[inaudible conversations] >> on the road to the white house this morning, 2012 presidential candidate and former massachusetts governor mitt romney weighs in on the race. we will take you live to the university of utah in salt lake city 11:30 a.m. eastern on c-span3. >> the annual conservative political action conference kicked off yesterday and national harbor, maryland. this afternoon we'll take you there live as national rifle association ceo wayne lapeer addresses the crew. that's why 1 p.m. eastern on c-span3 and c-span.org. spent white house council of economic advisers chair jason furman talked about ways the federal government could encourage economic growth at a

meeting of the joint economic committee. this is one hour and a half. >> the committee will come to order. is another turn on the microphone. the committee will come to order. chairman furman, welcome. we appreciate your willingness to come to speak with us follow the economic report o of the president. it's a wordpress understand what is in this and get your take on it and where we're going. it certainly helps us in terms of our policymaking decisions going forward. want to welcome you here and thank you for your participation. vice chairman tiberi, ranking member maloney, and i appreciate your willingness to once more continue the longstanding tradition that we have of the chairman of the council of economic advisers testifies before the joint economic committee. this year marks the 70th

anniversary of both the council of economic advisers and the joint economic committee, both of which were created to advise our respective branches of government on a wide range of matters affecting the economy. we appreciate this annual opportunity to engage in dialogue with you and look forward to discussing this year's economic report of the president. much has been learned over the course of this slow-growth recovery, and these lessons will only continue for the foreseeable future. the current recovery has been slower than previous recoveries and subdued expectations about economic population and labor force growth at least additional pressures on federal budget constraints. however, i don't accept the often mention assertion that we have entered a new normal of slower economic growth. policy reforms seeking to create a better tax system, rein in spending, and loosen the regulatory shackles restricting our economy can alter this

trajectory by removing some of the structural barriers american workers and businesses face today. in my opinion, a lot of the problems we'd like to solve require us, as policymakers, to look in the mirror and see how current federal government policies are affecting the economy. in his final state of the union address this year, president obama stated that he wanted to focus on the next five years, the next 10 years, and beyond. however, he omitted one of the most important issues that america faces in the coming years. the financial obligations that will come due over those time frames, and particularly in the beyond. debt was not mentioned once in his address, and how to achieve fiscal sustainability was not among the four questions the president argued that we as a country have to answer. i found this to be a glaring omission, given how our national debt has risen so sharply over

the past seven years, from $10.6 trillion when president obama took office to now over $19 trillion. this accumulation of such staggering levels of debt is nothing short of reckless, and the situation will only get worse the longer we wait to address it. according to a recently released report by the non-partisan congressional budget office, in just 10 years, spending on mandatory spending programs and interest on the debt and will consume nearly 99% of all federal revenues. clearly this path is unsustainable. if we do not work to correct this disturbing trajectory, our ability to pay for essential government functions will be severely constrained, our economy will suffer, and our national security will be at risk. the cea's report we will discuss today devotes significant attention to inequality as a defining challenge of the 21st century.

however, i think it's important to recognize that intergenerational theft is also a form of inequality, a particularly severe one that our kids and grandkids are poised to inherit. their ability to succeed in our future economy will depend largely on the decisions we make today. for the american dream to remain attainable for future generations, we must accept the reality of our fiscal situation and act responsibly by addressing it immediately. i look forward to discussing these issues in more depth with chairman furman. i will now turn to our ranking member maloney for her opening statement. >> okay, first of all welcome, doctor fuhrman, thank you for calling this hearing, mr. chairman, and thank you, doctor fuhrman for appearing yet again before us today to answer questions about the current state of the u.s. economy. i share the overall assessment

of the economic report of the president that under the leadership of the president obama the nation's economy is back on track after what was the worst recession during, since the great depression. we have just completed the best two years of private sector job growth since the 1990s. we have recorded the fastest two-year drop in the annual average unemployment rate in 30 years but the unemployment rate has been cut in half. as you can see in this chart, we are in the midst of the longest streak of private sector job creation in history with a record 71 straight months of growth and the creation of 14 million private sector jobs. there are some who look lightly at these achievements, claiming that the obama recovery pales in comparison to average, quote average recoveries, as if the

economic meltdown during the last years of the bush administration was quote an average recession. it's the loss of almost 9 million american jobs average? is the loss of homes for 9 million americans average? let's remember when george bush left the oval office, the economy was in a death spiral. in the final quarter of 2008, gdp shrank at a staggering 8.2% annual rate, the worst quarterly economic performance in more than 50 years. housing prices were collapsing u.s. households lost nearly 13 trillion. dr. furman, last year you told us this recession was like and economic heart attack. he said the share of wealth lost in the early days of this recession was almost five times as large as the loss and wealth

that triggered the great depression. thanks to the bold action of president obama, democrats in congress and the federal reserve come we have steadily climbed back from this recession. as you can see from this chart, the u.s. gdp has grown in 24 of the past 26 quarters. real gdp has grown by over 14% since the start of the obama administration. the auto industry, written off by some as dead, has already added nearly 640,000 new jobs since 2009. and it is not exporting more than 2 million units per year. average housing prices have rebounded to 2007 levels, in household wealth is more than 17 trillion higher than before the recession.

this recovery has occurred despite efforts by many republicans in congress. first they oppose stimulated the economy. in fact, every single one of them in the house voted against the recovery act. they demanded budget cuts at exactly the time when economic theory says government should increase spending to boost demand. the report notes that the economy faces long-term structural challenges. first of all, the baby boomers are retiring. that alone will decrease labor force participation and slow the growth of gdp. we also face the devastating effects of off shoring of american jobs, and job losses due to automation and technical changes. these challenges are not a surprise. they have been on economists radars for years. so what should we do? i agree with your assessment that we need to rebuild the

nation's crumbling infrastructure, invest in early childhood education, implement paid leave, achieve equal pay for equal work, and make college more affordable. i want to close by looking at economic inequality, one of the central issues of our time, and the focus of the first and fourth chapters of the economic report of the president. the u.s. experience i diverge from other advanced countries. since 1980 7a share of income going to the top 1% in the united states has been greater than every other g7 country, every single year. we need to recommit ourselves to policies that expand opportunities and narrow inequality. these policies will pay dividends in the future and help us create an economy that is even more robust, an economy

