companies are not building new factories. they are not expanding their factories. they're buying equipment, investment and the like has recovered, but investment in new factories has not recovered. it plunged and is at very low levels today. when businesses invest, they need to hire new workers, and so we need to get the business investment first which is why i suggested corporate tax rate cuts. i think there's been lots of mistakes. i think the extended unemployment insurance benefits artificially pushed up the unemployment rate. if you have unemployment benefits the last two years, you create this natural incentive for people not to make the tough decisions they need to to go out and find jobs. so, you know, i don't believe that the basic idea of keynesian spending stimulus works. we've had trillion-dollar deficits four years in a row now. even this year, the 2009 stimulus bill has basically already ended, but we've still got a trillion dollars of so-called stimulus with the federal government deficit. that's in basic sort of textbook

keynesian terms, that's stimulus. and yet look at the results. the results are still very high unemployment. so i don't think this model works. i think when the government spends more money, it takes money away from the private sector. i think the private sector is more efficient. so the bigger the government gets, the more you push down gdp and it just hasn't been working. >> i had an employer in my area tell me i don't care how much they give me in tax breaks, i'm not going to hire more people unless there's a demand, unless the economy is growing. and we see in europe the idea of austerity has put england into a double-dip recession. we see people all over europe under the yoke of this austerity mission. what we need to do in this country is work together on a bipartisan basis to do something about it. but everything that the president obama proposed the republicans opposed. and i haven't heard any jobs proposals from the republicans

except give people more tax breaks. >> well, mr. waxman, i appreciate that. i do have a question for you. >> okay. >> it would be great for you to defend a stimulus that's 13 million jobs short of what the president promised us. and i wasn't here. and i presume you voted for it. one thing that's bothered me on the regulatory side as well is this idea that -- and i want this question asked for you, because this question constituents ask me and they said congressman, do you think washington politicians and regulators can make better decisions than businessmen and women? that would be my question for you. >> it's a good question. there are things called market failures, and -- >> and there are things called government failures. >> let him answer the question. >> yes. >> there are market failures, and that's when government needs to step in. for example, if you don't regulate pollution, the waste disposal into the air would be free, the market provides no

incentive for polluters to control pollution, it imposes social costs on everybody in terms of disease and death that far outweigh the cost to clean up. the other area where there's a failure in the market is insurance companies. i have so many people tell me -- >> could you answer the question, mr. waxman? >> you asked me about -- >> i'm out of time. i'm wondering if you can answer the question. >> i'm trying to answer your question. >> yeah. >> the market failure of insurance for health care, people cannot buy it if they have pre-existing medical conditions. you can't blame the insurance companies because if they have to provide insurance coverage for sick people, they have to raise the cost of insurance for everybody. so the idea behind the romney plan in massachusetts and the obama plan here was to spread the costs out with a requirement that everybody participate. stimulus, either by tax cuts or direct expenditure, is what you need with a strong unemployment to get people back to work.

and that is what we needed to do. and i wish there were some republicans that would have helped. >> thank you. >> not a single republican in the house voted to help president obama -- >> thank you. i think you did answer his question, but i want to keep on time. mr. ryan. >> thank you, mr. chairman. we've covered a lot of ground here this morning, and i just kind of want to go back over a couple things, one, first of all weather the auto bailout and the government getting involved. the reason the government got involved is because there wasn't any private-sector money to help martial them through this bankruptcy. state like ohio, 1 in every 8 jobs in ohio is tied directly to the auto industry, and the manufacturing jobs, we would have lost a lot of those. and i will tell you that it was my republican car dealer friends who were coming to washington, d.c., weekly to tell us how we needed to do this. and i will quote here bob lutz

from general motors, the vice chairman, also happens to be a republican talking about some of -- other republicans letting the auto industry go belly up. he says sh "it's once again the fiction that we didn't need the government and this could have been a privately run bankruptcy with a normal chapter 11. what these people always deliberately forget is there was no money. nobody had any money." and that's why the government had to intervene. and for those of us in ohio, we are very, very glad that they did. also, there was an issue of -- and i think it is this balance between public/private partnerships. and the gentleman from indiana talked about the indiana turnpike. i think it's very important for those people who are listening to know that the tolls on the indiana turnpike have doubled in the last five years, because you're not only maintaining the road, you're not only making sure it's cared for, you also got to factor in some profits. so the tolls on the indiana

