extraordinarily blessed and give up some of the tax breaks that i enjoy, i actually think that will make economic sense. for me as a christian, it also coincides with jesus' teaching that from to whom much is given, much shall be required. it mirrors the islamic belief that those who have been blessed have an obligation to help others. the jewish doctrine to help others and in consideration of others. >> we covered it live on c-span 2. it is on our web site. it is on c-span.org. we have a site for our book tv programming and a new site for c-span3's weekend history programming. we will continue the conversation tomorrow morning as we do every day at 7:00 a.m. eastern. keith ellison is a democrat from

minnesota and member of the house financial services committee as we talk about fannie mae and freddie mac to help homeowners under water. we will get the perspective of david schweikert. that is live on c-span television. thanks for joining us on this thursday. enjoy the rest of your evening. in a few moments, the head of the congressional office testifies on the economic outlook. in a little less than two hours, they will discuss extending a payroll tax cut and unemployment benefits. after that, the senate budget committee will talk about how the europe crisis will affect

the u.s. 2020 or half of all energy that navy uses afloat and ashore will come from non fossil fuel sources. >> from the first to use nuclear power for transportation, navy secretary ray mabus on new energy for the fleet. >> we are too dependent on volatile places on earth to get energy. we are susceptible to supply shocks and if we have enough, we have susceptible to price shocks. when the libya situation started and the price of oil went up $40 a barrel, that was almost a $1 billion additional fuel bill for the navy. the only place we have to get that money is operations or training. our ships steam less or planes fly less. >> more with the 75th navy secretary ray mabus sunday night

at 8:00 eastern. the head of the congressional budget office testified again today on capitol hill about the 2012 economic outlook. douglas elmendorf told the senate budget committee there will be slow economic growth this year with an unemployment rate of about 9%. this is a little more than two hours. >> the hearing will come to order. i want to welcome everyone to the budget committee today. today's hearing will focus on cbo's budget economic outlook which was released on tuesday. our witness is cbo's director douglas elmendorf. i might say very distinguished director. and i want to say how much i

appreciate the work of the congressional budget office. how credible i find it to be. how transparent i find it to be. and, look, sometimes they strenuously disagree with me. i remember very well on health care, my major initiative, cbo critiques very heavily. that's the way it should be. not that my proposal should have been critiqued as heavily as it was, but that's the way it works. that's why they have credibility and they have credibility on both sides because they tell it the way they see it. that's really absolutely critical to the process. we have to have some independent score keeper here. are they always right? no. this is the work of men and women and none of us are

perfect. no, their work is not perfect. it would be impossible to have any entity on matters of this complexity be completely right every time. but they are independent, they are credible, they are serious people and they are doing very important work for all of us. so, director elmendorf, welcome back to the committee. i want to thank you for the outstanding work that you and your team have been doing and with an extraordinary heavy workload. really extraordinarily heavy. i believe your leading cbo in a challenging time has risen to the occasion. as i say, many times i disagre.s i make my disagreements known. sometimes you react to that. most of the times you don't.

that's fine. and i think senator sessions will say the same thing. that you guys play it straight. i want to begin by highlighting what i believe are the key findings in cbo's report. this first chart depicts the ten-year budget outlook under the cbo new fiscal scenario. it shows the definite falling to $1.1 trillion in 2012. continuing to fall through 2015 and then rising through the latter half of the decade reaching $1.5 trillion in 2022. we cannot permit that to happen. please, colleagues, let's find a way to get this country back on track. we can do better than this. we are better than this. and we've got an absolute obligation to try to find a way

to come together to get this country back on track. it's important to note that most of the increased deficit over the next ten years under cbo's alternative fiscal scenario can be attributed to tax policies, not spending policies. we can see $6.4 trillion of the increased deficit under the scenario can be attributed to the extension of the 2001 and 2003 tax guts and other related debt service. in comparison, only $1.5 trillion of the increased deficit of the scenario can be attributed to spending policies. including extending the so-called doc fix. that is for doctors who treat medicare patients. the sequester by the medicare

control act and the debt service. that is the interest service. under the scenario, gross federal debt is expected to reach 103% of gross domestic product this year. and then continue rising to 120% of gdp by 2022. let me just indicate greece is about 140% of gdp on their debt. their sovereign debt. many economists regard anything above the 90% threshold as the danger zone. as disturbing as those debts are, the opening-term outlook is even more dire. in addition to our budget outlook, i look forward to director elmendorf's views on the state of the economy. i believe there are some positive signs we are now seeing for the economy.

