maryland, everyone could end up being on time. why don't we begin. first of all, we're here to discuss the president's 2013 budget proposal. i personally believe this is moving the country in the right direction. i think we need to put in context the circumstances that we have faced. first of all, the president inherited a fiscal disaster. that was not of his making. that was of the previous administration's making. and he has had to cope with it ever since. i'm encouraged by the trajectory of the deficit under the president's proposal from 8.5% of gdp down to 2.8% of gdp at

the end of the budget period. again, i think it's critically important to remember the context within which the president is operating. in 2008 and 2009 we experienced the worst recession since the great depression. the economy contracted at a rate of almost 9% in the fourth quarter of 2008. barack obama was not the president of the united states. we lost 800,000 private sector jobs in january of 2009. that was mot the result of the policies of barack obama. unemployment was surging. housing market crisis was rippling through the economy with home building and home sales plummeting. and we faced a financial market crisis that threatened to set off a global economic collapse. i will never forget chris being

called to the capitol in a fall day and told by the secretary of the treasury of the previous administration and the chairman of the feshderal reserve if actn was not taken immediately there would be a global financial collapse. again, barack obama was not the president. we've come a long ways since them. the federal response has pulled us back from the brink and i believe president obama deserves considerable credit for the part he played in that success. as i noted in the fourth quarter of 2008 the economy contracted at a rate of almost 9%. positive economic growth returned in the third quarter of 2009 and we have now had ten consecutive quarters of positive growth. with see a similar picture with job growth. in 2009 the economy lost more than 800,000 private sector

jobs. private sector job growth returned in march of 2010 and we've now had 23 consecutive months of growth. this is the result of a fiscal policy that got america back on track. it is the policy of president obama. he can be proud of it and he deserves a good deal of credit for this recovery. we would like to see stronger growth and more job creation, although unemployment has come down, it's still too high. but the slow pace of this recovery is not unexpected. economists have found that recessions accompanied by a severe financial crisis rorvepryes terorvep recoveries tend to be shallower and take much longer. looking forward we need to remember that we really need to have two major problems facing our country. one shorter term and one longer term. short term we are still recovering from the worst

recession since the great depression. although the economy is improving we still have weak demand for goods and service which is holding back economic growth. longer term we face a death threat. job one is to improve economic growth with steps that strengthen demand. simultaneously we need to enact a credible plan to bring down our debt. republican colleagues have completely overlooked the first problem of weak demand and would actively make that problem worse by imposing fiscal austerity right now. they have focused solely on the longer term debt. their proposals of austerity now would only further weaken demand which would lower economic growth, kill job creation, and choke off recovery.

the republican economic approach suggests the economic recovery is being held back by rising interest rates. and that immediate fiscal austerity would address that problem. we don't have rising economic or interest rates. interest rates are at a record low. you know, often our republican friends say we ought to listen to the markets. let's do that. let's listen to the markets. what are the markets telling us? we have record low interest rates. we have weak demand. that tells us we need to take steps to strengthen demand. but over time, to get back on track in terms of dealing with our debt, the problem we have right now, i want to emphasize is weak demand. another leading economist, dr. joel cracken, the chairman

described the problem in recent testimony before the senate budget committee. he stated the number one problem that small business essay they have to deal with right now is lack of demantd. they do not say access to capital. they do not say the burden of regulation. they say their order books are slim. so let's pay attention to what the markets are telling us. a that is why companies are not hiring as fast as they could be. we also need to address the second problem of rising debt. we should not wait to respond to that challenge either. but not by imposing fiscal austerity right now, but by adopting a plan that phases in fiscal discipline as the economy strnt thens. that has been the testimony of virtually every economic expert

before the senate budget committee. the head of the congressional budget office. the chairman of the federal reserve. the most distinguished economists in this country warning us don't impose fiscal austerity right now as the republicans would or you will kill job creation, you will hurt economic growth. but at the same time, they say, yes, we do have the longer term problem of a debt threat and that has to be addressed as well. we really need an economic two step. we need short-term strengthening of demand in infrastructure. that would help people put people to work and improve our competitive position as a country. second, and simultaneously, we should adopt a credible plan that puts us back on track the long-term fiscal condition of the country. we need to do that by tax reform, by reforming our entitlement programs, and by

attacking wasteful spending. in his testimony before the senate budget committee last week federal chairman, federal reserve chairman, ben bernanke, addressed the need for this kind of two-step approach. he said this. even as fiscal policymakers addressed the urgent issue of fiscal sustainability they should take care not to unnecessarily impede the current economic recovery. fortunately the two goals of achieving long-term fiscal sustainability and avoiding a fiscal headwinds for the current recovery are fully compatible. indeed, they are mutually re-enforcing. and i believe that is precisely the balance that the president has struck in this budget proposal. to address the short term lack of demand the president's budget includes a number of proposals. these include extending the payroll tax cut and unemployment insurance benefits through 2012.

