so i'd like to ask you a coupleo of questions.ons. do we kno captions copyright national cable satellite corp. 2008 budget would be implemented by captioning performed by vitac this country? do we know how much federal funding is being leveraged with local funds by non-profits? do we know how many budget -- excuse me, gentlemen. i'm trying to have a -- you're having a conversation. i'm trying to ask some questions here. thank you very much. do we know how many jobs non-profits will create within the federal funds in this budget? this isn't a gotcha because nobody normal asks these questions. so if you're not prepared to answer these right now -- >> they are very good questions. >> well, i would very much like to work with you as you get these answers because none of us on this committee to my knowledge since i've been on the budget committee, has asked about the non-profit sector.

and so i do hope that the chair takes some interest in this and looks at how this is interrelated. so i'd like to follow up with you about how we increase the focus on non-profit sector to strengthen it. to strengthen local economies because, as i said earlier, they implement a lot of things that the federal government needs to have happen in this country, and they do a lot of the work that the for-profit sector just won't get involved in because there's not profit in it but yet the for-profit sector relies on many of the programs that they provide. i know i asked you some questions you didn't have direct answers for but if there's anything you'd like to say about -- >> no iagree with you that they are essential both to making sure that our programs are effectively implemented in the federal government and to our society rit large. as to your specific questions

ilook forward to my staff following up with you or your staff to address some of the specific data that you are looking for because i do not have that handy. >> sir, i think we need to talk about this because you and i both know in our communities how integral they are to the fabric of our societies. >> these institutions are critical to a civil society flourishing. i would simply say we want to get back to a virtuous cycle because the non-profit sector thrives on donations from the profit-making center. meaning the private sector. and so we clearly need to have a vibrant, profitable, private sector so that we can have a flourishing non-profit sector. >> mr. chairman if i could -- >> it's a virtual cycle. we have different approaches on how to achieve these. >> i'm not even -- let's leave the politics aside. >> no, that's my point. >> i think we need to understand. we need to understand how the non-profit sector is working and

how not being as members of congress sometimes to say, oh, we'll have a private sector do that. we just assume that the private sector can pick up the slack. and to your point, the business sector sometimes says, you know, the bank is closed on that. >> i indulge because we had time and now we don't. and i want to be mindful of this gentleman's time. >> thank you, mr. chairman. i appreciate the opportunity. mr. zients, i appreciate the opportunity to question you today. i appreciate the budget presentation. and going through the budget, i haven't dug into it as much as i will shortly, but if you had to pick one thing as the absolute highlight of this budget, what would it be? what your most proud about in this particular budget? >> i think it's the combination of investing in the short term to make sure that we put people back to work. and at the same time, putting us on a sustainable path by getting

our debt deficits under control. >> when i look -- >> it's doing both at once. it's not an either/or. >> i appreciate that. and we've had earlier question. i stepped out for a little bit. there was another committee visiting with folks about their budget in a particular area. but you did answer the question early ber exactly when do we actually balance? when i visit with constituents, they are worried about a deficit. they are more importantly worried about the debt. they understand the math. do not have a deficit. you can't propose to pay down the debt. maybe i'll ask the question differently. when does the president propose to reduce the debt on america? >> well, he stabilizes the debt in this budget and this budget makes major progress. the president looks forward to working with both houses to continue to bring down our deficits and bring down our debt. >> what year does he actually stabilize the debt? that would suggest there's a year in which -- >> 2018. >> that's when the budget will

balance? >> that's when -- i think the question is when does the debt stabilize? the debt stabilizes in 2018 as a percent of gdp. >> as a percent of gdp. >> which we keep coming back to. you have to think about it that way. nominal dollars don't make any sense. if i told you you could have $1 today or $1 ten years ago we'd all take the $1 today. >> because the debt stabilizer, the additional debt the president's budget proposes, that stabilizes, but the debt load continues to increase as a percentage of gdp. >> debt stabilizes is a percentage of gdp starting 2018. but this budget will never -- the president does not propose to ever actually balance the budget. is that correct? >> we are not at the point in this budget window that -- where we are balancing the budget. this takes us a significant step toward that and then we need to work together to continue to drive toward a balanced budget. >> so the window you discuss is in the next ten years.

