federal express created a revolution in package delivery by battling against regulation in the 1970s. remove business subsidies, tear down barriers to entrepreneurs and i think we will unleash more economic growth. a few quick examples, i think repealing farm subsidies would spur innovation in the agriculture industry like it has in new zealand. repealing the postal service monopoly would spur entrepreneurship in the package delivery. privatizing amtrak, the air traffic control system as canada has done. those sorts of reforms i think would spur innovation, they would give entrepreneurs new industries to innovate in. we saw just last week the success of the spacex space flight up to the international space station. that's the example of what i believe the awesome job entrepreneurs can do if we give them some space. and tabs reform is important. we do need to lower the corporate tax rate and capital gains rate. it's very important for business investment and venture capital and angel investment.

i strongly support the chairman's approach to tax reform and that's about all my comments and we've got all kinds of other proposals on cato's web site downsizinggovernment.org. thank you. >> congressman waxman. >> thank you very. i'm honored to be among you to discuss this very important issue, which goes to the very question of what is the role of government, what is the appropriate way for a capitalist economy to succeed because all three of us believe in the capitalist economy but how do we get that economy to function best and how do we deal with the market failures and the inequities which have left us with a stark contrast between the people who have a lot and the many who have very little, as well as the middle class which is getting very squeezed. we have a different sense about the vision for america. raspberry will argue that

government regulations are bad for the economy and public investments harm free enterprise. democrats have a more optimist being vision. we believe that the economy works best when the government establishes the rules of the road, adopting sensible standards, protecting the middle class, promoting competition and preventing corporate abuses. we believe public investments in our country's future will pay off. we believe that educating tomorrow's workers, supporting entrepreneurs, new industries will grow our economy faster and better. and we think history has proved our side of the case. our vision is the right one for america. house republicans seem to want to return to an america that

predated the new deal, the fair deal, the great society, really a period of time when the robber barons ran this country. the legislation of that the republican controlled house would bring back a world where there are no restraints on wall street banks anders enriching themselves at the expense of everyone else. we tried that. in the 1930s the absence of government regulation and fair rules for competition brought us the great depression. and in 2008 the same theory of government brought us the great recession. it isn't government regulation that caused our economic woes. i chaired hearings in 2008 when i was chairman of the oversight committee on the collapse on wall street and what we found was the absence of cops on the beat, the heart breaking

unemployment hurting america's families stems from a philosophy that wall street banks should be allowed to operate free from regulation. even if that means jeopardizing our economic future for their profit. americans cherish clean air, clean water, safe food, protections of the environment and their health but republicans in the house have voted again and again with the oil companies and corporate polluters. this is the most anti-environment house in the history. i asked my staff is to start tracking anti-environment votes on the floor and today the republican controlled house as voted over 200 times to weaken and eliminate protections for human health in the environment. the house voted to repeal the health-based standards that are part -- in fact, they're the heart of the clean air act with

no hearings and just ten minutes of debate. when it comes to health issue, the house is stunningly anti-health. not on do we see proposals to cut back on preventive care but as opposition to the affordable care act which would provide 30 million americans with health insurance, the republican budget adopted by the house slashes medicaid by over $1 trillion. it ends the guarantee for medicare benefits for seniors and individuals with disabilities and instead gives them a voucher and tells them to go shop in a broken health insurance market. the prioritiesmake seniors pay more for their medicare and preserve tax loopholes for oil companies and at the same time

lower taxes for millionaires and billionaires. corporate subsidies are not just government expenditures, they're government expenditures through the tax code as well and we see a lot of that going on. so i find myself in common ground with some of what mr. edwards had to say. 98% of the republican members of the congress have pledged to oppose any increase in tax rates and any reduction of tax loopholes to reduce the deficit. no wonder the wealthiest continue to grow wealthier as the middle class struggles just to get by and no wonder we are facing a fiscal crisis. one especially clear embodiment of the misplaced priorities of house republicans is their hostility to clean energy. the international energy agency says that trillions of dollars are going to be invested in new energy infrastructure over the next 20 years. our economic growth and our national security will be determined by whether we succeed in building these new clean energy industries for the future.