for example, we experienced 22 consecutive months of private sector job growth. the unemployment rate has come down. that's good. we have seen ten consecutive quarters of real gdp growth. that's good. housing starts are up 25% since december of 2010. consumer confidence is showing signs of improvement. u.s. auto manufactures are returning to profitability and reported strong sales for january. state revenues are showing modest signs of improvement. but we cannot become complacent. please, let no one take my reference to some positive indicators that we have solved these problems. there are serious risks out there to fuller economic recovery. unemployment remains far too high and threatens.

housing continues to pose a threat as we heard in yesterday's hearing. with too many homes still in foreclosure or under water with people owing more on the house than the house is worth. the political deadlock in washington could block key measures. federal, state and local budget cuts could add to near term fiscal drag. and the european debt and fiscal crisis is creating uncertainty and threatening u.s. exports and threatening to pull us into recession as europe heads into recession. i hope director elmendorf will comment on these positives signs and the risks to the economy in his testimony. i believe we need a policy that stresses both the fragility of the near-term economy and the need for the long-term

reduction. my personal strong belief is we have to walk and chew gum at the same time. we need to take steps now to give a lift to the economy. what i hear from business is the problem with deploying the $2 trillion on their balance sheets is a lack of demand. a lack of demand. thin order books. so, the federal reserve chairman made very clear in his testimony before the joint economic committee last fall, and let me quote from it. "our crucial achieve long-run fiscal sustainability." the federal budget is heclearly not on a sustainable path. the second objective is avoid fiscal actions to impede the ongoing economic recovery. in the short-term, we need more steps to strengthen the economy.

in the medium- and longer-term, we need credible serious action to address the debt threat. the first two objectives are certainly not incompatible. but to some people's ears, they sound incompatible. putting in place a credible plan for reducing future deficits over the longer term does not preclude a tainted budget. i believe he has it right. we must find a way to come together on a comprehensive and balanced plan to put our long-term fiscal house in order. that is critically important. at the same time, we must be careful not to take steps that could create additional fiscal drag in the near term, pushing us toward recession. that would make our deficit and

debt situation worse as our friends in england on finding out. there, they put austerity measures in place and they are slipping and making their deficit and debt situation worse. let's not repeat that mistake. that's why i believe it is so important we extend the payroll tax cut and emergency benefits for the rest of the year. and perhaps, more important, that we engage in a rebuild america plan to strengthen the infrastructure because we not only have fiscal deficit, we have an infrastructure deficit in the country. anybody that doesn't believe it, just go out on i-95 here in washington d.c. after 3:30 in the afternoon. that's why i believe it is so

important we extend, as i said before, the payroll tax cut and emergency unemployment benefits and put together a build america plan to invest in infrastructure. by the way, chairman bernancke has made clear that he believes we ought to be thinking seriously about additional investments in infrastructure at this time. it's a two-fer. not only do you get increased demand at a time of weak demand, but you can get very good prices and it improves the competitive position of the united states. we have had report after report that our infrastructure will not allow us to be fully competitive. if you doubt that, go to china and see what they are doing with infrastructure. with that, we'll now turn to senator toomey. he is here filling in for senator sessions. senator sessions could not be with us early this morning. senator toomey is filling in for him.

