fiscal sustainability and a debt level that is under control. >> anybody want to agree with me? >> partly. two one-sentence responses. one, i think it is more important to get the overall budget into sustainable ambulance th balance than it is to avoid an increase in government revenue shares of the economy. point two, i think we can get a contribution to that outcome with higher government revenues without raising marginal tax getting rid of a lot of tax expenditures and finding a lot of base-broadening to go along with maintaining or even possibly cutting like in the corporate case some of the tax rates. so i think there is a perfectly doable package here that addresses at least what seem to be your main concern, marginal rates at the same time increasing revenues as part of

an overall budget package, which to me is the most important priority. >> senator, i think your concern about tax rates is very well focused. i think two things. one, we're going to have to pay for what we've wasted over the last 30 years. your charts showed our debt has gone up, our deficit has gone up. someone has to pay for that. right? it was a mistake. we all agree we shouldn't have done it. but we have to now pay for it. that is going to require a rise in tax revenue. not in tax rates, but fred is absolutely right. and the fact of the matter is if you raise marginal tax rates, especially on high income people, you're not going to generate the revenue first a question of how much more revenue you'll generate. and you'll certainly not generate anywhere near the amount of revenue you need to close the gaps significantly. how do you broaden the tax base? and how do you broaden the tax base without affecting economic

growth, or minimal impact on economic growth. and that is the key issue. raising marginal tax rates can be politically attractive. it can be politically popular. in this country, 50% of u.s. voters don't pay any federal income tax. 60% receive more from the government than they pay in income taxes. so raising taxes on the remaining highest 20 or 30% can be politically expeditious. but i think you have to any meaningful reduction of the deficit is broadening the tax base. raising tax rates will not help it. >> even people don't pay what is called federal income tax, they pay payroll tax. it's historical that we make this distinction. most countries don't make that distinction. you're funding social security. you're funding medicare out of the payroll taxes. that is an important federal tax obligation that most voters actually do pay. >> i would raise one quick point on that. i view medicare and payroll

taxes, those are pension funds. and health care costs, those are not taxes to pay for general government expenditure. >> i agree. >> let me just make this point. this is where we have a disagreement. when i look back at the five years we've balanced the budget in the last 30 years, tax revenue was close to 20% of gdp. 19.7 one year. 19.8, 20.6. so the years we've actually balanced the budget, tax revenue has not been 18.1. it has been close to 20% of gdp. we have the additional problem of the demographics of the country changing. an aging population. so my personal belief is we've got to be in the high 19 percent of gdp range to get a package. i agree entirely the way to do that is not raising marginal tax

rates. and, you know, if you look at somebody like martin feldstein, pretty credible conservative. he says don't raise marginal tax rates, broaden the base, reduce and in some cases eliminate tax expenditures. i don't want to put words in his mouth. he says you ought to focus like a laser on tax expenditures because it is just spend big a different name. and some of these tax expenditures now are running $1.1 trillion a year in tax expenditures. we're spending more money through the tax code than we are through all the appropriated accounts. and it gets almost no attention. i'm on the finance committee. and i can tell you it is -- we do not pay -- we pay much less attention to expenditures through the tax code than we do through the appropriated accounts. now i don't for a minute suggest that means we don't have to cut the appropriated accounts.

and we certainly have to have as part of any serious package a focus on entitlements, because, you know, 30 years ago, the share of our budget going for mandatory spending was the smallest share. the biggest share was the appropriated accounts. now it's flipped. we're over 60% the mandatory accounts, social security, medicare, the discretionary accounts are now the smaller share. >> it's one of my charts. >> yes. and it is strange the way we operate around here because when we look at a solution, nobody wants to kind of talk about the elephant in the room. nobody wants to talk about the entitlements. we want to focus on discretionary spending, which i would argue is much less the problem. but, you know, we all understand politics.