turnpike that have been privatized have doubled in the last five years. >> would the gentleman yield? >> sorry, matt. only got five minutes. >> all right. >> be happy to -- can't alter the facts, though, and those are the facts. the other thing you mentioned, governor bush, and i agree with you wholeheartedly, was canada and how they solved their problem by the liberals and the conservatives coming together to solve the problem. the issue in canada, though, is is that the conservatives in canada would be moderate democrats in american political system. and there is no question about that, as well. and so what we're trying to argue here is that it is going to take a balance, it is going to take both parties, and it's got to be a moderate approach like i think you probably espouse and like your father certainly espoused, as well. is that -- down the middle -- if you want to comment on that.

>> well, structural reform is not really ideological, but it did take out your entitlement costs and pension costs and modified fem them in a way that made it possible for them to reduce their size of their government as related to the size of the economy. now, i'm not sure that's a -- i don't know -- that's not a ideological thing, but it's reality checking. when you have structural problems, you've got to pause and deal with them. and many countries do that. and, you know, so i would disagree that conservatives are moderate democrats or moderate liberals or whatever -- >> nobody in canada said take away their health care for all the people. they said let's do some things on a bipartisan basis. didn't make sense. here we have proposals to cut the safety net out of the poor, take away the guaranteed benefit for medicare so that millionaires and billionaires can have tax cuts. that makes no sense to me, and i don't think it makes sense to

the american people. and the auto bailout was a success. why are we fighting against what was a success? >> i agree. let me just ask governor bush one question, because i think the debate of investments and what the role of government is today is i think a very important question for us. i know in the florida budgets when you were governor from '99 to '06, had went up significantly from $48 billion in 1999 to $74 billion in 2006. my question is just what were the investments that were made? what were the priorities that were given? and explain some of those increases. and has florida yielded some of the benefits from those investments that you made? because i've heard you talk about -- >> you have 30 seconds left so, if you ear going to ask him a big open-ended question like that, give him a second to answer it. >> the largest increase was our medicaid budget, which the federal government was our partner in increasing, and it

grew dramatically because we had no control over it. we did spend increased money in real terms on public education. we increased money on land conservation and things that -- the objective was to take onetime moneys as best as possible and spend them on long-term things. so we created a research focus of taking onetime moneys to spend over the long haul and brought five or six private research institutes from california. and so, you know, we did -- we prioritized. our government grew slower than personal income growth in the state. we had 22,000 fewer state workers in spite of the growth of the government. and i think our job creation in the state, not because of the government but because it was -- there were good times and we had a good business climate, grew faster than -- created more jobs than any state in the united

states, roughly about 20% of all the jobs during that period. so it was a different time than we're in right now. that's for sure. >> thank you. mr. riddle. >> thank you, chairman. thanks to the panel. get right at it. only have five minutes. mr. edward, if you had -- say the existing tax code disappeared and you had a blank piece of paper in front of you, would you tell me your top three principles that you would use as your guide in writing a new tax code? >> i would say economic efficiency, simplification, and visibility and transparency. economic efficiency. the key is lowering marginal tax rates, and the chairman's plan certainly does that, lowering rates down to 10% and 25%. simplification. the tax code is usually complex, especially for business and small business. that is just a compliance tax on the overall economy that doesn't do any of us good.

and transparency and visibility. i would take steps, for example, americans only see half of the social security and medicare tax on their pay stubs every cup weeks. so they don't know -- they only know half the giant costs of social security and medicare. i would make that visible on pay stubs. so that's the type of thing i would do. again, i would say the most important thing, economic efficien efficiency, lowering the corporate tax rate is the single most important thing we can and should do in this country. and, again, that has been a bipartisan reform around the world. i mean, even the the most socialist welfare states in europe, france and the like, have chopped their corporate tax rates just because of this real sigs that they want their businesses to do well in the global economy and we should do the same. >> just a quick follow-up on that. where does any corporation get the money to pay the taxes? where does that money come from? >> well, you know, of course corporate taxes are really -- the ultimate burden lands on

