percentage of gdp, can say which means or something like that. >> we'll work on that. >> this is a way where we can s educate ourselves and educate the general public when they hear terminology -- hen >> i think the main thing is the general public needs to understand that there's an immediate emphasis on job creation, getting people back to work, which is essential for our economy and for individuals and for families and for the middlec class.on and at the same time, we do neet to bring down our deficits to a point where they're stable. they have declined.we h we have stable debt. and, therefore, as a percent of gdp, that makes sure that we as a country remain favored place to invest, both for american m companies and for global companies. >> thank you, mr. chairman. >> thank you.th >> thank you, dr. price. >> thank you, mr. chairman.you, i want to welcome you, but i think what the american people ' are -- they just have a huge

frustration about what's happening here in washington.on and they don't get a sense that anybody's dealing with the issues honestly and forthrightly. cuts if you look at -- and this mira budget, i think, compounds that. if you look at what some folks t are saying across the country, m the "wall street journal" says promises of future spending cuts are a mirage. mr. obama needs to point to the mirage because fiscal record isr the worst in modern american it history. "washington post" says, mr. a obama proposed budget for fisca year 2013 falls short.y. final budget of his first term a does not reflect the leadership on issues of debt and deficit ac that mr. obama once vowed. bloomberg says it's a wasted opportunity. on and on and on.at as a physician i can tell you that the doctors across this ote land and the patients across this land are very, very o concerned that the pack that they have with each other, the ability to be able to provide the highest quality health care in this country they see it

eroding away. what revenue do you project for the united states in the next fiscal year? >> the -- t is >> ballpark. >> are we doing fiscal year 2013? >> correct. >> the total receipts for the u.s. government is $2.9 trillion. >> what level of spending do yo? project? >> $3.8 trillion. >> 3.8. and the discretionary amount? t >> is a little over a trillion t dollars. >> a trillion. so if you removed all >> discretionary money, then we di would barely get to balance knos under your current budget.>> is that right? >> yes.emove discretionary spending, so you i know, is going down.s >> i understand that. >> but if you removed it all he that is all the spending at the federal level completely?of >> given that we have a deficit of about $900 billion -- >> my point is that the concern on the health care side, is that unless we address the fundamental reforms that are fo necessary to save medicare and

medicaid, that we're ignoring the problems. so what solutions are budget incorporated in this budget for medicare, for example? >> so it starts with the re, fo affordable care act which saves $100 billion first decade, a trillion in the second. and there's $360 billion in thi0 budget. which has things like, when people move from medicaid to medicare, they get the same drue rebate that they -- that we get as a government, the same drug rebate that they got in medicaid, we get that in medicare.medica it saves a lot of money. entingt >> you're not presuming to tell me that's the major fundamental reform that's going to save medicare? >> no. re >> the major fundamental reform that's going to save medicare in this budget is -- >> the major fundamental reform is to keep going at it the way the president has. here's $360 billion of savings. i think the framework that we

start with or the principle we start with is that we have a wt compact with the american people -- t period >> i have a short period of time. >> we have a compact with the american people -- in your own budget, medicare but spending in 2022 is a trillion 2 dollars. this next year, $487 billion. i want to revisit if i may, the independent payment revisory tis board, a because it's of great concern to patient as cross the, land, because they believe it to be, as i believe it to be a denial of care board. ear and i think in your earlier comments to the chairman you mentioned that this budget wouln give new tools to the independent payment advisory board through value-based fit de benefit design changes, that you intimated benefits to beneficiary -- to >> i want to be clear, that board we attribute no savings h that to that board.no that board is there as a oard. backstop, if we don't get the savings that we've committed top >> and a backstop, requires tha there's a catcher to catch the o ball first. and i would suggest that there

is no catcher in place. >> right. and i think -- and therefore, if i may, and err therefore, the backstop, will be the only thing there. independent payment advisory board. on ba >> if you look at the data, health care costs on a per person basis is coming in. it came in quite a bit. so we are making progress in te making health care more effective. >> i've got 30 more seconds. i want to share with you the lah concern that the physicians of e this land have. and that is that they are no th longer able to have that eve is physician/patient relationship that allows them to provide the quality of care that they believe is most important for their patients. they also believe that the is co whacking away at providers in this country is destructive to the ability of them to care for their patients. and consequently, this patient's access to care is terribly eroded and the budget continues that. do

