quite clearly, don't think that's important. they don't think it's important to balance the budget in fact advocate levels of sperchding that would make it impossible to balance the budget. isn't that important enough to have a debate and ask people to go on record and start to build on these ideas and hopefully use that to arrive at a consensus at some point? how are we of going to reach that consensus and get to a resolution of this problem if we're not willing to have that debate, cast those votes and move forward in a sensible process jie just want to say i am very, very disappoint woor not going to have a meaningful discussion, we're not going to have votes. we're not going to have alternatives on the table today, but i intend to take my alternative budget to the senate floor and at least hopefully have a debate then. >> well, i think today is going to be a very unfortunate charade. this is a total about da kafgs lead sherp on the part of the democratic party and the part of

the president. face it, his budget lost 0-97 to the senate. last week, 0-414. the american people really need to understand how -- amazing that is. that when we're facing a financial crisis, the size we are in this country, that the president fails to lead and the democratic senator fails to lead again. i've been involved in private sector 33 years. this is the first time that i've been involved in a financial ent they doesn't have a budget. face it the united states of america is the largest financial envy of the world. i really want the american people to look at the fact that the democratic party refuses to put their fingerprints on any kind of plan to solve our fiscal situation, and that's incredibly unfortunate. thank you. >> this has just been an absolute failure of lead sherp, and

-- leadership and it starts at the top wit president of the united states. we know when the president was asked about the failure of the senate to pass a budget for over three years he said he had no opinion on it. can you imagine the president of the united states has no opinion on whether the united states senate, his party, the democratic party in charge of the united states senate, should have a budget for this country. well, i ran for the united states senate to get our fiscal house in order. i have two children, and i know if we don't address this debt crisis now, that it's not just about us. it's about the legacy of debt that we are burdening our children with, and so i would say, mr. president, where is your leadership? you have no opinion that the united states senate budget committee won't do a budget? your own budget failed, as senator johnson said, zero votes in the house of representatives. 0-414. and finally we have a majority leader in the senate, the democrat-led senate by harry reid who last year said very clearly he thought it would be

foolish for the united states senate budget committee to do its job and for us to pass a responsible fiscal blueprint for this country, a budget. that's what every american does at home, in our small businesses, and this is just absurd. you know, if you can't pass a budget, you should be fired. and i think that the president should be fired for failing to lead on this issue, and i also think that the democrat senate in terms of the majority leader should be fired, because if you can't get the basics of putting a budget together for this country, then you don't deserve to lead this country, and that's what this salve todis about tod. we're about to go into a budget hearing that's a sham. why have a budget dmt you're not going the basic of budgeting for this country? >> your predecessor supported simpson-bowles and you signed a letter embracing some of the con

tep concepts of zb zchblgsimpson-bo >> what we're voting on today is not simpson-bowles. circumstances are different than at the time simpson-bowles came forward. we're not even voting today, so it's a sham. i have said and will willing and signed on to sit down with anyone when it comes to coming up with a minimum of $4 trillion of debt reduction over the next ten years. i think we need to do more. the house of representatives came up with a blueprint that does do more for this country. i'm willing to sit down with anybody on the other side of the aisle. certainly, this is a joke and a sham. i don't think this is the right way to do things. >> i wanted to make one final point. the democrats control the committee. they can pass a budget. it's oftentimes misrepresented that the republicans can block a vote on the budget on the floor of the senate. we can't. the democrats have enough votes to pass a budget. they should get their act together and they should fulfill

the responsibility and pass a budget. thank you. >> we have to go to our -- [ inaudible ]. remarks from the senate budget committee members, including ranking member jeff sessions. other committee members holding a briefing ahead of the budget committee's meeting on the budget proposal from share senator kent conrad knop votes expected today during that meeting as this is not an official markup, as you heard. senators will simply offer opening statements. that hearing is about to get underway. we are now in the hearing room. live coverage here on c-span3. >> -- different parties are available. and members will be recognized for statements from five to seven minutes. amendments will not be in order today. the mark will not be before us as is the tradition of this committee until the end of our opening statements today.