so there's no balanced budget in the next ten years but looking long term, it's a question i get from constituents. when will washington, instead of talking about a balanced approach, actually give us a balanced budget. can you foresee how many years, decades, that might occur in -- >> i don't think any of us can project out that far. what i can tell you is this budget makes significant progress. we bring down our deficits to below 3% of gdp. we stabilize our debt as a percent of gdp. that's a major milestone. there's more work to be done. >> but adding another -- in the next ten years, another question, how much more debt is added to the bottom line in this president's budget? >> again, you shouldn't think about it in nominal terms. >> but what is the nominal term. humor me with -- >> i think what your colleague was saying before some numbers. i can try to track them down. the debt held by the public is currently in 2012 about $11.6

trillion. and in 2022, 19.5. >> so to you, stabilizing the situation is just adding debt but not as quickly. this president's comfortable with never having a balanced budget maybe in the next 20 to 30 to 40 years? >> i think what we're talking about is making serious progress in a period of time when you can actually talk about progress. who knows what happens across 30, 40, 50 years of time. we're making that progress. we're making that progress while maintaining the basic compact we have with our citizens. >> i would hope if -- maybe your staff would actually project what the administration would like to see. give us a date when we'd have a balanced budget, not a percent of gdp but actually spend less in one year than we're taking in. and that has not happened in decades. and i would like to see that. another thing. quick question. what part of the -- what part of the budget and particularly the

president's tax increases actually create jobs? i know it's a short time, only 22 seconds left, but i wish your staff would get back to me. i know the president has proposed a bunch of new tax increases. i'm concerned about jobs. exactly which one of these tax increases and how will they actually create jobs. that's what the american people want. >> i think in terms of the medium term, having a balanced approach to deficit reduction which creates an investment environment -- >> and will, as you said, we'll let you get back to him in writing. >> mr. ryan? >> thank you, mr. chairman. i feel like i'm living in an alternative reality. i just left the armed services committee in which -- i am. thank you. i left the armed services ght which secretary panetta were presenting $500 billion worth of cuts to the military making very significant cuts that many

people were uncomfortable with. and it was my friends on the other side of the aisle saying, wait a minute. maybe we shouldn't make those cuts. maybe we've got to be careful about how deep we go. then i come to the budget committee and we're not cutting enough. so i think that's always proof that we are, i think, striking the right balance and i think you guys are doing that. and i think it's also important for us to know that the republican budget adds almost $9 trillion to the debt over the course of the next ten years. republican study committee budget adds almost $6 trillion to the debt over the next few years as well. i think it's also important to point out that the policies that this president and in many instances the democrats passed that stabilized the economy, made investments, the stimulus package, stabilized the economy. got us to where we're going now

in the right direction. they were opposed by the republicans. the auto industry bailout in ohio. thousands of people. one in every eight jobs in ohio is related to the auto industry because of what president obama did. and that is helping us stabilize things. and i think you hit the nail on the head with the issue of medicare. and i will ask you. medicare -- is medicare a medicare problem? is it an entitlement problem or a health care cost increase problem that is leading to the increases in the medicare -- >> we need to make sure we keep the compact we have with the american people. and that we can do that through smart changes to the medicare system. the affordable care act. saved over -- >> medicare costs are going up because health care costs are going up. >> health care costs are going up and the baby boomers are

retiring. it's a demographic issue and it's a health care cost issue. fortunately, some of those health care costs are starting to come down. we still have our demographic issue. >> right. >> and we see in hospitals like in akron, ohio, that is focused on the patient-centered medical home where they are beginning to use that way of reorganizing the system and the delivery of health care to drive down costs. >> well, it makes me optimistic are examples like the one you cite. we have those examples all around the country. let's take what's working and transfer it around the country so we have best practices throughout. and best practice is to find as cost efficient care that has the best possible outcomes. >> right. and i agree with you in that the affordable care act is essential to all of this. and the medical homes and those kinds of things. i think it's important, also, to point out, somebody brought up president reagan. president reagan did cut taxes

and then a few years later, he raised taxes. several times. do you know how many times president reagan raised taxes? >> i don't know. >> six, seven, eight. so i like to remind my friends who worship at the altar of ronald reagan that he would be beneath ron paul in the presidential primary election right now as far as support from the tea party. quickly, the research and development. because i love what you guys are doing with the community colleges. these are youngstown, ohio, akron, ohio, these are decisions in a value-based document which is our budget that are going to help my constituents. $10,000, tax credit for tuitions, pell grants, community colleges. these are the things that are going to save -- >> dwrud the list ensuring that the interest rate does not go up on student loans which it's scheduled to go up to 6.8% from 3.4%. the budget keeps it at 3.4%. >> so the average person is not only going to get a payroll tax

