>> two very brief points. this is just repeating something i think gene said a minute ago. the affordable care act by pushing out medicaid eligibility including to the disabled reduces a work disincentive and is pro-work inducing for folks with mild disabilities. it kind of reduces the cliff there which is helpful. my second point is was the idea, numerous folks have looked at this, the extent to which disability roles are rising faster than we might expect to faster than in prior years. there's question are some long term unemployed people using disability as place for unemployment insurance. i'm sure there's some of that going on.

one of my colleagues has look t at those numbers. there's going be more disability. that's created significant upward pressure on the rolls as well. it pushes back on the idea that folks are illlegitimately getting on the roles. >> thank you. that gentleman's time has expired. >> one of the things significant about that massachusetts plan is the consumer satisfaction rate. it remains pretty popular across the board. small business, large business, carefully negotiated. i think that bears noting in the discussion that we're having. once it was implemented and people had chance to see the fruit of the investment, it's been fairly well met. i don't know anybody in the state, republican or democrat,

talking about going back to the previous system. they have all made sure it would work and regardless of what the court does tomorrow, people in massachusetts left, right and center are committed to making this plan work. nobody talks about breaking it out. one of the things we did in '96, which was a series of artful compromises. we did talk about job training, transportation incentives, child care, day care, but also one of the things that was very, very important and it was done on a bipartisan basis was the whole notion of child support. would you speak about that

experience because i think it bears note going forward? >> i will. if i may comment on your massachusetts health comment first. >> you may. >> the council of economic advisors looked at the impact of the affordable care act on businesses small and large. they wrote creating a well functioning insurance market prevents inefficient allocation of labor by leveling the playing field among firms of all siesz, which is a complicated way of saying what you said plainly. large firms are likely to offer comprehensive health care for their workers, the system like outside of massachusetts gives them an advantage. if you have a work comprehensive system as the affordable care affect would prevent, small firms lose that competitive

disadvantage to large firms. child support was one of the many work supports that i would argue go far further than tweaking marginal tax rates whether it's quality child care, transportation assistance, job training and education, subsidized employment, which was a program that worked very well in the recovery act. these kind of work supports have been shown to be much more consequential in helping people move from welfare to work. >> the area in new england where we saw the textile industry leave and we saw the old line manufacturers begin to depart over the last 50 years, i must tell you, based upon that solid old manufacturing history, i never met anybody, the families that i've known those years that

were inclined to exthe end unemployment benefits if they thought they could get another job in similar industry. >> i also come from a major manufacturing center. in the early 1980s, caterpillar went through the recession the rest of the country did. basically, over 50% of the blue collar employees were laid off. we had a great example of that just in our hometown. what happened was anyone who had any home building done, any work on the side, basically hired someone who did it on the side and presumably with no taxes paid. who are these people? they are blue collar, caterpillar workers. people might be working, but they're not reporting their income. >> okay. you weren't suggesting that

people with that strong history of work and a good solid work ethic didn't want to go back to work if they could find a good job or similar to the one they lost? >> no. i think if you have a blue collar job and you get laid off for two or three or four months, it becomes a rational decision. you realize you're getting exactly half your salary, it might make sense to take a few months off. when i was a professor in wisconsin, i knew people who worked at osh kosh truck and when they had to lay people off, they took volunteers. some people had jobs they wanted to do on the side in winter. >> thank you. >> i thank the paj for beinel f

here. this is a critical debate and issue, and won't be solved today. our goal is to lift people out of poverty and try to create a system that encourages the end result where people aren't self-sufficient. the thing that obviously is clear today is programs and the tax as these are combined really create an unintentional barrier to help lift people out. i guess we talked about the dead zones and the poverty traps. my question is how do we fix this to encourage people to work? >> i think we could address the payroll tax. it comes in a dollar one of earnings. while the federal income tax is

highly progressive. it has a zero bracket of the working people of low-income and moderate income are paying much higher taxes than did people during the 1960s when the payroll tax was 4% and the employer matched that. >> is there some evidence and i think the panels agree if you design it you have quicker early intervention. in some cases it's the habits that are developed in these periods of unemployment and disability that continue. there's some that are trying to figure out to put more ways to employers. that's one area we could work. i mentioned a lot of other relative shifts.

once we agree we'll have a social welfare structure, the issue is not going to go away. i think we could make work a greater requirement for some other benefits. another one that is much broader is our social welfare budget keeps expanding. maybe we'll devote 90% more. we can orient that growth not wards so much on consumption and shift it more wards incentives

and word. >> we're going to be have these marginal tax rates. my answer is the best that we can do is to have that faze out be as long and gradual. there's a trade off with cost. i think the evidence is clear that that helps in the case of the e.i.t.c. or states where food stamps with the marginal tax rates are kept low. work support is important. third, this is key, the adequate availability of jobs. that takes me more to the demand side. i wouldn't think of adding work requirements to other programs that don't have them in a climate where therein inadequate job availability.

