the sequester? >> we started in terms of building the budget resolution. started with cbo's cbo has the -- the -- the medicare sequester in its base line. again that would be something the committees would have to deal with in, in, as they go through the process of implementing it. our overall numbers, went assumptions, in terms of what our savings are. >> i did not have an assumption, reconciliation, fixing the sequester. it applies to discretionary sequester. >> okay. income security function 600. before i go there, i want to ask committee if you have any questions now. i can come back to the remainder of it. ms. schwartz. >> thank you. iant to appreciate the ranking

member q a couple mai sure i had heard what your answer to a one. because the budget repeels the health law we passed, the affordable care act, the opportunity that is taking place tohe donut hole, prescription drug coverage and seniorsttinefirst ch t$250. know it is $500. this year and gradually w presc drug coverage. because the -- this, the budget assumes repeal of the, the law. that would go away. those dollars, that cost, would then be shifted back to seniors. is that correct? >> assumptions are the savings from affordable care act in the

medicare area should not have gone to expansions in other entightmetlement programs. >> that's the same program. >> devoted to the savings in medicare should not use subsidies in medicaid and so forth. they should be devoted to medicare and deficit reducts. the budget assumes the expansions in the affordable care act are repealed. how that is implemented beyond that will be up to the ways and means and energy and commerce committees. >> they can decide they will find money elsewhere in the budget that would meet the additional f coverage for medicare country, three very specific expansions as you call it under medicare. one was that the donut hole was going to be os real benefits. additional expansion as you call

them benefits for, from, prescription drug coverage. they no longer have to pay the 20% co-pay for preventative and that you consider an expansion and goes away. the attention to primary care, patient centered medical additn expansion under, medicaren particular, but there are others you expansions, inappropriate, they're going away. sometime in the future the committees could change their hey could find the money. but under this budget the assumption is that is an expansion, that was a bad idea, >> yes, the chairman assumes repealed. in terms of. >> those benefits go away. >> in terms of specifics we can go through individual assumptions. the budget committee doesn't determine what happens with the donut hole and the assumptions the we set an overall number.

resolution sets overall numbers. the committees of jurisdiction determine the details. >> again because theea affordab will be now the assumption news be that that those expansions will,ques but clear those will be repealed? and again, committees could decide to dootr. just really on tha also assumes00 billion in, savings under the -- under the affordablehose savings, or, some times referred to last year as cuts to medicare, they remain in the budget? they're accounted for in the budget at savings. $500 billion. >> we assume the savings and devote them to solvency oft red instead of covering anplace. there has been some confusion about that, in the public, i

wanted to be clear that that remains. and, i did clear, follow up, the chairman asked about, the 1% increase if increase as you poundthisystem insurance companies deep side to spend more, charge more than the 1% of the government would no longer pay more than 1% of gdp. that's what you said before. that you would cap it at 1% whu difference. government wouldn't. saves dollars for the government. who would pay those -- assume it's not defined in the budget who would pick up t is there any prevention? is there anything in the budget that doesn't allow the private insurancee more to beneficiaries or competitivd bring us well within the .5% above gdp.

>> if it didn't? would be capped at that level. it is the same thing with respect to how the president's proposal works. the ipipap has the same issue. not clear. how it will achieve the savings. >> you embrace the t thuout thet to be made to seniors. if insurers decide they will charge more that shift is made to our seniors. i did want a question. i will have to yield back at this point. [ inaudible ]

>> the medicare savings go towards solvency of the program, not expansions.inaudible ] >> yes, sir. >> thank you. mr. chairman, i just want to understand how you treat transportation. under this bill, you get a sense of exactly how much is going to be available if were some how to be enacted. would be available for transportation functions? >> yes, well the transportation function we can go through and make comparisons overall unterms the duction.in transportation, is highway, transit programs. and they're financed by fund. and under current law that trust fund is going to become

insolvent in thoming fiscal year, 2013, covered by the budget resolution. as a result, the budget reflects a policy t t highway, programs and transit programs, should be as it has been, intended when the program was first created, user fee financed. we start with that assumption, that we're going highway expenned chur expenditu revenue coming into the highway program. next we assume three things in the budget. fiin there have been general fund transfers. amounted to $35 billion intohig. right now, there is, those aren't recorded as a cost. we think they should be recorded a rorded as a cost go second thing we do is -- the budget resolution assumes --

expansion, in oil and gas leas u.s. has huge resources, energy resources. the federal government is the largest landholder in we assume additional proceeds from that -- th activity will g into the highway trust fund. awe how much is that assumption? >> we rely on cbo estimates. recollection is $4 billion over the 10 year period. while for those lands to become available and -- and -- and cbo, we think conservative on their estimates. we use cbo estimates here. there is still going to be a large short fall which is, in the program. as a result we create a mechanism. a reserve fund. the chairman has t aggregates i budget resolution, committee allocations and so forth to

ensure the legislation comes along that other ways of jaut soffsetting the sh highway and transit programs. >> what i would look to understand -- how much money under this proposal would be guarantees for the transportation functions next fiscal year? >> what's our total? >> our total level for function 400 for fiscal year 2013 is $57 billion. total outlayings are $49 billio013. >> how does that compare to what we spent this year?

