achieve a net of 1.5 trillion dollars in additional revenue, doing it in a way that protects middle income taxpayers but does ask the folks at the top to pay more. we hear from the colleagues, the wealthiest are paying a growing share of income, it's not because their tax rates have gone up, it's because they have done better than all other americans t productivity gains from the 1990s and 2000s, did not accrue to the benefit of working americans. middle income americans. they accrued to folks at the top. that's great. but when you're dealing with the deficit, i shouldn't say that's great. it would be better to have shared posterity. the reality is when you're dealing with the deficits, you have to make choices. put up the slide. but i hope everyone will look at the cbo report that came out last fall on growing income inequality in the united states. what this chart shows and that

red line there at the top are the top 1% income gains. again, proportional, and you can see what people in different quintiles did, this is why the folks at the top are paying more in terms of taxes. because they are making a whole lot more than everybody else. that is simple math. this is not about the politics of envy or class warfare, this is how do we solve a deficit problem in a way that asks for shared responsibility. and what this chart he shows is that we should ask the folks at the top to pay a little more because if we don't, we will have to do what the republican budget did last year which is slash important investments in education and whack medicaid and end the medicare guarantee. if we could go to the next. here, we also hear the president's budget will lead to the huge tax increases that are

going to weigh down the economy. what this chart shows is that if you go back to the clinton years, you had revenue at 21% of gdp. the simpson-bowles proposal takes revenue to 20.6% and hen the president's budget has less revenue as a percent of gdp at the end of this window. the point here is that, this is a balanced approach which doesn't even raise as much revenue as a percent of gdp as it did during the clinton years when the economy was booming or in the bipartisan simpson-bowles proposals. here is what i'm going to ask of you, layout clearly why it's important to take a balanced

approach. why it's important to deal with the revenue side of the equation as well as the cutting side of the equation and what the consequences are for middle income americans and all americans if you don't take a balanced approach. if you try to deal with this deficit ush u the way our republican colleagues suggested, without taking one penny for deficit reductions from closing tax breaks. >> i think, first of all, you mentioned discretionary spending, this budget takes discretionary spending down to 5% of gdp, so we are making very, very hard choices in achieving that. the balanced approach at the center of the president's plan has also been at the center of other plans. you mention simpson-bowles, that

has a balanced approach and in fact raises more revenue than we are talking about raising here. when a serious group looks at this, there's a recognition that we need to increase our revenues. we cannot increase the revenues from the middle class. the president has no tax increases for families less than $250,000. in fact there are further tax cuts. we need to increase revenue from the wealthiest 2% who as you pointed out congressman, have benefited extraordinarily across the last several decades. and asking them to do their fair share so we as a country can succeed and have a healthy growing middle class. makes a lot of sense. as someone who was part of the private sector during the '90s when the tax rates were the tax rates that enabled us to have that share that you have on the screen, there was plenty of incentive to grow businesses.

plenty of incentive to invest. so we need to have everyone do their fair share in order for the country to get on to a better position than we are in today. to have us have deficits of less than 3% of gdp by 2018 and to stabilize debt as a percent of gdp was important >> thank you, mr. chairman. let me just conclude by reading from the statement from the co-chairs of simpson bowles commission with respect to the president's budget. i think we all agree, we should all find ways to achieve greater deficit reduction as we move into the outyears especially. but here's what they said. in the framework the president announced in april and what he submitted to the select committee the president embraced many of the goals and principles outlined by the fiscal commission and incorporated some

of the policies we proposed. we are pleased that the president's latest budget continues to focus on deficit reduction and are also encouraged to see real specific policies for limiting tax expenditures, slowing health care cost growth, and reducing spending throughout the government. that's the quote from the bipartisan co-chairs of the president's fiscal commission. and again, i think what the president laid out here is the balanced approach rather than a lopsided approach that will ask middle income families to take the brunt of our national effort to put the country on a long-term fiscally sustainable footing. and with that, mr. chairman, i thank you. >> all right. >> thank you. >> mr. garrett? >> thank you. appreciate your testimony today. appreciate you also being here from the private sector. you probably feel a little lonely at the white house in that respect. i'm glad you're here coming with