>> i just want to add one caution in terms of percentage of gdp and revenue during boom times that is when your percentage of revenue is going to increase. and obviously in tough economic times, it goes down 15%. so it isn't necessarily ambulanced to our budget because we raise increase taxes to the level, it's because the economy was booming and allowed that much revenue to be extracted from the economy. again, it's all subject to debate. but that would be my caution. >> here we are in a situation in which our spending right now is over 24% of gdp. our revenue is between 14 and 15% of gdp. so spending as a share of the economy is at or near a 60-year high. revenue is at or near a 60-year low. no wonder we've got record deficits. and really, i don't know which one of you mentioned. i think maybe it was you, dr. lerrick.

if you look at the ten-year outlook here, i think on a realistic basis, we're looking at trillion deficits as far as the eye can see. you said that, dr. bergsten. okay. i always like to attribute to it the right place. thank you all. i know we committed to ending at noon. somebody's got to make a plane. but we appreciate very, very much the testimony. i think this has been an outstanding hearing. >> thank you very much. >> federal reserve chairman ben bernanke will be on capitol hill tomorrow morning to talk about the health of the u.s. economy. he is also expected to be asked about inflation and economic growth.

live coverage at 10:00 a.m. eastern here on c-span 3. u.s. manufacturing continued to grow in the month of january. up next, a conversation with ohio congressman tim ryan about manufacturing jobs and the economy. and then house and senate republicans talk to reporters about the federal budget. congressman tim ryan joined us on washington journal to talk about u.s. manufacturing jobs. this is 40 minutes. >> congressman tim ryan, a member of the house budget committee, and also the co-chair of the congressional manufacturing caucus. thank you for being here. we'll get to manufacturing and the economy. but i want to begin with overall look of the economy released yesterday by the congressional budget office on deficits. and this is "the wall street

journal" editorial page this morning. $5 trillion in change is what they say. all of this has increased the federal debt by nearly $5 trillion in merely four years. the federal deficit will decline to 1.08 trillion in 2012 or 7% of gdp. but that is still the highest deficit since 1946. except for the three previous years. in other words, the four years of obama's presidency will mark the four highest years in spending and deficits as a share of the economy since harry truman sat in the oval office. what's your reaction? >> well, i love how they try to blame obama. these numbers are the result of economic policies and deregulation policies of wall street that allowed the housing market to get out of control. we all know how the story ended in 2008. and the stimulus bill and other things that have been done, reduction in revenue when you have 10 and 15% unemployment in some major cities in the united states, reduced revenue, bad

economy, a stimulus bill needed to plug that hole. you they'd up, and that's where we are. but to try to somehow blame obama for all this is just -- it's politics coming out of the "wall street journal" editorial page. >> not surprisingly, they disagree with you on their take of how this happened. this is what they say. it has two main causes. first, the anemic recovery in jobs isn't spinning off enough outgrowth to boost tax receipts anywhere near the historic level. second, a series of nonstimulus tax cuts, tax rebates in 2008 and 2009 and payroll tax holidays in twlefnt and this year have depleted the treasben. these tax cuts don't change the incentive at the margin to work or invest and thus have little feedback in revenues from faster growth. >> that's a complete distortion. i can't believe a newspaper like "the wall street journal" can credibly say things like that. to say that the stimulus bill and the reduction in the payroll

taxes had no effect. has it had as much of an effect as we want it to? no, of course not. i represent youngstown, ohio. but it has plugged the hole. my opinion from day one along with many others is that the stimulus package wasn't big enough. to get one republican vote we had to do $300 million, fix the amt and do tax cuts to get one republican vote in the senate. so there wasn't enough money pumped into the economy. and i know that's an unpopular thing to say in some quarters. but it is economics. it is based on what happened during world war ii and what we needed to do. so the fact that these numbers are parallel to what happened after the great depression, and you're talking about truman, well, it took a while for us to get out of that. so we've got to continue these policies, continue to cut the payroll taxes for next year. and allow that money to get back into the economy.

