29 to 34 have an associate's degree. there aren't jobs -- there is no job growth.ere are there is no manufacturing there is no productivity. so, you have to have a job forma a minimum wage impact.job for and i agree that it does unequivocally. i would really challenge you given the membership on this committee in particular with the states that i mentioned, that there has to be an effort focusing on wage earnings in the middle class that you are investing in those difficult states. and there has to be a very t specific strategy so we all catch up in a meaningful way. and i would really implore you and the president to look at that specifically. >> gentlaye lady's time has expired. the gentleman from south carolina, mr. sanford, is recognized. >> thank you, mr. chairman. the one thing we develop over time is the humility to be careful with our words.y i was struck by what you said to ago the chairman a few minutes ago.

and that was -- he'd asked you about mindless austerity, mindless sequestration cuts, ndless which was both in your written testimony and your spoken testimony. do you really mindean mindless or was that a misspeak? >> what i mean by that is we sspea should look to make smart cuts hould in programs that aren't working. >> it doesn't say smart. it says mindless. >> the implication of mindless >> is that it t applies a kind of across the board one size fits all approach to cutting spending as opposed to what i think we're trying to do in our budget, which is to be much mortar getted. >> fair enough. but i guess the point the chairman was getting at is given that bob woodward wrote about it and he says it was the brain child of jack lew in the white house. was the president not smart in offering that proposal ? >> i think the history was it was something that was thought to be so bad that it would neverd

neve go into effect. so i don't think anybody at the time thought it was a smart strategy for reducing our budget. >> i'll let you take that up with bob woodward. anyway, a couple quick thoughts. one is you with my colleague from south carolina justple a moment ago said you guys were m quote, extending the life of trust funds. i just pulled up the social security socnumbers. i see nothing in here that that extends the life of social security trust fund. urity >> what i was saying is that taking steps to pass imprenls impressive immigration reform would benefit social security and extend the life of the trust funds 37woy . >> maybe maybe not. >> cbo last week -- >> we could argue it. >> -- and the social security actuary this week -- >> but mathematically, why don'twhy do we take in the entire rest of est of the world and extend the life of the trust fund by that accounting.fe that i mean, it's a longer 's a theoretical argument, which is

if you bring a much more peopleou don't look at the cost. >> we do look -- cbo did look atdo loo the costs, actually. >> again, it's a longer debate. but i guess my question is whatmy que is real in this budget is borrowing from peter to pay for rrow paul. you borrow from the social security trust fund to pay for soci disability now.ald and that shortens the life of sa the trustbili fund. that's what's in this budget. immigration reform may or may not pass but what we do know, fund. as proposed in this budget, is as borrowing from peter to pay for paul. why is that a good idea? because i think we're in a real use pinch with the guardian of these trust funds. >> first of all, it would be terrible to let folks who have paid into the disability -- intobility the social security system have their benefits cut by 19% next year. and what we're proposing is a th solution on a bipartisan basis has been done many times before. it has a very very small impact

on the retirement trust fund and -- >>fy might -- >> and -- >> if i might claim which is, it's a big impact because i think it's a fiction -- when we i look out at the trust fund at tru numbers, what matters in government is cash flow. and the cash flow goes negative 2019. if you take out interest it's in negative cash flow right now. so, we're exacerbating that ight n trend line with regard to future borrowings based on, again, borrowing from something that's either now negative cash flow or going to go negative cash flow the in the immediate future, which plays straight into the difference between -- you just quoted cbo. you've quoted cbo throughout testimony. the place where you don't quote thro cbo isug in economic projections, because as you know there's t quot about a $2 trillion delta between where cbo is and where you guys are with regard to economic projections over the ten-year period. so, if we actually run by the re.

cbo numbers, your budget's about $2 trillion out of balance. >> actually, we're quite close >> w in our economic projections to cbo. >> well, no, no. >> where i think we can agree, congressman -- >> not quite close. $2 trillion is quite close? that >> on the economic projections, that's not accurate. >> that is accurate. >> i think where we can agree -- >> wait, wait.here we where is that inaccurate? >> i'd be happy to spend time afterwards talking about the wher specifics of where we aree lative relative to cbo. the important point is where we while agree is that while social ry security isn't a primary driver its in our a deficits and our debts, it it is something we i ought to look at by -- by doing the reallocation -- >> i've got five seconds.seco the budget this year increases government spending -- revenue by 16.7% and expenses by 7%. why is it a good idea? i'd love to get this in written response. for government to grow faster

than the people's paychecks. go >> mr. donovan will be able to get respond to that in written form. and the gentleman's time is res expired. ms. moore from wisconsin. >> thank lemayou, mr. chairman, hank mr. ranking y member. i want to welcome my colleague from wisconsin that served in wiscon the state legislature with him. always glad to see you, mr. director.d to see i do want to commend the president on including more money for the s.e.c. the cftc and the consumer financial protectionum bureau. we hear many complaints in in congress on a bipartisan basis about wall street having run amuck, about wall street having -- depends on whose estimate you believe, maybe something in the way of $16 trillion worth of damage to our economy. so i really do appreciate the

