how can it be possible that the police take us to far away parts of the city and that they fracture our wrists with their pistol butts? it is a suffering people. it is a -- it is a people that needs fro come. -- freedom. freedom depends on us cubans. but we need to support -- we need the material and spiritual support of other governments. i want to go further back. in 1980, 100,000 cubans left cuba. teachers engineers, physicians and castro called them scum and

said they were leading to -- >> i'm going to interrupt you a second because i know you have a flight to catch. i want to say something before you leave. this is the news of today. dissidents arrested for protests near cuban national assembly. this morning so much has changed. a group of 12 dissidents were arrested as they tried to stage a protest near the havana headquarters of the cuban regime's national assembly. the dissidents part of the orlando -- the civil resistance front took out a sign, demanding the elimination of castro's draconian laws. that ever wonderful social dangerousness. and the ratification of the u.n. human rights covenants. their whereabouts remain unknown. in stark contrast this release says cuban democracy activists

atunis, and they're both leaders of this group are freely and openly testifying before the u.s. house of representatives in washington, d.c. this morning. what a contrast. berta, you have to hop on a plane and i know you will be marching with the ladies in white on sunday. we will pray for you. we will pray for all of the people of cuba. you make us proud, you make freedom and liberty shine. [ speaking a foreign language ] [ speaking a foreign language ]

>> thank you so much. thank you. now move your butt over to the airport. because that's free commerce in action. they won't hold that plane. only in castro's cuba will they hold it. sarah and then i don't know if mr. theel could speak as well. >> if you allow me i would like to -- i would like to speak about the private sector in cuba. there is no private sector in cuba. where there is no freedom to negotiate, the so-called self-entrepreneurs who are very tiny minority are constantly

blackmailed by the regime. they must respond to the interests of the regime in order to keep their businesses running. they can't have their own unions. they can't defend their rights. that's why i insist no type of commerce with cuba benefits the people. whatever enters cuba remains in the hands of the regime. whatever money enters cuba remains in the hand of the regimes. i want to say i feel a deep

sadness every time i think of political prisoners. it's very hard in the 21st century that in the 21st century, there are still people in my country who are in prison for their ideas. that there are so many marginalized people who can't finish their studies because of their ideas. but it's not only this. many youth who are not directly involved in opposition activity also suffer from persecution and also suffer from discrimination because they are the children of opposition activists.

it is a crime that youth cannot pursue their studies. and that they desperately seek in pross tuition -- prostitution a means to which to maintain their families. we condemn the castro regime. we demand that there be no -- for the regime. we want a free, just and democratic country. >> thank you so much, mr. chairman, i regret that i have to -- i have a plane to catch as well. i did not give mr. theel a chance to respond. i don't know if you'll be able to and i'll hear it on c-span radio. >> thank you so much. thank you.

i'm on a plane, i just remembered. it's not going to wait for me either. thank you. >> only briefly, thank you. thank you for the series of questions and comments. without wanting to enter into a whole debate about exactly how you characterize the human rights situation in cuba, i think it's clear no one denies there are serious human rights problems on the island. the question is how to address them and what the united states government can do. i think that the policy of engagement that was announced on the 17th, the policies have been supported by others in the cuban dissident community, some who testified before the senate the other day, that's supported by the catholic church in cuba, supported by the catholic conference endorsed by the pope republicans and democrats have endorsed, that freedom house has endorsed, i think the message is there's a very strong view that the best way to address the human rights situation in cuba is engagement. >> thank you. >> let me just -- i'll give --

if any of you you want to make final comments as we conclude the hearing again i'd respectfully disagree, mr. theel, and i thank you for your candor. we've tried that before. and it seems to me it's not about isolation, it is about meaningful engagement where steps that we take are predicated on just observing universally recognized human rights. we are only asking that the universal declaration of human rights, the treaty bodies that have been enacted or for want of a better word with concurrence and full all in by the countries of the world. be followed. and certainly the convention against torture which has been violated with impunity by castro and is one of the most egregious violations torturing people is one of the most heinous acts one human being can commit against another. i would just very quickly, have

you ever asked to meet with a political prisoner in prison? no? i hope you would. i think that -- you know, i think -- i have made it my business, 35 years as a member of congress, to meet with dissidents everywhere and anywhere i go where there's a repressive regime. but i always seek to go to the prisons. to try to show some solidarity, some empathy with those who are suffering. the daily acts of torture and brutal mistreatment that mr. atunis articulated. the book that got me into fighting for religious freedom frankly in 1981 was "torture for christ" and he talked about the prisons of cuba where torture is common place. then when i met -- the book that

i mentioned earlier, he talked attack tortures that never -- talked about the fortunes that never ended. he talked about the hoe chin min poles that were being jabbed in -- and there was no sleep. you never knew when you'd get another shot to the face, the nose, the solar plexus area. they'd use the ho chi minh poles. and it was always designed by sadists to get the -- extract the worst possible pain on women and men and then the sexual abuses that are visited upon people as well. dr. bisset talked about how they punched his teeth you know? major, major problems. just beatings, beatings and more beatings. i honestly believe castro and those who have committed these atrocities ought to be held to account by the world for crimes

against humanity. rather than invited in as partners. yes, you have to deal with dictators as a country. ours does and do many others, but to have human rights as you know, an issue, maybe an issue, not the issue is a serious mistake. and again the embargo i would just say for the record and perhaps some of our witnesses will want to speak to this. there has been robust trade with the european union canada and other countries of the world with cuba for decades. and there's been no diminution whatsoever in torture, child sex trafficking. if anything the trade has facilitated particularly with convicted pedophiles and others who travel the world, to abuse little children, to rent a boy or a girl when they go to cuba. i just had passed on the floor

of the house of representatives for third time the international megan's law. so that convicted pedophiles -- that we will know this country is a destiny when they're leaving to go on sex tourism trips. how horrific is it that the government of cuba actually benefits financially from that, and if that's not accurate then allow a full-scale investigation because we have so many stories and so much information and again, i have to say this and i would put this major parts of this into the record. the trafficking victims protection act has established what will be called a tip report. comes out every year and cuba has been designated as a tier three country when it comes to modern day slavery. the idea of trade and somehow

there's a matriculation with more trade with the dictatorship didn't work in vietnam. they have gotten worse. it has not worked in china. xi jinping is in love with mao and more trade occurs with the people's republic of china and even many of our businesses are learning that if you don't respect human rights intellectual property rights and the like are another casualty of a dictatorship. when people talk about the internet being open, i'm the one who held the hearings right in this room. several times. but one truly historic one with google, yahoo! microsoft and cisco, and yes, it was in china. i swore them all in and they were part of the censorship. we know that the castro regime has great capabilities as the look of belarus and other

dictators to ensure that internet, whether it's e-mails will be closely surveilled so the best and brightest of cuba are found and apprehended and thrown into prisons. there's no open internet there. there isn't in any dictatorship in the world. china has written a book on it with the great firewall of china and we have a situation that will replicate itself there. finally, will say this testimony from these unbelievably brave women and men helps tear off the veil of secrecy and open secret if you will. it's been out there, but thankfully through c-span and the congressmen and women who will see this record, you are bearing truth and bearing witness to a very ugly reality that is pervasive. again, i do believe the facade

of legitimacy that castro craves and i believe just got a helping hand. that's just my view. "the washington post" and so many others have already opined on that in their editorials. this was not the time to take that view. there should have been an effort to say, human rights first. as you say, mr. atunis, then economic issues and other kinds of engagements. but as we have seen i have seen one statement after another out of havana, from high government officials, nothing is going to change. and if anything, with the re-arrests of at least five, maybe more of the 53, and others who have been rounded up which is the game that this man plays or this regime plays in cuba, just shows that they are intent on doubling down and making it even worse for the dissidents. thank you for again bearing witness to the truth and for exposing these crimes against humanity. if you'd like to make any final

comment, mr. theel starting with you and then finishing with mr. artunis. >> i have the deepest respect for your commitment to human rights. and particularly your focus on child trafficking, human trafficking issues. obviously we differ about what's the best way to move forward in cuba and i'm happy to continue that discussion. the only thing i'd say on the human trafficking issue is that if you look at the u.n. human trafficking reports on cuba, they're different than our tier 3 listing. they're different because cuba and the united states -- cuba's refused to dialogue with the united states about this issue. i believe that that's changing and there have been some discussions with the tip units. >> i understand. can i say that the problem has been with some u.n. bureaucracies. i remember i held a hearing in this room on elian gonzalez and reverend walker came and presented testimony and was waxing eloquent about how the child mortality rate is so low

and i had read the reports that came out of the certain u.n. agencies that suggested that was so. and i asked him, because i know of one -- as some of our witnesses have said earlier trusting government officials to tender honest numbers you know if you believe that i'll sell you the brooklyn bridge. there's no reliability. there's no independent confirmation. there's no cross checks. there are checks and balances whatsoever. but i also pointed out that dr. bisset, a great man who had suffered horribly for his views on human rights belief in human rights, he exposed eugenics policies in cuba. where children who have disabilities are routinely killed through coercive abortion so that yeah, sure some of these kids, you know, never make it to birth because they have been killed by the state. and that is another crime against humanity. it was called that at the

nuremberg war crime tribunals for what the nazis did to the polish women and others. the doctor suffered for that, so those numbers are very, very unreliable and -- the child mortality and the like. and as was mentioned earlier, russ lleyton, there's so much showcasing going on, but the ability to discern the real facts when others bear witness that's not the case is very -- very large. >> yes, i have something to say. i remember that in 1990 i don't have a precise amount, i don't have a precise number.