where the benefits of growth are shared across the income spectrum. as you note, giving all people a fair shot will strengthen our economy by boosting productivity and accelerating growth. dr. furman, thank you once again for appearing before the committee. i am eager to your testimony come and congratulations on an excellent report. >> thank you, ranking member maloney. now we turn to introducing our distinguished witness, chairman from. jason furman is the chairman of the council of economic advisers. previously he served as a principal deputy director of the national economic council and senior vice president of the world bank. he has also been a senior fellow and economic studies and director of the hamilton project at the brookings institution. dr. furman earned his ph.d in economics and investors in arts and government from harvard university and a masters in science and economics from the

london school of economics. we look forward to hearing from you report. >> thank you, chairman coats, vice chairman tiberi, ranking member maloney, and members of the committee. we are excited to be here today to talk about the 70th annual economic report of the president, something that the cea and this could have had a chance to do many times over the decades. this report over all macroeconomic theme is up 2015 was a year of continued growth for the u.s. economy in the face of substantial headwinds from abroad. ranking member maloney cited a number of the statistics, the strongest job growth in two years, two years of job growth, and a decade the largest one in the unemployment rate, and 30 years the longest streak of private sector job growth on record. the unemployment rate has

consistently fallen well faster than what anyone would expect falling to 4.9% in february 2008 as compared to forecasts which is raised as 2014 had expected it to stay above 5% through 2020. at the same time the labor force participation rate has been relatively stable over the past year as improving economic conditions partially offset the drag on participation from the retired of the baby boom generation. and perhaps most importantly over the past six months nominal hourly earnings are private sector workers have grown at theithefastest pace since the gt recession, although more work remains to be done to boost wages. our domestic progress is all the more notable in light of the substantial headwinds that the united states faces from the global economy. the international monetary fund estimates that global economic growth was 3.1% in 2015, the

slowest since 2009, continuing a trend of falling below expectations. the united states had the highest growth rate of any major advanced economy but slowing growth in a number of large emerging markets weight heavily on the global economy in 2015. week growth abroad serve as a drag on u.s. exports with exports subtracting 0.01 percentage points in 2015, a substantial shift from a half point that exports have been having to growth in 2013 and 14. we expect these headwinds to continue into the year 2016. particularly in light of these adverse global developments it's important that we work to strengthen domestic growth by boosting productivity and dynamism in the u.s. economy.

it's also born we work to ensure that the benefits of economic growth are shared broadly. and it is in the 2016 economic report of the president lays out the president' president's agenr inclusive growth. despite progress since the great recession, the unequal distribution of income wealth and opportunity remains one of the greatest challenges facing our economy. it's not unique to the united states, but it's more severe here than in other countries around the world. some of the increase we've seen is a natural consequence of competitive markets, a result of differences in productivity as technology evolves but some of the entries to reflect the rising influence of what economists call economic rent. the income capture by companies and workers beyond what their productivity justifies. the apparent increase in rents in recent decades in the oval increase the unequal distribution have contributed to overall inequality without

boosting productivity providing opportunities to improve both efficiency and equity in the u.s. economy. the president's agenda includes making competitive markets work better by increasing opportunity and combating the trend of rising an equally divided rents. competition most effectively promotes economic growth when it is open to the widest pool of talent. so the president promoted equality of opportunity by supporting children in low-income families and ensuring a fair criminal justice system. and the president also supports policies to make markets more competitive by reducing overall economic rents through promoting more open and competitive markets balanced intellectual property rules and is more approach to occupational license he, regulation among other policies. other sections let additional steps we can and should take to ensure a strong domestic economy

including expanding trade, investing in technology, investing in infrastructure and investing in children. and i'd be more than happy to talk about these or any other topics that you are interested in. thank you. >> thank you, thank you very much. i want to apologize for having to leave shortly. the senate has called for four consecutive votes which will take considerable amount of time. i'm going to ask my question to you and then turn this over to mr. tiberi, our vice chairman, who will recognize ms. maloney as ranking member, and then into somewhat byzantine order of who came first and which chamber you are from and what is your seniority, we will try to do a fair allocation of back and forth. and i have someone here who has studied, and an expert on telling you, vice chairman, who is next. and trust me, with people in and out back and forth they can get

very complicated. mr. chairman, i came to office all long time ago. one of the very first critical votes i had to face wasn't the decision as to whether or not we would raise the debt ceiling limit to over $1 trillion. people say wow, that must've been 100 years ago. not quite. that was 1981. today we are at the 19 trillion mark. look, let's take the politics out of this. we had three years of balanced budgets at the end of the 1900s before he came into this new millennium. under both republican control and democrat-controlled, we have seen an ever accelerating plunge into debt. we know that the darth vader of the future economy is lurking out there, waiting to collect the bills. we know that from cbo projections going forward are

dramatic, relative to the way discretionary spending shrinks as mandatory spending continues to grow. in fact, cbo said that in 10 years we will at the current trend be at 99%, 99% of our budget will be consumed by mandatory spending and interest coverage. this obviously is unacceptable. we know that baby boom budget, baby boom era has been to sydney upon a so we have known this for decades. and so if we can take the politics out of office as to who to blame and who's responsible and simply say we now, whether you're a republican or democrat, conservative or liberal or in between on the spectrum, we have a common challenge that has to be addressed. it has been pushed down the road over and over and over but it is becoming increasingly a hindrance to our economy and

ability to grow to provide for our national security, to pave roads, to build infrastructure, to provide for health care, research, and you name the functions that are necessary to be addressed. so i wonder if you would tell us, what is the next president, regardless of who that is, what is the next president and the next congress, what do they need to do to finally stand up to this looming crisis to put in place a long-term solution that is feasible in terms of how we need to govern but will put us on a path to more fiscal responsibility and avoid these common law that we're going to hit if we don't take action that i may not be able to be your to your final answer on that but we would like it for the record and i would appreciate it if you would address that.

that's the only question. then i will turn over to mr. tiberi. >> so thank you very much for the question, and i think i agree with the premise of almost everything that you said but i think it's important to put this in context. our deficit was nearly 10% of gdp when the president walked in the door. i was a consequence of a very severe recession. the deficit has come down to 2.5% of gdp which is below the average of the last 40 years of -- >> but we know it's going to spike shortly, right to speak with absolutely. that's due to combination of deficit reduction and also a strengthening economy. .com the door, the former cbo director wrote a paper which he argued the fiscal outlook over the next 25 years is a challenge. as you said, less of a challenge than it looked a couple of years ago in part because of the steps we've taken in part because lower interest rates your but moore does need to be done.