yet house republicans wanted to defund investment in wind, solar and other forms of clean energy. their budget protects the billions of dollars in subsidies that the oil industry receives, a well established, very profitable industry, which will crush competition if the government doesn't stand up to allow these new enterprises to take their place. the house republican position is based on science denial. if you deny the existence of climate, an overwhelming republican majority denies that science, the need for clean energy may not be apparent. but if you live in reality, you know the world cannot continue its dependence on fossil fuels. you know without government involvement we're in danger of losing the booming clean energy industry and millions of jobs to

competitors such a china and germany. we can outcompete china. we can grow a stronger and better america with jobs and opportunities for everyone to work hard and play by the rules, but to do so we have to reject the defeatist anti-science, anti-progress, anti-jobs view of those who oppose investment in clean energy, who want to preserve tax breaks for the wealthy expense of the middle class, who want to slash the national transportation safety board and end medicare's guarantee. this is an important hearing, mr. chairman. democrats and republicans hold starkly different views about the role of government and i welcome this opportunity to discuss these differences with you today. thank you. >> thank you. so much for bipartisan comity on the issue. >> are we not allowed to talk about our differences? >> it's perfectly fine. >> is that class warfare? >> we just got the employment numbers about a half hour ago. only 69,000 jobs added last month. that's about half of the 150,000 that the markets were expecting.

the last two months job growth was revised downward by 49,000 jobs. the unemployment rate has now gone up to 8.2%. the u-6 unemployment rate, which lots of us track, which is people who are looking for jobs that didn't find one, people who stopped looking for a job or people who are in the part-time job who want full time went from 14.5% up to 14.8%. it's not working. the economic policies we have today are not working. and i always try not to say what it is my political adversary is in favor of, i'll let him speak for himself, but what i think what we're trying to establish here is that both parties have messed this up. i think mr. edwards did a pretty

good job of going through the past about how with good intentions republicans and democrats have believed that if they could just put some kind of a preference in law for a selective industry, for a select of company that, good things could result from that. and it's helpful for to us go back and look at the track record of this bipartisan idea that government is smarter and better at picking winners and losers in the marketplace than the market itself is. and what we have learned from the bipartisan approach is that rr does occur and that what ends up happening is those who are connected, those who have established connections, those who know the ways of washington end up usually getting the benefits and those who are out there around america working hard, slaving away, creating ideas, coming one companies in their garages, they're not on the inside of this.

and so we end up erecting barriers to entry that protect established businesses, connected businesses or sectors or businesses and that necessarily comes at the expense of tomorrow's entrepreneur. that makes it harder for people to rise and create new ideas and businesses, which as we've learned through the economy, through economic evidence is the greatest chance of giving people prosperity, of decentralizing wealth in this country, of allowing people to rise and have social mobility. and so what we're trying to do is recognize that both parties messed this up. let's not sit around and point fingers at each other. let's recognize both parties messed it up. let's go back with what works. what works is entrepreneurship, small business growth, risk

taking and, yes, regulations that are fair for all, regulations that do put the guardrail up so that we have transparency, so that we have honest play, so that we have rules of the road that apply equally to everybody, equality before the law. that's what we are trying to reestablish here. no one is suggesting that we have some sort of dog eat dog society where just the powerful and the connected survive at the expense of everybody else. no, what we're saying is the same rules apply to everybody so that you based on your own merits, your own good-given talent, that determines success. so that our goal in america is to try to advance the starting line so we can promote equal opportunity so people can make the most of their lives instead of having people pick and choose

winners in washington because what ends up happening, whether a republican is in the white house or a democrat is in the white house or whoever is running congress is interest groups get involved and they decide how this is all done at the end of the day. that doesn't work. we've seen our friends in europe try this and now we look at the results of that. governor bush and mr. edwards, you've seen this work, you have great experience in government. has this worked at the state level? state governments tend to do this a lot. the stimulus, for example, sent a lot of money to the states. did that work? do these 49 different job training programs which were created with good intention, had various states advocating for this and that job training program, does that work to give people the tools they need to go into getting skills so they can get on to a career path if they were in an obsolete industry that was gone. where i live we lost four auto factories since 2008. all my friends i grew up in high school with, the guys i knew from childhood doesn't have a sector they can work in that they got their training in and

people are trying to go back to school to learn a new skill to get back on their feet again. does this approach work? did the 49 job training programs work? and then, mr. edwards, give me more examples about the canadian system. i think that's very intriguing. you write about how canada actually went after a lot of this corporate welfare and cronyism. give me more stories on that because i think there's something we can learn from the canadiens on this front. governor bush. >> we had a mini stimulus package when i was governor in the early 2000s. for some states it worked because there was chronic budget deficits and they filled the gap and they considered that stimulative rather than change the way they do things. in the state of florida we took that money and used it on a one-time basis to try to help create -- to invest in basic research. in essence, which i think is the proper role of government. this is where maybe my cato

institute friend and i might disagree. i do think there is a proper role for government in things to build capacity, to build infrastructure and that's what we used the money for. it wasn't stimulative in terms of an economic recovery, but we already handled our budget because we have a balanced budget requirement as almost every other state did, we had to make tough choice, challenge hough we did things and we got through the budget challenges quite well. similarly, i think many states did the exact same thing this last year. florida did not raise taxes last couple of years. in fact, florida has cut taxes. they've done it -- the challenge became an opportunity, which happens in the private sector as well. when you don't have the pressure of a balanced budget requirement, as you all doesn't have here, then, you know, it doesn't really matter. but every other jurisdiction, loam and state governments have that challenge and they adjust. i would say to use the clean energy example a better approach would be to spend less money but spend it on basic research that creates the disruptive technologies that are market based that will be sustainable over the long haul rather than