my youngest son was born prematurely. and where he was born i saw several children die. however, -- however i know that the hospital never reported those deaths and it was not known nationally or internationally. i didn't -- i didn't like to listen to fidel castro's speeches but sometimes i had to when i did. because we need to know what the enemy says. and fidel castro is the enemy, and fidel castro is the enemy of cuba. i listened to the dictator's speech that year.

and he said -- he said that -- i don't know what the statistic was, but he referred to the child mortality rate in cuba being very low. but having been pregnant and having had the difficult situation with my son i had been in two hospitals. and i can assure you that many more children had died. but also i never received adequate medical assistance. in order to help me in childbirth. in cuba medicine and education

are only good for those who are part of the regime or who sympathize with the regime. that is my testimony and with regards to the child mortality rate in cuba. and as to what kind of treatment, a cuban who dissends from the regime receives the best hospitals and schools. >> i want to clearly establish something before we finish today. maybe it hasn't been well understood. or maybe it's the redeem's ability to spew false numbers that confuse people. i want to tell you that in spite of the fact that there are some

dissidents who do support obama's policies toward cuba and what i'm referring to are the negotiations i can tell you that it's a minority of dissidents. i assure you that the majority of dissident leaders in cuba of opposition leaders in cuba oppose and an example of this is the forum for rights and freedoms. as well as the agreement for the democracy of cuba. both of these are initiatives, and have been signed -- they have been signed by the most important leaders of the cuban resistance. there's one last thing which i want to tell you because i know this is part of the permanent congressional record.

and it's something that has worried me ever since i first heard it. because i know that the victims don't have a possibility of speaking here. i ask those who are seeing me and listening to me, all those who are well intentioned are listening to this. i ask you to closely follow to follow the repressive situation in cuba right now. i want to call attention to how the cuban national front which consists of different organizations is being oppressed. who right now yesterday or the day before yesterday but right now are being repressed. because they're demanding freedom and democracy.

finally, the struggle for cuban freedom has caused a lot of pain, a lot of blood, a lot of dead. a lot of political prisoners. and that's why we can't allow that a maneuver by raul castro can result in an understanding of the u.s. government that may contribute to this being provided to the leaders and therefore to the continuity of the people. i assure you that -- i assure you that the permanence of the regime in power -- i assure you that neo castroism can be worse. i assure you that neo castroism can be worse than all of these years we have suffered. i want to thank you for this opportunity.

and especially chairman smith. and that the cuban resistance in spite of this agreement which we consider to be immoral, in spite of the beatings, in spite of the imprisonment and the pain, the cuban resistance will continue its struggle. we are not going to -- to surrender our country's destiny to anyone. because we are convinced that the principals and the destiny of a country should not be decided on a negotiating table. the destiny and the freedom of a country should not be decided at

a negotiating table where the people have been excluded from. i thank the u.s. congress, i thank those this cuba listening to us. and i return to cuba after this experience much -- i return to cuba after this experience much more convinced of the path we have taken. and i reiterate what is my slogan. i will not be quiet. >> thank you so very much for that eloquent courage. thank you for your testimonies and your leadership. the hearing is adjourned.

the senate armed services committee heard testimony today on the state of the guantanamo bay prison as the u.s. normalizes relations with cuba. here's a brief exchange between senator tom cotton of arkansas what presents his reasons for keeping the prison open, to principal deputy undersecretary of state brian mckean. >> okay, now i want to explore the so-called risk balance between recidivism and released terrorists and the propaganda value that they get at guantanamo bay. how many recidivists at guantanamo bay? >> i'm not sure. >> how many are engaged in anti-american -- >> it's -- >> because they're contained. because they only engage in that overseas.

how many detainees are at guantanamo bay on september 11, 2001? >> zero. >> how many were there in october 2000 when al qaeda bombed the uss"uss cole"? >> none. >> the facility was not own before 2002. >> what about 1979 when iran took over the embassy? 1983 when hezbollah bombed our embassy in our marine barracks in lebanon? the answer is zero. >> correct. >> islamic terrorists don't need an excuse to attack the united states. they don't attack us for what they do. they attack us for who we are. it is not a security decision, it's a political decision based on promise the president made on his campaign. to say that it's a security decision based on propaganda value that our enemies get from it is a pretext to justify a political decision. in my opinion, the only problem with guantanamo bay is there are too many empty beds and cells there right now.

we should be sending more terrorists there for further interrogation to keep this country safe. as far as i'm concerned every last one of them can rot in hell. as long as they can't do that they can rot in guantanamo bay. >> if you missed any of the hearings on guantanamo bay you can see it later in our video library any time at c-span.org. the political landscape is changed with the 114th congress. not only are there 43 new republicans and 15 new democrats in the house, and 12 new republicans and one new democrat in the senate there's also 108 women in congress including the first african-american republican in the house. and the first woman veteran in the senate. keep track of the members of congress using congressional chronicle on c-span.org. the congressional chronicle page has lots of useful information there, including voting results and statistics. new congress, best access on

c-span, c-span 2, c-span radio and c-span.org. now to lincoln, nebraska, where pete ricketts delivered the state of the state address. he was sworn into office on january 8th as nebraska's 40th governor replacing fellow republican david hein ayman. these 30 minute remarks come courtesy of nebraska educational telecommunications. >> honorable senators and distinguished guests i present to you the governor of the great state of nebraska -- governor pete ricketts. >> thank you very much. thank you. please go ahead and sit down. thank you very much, i appreciate it.

president foley, speaker hadley, members of the legislature, tribal chairman distinguished guests, friends, fellow nebraskans, congratulations once again on the commencement of the 104th nebraska legislature. i want to commend you on your willingness to serve your constituents and our great state. i recognize your personal sacrifice as well as your commitment to public service which is a high and noble calling. i look forward to working together in a spirit of collaboration which is of course the tradition of nebraska's unique nonpartisan institution. our future success depends on our ability to work together. and i look forward to continuing to work with each and every one of you.

speaker hadley it's a pleasure to work with you. i look forward to seeing what we can do together for the state. congratulations on being elected speaker. the confidence your colleagues have in you speaks volumes. and nebraska is grateful for your dedication. i also want to take a moment to recognize the nebraska national guard. the role of these men and women who are truly citizen soldiers has never been more important, has never been more difficult for families, and never been more dangerous. we live in a world that is dangerous. and these men and women not only protect us by deploying to foreign legions, but also keep us safe here at home when we have situations like the tornados in pilgrim and beaver crossing. we are grateful for their service and their sacrifice.

general bowheck, i think you're here. [ applause ] nebraska is a special place. we are more than just lines on a map. we are bound together by more than just our common geography. it's a culture. a way of life. it's how we treat each other. with dignity, respect, and civility. we have a great state built by our ancestors who made nebraska home for their children and grandchildren. like our ancestors before us we have a duty to create an even better future for our kids and grandkid grandkids. and just as our ancestors before

us, we a duty to grow nebraska. i'm excited to join you to take advantage of the opportunities that we have. i'm -- i've been encouraged by the discussions i have had with many of you about how we grow nebraska. as citizen legislators, you all bring your experiences, your life experiences to our work. i too have outside experiences and i promise the people of nebraska to bring my business experience to work for the state. to that end, i have crafted a budget, a blueprint, that slows the growth of spending, provides for property tax relief has room to make improvements in critical areas such as hhs and corrections. and also funds the essential services of state government. let me take a moment to talk about my philosophy. on the cash reserve.