that experience. one point you though, you did just say there are no tax increases for those folks making under -- >> $250,000. >> -- $250,000. >> families under $250,000. individuals under 250k. >> if i am part of a family who does not buy health insurance in violation of the president's health care program and i got to pay because of that, that is not a tax on me? >> the affordable care act saves money. >> i understand that. is that a tax on me then if i do not pay that, or is that not a tax? >> i'm not sure i'm following the question. >> you say there are no tax increases on people who make under $250,000. if i make under $250,000 and i do not buy health insurance as i'm supposed to, is that a tax on me or not on me? a moment ago you said there are no tax increase. but that's not a tax? >> no. >> that's not a tax. okay. i just want to be clear on that because that's not the argument the administration is making. let's move on -- before the supreme court.

i appreciate again that the fact that you are from the private sector. two decades in the private sector leading public companies. in that area of responsibility did you always have a budget like you're -- you always have to present a budget for those company, right? >> absolutely. >> that's why i commend the administration for coming forward with this budget. do you anticipate that this budget will be taken up in the senate? >> i look forward to the policies in this budget being put into law. i'm not an expert in the process of congress or process of -- but i will tell you that i look forward to policies that are embedded in this budget become law. >> when you were with public companies would it be responsible to have a budget, in public companies. >> absolutely. >> when you were leading public companies would it be fair to say it would be irresponsible not to have a budget? >> yes. and i would say that as the ceo of a public company, if you

think as the president of a ceo of this country, that ceo has come forward on multiple occasions -- >> that's why -- >> -- with serious proposals. >> i appreciate that. i thank the administration and i thank you for being here. as paul did as well. it's a hard seat to put here. i thank the administration for putting pen to paper. that's good. we have something to dialog with. >> i want to emphasize it's not the first time the president put forward in april, september -- >> i'm not going back in history. i appreciate that. i'm hearing from you that it's responsible to have a budget. last year the president proposed a budget to the senate and he got zero votes, if i understanding. recently the senate president said he has no intention of putting a budget up, so as far as i understand right now, i commend you and i commend the president for coming forward with a budget. as of right now, if what you said before is responsible thing to have a budget, it's irresponsible not to have a budget -- it's seen as though it would be irresponsible for senate president reid to not take this budget up and have a vote on this. would you agree with that?

>> as mr. sherman said, the president and obviously the legislative bodies put into effect the balance that the bca last summer, that serves as a budget. and that's a real accomplishment. >> we don't need this budget? >> what we need is this budget, we need this -- the policies embedded in this 2013 budget the president has put forward -- >> that will only be done -- >> $4 trillion of deficit be passed into law. >> it only will be done if it passed into law if senator reid takes this up as -- in a budget, in the senate, so we -- we are both on the same page. encouraging -- >> i hope the senate and the house work together to make sure that the president's policies are enacted into law as soon as possible. we achieve the deficit reduction. >> if we do that. another quick question and give me one answer. if we pass this budget tomorrow, when does the budget balance in this country, under your proposal? >> we achieve significant progress --

>> i'm looking for a year. >> achieve significant progress -- just a year. when does this budget balance in this country under your proposal? >> this budget makes a serious -- >> just a year? >> no. >> just a year. can you tell me when this budget -- >> that's not a year question. >> sure it is. you put a chart up here -- what this budget does -- >> i can put a project here on the rnc budget. i can put a -- i'm looking for -- he's not answering the question. it's a simple question. i'm looking for a year. paul's budget can tell us when the balance of the rnc can tell us when it's balanced. a simple year. what year would a zero budget? >> this budget makes significant progress across this decade. the president is willing -- >> is your answer that this budget -- >> willing to do more work to drive it towards progress. >> is your answer that the budget never balances? >> time is short. obviously not going to answer the question. >> ms. schwartz. >> thank you, mr. chairman.