i did break from tradition by providing the ranking member yesterday roughly 24 hours in advance. i think a little less than that as it turned out. the outline of the mark that i will be releasing later today so that hopefully members will have a better idea of what they're talking about with respect to their opening states. so we did break from tradition by giving the ranking member the outline of the mark yesterday. as i announced yesterday, i'm going to lay down as my chairman's mark the bipartisan fiscal commission plan. also known as the bowles-simpson plan. a plan which i believe represents the best blueprint from which to build a bipartisan deficit reduction agreement. but i am proposes it's not part

sn subpoena i'm not t partisan. trying to break from business as usual that's going on for too long. i'm hoping my senate colleagues will be open to finding a path forward that can bring us together before we face the expiration of all the tax cuts from the bush era and before we face the imposition of the sequester. the only way this can happen is if we find some way to come together. and i know it's difficult. i want to emphasize, we already have a budget in place for this year and next. so we are in a different position than we usually are with respect to a budget resolution. last year instead of a budget resolution congress passed the budget control act, which is an actual law. it states clearly that the

budget control act shall apply in the senate in the same manner as for a concurrent resolution on the budget. for fiscal years 2012 and 2013. so we have spending limits in place for 2012 and 2013. the budget control act also provided for ten years of spending caps providing $900 billion in saving over that period. and create add special committee to reform social security and the tax system and the budget control act said if the special committee did not succeed, there would be an additional $1.2 trillion of spending cuts imposed at the beginning of next year. the so-called sequester. because the special committee did not reach an agreement, those additional cuts are now in the law.

so a total of more than $2 trillion of spending cuts was provided by the budget control act. that is the biggest package of spending cuts that i can find in the history of our country. and all of those cuts are now in law. and a law is much stronger than a budget resolution. as all of us know here, a budget resolution is purely a congressional document. it never goes to the president for his signature. a law, like the budget control act, was passed not only in the house and the senate, but was signed by the president. so it is the law. what we do not have, and the reason why i think it is important that we find a way to negotiate a long-term budget agreement, is we don't have a long-term budget plan. that's what we must now work to achieve.

the fiscal commission budget plan, which i am presenting today, provides a comprehensive and balanced deficit wee duction framework to build upon. it is not perfect. but it does represent middle ground. it brings the deficit down from what it would otherwise be, and it brings the debt down from what it would otherwise be. and it does so in a responsible, fair and balanced way. it protects the most vulnerable. it phases in changes to avoid harming the economy. and it includes savings from across the budget, including from entitlement reform and from tax reform that raises revenue by lowering rates. i recognize adjustments will have to be made to that plan, because what i am putting before the body is the original bowles-simpson plan. obviously, things have happened in this two years for example the budget control act.

so we know adjustments will have to be made. that is going to take time. and those adjustments will have to be negotiated. and those negotiations, i think, are critically important to take place before we get to the end of this year when we will face the expiration of all the bush tax cuts and the imposition of the sequester. i intend to give members of the committee an extended period to evaluate my mark, and as i review this plan, i hope to hear back from members how they think we can maximize our chances of successfully reaching a bipartisan agreement. there's nothing i would like more than to reach an agreement on a long-term plan right now, and it could be that outside events such as a crisis overseas will drive us to come together

sooner than we might otherwise. i'd certainly be open to reaching conclusion sooner if that's possible, but i am a realist and i recognize the chances of that are slim. many have suggested will not be able to reach conclusion after after the election. it may be that all sides find it difficult to move off their fixed position before a national election. i wish that weren't the case, but it probably is the case. but we are going to have powerful, motivated factors pushing us towards resolution. the expiration, as i've indicated, of all the bush era tax cuts, and the potential imposition of the sequester. let's remember that the original fiscal commission panel was structured to have a vote after the 2010 election. it was structured that way for a reason.

senator gregg an i believed that it was critically important to have the vote and the votes when there was the greatest prospect of actually getting a result. and we concluded the best chance was right after an election. that is what i am hoping to replicate now. by presenting the fiscal commission plan as a budget resolution, i'd hoped we could be ready with a bipartisan plan later this year. it is going to take an enormous amount of work. all those who served on the commission, it's special committee, all those who serve in the group of six or what is now the group of eight i think know, these things can not be done in a matter of weeks. the ground has to be plowed now. we are borrowing almost 40 cents

of every dollar we spend. that is the hard reality that we confront as we meet here today. that is not sustainable. gross federal debt is expected to reach 104% of our gross domestic product this year, and then continue rising to 119% of gdp by 2022. many economists regard anything above the 90% threshold as the danger zone. and the long-term debt outlook is even more dire. the reality is that we face both a spending and a revenue problem. spending is near its highest share -- its highest level as a share of the economy in more than 60 years, and revenue is at or near a 60-year low, as a share of our national income. both sides of the ledger, i believe, are part of the problem, and will have to be part of a solution. we also know the american people