trying to create a wholly owned venture capital subsidiary inside the department of energy where if there's winners or losers picked, it's not going to create advancement of new technologies, it basically protects in the cases of the failed companies it, protected companies that didn't have the best idea. the market punished them and the government was out of pocket. a better approach would be for the government to fund basic research, applied research to be able to create the next generation of industries but let the market solutions be the means by which we achieve the desired result. >> you know, i believe in the 50 states are the laboratories are crass circumstance i believe in federalism, i believe we ought to get a lot of these programs out of washington and let the 50 states figure out whether they want to do them.

job training programs, you know, we've had them since john f. kennedy's administration. they've never worked very well. the gao has said they've never worked very well. let's let the states fund it and do it and then the states can learn from each other to see what works. so, you know, the problem is we have over a thousand federal aid to stay programs now. the money pours out of washington, there's rules and regulations with each of these programs. they put state governments in a straight jacket, which doesn't make any sense and we see that now with no child left behind, states have rebelled against that. one political scientist said the problem now is we have sort of a marble cake with american federalism between the three layers of government. we should have a layered cake. each of the levels of government should fund their own programs, do their own programs and the states should look at each other to see what works.

the transition over to canada, this is one of the this evenings canada did. two decades ago canada was in a horrible budget situation like we are today, massive budget deficit, massive spending. they did a series of five years of really big spending cuts. they chopped their total federal budget 10% in just two years, which would be like us cutting $400 billion out of the budget in two years. what did they cut? they cut business subsidies, they cut aid to the lower government, they cut defense. so they cut all kinds of stuff and it's worked extremely well. the canadian economy did not go into a recession with these government spending cuts, it boomed. the canadian economy boomed for 15 years, even as the spending cuts dramatically dropped the size of their government. so just to put a couple numbers on that, go back a couple decades, the federal governments in canada and the united states were both around 23, 24% of gdp. the can -- the federal government is around 15% of gdp,

our is up around 23 or 24. soap they massively cut the size of their federal government and decentralized their federation and it has worked extremely well. >> thank you. mr. van hollen. >> thank you, mr. chairman. i do believe that there's a lot of agreement but let me just start with what sort of got me going here. the chairman's opening remarks talked about the obama administration and cronyism and continue to talk about the auto rescue. how does the government intervention that saved millions of jobs. i want to ask you, governor bush, i believe you supported as did a lot of us, not all of us, the effort that president bush took to help rescue the financial sector, which in part precipitated the crisis. and many of us believe that it was also appropriate to take the actions that president obama did to help rescue the auto industry and a million jobs. did you support that effort?

>> no. >> okay. >> okay. i understand. >> do you agree with governor romney's position that we should have let them go bankrupt? >> they did go bankrupt. it just was in a way where the government -- it was a government-induced bankrupt that allows now, for example, tax laws to carry forward that never under normal bankruptcies would exist. allows for general motors not to pay taxes based on profit that otherwise they would have to be paying taxes on. that's the form of capitalism when the government intervenes in a very muscular kind of way, and i don't believe that's appropriate. >> maybe i made an assumption and i was wrong. did you support the rescue of wall street banks? >> i've never been asked that either. i was out of office. i think given the circumstances

of the potential for a meltdown that would have been hard to recover, some support was appropriate. was, therefore, then the next step of adding regulations on top of regulations, the congressman in his remarks made an interesting point assuming that there was no regulation on the banks or financial services industries prior to dodd/frank's passage. there was massive regulation. enforcement was the part not that we had a deregulate industry. for a short-term answer to a problem that had global implications, that was probably the right thing to do. but then to take it and add on top of this challenge that we faced massive rules that will take years to implement that creates more uncertainty and the probability of more unintended consequences that will create a

weakening economy rather than a strengthening one, i think was the wrong approach. >> thank you for stating your position on the record. i think many of us believe that the decision to help rescue the financial industry was a bitter pill, but a necessary one, and many of us also thought it was worth taking extraordinary action to help save over a million jobs in the auto industry. let me just talk about the budget issues and some of the government expenditures. the figure of government spending right now is about $3.6 trillion according to the congressional budget office. a big part of that is social security. which of course, came about after the great depression as a way to provide retirement security for americans. i'm assuming from your testimony you don't think that that's an inappropriate government interference in the marketplace? >> that's correct. >> okay. another major part of that $3.6

