shared sacrifice here. whatever happened to that concept we've heard so much about, about shared sacrifice? people on social security didn't receive for two years or any other increase and they understood that. arizona public employees haven't received an increase in five years. the reality is that -- people that work here in washington with very well paid. and we have very good benefits. and the people that pay their salaries are the ones that are going to be making a lot of different sacrifices in a lot of different ways. i think it fair to ask federal employees to make a sacrifice as well? at the end of another year, there will be been a two-year pay freeze. we haven't had a two-year pay freeze yet. the commission said we should have a three-year pay freeze. i heard about the wonderful

recommendations of this committee except when it comes to this so there are a lot of reasons why i think it would be perfectly appropriate to ask federal employees to be part of the sacrifice. i perfectly understand why the two representatives on this panel who represent more of the federal employees than the rest of us, would be making the arguments that they are. i probably would be making them as part of that effort as well. all of us have to have ourselves as representatives of the whole country here and it just seems to me fair that we extend for a relatively short period of time, the relatively high level of payment with no increase for federal employees. >> mr. levin? >> i'll turn to chris. i just want to say, there are federal employees everywhere. and the house proposal that

passed on a partisan basis, there were only a handful of democrats. >> 72. >> i'm talking about the proposal that came over from the house on federal employees. $63 billion. there are two proposals. and we all have federal employees everywhere. chris van holland. >> thank wow, mr. levin. look, i think we all benefit from the federal employees who are doing research at nih into life-saving curious and treatments. i think we all benefit from the folks in the intelligence community, who help track down osama bin laden. i don't think this is an issue of whether or not we represent a small number or a lot of federal employees. again, i think we all benefit and i think the american people benefits from that. let me start with the vote mr. upton referenced in the house. the reasoned that such a big vote, i think the gentleman knows is because you coupled a

freeze on congressional salaries with a freeze on all federal employees salaries. as mr. carden mentioned i think we can settle the question of pay freeze for congressional salaries. we can all support that and if the chairman wants to entertain a motion we can do that right now. but let's not mix up the two and the reason you have that vote is -- i heard from a lot of my colleagues, they were afraid they would be accused of trying to protect their own pay if he voted against that provision. let me just briefly get to the threshold question here as to offsets and i don't want to go into great detail because we've had this conversation before. we have this new standard being applied to payroll tax cuts. the majority of the house in the first act, changed the rules to say that when it comes to tax cuts for folks at the very top,

we don't have to pay for them. we can put another trillion, according to cbo, on the extending the tax cuts for the folks at the very top. we don't have to pay a penny. now when it comes to less than $100 billion, tax relief for 160 million americans we have a different standard so it seems to me when we're considering offsets, we should look at some of the offsets that have been suggested by our democratic colleagues in the senate with the surcharge and other proposals to close corporate tax loopholes. and i say that by way of mepgss that federal employees are prepared to sacrifice. federal employees recognize they've got to be part of the solution here. federal employees have seen a t two-year pay freeze. that's about $60 billion. social security recipients are

getting their colas. the president has proposed with respect to federal employees, not a full but a half a percent which still represents $18 billion that would be dedicated toward deficit reduction. in other words, $18 billion cut. that comes to $60 billion plus $18 billion is $78 billion. that's federal employees will help to contribute toward deficit reduction as they should. and so the question here is not whether federal employees are going to be part of the solution but whether they should be singled out as the piggy bank for all these other issues and if you look at all the other legislation moving through the house and maybe the senate they seem to be the main target. they're talking about using federal employees for the transportation bill. so they may be an easy target for a lot of people but i think it counterproductive to move in that direction. i want to talk about a couple of

studies because we just had the cbo studies and there have been a lot of studies and these issues come up in context of the joint committee and the context of other deficit reduction efforts. and really what we need to do is take a comprehensive look at this issue. if you look at the federal salary, the bureau of labor statistics data, they show federal employees on average, if you look at tear compensation package, are underpaid by 26%. what's the difference? the difference is the methodology you use. what the bureau of labor statistics, the federal salary council does is look at the responsibilities of the job of a particular federal employee and try to compare that to federal jobs with similar responsibilities. so for example, you have somebody who's been a pediatrician but then goes to work at nih. supervising about 30 or 40 researchers in the area of

