that with no degree. and almost day market-based economy it could be $35,000

for of family and that is pre-tax in tom. here is one of the problems. . .

750,000 administrators of various types. we have seen a dramatic explosion in this educational complex in which this bureaucracy has become of food frenzy and the american families are paying for it. the very same people you are looking at right now who are making those investments often are dipping into they're retirements. what what are we doing with the leverage we have to begin to compel these institutions which already benefit and nonprofit institutions to say if you want to have the benefit of government-subsidized tuition and other things you must demonstrate capacity. you are doing it in healthcare.

why not in education? >> by starting with transparency and inspiring individuals to make decisions that puts pressure on the university system to take it seriously. i seriously. i agree cost has been rising to rapidly. there is an irreducible minimum of people it takes to teach groups of 20 or 30. with the move toward technology, ultimately contact with professors is still needed. it is not my area, obviously of current expertise. the department of education is working hard on these issues. >> thank you. mr. smith. >> thank you. as i i have said here and listen to your presentation and questions i am reminded of a congressman from missouri and a speech he

gave in 1899. what what he said, i come from the state that grows corn and cotton and democrats. your frothy eloquence neither convinces or satisfies me. i am from the show me state, and state, and you have got to show me. i am asking in this budget how the policies in this budget help rural america. less than 97.9 percent of all the counties in the united states have not rebounded from the recession and 60 percent of rural counties have decreased in population in the last year. what policies and your budget help rural america rebound?

>> obviously agricultural policy is not primarily my responsibility. the department of agriculture has been working to put in place policies that we believe are beneficial. the efforts being made to bring investment has been successful. i collaborated with the department on some of they're business efforts. if you look at the economic performance they have done considerably better than your description. again, it is not my core area but i am happy to follow up with you. it is i think for a lot of rural communities a better time then you describe. >> let's talk about a policy that has been discussed when you have proposed,

increasing the estate tax and death tax something extremely detrimental to farmers and small business owners. the boot hill of the state of missouri those seven counties have some of the best farmland in the country and produce more than one 3rd of agriculture production for our state. the average per acre of a farm is roughly $8,000. the average family farm is 441 acres. underneath the policies you are proposing every one of those average family farms would be devastated by your proposal of the estate tax that would almost account of 57% of attacks on there inheritance. maybe you don't no this this but almost 85 percent of all the values of farms is with equipment and farmland. they do not have a lot of liquid assets.

if they if they have a 57 percent tax increase they we will have to sell there farm which is eliminating a small business, destroying destroying heritage. explain that to me. >> as we have looked at the estate tax we have agreed to have high thresholds so that family farms, many would be exempt. >> the average family farm is 441 acres. 437 acres times $8,000 would go over your three and a half million dollar exemption. an average family family farm does not even qualify underneath your proposal. >> i think the goal of both our state tax and proposals are to make sure we do not have a large appreciation of

assets that essentially go untaxed for all time. >> they need to pay taxes double and triple? >> not double and triple. >> this is why the statistic i said earlier decreasing in population because they experience a tax code that promotes them to sell the family farm and moved to the city. i believe this is so unfortunate and his policies must be stopped. >> i'm happy to follow up with you and look at some of the numbers you describe. >> i would love that. >> i don't think the impact is as broad as you describe. >> let's get together. >> thank you. >> thank you, mr. chairman. america is a great country because of our people. aspirational entrepreneurial, intuitive, and i am sure we can agree on that. >> i think we can.

>> with the american people see a budget which poses more than $2 trillion in spending more than 2 trillion an additional tax, more than 8 trillion in additional debt, a budget that never balances and at the end of the day you end up with bigger government and bigger debt i don't think that the intuition of the american people says that that is a success. i don't think they see it as the way forward to ensuring america is the greatest nation for the next generation. i believe i am the last person. first following up the question about theft of intellectual property in china. i know i know you have been involved. obviously strong intellectual property rights

are incredibly important to our economy perhaps one of our most important assets as americans. if you could take a a brief moment to talk about what the administration is doing to address theft of intellectual property by the chinese. i was unimpressed with they're efforts to prevent theft of intellectual property. >> congressman i have raised this issue at the highest levels of the chinese government. they understand the need to take more action. they understand it is an issue. the reality is they for a long time denied they had a problem and now have a system that is at least starting to deal with it. we must be relentless pushing forward and make clear that if china wants to

be the world leader it aspires to be it has to play by the basic rules that the rest of the world plays by. this is not limited to an lakeshore property. market access competitiveness. i think it is in our interest for their to be a healthy china and in china's interest for their to be a healthy united states. but it has to be on a fair basis. if they cannot meet the world standard they cannot -- >> you agree the united states, our states our intellectual property laws are the gold standard around the world, and that is why innovation is such an important part of our economy. >> absolutely. i said to them, if you want to do well in the future you need to encourage innovation

>> right. you would also agree in the current negotiations as we consider tpa we should be mindful of addressing intellectual property protections when we negotiate with other countries and don't dumb down our own standards in the united states to meet standards of countries were innovation advancement in things like biologic are nowhere in comparison to the standards we have in this country. >> we have to pursue a high standard discussion in a number of areas. intellectual property is one. i heard a number of questions about currency. currency. we take the issues very seriously in the g7 the g 20 bilateral discussions and look forward to work with congress.

>> a few other quick hits. inheritance tax was a double taxation. i assume you agree with me that it is actually a triple taxation. is that correct? >> no, sir. >> for the record, i will send you a follow-up question or two. >> i'd be happy to look at that. >> the renunciation rates going through the roof at the highest levels we have ever seen. i believe it is abhorrent the american government is pursuing regulations and policies. i will submit follow-up questions. thank you. >> mr. chairman, you run a tight ship. >> we try. >> yes. watch.

thank you, secretary lew for appearing with us today. members today. members be advised, you may submit written questions in writing which we will be reflected and included in the record of this hearing. we kept a tight ship, got hear got hear on time and the hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]