>> spending is $89 billion in budget authority. and $92.7 billion in outlays. >> okay. $92 billion this year in outlays. $89 billion budget authority. you would talk that done to $57 bin authority. and about $50 billion in outlay. >> correct, yes, sir. >> thank you. >> thank you. >> this is one of the areas in the budget we werei want to makd it. so, your budget presumes,

compared the level of transportation funding in this fiscal year, outlays, you will reduce that by whatever, $40 billion, $50 bill fiscal year is that correct? >> yes, sir. >> have you done any ys that wo on -- projects that are -- ongoing? >> the trust fund has a -- is right now, expenditures are well above revenues. bankrupt in fiscal year 2013. if congress doesn't take action, it's going to start having to make dramatic reductions under current law to rebalance, bring spending down in line with revenues. so as i mentioned before. the chairman's mark has a policy to donis, one is a reserve fund that allows if congress findsti that can be used to increase, to

avoid reductions from occurring. >> just so i understand. your budget changes will not occur. is that right? >> the levels reflect current law. but the budget resolution policies are to present revenues, oil, gas exploration. it will take time before thatan there are additional savings found they can be used to offshoffset the short fall and allow the highway program continue at the level. >> but it assumes for purposes this budget it assumes that there will be the billion. for oil and gas. assuming will be available? >> yes, that $5 billion, $5 billion is, we defi

reduction. program and offsets the short fall. yes, partially. i shouldn't have said that. >> so, has cbo scored that particular -- proposal? >> we have been working with the re complicated area in that the contract authority for the program is controlled by the authorizing committees. tni committee. it i -- that the states ultimately manage it. the outlays on the other hand are controlled by the proech appropriations committee. they set obligation ceilings the we have been trying to get a sense, or assess what happens under current law and budgetary impact. the chairman's mark is designed to reflect that. >> i guess i am also asking, with respect to the

you assert is generated from the oil and gas -- royalties. whether or not, cbo has scored that particular provision. >> we gave them assumptions. the estimates on our -- oil and gas exploration are based on estimates and based on assumptions we gave them. >> are those assumptions available? >> let me just check. i've think we can. i want to double ch that. in terms of what the specific exploration t -- that -- of would be. i just want to double check on that. >> you understand what my question raises. distinction between a approxim and concluding what the reasonable -- reasonable amount of revenue generate would be th

of specific assumptions. and they just calculate mathematically how much revenue is generated. there is a fundamental approaches. >> i believe in the transportation bill. if the tni committee reported. resources committee report, had $4 billion based on specific language provisions. specific provisions of, of, of the bill.scored. that's what our estimates are based upon. >> yeah. >> before we finish this, but it just -- it would be, i think useful for us alllitt bit here.t there are, on the order of magnitude of 56 billion in outlays that are anticipated for 2013. that these are already legally

binding -- in - transportation and that, it was beyond the highway trust fund. there is a series of things. that -- contracts. no salaries. no new these agencies would committed to billions in commitments made in prior yearsy how -- executing a situation where height w of transportatio. they're bound they can't spend more than is available. executed. we don't know how that will happen. series of players. states. federal government, so forth. >> want to that there are in the department of transportation, therecommitn'tmy

program. you are allocating as i understand it $50 billion. there are $56 billion of that are scheduled. so that if you down -- no new programs. you are not paying people. you don't have enough to satisfy the obligations. notrying to track you.ad an that's just what i was told. i would like some help to understand the situation we have go assumptions in our budget resolution, transn function. by far the largest the highway program. there are other asumgtss. f -- there are some other assumptions we make. overall we have an assumption that the highway program would have to -- would have to act very, very quickly to stop

spng entire system. not just at the federal level. but also ll. for the programs they administer. >> yeah, it will in fact -- hammer our people back home who rely on this and their way. that we have all dealt with. but i will give you a copy of the article. again. it's from transportation weekly. they line it out. they sayit's $56 billion already committed. and you are telling us that youable hayou will have less than $50 billion available to satisfy these obligations. i think we ought to just know that. going forward to explain to our friend at home, what, what -- this budget next year. we are ghoing into a constructin cycle now.

i hope, against hope, that the house would actually approve the bipartisan senate bill that its significantly above this level, just for, for the transportation side. that has the god forbid some ne the house and senate, excuse at able to give people an answer as we are going into constru nexti would. if you just have some of your team look at this -- thisportat weekly. and help us understand what we are getting into. i would appreciate it. >> thank you so much. thank you, mr. chairman. >> i thank, my colleague. and i think this committee will what an opportunity later on tol the gentleman talks about moving forward on the bipartisan transportation bill. if i could go back to asking question as but ts about theunc.