my budget recommendation for the next bian yum does not draw down on the reserves, however we have too much money there. we should work together, to return more of that money to taxpayers. and the remaining reserves should be only used for emergencies or one-time critical expenses. it's easy to view a government budget as a collection of numbers and rows and columns next to agencies and programs. but behind those numbers are people's lives. we must be mindful that every dollar is precious. the dollars that fund our budgets, our dollars that come from hard working nebraskans. we must be mindful that the agencies and programs are designed to serve our citizens. and many of them are people in need.

this session we will meet, we will debate, we may even compromise. about the -- how we set about to fund the important services for the people that we represent. that our job. we will do it with dedication and commitment. today, i am privileged to report on the condition of nebraska. it should come as no surprise that i believe the state of our state of nebraska to be strong. [ applause ] that's a good -- yeah. here in the heartland we have major military installations. fine academic research centers. and we are at the heart of the nation's agricultural system. nebraska is on the front lines of bioterrorism preparedness and

at the university of nebraska medical center, we have medical center who have had success in responding to the ebola outbreak. i want to recognize that the members of the team that were here with us today for their success and bravery. up here we have dr. dan johnson. nurses kate bolter. and shelly sweethelm. please stand up and take a bow. there you are. [ applause ] our people, every day heroes all across nebraska are the reason the state of our state is so strong. from the teachers that prepare our children for an

ever-changing world, to the medical professionals that are treating ebola patients. from the law enforcement officers and firefighters who put themselves at risk each and every day to our farm families that feed the world. from the volunteers who build our communities, to the crews at our air force base and our military families who answer the call. these nebraskans love to serve. and they are what make our state strong. i have long said that nebraska's greatest resource is our people. i know from personal experience when you hire a nebraskan you'll hire somebody who has a great education, a great work ethic, who's loyal. and who will help your business succeed. as i have said it before, nebraska is what america is supposed to be.

i travel nebraska from shadron to fall city. from norfolk, and i have listened to the people of nebraska and i have been privileged in my travels to connect with old friends. like senators brosh, bob cris and jim smith. i also appreciate making new friends who supported me like senator dan hughes and john king who are on my ag advisory committee and senator bloomfield who is supported throughout. senators campbell and mellow were gracious enough to meet with me to discuss issues and senator capels came to an event with mike foley. this budget which was informed by my discussions with many of you and by the fact that i grew up here represents not only the

priorities of nebraskans, but their hopes for our shared future. i'm eager to work with you on four major priorities. to grow nebraska. the first is strengthening our economy and a creating jobs. second, reducing taxes. third, easing regulatory burdens. additionally, expanding educational opportunities. all of these priorities are interconnected and are reflected in my budget recommendations. now, because it's so important that we boost the economic engine of our state and create jobs, one of my administration's first steps was to conduct a national jobs search for a new director of the department of economic development. i'm proud to have brenda hix sorensen join my team.

her expertise will help us realize the untapped potential in our state. and will be well served by her track record. in attracting and recruiting businesses. we want the world to know that nebraska welcomes business investment, and has good jobs in great communities. brenda will help us get that message out. but creating jobs is more than just a marketing focus or incentives. we need to evaluate what we're doing to encourage small business to expand and grow. we need to have a plan to attract business investment as well as business relocations. and we need to be strategic and aggressive about trade opportunities. and there's no better place in expanding export opportunities than with agriculture. our farmers and ranchers are feeding the world. according to ron in green at the

university of nebraska, by 2050 in will be 2 billion more people on the face of the earth. and because of rising standards of living we will have to produce 100% more food. 70% of that will have to come from productivity and innovation. well, folks, our farmers and ranchers are the most productive, innovative in the world. and nebraska is number one for cattle feed, and number three in corn production. and we're the fourth largest state for overall agricultural production. i'm looking forward to working with senator johnson and the members of the ag committee on how we can expand upon these successes. this budget provides additional funds for more export trade missions in both the department of economic development and the department of agriculture. and under my administration, these two departments will work more closely than ever before. job creation in part depends

upon a tax climate that encourages growth. we have a lot of work to do to stay competitive with our neighboring states and staying competitive is something that is often overlooked when we talk about jobs. we need to attract new individuals and families to nebraska. we have a great way of life. and great jobs to offer. now we need to highlight and these and invite people to come and make nebraska their home. unemployment in nebraska is around 3%. which is a blessing and a challenge. a recent state chambers study said that retaining skill -- skilled workforce is one of the top concerns for our business leaders. we have long discussed the problem of brain drain and i can tell you as a dad, i want all roads to lead back to nebraska. [ applause ]

to do that, we need to remove the obstacles. which is one reason why we must reduce taxes. according to one national business news network we are the third overall highest tax state, behind only california and new york. now, think about that for a second. we can do better. our high tax reality doesn't just hit our citizen, it discourages our businesses and new business investment and our high taxes, to discourage people from choosing nebraska as a place to live, work and raise their family. and there's one consistent message that i have heard in every corner of the state -- property taxes are too high.

[ applause ] my budget adds $60 million each year to the property tax credit relief fund. that's nearly 43% increase and it will create a grand total for the biannium of $400 million. this will help all nebraskans, homeowners, business owners and our farmers and ranchers. an exampl of someone we can help is roger brant. he's a farmer from up in wayne county. when i met with him -- actually, he's here today. can you stand up please. [ applause ] when i met with roger last spring, roger showed me his tax assessments from three pieces of

property that he owns. his assessments increased to 36% to 50%. on each parcel. that was just in one year. folks, that is not sustainable. that's why i also want to work with you to reduce the valuations on ag land. i have funded a phased in approach in my budget to reduce valuations from 75% to 65%. now, we didn't get to be a high tax state overnight. and we're not going to get our taxes down overnight either. but together, we can take important steps to providing tax relief. i do want to take a moment to talk about some of our funding priorities. one of the most important things we do in government is take care of the most vulnerable people in our state. we as elected officials are a voice -- give voice to the voiceless. and we can and we must do better.

my administration is conducting a national job search for a new ceo for health and human services. i'm -- thank you. [ applause ] i am looking for a transformational leader to come in and reform that culture. state government needs to work for the children who are in the care of the state, for the individuals who are in our facilities, or who rely on government services. we need a culture in our state agencies that is people centric. the people who we help don't fit neatly into the silos we've created. they use services across all of our divisions. and we need a system that will help the entire person. and help them reach their full potential and if possible, live a life free of public assistance. [ applause ]

there will always be people who continue to need our help. and we must serve them with dignity and respect and more effectively. and when we start getting better outcomes for our people, our costs will come down as well. many people who need our services just need a hand up to get back on their feet. we have to prevent government from getting in their way. last year, i met suzanne sheldon. she is a widow and has three kids. they receive their health insurance through medicaid. she works hard and is intent on teaching her children the value of a great work ethic, just like her father taught her.

so when her 16-year-old daughter got a job and was told that if she earned more than $6,000 a year she would lose her health care insurance, suzanne was infuriated. i don't blame her. suzanne and her family have joined me here today. suzanne, kids, will you please stand. [ applause ] suzanne and her children put faces on our need for common sense approach for a government that doesn't create disincentives for people and families to work. [ applause ] next, it is time to pursue comprehensive reform in our corrections system. another department in need of cultural reform. [ applause ]

scott brakes will be joining my administration as the me administration. he brings a wealth of experience with over 32 years in the corrections system. starting out as a corrections officer, he worked his way up through the own wormed ranks before moving into management. i'm confident that he will help us chart a new course for this agency. inmates released early by mistake threaten not only the public safety but also the public's trust in their government. nobody in corrections want these mistakes to occur, you they did and we have got to do better. interdirector frakes we will create a culture of accountability, common sense and excellence. the department of corrections will seek to improve its rehabilitation and reentry programs to address recidivism.

we will immediately evaluate our short-term and long-term needs and set out on a course of reform for this system. this budget leaves room to address the immediate needs that we have in corrections. many of you here today have worked to tackle this issue. there is no branch of government that has a corner on the market of good ideas or solutions. we have to work together executive, legislative and judicial, for comprehensive reworm that includes addressing sentencing, good time laws and facilities management. also mental health. i will work with scott frakes to get a full picture of what we need to do and a look forward to sitting down with the leadership of this body to set a timetable to what we can agree on to make substantive changes.