welcome. >> thank you very much, mr. chairman. i apologize for getting here a little bit late. i was reminded of how challenging it can be to extracate oneself from the prayer breakfast. it was a terrific event. i think senator sessions will join us shortly. dr. elmendorf, thank you for being here. if i could take a brief moment, mr. chairman, i would like to thank dr. elmendorf and his staff for their terrific cooperation and support during the work of the joint select committee on deficit reduction. that was a difficult ands fr frustrating experience for me, not because of your doing. i want to commend you and your staff for the really professional and prompt and thorough and thoughtful work you provided and response you gave us. >> can i interrupt and ask, did you find that director elmendorf

was always in agreement with your assessment on the matters or did you have the experience like mine that i often find he doesn't agree with my position? >> it was my experience that in the most civil and diplomatic way he expressed his disagreement. but i appreciated his candor and help. just a few thoughts, if i could, mr. chairman. first, i would suggest that comments have been an contribute an attributed to you with comments in the committee. i would just want to encourage you as strongly as i possibly can. i think that is something the committee should take up. i hope we will. then, i hope very much that we will take this up as a full body. i have to say, i am very, very

disappointed we are going into our third year without a budget. i think that is a failure to accept the responsibility that the united states senate has. i hope we will, at least, remedy that this year in going forward. i understand that the budget control act does provide as a substitute in certain respects, but it is not a full substitute for a full resolution. i happen to be a fan of establishing discretionary funding caps. there are many other things a budget resolution sort of uniquely addresses. and i hope that we will take it up in committee and then the full body will. >> if i could just answer you on that point, senator toomey. number one, i believe the budget control act has put in place for two years a deeming resolution which has been used in the past to set budget aggregates and that is in place. it is the law.

it also provides the enforcement mechanism and it provides, as you indicated, ten years as spending caps. i am committed to going to markup in this committee. i think it is important. the only year we did not do it was last year when, in effect, we got bigfooted above our pay level with leaders of the house and senate and democrats and the republicans in the white house. i look very much forward to our trying in this committee to find agreement. you've struggled with this. i did on the fiscal commission. having the group of six. i think it will be healthy for the body and healthy for the country and i am looking forward to it. one of the things we need to establish today is when we might get the reestimates from cbo. that could effect the timing when we go to markup in the committee. i hope that is one thing we can

learn today the best estimate of the director is. >> thank you. >> i don't want to interrupt senator toomey's time. >> i won't take up too much more time. we have other members that want to speak. a couple of points that i think are worth stressing. one is, i think it is very hard to overstate the fiscal danger wes we have gotten ourselves into. 2012 is the fourth straight year with a $1 trillion plus definite. we will ada additional debt over the coming year. it certainly looks like our debt-to-gdp ratio will increase. i would suggest that the debt-to-gdp ratio is the single most important metric we should be looking at from the point of view of the budget. we are on path, such that by the end of the fiscal year, this

administration and the congress working together or not, will have added nearly as much to our nation's debt as all of the previous administrations in the history of the republic. we all know this on the committee, but it bears reinforcing that the current law baseline is not meant to be any kind of prediction. its a yardstick in a way. a measuring tool. that is how i look at it, anyway, against which we kcompae alternati alternatives. it suggests a relatively benign outlook. in fact, the outlook is anything but benign. it is troubling. even the current line baseline shows in the latter years of the

ten-year window accelerating mounting debt and a trajectory that is worrisome. that was not meant to be anybody's prediction of the future. i think it is fair to say. it is probably somewhat closer approximation to what is more likely to occur and when you look at that picture, of course, it is very grim indeed by 2022. spending exceeds $6 trillion. it is 24.4% of gdp. this is a post-war structural high. it has the debt reaching 94% of gdp and as with the current law scenario, the deficits are accelerating and ramping up in the latter years. in the absence of structural reform of the big entitlement

programs, that is what will happen. it's my view that the problem that we have is a spending problem. it is more specifically a mandatory spending problem. it is interesting to note if you look at the scenarios over time, discretionary spending actually drops considering gdp. despite that, we have huge debt problems. there is only one issue. i would say to be more precise, it is health care spending which is the real driver of the problem. the president himself said, and i will quote, our long term debt and deficits are caused by escalating health care costs that we see in medicare and medicaid which is putting pressure on the budget. the president also said, and this is a quote, if you look at the numbers, medicare in particular, will run out of money and we will not be able to sustain that program no matter how much taxes go up.

