had control of both houses of congress and the white house for all of 2009 and 2010. why didn't you do those things when you were in control? >> we'll let you get back to him in writing. >> please. >> let's go to -- we are -- mr. young next. >> thank you. mr. zients, thank you so much. we've almost hit the end here. only a couple more questioners. i really appreciate you being here today to explain this budget. i do have to say, you know, when i visit my constituents in southern indiana, and i do town hall meetings, i frequently go through a budget presentation and power point presentation. where i start is where the money goes. and i think many americans don't really appreciate how much money is spent on so-called mandatory expenditures. medicare, medicaid, social security, being the largest of those expenditures.

they account for projeapproxima 70%. net medicare spending increases by my reading about $135 billion of the next ten years, correct? >> if you've done the math, you've done the math. >> president's budget, medicaid spending, more than doubles over the next ten years. president's budget, social security runs a permanent cash deficit over the next ten years accounting for $1.1 trillion. again, these are the largest programs of our federal government. the largest mandatory programs. under the president's budget for 2013, 6.5% of total federal outlays will go to debt service. that increases more than doubling to about 15% in 2022. under the president's budget, mandatory spending over the next ten years will increase to almost 80% of total federalpeit.

at least a pretty obvious question here and i just want to dig fairly deeply on this. why did the administration not address this entirely predictable situation where mandatory spending continues to tick upward at a rapid rate, driving our debt crisis? >> well, i think that, let's break it apart a little bit here. on medicare, the affordable care act actually saves over $100 billion in its first decade and $1 trillion in its second. in this budget, there's $360 billion of health care savings as we've talked about repeatedly today. we will continue to work together to figure out how we make care more effective and efficient. but we have a basic compact with our citizens -- >> agreed. let me pivot on that compact. >> we need to make sure that we don't break that compact. >> absolutely. >> by creating a system of vouchers where we transfer risk

to our citizens. >> i'm going to reclaim my time here. and agree that we need to maintain the trust and not break the faith with the american people. these are important programs that my constituents are dema demanding. we lay out a coherent plan to make them solvent, to make them sustainable. why haven't you done that? >> we've made significant progress. >> what does that mean? significant progress. >> look at the budget. the budget brings the deficit down below 3% of gdp. it maintains that compact that we have with -- >> mr. zients, i'm going to reclaim my time. a budget is a road map as to how you would solve these fiscal problems in the future. all right? it doesn't lay down some weak marker so that in the future we can cooperate. it's supposed to lay out an optimal plan. it's supposed to lay out, frankly, what the priorities of the administration are, which are ideas.

and then we can find compromise with that. no, sir, sir, let me continue, please. without any specifics, you know what we're left with? we're left with talking points. we're left with political arguments. if we would lay out a scorable plan for each of these different programs, then we can find common ground which is exactly what the american people want. i'll give you an opportunity to respond to that point. >> i think i've told you about the president's budget and why i think it's the right way to go. i would contrast it with the republican budget which creates vouchers and transfers risk to our citizens on health care. >> mr. zients, i'd be happy to show you in writing how it doesn't do that. i'd be happy to share that with you later. >> at the same time creates block grants for medicaid at very low levels. continues in -- >> i'm going to reclaim my time because those are tested talking points here. >> continues tax cuts for the wealthiest americans. that doesn't strike me as a good

plan. >> mr. chairman, we have a plan -- >> he's trying to answer the member the question. >> i agree with that. >> it's a -- >> i think it's sufficient. >> all right. it's not a voucher plan. it's the same plan members of congress have. it's -- >> the chairman interjected on the last point. i'll show you why it's not at all the same plan members of congress have. >> based on the same model where they have to compete for our business and you still enjoy the benefits of competition while saving the american people money. >> the plan members of congress have is a much better deal in terms of shared contribution than the plan proposed by the problems. >> since all time has expired. >> i look forward to seeing your plan, mr. van holland. >> i'm going to risk the temptation. it is mr. langford's term. >> thank you, mr. chairman. mr. zients, thanks for being here. long day. thank you. i do thank you for your experience in the private sector both at bain and with portfolio