president -- the ftc has th complained and the cftc has complained they can't really do their jobs without, you know, those beingr -- those expenditures -- i mean, those resources being raised. so, having said that we see some recovery in our economy and yet my colleagues here on the wi committee, notwithstanding that have said that the poor have poor become more poor as a result of the president's policies.pre and i am just -- just for the record, sort of reminding -- andus maybe you could remind us a bit little bit about the conditions s the president faced when he raised his hand in january of 2009. briefly. >> frankly we had the worst economy of our lifetimes.imes and poverty rate was

skyrocketing. wages were dropping. unemployment was at 800,000 -- ployment 800,000 new jobs lost every s at month. >> every month, yeah. >> and so obviously we've seen rovement substantial improvement from there. >> yes. i just want to remind those in comm committee and those who knew, these are not new policies. then i was here during the -- i d think it was the 111th congress when secretary paulson came and when said, we need $700 billion or else we won't have an economy tomorrow. and so i want to commend to my say colleagues who say that it's themay president's fault that that may not be true. also, i wanted to -- i was curious as to why we have so hav many members one this committee who are, to my delight defending the poor and saying -- you know reciting those awful

data about one in three children live in poverty 36 million are on food stamps. and i just want to -- you to remind us, because i know you were around about the 112th and 113th congress the billions of dollars that were cut from food-sustaining programs from food stamps fights over the , food pell grant unwillingness to can provideyo unemployment insurance. can you remind us briefly? >> sequestration in particular has had a very negative effect on a number of programs that are critical safety nets.prog i know from my own experience at hud that there were tens of thousands of families whot lost housing assistance or were in line that would have gotten it and didn't get it. particularly on homelessness andelessnes a range of other areas. but i do think there are areas in this budget where if we can

get some bipartisan movement, we could significantly improve the prospects for our lowest income americans. >> and i'm very happy to hear that, mr. directorr .lo y i was really happy to see the s early childhood homeee visiting program and your anticipation ogram that that is going to lift the most vulnerable out of poverty, our children.verty, o i also was heard a couple of oureard a members actually refer to social security as a giveaway. ourl secu and i guess i just wanted you to clarify for us what the social security program does and prog whether it deserves that characterization.ra >> as i said earlier, these are benefits that have been earned. families have been paying in throughout their working lives work to social security. and we ought to protect those benefits. >> i think you so much. and i yield back the balance of

my time. >>th gentle lady yields back. the gentleman from iowa mr. blum. >> thank you mr. fchairman. thank you, mr. donovan, for providing your thinsights on the an budget and the economy today.econ i appreciate it very much. >> thank you. th >> on your opening statement, open mr. donovan, you stated we we cannot afford a return to mindless austerity and and i would like to say with all due respect, the good people of iowa io that i represent would not agree with you that by increasing the no federal debt by nearly 8$8 trillion under president obama is mindless austerity. pau i think the president's administration and your office lose credibility when we make those types of statements. isn't it a fact, mr. donovan fact this is the worst economic recovery in the united states history post world war ii?ery >> i don't believe that's accurate. >> it is. that is accurate. your budget has a ten-year average gdp growth rate of 2.5%

is that iscorrect? >> that's roughly correct. i don't have the numbers in s front of me. ont >> do you happen toof know what ha the average forpp the last 50 years of gdp growth rate is for our economy?av >> i don't have that in front off me. >> i happen to have that number. it's 3.3%.3.3 in essence, the president is projecting over the next ten years a below average economy. is that correct?correc >> i think the president is suggest we invest in things that would grow our economy faster.th >> if that's the case, why are we projecting a less than average economy? >> we are projecting that the impacts -- the investments that we will make should have a positive impact on the economy compared to what we would have under current policies. and we believe we ought to make those investments and that they're critical to growing our economy faster. >> but you're projecting -- thisproj

is a fifth year average, mr. donovan. you're projecting a less than average economy. >> i think -- not to get too technical about the way budget forecasting is done, but we are not unlike dynamic scoring or aunli range of other things, ing projecting substantial impacts on these figures because that ises bec not what is traditionally done n in budgetary forecasts. >> i c come from the private sector, mr. donovan. just to draw an analogy here. this would be like the president like of a company standing up to his ng employees and wsaying, we're below average.r the revenues for the next ten years are going to be below average. the expenses for the next ten years are going to be above average. our profits are going to be below average. your pay is going to be below average. that in essence is what this budget is telling the american people. i know what i would say as a. shareholder. i would say, mr. president, you're fired. what would you say?de

>> i would say we should come together on a bipartisan basis and invest in the things that are going to grow our economy, l that will help prepare people to take those jobs. that's what our budget does. >> when i talk about the economyat in iowa, mr. donovan, i often get asked this question, and an 82-year-old lady in decora iday. iowa, just asked me this. she tugged on my shirt sleeve and said, mr. blum, can't we do better? can't america do i better? can how should i answer her? >> i think we could do better. >> then why are we projecting a >> below average economy. >> we've laid you the out a very our specific plan in our budget to we do that and we hope we can work together to get some of those things done. >> since this is president took office, mr. donovan, working t families household income is income i down. working families' household net worth is also down. now, you give a pretty rosy net assessment of the economy in your opening statement, but recent polls "the wall street