>> the affordable care act is very sensitive to that patient/physician relationship and making sure that we do it -n we work together in a way across the whole health system so thata we maintain that relationship and improve the system both in terms of outcomes and lowering , the cost. >> thank you for pointing me to that. >> tha >> thank you.hard w >> thank you, mr. chairman. welcome, director. >> thank you. >> thank you for all of your gr. hard work and your whole team. the economy is getting better. we've had 23 months of private sector job growth. the unemployment rate is at its lowest level in three years.owi. i think the first chart we had up is, you know, tells the t's c story. small business confidence is growing. that >> uh-huh. >> but it's clear that your n country must do more to accelerate job creation so thatn our neighbors have good jobs. and nonpartisan cbo gave us some good healthy advice just a few months ago and director

elmendorf reiterated that when he was here just a week or two ago.as if america can create more jobs, we can reduce the deficit. so it's very important to see the administration's job tion's creation strategy that also doubles as a debt reduction ion strategy.i'd li i'd like you to focus in a litt little bit on the administration's job creation strategy. i know it hasn't been easy because the president's american jobs act has been blocked by thn republican congress. but i'm happy to see that in this budget the president does not give up on a number of investments, strategies, and job creation strategies. if it's infrastructure, research and innovation, i appreciate that we're -- that you believe i that we need to continue to thaw invest there. and i'd like you to focus on education because it's vitally n important that america continue

to invest in students and our to future workforce. and they've got to be trained and talented to focus on the challenges of the coming chal decades. so would you go through the education section? i represent a community where w? have a large public research university.ge we have private universities ann colleges. and a substantial community college presence. they're going to be very interested in what you're proposing for the pell grant, what you're proposing for , community colleges, and other investment job creation strategies. >> as you know, it's one of the. most important areas of focus for the president to ensure ourg long-term competitiveness, to invest in education and i'll hit on a few highlights, but the budget is very robust as to isy education from early childhood through college. in terms of a few of the highlights i mentioned earlier,

the american opportunity tax credit, which gives up to $10,000 of tax breaks for tuition, the community college t area is very important. the president just this week au announced a new $8 billion ly initiative to work with our es n community colleges around the country working closely with businesses in those community college areas to ensure that coe we're putting together the righ courses and the right teaching so that when folks graduate, do when they do their courses, they have jobs.millio and we expect that will impact two million students across the country.esiden the other area i would touch on is pell grant.rant at the president's budget has the pell grant at the higher level of $5600 or $5650 funded for two years. and i think more than 9 milliont students are part of the pell 9 grant program. so the president, it's three ofs many initiatives.id the president also really

believes that we need to make bv sure that college is affordable. if tuition increases, continue to compound that rates poof above inflation, students either can't afford to go to college or they leave with debt that's toor high. empha so the president has a real emphasis on making college more affordable, by having incentiveo for colleges to begin to reign in their tuition increases. so from early childhood through k through 12 through college, this president and this budget g focuses on education and makingu sure that we are able to compet and win in this global economy by having the most educated nomy workforce. >> and the president has also continued to put emphasis on thm job -- the portion of the american jobs act creating jobs through school -- public school modernization and renovation because all across the areas i represent, we, you know, the as

state has -- and this is not y unique to florida, but many da,b states have shown what they are able to do in schools and we could put thousands and thousands of people to work renovating schools. peopl >> it's a great situation. it's $30 billion to both modernize our schools, which isn great for education and at the same time as you point out, puth people to work. this puts construction workers to work who need jobs. so it's a great opportunity to k get a two-for.great improve our schools which is great for our students which will make them better educated and more competitive in this marketplace and immediately puts people to work. $30 billion is in the and president's budget to do just that. >> thank you.billion >> thank you. mr. mcclintock. >> thank you, mr. chairman.>> the ranking member, i think, put his finger on the great question confronting this committee and t for that matter, confronting nd this nation.