this pudget etbudget holds the growth of state spending to a little over 3% in the next two years the slower growth rate than 6 1/2% from the last one. we will fund our priority puss in a way that is sustainable. we grow our revenues about 5% a year on average. if we restrain government's growth, we can afford to put money back into the pocket of taxpayers. in turn taxpayers will be able to afford more goods and services. businesses will expand. and we will grow nebraska. [ applause ] another way is to provide a private sector solution of chief operating officer. i have hired felix davidson, u.s. marine corps, army captain

and a proven track record of success in change management and process improvement. i have one more tax relief proposal an important one. like many of you, i believe that we need to eliminate the state income taxes on our military families. [ applause ] i have left room in this budget package to work with the chairman and the revenue committee to give our veterans relief. chairman dplchlt manman manman glor, i want to thank you for your series in the u.s. air force and you know how important it is to take care of our veterans. from the crews at the air force base to the army in scotts bluff, we can't thank our men and women in uniform enough and we don't want to lose these treasured resources to another

state. besides high taxes and lost talent our business leaders say overregulation is a top concern. we all want clean air, clean water and safe working conditions. but we must also apply common sense so we don't create barriers for businesses creating jobs. when we get our property tax bill, we can see exactly how much we are paying. the cost of regulation, however, is hidden. the job killer all the same. as governor, i will stand up to the overregulation forced on us by washington, whether it's new health care mandates for employers, ep overreach on car upon emissions or waters of the u.s. or the delay in the keystone pipeline. washington just doesn't get it.carbon

emissions or waters of the u.s. or the delay in the keystone pipeline. washington just doesn't get it. mud applaud i have urged congress and president obama to swiftly approve the keystone pipeline it will bring much needed tax revenue to nebraska counties not only during construction but for years to come and back here at home, we also want to set a good example. i will be asking all of my agency directors to make it a priority to innovate ways to reduce regulatory burdens and purr rowe bureaucratic delays. [ applause ] proper regulation protects our health and safety. overregulation delays progress and growth. we can do better and we will. as we seek to create jobs slow the growth of government, reduce taxes and fight burdensome regulation, we must also continue to strengthen our education system. as we balance the budget, we

must ensure we put a priority on proper school funding and improve educational outcomes. in particular, i've talked a lot career vocational training. every manufacturer i have talked with said they cannot find enough skilled labor and it's a parrier gore them ex-band issing. i have proposed an investment in innovation. my pudget includes funding for a pilot program, $250,000 in each year to form a public/private partnership to create career and vocational training. it is a great option for our young people that are looking for jobs high-paying jobs in our skilled labor force, manufacturing and agriculture. i was told that if you get a two-year electrics's degrill and

work for them, make $22 an hour. stay there a year, pass two tests, making $28 an hour. think that. that's 21-year-old making $56,000 a year. plus full pen fits. that's the start of a great career. now, as i mentioned before we honor the service of our national guard. my budget recommendation includes an additional $120,000 per year for a total of more than $488,000 of tuition assistance for these patriots who serve in our nebraska national guard. [ applause ]

what can we be doing to make nebraska a place where people want to be? many of us in this chamber have different political philosophies or come from different ends of the state i know that we are united. we are united in our desire to make nebraska a better place for our communities and for our children and grandchildren. we are united in our desire to make nebraska a place where people want to be. for the native americans who nurtured our rich land to the pioneer homesteaders to the founders of our businesses, universities, farms and ranches, our ancestors built more than just a state. they built a community that reflects the very best of america. our ancestors made sacrifices

for future generations for the greater good of nebraska so, too, we will focus on the future of nebraska. bell harness the spirit of our unmc heroes and out nurses and doctors across the state. we will call upon the dedication of our police and firefighters in nebraska cities and towns. we will harness the determination of roger branch and nebraska veterans and call upon the hard work and aspirations of suzanne shawl and her family and all the hard working families across nebraska. we will work together fuelled by their strength, acting on their behalf, and we will grow nebraska. [ applause ] thank you all very much for what you do for our great state.

god bless. and god bless the people of our great state. [ applause ] up next on c-span3, treasury secretary jack lew testifies the president's 2016 budget request and overhauling the u.s. tax code. then, congressman paul ryan discusses international trade. later, a hearing looks at possible changes to military compensation and benefits. here are some of our featured programs for this weekend on the c-span networks. on c-span2's book tv saturday night at 10 on after words washington bureau chief for the sunday times of london toby harnden on the british efforts in 2009 to stop the tall bans advance in afghanistan while

awaiting u.s. marines' reinforcement. sunday at 10 mark crow to have, senior editor at melville house books on the u.s. senate's torture report and why his company decided to publish it. and on american history tv on c-span3 all this month interviews with former korean war p.o.w.s. this sunday at 10 a.m. eastern charles ross an army sergeant who was captured by the chinese and held as a p.o.w. from 1950 to 1953. and just after 9, a look back at selma and the voting rights acts 50 years late we are congresswoman eleanor holmes norton and cbs news white house correspondent, bill plante. find our complete television schedule at c-span.org and let us know what you think about the programs you're watching. call us at 202-626-3400. e-mail us at comments at c-span.org. or send us a tweet at c span #comments. join the c-span conversation. like us on facebook. follow us on guilter.

next, treasury secretary jack lew testifies about president obama's 2016 budget request. he also speaks about economic growth and taxes at this two-hour senate finance committee hearing. senator orrin hatch of utah chairs the committee. >> the committee will come to order. schumer. ha ha ha. [ feedback "discovery"back ] today's hearing is on president

obama's budget for fiscal year 2016. i want to thank secretary lew for appearing before us today and i'm not going to sugarcoat anything with this budget. instead, i'm going to cut right to the chase. the president's budget proposes to hike taxes by $2.1 trillion. seemingly, not content with the $1.7 trillion the new taxes allies in congress have imposed the past six years. the president, with this budget wants to raise taxes on savings, investment small business and more somehow thinking it will help the committee. sadly, this insatiable desire to raise taxes is not intended to bring our budget into balance. rather, the president's $2.1 trillion tax hike is accompanied by proposals to further expand the government to an even greater share of our committee. the proposed pudget never balances. deficits continue which means the debt is a share in the committee would remain at levels not seen in our nation's history outside of a few years

surrounding world war ii. that outcome would mean continuing risk of what the non-partisan congressional budget office has labeled a "fiscal crisis." in fact, cbo has warned us repeatedly about potential fiscal crises under president obama's tenure. they have also made clear that unsustainable entitlement spending is at the heart of the potential for a fiscal crisis. yet, the president's pudget pro-proposes little in the way of reining in spending on entitlements and does virtually nothing to address social security. despite having pledged in 2009 he would not kick the can down the road on social security, that is exactly what the president is now proposing to do with his budget, even while the disability trust fund is projected to be exhausted next year. simply put there are too many shortcomings in the president's budget to adequately address in my opening statement you they include higher taxes that would

stifle job creation, economic growth savings and investment, new wealth taxes muddled thinking distributional issues a lack of significant reforms to our unstable entitlements, ongoing deficits and outside -- outsized risky federal debt and a repackaged pank tax that nods to the ineffectiveness of the dodd frank law. the budget even puts forward a tax on section 529 education savings, which suggests that the budget's authors are out of touch with the american people. of course, we have heard that the proposal to tax 529 education savings has been withdrawn and labeled a distraction. but it's still supported on policy ground buys the administration, although i am happy to see it's withdrawn. this is unhelpful and that's the kindest possible word i can think of to describe that particular proposal and others like that it that are apparently

founded on the no eggs that american people's savings are not their own but instead targets for more redistribution. like i said, there's a lot i can complain about when it comes to president obama's budget, but let's be honest rehashing these complaints over and over again is not going to be the best use of the committee's time. so secretary lew, let's try to look at some areas in the budget where the administration seems willing to go in a positive direction even if in my opinion, it falls short on the substance. in those areas, let's try to work together toward what i believe is the shared goal of everyone here, to help americans where we can and get out of the way when we should. for example, i believe that we share a desire to reform our tax code, which everyone agrees is severely broken. it does not help american families and harms american businesses. and by businesses, i mean businesses of all types, not just one particular organizational form. i believe we share a desir to renew trade promotion authority as you identify in your -- in

your testimony. i believe we share a desir to promote productive investments in infrastructure. of course if we are going to effectively address these issues, the president and his administration owe it to the american people to suspend what often seems like an unending political campaign for enough time to at least explore bipartisan corporation. i will close with a question for you, secretary lew, a question did you not answer and evaded in testimony earlier this week. the irs commissioner evaded a similar question when he was here on tuesday. secretary burr well did the same in our hearing yesterday. the american people deserve an answer to this question and i hope you will be willing to give us one today. the question is do you have contingency plans in place in the event the supreme court invalidates the current structure of the affordable care act tax subsidies later this year? i would like you to address this question in your opening remarks, if you will and i will note that it's a simple