support a balanced approach to deficit reduction. in a pew research poll conducted in november, people were asked, what is the best way to reduce the federal budget deficit? 17% supported cutting major programs only. 8% supported increasing taxes only. 62% said we should do a combination of both. the fiscal commission budget plan does just that. it cuts spending and it raises revenue through tax reform. it does exactly what the american people are asking us to do. it is the kind of plan i believe the american people, when fully briefed on it, will support. the guiding principles and values of the plan as they were outlined in the original fiscal commission report were as follows -- one, we all have a patriotic

duty to make american better tomorrow than it is today. that we shouldn't disrupt the fragile economic recovery. that we should cut and invest to promote economic growth and keep america competitive. we should protect the truly disadvanta disadvantaged, we should cut spending we cannot afford, no exceptions. that we should demand productivity and effectiveness from washington. that we should reform and simplify the tax code. that we shouldn't make promises we can't keep. that the problem is real and the solution will be painful. and that we should keep america sound over the long run. here is a brief overview of the fiscal commission budget plan that i am putting before the body today. it includes 5.4 trillion dollars of deficit reduction over ten years. including savings from last year's budget control act. it lowers the deficit from 7.6% of gdp in 2012 to 2.5% in 2015,

and 1.4% in 2022. so it takes the deficit down well below the 3% of gdp level that is widely viewed as sustainable. it stabilizes gross debt by 2015 then low ares it to 93% of gdp by 2022 putting debt on a clearly downward trajectory. it reduces overall spending to 21.9% of gdp by 2022, and it reduces discretionary spending to an historic low of 4.8% of gdp by 2022. it builds on health care reform, but adds additional savings. and it fully offsets the doc fix preventing a dramatic drop in medicare payments to physicians who treat medicare patients.

it calls for social security reform that ensures the 75 year solvency of social security and calls for social security savings to be used only to extend the program's solvency, not for deficit reduction. finally, it includes fundamental tax reform, tax reform that will make the tax code simpler, fairer and more efficient, while raising additional revenue. the next chart shows the deficit trajectory under the plan as i noted, it brings the deficit down to 1.4% of gdp by the end of the decade, well below the 3% level that is viewed as sustainable. it stabilizes the debt as i indicateed by 2015 and begins to bring it down steadily after that. over the ten years of the plan, spending averages, 21.8% of gdp, which is actually below the level that we experienced during the reagan administration. the plan brings discretionary spending. those funds appropriated by

congress each year, down from 8.4% of gdp in 2012 to an historic low of 4.8% by 2022. i think we all acknowledge that health care spending is the 800-pound gorilla. although health care reform adopted in 2010 made progress in changing health care incentives, in bending the cost curve, rising health costs remain the single largest factor contributing to the nation's long-term fiscal imbalance. in 1972, medicare and medicaid and other federal health spending totaled only 1.1% of gdp. by 2050, by 2050, that federal health spending could grow to more than 13% of gdp. and we can see that medicare represents the fastest growing portion of that spending. of course, it is important to remember that rising health care costs are a problem in the private sector as well.

this is not just a medicare or medicaid-related problem. like the original fiscal commission plan, the plan i'm presenting today does not reopen the health care reform debate. instead, it builds on health care reform by providing additional health care savings. it provides an option to phase out the tax exclusion for health care. a step the congressional budget office has said would be one of the most significant steps we could take to bend the cost curve on health care spending. as i noted before, it fully offsets the docfix. to offset costs it includes savings proposals such as medicare beneficiary cost sharing, reforming payments of health care providers, eliminating state gaming of the medicaid tax, and extending the medicaid drug rebate to dual eligibles in medicare part d. while the fiscal commission budget plan calls for the same

social security reforms as the original fiscal commission plan, it does not include in its numbers the savings from those social security proposals. that is because, as everyone on this committee know, the congressional budget act of 1974 the law that established the budget process, prohibits the inclusion of social security and the deficit totals of a budget resolution. so social security reforms will have to be considered separately. however, the fiscal commission budget plan does include a policy statement that supports the original fiscal commission recommendations regarding social security. it calls for social security reform that reforms social security to make it solvent, not for deficit reduction. all the savings from social security go to extending the solvency of social security, none for deficit reduction.

it restores the 75-year solvency of social security. it strengthens the safety net with an enhanced minimum benefit for low wage workers. a bump up in benefits for our oldest seniors, and the longtime disabled. and a hardship exemption for those unable to work past 62. all of these were part of the original bowles-simpson proposal and i've carried them through to this proposal. it gradually increases the maximum level of wages taxed for social security and raises the retirement age, but only very gradually, reaching age 69 by 2075. with respect to the enhance the minimum benefit provision, i received a commitment during the fiscal commission discussions that it would be better targeted to protect low-income b beneficiaries and i am committed to seeing that provision improved.

