very quickly adjusted and started growing again. i think that there's been lots of mistakes. i think the jobs problem i think is ultimately business investment problem. if you look at the national income accounts data, u.s. 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 so we need the business investment first which is why i've suggested corporate tax rate cuts. 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 incentives for people not to make the tough decisions they need to do go out and find jobs. so, you know, i don't believe that the basic idea of cainsian

spending works. we've had trillion-dollar deficits four years in a row. the 2009 stimulus billion has basically ended. we've got trillions of dollars of so-called stimulus. in textbook terms that's stimulus, yet look at the results. the results are high unemployment. 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. the bigger the government gets the more you push down gdp and it 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. we see in europe the idea of austerity, it's put england into a double-dip recession. we see people all over europe bridling under the yoke of this austerity notion.

what we needed to do in this country was to 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 upper-income people more tax breaks. >> mr. waxman, i appreciate that. i do have a question for you. >> good. >> 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. but 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 it's a question constituents ask me. they said, congressman, do you think washington politicians and regulators can make better decisions than businessmen and women? and that would be my question for you. >> it's a good question. there are things called market failures -- >> and there are things called

government failures. >> let's let him answer the question. >> there are market failures. and that's where 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 costs to clean up. the other area where there's a failure of 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 wonder if you can answer the question. >> on stimulus? i'm trying to answer your question. 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 where there's 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 want to kind of go back over a couple of things. one, first of all, with 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 marshal them through this bankruptcy. a state like ohio, one in every eight jobs in ohio is tied

directly to the auto industry. and there are good manufacturing jobs, we would have lost a lot of those. and i will tell you that it was the -- 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, "it's once again the fiction that, oh, we didn't need the government, and this could have been a privately-run bankruptcy with the 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 this is balance between public/private partnerships. 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've also got to factor in some profits. the tolls on the indiana turnpike that have been privatized have doubled in the last five years. >> will the gentleman yield? >> sorry, man, only got five minutes. be happy to. can't alter the facts and those are the facts. the other thing that you mentioned, governor bush, and i agree with you wholeheartedly, was the issue of canada. how canada solved their problem by the conservatives and the liberals coming together to solve the problem. the issue in canada, though, 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 -- be happy 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 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. many countries do that. 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 on of a bipartisan basis that makes 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 i think is a very important question for us. and i know that 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. and my question is just what were the investments that were made? what were the priorities that were given? and it explains 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 -- >> 30 seconds left so if you're going to ask a big 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 one-time monies as best as possible and spend them on long-term things. so we created a research focus of taking one-time 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. i think our job creation in the state, not because of the government but because it was -- there were good times and we have a good business climate, grew faster than any -- we created more jobs than any state in the united states, roughly 20% of all the jobs during that period. it was a different time than we're in right now, that's for sure. >> thank you. mr. riddle. >> thank you, mr. chairman. thanks to the panel. i'll get right at it, we only have five minutes. mr. edwards, if you had -- let's just 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 you would use as your guide in writing a new tax code? >> i would say economic efficiency, simplification, and visibility and transparency. so economic efficiency, the key is lowering marginal tax rates and the chairman's plan does

that. lowering rates town to 10%, 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 medicare tax on their pay stubs every couple of weeks so they don't know -- they only know half the giant cost of social security and medicare. i would make that visible on pay stubs. so that's the type of thing i would do. i would say the most important thing, economic efficiency, lowering the corporate tax rate is the single most important thing we can and should do in this country. again, that has been a bipartisan reform around the world. even the most socialist welfare states in europe, france and the like, have chopped their corporate tax rates just because of this realization 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, 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 disagreement 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 inmobile 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 that find most of the corporate tax burden has the effect of lowering the wages of workers. >> thank you. governor, what would be your principles? >> those sound pretty good to me. simple, transparent, and at a place that creates the most

efficiencies for economic growth and for the government to receive the revenues that they need to do the basic 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, 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 really ought to be the objective. 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? >> i think the first thing that happens when you do that is that you're shifting power away from washington and the surrounding areas, which is the -- probably the place of greatest economic prosperity right now. to -- back to the rest of the country where decisions -- economic decisions are made by individuals that want to richction their capital and purs pursue their dreams. it's fun to go to dulles airport, drive by there, these are major companies that have huge growth, lots of construction, housing prices are incredibly high, income levels are the highest in the country. why is that? i'm sure maryland has a great business climate, so does virginia. 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 would just make one comment to congressman waxman. thanks for being here today. i know it's tough to come in here. i would say you used the phrase house republicans want to return america to the era of robber barons. a robber baron is a government that steals money from middle-class, hard-working 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. >> i wanted to make sure because you were invoked and out of fairness. the gentle lady from florida, 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 public schools in florida. and also as someone who's served for six years of my tenure in the legislature with you as governor. and the one-time monies 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. 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 monies that were allocated from florida. palm beach county anted up $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 one-time federal economic stimulus money than by

investing in a project that spurs economic growth. i 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 the scripps bill. i voted for the scripps bill. >> i know you did. >> we tried it your way. let me describe the result. as of 2010, scripps florida employed 377 people. 1.32 million per employee. the operation is projected to employ 545 people by 2014, 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. as of the end of year seven, scripps florida employed 377 people. estimated spin-off jobs in other companies were largely overblown. from 6,500 at the time to 40,000 or 50,000 predicted. quoting from the florida office of program policy analysis and government accountability, in 2004 scripps had only supported the creation of a projected 615 full-time and part-time equivalents. in '07 the creation of an estimated 1327 jobs. in 2003 the year the scripps give-away passed in florida there was a $40 million cut for state universities and the end of enrollment in healthy kids children's health insurance program. given the employment numbers which were far lower than projected was it a good decision to fund and private interprize the head of education in health care? how many low income children could have had health insurance or tuition assistance at the equivalent of $1.32 million per