question requiring only a one word answer yes or no. once again, i want to thank secretary lew for appearing here today. and with that, i will turn it over to the ranking member senator wyden for his opening statement. >> thank you very much mr. chairman, and thank you secretary lew, for being here on day three of what is essentially budget pal lose za here at the finance committee. while the committee examines the administration's pudget proposal today, the underlying issue remains the health of the budgets of middle class workers and families trying to get ahead. the fact is too many middle class oregonians are hurting. our job is to put america's middle class on solid economic ground, lift wages and make sure that everybody benefits when the committee grows. the president's budget proposals go after that challenge in a number of ways and many of them are designed to improve america's badly broken tax code. for example, the budget proposes

to make incentives for education, child care and retirement savings more xbren rouse. it would take several steps to address the unfair ways our tax system treats wage-earning middle-class workers compared to others and i was pleased to see that the proposal would move toward ending the system of tax deferral that traps the profits of america's businesses overseas instead of reinvesting them here in this country. these are all strong ideas but i see an opportunity to do something even bolder. when it comes to the tax code colleagues why keep bailing water out of the boat instead of fixing the leaks? the most effective improvements that congress can make to the middle class tax incentives are going to come through comprehensive tax reform. that's the best route to a modern tax system that is simpler and fairer for all. and it's the pest way to end the

uncertainty caused by our tax code and to address its most persistent issues. through comprehensive reform the congress can ensure that incentives provide the biggest help to the people most in need. too often that is not how the code works today. comprehensive reform can do more than piecemeal changes to level the playing field for wage earners and make filing easier to manage. and there is one indisputable fact. a comprehensive approach to tax reform is the best option for middle-class families, not one that is focused exclusively on business taxes. a lot of americans certainly there are a number in the administration that have advocated a corporate-only or business-only plan for reform. i would not want to have to explain to a single parent in oregon why the congress overhauled the tax code for corporations but not for that

middle-class person. the corporate side of our tax code undeniably needs reform. tax reform can and should make american business more competitive in the tough global marketplace. you it would be a grave mistake to leave millions of middle class families and small businesses out. now, of course, the finance committee is going to be working with the treasury department closely over the upcoming year on a variety of issues in addition to tax reform. the treasury department is working hard to look at new approaches to make sure that american workers and american priorities are maintained in tough global markets. so i look forward to hearinged administration's efforts to address mislined currencies particularly with respect to the ongoing discussions with -- on the transpacific partnership. and it's important not to forget the treasury plays the an ining at the dpral role managing economic sanctions against countries like russia iran and cube pa.

we welcome secretary lew, as you know, updates on how those sanctions are working and how the administration envisions them changing in the future. so, there is a lot on your plate, secretary lew. we thank you for being here and colleagues i just want to know about the, as i tried to do yesterday when it seemed at some point the finance committee looked like it was becoming a mock trial kind of getting into a whole host of legal you know, issues, is i think there is something ironic the fact that a number of our colleagues on the other side of the aisle have filed a supreme court brief challenging the law and then keep demanding various cabinet secretaries explain how he or she plan to avert the disaster that's going to occur if their brief is successful. so, i hope that we can have a discussion on the important issues relateding to the budget, taxes and our competitiveness.

i think we talked about this at great length yesterday. at some point, i admitted that chairman hatch is a real lawyer, he's trial lawyer. i'm a lawyer in name only, having run the legal aid program for the great panthers. yesterday, felt like we were going back to the socratic method here in the finance committee and i hope we can tackle these major issues in front of the treasury pudget today. and thank you, mr. chairman. >> thank you. i think you're a good lawyer and anybody can do what you did with the great panthers has got to have some moxie is all i can say. so i have a lot of respect for you. our witness today is treasury secretary jacob lew. secretary lew was confirmed to his current position on february 27, 2013. previously, secretary lew served as box's white house chief of staff and before that, he was the director of the office of management and budget, a position he also held in president clinton's cabinet from

1998 to 2001. before returning to omb, secretary lew first joined the obama administration as deputy secretary of state for management and resources. secretary lew also has broad-paced private sector experience. he served as managing director and chief operating officer for two different citi group business units and served as executive vice president and chief operating officer of new york university. secretary lew has a long history with the federal government including the federal budget and the budget process, goes all the way back to the tax bill of 1986 and the three years before that. i'm afraid secretary lew, if i detail your long history of public service, we will run out of time for this hearing. so, i'm ashamed that you had to work so long in the federal government. but really very proud of you for all the work that you have done all those years. suffice it to say, secretary lew, that we generally appreciate your long history of

service to our country. i want to thank you for being here today. and i want you to proceed with your statement and i have to -- i have to open up the senate and then i have to be in judiciary because one of my bills is coming up and so i have asked senator thune to take over till i can get back or at least until 11:00, then i will -- if i don't get back by then i will have others take over. so, with that, let's turn the time over for you for your statement. >> thank you, mr. chairman for that very gracious introduction and welcome. thank you, ranking member widen, members of the committee for having me here today to testify on the president's budget. a year ago, president obama said that 2014 could be a break through year for our committee and the evidence is now clear that over the past 12 months america has made great strides. we are seeing real progress in job creation, economic growth family wealth, energy independence manufacturing

exports, retirement account, the stock market, health care costs graduation rates and the deficit. the fact is our businesses created nearly 3 million jobs last year, the most jobs of any year since the late 1990s. this capped off roughly five years of job growth the longest stretch of job growth in our nation's history and the creation of 11 million new jobs. in addition, unemployment rate dropped to its lowest rate in 6 1/2 years and our committee continued to expand, with healthy growth in the second third and fourth quarters of 2014 and forecasts projecting above-trend growth for 2015. from a global perspective, we continue to outber form our trading partners, many of which are still trying to climb out of the vast hole created by the global economic crisis. at the same time with the affordable care act in place, 10 million americans now know the financial security of health insurance and health care prices rose at the lowest rate in decades. the automobile industry continued its rebound in 2014, even as we mark the official end of the auto industry rescue and

american taxpayers recovered more money than we invested. finally, thanks to the administration's all of the above energy strategy we move closer to energy independence than we have been in decades and gas prices fell, providing a shot in the arm for families and small businesses. so, today, our nation has turned the corner on a number of fronts. yet as we know this resurgence has not reached every american. for too many hard-working men and women in this country it's still too hard to get ahead and too hard to earn enough to raise a family for child care pay for college, buy a home and sec your a retirement. the president's budget meets these challenges by offering real solutions to grow the committee, strengthen the middle class and make paychecks go further. this budget is built around the basic idea that hard work should pay off. it is practical, not partisan and it lays out clear steps to rein in spending and eliminate wasteful tax breaks so we can reduce taxes for working families as well as many business and manufacturers. what's more this pudget replace the across the board cuts from

sequestration and makes sensible investments to increase our committee's competitiveness while maintaining a responsible fiscal path. as we know, not long ago, some were predicting that the president's policies would explode our deficits a little history though makes clear the opposite is true. in the 1990s when i was budget director, i oversaw three budget surpluses in a reand we were on a president to pay down our national debt. you when this administration took office in 2009, there was a very different reality. after years of runaway spending, including tax cuts for the most well off and two wars, neither of which were paid for and then the financial crisis, our deficits reached a postworld war two high. the president moved to right our nation's fiscal ship with his balanced economic approach the agreements forged with congress and a growing economy the deficit has fallen by almost three-quarters. the swiftest downturn since the period of demobilization following world war ii. the deficit is projected to decline even further in the next fiscal year. and today, we are putting forward a plan to lower our def

city to about 2 1/2% of ddp over the ten-year budget window. our nation's improved financial footing has occurred even as congress was able to undo a portion of sequestration in recent years, replacing these cuts with more sensible and balanced savings. still, nothing has been done to address these dangerous cuts in 2016. without congressional action vital funding for our national defense and key priorities like education, infrastructure and research will be severely cut pack. the president's budget provides path to eliminate sequestration while achieving the president's long-standing commitment to a responsible and palled fiscal approach. in other words, it charts a specific way forward to not only keep our fiscal house in order but to create room for pro-growth economic policies which are needed to keep our nation stronger for the future. one pro-growth strat veriycy tax reform to restore basic fairness and efficiency for our system. pie scrapping loopholes and tax breaks that reduce the taxes for the most to the nat american bus

do not help our economy, we can provide critical tax relief for middle class families and those struggling to join the middle class. our economy should work for everyone and everyone should shoulder their fair share to maintain our fiscal -- our nation's fiscal health. this budget also places a serious focus on achieving bipartisan business tax reform so that america is the best place in the world for business to locate, grow and create the kind of good, high-paying jobs that support middle class families. this plan shows how members of both parties can reach common ground and realize the shared objectives of simple bluffbying the system, removing wasteful tax references and distortions and lowering tax rates so that we no longer have a system in which some businesses pay nothing while others bay the highest rates in the developed world. it's time to stop rewarding corporation and industries that have the best lobbyist and most creative accountants and start strengthening businesses that build, hire and invest in the united states. it is also time to make inversions, a loophole that allows u.s. companies to lower their taxes after they pie