i want to make a comment or two about the conversation that's been going on, the questioning. two points i wanted to make quickly on the last questioning. you may want to -- you were gracious not to, but to point out that the oh ryan budget last year voted by the republican house did not reach balance in the ten-year window. so that's the standard -- i think the president's doing pretty well. just a comment, also, about the chairman's not wanting to acknowledge what i understand to be the budget process, which is to take current law even -- which might be a law passed in the past. and apply it to our current budget and to the ten-year window. he wanted to take away the fact that this president, president obama, actually put more expenditures in the budget rather than considering them emergency spending every year. and so did anticipate those expenditures in the future to be honest about budgeting. >> yes. >> and the fact that we're now not going to spend all of that is a good thing for this country. but it means it gets acknowledged in the budget, right? yes.

>> absolutely. >> secondly. on the same thing on str, the anticipated cuts that never -- only happened once in the last decade. again, this budget deals with that in a way if the chairman is suggest that we don't have to actually make up for that difference in str, boy, would that make it a lot easier for us, if we don't have to acknowledge it's the law of the land and, quote, pay for it, which i also consider an accounting problem. the chairman in his analysis, if you take all that off, means we don't have to consider current law in our budget. that's kind of stabbing. i don't know how we would -- may want to change the budget process but we're in the middle of a budget process. if we were at home, home budgets. and someone said your mortgage is going to go down, even though you've anticipate ed what your mortgage payment is going to be for the next ten years, if someone says they're going to go down, you change what you were going to spend next year and the year after and the year after that. at that all this is doing, is acknowledging the reality of current law and how that affects future budgets.

the chairman of the budget committee just said he doesn't consider that process legitimate. nobody considers it legitimate but that is the process of the way the budget is determined and how we deal with it. you've done that. the president has done that. to his credit he is dealing with reality of both more savings, savings that that accomplishes, and the cuts that are not going to happen. so i -- i don't know how we begin to have a discussion about baseline when the chairman of the budget committee just denied the way we do it. anyway. want to take the next 2 1/2 minutes just to quickly ask you what i think is what is on the minds of most americans. which is, how the president obama and moves forward in the budget in making sure we grow this economy. and we don't do anything to hurt this fragile economic growth. maybe even more importantly, makes critical investments in the future, particularly in growth industries. so i wanted to just take a couple of minutes, if you would, to talk about the critical investments that are made and everything from basic research

on energy and life sciences to investments in innovative industries and advanced manufacturing. these are growth industries in our nation. we're excited about the increase in manufacturing that's happening in this country. but this is so important that the president is making clear investments in an inventive sector, going to create jobs for americans right now and into the future. and if not done, could seriously hurt our economic growth in the future. >> agreed. we are seeing the signs of recovery. but we've got a lot of work ahead. 8.3% unemployment is completely unacceptable. the president is making investments to continue the job growth. it starts with the payroll tax holiday, which i know you're making progress on. extending unemployment. fixing, as you said, sgr. the president looks forward to signing something soon. >> we would like to fix it permanently. >> that's a different conversation but let's get it done. let's get payroll tax holiday done so there is not a tax

increase on 160 million americans. it starts there. there is a call for an immediate $50 billion investment in infrastructure, which i think is important both for jobs and for global competitiveness. on manufacturing, we are seeing manufacturing job growth which is great. manufacturing jobs are great jobs. well paid jobs. they have great spill-over effect to other service jobs. there are investments in this budget to continue r&d around manufacturing, particularly at nist and other agencies. continuing to do research around clean energy and at the same time encouraging manufacturing companies to locate here and manufacturing here. there are tax incentives to manufacturing to do manufacturing here in the united states. you mentioned health care even in this difficult environment,

we are maintaining nih's funding at increasing the number of grants. >> thank you. all extremely important to our economy. thank you. >> thank you, mr. chairman. i'm tempted to ask you if you were drafted for this job or you volunteered, but i won't go there. because it's a tough job that you have. i know that. i appreciate you today to present the president's budget. i'm also fascinated by this discussion we have and we get into baselines and all this kind of stuff. the american people really don't care about baselines but i do find it interest that you're eyeing to use oco savings when there is not an account in treasury with all this money in it that we're doing to save and not spend. that's the reality. as i remember, it was the bush administration that signed the status -- what was it, the status force agreement, and we've known oh we were going to be coming out of iraq for a number of years. so to count a continued effort as we have had in the last several years for the next ten years and then say we're saving it is just phony, which a lot of this budget is, quite frankly.