but we also need, not to get on a complete rant here, but we also need long-term systemic changes for the economy. and i think president obama hit the nail on the head at the state of the union. community college, get kids back to work, more engineers, more investment in research and development, the sciences, nih, national science foundation, jump-starting the economy with a new green revolution. this is the way out. and we've stopped investing in the united states. stopped investing in infrastructure, stopped investing in research and development, stopped investing in education. and we are where we are because of those disinvestmentses over the past ten years or so. >> let me go back to "the wall street journal." they say even the keynesians who run the cbo concede that the 2013 tax hike on capital gains dividends, estates and small businesses would knock economic growth down to 1% next year and raise unemployment to 9.1% from 8.5. that means about 750,000 more

jobless americans. you can't have such a lousy economy and cut the deficit in half. so in other words, would you be in favor of continuing the tax cuts that are in place in order to not damage the economy? >> well, not for the high-end folks. i think the buffett rule and what the president is promoting with that, i think should happen. you know, folks have been doing very, very well. and it's -- the way the current system is set up is inhumane. what we have going on in our country right now, and it's time we stop and just say it. it's inhuman what's happening, what some families have to go through in the united states of america in some of our major cities and some of our rural areas. and to think that somehow warren buffett or some of these others can't contribute a little bit more in order to help us pay down the deficit. i have republicans in my district who don't pay that close of attention to the daily workings of congress say why don't you guys just raise taxes

on those who make more than a million dollars a year. and i say that's exactly what we're trying to do. but you have "the wall street journal" editorial page, and you have the right wing caucus of the tea party folks in the house aren't for any of that. not even asking millionaires to pay more. and when you have that big of a chasm between what practical, responsible, reasonable approaches are, versus ideology, when you have that big of a chasm, it becomes difficult to find some common ground. >> the tax discussion brings us to the manufacturing agenda that president obama laid out in the state of the union address. he talked about a minimum tax for multinational companies. here is a piece that was put in the "washington post" talking about howard glickman's take on this tax. he says the multinational's minimum tax would be entirely unworkable. even if congress passed the levee, which it won't, those firms would find ways around it. minimum taxes are band-aids for a flawed tax system.

the solution is not to create a new penalty for firms, goes on to say, that learn to manipulate the law. it's to fix the basic law in the first place. >> i think we do need complete tax reform, and it needs to be done in a comprehensive way. but clearly there is no partners. i think president obama wants to sit down and do this. but he doesn't have any partners in congress. and i think we look, go back to the debt ceiling discussion where him and speaker boehner, the president and speaker boehner had a deal worked out for long-term deficit reduction. speaker boehner brought it back to the tea party caucus in the house and got the kibosh put it on it. so it's hard to say oh, don't do this or don't do that. we need comprehensive reform. but if you only have the president of the united states being the only responsible adult in the room trying to get some of this stuff done, it becomes very, very difficult. but this is the thing. you have these folks who will jump and talk about, you know, the food stamp president and --

but oh, god, we couldn't possibly do anything to raise some revenues from the wealthiest folks in our country. not even the top 1%. sometimes it's the top .1%. >> do you agree the multinational minimum tax is completely unrealistic? it's not going to happen? >> it's probably not going to happen politically. but i think it is a good thing for the president to continue to push because it draws that line in the sand and it makes the republicans continue to do what they've been doing, and that's defend wall street and defend the top 1%. i hate to say that, because we're all in the 100%. any way we slice it, we're all in this together. and having this chasm between the wealthiest and the middle class and the poor is not healthy for our democracy. but at the end of the day, i think it's important for voters to know who is asking for basic fairness, who is asking for justice and responsibility and policemen policing wall street and the regulatory markets. and who is not.

>> there are other items that were included in presidents manufacturing agenda. you listed off some of them as we were talking here. again, on the reality front, what can get through congress of what he proposed? >> well, i would hope some of the manufacturing policies could get promoted. because i think there is a genuine consensus when the cameras are off that these things can get done. when we -- and a good example of is i have a china currency bill that i've been pushing for eight years now. before the democrats left congress, speaker pelosi brought to it the floor. i think we had 370 votes. it was probably the largest bipartisan vote of a substantive issue we had in that congress. and the republicans currently now won't even bring it up for a vote. you're talking about 370 members of the united states congress agreeing on something. that's a good day. now they won't even bring it up for a vote because they're

getting their strings pulled by some of the multinationals. my point is i think there is some genuine concern for manufacturing in the united states and bringing it back. and i hope that we can pick one or two of these things, maybe with tax incentives for retrofitting trucks and buss for natural gas because of the marcellus shale boom going on in pennsylvania and ohio and others, that would be a good place to start where maybe we can find some common ground. >> phone calls. tony is a democrat in pennsylvania. you're on the air with tim ryan of ohio. >> caller: governor, greta. governor, mr. ryan. >> good morning. >> caller: an example of something i wanted to bring up rather than a question. an 80-year-old woman, you know, on social security, she has to buy a pair of tweezers, say. she goes to the store. there is an american-made pair for $1.49 that is going to last 30 years. and then there is, you know, a cheap pair from china, 99 cents. i think most people understand why she buys the 99 cent pair.