foreign businesses a thing of the past and this budget does that. a more fair and efficient tax system will help create good middle-class jobs and grow our economy. we no that he with business tax reform there will be one-time transition revenues. the president wants to use some of these one-time revenues to make long overdue repairs to our nation's roads, bridges ports and airports. the need to rebuild our infrastructure is irrefutable and that's why this budget tackles our infrastructure challenges by creating an extended period of sustained funding for a six-year surface transportation bill and starting an innovative new pond program that will ignite more public/private partnerships in cities and states across the country. of course, keeping our come back on track building on the momentum we have made and making possible for every american to get ahead is going to require strategies that are both bold and effective. and that's what this budget is about. it proposes a series of targeted investments that have been proven to make a difference. it invests in education by expanding student loans, strengthening tax incentives and making community college free

for those who earned it. it invests in america's workers by starting apprenticeship grants enhancing job training programs and boosting the earned income tax credit. it invests in working families by increasing the child care tax credit, providing tax relief for families when both parents are holding down jobs and allowing more working families to earn paid leave. it invests in retirement secure pit i making it easier for employees to automatically save for the future and business to provide 401(k)s to their employees and it invests in innovation by creating more advanced manufacturing institutes creating cutting-edge medical research initiatives and bringing broadband access to more communities. in concert with these breaux growth strategies this budget calls on congress to send measures to the president's des that can will help our committee now and far into the future. this includes raising the minimum beige and fixing our broken immigration system. the president's trade agenda is another important component of our strategy to grow the committee and strengthin' the kmidle class and i look forward to working with all of you to pass trade promotion authority to expand the reach of america's

exports and create a level playing field for business and workers. the strategies i have described are part of the president's plan to help improve the lives of millions of hard-working americans while meeting our responsibilities to future generations. the task before us now is to put political brinksmanship aside and find areas of compromise and common ground. i'm certain with he can get this done and i will work with and every member of this committee so we can deliver for the american people. i thank you and i look forward to answering your questions. >> all right. thank you, mr. secretary. i'm gonna start with a couple of questions here and hopefully, the chairman will return soon and i will use five-minute rounds and see where it goes from there. i'm particularly concerned about the administration's proposal to raise the capital gains tax and apply the tax when an asset is transferred at death or by gift, not when the asset is sold as is the case today. that proposal, if enacted would have a devastating impact on

family farms and small businesses in my small state of south dakota and i want to give you an example. according to the south dakota state university agricultural land survey published last year land values in south dakota more than doubled since 2010 and gone up seven times since 2000. so if you take a typical family farm in south dakota that bought a section of land 640 acres back in 2000 for $640,000, which would have been roughly the price at that time in certain areas of my state and i would note that in south dakota, that would be considered a small farm, today that same farmland is probably worth somewhere between 3.5 and 4.5 million dollars, depending on where it is located. so under the current estate tax law which excludes assets up to 5.43 million dollars that family farm isn't taxed when it passes from one generation to the next. now, under the administration's proposal that family farm would be hit with a significant tax

when it's transferred from the -- to the next generation of family members. now, your proposal, as i understand it, exempts $100,000 in capital gains or 200,000 per couple. and raises the gains rate to 20%. so in that example, this south dakota family would suddenly find themselves facing a tax bill of $1 million or more. so, most farms of this size would not have liquid assets to deal with that large of a tax pill, meaning the only way they would be able to pay uncle sam would be to break up the family farm and sell off portions of it. so i know the president likes to talk about loopholes and trust funds and the like, but this capital gains row postal that you-all put forward really need to talk clearly what it would do. it is a very punitive death tax on america's family farms and family businesses, especially in places like south dakota, where we have seen significant price

appreciation for land. so, the question mr. secretary, very simply is what is the administration's intent with regard to this tax? if it's to break up family farms, obviously, it's gonna have that effect or is it simply an unintended consequence of your interest in posing yet another layer of taxation at death, which i think again would be very unfortunate? >> senator, let me step pack and go to the reason for stepped up basis and then get to the specific question about farms. stepped up basis is really meant to make our system work in a way that's more fair. right now, if any of us take savings and 401(k)s or i.r.a.s for our retirement we need to realize the income and pay income tax on that. for families that are able to accrue enormous fortunes that never need to realize the income, they are able to pass on

in stocks and bonds and other assets without any taxes paid the appreciated value. stepped up basis would treat those families the same as it treats all of us and middle class families. we were very concerned that it not have an impact that was unintended on small businesses and family farms so we do have exemptions that apply for the first $100,000 for individual, $200,000 for a couple. we also have an exemption that apply it is there's a modest income and we also have provided 15 years for the payment of any of the capital gains so that it wouldn't require a forced sale and we would look forward to working with and you the committee on trying to refine in any way we could to make this proposal which we think is fundamentally fair something that works well. >> well i guess the way -- the way that i look at this these are non-liquid assets not like

somebody that's selling stocks or bonds. we are talking about you know these are -- farmers tend to be land-rich and cash-poor. and you're talking shifting the point, the time the gain is realized. you're talking about raising the rate. and you're talking about just a huge tax liability for a lot of people who at a time when you want to see some of these assets transfer to the next generation. if you want to maintain family farming and ranching operations most of those require intergenerational transfers. i mean, that's how we keep that economy sustainable in states like south dakota. and strikes me at least that this is just a very, very punitive tax on family farms and small businesses. >> senator, i would say on the capital gains rate what we have proposed is returning to the capital gains rate that was in effect under president reagan at a time when we went through a period of economic growth with that capital gains rate.

so, i don't think the capital gains rate is something that is an untested one. in terms of the impact on illiquid assets we designed it so it wouldn't require a forced sale and we would look forward to working with you to deal with issues that arise in the design of a provision -- >> even if the rate goes back to the 28% rate, which it was before, i mean you're still talking about shifting the time the which the gain is realized and hitting people -- essentially, i mean it's death tax. normally for a begin to be realized, somebody has to sell the asset. in this case, that doesn't happen. i mean, this just seems like a really strange proposal, particularly to represent a constituency like i do on a farm part of the country. so -- >> the problem with stepped up basis under current law is that gains go untaxed forever in many

case and i don't think that these something we would design the tax law to do. you know, if you were talking about stocks and ponds and not a family farm it would be very hard to defend having tens of millions of dollars of gains that effectively go untaxed from generation to generation. i understand the issue in terms of illiquid assets we did put in the 15-year term to make it something that for a working farm or a working business would be something that could be managed in the normal conduct of the business. and i would just point out that in the case of the estate tax, the estate tax, you know, in -- cpo did a study that concluded that only 65 farms in a given year would have been subject to the estate tax. so i think a lot of the concerns about the imposition of burden have opinion out of line with the actual impact and if there are issues here that we need to fine tune we would look forward to working together. >> yeah. well, again, you have got a

triple shot an increase in the rate. you have a change in the time of realization and you do away with step up basis all at the same time. and again, these are -- these are -- these are pretty dramatic changes. and i understand what you're getting at under a normal circumstance to try and ensure that like transactions are taxed in a like manner you we have always treated arm land and assets that are transferred at death in a very different way. anyway, my time's expired. senator wyden? >> thank you very much mr. chairman. let's talk about the middle class for a few minutes secretary lew. you all put in a number of proposals, 052nd tripling the child care credit, expanding the opportunity credit, all of theme that are going to be well received. as you know, there's been a pretty solid debate here these already emerged with people like the tax policy center about whether this is going to put more money broadly, broadly into the pockets of middle-class wage

earners or will it be select groups like those with young children or college-aged children? i'm of the view that we grow the committee from the middle out, that you've got to get the relief to a road spectrum of middle class americans. did you-all consider a proposal such as significantly expanding the standard deduction? only does does this put a significant amount of money in the pockets of middle-class people, it it has bipartisan support. senator coates interested in that former chairman dave kemp was interested in that i want to know what you think is in the budget that would, for example, grow the 35i check for a 50-year-old auto worker whose children are already out of the nest. >> um, senator wyden, we designed a budget that was obviously very much intended to provide meaningful relief and support for middle-class families. i think that from the education

provisions that we have in the budge pet to the retirement provision and the minh mum beige proposal, we have shown we want people who are in the middle class and aspiring to be in the middle class to have more opportunity. the proposal to increase the standard deduction obviously would be of help to filers who don't have a lot of itemized deductions. and in the context of individual tax reform is something that we would -- we would think is something to be looked at. so we were taking the view that we need to target the specific things that are the steps on the ladder opportunity and our budget was designed around that. >> make no mistake about it those kind of efforts particularly in terms of education, they are absolutely key to repairing this pretty tattered ladder of opportunity.