logic. those are successful companies. and then i assume you'd much rather be here talking about washington nationals baseball today than you would about the budget today in the history that you have with that. so thanks for what you've done on that and some time we'll visit offline about baseball. >> i look forward to that. >> let me tell you. somewhat the frustration i guess as we come into this. and just looking at the budget and starting to go through it because there is this sense when we are home in our districts and people talk to us and they just want to know when are we going to get control of our debt. and how is that going to happen and when is that going to come down? and their perspective is from their business and from their home that there is this plan, i'm going to pay off this big mortgage in their business. you don't have a ceo of a company that says for the rest of this company, we're going to run in the red. we're never going to run in the black. so that just doesn't translate. and when you use terms like stabilize our debt, to try to get us down to 3% of gdp, that

doesn't translate anywhere else. last year the term in the same committee from jack lew and from timothy geithner was sustainable deficits. and we had the same frustration. is there ever a point, and again the same conversations this year, the same as last year. i go back to, for me, somewhat past is prologue on this. i go back to 2009 when the president said today i'm pledging to cut the deficit we inherited in half by the end of my first term in office. and i pull up the 2010 budget from the president and go to this year, 2012. so in the 2010 and look to what was the expected deficit this year, the expected deficit this year was $581 billion. it is actually going to be $1.3 trillion. so you understand our frustration in coming into this. it is easy to look at some future document like this did

and to say i've got this great plan. we're going to spend this. we're going to do this. but it ends up in this case being almost three times higher this year than what was anticipated by the president in 2010. that's the frustration. i say that just to say hear our empathy with us as well. it's easy in washington to say we're going to stabilize our debt. no one outside of this ten-square miles processes that. we said three years ago $581 billion. it's actually $1.3 trillion. and then we look at the projections now, future and think, these are guesses. we've got to figure out how to budget. i want to ask, though, about some of the tax pieces. there's a segment in there about energy taxes. i think it's about $40 billion or so if i remember the number correctly, in energy for companies that are producing energy. do you know some of the specifics of that? >> what sector of the energy market? >> this particularly was on

fossil fuels. >> uh-huh. >> so there was a whole series of taxes saying it's about $40 billion. do you know what some of those taxes may be? >> what i do know is that oil and gas profits are record high. we know longer need these type of incentives. production is at record high and our imports are down. so the industry can absorb -- >> actually our imports are down because we're producing more. >> that's right. >> production is at the highest point in eight years. >> it's been great. >> and part of that is making sure that we continue to open up properties both onshore and offshore for production. >> completely agree. but you're not sure which taxes that would be or which area? >> we can get you the numbers. >> intangible drilling costs. there don't seem to be any different for a company that's doing drilling than it is for any other business writing off their business expense. trying to figure out what the dynam sick to say if you do manufacturing or something else, then you write off your business expense.

but if you thoop produce oil or produce natural gas you can't write off that business expense. we're going to -- that's no longer manufacturing. and so we're going to -- is that the plan at this point or do you know if there's a breakdown of large companies, small companies? will a company that's a drilling company or the small independents, the majority of the drilling and operation is very small company. so they may have 5 to 12 employees. they have the same tax burden that a company that has 5,000 that also produces oil. is it the same across that? >> we'll work with treasury to get you answers. >> that would be helpful to know. if you're talking about energy companies. everyone goes to exxon. exxon is a pretty rare breed in this field. the majority of them are mom and pop shops that are family owned businesses and we're talking about putting literally their business model is based around when they have business expenses they can write them off just like every other small business in america. >> we will work with treasury to follow up. >> i yield back. >> i want to say in fairness, we're going to limit to the remaining members here, meaning

if another member shows up, we're closing the roll with who is here. so if a member has come in, they'll not be able to get time. with that, miss wasserman schultz. >> just under the fire, chairman. welcome. congratulations. getting back to something that mr. mcclintock talked about in extolling the virtues and the record of former president reagan in helping to bring us out of a significant recession at the time, i want to just read a quote. we're going to close the unproductive tax loopholes that have allowed some of the truly wealthy to avoid paying their fair share. some were understandable. but in practice, they sometimes made it possible for millionaires to pay nothing while a bus driver was paying 10% of his salary and that's crazy. it's time we stopped it. now if i was going to quiz the members here on who might -- we