either workers, consumers, or workers for corporations. every economist left and right agrees with that. there's dais greemt about where corporations actually push down the burden. but in a global economy, the general rule is that the burden lands on the most immobile factor of production. the most immobile factor of production is labor. so economists more and more agree that the corporate tax burden ultimately lands on labor, american workers. and there's been studies by scholars and others that find that most of the corporate tax burden has the effect of lowering the wages of workers. ? thank you. governor, what would be your principles? >> those sounded pretty good to me. simple, transparent, and at a place that creates, you know, the most efficiencies for economic growth and for the government to receive the revenues that they need to do the big things. time and time again, you see

examples of higher rates not necessarily yielding higher revenues for government. so there is a point where there is a balance, you know, there's an efficiency, a place of efficiency where the rate will yield a greater amount and will create at the same time -- create economic activity, which ought to be the objective because a growing economy based on our tax code creates far more revenue for government. disproportionately more. >> can i do a follow-up question on that topic. if we reform the tax code to eliminate the expenditures, take the savings and apply it to a lower rate that is essentially the effective rate, which is what it is, have we really done anything to gain competitiveness, or do we need to go below the effective rate? >> oh, i think -- i think you -- the first thing that happens when you do that is that you're shifting power away from washington and the surrounding

areas where -- which is the -- probably the place of greatest economic prosperity right now. to -- back to rest of the country, where economic decisions are made by individuals that want to risk their capital and pursue their dreams. right now, you know, it's fun to go to dulles airport and drive by there. these are major companies that have huge growth, lots of construction, housing prices are incredibly high, income levels here are the highest in the country. and why is that? i'm sure that maryland has a great business climate, and so does virginia. but it's because this is a source of business now that is incredibly important for all sorts of businesses. so you would shift power away from washington. and i think you would have more economic activity if you simplified the code that would generate more revenues for the government. >> thank you. i'd just make one comment to congressman waxman. thank you for being here today. i know it's tough to come in here. but i would say you used the phrase that house republicans want to return america to the

era of robber barons. my take is that's a government that steals money from middle-class, hardworking taxpayers and gives it to rich bundlers like solyndra. thank you. and i yield back my time. >> mr. waxman? >> i don't think that was a question. it's his comment, and he has his views. >> just want to make sure, because you're in vote, out of fairness. who is next? i don't know if you know this. the gentlelady from florida. her name is miss wasserman schultz. >> we've met. >> yes, we have. >> governor. it's good to see you. welcome to the budget committee. i want to ask my question and frame it from my standpoint as a mom who's raising three young children attending the public schools in florida and also as someone who served for six years of my tenure in the legislature with you as governor. and the onetime moneys that you just referenced that were created to lure five or six

research institutes from california. and i do find some irony here that you're here today under the guise of removing barriers to free enterprise. while in office, you recall you spearheaded a deal to use more than $600 million in public money to lure the scripps research institute to build a facility in florida. now, as a state legislator at the time i remember being called into special session of the legislature so that we could pass a one-time $310 million gift to the scripps research institute from federal stimulus moneys that were allocated from florida. in fact, palm beach county anteed up about $269 million to pay for land and buildings for scripps. at the time, you were quoted as saying there is no better way to spend the onetime federal economic stimulus money than by investing in a project that spurs targeted economic growth. i was on the appropriations committee and remember distinctly questioning your staff and you about the importance of accountability with that investment. you insisted that wasn't necessary. i remember distinctly attempting through amendments that we could ensure that if the promised jobs

were not created that scripps would have to pay some of the funds back to the state. you opposed that and said it wasn't necessary. in spite of our strong reservations about this gift with no accountability at all to a private entity, democrats, including me, voted for scripps bill. >> mm-hmm. >> voted for the vips bill. >> i know you did. >> so we tried it your way. let me describe the result. as of 2010, scripps florida employed 377 people. that's $1.32 million per employee. the operation is projected to employ 545 people by 2014. that's over $900,000 per employee. in fact, estimates of the scripps florida deal and the promises of massive job creation were massively overblown. depending on which proponent you were listening to it would create 2,800 direct jobs after 15 years. but as of the end of year seven, scripps florida employed just 377 people. estimated spin-off jobs in other companies were largely