the fiscal commission budget plan also includes the fundamental tax reform that was included in bowles-simpson. they need for fundamental tax reform could not be more clear. the state of our tax code is simply indefensible. it's out of date, inefficient and hurting the competitive position of our country. as everyone has been filing taxes in recent days knows, the complexity of the tax code imposes a significant burden on those required to file returns. expiring provisions create uncertainty and confusion. the tax code is also hemorrhaging revenue from the tax gap, tax havens and abuse of tax shelters. we also need to restore fairness to the tax code. the current system is contributing to the growing income and inequality in the country. and finally we need tax reform to help with the long-term

fiscal balance. revenue is part of the problem and must be part of the solution. adopting comprehensive tax reform allows to us compete better in the global marketplace. how our cbo director mr. elmendorf described the economic benefit of tax reform in his testimony before this committee, and i quote him -- i think analysts would widely agree that the reform of the tax code that broadened the base and brought down rates would be positive force for economic growth, both in the short term and over the longer period. tax reform can also help address the growing income inequality in the country. in recent years we have seen that gap grow. since 1979, the real after-tax household income for the top 1% has grown about 275%. over the same time period, the income for the middle quintile has grown about 35%. our tax system, i believe, is

contributing to this income inequality. it's not the only factor. there are many others. globalization, and so many others, but i think we have to acknowledge the tax system is part of it. tax expenditures, the countless preferences, credits, deductions, exclusions, added that benefit those at the very top. in 2011 the top 1% of taxpayers received an increase in after tax income of almost $220,000 from tax expenditures in comparison to the middle quintile received about $3,200 from tax expenditures. by scaling bag some tax expenditures and they're now more than all of the appropriated accounts, by scaling some of them back we can simplify the code, vastly improve the economy's efficiency and effectiveness and help restore fair inside.

conservist and youer president reagan described the benefit of reducing tax expenditures in an op-ed in the "wall street journal." and i quote from martin feldstein. cutting tax expenditures is really the best way to reduce government spending. let me repeat that. reducing tax expenditures, or cutting them, is really the best way to reduce government spending. eliminating tax expenditures does not increase marginal tax rates or reduce the reward for saving, investment or risktaking. it would also increase overall economic firnlt sefficiency by removing incentives to distort private spending decisions and eliminating or consolidating the large number of tax based subsidies and greatly simplify tax filing. in short, cutting tax expenditures is not at all like other ways of raising revenue.

we also know that we need more revenue. some of my republican colleagues have argued that revenue should not exceed 18% of gdp. the average over the last several decades. but on the five occasions when the budget was in surplus since 1969, revenues have ranged between 19.5% of gdp and 20.6%. and we will likely need a somewhat higher level in the future because the country faces an unprecedented demographic situation wit retirement of the baby boom generation. fiscal commission plan includes the kind of fundamental tax reform that i believe needs to be adopted. it eliminates or scales back tax expenditures and lowers tax rates. it promotes economic growth and improves america's global competitiveness. makes the tax code more progressive. notably, the commission's report included an illustrative tax

reform plan that demonstrates how eliminating or scaling back tax expenditures can simplify the code while low aring rates. instead of six brackets, it includes just three. 12, 22 and 28%. the corporate rate would also be reduced from 35 to 28. capital gains and dividends would be taxed as ordinary income. that is part of the original bowles-simpson plan. although a differential could be maintained if it were bought up with a higher top rate. the mortgage interest and charitable deductions would be reformed better targeting those tax benefits. the child tax credit and earned income tax credit would be preserved to help working families. and the alternative minimum tax repeople pd overall the fiscal commission plan would increase revenue to 20.5% of gdp by 2022.

over the ten years -- i'm almost done. i appreciate your patience. this is -- i know, a lengthy presentation, but there's a lot here. over the ten years, revenue under the plan as i indicated would average 19.7%, roughly the same level as during the clinton administration, when we experienced the longest period of uninterrupted economic growth in the nation's history. and 24 million jobs were created. in dollar terms, compared to the alternative baseline provided the plan, it includes 2.4 trillion in new revenue over the ten years. compared to a current law baseline, it represent as 1.8 trillion dollar tax cut. so compared to current policy, it represents an increase of revenue of