i think that is a very important observation. it is exactly correct. i think it is very unfortunate that he has nevertheless, failed to give us a proposal to change the architecture of the programs in a way that makes them sustainable and viable for the budget and also for future generations of americans that will need it. in fact, medicare is growing at several multiples of the rate of economic growth. medicaid is growing faster than that. no significant program can grow faster than the economy for an extended period of time. it just is not possible to sustain that. i hope we'll use this occasion to reinforce the need to pursue in a bipartisan fashion the architecture reform that is needed. the last point i would make is, and i think this is consistent with what the chairman said, although we have different ways to get there.

that is important in maximizing economic growth. it is important to maximize growth because this is how we create jobs and elevate the standard of living. of course, it is enormously important from a budgetary point of view. the cbo estimates on page 108, i think, of the report, that one-tenth of a percentage point increase in gdp growth over the ten-year period of time generates in their estimate over $300 billion of additional revenue. i know this is not purely lin r linear, but let's say 1% of economic growth sustained. stronger growth is worth about $3 trillion in deficit reduction. there is no better way to reduce the size of our deficits and help to contribute to a sustainable path than through stronger economic growth. i certainly hope we will pursue

the policies that will maximize growth and change the archite architecture of the programs that are driving our deficits. mr. chairman, i will yield the balance of my time. >> thank you, senator. let me just say, one place where we are in strong agreement is economic growth has to be the cornerstone of any policy that we advance. that has got to be the goal because that helps us with deficits and debt more than any other thing we could do. if we don't have growth, our deficits and debt become more dire, more serious. so, i think one place we may agree with respect to economic growth is we have a tax system that was never designed with that in mind. we have a tax system that was designed, when frankly, we did not have to worry about

america's competitive position. now we do. and so, i would put high on the agenda the need for fundamental tax reform with economic growth in mind as well as fairness, but also with an understanding that we're in a different world. it is a global economy. we have real competition. that's a place i think we might find agreement. let me say the place where i disagree is this is just a spending problem. as i look at our current condition, our spending, yes, is a problem, without question. we have at or near a 60 years high on the gdp on the spending side. on the revenue side, we are at or near a 60-year low. i don't know how, if one is concerned about the gap between spending and revenue, how one can just focus on one side of the equation. i think we have to focus on both

sides of equation. i think we have to find ways to generate more revenue without increasing tax rates. because that would hurt our competitive position. i think the place we ought to look is tax expenditures. we are spending more through the tax code than we are spending in all of the appropriated accounts. we give it much less review. i'm on the finance committee and one thing that just strikes you is how wasteful some of it is. so, look, i think we have a charge here. yes, we have got to get tough on the spending side of the equation. yes, entitlements have to reformed. health care is the 800 pound, o

gorilla in the room. we are now spending 18% of our gdp on health care. we have a big society challenge. with that, director elmendorf, please proceed with your testimony and we will go with questions. again, thank you for your service. >> thank you, mr. chairman, senator toomey and thanks to both of you for your kind words about the work of my colleagues. i am lucky to have this opportunity to lead such exceptionally talented and dedicated public servants. all of us at the cbo are appreciative of the support that you, mr. chairman and mr. toomey and mr. sessions have shown for our work. we will continue to do the best to give you the information you need in making the important decisions the country faces. i'll refer to the charts in

front of you. let me begin and senator toomey said our projections on based on current law, not because we expect will will be no changes in law, but this provides a benchmarks against which potential changes can be made. we are presenting a bench mark. not a forecast. that is important in reading our projections. what is our assessment of the economic outlook? the pace of the recovery has been slow since the recession ended two and a half years ago. we project it will continue to be slow for the next two years. reflecting both the lingering effects of the financial crisis and recession and the fiscal restraint that will rise under current law. current law fiscal policy will reduce the growth output in 2012 and 2013 through a large combination of tax increases and spending cuts. our