i'm just a simple guy from idaho. what the american people want to know is how much deficit are we going to add to our current deficit if we were to pass this blueprint this year, which i understand is $1.3 trillion. how much would it be at the end of the ten-year cycle which i understand is going to be still around $750 billion. what would the total deficit be at the end of a ten-year cycle if we adopted the president's spending plan? point one. point two is the point that mr. garrett made. every budget i've seen except the ones propose bid this president, previously and this year, never put a target out there of when we expect the budget to be balanced. and you ought to at least present a budget which says, i don't care, 50 years from now, make it some time, but tell us when, if we adopt this spending plan, when we will achieve a

balanced budget. and quit adding to the debt. the question i have is, does this administration really care about deficits and debt? they talk a lot about it but their budgets don't reflect that. and i also hear a lot of talk about simpson bowles, which i support, but you know what? this administration walked away from it. >> well, there's a lot of lines and let me try to respond and i will do it quickly, mr. chairman. first of all, i'm honored to be in this job and i'm honored to serve this president and honored to present this budget. on oco, i made the points, i'll repeat them. it closes the back door. i think we all agree that cbo is our referee cbo scores it as to savings ziemt what back door? >> the back door for discretionary spending. second, on deficits, i don't think you want to look at this in nominal dollars. no one thinks a dollar today is worth a dollar tomorrow. so i would rather have the dollar today than tomorrow.

let's pivot to gdp. >> no one cares about that. they care about what the dollar amount is that you are creating deficits. >> at the end of the day -- >> the constituents talk to me don't say, as a percentage of gdp what is our debt going to be in den years? >> as a percentage of gdp -- >> how much are we spending and how much are we going in debt and are we becoming greece? this plan is greece's plan. >> let him answer. >> right. >> i mean, i think what you're seeing is declining deficits in real dollars, which is the right way to look at it. you're seeing debt stabilize as a percent of gdp. we are hardly greece. look at our interest rates. people want to invest. people will continue to invest. this budget achieves significant savings in the ten-year window. it is a step. it's an important step. there's more work to be done. and president has shown his leadership and his willingness to work with congress to achieve deficit reduction and let's start by getting this budget,

the policies in this budget enacted into law. that's a good -- we will achieve a good milestone by doing that. >> you do a great job of trying to defend it but i tell you that this budget leads us to greece. at some point in time, we have to balance this budget. and i don't see this administration taking any steps to do that. yes, they make little savings there and little savings here and make phony comparisons against a baseline that they've created and say that we're saving money when we're not. i will tell you that the american -- >> we are -- >> -- are fed up with this. >> -- we are not greece. >> i'm fed up with this. >> we're not grease. >> we're not greece yet. >> we're not going to be greece. this budget achieves a sustainable level of debt as a percent of gdp and we'll make sure that this country. continues to be a great place to invest in. i believe in this country. i believe in our workers. i believe in our competitiveness and the president's budget supports it. >> so does everyone in here. the rhetoric, i wish the budget matched the rhetoric you put forward. i appreciate you being here, because you've got a tough job.

>> thank you. >> mr. blumenauer. >> thank you, mr. chairman. appreciate your being here. >> thank you. >> it's interesting for me, just as i have two points of reference as i listen to my colleagues go back and forth. one is to look at what is proposed on this by the presidential candidates running for the republican nomination in terms of more defense spending, no revenue adjustments, and even people like george will pointing out that it's just an absolute fantasy land and it will be fun to watch in the unfortunate circumstance if you have a