journal" poll came out, and said that 50% of americans believe we're still in a recession. i believe it's because their incomes are down, net worth is down. why do you believe 50% of the americans think we are still in a recession?ir w >> when we came into office we were in the middle of the worst economic recession we've seen in ec our lifetimes. we have fought hard to recover t. from that. in fact, when we have come come together on a bisaturday pan basis, reversed sequestration, at least partially, begun to invest in the kinds of things we're proposing in our budget, what we've seen particularly over the last year is the fastest decline in unemployment in 30 years. we've seen a record streak of private sector job growth totaling 11 million jobs. we have begun to really turn from

this recovery around from one of the great recessions in the history of this country.we >> my -- >> we need to build on that and do more. b that's what would he proposing in our budget. >> the gentleman's time is he expired. the gentleman from ohio mr. ryan, is recognized. >> thank you, mr. chairman. congratulations on your promotion. f you know, we live in a society where we put our food in the microwave and hit a button and hope in 35 seconds we've got a hot meal. and if we're driving around meal. question go through a fast food restaurant and immediately eat.mediat if we get on the internet, you know, we try to click. to c if a web page doesn't come up inesn't 2.5 seconds, we're upset that we can't access it quick enough. and i understand that urgency that that we all have culturally now.now. but i think this hearing there's a high level of delusion coming from my friends on the the other side. i say that really with all due

respect. no one talked about the previousus decade on how we got to a point where our deficits were almost almost 10%, with a complete economic collapse. and it wasn't our economic e philosophy that was implemented at that point. it was yours. itosophy you had the house, the senate po the presidency. you implemented supply side economics. you deregulated the markets. you didn't fund the police and econom the cops that were supposed to behe on the beat to make sure everything was happening, was on beats the up and up. and then the economy collapsed. here comes that point, secretary donovan and president obama and trying to fix the mess.mix. and i remember being here and ing to listening to all my friends on the other side.ends you pass obamacare, the sky's going to fall. the economy's going to collapse. we're not going to ab able to grow the economy. unemployment rate will shoot through the roof. deficits are going to go up, not down.

and same with unemployment.i and i'm sitting hereth looking at the numbers. 9.8% deficit is a percent of the th gdp. down to 2.8% in 2014. and 2.5% projected out to 2025. you see what's happened with health health care. insurance premiums, 10.8% prior to for individual markets. 8.7% growth after the affordable care act.dable small group insurance 10.4% growth prior to, 6% growth after. these are facts. so, instead of sitting down with us and saying, look, we have other things we need to do. this is not perfect. how do we get wages up?eaperf and i think that's the kind of conversation the american people to want us to have, not revisionist history as to how everything

that is a problem in society is president barack obama's fault. you know, i'm thinking that he he was responsible for the interception at the end of the super bowl game and the republicans are going to blame obama. he called an audible and he he c shouldn't have.al i mean that's the level of krut any, i think, and unfairness that's coming to the president. now, as i said, the sky was and supposed to fall. i want to make two quick points. on the tax expenditure piece, ure the reason it's an expenditures expenditure -- here's the tax code. everything stays. it's clear. there aren't all these to g loopholes. here's the money that's going to co be generated. come in, congress, president and we carve out little exemptions for certain companies, credits and all the rest. and that number goes down. so, all things being equal thisgoes dow is the number we would have but w then we comeou in and we manipulate the tax code and the t those are calledax expenditures.it's

it is a market distortion for our conservative economists. i' i'm okay with some market di distortions because i don't worship the free market like it's infallible. i'm okay with some of these incentives in here. let's be honest about, you know what it's called.h lastly, your budget. and i commend you for iit is t going to put money in the of pockets of average people.if you if you can have community c college where you can save some money and go get retrained or send some kids to school that's kids money you don't have to spend on community college.t' that's a public good.c a good investment for us. child care same way. while we have to work to figure how out how to increase wages thesee are programs, the child care, universal preschool, these are l things that are going to move th our economy forward. lastly, i would just like to say, we had a tiger grant in my community, the city of kent, $20 million. drew over 140 -- $120 million oftional

additional investment because of that targeted. we have the first manufacturing institute. added manufacturing.stitute. we had a company come in because of the institute, and donated $440 million in software s to youngstown sat university. we have corporations now in now i downtown youngstown.wn your budget --.your >> gentleman's time -- >> -- understands these budget and the ripple effect and how will it will drive private investment and i commend you for that. >> mr. palmer is recognized. >> thank you for being with us today. earlier today alice in wonderland was mentioned the d. fairytale. i would like to bring up aesop's gras fable, the ant and the grass wit hopper. the ant was very diligent in n preparing for the winter. warned the grass hopper that he should as well. and the thegrasshopper was d the dismisses ive and undisciplined. we know how that turned out. when winter came, he starved.