where there is a savings$380 billion. i wonder if you could identify how you be achieved. >> the largest savings are -- in the savings are, two largest -- or s.n.a.p. ogs.n.a.p. we assume the program moves to a block grant in 2017, i believe. and grows with just eligible population and -- d -- the thrifty, the food inflation adjustment after that. the other large savings is in the area of -- in -- in resirement employees. civil employees.

i believe we have -- have 112 billion in ten year savings. through reforms in that area. we increased the match. assumption is we increase the match. federal employees pay levels that the federal government pays for their retirement, contributions that are made. minute on s.n.a.p. employees seem to pay for it in every bill that goes through the house these days. and i think that's -- a huge mistake. but i am just going to focus on the budget question here with respect to -- s.n.a.p. you block grant s.n.a.p. and make receiving it contingent on wor how ch do you -- assume wou be saved by -- by applying that condition. >> the two specific savings we have in the s.n.a.p. program

beyond -- block granting are, there is a -- a prgs i don't know if ted mccann can join me to provide detail. let me just get through this. >> there are two provisions outside of the block grant. we wouldnd categorical eligibility which allows for individuals to be automatically eligible for food stamps if the. that basically means if you receive a brochure or 1-#00 number, you would be eligible for food stamps under less restrictive eligibility rules. the reform requires individuals to be el juigible for cash assistance, rather than tanif

fund add cyed assistance. ending heat and eat. they're providing live heat checks. when they receive that individuals receive increased food stamp benefits. >> let me break this down. a little bit. how much are you assuming is being saved just by virtue of the block grant itself? $133.5 billion. over ten years. >> then how much is saved by the tanif requirement? >> that is the total estimate of all the savings, that would include categorical, heat and eat savings and block grant. >> since -- since job training is a condition of receiving s.n.a.p., am i right, you make that a condition? >> we, we wanted to -- replicate

the -- the reforms that were achieved in the welfare reform area in the 1990s. so we wanted to move more towards work requirements and so forth. ,000 we have built those assumptions into, into our budget. >> as you may remember that reform provided at that time, fund to help in work force training. so my question is do you assume since you make work force training a condifgs receiving food stamps how much do you assume in the budget will be spent in providing that work force training? >> food stamps has gone through a huge growth in the past -- i think it's quadrupled over a period of time. just an enormous growth. there have been a number of legislative expansions and so forth. at superintendenti

the assumption is to move to block grant, to make work and training requirements, in the case in programs we gave states flexibility team. it would be their al low kaloca deal with issues. i don't want to get in an argue just an answer. i'm understanding that this budget does not provide the states with any funds pew provide the job training that would be required as a condition of receiving food stamps is that correct? >> well, within food stamps would be addressed by virtue of the -- through the block grant. there are -- there are, there is federal government has a host of other job training programs. i think there are 49 of them. spread across several agencies. there as it nother reform in the chairman's mark to consolidate those, those programs, to better target. get better results from job training. >> that's the point. the answer is, you have the

block grant and work requirement and the job training requirement. another provision of the budget we prose to consolidate the 49 different various federal job training programs and career scholarships. we have a job training program in another part of the budget. to streamline, work/federal job training programs to go to individuals for career scholarships there is a job training program in the budget. let's not forget the fact that as a result of the 1990s welfare reform. new job training program were begun in those days as well. which are still in place. >> okay. thank you. okay, ms. schwartz. >> i will give you a break for a second. scum back come back to it. i wanted to ask a question on health care. one of the aspects of the budget is a -- a dra mmatic cut in medica medicaid. this has been explained as the

a, flexibility to our governors, to our states. and being able to do things med. states have quite a bit of flexibility under medicaid. set rates of reimbursement. some of those in our opinions are too low. made it very difficult. but the cults in tun cuts in tht at 30% and go almost, 70%, 75% over time. you may want to correct me on that. i understand it is $800 billion. a third, is the numbers that we have. if we are misreading that that would be a good thing. >> we don't make up 30% immediate reduction in medicaid. over, over the ten year period, medicaid, first is seeing growte program. then on top, a large expansion under affordable care act. i believe the block grant saf z

savings are $110 billiopen.ent? >> we could go back and find that out. >> numbers. 30%. about 30%. so i understand some of this is cutting as you call it expansion from affordable care act. one of my questions for you is, what standards, or is therethe the bunt th the budget that would suggest we are going to hold states and governments accountable for providing services under medicaid. many of us are worried about but as the you know, big costs ash in nursing homes and frail, sick seniors. talking abut that later. is there any way there is something in the budget that hold governors accountable, or states accountable for, continuing to provide support for seniors in nursing homes, very frail, elderly, disabled, or is that up to the government snores. >> so our assumption is that states would be required