romney budget here, and some of you are sentenced to the budget committee again, reconciling what he was talking about with this impassioned rhetoric. when the republicans were in charge with the bush administration, republicans, what we were presented every year looked better because it wasn't anywhere near an honest budget. i really commend you and president for not being in a fantasyland that somehow these overseas adventures are unforeseen, supplemental funding. it's free money, congress. that somehow we're not dealing with alternative minimum tax, that we're not dealing with the sustainable growth rate for medicare reimbursement for physicians. if we did the fantasy budgeting that my republican friends accepted and, in fact, participated in with the bush

administration, this $700 billion number would look more like, what, under $200 billion if you engage in fantasy budgeting which didn't bother people when republicans were in charge. i appreciate your laying it out. i appreciate the notion at looking at some longer term investments because you could not be more right. we're not greece. and the world would not be lending us billions of dollars at very low interest rates if they thought we were even remotely. so that our challenge is how do we move forward over the next ten years to start bending the cost curve. >> yes. >> and i think you've got a number of things here that presumably, even republicans and democrats can agree on. i would like to zero on one, where there's been some support around this table, the chairman and i have worked on some

agricultural reforms in the past. and they were even part -- one of the good parts of the budget. the administration proposes reduction in agricultural subsidies. i wonder you could elaborate on that a little bit. >> absolutely. i mean, it is a time of strong profitability in the farm sector. there are direct payments go to some farmers, even though they're not producing. crop insurance, the returns, the irr on crop insurance is too high. so there are opportunities to save about $30 billion by getting rid of these unnecessary subsidies and, at the same time, you know, continuing to be -- have a very competitive agricultural sector. that's part of the savings that i mentioned that were part of the other mandatory savings. >> well, i think this is an example of where maybe we can

stop sort of the posturing. we'll do some political posturing. we've done it before, we'll do it again. this is an area where i think the administration has outlined something that ought to be able on this committee can get behind. we have a farm bill that is expiring september 30th. we can move forward with actually more substantial savings. >> the exact number in the president's budget, i wasn't off by much, is $32.3 billion, real money, that i think makes sense to put into law as soon as possible. >> i would hope, mr. chairman -- >> i think that's the one thing we agree with him on. >> -- that this is something that the committee might roll up our sleeves and do some work this year providing budget committee leadership. i know you believe in this. the administration believes in it. >> the only thing i would say --

>> sorry. we're fighting sort of a juggernaut on the floor but this is something we ought to be able to set our sights on, deliver some real savings, show that we can work together and do something that will help the american public and actually are help more farmers. >> if i may just make one point. i do think it's important that as we work together and achieve real deficit reduction, we do it in a balanced way. so it's important to find savings in agricultural, it's important to find savings in health care. it's also important to get revenue. >> thank you. >> this budget has $2.50 of spending for every dollar of revenue. we need to maintain a balanced approach and not cherry pick here and there. >> time constraints. i appreciate it. obviously we disagree with that number. mr. calvert. >> thank you, mr. chairman. i know mike left but i want to certainly associate myself to his remarks. i really do, looking through

this budget, i think it's a lack of leadership that's put us on an unsustainable path, that if enacted would lead to this country's economic demise. that's why there's little support in the house for this, there's little -- no support for it in the united states senate. and i suspect very little support throughout this country. thankfully there is a lot of people in this room and throughout the country to make sure this doesn't hold. and you know, i think the budget we've done here is a responsible budget. at least it puts us on a pathway to economic insolvency. sol veins i. and i want to congratulate the chairman and the committee for the good work we're trying to do to keep this country fiscally sound. i also serve on another committee so i want to get into some other issues. on the issue of defense acquisitions, i serve on the defense house appropriations subcommittee with my good friend

mr. pull, and obviously we're looking at how to do the acquisitions. as budget requests delays and restructure several major acquisition programs, including the joint, strike fighter, army ground combat vehicle, and the replacement for the navy's ballistic missile submarine. you're claiming that these delays will save taxpayer money. historically, stretching out to these defense acquisition programs to those reduce costs or are you just shifting those costs outside the budget? >> i'd like to start with your comment about our economic demise. maybe i'm just more optimistic about this country but i think a budget that puts people back to work and at the same time puts us on a sustainable path to deficit reduction -- >> claiming my time. i'm optimistic too because i know your budget is not going to