the fiscal winter is upon us l mr. donovan. if this budget is any indication, this administration is playing the role of the grasshopper. what you're trying to sell the american people on is the idea that the obama budget, which in its best year still has a deficit of $463 billion and adds almost $1 trillion to our debt as deficit reduction. this might make sense to the this administration, but it defies common sense. than if you spend more than you take in in e each year, especially with a $19 trillion debt, can you honestly believe this is a responsible budget? >> i believe if you look at the record -- >> no, no, that's not -- it's you not the record. the question is if you spend nd more than you take in is that responsible budgeting? >> this is a responsible budget. it keeps deficits below 3% of

gdp, widely recognized -- >> the issue is -- >> standard and reduces our debt -- st >> let me -- you mentioned that >> you in this budget there are savings and medicare and medicaid that and are generated through the independent payment adviseory board. aren't thoseth savings that are en't t really going to be on theho backs o of seniors who are denied services? >> in fact, the only so-called ipab the savings kick in if hea savings in our health care is as not as much as we would expect. most importantly, their can't recommendations can't deny de service. anything they recommend comes to congress for approval. . >> i just find it astonishing hing that there would be so much muc emphasis on taxing job creators, the people who create jobs. i grew up dirt poor in a tiny little town in northwest alabama, so i understand who the jobjo creators are. i just find it astonishing that that

you want to punish the job creators yet count savings st against seniors who very likely will be denied access to services.ces. let me ask you this.th in this budget you propose a 14% tax and minimum of 19% on all future foreign income on u.s. business. fo at a time when some of our biggest companies, such as h burger king and pharmaceuticals an d medtronic and horizon pharma in chicago, for instance, are moving their headquarters s overseas and countless others are looking tat because the u.s. is punishing tax code what makes you think that addsing more taxes on these companies ing bu for doing business internationally is going to keep them rooted here? >> well actually, our business tax plan would lower the domestic rate from 35% to 38% and it has specific provisions

that would stop companies from these so-called inversions. >> no, that -- ed >> and create incentives to bring money back home, jobs back, brin home and invest it here in the u.s. >> still a far -- a long way off from making us competitive with way other countries.ro the last thing i want to ask you about is you mentioned the savings generated through this t administration's immigration policies. let me ask you this. given the likelihood this congress will not pass this ven th administration's e budget how much of this does the president intend to do through executive order? >> the president has already he taken action within the power that l that the law grants him. he's making clear -- >> he's taken action beyond what the power --ctio >> to make -- he's made clear hat that congress should act to change the law in a way that would not only grow our economy but also bring down our deficits. >> he also says he has a pen and

a phone.one. he's already used it in an unconstitutional manner. i'm just wondering if there's been any discussions in the any white house about implementing some of thesedi things and this irresponsible budget through executive order?hink w >> i think when the president took action last year, he made ear th clear he wasat acting within the hin authority granted him by law -- >>y 22 -- we >> and there were additionalre steps that congress needed to ne take that on a bipartisan basis,an the senate came together and agreed to and that those steps would have powerful effects to grow our economy and reduce our deficits.co no and reduce our deficits. we ought to come together and take those steps. >> the gentleman fom >> the gentleman from michigan is recognized. >> thank you, mr. chairman. mr. donovan thank you for being with us today. >> thank you. >> and for your testimony. there are a number of new spending programs in the president's proposal. but one area that i was

interested in, and i wanted to get your feedback, on the great lakes restoration initiative. there was a $50 million cut. and i bring that up because you may be familiar with the asian carp situation and i believe that funding is used to fight invasive species in the great lakes. recently, there was edna found on asian carp the equivalent of one city block away from lake michigan. and the great lakes has about a $7 billion fishing industry and the asian carp would be a serious threat to that. so, at the time when, you know, we're offering free college, all sorts of other increases in spending in different programs, why did the president recommend cutting spending in this important area? >> so, specifically there there

is a significant amount of funding from prior years that is still available and we felt that by combining the $250 million that we're proposing in our budget existing levels and hundreds of millions of dollars of other funding that is not in that specific -- the restoration initiative but in other parts of the budget that would maintain the health of the lakes that we had sufficient funding in the budget to continue the important work that you're talking about. >> do you feel -- because in michigan and i think throughout the area there's a feeling that there hasn't been enough progress made. and there seemed to be delay after delay. at the same time the army corps of engineers and the epa is focusing on other priorities, whether it's, you know, regulating the water on farmers'

property or other, you know, priorities against coal, it seemed that this area of fighting invasive species and having a long-term solution that is implemented quickly is not a priority. and so i -- i guess i'm curious you know, why isn't that money being spent that has been allocated? and secondly isn't there a way to make this a more urgent priority on the part of the administration? >> i want to assure you, this is an urgent priority for us. i suggest we ask my team to follow up with yours. we could sit down and specifically talk through the issues around the prior year's funding and how we accelerate that. >> thank you. and just another question on the community college proposal. how was that proposal developed?