>> the minimum wage can have that disincentive for young people, especially teenagers to enter that workday world. i want congress to think long and hard before they increase that again. >> thank you very much. >> i thank you. >> thank you, chairman davis. i had the opportunity to travel to china and got in a heated debate, one this committee is familiar with about china currency and the trade disparity that exists between our countries. the former ambassador said how many people do you think we have

lifted out of poverty in china. i did not know, to be honest. it was around 320 million which is the entire population of the united states. they were able to do so by investing in their intrastructuintrfr infrastructure. we witnessed all the investment in infrastructure. i raise this point because you pointed out the adequacy of jobs. fundamentally, people aren't going to be able to work if jobs aren't available to them. while there's been much valley hoo about how we're going to create jobs here, we sit in a congress where we have yet to take up after more than 100 days

a transportation bill that as the season eclipses and fundamentally, the president's request of last september to have his bill taken up in terms of jobs is not. i'll ask you and then i have a request for dr. sterling. what would the effect of passing the president's jobs plan be on millions of americans that can't find a job, and then the german system where they incentivise by instead of paying unemployment, they provide the company with subsidy to retain that person instead of having them go outside to work. >> physical i may poach for a second on gene's question. we have a work sharing program here. i commend congress for passing it. there is, some of my colleagues up here may agree with what i

say. i know they are for focused on the tax rate side of this. there's no better social welfare program, no stronger social welfare program for reducing poverty than an adequate availability of good jobs for low wage people. instead of an excess supply of lower wage workers there's an excess demand for them. i think we saw that most clearly in the second half of the 1990s where there were a lot of moving parts, welfare reform, higher minimum wage, lots of going on. even in the midst, we saw the employment rates of less skilled, disadvantaged workers, poor workers, single moms go to the highest rates on record and poverty rates dropped to some of their lower rates. simply put, no better program.

>> i think you make a very good point. i think we could learn a lot from the german system. the german system is especially good at sponsoring apprenticeships and favoring education of people who don't go to college, not just those who do to college, something i don't think we do a good job in this country. i mentioned earlier that you could change the incentives in unemployment disability and engage the employer in maybe you can experience rate a little more. it's not so much the employer has the pay the full burden but it would be nice to have somebody that would help which is sometimes harder for the government to do. there are ways which we can learn from the german system. >> government works best when it's a collective enterprise. by using the term collective, i

think what he meant is by embracing our academic private sectors, labor sectors and government pulling together, we do have this engine of growth and opportunity. what models would you suggest or do you have any that we should follow to achieve those goals and address some of the concerns our chair has raised about coming to the precipice of this cliff and making sure we're going the right things? >> the long term engine for all of this is economic growth. i keep mentioning that the economy will expand over time. i encourage you to think about how we restructure our social welfare system in a broad sense as we move forward five, ten, 15, 20 years from now.

we're planning on spending about a trillion dollars more in another ten years. all of it is going for interest on the debt and social security and medicare and medicaid not for children in ways that don't favor employment at all. if you get the economic growth, then the relative wage from working starts growing and growing than just a subsidy from the government. what point is going to work and engaging in the market. >> the war cost of some $3 trillion in having the two wars and tax cuts -- >> gentleman's time has expired. you say it would be a

significant policy mistake to require recipients of benefits to work without ensuring adequate job availability. this is exactly the same argument that some made against welfare reform in the 1990s that it was wrong to require work without guaranteeing quote adequate job availability for everyone. how do you define adequate job availability? >> that's a fair question. i was there at the time thinking, writing about welfare reform. i didn't mean to imply there should be a guaranteed job for everyone. my statement was meant to stress absent, stronger wage demand, you'll find there are far more job seekers than job availability. obviously, that's partly a function of the recession. even in a stronger economy when the business cycle is expanding, the low wage market is by excess

market and not enough jobs. it's quite successful in moving people from welfare to work through this period of welfare in the latter '90s. it's been quite unsuccessful ever since even with relatively low overall unemployment. as jean as i were just reflecting, you have to have a very strong demand side functioning on the low-wage labor market if you're going to require work and expect it to reduce poverty. >> would any of the other panelists like to comment? >> it's a private charity system will also relax eligibility

standards, extend unemployment benefits and so forth because of the objectively, more difficult circumstances facing people who are vulnerable. having said that, it's understandable that when we do have a robust

nopefully we'll continue to work ahead in the broken processes to harmize this and get to the point that mr. brandon talked about at the end.

if members have additional questions they will submit them to you. we appreciate it if you would reply to the committee so we can have those inserted. thank you. with that i conclude the hearing.

thnchts is the conversation we need to have in this country that nobody is willing to have. what role should the government play in housing finance? >> gretchen morganson detailed the financial collapse. >> if you want to subsidize housing in this country, and we want to talk about it and the populous agrees it's something we should subsidize then put it on the balance sheet and make it clear and make it evident and make everybody aware of how much it's costing. when you deliver it through

these third party enterprises, fannie mae and freddie mac, that's not a very good way of subsidizing homeownership. >> more on sunday at 8:00. yesterday the defense department hostinged it's first pride month event since the repeal of don't ask, don't tell. we'll hear a discussion on the value of diversity in the mi military as well as remarks from leon panetta. this is an hour.

>> good afternoon. welcome to the department of defense lesbian, gay and transgender national event. please stand and remain standing for the national anthem.

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>> please be seated. please direct your attention to the center screen for the president's lgbt pride month video message followed by secretary panetta's pride month message.

>> i've often said that the true genius of america is that america can change. we can pass laws to write wrongs. we can soften hardened attitudes. our union can be made more perfect. change never happens on its own. change happens before ordinary people, countless unsung heroes of our american story stand up and demand it. the story of lesbian, gay, bisexual and transgender american is no different. we remember the activists and advocates who refuse to be treated like second class citizens. people who marched and protested and believed in a better future. we also remember the unsung heroes t heroes, the millions of americans for every day acts require extraordinary courage. the young people who came out as

gay or transgender to their parents not knowing what to expect the the two moms or two dads not knowing how they would be received. the couple that got married even if their bosses or neighbors wouldn't approve, at least not right away. most didn't set out to make history, but that's what they did. bit by bit, step by step, they bent the ark of the moral universe towards justice. let take time to celebrate teachers and students who take a stand against bullying. openly gay servicemen and women who defend our country with honor and integrity. family and friends who have seen their own attitudes evolve. perfecting our union isn't something we can do in one month but we can remember those before us. we is summon the courage to build on their legacy and renew