the deficit will rise as the ship gdp. the debt will rise as a share of gdp. our approach as a phallus commendation of measures on the spending side including entitlements and measures on the tax side, which presumably are not about race and we thought about cutting back on tax benefits for high income households, many of which are economically efficient at the last thing i should say is that our goal is to see the jet to gdp ratio on a downward path and stabilized but one can accomplish both by lowering the debt but also by raising gdp. steps that strengthen our economy are really important part aboupart of how we do witht and deficit as well. >> thank you. we finish 12 seconds behind my time sunday to pass this on to mr. tiberi. again, apologize for having to leave. hopefully to be back as quick as i can. >> thank you. >> thank you, mr. chairman. i will recognize the ranking member for five minutes. >> thank you very much.

a major focus of the economic report of the president is a widening economic inequality. and you'll report argues that extreme inequality can be a macroeconomic problem, a drag on productivity and growth. please explain to even those who are not concerned about the growing gap between the haves and have-nots why we should be concerned about inequality, and why is past inequality everybody's problem. >> thanks for your question. i think there's a number of reasons, one of the clearest is that if you have inequality of income you are going to have inequality of opportunity. we have inequality of opportunity, there is talent that could be contributing more to our economy but won't get the shot they should get because

lacking educational and other opportunities. so will miss out on the innovation, creativity we need to push this forward. >> as you noted in your testimony, they share of income going to the top 1% in the united states is much higher than in other g7 countries. and why has the experience in the united states been so different from the other g7 countries? >> all of our economies are facing similar forces in terms of technology and globalization, and also played a role in rising inequality across the advanced economies. one thing that's happened in the united states though is we have made less of an investment in education that would let our workers keep up with the skills that would complement the advances we see in technology, or to take advantage of globalization. that's one reason why we have

seen an increase in inequality. i think also institutional changes matter. the fact that the united states has a minimum wage that is very low by the standards of the g7 has been eroded substantially by inflation, has also been a contributing factor. >> many people understand that expand economic opportunity for women in workplace and paying them fairly is the right thing to do. why is it also good for the broader economy? >> one of the challenges we face in our economy is the demographic challenge that we are an increasingly aging society and that slowed the growth of our labor force. one of the ways to increase the growth of our labor force would be to incorporate both more men and women in the workforce. when you take steps like more flexible workplaces, more subsidies for childcare, reducing the tax penalty on secondary earners and other

measures along those lines, paid leave, all of that helps bring more women into the workforce and helps us overcome some of the demographic challenges we have built into our infrastructure. >> and people understand programs like head start and universal pre-k are an effective tool for helping children succeed in life. what are the economic benefits for allowing all of our children to have this opportunity in pre-k? >> recently economic research has been taking advantage of studies that follow children over a very long period of time after public policies, and they found that high quality preschool, for example, raises future earnings substantially and raises the more than enough to justify the initial cost of the program. high quality preschool also by the way helps labor force participation it helps to pay the family as a whole, and

balance work and family, then it helps the children played on. that's true of a wide of intervention, your earned income tax credit, substance -- medicated ball been shown to have long-term benefits for children in terms of education earnings and health. >> when the united states congress instituted automatic spending cuts in 2013, did it help or hurt the economy? >> that hurt the economy. it created a fiscal headwind. >> well, my time is expired. thank you. >> thank you, ranking member. that afternoon, chairman furman. thanks for joining us today. in his letter to congress introducing the erp, president obama says and i quote, i have never been more optimistic about america's future that i am today. however, the chart that i have hopefully on the screen in a second, shows that passed the

growth projections on the administration have not lived up to expectations and they have failed. and that now by the administration's own estimates, the long-term growth potential is meager at best. so the red is always forecast. the solid black line is actual, and the dotted black line is the new projection going forward, and then the blue, there is bluebloods are other nonpartisan organizations. you can see the growth, gdp growth is between two and 2.5% which is below the historic averages. this is investment is essential. it has slowed dramatically in the last two years. so you describe and optimistic and a pessimistic view of the

future trend in business investment within your report. so are you optimistic or pessimistic? >> thank you so much for the question of course i am optimistic. and that optimism depends both on the inherent strength of the u.s. economy and also the policy measures that we can take. if you look at the unemployment rate, and i had shown the chart in my initial presentation, that has consistently fallen faster than our forecast. interest rates have come in below are forecast. the goal is to forecast the budget deficit which is also generally come in at less than what we had expected. for a number of things have come in ahead of expectations. i think you are right though on a business investment across all the advanced economies, the uk, the euro zone, japan has not been what we would like to see. i think a lot of it is a consequent of the very deep recession.

the bright spot within business investment is research and development by private companies is the highest it's been as a share of gdp. >> you yourself mentioned the importance of gdp growth to the chairman, mr. coates question regarding our debts and our long-term debt. so larry summers who you know recently talked about secular stagnation. his hypothesis, season-low capital investment, slow labor growth and slow ecological process as lasting conditions long-term. is secular stagnation the same as a pessimistic view in the erp, or how do you explain it and do you agree with that? >> i guess i interpret secular stagnation a specific economic hypothesis about long-term equilibrium interest rates and the like. i think it has a number of problems in its application to the united states. i think it may help us understand places like japan and

the eurozone. i don't think it applies to the united states. that being said, i think the impetus that we need to take big bold steps like invest more in our infrastructure are very much true. we would have a brighter future if we did that. >> last question that i have a chart of you i was disappointed the erp does not address what i believe is the limiting effect of economic growth potential from a whole host of the administrations actions and policies like increased spending, debt, failure to reform the tax code and the ravenswood burdensome regulations. on this chart it shows historic a projected greenhouse gas emissions including the effects on the president clean power plan specifically the paris pledge. these policies and regulations are not even mentioned in the erp and administration of perez turned away from all-of-the-above energy strategy that it was once in favor of as of now closest power plants such

as natural gas and nuclear powe. so we've also seen this administration poor on new financial labor regulations, environmental regulations. art those holding that economic growth and art their massive cost of social with such decline in emissions on this chart? these policies none of them what you just mentioned are included in the economic report. shouldn't the erp discuss the most important issues impacting our economy and explain that the summer policies might constrain economic growth? >> i, you know, to some degree when you don't see something in the report is just a matter of space and already a post 430 pages on you. you mention taxes like you, for example, we have a long discussion of the tax reform and i would hope you find a lot to agree with in that discussion, the importance of lowering our f rates and making our international system more competitive. we just didn't repeat that again

this year, not because it's not important, just a matter of space. on regulations i suspect we seek to fully answer but our analysis of the determined of investment growth in the economy finds the trajectory of investment growth we've seen is very well explained by traditional model that doesn't take into account these regulatory changes and the investment we've seen performance in the us economy has been very similar to other economies that have a very different regulatory trajectory. i don't think they are a very important factor in explaining the macro phenomenon. >> thank you. mr. byers is recognized for five minutes. >> thank you, mr. chairman. chairman furman, the report notes that quote while investment has below the rate of payout to shareholders by nonfinancial firms in the form of dividends or net share buybacks has been rising. nonfinancial corporations now returning nearly half of the funds that could be used for investment to stockholders. one possible exploration provided by the report is that