was it in consultation with the community college association? were people consulted on that? you know, and, you know, it seems -- i haven't heard the exact amount of dollars that, you know the cost estimates both for, you know, for the federal government as well as for states and what that means but -- >> so, i would be happy to get you more detail on it. i can tell you there was extensive conversation through the education democrat the domestic policy council a broad range of community colleges and a broad range of other experts on this. it is structured in a way to partner with states that are interested in us doing this. rather than a federal-only approach, what we're doing is offering incentives that need to be matched by the state and structuring it in a way,

so-called first dollar in, to ensure that it not only would help cover tuition but that other funding a student might be bringing themselves to cover tuition, could also be used to cover books, all the other cost around community college that often stop access from happening. >> at this point there's not a cost estimate? >> there is. i don't have it in front of me, unfortunately. $60 billion. >> $60 billion? >> yes. >> okay. thank you. >> gentleman yields back. the gentleman from arkansas is recognized for five minutes. >> thank you, mr. chairman. director donovan i think that as you answered my question first, you would have been done a long time ago. appreciate you being here. i understand your math on the $400 billion in projected savings on medicare and medicaid. i'm an engineer. the math is easy to understand, the logic and methodology is

much harder to swallow. it's kind of like telling a person in front of a firing squad that we're going to shoot 20 times but you found a way to save four bullets so you're only going to shoot them 16 times now. medicaid expansion has occurred in 28 states and d.c. we've seen 6 million new enrollees. estimates are there's another 8 to 9 million americans who are eligible for medicaid expansion funding in the states that haven't expanded. i assume the administration is holding out that these other states will expand. so, my question the first one is how much has been spent on medicaid expansion to date? and the second part of that is, how does the administration budget for those potential enrollees and how much is in the president's budget for that? >> i'll have to follow up with you, congressman, on those exact figures. i don't have them in front of me. what i can tell you is that we do budget for projected

enrollment based on an expectation of further states. i don't have the exact figures in front of me enrolling and joining. those cost were also fully projected as part of the original estimates and scoring done by cbo and they showed that the affordable care act would actually contribute to deficit reduction even with those numbers included. >> so, is it safe to say medicaid costs are projected to increase from the levels they are right now? >> that is why these savings proposals are critical. it's also why the cost saving measures that were part of the affordable care act more broadly that have dramatically reduced the expected cost of medicaid going forward are so important. >> so, if the medicaid costs are

increasing but you're lowering overall medicaid and medicare costs sdshgs that mean you're cutting costs dramatically in the medicare program? >> the critical question, given the growing demographic trend that we have, what we are proposing to do in our budget would make changes that would reduce costs compared to what we currently expect. and that's the critical factor here. is can we, as the president likes to say, bend the cost curve, so that we can substantially reduce our expected deficits and debt going forward. >> i think the critical factor is that we're seeing expanding medicaid costs we're seeing a growing population who depend on medicare, yet we're saying we're going to save $400 billion in those two programs in the budget. it's easy to see that it's not equitable for expansion states to be receiving dollars while

nonexpansion states get zero dollars. but those expansion states -- or nonexpansion states made a responsible choice not to expand. but let's look at fair and equitable just in the states that did expand. under expansion a state can get 100% funding for say, a 28-year-old medical school student while the same state might only get a 50 to 75% funding rate or match rate based on the state for a disabled child. so do you think that's fair and equitable and proper use of america's hard-earned tax dollars to have those match rates set up that way? the act was structured in a way to encourage states to expand

medicaid. in fact, to go to your larger point, those folks are getting medical care somewhere now, right? they're going to emergency departments. those are costs that are typically falling on state governments already or on hospitals or others. and often those costs are higher because they're waiting to seek care until it really is an emergency. and so, when you really look at the broader picture, if we're implementing medicaid expansion, particularly with federal support, what we're seeing in states that are expanding is it's actually a very responsible fiscal choice that they're making because not only are they improving the health of those citizens they're lowering emergency care costs and others that are currently falling either to state governments or to private hospitals and others that have to absorb them. >> gentleman's time has expired.

gentle lady from tennessee, mrs. black s recognized. >> thank you, mr. chairman. thank you, mr. donovan, for being here today. i know this question has been asked previously, but i want for the record, does the president's budget balance at the end of the ten-year window? >> the president's budget meets the key fiscal tests that we've set out and that our -- >> and that was -- >> broadly recognized. >> if i could just reclaim my time. yes or no, does it balance at the end of the ten-year window? >> the president's budget achieves the key fiscal targets that we've set bringing deficits below 3% of gdp throughout the entire window -- >> thank you, mr. donovan. >> and reducing the deficit -- >> i'm going to reclaim my time. because i know it adds $8.5 trillion in debt. and that is a direction that i don't think any of us think we should be going toward. and i want to then take this to a point in the budget that it

kind of comes back a very personal thing to my state where the president is offering this new program where folks could get a free community college education. he did come to the state of tennessee and visit us. and as a matter of fact, he patterned it off of the tennessee promise program. but i want to clear for the record that it is not the same. because it is being said that this is the same as what we're doing in tennessee. as a matter of fact, in tennessee, the students must be high school graduates coming out of high school. the program requires that there is a mentor, that they have to do community service time. it's a 2.0 gpa. and it also comes from the lottery reserve, so it is not an additional debt for our state. but what i see in the president's budget is that we're going to have a $60 billion cost over ten years. and that's not also including if this were handed down to the states, what their costs would

be. it would be estimated to be about another $20 billion for the state. so, it is a different program entirely in that it is paid for in a different way, not by taxpayer money, but by lottery money in our state. so my question for you is how did the administration arrive at the estimate for the cost of this federal program over the ten years? >> i don't have that detailed information in front of me. i'd be happy to provide it to your office afterwards. what i would say is that it is more than fully paid for by other savings and revenues that we have in the budget. so, it's fully offset. >> by additional taxes, not cuts, but by additional taxes? >> we do achieve savings on the spending side as well. so, it is fully offset in the budget. >> additional taxes. how many additional new taxes will be in this budget? >> what we do on the tax side, we have actually 44 million