overblown. from 6,500 at the time to 40,000 or 50,000 were predicted. quoting directly from the florida office of program policy and government accountability, in fiscal year 2004 scripps had only created 615 full-time and part-time equivalents and in fiscal '07 it provided 1,327 jobs. in 2003, the year of the scripps passed in florida, there was a $40 million cut for state universities and the end of enrollment in healthy kids and children's health insurance program. given the employment numbers, far lower than projected, was it a good decision to fund private enterprise ahead of health care? how many low-income children could have had health care or students receive education assistance? this same policy is large in the romney/ryan budget plan which doubles down on a privacy that benefits large, private corporate earningses and the wealthiest americans and leaves the middle class and working families to fend for themselves. florida has had one of the worst

high school graduation wrat raitts in the country and half the graduates require remediation when they get to college. yet we're depending on a company to relocate rather than investing in education, which is the main draw for employers. this year florida forced universities to cut $300 million from their reserves d -- >> is the gentlelady going to give gentleman time to respond? >> i'm trying. you just took some seconds off my time. if you'd restore it, i'd appreciate it. all because the economic policies originally established by you, governor, gave away billions of dollars in taxes that could have gone to education and infrastructure. here's my question. you said that is why my best advice to you is to form a cost/benefit analysis. please note no matter your good intentions, the government creates unintended consequences when it acts. you ask what would a cost b cost-benefit analysis show? in reference to your example of the federal job training programs, you ask are they being

measured on the success under which they get people retrained? good question. how do you think if we apply krour advice to the scripps deal that a cost benefit analysis of $1.32 million per state job would hold up given our students graduate unprepared for work, tens of thousands of children languish on a waiting list for affordable child care. how can you justify giving away that money with no accountability to a private company? >> again, welcome to the budget committee, governor bush. you have nine seconds to respond. we'll let you go over your time. >> the scripps research institute is not a corporation. it's not a for-profit company. it is a premier not-for-profit research institute that does world-class research. the accountable that you voted for, i'm glad that you voted for i it. you weren't against it before you were for it. you were for it before you were against it. i'm happy we had your votes. the money would go out based on

the 575 jobs that are in the process or probably already have been completed. so this is an idea to spur innovation, to spur additional activity. it gets hilt by the downturn in the economy, but there has been significantly higher numbers of zwrobs, spin-off jobs or jobs created because of scripps and burnham and torrey pines and other institutes. and we've increased, at least during my tenure -- i haven't followed the budget of the state since i left -- but we increased funding for research for our universities as well. in the life science sector florida has gone from being in the back of the pack to aspiring to top-tier status. i would say we're probably in terms of research spending probably number five or number four. and ten years ago, we were probably 25 or even higher than that. so i think from that perspective, it ought to be reviewed. i agree. there ought to be analysis done. but i think for something that's a work in progress i would say it's been a success. and i would add that had we not spent these onetime money on

these long-term things, the money would have been spent, and it would have been spent creating huge recurring gaps that many other states have had to deal with that would have ended up creating higher taxes for floridians. it would have hurt our economy and made our business climate worse. >> no. mr. chairman, i don't want -- >> the time has expired. >> i know mr. chairman. i'm not going to respond. >> to include something in the record? >> yes. and let me just say what it is so i can get it included. it's an article from the "sun-sentinel" that shows that palm beach county -- >> the the gentlelady asked -- >> -- to its farming roots because it was such a debacle. >> without objection, the article will be included in the record. >> thank you. >> governor bush, were you finished with your answer? >> it's a joy to be here. [ laughter ] >> mr. ammash. >> i know. it's amazing. >> thank you, mr. chairman. and thank you all for being here. i won't give a five-minute

campaign speech. mr. edwards, to what extent is it necessary for government to provide infrastructure, and how much can the private sector do? >> the governor actually touched on this. you know, he commented that we're actually behind a lot of countries around the world in terms of privatizing our infrastructure or moving at least to the public/private partnership vuk chur. the indiana toll road was mentioned, but where i live in virginia, the capital beltway is being widened by a billion dollars of private money down around norfolk and virginia beach, they're building new tunnels and bridges all with private money. so there's a heck of a lot the private sector can do in terms of infrastructure spending. i'm actually on a monthly e-mail list by this consulting company that tallies the global totals in private money going into public infrastructure. the united states is way behind. countries like australia and canada are ahead of us on this so that there's a hell of a lot we can do. you know, i mentioned canada, for example, in terms of