but just to pose that against a hypothetical billionaire from new york who owns hotels throughout new york city and atlantic city, and he is buying furniture for his hotels that he flies the american flag outside of. the bid comes in from china 20% lower than the u.s. manufacturer. and he buys the chinese furniture. you know what? is everything the bottom line? be an american. be a patriot. pay the extra 20% and feel good about it. and really, that's all i've got to say. thanks. >> well, you know, we have lost a lot of manufacturing. and i don't think there is many districts that have lost more than mine. i represent northeast ohio just south of cleveland, akron, youngstown, ravenna, you know, halfway between cleveland and pittsburgh, the old steel belt. some of these we aren't going to get back. we're not going to get back the tweezer manufacturer. i think our focus needs to be

how do we make america competitive to make the high-end advanced manufacturing products that we can sell to the world, the advance batteries that the president talked about. and if we're going to do that, we need a government that is smart. and it's not this all government is bad, all we need to do is make the government small enough to be able to put it in a bathtub and drown it. that kind of incendiary rhetoric is not healthy. we need to pump up national science foundation. pump up national institutes of health. make sure everybody in the country gets a community college degree so we have the workforce necessary to fill these new jobs. how do we grow engineers in the united states and provide scholarships for young people to go to these schools? we've got all kinds of school reform that we need too. but set a vision. and most of this is going to be in the field of energy. and if we don't wake up and smell the coffee in this country, if we think we're going to be able to still do what

we've been doing, we're going to fall behind. china is pumping billions of dollars into all kinds of renewable energy portfolios and the like. and we're falling behind. >> does that mean you disagree with the president on his keystone decision? >> no. i think what he is doing is fine. you know, but we do have opportunities with clean gas that is here in the united states, the natural gas. let's convert our economy over. we only have 2% of the world's oil, for god's sake. let's get off this idea that we can still run on oil. we can't. and we keep going down this road further and further while china is investing billions of dollars in green technology windmills, nuclear, clean coal, all of these things. we need to be doing that stuff and get out of this ideology and get our head out of the sand and let's go. we have a generation of young americans who have no clue what they're going to do when they get out of college, or they're already out of college and they have $100,000 in debt and have no clue there is no space race. there is no we're going to lead the world in manufacturing, there is no connection. that's why i was so inspired by

the president's state of the union because i really thought of all of the candidates you see in the republican primary, and what you hear coming from the president of the united states, if you're a 25-year-old woman thinking what am i going to do, have i $100,000 in college debt, which one of these folks or which one of these parties is really going to lay out an agenda that i can contribute my talents and skills too, it's the president. by far. and that's what we need to do. and we can't worry about the tweezers. manufacturers are gone. how do we get back and do the new generation of manufacturing. >> on that point, here is the dayton daily news from ohio back in october with this headline. "ohio has lost 3500 factory others the last ten years." >> yeah. i'm not surprised because that's the world i live in. >> right. >> every single day. going into these factories, dealing with trade adjustment assistance for the workers, being with these workers as they go through bankruptcy.

i've seen too many steel mills close down and manufacturing facilities close down. it's not just the one that closed down, it's the entire supply chain. >> give us -- i want to show our viewers manufacturing in ohio by the numbers. home to about 22,000 manufacturing companies. cincinnati ranks sixth for manufacturing jobs. cleveland 10th and columbus 19th in the whole country. leads the nation in general purpose machinery, second in metal working machinery. 67.74% gross state product is generated by manufacturing, about 80 billion annually. tenth in the nation and fifth in the nation for total manufacturing and dollars. so given what i have just said, paint the picture of youngstown, ohio. what did it look like before? what does it look like now? >> it used to have steel miles that would be miles long down the mahoning river. and there are some great old pictures of it looks like a town is emptying out because there are thousands and thousands of workers getting out when the whistle blew. people lived all around the