quote the rise of payout to shareholders may be related to the decline. the startup rate as young firms more likely to reinvest the cash flows and mature firms. the report notes the lower investment growth and hash of fund returned to shareholders such as firms have more cash than they thought they could possibly reinvest. however, the rights of share buybacks predates current economic circumstances. senator baldwin among others have pointed to a 1982 sec rule the provided for safe harbor form manipulation by building. at the beginning of explosion of stock buybacks. prior to 1982, buybacks were a very limited use of corporate profits, and buybacks as we know to make earnings reports look better and good short-term executive compensation. and foster short term thinking in the corporate governance. can you comment on the impact of this and other regulatory changes have contributed to good investment environment? should we be sinking -- seeking to limit buybacks?

>> so thank you for your question. i certainly have seen the hypothesis put forward with that 1982 regulation has played a role in the rise of buybacks. and it certainly isn't the case that buybacks have risen over time but it's not just a recent phenomenon. i haven't seen, reviewed the research in terms of assessing at length so i don't have an opinion about. i'd be happy to look into it. a little bit why get back to you. i think one of the most important questions for us to ask about is what we do to make sure companies are good things to invest in and make sure that we have a really dynamic system in which new businesses are being formed coming into existence. if you have a large mature company that does have great investment projects, the shareholders can allocated to some other part of the economy that could be of higher efficiency. i usually step back and look a little bit less at where the money is going and a little bit

more at what's shaping the business decisions and business opportunities in terms of the real investment prospects and they have. >> thank you very much. the erp contains an interesting discussion, the impact of economic rents as a driver of inequality. i like your simple definition was economic rents is in, cash the company and workers beyond that which the productivity justifies. rents can be created by market consolidation and regulations which favor specific business or sector industry over its competitors. can you recommend policy approaches to address the undeserved rent a? >> sure. one is something that senators held a hearing on a few weeks ago which is occupational licensing. the fact that at the state level now 25% of occupations you need a license to get that reduces your ability to move between jobs if you want to shrink it

let's you command premium. land-use restrictions that drive up the cost of living in certain areas also create rents are literally and in the economic sense. greater degree of competition is important in this regard, but the other thing i would say some rents are inevitable and it's a question of how they're divided. a higher minimum wage or expanding workers boyce including labor unions would help make sure that when you're dividing the pie it gets divided a little bit more towards the labor end. >> thank you. mr. chairman, we keep hearing about mandatory spending continued to increase, and that at some point in our lifetimes there will be one of% of federal revenues. do have a plan to address this, the long-term think about what we're going to do to maintain a meaningful discretionary part of our budget? >> we currently have much lower

projected health care both level and growth rates going forward on the projections six or seven years ago and that's in part due to the affordable care act and in part due to set of changes that were underway and our health system and continue to implement that which is most of the job of our administration is really important. we could also take additional steps modeled on that the bring down the cost of health care open to reduce premiums and extend the life of medicare and reducing the pressure on discretionary spending that you cite in your question. >> thank you, mr. chairman. i yield back. >> mr. boulton is recognized. >> thank you, mr. chairman and thank you dr. furman for being here. following up on the report. is addressing to be because some of the numbers you cited and the others cite, we've had the fastest, without the best and we got records but here's another number i think is critical. the u.s. bureau of labor

statistics announced that for all of 2015, all of last year, we had u.s. productivity, labor productivity rose only .6%. this is the fifth year in a row where growth has been below 1%. so sense the u.s. started collecting this data going back all the way to 1947, up until now there's never ever been such a poor five year stretch because we've had five years in a row where it has been below 1%. so knowing that's the case, this is really important, the link between increases in labor productivity and average u.s. standard of living, one example about estimates, for instance, because of the and increases in labor productivity of 3% come if you had to present the average standard of living would double in just about 24 years here in the united states but now you compare that to the last five years we've had with low

productivity growth, we've changed it with average standard of living would not be doubled until 139 years. 139 years to double our standard of living. these are numbers i think i got that many people feel, they feel it's the despairing of the american dream. it's probably why 72% feels we are in a recession right now although technical we are not. i'm not a doctor but one of the rules we have is do no harm. entrance without question, to what end do you or the administration, what thoughts have you given, what analysis have you provided, or do you acknowledge that accusative effect of a lot of regulations on small, medium, large businesses has had on a lack of productivity growth and the fact that is how they now on a lower standard of living in the united states? >> thank you for your question, and i think you are right to identify productivity as one of the biggest challenges our economy faces here and analysis

by the san francisco fed put the date around 2004 when productivity growth started to slow. it's something we've seen across a range of other countries. the united states and one of the reason i'm optimistic about the united states is over the last 10 years we have had the fastest productivity growth but we certainly have not had enough as you said that places a big role in terms of what future we can expect for wage growth. i think the most important question is what steps can we take. i would suggest expanding markets abroad through steps like tpp, reform of our business taxes and from lowering the rate, reforming the base, investing more in infrastructure, investing more in in research and development, and bring it down our deficit to free up more private capital for investment are five really important steps we can take to increase our productivity.

>> i would agree, tax reform, trade opportunities and so more american goods and services overseas can get the money back on. but what about the regulatory and five at? do you acknowledge hardheaded analysis just on the weight of regulations that is at? it's a consistent message i hear from my implicit ties isn't within minnesota all the time. >> i don't think, i think it's important to get regulations record one of our jobs is to purchase the in the process by which the executive branch regulations are reviewed every take that responsibility very seriously and work hard to get the benefits as high relative to the costs as you possibly can. off and that means doing regulations in a way tha that is flexible, the use market mechanisms. i think if you do that it can be consistent with a stronger economy, stronger economic growth. >> thank you, mr. chairman. >> thank you. congressman delaney is recommend

for five minutes. >> , but i also want to welcome chairman furman and thank you for your very intelligent report and testimony today. it also has throw weight with it. but great work product as you are as good as the economic strength but my friend already covered that so what if about to point that was raised by the chairman about th the paris the board, in thinking about this debate about economic growth as it relates to how we position the country around climate change. so when you think of two postures, one that is more forward leaning as it relates to climate change, in other words, setting goals like 50% clean electricity by 2030, or very so goals are achievable based on current technology but aspirational, stretch goals, versus not taking these steps, not putting the proper incentives and. how do you think about that as a relates, putting aside