might have attributed that quote to, i bet it wouldn't be at the much to anyone's mind that that was from a speech by ronald reagan at north side high school in atlanta, georgia, on june 6th, 1985. >> no one would have guessed that warren buffett would say the same thing. >> exactly. he said i would raise rates immediately on taxable income, including dividend and capital gains. and for those who made $10 million or more. i would suggest an additional increase in rate. and that was on august 14th, 2011. so that prefaces my question, mr. zients. how does the president's budget strike a balance when it comes to addressing our short-term and long-term deficit reduction needs? i think there's very little we're agreeing on in congress these days. but i think we actually all agree that we need to make a commitment to reducing our deficit in the short term and in the long term. >> agree. >> but the economists that i

have heard from across the spectrum, major economists, have really indicated that we need to be careful about not short circuiting what is an obvious recovery that we have begun. >> i think that's right. >> so it's a two-step process. it's a focus on job creation, making sure that we continue to have the economic recovery starting with the payroll tax, unemployment, extending that, the $50 billion of infrastructure, modernizing our schools, just to hit a few of the highlights. at the same time, we move to deficit reduction, across the medium term. the key is that it's a balanced approach. and this is at the core of everybody's approach outside of -- or most approaches outside of this chamber in terms of looking to bowles/simpson. it's a balanced approach. ours has $2.50 of spending cuts for every $1 of revenue. >> that's an important point.

the budget proposed by the president has $2.50 in spending cuts for every $1 in proposed revenue. >> yes. >> when it comes to oil subsidies, for example. subsidies for the oil industry, for example, i mean, i think it's important to note that we had an increase in production. the most production of oil domestically that we've ever had. but how does the president's budget treat subsidies -- taxpayer subsidies to the tax industry who are making record profits. >> it gets rid of them. gets rid of -- i think it's about $40 billion, i believe that figure, is correct. >> and -- >> they don't need those subsidies. >> so the feeling is that those oil companies don't need those subsidies in order to be able to remain very, very profitable and still be able to increase domestic production because we're allowing more lease sales, opening up more areas to drilling, which, by the way, i

oppose. at least in terms of lease sai s sales that are not available. >> product whereon is way up. imports are way down. and just to correct the figure. it's $30 billion, not $40 billion. >> and this is all being done within the lease sales that are currently available and that we opened up in the gomesa agreement from 2002? >> i believe so. if not, i'll have my staff follow up. >> yield back. >> mr. stutsman. >> thank you, mr. chairman and mr. zients for being here today. i got a couple of questions. i want to follow up on the comments that you've made throughout the day. i guess i'll start with -- you talk about the compact with americans. and i guess what exactly -- how do you define that? i assume you're talking about social security, medicare.

can you define what you are saying when you say compact with americans? >> i think you're right. we have people who have contributed across the years to medicare, to social security and they've correctly relied on a set of promises that we've made. and we need to live up to those promises while at the same time we do responsible things. >> but the largest -- two of the largest expenditure items in our federal budget is social security and medicare gop you think that we can keep the compact with americans, and i am assuming you are saying all americans. that includes you and i at the current levels of benefits, demographics, payroll tax cuts, all of the games that are played around social security and medicare? can we keep that compact at sustainable levels? >> we've talked about medicare on several occasions today. let me summarize the affordable

care act is essential. it expands coverage. it saves $100 billion in its first decade. a trillion dollars in its second decade. the package the president's budget has on health care saves another 3 $60 billi0 billion do. in the president's budget you see $360 billion of savings in health care. medicare and medicaid and other programs. that's an important step. the same way we do in other sectors that keep going at it. >> what about social security? >> social security is solvent until 2036. at the same time, the president has expressed his desire to begin to lean into that issue to do it in a balanced way. and he looks forward to working with members of both the house and the senate. >> so the -- the compacts will change? >> i tonight clear on social security, that's not our immediate problem. we should get on to it but