he made two statements, one of r which i disagree the other which i heart illy agree with. you said that this t administration had inherited thr worst economy since the great depression. and i agree it inherited a terrible mess, but i seem to remember a time more recently when we had double-digit unemployment, double-digit inflation, mile-long lines mi around gas stations, interest oi rates at 21.5%.nt that was the end of the carter administration. we elected ronald reagan who adopted policies quite the opposite of this administratione perhaps the reason the ranking i member doesn't recognize it is because they didn't last very long.oesn't those policies produced one of the great economic expansions in our nation's history.ne o in fact, phil graham recently published an article in "the wall street journal" in which hc estimated that if the economic recovery under this t administration had tracked the y same as the reagan years, we t would have nearly 17 million more americans working today

with per capita income about $5,500 greater than it is todaye which brings me to the point t that he made that i heartily agree with.with. he says we can't return to the n same policies that got us into this mess. amen to that. we have to ask ourselves, what were those policies?es the bush administration increased spending by over 2%. over 2.5% of gdp.. they expanded entitlement spending massively. they turned in massive budget deficits and they presided over an unprecedented government intervention in the housing market, encouraging bad loans bh dragooning taxpayers into covering of the losses for thoss bad loans.admini my beef with this administration, my concern overh this budget is that it has not e

only not corrected those mistakes, those policies, but instead has repeated them and doubled down on them which like brings me to the concerns that's i'd like to raise with this budget and get your feedback. a year ago, we had one economist after another coming before thit committee warning us that the t federal government needs to gete its finances in order in the 5 next 3 to 5 years to avoid a fiscal meltdown that would dwarf the 2008 crisis. one of those economists was secretary geithner.nomi and i'd like to read you a quot from his testimony. he said over the next five to ten years, we have an rethe unsustainable fiscal position. we have to get that down to a ni level where the debt is not get growing as a share of the vel wr economy. not without that, nothing else is possible and will do a lot of damage to future growth and el confidence. lo that's very important. growth now listen very carefully to ce. this next line, mr. zients because i'm going to need your o guidance on it. that's why you need to bring th deficits down over the next

three to five years to something that achieves primary balance.ro that is a minimum necessary. does this budget bring us down to primary balance in that time frame? >> a quick comment on your -- i'll answer your question in a second.nce? >> i only have 1:30. it was not a question, it was a statement.stwer the i would like you to answer the question.esbring does the budget bring us to arya primary balance? >> yes. >> in what period of time? >> five years. >> from now? -- >> yes. the >> okay. secre so it's -- it is not the minimua that secretary geithner said last year of three to five years from last year. >> the budget achieves primary s balance in 2018 given unexpected economic situations this summer which a lot of it is 20 si controllable around the debt ceiling. if we avoided that, we might voe have had a better economic recovery.gh >> i'm going to have to reclaim my time because i need to get back to the credibility of that statement.f th

in 2009, the president projected a $581 billion deficit for fiscal year 2012. by 2010, his 2012 estimate had grown to $828 billion, an increase of 41% in his projection in just a single year. in february of 2011, the president's projected 2012 in fu budget deficit grew to $1.1 icit trillion. and this year the president projects that deficit to be $1.3 trillion which is 128% increase over his projection at the beginning of his term.incr why should we trust your budgetn projections three or four or trt five years into the future when we have a track record of grossly, grossly distorted t projections under this administration? think >> i think the first thing to start with is your comparison to the reagan recession. it's apples and oranges. that was fueled by inflation and fed policy was the answer. an you get out of a recession like.

that much more quickly than a financially led recession whicha is unfortunately what we inherited based in large part o those policies that you articulated so elegantly at the beginning. a the president's budget -- so we started in a hole.o we thought it was a hole that a was about negative 3% of gdp. it ended up being negative 8% for q4 of '08 and q1 of a's 09. so a much deeper hole.o m we're digging ourselves out of that hole. and the president's budget putsi us on a sustainable path. >> if you want to keep to your t schedule you have to -- 's >> you want to be out by 12:30.e i'm trying to get throug >> thank you, mr. chair. thank you mr. zients for joinin us. i want to use my brief time here to focus on the issues of joing fairness. that are emphasized in this budget proposal. i want to read briefly from a fa letter that chris, a constituent of mine from new york wrote of

almost exactly one year ago. he writes of his thanks for having -- for living in a society that has allowed him, his wife and their two children to succeed. and and the role that things like to public infrastructure and publit education played in their pu success. he concluded his eloquent letter with this. we are not rich but as americans, we are willing to give back to the country that it has given so much to us. we feel a responsibility and to ensure that others have that oni same opportunity that we benefit from. as my elected representative, i want you to know that when our government requires additional revenues to close the budget gap, we are willing to do our re share. if it becomes necessary to raise taxes to preserve essential social services, i will consider it an honor to support them ll through my contributions. this committee on both sides of the aisle is rightfully this c concerned about the future of our deficit. in 2011, federal spending was 24.1% of gdp. tax revenue was 15.4% of gdp.