families who have their tax -- middle class families who have their taxes cut by an average of $600 per year. that is fully paid for. in addition we have about $640 billion of loopholes that we close and other revenues we raise, particularly from highest income changes -- >> so what -- if i could reclaim my time. >> we also have significant revenues that come from new workers that come in in taxes -- >> i have a minute and a half left so i could reclaim my time sir. thank you very much. since the federal government has become a main player in the student loan market, we've seen a skyrocketing of tuitions. what do you think that this program is going to do considering what we have already seen has occurred as a result of the federal government getting involved? >> actually what the president has done during his time in office is to dramatically increase assistance to students

through increased pell grants and a number of other means. we're proposing in this budget to significantly expand tax credits for families that are paying for college, to help them. and we've created a score card which would hold colleges accountable to actually lower their costs and drive down tuition. >> and that does help me because that tells me that you have done something on the other side. i'd like to see that information about what the score card would look like. because there's a great concern that policies, and especially this with the student loans, we have seen the tuitions really go up and really push a lot of those lower income and middle income out of the actual market. and i just want to end here by saying that i'm very concerned about the states and what kind of mandate this would place on the states because $20 billion for states that are already struggling is a lot of money. thank you. >> it's fully voluntary, i would

point out. there is no mandate here. so, states can choose to join the program or not. >> well, i think it would be difficult for states if you're putting that out there for them to make that decision. but, thank you. i yield back. >> gentleman lady yields back. the gentleman from virginia, mr. brad, is recognized for five minutes. >> can you hear me? >> i can. >> thanks for coming today. >> i appreciate it. >> what's your background, economics? >> i have a public policy degree. >> the only reason i ask, i'm just trying to be bipartisan, getting some numbers, getting the state of the economy. but if a member asks, does the budget balance within a ten-year window and we can't get a yes or no or a factual -- i got a ph.d. in economics. so we just try to do science and answer the value judgments are off the table but the facts are all very much on the table. and so i mean i just want -- i wanted to go through some other numbers that are even bigger than that.

but let's just -- i'm just kind of disappointed that we can't get a yes or no on that kind of a simple economic question. and so i just want to go even bigger in terms of the macro economy that affects the work we're doing here. we're trying to put together a budget that bipartisan moves the country in the right direction. the fed right now the federal reserve, has 3.5 trillion treasuries on their book. so if you look at the strength of the economy everybody knows the stock market's up, some members have talked about the he can quit market being strong and we're in good shape 37 but whenever we do quantitative easing and peel about $10 or $20 billion off, it's like a tablespoon, the equity markets get in a spin. i mean is that your -- do you view the equity market in that way, too? that is it's more fragile than it is strong if you're peeling $20 billion off of a $3.5 trillion issue and they get jittery? >> i guess i'm not sure what the question is.

>> well let me -- i'll move on from that one. on the deficit, i was in earlier and you said it's good news, deficits are going down as a percent of gdp. that's good news. i agree with you. and we're moving in the right direction. but then they go back up by 2025 to i think over $1 trillion by most forecasts. and so that's in the bigger environment that that also is lifting up the macro economy. if you're spending borrowing from future generations, of course, that's going to lift your current economy. but how do you view the inner generational fairness on the next generation when they're at $18 trillion in debt already. we're going to be adding, $460 billion this year. how are we doing them a service if we keep moving in that direction? >> i think the numbers you're using are under current policy. >> yeah. >> this goes back to the key test that i said our budget meets, which is that instead of debt and deficits rising as a

share of gdp, we actually stabilize them and begin to bring them down. and part of the reason for that is that we focused on the key drivers of those long-term deficits and we've done things in the budget that actually -- the impact gross over time. like the revenue changes that we have, like the health care cost changes, and immigration reform. >> okay, good. yeah, i don't want to dwell -- the immigration reform that thing scored in terms of helping social security, that was scored out till what year? of course, if folks come in and contribute to social security on that, that adds to social security while they're in the working years. how many years was that scored out -- >> equally -- it's not just social security, right? it's -- we have a fundamental demographic imbalance. >> right. i agree with that. >> we bring in more workers. they're actually paying income taxes as well, not just social security taxes. >> yeah. skip that one because that's -- i got a minute and a half and i

can't get into that one. bigger issue in terms of -- you know, you're trying to do some good moves on the deficit side and you have some policy drivers that are driving the right way but the entitlement side is have you to go to the bottom it's at about $125 trillion. $210 trillion, all the debt on the u.s. books. and so that also -- not only the debt burden, but the entitlement burden, those four programs take up the entire u.s. budget. by 2032 i think it is. most of those programs are insolvent by 2032. how can we work together -- again, you know, when you're on the campaign trail, i tell seniors all the time everybody is safe within a ten-year window, we'll take care of you but there aren't going to be any programs at 2032. and there's none for the next generation. what are the drivers we're using to fix those? >> health care costs are the single bilk biggest driver. as we've talked about, we're now