providing $50 billion in up front infrastructure investment in roads, bridges, rail, and airports, eb. engine end thing te i -- provid billion for school modernization, $30 billion to help states and localities retain and hire teacher and first responders. establishing project rebuild to create jobs by restoring distressed communities and creating a new tax credit for small businesses that add jobs and increase wages. now, i want to address one other can nard that i hear repeatedly from our colleague on the other side. they have said it has been more than 1,000 days since the democratic senate passed a budget. that is flatly wrong. the budget control act that was passed in august of last year contain the essential elements of the budget for 2012 and 2013.

it was passed by the senate. it was passed by the house. it was signed into law by the president of the united states. it is now the law of the land. in many respects it is stronger than any budget resolution. s your know, a budget resolution never goes to the president for his signature. let me repeat that. a budget resolution never goes to the president for his signature. it is not the law. the budget control act not only passed the house and the senate, it was signed by the president. it is the law. in many ways it is more extensive than a traditional budget. not only does it have thes for force of law but it set discretionary caps for ten years, saving over $900 billion.

typically budget caps are put in place for only one year in a typical budget resolution. further, it provided enforcement mechanisms including a two-year deeming resolution which improves the enforcement of budget points of order and it created a reconciliation like super committee process to address entitlements and tax reforms. unfortunately that super committee did not come to conclusion. but it had the opportunity. and backed that process with a $1.2 trillion sequester that is now the law of the land. so the fact is we've got a pud jet for this year, we've got a budget for next year. it was passed in the budget control act of august of last year with an overwhelming bipartisan vote in the united states senate and strong vote in the house of representatives and signed into law by the president of the united states. we all know that this is the

beginning. this budget proposal of the president. we know more has to be done. it will require a bipartisan effort. to do more than what the president has proposed will require both sides to come together. we hope that can occur in this budget process. but i think we all understand this is an election year. and so trying to come together is especially difficult in that context. but i retain hope, i retain the belief that working together in a good faith basis that we did in the fiscal commission as we did in the group of six, we can reach agreement across the aisle. with that i'm going to turn it over to my colleague congressman van holland who i very much appreciate his coming to be with me here today. >> thank you, senator conrad, and thank all of you for joining

us here today. the president's budget is a budget that's good for the country, it's good for jobs, it's good in terms of nurturing a very fragile economy. it's good in terms of making long-term investments in education, in science and research, innovation. the things that we're going to need for a strong foundation, to a strong foundation for the economy for years and years to come. it's good because it takes a balanced approach to deficit reducti reduction. this chart here tells a very important story. let me just pick up with a story of senator conrad was telling it. as you can see back in january 2009, the very month the president put his hand on the bible and was sworn in, the economy was in total free-fall. negative 7% gdp. losing 840,000 jobs every month. so the bottom was falling out of the economy and what you see is,

as a result of the actions taken by the president and the congress at the time in passing the recovery act, and also taken by other players in the economy, we began to stop the free-fall, turn the corner, the reality is that since march of 2010 we've seen over 3 1/2 million private sector jobs created, the most recent good news being 257,000 private sector jobs added last month. so what is the president's budget do about this? it says we've got to be very careful not to mess up a very fragile recovery. and that's why he calls for immediate additional investments in the economy. we've got to get the payroll tax cut passed. we've got to extend unemployment insurance for millions of

americans who are out of work through no fault of their own. we've got to take another number of immediate steps. a good part of that part of the president's budget was what the president submitted to congress last september when he came before a joint session. at that time he called for a payroll tax cut extension, he called for extension of unemployment insurance. he also brought in a number of others. he said, let's make a $50 billion infrastructure investment. let's invest $30 billion in schools. let's make sure that during these tough times state and local governments have enough resources to prevent layoffs of teachers and firefighters. after all, this is a very good news story. if you were going to look at the public sector job performance over the last many months, we've actually seen layoffs in that sector. that's in large part because the recovery money was invested in