environmental stewardship, but just as a dramatic of economics, which posture will drive greater economic growth for the united states? >> i think acting as soon as possible and to great as predictable a path for the future and one that as you said is achievable but a little bit of stretch to make sure we're telling ourselves is the thing that makes the most economic -- challenging ourselves where most every other country in the world is doing the same thing. some of the progress we've seen in solar energy, in wind, and conserving energy, all of that is open to picture jobs are located here in the united states. >> would you think about job creation opportunity in carbon intensive industries versus non-carbon intensive industries, what does the data suggest in terms of both, also this notion

that i may be wrong, but my sense is that the carbon intensive industries have become much more automated and, therefore, are not actually driving labor. and, in fact, they are not even as to produce the same amount of energy. they are not reducing their labor participation versus a clean energy, green energy tend to be more labor-intensive. do you have a few on the? >> yes. so that's my understanding as well, that's a lot of the traditional carbon intensive industries are very capital heavy. it is a continuum of the. natural gas, for example, has carbon but it does have as much carbon beginning to end as cole would have. we have substantial increases in natural gas production that helped create jobs in our country. i think that's a good thing and something we would welcome and encourage but it's also something that is compatible with how we're trying to get our goals for climate change, then

solar and wind and a range of renewables and industries around us as you said are very labor intensive. >> you think about economic risk or threats to american prosperity, because as we've seen from the economic performance this country has realized a cost the last seven years, particularly relative to competitors which this might be one of the greatest periods of time when with outpace the rest of the world and how we have recovery financial crisis at how well our economy is doing relative to other places, how less dependent we are to other parts of the world, but when we think about that threat, mark carney, the chairman of the bank of england gave a speech about a year ago when he talked about one of the risks to financial markets they saw was, in fact, climate change. he said there might be a point in time when people come and may not be when some of the

catastrophic ascenders occur but when people actually come to the view that will be a reality and there's a dramatic replacing assets based on that. how you think about that in terms of risk to our economy? >> right. so the administration has what's called social cost of carbon, an estimate of how much each ton of carbon cost us economically. our estimate is about $40 a ton that we use as an input into the rulemaking process. that estimate does not include the uncertainty entail risks associate with climate change, and that's a lot of what mark carney was talking about in that speech greek virtue and i might be a larger and more consequential cost than this this. then at the other end as soon as you deal with it, they're cheaper and more efficient it is but if you waited 30 years it would be quite costly to address. >> thank you, chairman.

>> senator lee is recognized for five minutes. >> thank you, mr. chairman. thank you, chairman furman, for coming to testify today. i want to thank you all so once again for coming to testify on occupational licensing just last month in the judiciary committee. i'd like to speak with you about innovation and get your thoughts on a piece of the report to focus on the potential job market effects of robots. it seems we might be nearing a really significant technological inflection point, one that could have profound implications for our economy. it dynamics continue to release videos of robots with incredible mobility and coordination while industrial applications involving machine learning and analytical algorithms. at some level simulated cognition continue to advance. some observers suggest we may be on the edge of a new wave of

innovation and that this new wave of innovation my summer to that was spurred on by the invention of the internal combustion engine, for example. which, of course, effectively lead to a really sharp and economically significant decline in the use of horses. first of all, as policymakers should we be thinking about automation as a discrete issue, or is a better thought of as a piece of a larger challenge involving globalization, trade and a number of other similar factors? i'm referring to the challenges facing lower skilled, lower income workers in their jobs. >> i think that's a great question and it's something i know i grapple with all the time but i think to some degree that's all one set of issues but i think automation rings it to the floor in a very direct way. in the theory automation shouldn't present any problem at all. we got automation for thousands

of years and would always find more jobs for people. but in practice that can come at a cost, either in terms of inequality if we don't have the skills, or some people to get displaced don't find another job that you might call it transition or temporary but that could last for decades. >> right, right. which is part one of raise this question. i was looking to try to stay ahead of the curve. your report estimates a high likelihood that jobs today paying less than $20 per hour will eventually be automated. there doesn't seem to be a hard timetable but is that accurate? >> that's accurate, and we were drawing on research that was done at oxford in that regard. mckinsey has also been on research which reaches similar conclusions. >> the current administration of course supports raising the minimum wage and, obviously, every policy has trade-offs.

that's what we've tried to hash out at these debates and one of the things we discussed in this committee, economic implications of policies like that one. if low-paying jobs are the ones that are most threatened, most potentially threatened by automation, does raising the minimum wage just raise the cost of low skilled work at the incentivize employers to accelerate the process of automating these jobs, the very jobs that we are most perhaps concerned about? ..

want to be clear. i am not trying to talk about policies here, that is not something that is going to happen in your current position. as a society, and honest day's work should earn an honest day's wage and machines are going to make it harder and perhaps impossible for low-skilled entry-level americans to find an honest-'s work, doesn't the basic design of our social safety nets have to look a lot different than it does today? >> it certainly has implications for how we design our social safety net. that is an important conversation to have. i would not throw out the lessons of the last 50 years about what works and what does not for income tax credit.

but i'd think we should be thinking hard about these questions as well. >> thank you, mr. chairman. >> thank you for the votes going on here. i appreciate the improvement in the economy, we have all seen that, it is 3% unemployment, we also know there are challenges, you raise one about income inequality, we have challenges on workers that are retired and heavy shoes with their pensions, right behind you, going to meet with leader, someone from northern minnesota, a janitor and a teamster, his pension because of the decision inordinate be affecting a lot of states in the midwest, we are trying to work on but another

issue in northern minnesota that i know you are well aware of is the current employment situation, the iron ore mining affected by overproduction in many countries combined with illegal steel dumping quote reno is going on and i appreciated the recent move of the administration to try and to be more aggressive in the enforcement including adding 40 new inspectors to the budget money we got last year as well as working on the enforcement actions including new tariffs today. could you talk about that industry and what is going on and what the future is? >> thank you. that is an issue week a lot attention to. the backdrop for the substantial global overcapacity in steel, capacity is 70% outside those,

much of its in economies that have made very heavy investments in supporting their steel industries. this overcapacity has collided with a collapsed in worldwide demand for a range of commodities and products including steel and the result has been 35% decline in steel prices in 2015 which is having a significant impact on our industry and your state among others. we have taken 149 actions, 40 of them in 2016 alone, the highest breach of actions in 14 years. that has contributed to the fact that in 13 months, 13% over the last year and we are going to continue to vigorously enforce our trade laws including taking