finding a cures and treatments for cancer. when the folks at the federal salary council look at that, they see not just a solo practitioner pediatrician, they see something who also has responsibility for managing 30 people. it seems to me that's a reasonable distinction to be made. that that person is not just doesn't have comparable pay to a pediatrician but somebody who is also managing people in the private sector. take a simple prison cook. you could say, that person should just receive the same amount of money as a cook anywhere in any other kind of institution. but the reality is that prison cooks also have to be trained to take care of a violence in the prison or other outbreaks. so that's why you have these big disparities in the different studies that have been done. federal salary council says on average, when you compare actual job responsibilities, federal

employees on average, 26% underpaid. now you have the cbo study that looks at senator carden pointed out, simply demographic characteristic. so if women are underpaid in the work force, if we don't have pay equity in the job work force that would translate into that same analysis and so that's the different approach. bu the cbo approach says they agree with respect to highly-skilled workers, you have people that are underpaid. with respect to highly-paid highly-skilled workers you have people who are underpaid in the federal workforce. in fact, according to the cbo analysis, it was approximately 18% underpaid. so some of the folks at the federal government is trying to recruit in some of the most sensitive positions in the federal government are underpaid. and these are people i would

think, that we would want to make sure that were able to continue to have in the federal government and so to take a hatchet approach, to say our solution to this is an across-the-board hatchet approach is the wrong way and even if we were to triefd to segment out groups here, that would be a many steak in the sense that this is an area that requires a more comprehensive view. people have proposed taking a study and looking at the discrepancies in these different reports, really getting to the bottom of this rather than taking an across-the-board whack. it seems to be the flavor of the day to go after federal employees but i think it's a short-sighted approach and i urge my colleagues to step back, ask yourself the question, why there are these big discrepancies between these different studies, huge swings and take a comprehensivelike

before we plunge in and do what i think could be great long-term damage. not so much to the federal workforce but to the country. because if we don't make these decisions in a smart way, ultimately, it's the taxpayers that will be hurt because they're not going to be able to have the set of skills that are necessary to make sure that federal employees can do the job that needs to be done. >> thank you. dr. price? >> thank you, mr. chairman. i'll tell you, the taxpayers that are being hurt right now are all the american taxpayers by the policies that have been adopted by this congress and the lack of responsibility when it comes to spending. look, nobody is criticizing the work the federal workers are doing. they do great work. i've got a bunch of them in my district as well and i commend the senator from maryland and the gentleman from maryland for standing up and representing their constituents. it's a commendable thing. however, folks at home are looking at us and saying, what the heck is going on?

we believe that these policies are appropriate. that an extension of the temporary payroll tax holiday is an appropriate policy however, we don't believe we ought to do it without a paying for it. we don't believe it ought to be paid for with money that we just don't have. and so the american people say, find the money. we know there's must be there. find the money. the house bill the on nest, sincere, positive attempt to try to get to spending in washington. by having appropriate offsets. so far, the arguments that we've heard against this, i think, ring hollow with the american people. the numbers are clear and they've been reviewed by a couple of folks. the office of personnel management study in october of 2011. the average federal salary, the

average federal government salary was $75,614, which is commendable. but the average salary out there in the real world is $52,000. so the average federal worker makes about 45% more than the average individual out there in the private sector. a half million federal employees make over a $100,000. and the one of the statistics that it's incomprehensible to me is the u.s. department of transportation. when the recession began had one individual whose salary was over $170,000. and now, 18 months later, 1,690 individuals making over $170,000. now, they all may be appropriately being compensated.

however, i think that when the american people look at this and they know the tightening of the belts they have had to undergo and the conversations they've had around the kitchen table when they look at each other and say -- i don't know we're going to be able to send our son our daughter to college. i don't know how we can pay for the car payment. i don't know how we're going to be able to do that. so when they look to us around the table and it is incomprehensible to them that we just can't figure out how to pay for this out of another pot and this is one that clearly, there is room for improvement. i think it's important to ask the question -- what's happened in the past? kind of a distant past. 1933, franklin tell for revocation velt didn't ask for a pay freeze he put in place a pay cut. a pay cut for federal workers. and that was at a time in the early '30s when folks could

argue it was not dissimilar to where we are no now and the simpson commission has been mentioned. it recommended a three-year pay freeze. this is not something that's out of the ordinary. the bowl simpson commission has been touted by folks on both sides of the aisle around this table, right here, within the last week to ten days. so i think we need to recognize that others who have looked at this issue made the outside of the bright spotlight and outside the cameras and microphones said, it's a reasonable thing to do to have a pay freeze. and remember, the pay freeze doesn't include the step increases. it simply indiana clouds the c.o.l.a., the cost of living adjustment. what our seniors have done in our country for the last two years. they have not had a c.o.l.a. increase in is social security. we all want these policies to occur, no doubt. but we need to pay for it with money that we have, not money