the first two years. it's no longer there and it's become republicans in the house have refused to take action on the president's jobs bill. it's as simple as that. so that this budget says pass my jobs bill. pass the jobs bill that's been sitting in front of the house of representatives since last september. we're pleased that -- we're open that we will be able to move forward on that small piece of it, payroll tax cut. unemployment insurance. as many of you have heard, who have been listening in on the conference committee, our republican colleagues keep wanting to talk about extraneous issues when we talk about extending payroll tax cut. they want to clamp down on clean air regulations. mercury regulations. debate those on your own merit. don't allow them to slow down. payroll tax cut and jeopardize this very fragile economy. that's one thing the president's budget does. the very o. there very important thing it does is put us on a balanced pat toward long term

deficit deduction. as senator conrad said at the end of this ten-year period you will reduce the deficit to 2.8% of gdp under the president's plan. you will stabilize the debt as a percentage of gdp. in fact, it begins to take it on a downward trajectory. the last couple of years the president's budget, the end of the ten-year window. he does it in a balanced way. he does it through a combination of cuts. we've made substantial discretionary cuts already. we already cut the trillion dollars off the discretionary budget through caps that have been set. that takes the discretionary budget down to the lowest percentage as a function of gdp since the eisenhower administration. the president's budget also makes cuts in the mandatory spending categories. but the president also says rightly that we need a balanced approach, that we've got to ask the folks who have been taking

advantage of all of these tax loopholes to share a greater responsibility for reducing the deficit. that we should ask, you know, the folks at the very top, top 2%, to go back to the same tax rates they were paying during the clinton administration, a period of time where we saw very rapid job growth. and so the president takes a balanced approach. now, i heard our republican colleagues today bashing the president's budget i'm looking forward to seeing theirs because if theirs this year looks like theirs last year, here's how you they deal with the deficit. they gut our investments in education, in our kids' preparedness for school thanks gut our investment in science and research and the drivers of innovation, and they gut our investment in infrastructure, our roads, bridges, highways. they gut all that.

what else do they do? they totally shred the social safety net. they just wipe it out. they cut medicaid by one-third, over $70 billion. these are funds that help vulnerable seniors in nursing homes and many others. they, of course, end the medicare guarantee. they say to seniors, you know what? we're projecting rising health care costs. you're on your own. you have to eat them yourself. and so the question is not whether we reduce the deficit. the president's budget does that. takes the deficit down to 2.8% of gdp, begins to stabilize the debt as a percentage of gdb. it does that. but it doesn't do it the way the republicans do it because the president asks for everybody to share in the responsibility for get that job done. and he insists on closing some

of these special interest tax breaks. he insists on getting rid of he insists on getting rid of some of the incentives to ship american jobs overseas. we all want to be shipping products and services overseas. we don't want to be shipping american jobs overseas. the republicans have a different view. they don't want one penny to go to deficit reductions if it involves closing a corporate loophole, not one penny. a lot of them signed a pledge. we're going to protect all of those loopholes if it comes to closing them for the purpose of deficit reduction. the president does that in a balanced way, reduces the deficit in a balanced way, focuses in the immediate term on making sure we get the economy going, and don't jeopardize this very positive but very fragile trajectory we're seeing when it comes to jobs. thank you for joining us and happy to answer any questions. >> happy to take questions. >> can i ask you and both of you

actually why won't you use reconciliation in a budget this year to try to help get some of these things through? that's the main reason why budgets are useful and representative van hollen, can you comment on the house leadership's backup plan that they announced to just pass the payroll tax that's unpaid for? >> i will be happy to answer. >> with respect to the house leadership and i haven't seen the full statement and i saw some of their comments. first of all, we should have what this conference committee work its will, and we should focus on the priority, and the priority is extending the payroll tax cut for 160 million americans, extending unemployment insurance for ten months for millions of americans out of work through no fault of their own and making sure that seniors on medicare have doctors that will participate in the

program. we should be able to get that done. i would hope that the house republican leadership instead of issuing threats would make sure that the conference committee moves forward to get the job done for the american people because frankly we saw what happened the last time. the house republican leadership decided to go it alone. their proposal crashed and burned. it put 160 million american taxpayers at risk, so i hope that they don't want to repeat the same kind of story we saw last december where they almost allowed time to totally run out on 160 million taxpayers. >> you would vote against the state payroll tax cut extension if that comes to the floor or would you expect other -- >> i support. >> and do you think it would be