employee? this came policy is writ large in the romney ryan budget plan which doubles down on a policy that benefits large private corporations and the wealthiest most important americans and leaves the middle class and working families to fend for themselves. florida's had one of the worst high school graduation rates in the country and roughly half of florida's graduates require remediation when they get to colle college. yet we're paying for a company requiring employees to relocate rather than investing in education which is the main draw for good employers. this year florida's forced universities to cut $300 million from their reserves -- >> are you going to give the gentleman time to respond? >> i'm trying. you just took some seconds off my time. if you would restore it i'd appreciate it. all because the economic policies established by you governor gave away billions of dollars in taxes that could have gone to education, infrastructure and other important investments. here's my question. is this quoting from your testimony this morning, you said that is why my best advice is to perform a cost benefit

reconsideration of many programs in the federal budget. the government creates unintended consequences when it acts. you ask what would a cost benefit analysis show? later in reference to your example of the 49 different federal job training programs you ask are they being measured on the success with which they get people restrained? good question. how do you think if we apply your advice to the scripps deal a cost benefit analysis of $1.32 million per job would hold up? given the students in our state graduate unprepared for college level work, tens of thousands of low-income students languish for child care, how can you justify giving away millions with no accountability? >> welcome to the committee, governor bush, you have nine seconds to respond. i'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 accountability that you voted for -- i'm glad that you voted for it. you weren't against it before you were for it, you were for it before you were against it. i'm happy that we had your vote. the money would go out based on the 575 jobs that are in the process or probably have already been completed. so this is an idea to spur innovation, to spur additional activity. it gets hit by the downturn in the economy but there has been significantly higher numbers of jobs, spin-off jobs, or jobs created because of scripps and burnham and torrey pines and other institutes and we've credited, at least during my tenure, i haven't followed the budget of the state since i left, 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 completely agree with that. there ought to be analysis done. i think for something that's a work in progress i would say it's been a success. had we not spent this one-time money on long-term things the money would have been spent and spent creating huge, recurring gaps that many other states have had to deal with that would have ended up creating higher taxes for floridians that would have hurt our economy and made our business climate worse. >> no, mr. chairman -- >> the time has expired. >> i'm not going to respond, i would just ask -- do you want to include something in the record? >> yes, and let me say what it is so that i can get it included. it's an article from the "sun sentinel" that shows palm beach county's -- >> ask to have it included in the record. >> should return to its farming roots because it was such a debacle. >> without objection the gentle lady's article will be included in the record.

governor bush were you finished with your answer? >> it's a joy to be here. >> mr. amash. >> 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. he commented that we're actually behind a lot of countries around the world in terms of privatizing our infrastructure. moving at least to a public-private partnership structure. the indiana toll road was mentioned. where i live in virginia, the capital beltway is being widened by $1 billion of private money. around norfolk and virginia beach, they're building new tunnels and bridges with private money. 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 and private money going into public infrastructure. united states is way behind. uncountries like australia and canada are ahead of us on this. so that there's a hell of a lot we can do. i mentioned canada, for example, in terms of infrastructure. they privatize their air traffic control system in 1996. people in this country think, 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. the private sector can do a heck of a lot if we 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? >> well, i mean, i actually think that there's a lot of government failures that led up to the big crash in 2008. i think the central bank, the

federal reserve, held interest rates too low. i think all these housing subsidies that helped create the housing bubble. i think the idea of more regulation is really problematic because i think some of the biggest scandals, 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 just outright fraud. that is always illegal. so i don't think regulation's going to solve our problems. >> this is a change of topic. 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 federal governments? >> you know, for a century now there's been this huge pressure of centralization in united states which i think is really problematic. if you look at total government spending in the united states oot it's 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 state and local governments. again, i believe in the laboratories of democracy. i think when state and local governments fund their own programs, have control over their own programs, there's a lot more innovation, the programs are leaner and better-run. that's the direction we should move in. >> and as 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 crony capitalist features, which seem to be part of interventionism. do you think that cronyism, corruption, waste, are a natural

byproduct of interventionism? is it inevitable that when you have a government that is this big, you're going to get cronyism, 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 calculated the united states now has a -- federal government has 2,000 different subsidy programs from medicare down to hundreds of obscure programs most of us have never heard of. all of those 2,000 different subsidy programs, they get lobby groups grab on to them, they lobby for more and more and m. e congressman waxman could probably find a lot of these 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? >> cronyism in general? >> the more complex, the bigger

government gets, the more interactions, the more the uninteuni unintended consequences, the less clarity on what the rules of engagement are. a good example of that is dodd/frank with 500 separate rule-making processes that will take seven or eight years to implement. unintended consequences will play out and congress will have to adjust it. in the interim it freezes job-creating activities and it's not a question of regulation. we had regulation in place. and to the congressman's point, if the federal reserve chairman at the time said, we just 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. greed is unique to people. 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's abuse in the private sector. when we have cronies decide the 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. 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 when an area where there was abuse. because of greed. and let's keep that in mind. >> thank you. miss cantor. >> 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. >> thank you