seeing the slowest health care cost growth in 50 years. i think what we can do on a bipartisan basis to work together, we've put the sgr fix into our bill and added a number of reforms that could accelerate delivery costs reform. we have $400 billion just in a ten-year window of savings on medicare and medicaid that do hopefully accelerate the trends that we've seen. and we can do more. i think on a bipartisan basis in that area to really make a difference. but immigration reform, again we should recognize is an enormous impact. >> gentleman's time expired. gentleman from indiana is recognized for five minutes. >> thank you, mr. chairman. thank you, mr. donovan, for your time here. i want to read you a statement that former president made. we have experienced four straight years of surplus. a stretch of prosperity last seen following world war i. for three years in a row with very been able to pay off $363

billion of this debt and expect to pay off $600 billion within this year. with a sustained commitment to fiscal sdmin by continuing to use the surplus to pay down debt, this nation can be fully debt-free in this decade for the first time since 1835. we can eliminate the publicly held debt by the end of the decade. and by doing so we can strengthen our economy and our nation's prospects for the future. any idea who said that? >> i've got a pretty good idea. >> president clinton said that after he left office. you know the precedents already been set, if a democratic president working with a republican congress can get things done. you know, after -- reading your testimony here and kind of following up on mr. sanford's comments, you know, in your second paragraph you talk about mindless austerity, which i agree with him i think we need to be very careful with our rhetoric. but apparently that mindless austerity has -- go back to the

first paragraph and you say that the budget comes on the heels of a breakthrough year for america. that today america's a super energy power -- or energy super power. our manufacturing sector continues to experience the strongest period of job growth since the late 1990s. i mean, if this mindless austerity has caused this, i think we need to go back and re-examplen re-examine even though the sequester, the president's sequester, is not what everybody wanted but the president should have been careful in asking for it because even though he may not have expected it to happen, it happened. that's the only reason why we're seeing deficits being reduced. it's not because of an act of congress. it's because of inaction of congress and the white house working together.

says that our national debt is our biggest national security threat. former chairman of the joint chiefs of staff admiral made this statement. looking at the net interest spending compared to other spending in fiscal year 2025 if you look at where defense spending is compared to net interest, isn't the debt our greatest threat to this country if we start to see interest continue to rise at the rate that it is going? >> if you had heard the testimony of the joint chiefs this past week, they said specifically that sequestration was a major threat to executing on the president's national security strategy. i would also just -- >> admiral mike mullen says our national debt is our biggest

national security threat. you agree with that? >> i guess i would say that making the key investments in our defense in middle class families, if we don't make those investments, i would say that is our greatest threat. >> who needs to make those investments? the federal government or the private sector? >> well, obviously on the national security side we have key -- but this is not about public versus private. this is about ways that we can work together with the private sector. whether it is infrastructure or r & d or a range of other things. >> but do you agree with mr. mcclintock that a dollar spent by the government first came from an american taxpayer? >> absolutely. we're proposing tax cuts to 44 million middle class families. all of the spending that we're proposing increased spending is more than offset by cuts in

other spending or cuts in wasteful spending in the tax code. >> but the debt is going to double under -- almost double under president obama's administration. >> under our proposed budget we would reduce deficits by $1.8 trillion in ten years compared to what we are expecting. >> not that. the federal debt was $10.6 trillion when president obama took office. today it is over $18 trillion. >> as the size of our economy -- >> but the fact is that it is only going up. and that the net interest, that's not something that we can change in our line items in our budget and say we're going to just pay less interest on our debt. >> but looking at nominal dollars without inflation -- let me just go back to one point that you made quickly. sequestration is actually a very small part of what has reduced our deficits. >> gentleman's time has expired. >> lower health care spending and a range of other areas are actually more important than sequestration. >>. gentle lady from missouri is

recognized for five minutes. miss hartsler. >> thank you, mr. chair. following up a little bit on our discussion for national difficult, $38 billion above the cap is being requested to make up for readiness shortfalls in the dod's budget. there's also the dollar for dollar match that's been mentioned in spending between non-defense as well and non-defense portions of the budget for the first six years. so my first question is, would the president's support providing department of defense the additional $38 billion for readiness without also increasing domestic spending or increasing taxes? >> as the president said earlier this week, our national defense and our economic future are intimately linked. and we can't do one without the other without short-changing the economic future of the country,

and also short-changing our national security. veterans benefits the department of homeland security, all of those are funded on the so-called non-defense side and those are critical for our national security as well. >> sure. but i don't see the breakdown between those just to note our budgets have always provided for our veterans. but can you explain how our national security strategy and the necessary funding to execute that strategy should be contingent upon a dollar for dollar match? zbll i think what we're saying is that we've got critical priorities, whether it's investing in our kids, rebuilding our roads, making sure that we're keeping the american economy innovative through investment and r & d, and that those are critical to our national security as well. our economic strength is critical to our national security. >> but what are the threats in the world today that are in the presumptions that -- under the

president's budget? what are the threats today? >> we detailed examination with the department of of defense of the national security strategy and we've added in the budget in targeted places that enhance our technological capacity. the intelligence gathering that we have. a range of areas that were driven by the joint chiefs. >> okay. well, i want to go back to the observation that it raises dollar for dollar for the first six years, not the entire ten-year window of the budget. this slide shows that actually from the year 222 to 2025, you doe decrease both of those but proportionately more out of defense so at the end of the ten-year window you only increase defense spending by $9 billion but you increase the