advantage of the new tools congress gave us with customs enforcement that the president signed last week. it is important to understand domestic trade enforcement, international coordination is critical. u.s. imports represent 10% of global exports and we need to be working with other countries, steal countries dealing with many of the same issues our economy is as well as steel exporting countries like china to push on their overscapacity. >> the chief of staff came to northern minnesota, it was helpful to have him there. and asking more in writing from questions about this pension issue but talking generally about the importance in a volatile economy, millennials

dealing with the gay economy and having trouble saving because they don't have a structure in place and you have seniors who have retired but things changed with their pensions and it is difficult for them. >> retirement security is very important. a lot of people are not prepared for retirement and retirement security is enhanced when you're depending on multiple sources of social security being one. and pensions which include defined contribution and defined benefit. defined benefit have a number of challenges in our economy especially in the multi employers segment, that is an important issue in the pension benefit guaranty plays an important role helping to make sure those pensions function as well as they could. >> this issue with the central states pension plan which we can talk about more in the future is

affecting two thirds of participants are going to have pensions reduced 70% so that is a concern in northern minnesota which is the same place. so thank you. >> >> thanks for calling on me and chairman jason furman, it is an honor to testify. the labour participation rate is a little disappointing. when i go to my district one of the big complaints employers have is a hard time finding employees. okay. on the other hand they also feel there major competition is government itself because of all the government benefits. you mentioned the unemployment rate dropped during the obama administration which has that

the unemployment has dropped, staff enrollment has gone up by $12 billion so it seems as though we are either paying people not to work at all or not to work to their abilities. could you comment on whether or not you feel all of the benefits out there that are available are contributing to the lower labor participation rate or contributing to people not achieving their full potential. >> thank you for your question. for men between 25 and 54 their labor force participation rate has fallen nearly every year since the 1915s, coat is a longstanding phenomenon. for women since the late 1990's. even though we changed the system to be much less something you get regardless whether or not you are working to something you pretty much in most cases requires you to work to get.

many elements -- >> to its extent you're talking about earned income tax credit which rise were you to work a little but as soon as you work more than a little it is taken away. head. >> the income tax credit does increase labour force participation because people decide whether to work for not work is the several thousand dollars difference and if the faith and trained to have effects as well but those appear to be dominated by a large amount of money you get as an additional bonus for work. >> i disagree with you but i will mention other problems. economists found positive correlation between stable households in better outcomes for families. it is not difficult to come to put hypotheticals in which the blood oozing 30,000 -- a single parent could lose $30,000 a year by getting married. do you view -- i am seeing that in my district, parents a my son

can't get married, that sort of thing. can you think of anything to do in the remaining time of this administration or any plans for the future you could suggest for future administrations to do something about these huge marriage penalty we have right now. >> thanks for your question. president bush passed meaningful marriage penalty relief for many middle-class families which president obama signed into law. their substantial marriage penalty in the earned income tax credit that was reduced in 2009 and we just paid on a bipartisan basis of this past december. one of the proposals in the president's budget which i alluded to and sponsored by ranking member maloney is the fact that secondary earners often face higher tax rates than many other countries and so we have a tax benefit for secondary earners the we propose.

>> we agree we have a $30,000 penalty for a single parent making can to 15 grand a year if they do marry somebody, 40 or 50 grand year, the you agree with those figures? >> for most middle-class families we don't have a marriage penalty in the tax code anymore. >> all the benefits, the earned income tax. >> that is higher than i would have put the number. we have taken a number of steps that there is certainly more we can do. >> i will have to get you those figures. one more question. you talk about the fact you felt we could spending too much in 2011, 2010, it was better not to. a keynesian economics believes deficits spending improves the

economy. in the budget president obama has recently submitted to congress you also have a larger deficit. it makes me wonder, i love all people, but if the time to run a deficit when the economy is weak as it was in 2010-2011 of the we have such a long period of time of lower employment, income is not in line and you are still running a large deficit, is there ever a time for economists such as yourself would suggest? >> the goal we have in mind is having the desk on a declining path relative to the size of the economy so sure shrinking it relative to the size of the economy. that is not something undercurrent of we have achieved, it is something additional steps including greater spending production and reducing tax benefits especially for high-income households will help us achieve.

>> gentleman's time is expired. senator casey is recognized. >> thank you for being here. and wheat have been date when folks are voting and i will probably just have one question but i think it is the critically important topic. we could spend hours on this one topic and i am glad that you in your work and in the report for the administration focused on what we sometimes call early care and learning, early care meaning quality affordable child care and learning, prekindergarten education but i noted, they're both essential, this relationship between the two. i noted on page 4 of your testimony, you said, quote, that one of the chapters focuses on, quote, disparities in opportunities that appear at an early age, at the long run benefits of investment in

education, health and well-being of children and you go on to talk about the gas income early health and cognitive skills of children and you conclude by saying, quote, research demonstrates direct investment in more children can help close gaps in important outcome is can have lasting impact and a chart about cognitive skills, kindergarten versus fifth grade. i have been working on these issues years and the connection between learning and learning is not only demonstrated but something we should bear in mind. as kids learn more, meaning they are in those early years they will literally turn more later and we are all better off pants and wanted to ask you, can you

walk through the benefits that you see purely from an economic or work force perspective on making those investments in children in the dawn of their life. >> thank you for that question and bringing up that issue because that is an important chapter and an important example of how we can promote productivity growth which we have been talking about in this hearing and make sure that productivity growth is shared more widely. when you do an economic analysis of these early care programs for, early education programs you find it has two benefits. one is an immediate benefit because it enables the parent, more often than not the mother to work for--more if she chooses to do so and facilitate greater income for that family which itself is important for a learning environment for the child and the second set of benefits, the one you talked

about, a robust connection between education and how much you earned in 25, 30 years of age. when you look at just the extra tax revenue collected on the future earnings that is a enough to repay a substantial portion of not all of the initial cost of these programs. i am not suggesting we take into account in the budgetary treatment of them but in evaluating whether or not it is a good idea to undertake those programs that is certainly relevant. >> a number of studies show the return on investment which is really extraordinary, sometimes you spend a buck on high-quality early learning and get back multiples of that, sometimes in the teens, so it is significant. i will in the interest of time yield back, 1 minute and 7 seconds.

>> we appreciate it. >> thank you, chairman. i couldn't agree more with senator casey. arne duncan at strong start for children act, i supported that and keys to be the lead of that in the house and every possible matrix suggests universal pre k or is near as we can get to it is one of the best investments a society can make. but on another matter, you talked about corporate inversions, high corporate tax rate and mentioned you believe it is an issue. how would you correct it? kind of the issue has been demagogued by both sides in ways that are not helpful. certainly, in my opinion, what would you like to see happen?