i just want us to keep in mind somebody like a 50-year-old auto worker whose kids are out of the -- out of the nest because a lot of those families are hurting, too. let me now turn to something you and i have talked about and that's question of tax simplification. the national taxpayer advocate and again, we are talking about the middle class, said that this year, americans are going to spend $168 billion and spend $6.1 approximately hours trying to comply with the american tax code. you've got over 160 proposals in the treasury green book but to me, a lot of them look like add-on credits, deductions, new preferences and it seems to me that, again while i sbor very much this idea of getting relief to middle-class, you know people, it looks like it's going to take taxpayers more time and more hassle. so, tell me if you would what

in your view is in the budget that would simplify taxes for middle class people and then i'd like your thoughts on an approach i'm looking at. i would like to see mild class people get their march and april back rather than spending all of this you know time and money and i would like your thoughts on whether or not we ought to be looking at a tax reform system where many americans could fill a tax return out pie something that fits on a postcard. so, what's in the budget that simplifies the tax system for middle class people and what do you think of this idea of our working together again on a barn pace circumstance get the tax system for most people down to a postcard. >> senator, we have tried in areas like education to simplify some of the provisions. there were multiple provisions combining them to be easier for taxpayers to understand take advantage of.

i think the whole he have bore the on individual tax reform is one where simplification is something we very much aspire to. we obviously also think it's important to provide strong incentives for things like education and retirement savings and the like. so, there he is a bit of a tension between the total simple bluffication and having incentives for things that have very important for working middle-class families. we would very much look forward to working together to try to make the tax code as simple as possible. >> postcard size okay? >> i bish i could say we would get on the postcard. >> let's work for that. >> into the bad goal but it would be tough. >> you have got the w-2s a lot to work with right there. i think if we bear down and also note that senator stab now and i think colleagues on the other side are going to be working on the individual portion of the tax you there's got to be a

which to help the middle class that are hurting like that auto worker and get people out from the water torture filling out what all these forms are as the taxpayer advocate noted. thank you, mr. chairman. >> senator hiller. >> mr. chairman, thank you. and i look forward to the continuation of this particular hearing. mr. secretary, thank you for taking time. i wanted to just follow up briefly on what by colleague from south dakota's question was. obviously, being from nevada, we have similar concerns and problems with some of these small family farms and ranches you in my state, there's over 230,000 small businesses. and the a he is my understanding and correct me if i am wrong, that generally no tax would be due on small family-owned businesses until sold. can you clarify to me -- can you clarify to me what that business

threshold would be? that define what is a small business is? >> senator -- senator there is a provision in our proposal that would exempt very small businesses, truly small business. >> what is that threshold? >> $1 million. >> it's 1 million? >> in the proposal and it was designed to ease the burden on -- on family businesses the mom and pop stores. i think that for larger businesses that are still medium size -- >> yeah. >> -- the 15-year breaux vision that i described for working business is a way to take the incidence of the stepped up basis and spread it over a very long period of time, which we think is a way of addressing the bleeds of the larger small business. >> mr. secretary thank you. i don't believe people are always right or wrong for that matter. when the president's right, i

support him. when he is wrong, i don't. you made comments in your opening statement that i appreciate and that's the -- the efforts for infrastructure. and the priority for this administration. obviously, i care quite a bit about infrastructure. i'm on the working group with my colleague, senator bennett. look forward to moving forward on tax reform. i, like the chairman believe that our tax code is too costly, too complex and too burdensome. you i still would really like to tackle this issue on infrastructure. i thank you that's good for the state of nevada. bring more people in to portions of our state. and i think it's a core function of this government. i'm sure that you're aware of chairman dave camp's former bays and means chairman, as he introduced a tax reform discussion draft and one of the proposals that he had was a repatriation proposal that

proposed of two rate, one for cash and one for assets. any reason why the administration didn't look at this and impose two different rates? >> well senator there are a lot of similarities between the approach that we have and the approach that former chairman kemp had. you know we think that the rate that we -- rates we have put in in our international proposals make good sense. we have two rates, one would be a permanent rate of 19% and the other would be what we call a toll charge gore earnings that have built up over years and that would be 14%. in each case there would be a credit for taxes paid overseas, calculated in an appropriate way. and we think that it would create a tax burden that would be very reasonable and make it attractive for business to bring their taxes home. >> how were those rates decided? >> excuse me? >> how were the rates decided?

>> well, the 14% rate is half of our -- we have proposed a 28% rate and we set the toll charge of half of it, 14%. i don't want to overstate the scientific nature of it. you know, congressman kemp when he put his proposal in had a rate of 8 1/2%. there's rationales for a number of different levels. the 19% number, you know, was -- it was in the zone of where we think it should be and it was at a level that was revenue neutral in our proposal. so, i think that if you look at the -- the kind of structure of our proposal and the structure of the kemp proposal, shows there's a lot of room to work together. the important thing about the toll charge with your interest in infrastructure we use it to pay for a six-year reauthorization with a higher level or our surface transportation program. we think that would be enormously important f that toll charge were used for anything

other than a one-time expenditure, for example if it was used to lower rates permanently it would not be revenue neutral over time. so, we think that is a perfect combination of things that are important to american business and the future of our economy. >> one quick question, would the administration support voluntary repatriation to fund infrastructure? >> billion, the experience in 2004 with the one-time voluntary rebate tree yacht holiday was not very good. it turns out to be a bad incentive because after a repatriation holiday, you start to build up reserve -- overseas what business is waiting for the next holiday. secondly, we didn't see the reinvestment come from t what we have proposed we think is the right way to do it to have a transition to a new system where going forward, businesses will bring their earnings home and they will make their investments paced on where they are most economical, not where the tax advantage is greatest. >> secretary, thank you. >> thank you. >> thank you senator heller.

senator schumer. >> thank you mr. chairman and thank you, secretary lew. i want to applaud the good work you and the president and all your crew have done on the budget. i think it's focused on the middle class is really excellent. i think your efforts to find some common ground and yet stay true to your principles, you thread the needle extremely w i was very impressed with the pudget and i thank you for your hard work. on that budget obviously, one of the things you're focused on we are all focused on is infrastructure. one of the ways you talk about paying for it is the one-time 14% tax on previously untaxed gore ribbon income that comes pack. i'm very interested in that idea, or some variation of it. i think it makes a great deal of sense, something i have opinion talking about for a while and i think you have done -- refine it had in a much pert way than just about anybody else has. here is my question. do you believe it is feasible to consider the toll charge deemed

repeat repatriation by itself or in coordination with other international tax reform even if we cannot reach an agreement on a roader reform package? it is my view, probably different than some here, going to be really hard to get to real reform particularly getting the rate below 28%, which may not make too many people happy but the idea of some kind of deemed rebate tree yation gore a broad infrastructure proposal i think can get road support on both sides of the aisle. so, tell me what your thinking is on this. >> senator schumer, the best way to do it would be through a broad business tax reform pause if we don't doing in sming our high statutory rate, which is the highest in the developed world, if we don't eliminate the incentive for companies to move overseas, if we don't close the loophole for inversions we are going to see a lot of the problems that we still have. that can't all be fixed just

with the international provision. it's always hard to do road tax reform. hard in 1986. it is going to be hard, interests that very much value the deductions credits that they have right now. theoretically, could you separate out the international piece? one could. >> that's not your preference. >> would unt solve the whole problem. >> i understand. i have to say on inversions you guys don't get enough credit or take enough credit, the reforms that you have made internally have stopped most inversions in their track, and the financial people in new york i talk to say from -- in most all cases, it is no the worth not worth it anymore. >> thank you. >> we only have time and i want go to a less happy topic at les one between you and me which is the trade pillbill and currency manipulation. look, overall on trade, my views

have shifted some. i think the decline of middle-class incomes is the greatest problem america faces, bar none. bell we will have a different country if it keeps going for another ten years. and if obviously disputed by members on both sides but if these trade agreements, even though they might increase ddp and might increase corporate profits, serve to decrease middle-class wages because the company makes money whether it makes the product here or in china. so they will make profits an might get gdp gain for a lot of reasons. i can't support trade agreements like that anymore, all right? i just can't. because of my value system where middle-class decline in income has become so great. and so i am looking, and i have talked to but this i have talked to the president this something where we can counterbalance many of the things you want to do in it. pp, many ofby are good and the