wise for democratic support for that? >> i believe there would be. we'll have to see what our republican colleagues are ig sa. we have been making the point that when it came to tax cuts for folks at the very top, the house republicans went to great lengths to change their rules to say you don't have to pay for those and yet they have been saying when it comes to a short-term ten-month payroll tax cut all of a sudden you have to pay for it, so we have been making the argument we should move forward on this temporary payroll tax cut and our republican colleagues have instead proposed lots of off sets, for example, increasing medicare premiums. that was part of their package and those sorts of things, so i hope we can get it done. we're ready. >> as a follow-up to that, is there a worry if you separated out the payroll tax cut package that it could jeopardize the passage of unemployment

benefits? >> well, let me be clear. i haven't seen what the republican proposal is. we should move forward on the three pieces together. if what they're saying is with respect to the payroll tax cut, they're no longer demanding that it be offset with things like premium increases for seniors on medicare and that kind of thing, then that may be a positive development. it is still important that the three pieces travel together but if again i haven't seen their exact proposal. if they have changed their position with respect to offsetting the payroll tax cut the way they had proposed, then that would be a positive development. again, i say that with the qualification i haven't really heard their proposal spelled out. >> you didn't get a chance to get this question to me answered. you might well want to use

reconciliati reconciliation. i have certainly not ruled that out. >> just a point on that. i think we would welcome any opportunity to put it in context. i mean, we have seen this effort before to try and get a balanced approach. if you are going to use reconciliation, you would hope then that the republicans are prepared finally to take a balanced approach to deficit reduction. after all, we had the president was talking with speaker boehner. speaker boehner couldn't get his caucus to go along with the balanced approach because it asked folks at the top to pay more in revenue. when it came time to close corporate tax loop hools, you saw the republican majority leader walk away from the table. this has been a continuing issue. reconciliation is important. it is a solution to the extent

people are willing to really solve these problems and that means dealing with it in a balanced way. >> do you see this as a responsible way to address the second long-term problem you mentioned but you i think want to offer a budget with deeper cuts in the out years, so how do those go together? are your people going to make deeper cuts in the long-term? >> i have not put forward a budget yet. you know, we'll have a chance to talk about that at a later point. i have obviously been part of two other efforts, the fiscal commission and the group of six, and it is very interesting to look at what the president proposed. clearly he borrowed heavily from what the fiscal commission proposed. the fiscal commission proposed about $400 billion of savings in the healthcare accounts, over ten years. the president is very close to

that, $364 billion. the fiscal commission proposed through going tax reform, not through raising tax rates but by broadening the tax base to both improve the efficiency of the economy and also to reduce the deficit. the president has a revenue, total revenue number that's very close to what the fiscal commission proposed. in looking at the president's budget you will see he gets to a revenue level of 20.1% of gdp in the tenth year. that is actually a little short of the target that we had in the fiscal commission. he is not raising quite as much revenue as we thought was important in the fiscal commission but nonetheless he does move in that direction. so there are many places here where the president has borrowed heavily from the work of the fiscal commission, and i commend him for it.

>> senator conrad, a lot of talk about shared sacrifice on that. you are on the budget committee and the ag committee and very important in north dakota and farmers and ranchers and rural residents. what can they look forward to out of this budget in the farm bill? >> the president called for net savings over ten years out of agriculture of $32 billion. that's a little above where we were at the end of last year, the bipartisan agreement between the republicans and democrats on the agriculture committee, the senate and the house. we agreed there to $23 billion of net savings, so the president is asking for somewhat more. i prefer the number that we came up with last year but it is in the ballpark. >> where do those come from? >> well, those savings are going to come from i think virtually everyone has agreed from a reduction in direct payments.

>> house today said they want to replace the see questered 1.2 trillion and they talked about that and this was agreed upon as the backup mechanism in case the committee failed last year. i guess my question is to what extent does the fact that both sides are now backing away from the sequester give credence to people, the public's concern that you guys are actually kind of fiscally cowardly when it comes to the hard decisions? >> the president's budget would more than replace the savings of the sequester, so the deficit savings are greater than you would get with a sequester, number one. number two, if you look at terms of shared sacrifice as this gentleman raised, the problem with the direction we're going is all of the savings come out of discretionary spending and