>> there's a good way to address it and even better way to address it. the good way to address it would be to take a simple step of banning the practice of merging with a smaller foreign company and changing your tax domicile overseas and claiming the set of benefits associated with being an overseas corporation. that is a step we could take today is that would reduce inversion. even better way to deal with this fact to do that at the same time, it is more attractive to invest in the united states by reforming our business tax system, lowering the tax base. >> if you don't do the other -- >> it would be -- the conversion are happening so quickly that i don't think we can afford to wait and it is going to take a long time to reform the tax code than i would just deal with the emergence issue by its self.

that would be the economically prudent thing to do, even better would be to reform the business tax system as a whole to make it more attractive to be here. at the same time -- >> we are talking about larger positions being coopted by smaller ones, but you also can't stop the rivers, the idea of building an environment that makes it fundamentally attractive to bees year, which chairman brady supports is what we should be considering, the fact we have the highest corporate tax rates in the world is of fundamental problem when you look at companies like pfizer and johnson controls and others and apple in the conversation that ensues. i want to ask about something i am disappointed, i am afraid we won't be addressing this year, that is the trans-pacific partnership. i would like to give you an

opportunity to talk about it in any way you would like, without running an opinion if you don't want to. the ideas that we are not taking up this conversation is deeply disturbing to me regardless of where it goes. >> as i said in my opening statement, one of the challenges facing the u.s. economy is it is hard to increase your exports to world where growth in the rest of the world is slower and in that environment one of the steps we could take that could help make it easier would be to reduce or eliminate 18,000 taxes that exporters face, these 11 other countries and the ppp have. one study found not just a substantial benefit from doing it, it also found if you wait a year to do it you lose

$94 billion, morrison $600 or $700 per household in our economy so it is not just important to do, it is important to do with as expeditiously as possible. >> you heard the conversation on the streets that unions are deeply against it yet i find most people are very much uninformed or misinformed. what do you say to those people? >> united states is already a very open economy, very easy for other countries to sell here. we are trying to break down the barriers our companies face to countries around the world. we have high standards in our country, labor, environment. this would insure other countries are raising their standards and put us in a better position to compete on a level playing field. >> there's a big benefit. >> big benefit for workers and productivity. >> it just doesn't seem to be getting any traction. >> is something we have been

trying to communicate to make it tangible, cutting taxes on american exporters who support higher pay jobs. >> thank you, my time is expired. >> my understanding is the congressman beyer has questions,

would feel better if we were investing research, trade and all the different steps we should be taking. >> thank you. china and has lost $800 billion in reserves in the last 12 months. what are your views on drivers commandeer expect them to continue? how about china's reserves?

what is the impact? >> that is an important question and china has suffered from not always communicating its policies as clearly and transparently as we would like to season due and the market would like to season to end one consequence when you don't have transparent market oriented policies that are communicated clearly is you can see various abrupt changes and financial markets and hardest one is going on in china. china still has very substantial reserves, they have more than enough wherewithal to deal with the economic challenges that is a face but are they going to make sure they are doing the right reforms, right transparent policies and communicating in the right way such that they are

taking advantage of those resources to address the challenges they have? >> thank you, i yield to catch. >> thank you. congressman grassley. >> going a little differently i know there are countries around the world that want to get kids in the loving arms of their parents as soon as possible, king your report you emphasize head stock is a good wart is a improve the economic success but it has no impact in the long run and 2-year-olds that attended were worsened inert years. the brookings institution -- themselves came out that head start was not up to snuff.

given that the studies show head start is not that great is it better to leave kids with their parents, head start seems, kids across the board, why do you keep pushing this to get kids away from their parents? >> in the report we review several dozen studies conducted over a few decades, and any given study will have a different finding. we show in broad terms they consistently find positive results. a number of studies were authored by a nobel prize-winning economist from the university of chicago who happened to be a republican. that is not relevant for evaluating his research but this is a widely accepted finding in the economics profession, certainly i quality, you don't just want to do -- you want to pay attention to the quality of

what you're doing. >> you are with brookings. there are studies out there. one more question. i am alarmed about the growing income gap in this country and one of the things that contributed to it was the quantitative easing by the federal reserve which is pushing money towards the most obscenely wealthy americans and the feeling you will grow the economy that way. i realize you don't have direct control of the fed, but could you comment, do you think it was a mistake to juice the economy, for the fed in essence to financial the benefit the wealthiest, wealthiest americans, the idea was they thought it would trickle down, but do you think that was a

mistake? is there a moral problem with that? would it be better off if we base currency more to the working stiff? >> i don't comment on policy actions that the federal reserve. is better for them to undertake this independently. congress granted the federal reserve a dual mandate in terms of employment and inflation and i think any steps they take consistent with that mandate are ones that i would agree are in the best interests of our country. >> so you agree -- am i wrong? quantitative easing gives immediate benefit to somebody, immediate benefit to the big wall street banks? >> there is a large economic literature on the sources of inequality and i don't think any major economic research thinks monetary policy one way or the other is an important part of

the explanation for changes in indeed quality. >> thank you for the additional time, mr. chairman. >> thank you for being here today and your sincerity on this difficult topic. i want to associate myself in the back of your mind with what senator lee said. i worked at mcdonald's my first job and was really excited. six months in a got a minimum wage increase, increase in my pay which wasn't very much. the impact, good for me was not so good on the two guys that got hired after me because they lost their jobs. that is what senator lee is talking about. let me give you a better example. my next job was pumping gas at a gas station. i am dating myself here. you can't get anyone to pump gas

anymore, you do yourself. i remember the owner, small-business man telling us in high school and college that the biggest cost drivers in his business was us, so we'd better perform. i did not have many skills in high school but i've learned how to pump gas. today that job is gone. many service areas we find inert economy employers trying to figure out ways to reduce costs and one of the few areas in technology to reduce costs impacts those high school kids that don't have those skills that they have yet to learn and in our state of ohio, reflected more than any other state more and more individuals with lack of skills not being able to find those service jobs that once were plentiful when i was a kid. in urban areas it is even more tragic where unemployment among black and hispanics are double

digits. not a question, just put in the back of your mind, i worry as we have meaningful, well intended regulations from the federal government that sometimes they have the opposite effect of senator lee's point of trying to allow for those with the skill sets that i had when i was 16, are being left behind. thanks for your sincerity and again. >> if you think you were dating yourself and your first job wait till i tell you what i did. i see senator peters has arrived in the nick of time. you are on. >> thank you. you have not had a committee meeting in a long time where you walked in and sit down and the chairman says you are on. >> i need to do this more often, this is great, thank you for that, thank you for being here as well to talk about issues related to the economy and the