cut but if we start implement something of the budget priorities from the administration, they're going to see more help with their student loans. more money for pell grants. getting them in the community college. >> encouragement to make sure that colleges are more affordable. this is a major emphasis of this budget. >> i appreciate what you guys have done. this has been very, very difficult. and i think what we're seeing now in ohio and around the country is people start to appreciate what has been done as we have weathered the storm over he past few years. estion now is now what? now what do we do? now where do we go? i think what you're talking about with stem college and investments in the community colleges, are going to ramp america up to be competitive in the high-end manufacturing we're going to need. i appreciate what you're doing. we're here to support you. >> thank you. mr. mulvaney. >> if the staff could bring up the first slide. mr. zients iwas going to ask you about this originally. the president's promise he made during the -- >> my eyes are not good paper .

>> you can, actually. it's simply a pledge he made when he ran for office and said today i'm pledging to cut the deficit by half during the first term. in response to a "washington post" criticism of this promise yesterday, i understand the administration's official position is now they had to break that promise because things were just -- turned out to be much worse than they thought they were. then i was going to ask you about this next promise regarding about not raising taxes on any families making less than $250,000 a year. but i think you've been asked about a couple of those already. mr. garrett asked you about the individual mandate excise tax for failing to purchase government qualifying health care. i young said that was not a tax. and then i believe mr. chaffetz asked you about the medical devices tax and the indoor tanning service -- >> can i make one ten-second comment. the president has cut middle class taxes by $300 billion. >> except for everything that's on this list. >> $300 billion.

>> again, except for everything that's -- when you make a pledge i guess you don't get to say, listen, i'm going to raise it some place and reduce it some place else. my question focuses on something you said early cher is on the next slide which deals with -- >> there is actually no way i'll be able to read it. >> it's right out of your budget table. s-4. you mentioned several times this is a response from the budget as to deficit. and then you are -- loathe at times talk about nominal dollars. i agree when you are talking in 2012 about a dollar, it's not the same thing in 2012 but i would suggest you can talk apples to apples nominal dollars when talking about net interest payments in 2015 versus, say, medicaid payments in the same year. 2015. and i would suggest to you that the budget you offered to us today has net interest payments in 2015 exceeding what we'll spend on medicaid. the budget that you've offered us today has net interest payments exceeding the money that we spent on nondefense --

>> all i'm trying to do is track. medicare on s-4 -- >> medicaid on s-4 is. >> i thought you said medicare. >> medicaid. $372 billion of spending in 2015. net interest 384. >> yes. >> you go to nondefense by 2017. 553 versus net interest of 4 -- excuse me, 570. by 2020, net interest payments will exceed defense. so what you've offered us is a budget with the fastest growing line item being net interest and a future for this country where net interest by 2020 will exceed what we spend on defense, exceed what we spend on nondefense discretionary and what we will pay also for medicaid. i ask you, sir if you really do believe that that is a responsible budget as to deficit. >> i really want to be responsive and maybe this needs to be done, chairman in follow-up because table s-4 is the adjusted base line. that's not actually the

president's budget. the it would be very difficult for me to comment off of an adjustment -- >> i believe the data is off of your budget. >> this is the base line that at the beginning of my presentation i described as an accurate reflection of business as usual. so i think that if we want to start comparing numbers, we should probably do it off of the actual budget rather than adjusted baseline. and cognizant of the time that we have, i think it's probably best to -- >> just to interject. just go to s-5, your budget and the same point can be made. >> let's go to the next one. this is back to the president's own word. he said he was going to cut the deficit by half. a line that caught my attention which says ibut i refuse to leave our children with a debt they cannot repay. so i'll ask the same question that's been asked several times. when my children ask me when we can expect to start repaying the debt, what is the answer? >> i think what the answer is that we have to do two things here in this budget. and we're not alone in saying

this. cbo has said this. the fed has said this. major economists have said this. we need to get people back to work. we need to create jobs. we need to put ourselves in a position where we're more competitive as a country. that's step one. step two, and if we don't do step one, we're in real trouble. with step one done, we're able to get ourselves -- >> i thought this budget was designed to put people back to work and create jobs. >> it absolutely is. if you had your way, which is this budget -- when can i tell my kids that the budget is going to -- >> it gets us to a point where our debt is stabilizesed as a point of gdp. that will allow us to be a place to invest in. you can see it in our current credit markets that we're the chosen place. we can maintain that status. american companies will grow here. global companies will grow here. and we'll be on -- in a much better spot than we're in today. there's nor work to be done. >> my last question, your party

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 federal

expenditures. 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 lim