infrastructure. they privatize their air traffic control system back in 1996. people in this country think, you know, wow, that's crazy, something as important as the air traffic control system. in canada, it's run by an independent self-funded nonprofit corporation, and it's been a huge success. it's got international awards for innovation. so, you know, the private sector can do a heck of a lot if we really opened up some of these barriers to investment. >> and mr. waxman earlier talked about market failures when my colleague from kansas was speaking to him. do you have any general thoughts about market failures versus government failures? >> i actually think there's a lot of government failures that led up to the big crash in 2008. i think that central bank, the federal reserve, held interest rates too low. i think all these housing subsidies that helped create the housing bubble. and i think the idea of more regulation is really problematic because i think some of the biggest scandals, i mean, the bernie madoff one, for example, was not a result of lack of

regulation. that one was a result that the s.e.c. was simply sitting on its hands and ignoring the obvious evidence that was out there. the enron corporation debacle to me was -- that was just outright fraud. always illegal. so i don't think regulation is going to solve our problem. >> change of topic. when people are paying most of their taxes to the federal government rather than to state or local governments, do you think that's the right balance? should we shift in the long term toward more taxes going to local governments rather than the federal government? >> you know, for a century now there's been this huge pressure of centralization in the united states, which i think is really problematic. if you look at total government spending in the united states, it's now 70% federal and 30% state and local, which is rather astounding. it should be the other way around in my view. the federal government should have some basic functions that we all agree with, and we ought to leave a lot of stuff like infrastructure and education to the -- to state and local governments.

again, i believe in the laboratories of democracy. when state and local governments fund their own programs, have control over their own programs, there's a lot more innovation, that the programs are leaner and better run. and that's the direction we should move in. >> sz i talk to constituents, whether they are tea party people or people in the occupy movement, there seems to be a lot of anger about similar things. it's the bailouts, the subsidies, the revolving door between wall street and the treasury department. these are the kind of things, these kronney capitalist features which seem to be a part of intervention iism, do you thk that kronneyism, corruption, waste are a natural by-product of ber vengsism? is it inevitable when you have a government this big you're going to get croneyism, corruption, waste? >> yeah. absolutely. i mean, again, we're always going to have lobbying.

that's always going to be a problem. but we don't need to have all these subsidy programs. i've cal late collated the united states has -- the federal government has 2,000 different subsidy programs all the way from medicare to hundreds of obscure programs most of us have never even heard of. all of those 2,000 different subsidy programs, they get lobby groups, you know, grab on to them and they lobby for more and more and more. that is the fundamental problem. i a actually think congressman waxman and myself could get together and find a lot of these corporate crow knee programs in the budget and agree to cut them, and i think that's what congress ought to be doing. >> governor bush, do you have any thoughts on that? >> in what? >> croneyism in general. >> the more complex, the bigger government gets, the more the interactions a, the more the unintended consequences, so you're going to see more of this, and the less clarity on what the rules of engagement are. you know, a good example of that is dodd/frank. with 500 separate rule-making

processes that will take seven or eight years to implement, the unintended consequences of all this will play out and congress will have to adjust it. but in the interim, it freezes job-creating kind of activities. and i want's not a question of regulation. we had regulation in place. to the congressman's point, if the federal reserve chairman at the time said, well, we just didn't -- we didn't apply the regulations that the law already allowed, that's a separate subject than being deregulated or unregulated. >> greed is not unique to government. unique is -- greed is unique to people. and therefore you need to establish restrictions so that people don't take advantage of others. that's why we have police. that's why we have law. the rule of law needs to apply to government and to individuals. there is abuse in the private sector. when we have crow knees decide that salaries of ceos who also have contracts to do work for the executives of those same

companies, you can be sure they're going to recommend an inflated amount of pay for those ceos. government has nothing to do with that. that's just rampant greed. and that's why i was pleased as a result of one of our hearings the advisers for compensation realized they couldn't also be the consultants for the corporation. but they didn't pay attention to that. and there was an area where there was abuse because of greed. let's keep that in mind. >> thank you. miss cantor. >> yes, mr. chairman. i'd like unanimous consent to place certain newspaper articles in the record. >> without objection. >> thank you very much. along with the governor's biography as presented to the committee. >> already in the record, but -- >> thank you very much. welcome, governor, congressman waxman. thank you all for being here today. governor bush, i read your testimony with interest and apologize. i was on the floor and couldn't be here for the earlier part of the hearing. but in your testimony, you state, and i quo