future and i have a question, looking at the long term structural changes seem to be occurring in our economy that i think will pose some potentially very significant challenges for us in decades ahead by enjoyed reading the economic report on the president which i am sure most people enjoy reading this book and spending time with it but some interesting discussion about growing income inequality and jobless locations, job creation, dynamism, etc. but one issue addressed in here that you've done some studies related to as well deals with the pace of technological change and the impact on the job market. i heard that as i walked into day. it has always been, i would like your functions and thoughts on this because i think you have thought about this a bit, has always been folks have always feared technology would destroy jobs, jobs would be destroyed

and we would have thought much higher unemployment as a result of that but it never materialized, jobs, technology does destroy jobs which it has, it has always created more jobs that tend to be better jobs, higher paying jobs and a lot of routine jobs have been displaced by ones that require a higher education and skill training but it seems as if there are a lot of folks who think we may be getting to inflexion point where the technology is advancing to the point to where even those high knowledge jobs, creative jobs and be done with the technology, you have jobs, physicians for example when you look at watson, the medical breakthroughs being done with watson that undiagnosed disease perhaps better than most physicians can do it. a radiologist, machines that can do the job better than a lot of radiologists can. from that technology. we may be getting to the point

especially with artificial intelligence that can radically transform the job market. there was a recent study i was looking at, the matter of the next decade or two 50% of job classifications in this country could be done better with some sort of technology than a human could do it which is disturbing but it is a challenge. what are your thoughts on that and if that is indeed something we need to be concerned about. what policies should we be thinking about right now? >> thank you for that and that there's a lot of thought and i don't think it is a particularly partisan issue and i don't think we have all the answers it is something we should all be grappling with together. to a first approximation, i think one hypothesis you stated is right. for thousands of years we have invented new machines that replace things people use to do, most of what people did in the nineteenth century they are not doing today and we are much better off as a country for it.

the problem is when that happens abruptly and we are not prepared for it the consequences of that can be one of two things, one is unique quality, and 50% figure if you break down by income, higher than that, lower than 50% if your income is higher. if you see a lot of low-wage jobs reducing demand for those types of workers that lower their wages, that raises inequality so that is one side effects, inequality. the second is i certainly believe overtime if you lose a job you will find another job and hopefully a better job. lot of people lose a job back once that process can be long and painful and it is not always as easy, what we should be doing in this regard, more skills to take advantage of so they are complementing the innovation and

benefiting more from them, making sure we have a labour market that is better at moving people from job to job, the president proposed a wage insurance program to get people back on their feet, insuring against wage loss associated with the job as they move into a new job, probably a lot more than that the we need to do as well, we need to keep thinking about it. >> the challenge was training as well as technology particularly with artificial intelligence and the promise of fat, promise or significant challenges that may be difficult to train folks as well in that area. these are not things i'm worried about happening in the next year or five years or ten, but from some of my reading is something we should be very concerned about looking beyond that. for example, i have done a lot of work with autonomous vehicles, you talked-about autonomous vehicles, we're

passionate about the indeed for it, there will be incredible applications and most importantly will save tens of thousands of lives with the types of technology that will make cars safer eventually leading to autonomous vehicles but autonomous vehicles can also have great promise for the economy. talk a little bit about what you see happening with autonomous vehicles transforming the economy and investments it made the necessary to make that happen. >> that is an important question and autonomous vehicles, everyone is interested in them in the world right now. u.s. carmakers are making significant investments, german carmakers, japanese carmakers, is really technology, that is one reason it is important to make sure a lot of this is happening here. a lot of that is state regulation that allow experiments out testing, you

have cars with drivers on a road that is already quite dangerous. is often safer to let these cars on the road and make sure you and not letting the air get in a way of being able to undertake that type of experimentation. basically research that we found each year in washington is an important complement to the more applied research that is undertaken by the companies that doing that, investments in infrastructure that support autonomous vehicles as well as electric cars and other types there can be a chicken and egg problem of if the infrastructure is not there the infrastructure won't be there. the government can play a role in public policy overcoming it as chicken mandate or network externality obstacles to the adoption of the technology, says a number of different steps that come if we are thinking about that. >> thank you, appreciate it.

thank you so much. >> i want to follow up with one last thing while i have you and cheer. if you could take yourself out of your current job and say you are back at brookings or harvard or whatever and i came to you and said we talked about this runaway mandatory spending, a lot of it related to the aging of the population, the bulge that has, the baby boom generation, we have done a number of things to address that, we had sequestration, we have had the revenue increase that raise income taxes on the highest category, economic growth will help us address that problem but we still have that

impact of this bulge of the baby boom generation indeed is going to be with us for several years. particularly affecting social security and medicare and you know the numbers and so on. if we were able to summon the will to bring together bipartisan bicameral executive branch, working together, maybe my time is up, but reforming the

benefit structure in medicare so there is more cost sharing in areas like part b, home health, reduce the ability to blunt some of the cost savings and have more income related premiums, those are some of the steps we could take in medicare. i would say in health i would think broader and medicare, the health system as a whole, private and public, and the cadillac tax, tax on high-cost employer sponsored insurance, one of the most important steps iliad of to slow the growth of private health care and also results in additional revenue based on the idea that has been supported by democratic and republican economists.

i would say more broadly you want to think of filaments of the tax code. if you look at tax preferences those are tax expenditures and my predecessors like glenn hubbard who served under president reagan and president bush all said we should be looking at those, they are on auto pilot, not an efficient way of accomplishing the goal and not a fair way either so i would bring that into it and curb those tax expenditures for high-income households like the incentives we have for health, housing and pensions. >> thanks for that. i hope we get to that point without getting there by crisis. in 1983 social security was ready to go belly up. president reagan reached out, speaker of the house to the

neil, they to get out of politics, secured 30 years of solvency for social security so it has been done, can be done, but the question is you have to have the temple of a politician to get it done. often times the stakes--mistakes can be made when you do this increases form rather than laying it out and doing it in a logical way which doesn't end up making mistakes and putting people at risk. so i appreciate your getting us that templates. hopefully we will reach that point without getting too a crisis and i appreciate you coming and being with us today and continuing availability, working together is the only way we are going to solve this. we appreciate you being here and

with that, a couple housekeeping things here, we are going to keep the record open for five business days so that members can submit anything else they want to submit, for you also if you so desire and with that the hearing, thanks to you, is adjourned. [inaudible conversations]

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