geopolitical stuff is indisputable indisputable, that you want to do currency is the most logical one because it has broad support, currency bill that i authored along with senator brown, senator stab now, senator graham, senator collins and senator sessions, got 60 votes a while ago. and so, what i am asking you is now we have heard some talk from the administration that currency is not going to be part of tpp whether against japan, which is part of tppp or more important to me, although japan is important to me, china, which takes more jobs away, doesn't play fair, steals our intellectual property. when america has a good product, 80% of the time or so we don't let it in and we just shrug our shoulders and it's estimated that millions of jobs have gone away. so, my question 'cause i know my time is running out okay,

will you will the administration support some kind of rigorous controls on currency manipulation aimed alongside this bill of china, if not in the bill and in the bill aimed at japan? i have heard that we said that kur ribbon currency should not be part of tpp and i think that would be a wrong move. tell us about currency and tpp and tpa. when i say tpp i mean both. >> senator, may i respond? >> yes you get the last word. my time is up. >> i'm asking the chairman if i can take a couple of minutes. senator schumer let me start by strongly agreeing with you that if countries do things to intervene in a way that is designed to gain unfair advantage in trade, it is wrong and we oppose it. we don't just owe bows it. we take very strong action in the international bodies, g-7

g-20, imf and most importantly, bilateral bilaterally. when i meet bilate really with countries any question it is the number one topic that we raise and when we push packback there is a response. i think we have been successful pushing back on even the hint of interventions that have those characteristics in the time that we have been here. i think the challenge in the context of a trade agreement is how to address the issue in a way that helps and doesn't hurt. i would be concerned that the effectiveness we have dealing through the existing channels could be diminished in some ways if some approaches were taken. i think that we need to make sure that we use every tool that we have to make sure the countries don't take the steps to intervene in ways that are unfair. and i think if you look at recent year, we have been quite

successful. the g-7 agreement -- >> that's where we disagree. >> certainly are historical problems if we go back, but i'm talking the immediate to the present. two years ago, there was an agreement at the g-7 that we grow forward, which is the countries can only use domestic tools for domestic purposes. we had q-e policies in the united states, united kingdom had qe policies. it's critical to getting the economies moving after the great recession. quantitative easing monetary policies. i don't think any of us think those kind of policies should in any way be equated with unfair intervention. you know we have not seen the kinds of intervention that i think you're describing is much in the recent times. we've actually made progress pushing back on it. that being said we want to work together as we go through the discussions on trade legislation

to see if there's a way for us to build a bridge between the tools that we have and the trade discussion. i look forward to having that conversation. >> i would just say one sentence. we have not been very successful against china. i totally disagree with you. we need much more. >> can i just say one thing, senator, on china? since 2010 we've actually seen an appreciation that bounces around day to day but roughly 10% in china's currency. we have pushed hard to have china stop intervening in ways that they had been. they have agreed to limit their interventions to macro economic circumstances. we have pushed hard for transparency policies. they have agreed to subscribe to the imf's transparency policies. i'm not going to say there haven't historically been issues. but we've actually made progress, working through these issues.

>> all right. you guys can carry on this conversation outside the room. senator stabenow? >> well thank you. to continue this conversation. welcome. and i do want to say not to debate it, but just for the record, before talking about another issue, that i appreciate your efforts to address currency manipulation, international forums like imf and g-20 but these actions have not kept pace with increasing adverse impacts of currency manipulation and the impacts on u.s. businesses and workers. and we are seeing this, economists across the political spectrum, the economic policy institute, the peterson interstut, former adviser to president reagan, all agree that currency manipulation has cost the united states millions of jobs. and specifically on ppa and ppp, as you know, what's coming before us and japan, the most closed auto market in the world,

and the importance to the middle class economy in america of the auto industry, and i appreciate very much this administration standing with us in the auto industry, but as you know, we've seen the top financial executive at one of our u.s. automakers, ford motor company said recently that a weak yen gives japanese competitors as much as $11,000 more profit per car, per year. so $11,000 per car is a big deal in a very sensitive marketplace. so i want to actually talk about something else. i know your concerns about this. i disagree that quantitative easing and domestic policy is the same as theists veining in foreign currency. we will debate that later. with 60 of us in the senate senator graham and i led, 60 of us saying we want currency addressed in any trade agreement. i hope you understand that we

are very serious about this. >> senator, as we've discussed we look forward to working together to see if there's language that we can work through that would address the concern in a way that's consistent with our legal obligations and the policy. if i can just say one word about, you know, japan. for 15 years, we had the view that it was bad for the u.s. economy and the global economy for japan to be in an economic rut. you know they initiated monetary policies that were similar to those that our fed put in place. and they initiated fiscal policies. and for the first time gave the japanese economy a bit of a boost which was good for the global economy and good for the u.s. economy. they're not growing as fast as they should be. they need to use all the tools they need to use fiscal policy tools and fiscal reform. i think if you look at the monetary policy they put in effect, it doesn't meet the

criteria of unfair practices in the last few years. they're different from what might have happened in the '70s. i'm not going to say there wasn't bad behavior in the past. i think we just have to be careful not to define a standard that would lead to a set of rules that would make it impossible for monetary authorities to get economies out of recession. >> i appreciate that. let me just say, since they agreed to the imf that they weren't going to do this they've done it like 300 times something like that, i've seen the number, all i will say is we are an open market. japanese companies benefit by everything, including what we've done in our monetary policy on quantitative easing. and yet they are the most closed market. we can't get into them. we can't see an american-made vehicle. >> we totally agree the barriers need to come down. >> i want to change the subject for just one second. to a more -- to something we agree more on. simply to ask you to respond again to the big structure in

terms of how we move forward in the economy. because i think we ought to talk about what works not just in theory. so when you look at the clinton years, we actually raised the rates on americans paying a little bit more to balance the budget. creatinge inging 22 million jobs. asking folks at the top to do a little bit more. bush years which everybody seems to want to go back to, president bush's years, only helped those at the top. leaves everybody else waiting to hold their breath, trickle down, go to war, don't pay for it have a reckless speculation going on on wall street don't regulate it. we saw what happened. greatest recession. now we're back. in the end of 2012 we asked those at the top to do a little bit more. our friends said the world would end. it didn't end. we reduced the annual deficit by two-thirds, 11 million jobs. i wonder if you could speak to

the macro economics of paying down the debt the right way and growing the economy through a strong middle class. >> senator, i think we had an experiment. we saw what the tax rates and policies of the 1990s did. the longest period of uninterrupted growth in history. and we saw what happened in 2001 and 2004 where we had policies that cut taxes particularly at the top and as you say we had wars and other things that we didn't pay for, and a financial crisis on top of that producing the biggest deficit we had in history. an economic hole we've been digging ourselves out of. i think we had a test of the two theories. which is why i'm confident that the tax proposals that we put forward are good for the economy. >> thank you. thank you, mr. chairman. >> i've only been on the committee three weeks and been

sitting out there in the left field bleachers with my friend from nevada. and i noticed senator warner in the right field bleachers had other things to do. and all of a sudden i'm here at home plate with a gavel in my hand. ron leans over and said i've been working ten years to get this spot. i've been here three weeks. i'm recognizing myself for a long speech. they'd never ask me back if i did that. senator cantwell, you're up. >> thank you, mr. chairman. mr. secretary, thank you for your comments this morning, and your focus on the economic strategy moving forward. and for your emphasis on exports. my views are a little different than some that have been expressed by my colleagues, but we have a more integrated trade dependent economy in the pacific

northwest. i wanted to get your views on a couple of things that i believe are critical for this opportunity, that 95% of consumers live outside of the united states, that the doubling of the middle class around the globe in the next 15 years is great economic opportunity for the u.s. and what are the policies that we need to pursue to take advantage of that. so things on our agenda i mean, i almost feel like our economic agenda should just have the word export on it. and so freight mobility, improving our freight infrastructure, so we can get product to market quicker, state export assistance program, which is a key tool for small businesses to become exporters. but one of the stumbling blocks we're facing right now is the reauthorization of the export/import bank. and if you could talk a little bit about what you think the

importance of that structure is in this context of how important it is for the u.s. to not only just have financing tools, but also the fact that when you're actually a member of the -- if you actually have an export credit agency, then you can participate in a world dialogue of credit agencies around the globe for policies that are fair and transparent. and if we don't have that, and we also won't be participating in this international discussion. >> senator cantwell, i think you're totally right that exports are key to our economic future. and that's why we're pursuing trade promotion authority. it's why we're negotiating the tpp. we're looking at where the markets are growing. we want american companies to have access to those markets, and that will be a way to create good middle class jobs in the united states. that's the only reason that we're focused so much on this