that we don't have. i yield back. >> all right, senator reed? >> thank you, mr. chairman. i think the point that the senator made deserves to be re-enforced. if you look at the pay scales of federal workers, lower-paid workers tend to make more than lower-paid workers in the private sector. and i think that's a reflection of what's been happening in the private sector over the years is wages have basically not increased. benefits have not increased. as a result, the differentials go back to the one of the i. people are talking about and that's the growing inequality in this country. so from my standpoint, i think, cooks in federal correctional facilities who not only have to be prepared to cook but also,

prepareded to do other things are probably, indeed, being fairly paid. then when you get to the other side of the equation where senator carden points out where high-skilled federal workers receive much less and there's many examples of this. i mean, frankly, we're asking people with at the security and exchange commission, who are receiving in a sort of high levels of pay relative to federal workers, compare their pay with the people that they regulate. compare the facilities that, the computer systems and the institutional support they have with the people they're charged to regulate. there's no comparison. and if we want to attract good people into the federal government to have the intellectual capacity and skills to essentially regulate effectively and fairly, this is not sending the right signal.

again, and finally, when this argument isti congressional, there's no one around this table that does n t by example. you know, and vote consistently that way. when you look at the federal workforce, you have to recognize that they're highly competent. everyone around this room will say it. when they go back to michigan and look if the people, the federal workers in michigan, they're doing a great job. they're struggling and doing a bit more than they should. when you go around different facilities in rhode island, very talented people. and, frankly, i think like everyone, they certainly want to be paid but there's a certain dedication that they're committing beyond just a paycheck. i've seen that in a civilians in the department of defense and civilians in different agencies et cetera. they have a public duty. so i think, again, when we're not focusing on trying to pay

for these necessary, in my view, tax cuts for middle-income working americans. by also looking on the revenue side for people getting much more compensation than federal workers and we're single federal workers out we're not, i think, doing what's effective and what's appropriate. >> thank you. senator baucus, i don't know if there's a senate republican who would like to comment now? >> same subject? >> same subject. we're still on the same subject. >> apparently not. if there isn't i'd like to say a word -- go ahead. >> thank you very much, mr. chairman, i want to look at this maybe from a different perspective. the question of pay fors and how we're going to reach a compromise here. i think when we look at this we have to ask ourselves a couple of basic questions. number one, how do we get a

compromise that will result in a payroll tax cut? first and foremost. how do we do it in a way that's reasonable and fair and how do we do it in the time within which we have? i think we've got to start from the basics of -- if the goal is to get a payroll tax cut which i think we all share, in place, we know that the folks who will benefit mostly from that are folks in the middle who have had a tough time. and here's what i believe. this is based upon legislation that i introduced. the first bill i introduced at the end of last year had a surcharge on incomes above a million at 3.25%. we had a vote in the senate and we got 50 votes. didn't have 60. so we tried it again a couple weeks later. between the first vote and the second vote, i dropped the 3.25% surcharge down to

so it's evident from that legislation that i think the payroll tax cut or at least part of it, should be paid for by enacting a srcabove a million, words by "above a million." those e those folks can help us, help share the burden. not just the burden of paying for something that's amorphous, but the burden of continuing with recovery by helping directly, 160 million american workers. so i dropped down the surcharge proposal to 1.9% and that would have raised $145 billion. more than enough to cover not only the extension of the payroll tax cut that we're here to resolve.

but more than that, so that was an attempt at compromise. that was rejected. we still got about 50 votes or 51 ves, i think, on that. but here's thesoink a lot of ame this makes sense. this is a help us at this time. there's a direct connection between a reasonable is your challenge and direct help for 160 million workers. we're not saying a surcharge was some broad general fund that no one knows quite where it's going. so i think that direct nexus is why people are supportive of this. secondly, i think a compromise here is sesessential. both sides have to come to a conclusion about the principal issue that we face which is making sure payroll tax cut is

in place. we need to come together and compromise and in terms of the legislation i introduced, i was at 3.25% surcharge and dropped it to 1.9%. i just -- i end with a question. why not in the interest of trying to solve this, why not have a surcharge of 1% on incomes million dollars. i'm told by my staff we we can, of course, check this again, that would result in $76.3 billion. i put that on the table for >> thank you. before i go to mr. levin, i wouldropo sayl you suggest has failed the senate several times and the concept we have before us did puse th bipa 309-117. so that's why this is something