that's not your immediate problem. >> but the compact will change. it has to change. for you and i, you're a smart guy, a successful guy. it's not going to be the same for you when you're ready to retire as it is for those who are 55 and above. >> we need to keep the basic compact that we have, and we need to go about any reform that we do in a balanced and fair way. >> so it will change. so i want to touch a little bit on something within, and i'm a farmer from indiana. and i support eliminating direct payments. i've been an advocate of that. i'm glad that, you know, the president is following congress' lead on that. and including that in his budget. but if we're going to eliminate direct payments, will the federal government employees who administer direct payments be needed? >> i don't know about the exact employees and what they, you know, what they have in terms of their portfolio. i can tell you that secretary vilsack has been very aggressive

in managing administrative costs. these out there very strong position in terms of consolidating administrative costs. closing -- proposing to close offices. >> because originally -- >> it can be incredibly efficient with his use of administrate i've. >> the reason i ask is because you've proposed in 2011, enacted where salaries at 1208. >> what page are you working off of? >> i'm working off of -- i actually have this -- the usda budget summary. >> right. >> and you are working off of what line? >> it's page 16. it would be discretionary under farm service agency, fsa salaries and expenses. so i guess my comment and my question is, why would you eliminate an entire program but not adjust federal government

salaries to to show that this i program that's not going to be in existence, so we're going to continue to be paying government employees for a program that doesn't exist. >> we need to get to the bottom of it. because as i said, secretary vilsack has shown tremendous leadership in cutting expenses and ensuring that taxpayer dollars are well used. i'd like to come back to you on the specific line item and how -- >> that's fine. and that last point, real quick, gdp is estimated at 14.9 in 2011 or assumed, and in 2022, 25.4 -- 25.4. do you think that's even possible? >> i'm sorry. gdp -- >> 14.9 today, 25.4 in 2022. is that even possible? >> oh, absolutely. this is historical gdp growth. yes. >> mr. ribble? >> thank you, mr. chairman. i know it's been a long day. thanks for being here. welcome to the party.

like you, i've spent almost my entire life in the private sector, but i do have a couple questions, because i have concerns about the president's budget and actually concerns how you got there, given your background, but we'll talk about that in just a seconds. who was president of united states, december 2010? barack o. >> the democratic party controlled all three levers of government, and at that time they extended the 2001/2003 tax cuts to everybody. was that a balanced approach then, or was it terribly unbalanced in december 2010? >> i think in december 2010, we were in the midst of a very, very difficult economic situation, and a decision was made to, in the context of a

much larger package, as you know, to do that extension. the president's never believed in the extension for the wealthiest 2% and this budget has no tax increases for families making less than $250,000, but i think very rationally, and very fairly, has the wealthiest the 2% pay more, by returning to the same clinton era tax rates where we ran surpluses. and as someone who was in the private sector then, it sounds like you were there also, there was plenty of incentive to grow businesses, plenty of incentive to invest, plenty of incentive to hire people. >> and right now you're saying that we, because the economy is precarious, we still need to invest in deficit spending to this degree, because of it. because if we cut spending too much, we might harm the economic growth of the country. is that correct? >> that is true. >> so we can't have it both ways. we have to have it here, but tax cuts don't belong there. >> no, but i disagree.

i disagree. >> clearly. >> you're assuming that targeted investments in areas like infrastructure, research and development, and manufacturing, which we need in order to compete in this global economy and get people employed, equate to the same thing as asking the richest 2% to pay a little bit more. >> all right -- >> those aren't the same thing. those are apples and oranges. and we can do both and what that achieves is it gets people back to work and it gets us in a position where we have a balanced approach deficit reduction, which is essential to bringing down our deficit. >> let's talk about that balanced approach. you've used the word probably a hundred times today. >> i've been here a long time. >> yeah, i'm sure you have. if you look at the slide up there, the top 5% of american taxpayers are contributing 58.70% of the income tax revenue coming into the treasury. under your balanced approach idea, should that number be 70%,