there is a pretty big gap between those two numbers. gap that tax rate, 15.4% of gdp is the lowest i would point out tw since president eisenhower was in office before social security and medicare were law.ocial before we even had all 50 re states, in fact. 50 do you have on hand what federal revenues averaged under the reagan administration as a share of gdp? >> i don't have it readily handy, but my team might have it. i know under clinton -- >> as we saw earlier it was about 20%.i kn >> i believe my information is 18.2%. >> uh-huh.>> >> and do you have on hand what federal revenues averaged under the clinton administration as a share? >> that was shown earlier. i think right around 20%. >> 19%.ight so we have 19% under president n clinton. 18.2% under president reagan and now 15.4% under president obama. that's not the picture some of e my colleagues are painting here. i've heard my republican publicn colleagues commenting this week

that with this budget, the t wil president will increase spendinn over the course of 11 years by 62%. do we know how much president reagan's increase in spending was over his eight years in office? >> that was higher. i actually do have that data with me if my team can just hand it over. i'm sorry. let me follow up and get you s those specifics. >> my information is 69%. >> that sounds correct. >> how much did president george bush increase spending for his f eight years in office?eliev >> i believe even higher, but it sounds like you have the data iy front of you. >> my information is 89.fr >> yes. >> my point is, for what has wh been deemed a tax and spend presidency it seems to me that e president obama is cutting taxes more and increasing spending less as a share of gdp than man of our great republican leaders. and we need to restrain our rh rhetoric, i believe.we're

>> in fact, on the revenue side, we're bringing it in 2021 rightt to that 20% level at 19.9 -- i'm sorry, 20.1%. i'm >> tax and spend is a catchy line and it gets thrown around a lot in an election year. another constituent of mine ge wrote to me a couple of months ago with similar catchy lines.a rod is a retired teacher from new york. te you might think, he writes, tha after the ruinous binge of deficit spending that was the bush administration we would noe again hear the old tax and spend song. tax bush administration in rod's words was an era of spend and pretend and that is what we havt seen time and time from my colleagues across the aisle when they control our government. rod went on to write the ent following president -- the following. president obama is asking congress to invest in value creating enterprises. he believes. and i think if we can spend taxes to train young men and women to fight and kill, we can

spend taxes to teach the same young people to teach and heal. he believes if we build schools in iraq, we can build them in l. iowa. i'm incredibly honored to represent constituents like these and believe that the thes important facts here that need e to be exchanged in a very changd logical contrasting way is an important exercise. is >> i think what's at the core of both of your constituencies comments or letters is a balanced approach. this is a balanced approach. $2.50 of spending cuts for ever $1 of revenue.pendin we need a balanced approach in order to get on a sustainable path. >> i agree with you. and i appreciate that. agree i am running out of time.and i i was going to ask you about the investments in research and development. >> we can follow up. >> okay. thank you. >> thanks, mr. chairman and thank you mr. zients for being here. the president promised when he n was running for election he would not increase taxes on less anybody earning $250,000 or .

less. do you believe that to be the case, and is that the case moving forward? >> yes, the president is committed to no tax increases for those families earning $250,000 or less or individuals at $200,000 or less. >> but he's already violated that pledge, has he not? >> isn't the medical device tax ofe 2.3% that's about to kick in, k isn't that a tax on people earning $250,000 or less? >> medical -- you need to tell me more about the medical devicu tax and how that impacts individuals. >> well, anybody if you are earning less than $250,000 thenn you need to go purchase a medical device you'll have a ne tax of 2.3%. >> that's a corporate tax or it's an individual -- s a >> no, it's an individual tax. i'd appreciate if you'd look -- into that., >> i will. >> the indoor tanning tax. the tax on tobacco.wi the individual mandate.th there's a long list of things that have already been th implemented that i think violat that pledge. i would appreciate your that perspective on it. because to say that's true and will continue to be true in thes future i think is factually inaccurate.e to be >> let me have your staff follow up with yours on those