trillion is the medicare program because we realized in the because we realized in the 1960s that the private health insurance market didn't see a lot of profits to be made in insuring older and relatively sicker people. so that's a major chunk. i mean, i assume putting aside the issue of reform that you think that that's an appropriate intervention in the marketplace? >> for -- putting aside reform? >> no, the medicare program. the idea that there should be some government role in providing health security to seniors. >> in a dramatically different way, i could see it happening. but i'm not sure that accepting medicare as it was created in 1965 in 2012, that's the problem. we have this attitude that if you start something in the mid-20th century, it is appropriate to keep doing it the same way 50 years later. >> governor, actually, i mean, there's a difference of opinion as to what kind of reforms we need to take in medicare. that's a longer discussion. but i think everybody around

this table recognizes that we need to address those issues. we have different models, and they are efforts to modernize the program. the part of the budget that most of this conversation is circled around, at least with respect to the spending side, is the discretionary budget. represents about 16% today of our overall budget. it's a shrinking part of the budget as a result of cuts we made in the budget control act last august. it will actually be reduced to the lowest percentage of the economy since the eisenhower administration over the next ten years. it's a shrinking part of the budget. it's the part that helps the fbi, homeland security. and you mentioned basic research. nih, i think you agree, does an incredible amount of important research. there are lots of those investments in nih research that don't pan out. they don't cure cancer. they don't necessarily -- i

just -- i agree. i hope you'll agree with the logic that just because some of those investments in particular research projects don't pan out that the solution is to get rid of investment in nih. you're not suggesting that, are you? >> well, there's a huge difference between investing or a loan guaranty for solyndra and investing in basic research at nih. if you're trying to equate the two, i disagree. i don't think that there's -- of course research never works out exactly, but through trial and error, great minds develop discoveries in cooperation with other scientists that yield results that improve the human condition. so it's not a venture capital investment. it is more related to an expenditure that i think is more than appropriate for the federal government to have, and you know, there may be cuts over a very high base but there's been dramatic increases in spending

in nih over the last 20 years. i'm not uncomfortable with that. i do think that the same thing that in my testimony i brought out there -- you should challenge every basic assumption about how this money is spent. there should be benchmarks. if it doesn't work, you ought to move on to other things. but a particular science project by a particular researcher if it doesn't work out, that's not my point. >> i want to clarify. i didn't think it was. we also have student loan programs. not every student loan gets repaid. i don't think that most of us, anyway, those of us who support a student loan program say we didn't get all the loans repaid so we're going to shut down the student loan program or small business administration makes loans. not every small business is successful. i don't think the solution is to shut down the small business administration. you mentioned specifically doing more advanced cutting edge research into energy at the department of energy. i agree. i think that's a very important role. the budget that's coming out of this house significantly cuts back in the proposals that the president's asked for in that

very area. so i think that, you know, the chairman asked about actions taken by governors. i know lots of governors including yourself who took efforts in the renewable energy area. some of them may have been successful. some of them not. i just hope we don't take the lesson that because some of these things don't work out, we shouldn't be making investments in areas of basic research and as you said in some cases applied research. let me just close with this. i agree with you, first of all, i also agree with mr. edwards that we should get rid of some of those agricultural subsidies. we put forward a proposal recently how to do exactly that. >> and our budget does, as well. >> but i agree with you that, governor bush, if we find a program not working, let's get rid of it and reduce the deficit. i wonder if you would take that same approach to tax expenditures that aren't serving their purpose.

would you agree if you identify a tax expenditure that's not serving any useful purpose that we just get rid of it to reduce the deficit? >> i would love to see common ground to see dramatic reductions of tax expenditures or whatever you want to call them and have a dollar for dollar reduction in tax rates that would spur economic economic activity that would move us away from an l-shaped recovery to a v-shaped recovery. >> just to be clear, you disagree with the recommendations of simpson/bowles that says through tax reform, we should do exactly what you say, which is try and make the tax code a little simpler, but we should also use some of the funds generated to help reduce the deficit? you disagree with that? you agree with the essentially the form of the grover norquist pledge which is not -- >> no. >> do you agree with the grover norquist pledge? >> so i ran for office three

times. the pledge was presented to me three times. i never signed the pledge. i cut taxes every year i was governor. i don't believe you outsource your principles and convictions to people. i respect grover's political involvement. he has every right to do it, but i never signed any pledge. >> thank you, governor. >> thank you very much. governor, good to see you. thank you for being here. and just, if i may, thank you for being here not only as a representative of a family with an extraordinarily remarkable record of public service to this country in every way but being here as a person with considerable accomplishments of your own and certainly with the ability to speak for yourself, not for every other member of your family. so thanks for being here. >> can i say that my brother sends his warm regards to congressman waxman. w