90%, 95%? especially in light of the comments in your testimony where i quote, on page number one, by following these quintessentially american values of equal opportunity for all -- all -- and responsibility for from all -- all -- we can build an economy that will grow robustly and create good jobs for years to come. so i'm curious, glenn beck, to your balanced approach, the top -- i'll even give you some wiggle room here. let's use the top 10% of wage earners in the country. what is the balanced approach? how much more of the total burden should -- >> well, i guess, again, my eyesight's failing me. what are we looking at here? is this income -- >> that's the tax burden by income level. >> these are income taxes, or -- >> so the bottom 50% are paying 2.3% of revenue coming into the treasury. >> but does that include payroll tax, medicaid -- >> this is just income tax. >> i think that's important that

we're only paying income tax. >> but rich people pay other taxes too. >> i think if you look back across the past couple of decades or more, when we were both in the private sector, there's been such disproportionate wealth creation focused on that -- >> but there are have been a lot of middle class people brought into that wealthy place as well. >> middle class has not done nearly as well, and what we need to do is ask that top 2% to do their fair share. the president's budget has specific proposal -- >> so 36.7%'s not fair for them. it should be 50%? i'm trying to get a number from you so i know what balance is. >> so the president's proposal has two main pillars. one is to return to the clinton era tax rate of 39.6%, which worked quite well back then. we actually had surpluses. and then just to ask that the wealthiest limit their deductions to 28%, so their deductions are the same as, or don't so far exceed middle class.

that strikes me as fair. at the same time, i want to emphasize that the president is in favor of fundamental tax reform and the buffett rule would be part of that fundamental tax reform welcome a simpler code, lower rates would all be part of tax reform. >> mr. flores, last but not least. >> certainly not least. thank you for your testimony today. this ipad cost about $600. that's the same as about six barrels of oil that exxon produces. who makes more profit? >> i don't know the answer to that question. >> apple makes substantially more profit on that ipad. so the question is this. let's say that apple's making too much money on this, so let's go to apple and raise their taxes. now, are we to assume if we do that that apple's going to make more of these at a cheaper cost for the international community? >> i don't know what specific tax expenditures -- >> you know the answer like i do -- let me get in the rest of

my question. >> i do know there are outdated tax breaks and expenditures for oil and gas companies that no longer -- >> we expect apple to be able to reclaim its intellectual property investment and its investment in plant property equipment and people. the same thing that we allow energy companies to do. and to somehow come up with a fact that there should be a differential between these two is not fair to use the administration's language. it is not balanced. it will create winners and losers. now, let me go into the, just overall, i'm disappointed in the budget. it fails to address the president's competitiveness counsel that deals with jobs, it doesn't deal with the looming insolvency of medicare, social security, medicaid, those programs. got a few questions. on stimulus spending, we've got

tens of billions of dollars of so-called targeting spending in here. what metrics do we have to prove that this is going to be better spent than the $800 billion we spent in the last stimulus package? and i guess the overall question is, why does government do it better? chairman bernanke last woke, of the federal reserve, said that the private sector generally invests better and more efficiently for the greater good of the american people than does the government. so why are we reupping on this failed program? the stimulus, i mean, if you take the wildest job estimate of 2.7 million jobs, it costs $300,000 per job created. so i guarantee the private sector can do it for less than that. about 20 seconds. >> -- the president's council on job competitiveness, because i actually worked very closely with jeff immelt, ken skmult and otherwise. and it's not to say that everything in this budget is consistent with everything they recommended, but the focus on education, first and foremost

for that group. the focus on infrastructure, top of the list. an infrastructure bank, which we proposed in this budget for $10 billion is something the jobs council recommends. ft. has worked very closely with this jobs council and adopted many of his regulations. >> okay, thank you. reclaiming my time. thank you, i appreciate you addressing that. we're going to have to agree to disagree. i think it's just version 2.0 of a failed stimulus program. my question, i didn't see anything in the budget having to do with program integrity. in other words, i'll ask this question of every -- in every hearing that i go to with respect to this budget. what is it that prevents future solyndras? what is it that prevents the administration from picking winners and losers? what is it that will make the american hard-working taxpayer feel confident that they're dollars are being