to be considered. mr. levin, and i know we're beginning to run out of time and i know there's several speakers on the house side that want to supreme speak. mr. price, in terms of average, the average income of aedge fund taxpayer is probably 10 to 20 times that of a federal to talk about fairness, let's look more broadly. >> the average -- >> the average, i'm true. >> mr. -- >> i think we paid our salary. >> mr. levin -- >> i think there is awe difference in terms of one is taxpayer -- >> let mr. basara me remarks. >> thank you, mr. chairman. i'd like to actually pickwhat s. to me, to wrap it all up into what we're supposed to do. i guess we have to ask we propo,

does this proposal advance our mission, which will expire soon. our task as best i can toll is to keep america and its economy moving forward and rdi work of e to make this country beat, even though it's very tough. to essentially helping our middle-class families continue forward and finding a common sense solution. i know it was said proposal that's before us to tax middle class workers proposed before and has had bipartisan support and there are two answers and one has been said over and over again. if you cloak this proposal with the face of members of congress taking the hit, certainly a lot of folks, politically, will vote for it. but if you remove the face of members of congress, which i think most people wouldn't mind going after, and leave it at

what it really is. the bulk of the money coming out of thewid hydes of 3 million american women, most working class. they would say, no, this isn't the way we want this to move forward by essentially giving 160 million americans who work a chance to receive the payroll tax cut but doing it by asking close to 3 million american workser to pay for it. so while they'll be getting a payroll tax cut on their paycheck in one instance, at the same time, these close to 3 million american workers would see a cut in their pay and in their benefits to help cover the 2% payroll tax cut they would be receiving. i don't believe this is the way americans want us to do our business. i think it would be a cruel hoax to extend the payroll tax cut for 160 million american workers by asking close to 3 million americans workers to take the hit for them.

and this is where i think senator casey has hit on something. regardless of what's before us or what might come ahead of us, we have until the end of this month, until the 20 of us come up with a solution. and to my thinking, what senator casey has proposed has a great deal of resonance and it does with the american public, every chance they're asked this question they say, if millionaires could contribute a little more we think that would be a good way to do it. as senator casey said, by asking them to take a surcharge of less than 1% on income if they make more than a million dollars, we cannot only take care of this, but probably help take care of some of the other things we want to do in this package in the three big priorities we have payroll tax cut extension dealing with reimbursing our doctors and medicare so 48 million seniors can get their services under medicare and helping americans who are out of

work through no fault of their own so i would close by saying this. i hope that the solution that we come up with that's common sense to move us forward is not to penalize hard-working americans and i hope this doesn't mean that we're beginning this race to the bottom of the solutions for americans but we'll try to lift up anyone who, in this country, is willing to work, whether you're a federal employee, private sector employee or young or old employee, we'll tell folks we want to thank them and reward them for what this they do. so i urge us to move beyond this controversial proposal to something that's common sense and that we can all agree on bipartisanly. >> before i recognize one more house member to close, i just want to say that with nearly 13 million americans out of work and private sector wage growth has been essentially flat, you've got cbo just issuing a letter a week or so ago saying that the on average, federal workers are paid 16% more than their private sector

counterparts. it seems to me that a c.o.l.a. freeze which is what this proposes, still allowing federal workers to get step increases, is a very reasonable approach. dr. you're recognized to close. >> thank you. yesterday, a timely visit, indeed, i was atfire machine systems in patterson, new york. and fire machine systems has been in business for 30 years locally in the hudson valley and they export machines, devices, enormous devices, that create components for manufacturing throughout the world. a great success story in many ways. local employer, very dedicated. during the course of the tour i had occasion to find e find out about the burr agains we play on our private enterprise, hard-working private enterprise sector through trade policy,

through environmental policy, through tax policy and financial sector policy and through health care policy. but the number-one problem thate asked me to take it back to washington and it was the federal deficit. he's a business tryingr hi empl. for all those who rely on his continuing to be in business, based on his inherent worth in the marketplace. he has to prove himself. his workers have to prove themselves every day. the federal government is not run as a business as we all know, unfortunately. but right now it is in a situation analogous to a business whose receipts are far exceeded by its costs. and we have to ask for sacrifices, unfortunately, from our employees. because unlike the private