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 properly

spent? in other words, what makes them feel confident that we're not going to be bailing out some of the president's contributors in the future? do we have any provisions like that in this budget? >> well, in terms of program integrity, there's significant investment in program integrity, because program integrity has a heck of a good return. for every $1 you spend on irs program integrity, you return $5. >> i'm talking about the way we're spending dollars, not irs collection dollars. >> same in social security in terms of program integrity. same in health care in terms of program integrity. the president put a -- >> okay, you're telling me these provisions are included in this budget. is that correct? >> absolutely, they are. >> okay. >> the next thing i have to do has to do with gdp growth assumptions. i noticed that in looking at the 2012 budget versus the 2013 budget, during the years 2015 through 2019, at the gdp growth assumptions have been amped up a fair amount. this doesn't compare well with the recent cbo update that we

got that paints a much bleaker future for economic growth. so how does omb come up with numbers that are pretty optimistic? >> well, the cbo assumptions, i think, that you're talking about assumes that none of the president's policies are adopted. in fact, the '01 and '03 tax cuts disappear both for the middle class and the upper -- the wealthiest. so i think the cbo is based on current law, and therefore, is a projection that isn't reflective of the kind of policies that we would agree on, even if we don't agree on all of them. >> probably not any of them. >> well, i don't think any of us are looking to increase taxes on the middle class, for example. so the cbo assumption would have that. so i think you really are comparing apples and oranges. >> thank you. i yield back. >> guess what, time has expired. hearing is adjourned. mr. zeinst, welcome to your first trip to the budget committee. meeting is adjourned. >> thank you.