steel mill and company towns in some senses. but just in neighborhoods like the breyer hill neighborhood where all the italian immigrants settled and would walk down in to work. and it was a bustling place. now it was dirty. the wives were sweeping the porches twice, sometimes three times a day because the soot would come out of the steel mill. so it was a much different world. today youngstown is a tale of two cities, like many cities. youngstown has a burgeoning tech community, entrepreneur magazine said youngstown was one of the top ten best cities to start a business. we have a business incubator with over 300 worker there's. the average wage is about $58,000 a year doing a lot of business-to-business software. some of the fastest growing companies in the country in education software and green technologies, companies like turning technologies that these tech magazines ranked a few years ago as the fastest growing tech companies. we have general motors invested

millions of dollars along with state incentives and governor strickland to the lordstown plant. 4700 workers were selling the chevy cruze. it's the best-selling car general motors has now. we just had huge investments because of our location with the marcellus and utica shale. we've seen huge investments of almost a billion dollars for steel companies there. velora which is a french company just put $650 million into a steel meal between youngstown and girard, ohio. so we have thousands of building trades working in youngstown. and then you'll go a few miles away, and other building trades can't find work. so it's really the tale of two cities. but my point is on why i get so adamant about the investments and the sciences and the health is because i'm seeing in akron and in youngstown what these investments lead to. they lead to job creation at the end of the day.

and when we pull back those investments, businesses don't thrive. businesses don't partner with them. and we have no new economy. and we're getting stuck talking about tweezers when we should be talking about high-end battery manufacturing and how that can the done in the united states. and in places like youngstown and the old steel belt, if we had a tax policy that would incentive advise converting buses and trucks over to natural gas because of the boom we have, you're talking about relying on american energy right under our feet, tax incentives to make those new engines and trucks and buses here in the united states in places like youngstown and akron cleveland, ohio. that's exciting. people want that vision for a bright future. and we're not giving it to them because we're dealing with ideology. >> let me get some more phone calls in here. patricia is a republican in minneapolis. patricia, as we take your call, let's take a look at the unemployment rate nationally compared to ohio as well as u.s. manufacturing jobs in that state.

good ahead, patricia. >> caller: yeah, the only one stuck on talking about tweezers is your guest there. let me tell you what fair isn't. it isn't fair that half the citizens in america don't pay any income tax at all. i know they pay the other taxes, but so do the people who are working and risking and investing their money. and he doesn't explain that there is a difference between income tax and capital gains tax. and i'm so sick of hearing about warren buffett too. if he wants to give the government some money, go right ahead, warren. go right ahead. >> all right, patricia. let's take your two points. >> you know, there is a lot of people in my district who do pay taxes. they would trade places with you, ma'am, in a heartbeat to have a better situation. there are five people, four or five people looking for every one job that is available. the jobs we have lost in ohio that are now being replaced by

jobs, you're lucky. you're lucky if they pay half as much as the jobs you lost. there are a lot of americans. i know it's convenient, and i know it's cool to say oh, these people want to live on the dole. i know thousands of people that i have met over my 10 and 12 years in congress and in the state senate. they want a job. they don't want a handout. they don't want to be on the government dole. they want to go to work. and they want a job with health care and benefits and a pension. and i'm sick and tired, quite frankly, of people trying to paint with the broad brush how the american middle class or most americans don't want to work. i can't remember the last person i met who said i'm really comfortable. i love being on the public dole. there people who do that? of course there are. are if there people who take advantage? of course there are there are people in this building right now who the countries aren't getting maximized contributions from them as far as their contribution to the workforce. but to say that most americans are like that i think is

demeaning. and we've got to stop this. the right wing has been funding these groups, trying divide us. we saw it in ohio with the collective bargaining. who is union, who is nonunion. who is public sector union, who is private sector union. who is white, who is black, who is straight, who is gay, millions of different ways to divide us as americans. and here we are, divided, not going anywhere, getting beat up by china with manufacturing and other things. there are people that want to work. and we need to stop demeaning them and trying to lump them in with kind of the fringe elements of our society. >> let's hear from an independent. ben in tennessee, you're on the air. >> caller: yes. the gentleman there, y'all had the house and senate both for two years. and all you did is work on the