individual taxes and how they relate to individuals. >> thank you. you refer to a sustainable rate debt as a percentage of the gdp. what is that actual number? what do you think is an acceptable level of debt for an this country? >> well, this budget has it comt down to about 76% of gdp. >> but if you look at the total. debt offered by the treasury, a the total percentage, what the o percentage do you think is an acceptable level?well, >> well, i think that importantly, at this stage is a, the most important milestone is to stabilize it.ste've as we've talked about, our work is not done.>> i >> it's like 100% now.now. >> i think that's not the rightt way to look at it. the right way to look at it is t the debt that is held by the public and that currently in 2011 -- >> why wouldn't we look at the total debt?y i why wouldn't we look at all theo obligations -- >> we look at debt that's within the federal government.ok at that's sort of inside the family if you will.of in

this is looking outside. debt held by the public i thinks is the right metric what most would agree is the right metric. i just want to get back on the percent. currently in 2012, that's about 74%. >> would i be inaccurate to say if you look at the total debt which is on page 203 of the , dt budget, debt issued by the ry, t treasury, that when president obama took office it was in then range of $9 trillion and under s this plan that's put forward by the president it would go to $26 trillion.trilli can you see why people are concerned about this? >> absolutely.lutely and i would say a major root a cause of that problem is the fact that in the prior administration, we had -- tion, >> you are actually going to ree blame president bush -- you are actually going to blame president bush -- >> if you want to actually have -- if you want to answer your question as to where the bulk -- >> you really think -- id >> unpaid for tax cuts. it comes from unpaid for

medicare part d.un it comes from unfunded or unpaid for wars. that's a -- and then inheritingh the great recession which we absolutely needed to dig was ourselves out of.et m the hole was very, very deep. >> let me move on. i want to move -- i totally and fundamentally disagree with you from top to bottom. line the bottom line is the president was elected at $9 trillion in debt and we're going to grow it e iter $26 trillion under his plan, under his numbers.ver $2 i think that is fundamentally -. let me move on. >> let me -- >> i can't.s. i have a minute and 15 seconds. you said your part, i want to .ay mine if federal payroll continues to increase, the reality is there i are li145,000 additional federa workers -- not counting the uniform military, postal or census als. workers.aid 145,000 additional federal icano workers.he's the president has said before the american people and said f he's putting a pay freeze in es place.s and i think that was a farce.

because through step increases,n rewards and bonuses, the payroll went up and continues to go up.a can you please explain to me at what point do we think we can actually justify increasing the payroll even more and more?et >> well, this year's budget ly s actually calls for essentially a flat number of employees in those agencies that you are citing. 145,000 is 89% of that is security related.ed. i think we all would agree our veterans should get care in the hospitals. we should protect our borders at dhs. 89% of the increase -- increas >> you made your point. let me ask this last thing. i know you don't have this whole thing memorized by page 114 it r says this pay increase proposal permits savings of approximatels $28 billion over ten years and it continues. year if your staff could help explaie how a pay increase has a savings over the course of times -- >> i want to be very clear the s president froze civilian pay for two years. this proposal is for 50 basis points. b 0.5% of an increase and the

savings is the difference between that and what happens ie the private sector. >> and with that, the federal payroll went up.payr thank you. her >> miss mccollum. t >> thank you. i'd like to shift gears here a little bit and talk about a pari of the budget that we usually don't ever discuss here in the budget committee.ca i'm hoping the chairman, i can capture his interest and we can talk about this some more in the coming months.s and that is what this budget esn request means for our nation's private sector. the red cross, meals on wheels,e habitat for humanity, these and thousands of other non-profits a are working to solve problems, a improve the quality of life in communities all across the united states. the country's estimated 1.5 million non-profits are a distinct sector of america's din economy and they employ 10% of our country's workforce.f now there's no doubts that worko non-profits then are part of being job creators.

non-profits tackle issues that f are often beyond the reach of government and below the bottomw line of the business sector. that's why the profits that the work that non-profits do isn't t extra. it's essential. every american community depend. upon the non-profit sector. de the federal government depends upon non-profits to implement many federal programs from on worker retraining to crime prevention.ning t all of us in washington and at omb and congress need to start paying attention to the health d of the non-profit sector. much like we do with the small business sector. this budget requests $948 million for the small business 8 administration to protect, r th strengthen and represent the interest of our nation's small business.nati but the non-profit capacity building program authorized at 5 million is now recommended for zero.