non-defense categories $102 billion. why does your budget propose more additional funding for non-defense than defense when we have all these threats around the world? >> again what we've done is to work closely with the chiefs and meet the critical needs of the country. >> so do you believe then than non-defense spending is a greater national priority than defense, and therefore deserves more fundsing? that's what your budget reflects. that's what the president's budget reflects. >> i disagree that that's what it reflects. >> well look at the -- it's not shown on this one? >> what it reflects -- again, i think in the spirit of trying to get progress leer on a bipartisan basis, what we've done is to build on the precedent of the murray-ryan agreement which did exactly what we're proposing, dollar for dollar increases, fully offset

by changes on the mandatory side of revenues. that's the model we're -- so this is not our model. it is a model that follows what congress has done successfully on a bipartisan basis. >> i'll just say that i don't believe that this budget reflects -- actually addressing the threats of this world. the defense strategy is being dollar driven rather than threat driven by this president. we need to look at the threats in the world. we need to get our priorities back as a nation and the budget should reflect that. one of the few things that we should do in congress according to the constitution is provide for the common defense. these cuts that have taken place to the military are absolutely devastating and the president's proposal does not address those shortfalls. our national security is at risk and i think we can do better and we will as a committee here. so thank you very much. i yield back.

>> gentle lady yields back. a vote has been called but we have more than enough time for the most patient member of the committee who is recognized for five minutes. thank you for your patience. >> thank you. i'd like to think it is good news that representative moore is back and feeling better than she was a while ago. also like to thank -- there are going to be some disagreements here, but i'd like it thank you and the administration for introducing the term mindless austerity in the american lexicon. earlier today the lady from new mexico talked about a couple in which the husband was running up the credit card and the wife was stuck paying for it. so now in the world we can use the word "mindless austerity." let's not have anymore mindless austerity in this household." okay, now the question. ten years out, you are not close to balancing the budget. is that right? would you agree though that that would be something that we

should be working towards? >> i think what the budget ought to aim for is making key investments that we need to grow our economy and make sure that we have a strong middle class. and to do that in a fiscally responsible way. that's what our budget achieves. >> so you believe adding trillions of dollars to the federal debt that's some day going to have to be paid off by children or grandchildren by your definition that's fiscally responsible. >> this budget reduces deficits and it is a total of $1.8 trillion of deficit reduction compared to the path that we're on. >> okay. well, i think most people would like to see reductions. i'm going to give you a couple questions. one of the things that's been thrown out there is a way of reduce ing reducing federal spending. most states or local units of government when they're saddled with a responsibility from the federal government say we'd be willing to take less money if we

get more freedom in how we spend the money. would the obama administration be willing to look at say, block grants for medicaid as a way of reducing spending? >> obviously i haven't seen detailed approach, but in general proposals we've seen to block grant medicaid harm beneficiaries and don't end up providing health care in a way that we could support. we do have in the budget this year a proposal that would work with states and localities with a number of block grants to try to give them more flexibility. it's something that we think on a bipartisan basis would be worth while to pursue and so there are places where i think we can work together on a bipartisan basis to give states and localities more flexibility. but block granting medicaid is not something that -- at least in the proposals that we've seen -- leads to better

protection for american families. >> when i deal with school superintendents, they complain about local education. they almost uniformly say they'd be willing to accept less money if you took away some of the federal regulation that goes with it. i think soon they'll reauthorize the no child left behind act. would that be something that your predecessor signed i never did like. would you think it would be a good idea to maybe reduce the amount of education funding to the states if we removed some of the mandates? is that something you could support? i think most superintendents out there would support that. >> first of all i think our budget shows we should invest more in education, not less. but certainly if there are burdensome requirements that don't serve a purpose we're happy to look at those and try to make changes. what i will say though is, on a bipartisan basis there's been support for creating more

accountability for results. not for paperwork or needless regulations but for results, and that's something that is absolutely critical. it's helped us make progress. we have the highest graduation rate from high school in the history of this country and it is something that we should make sure happens as we reauthorize no child left behind. >> one little final question for you. it is not the biggest part of your budget, but there's something here that bothers me a little bit. which is fine. i appreciate that you realize maybe the most important job in america is raising children. you're increasing the child -- dependent care tax credit. one thing that concerns me a little bit about that is there are some parents -- some families in which both parents work and some parents are making a sacrifice in which one parent stays home. nevertheless, you have a substantial tax reduction for families in which both parents work and are leaving aside the

families in which huge sacrifices are being made and there is not a child care expense. could you comment on your apparent dislike or -- not caring about or -- a huge bias against families that are not using daycare. >> so first of all you may be referring to the second earner credit that we have in the budget as part of our proposal. that's actually something that -- >> child care tax credit. >> gentleman's time expired. if you have a brief answer. >> what i would say is we have lots of other ways that we're supporting families that have one earner as well as two. >> gentleman's time has expired. this concludes our hearing. mr. donovan thank you so very much for ahearing before us today. please be advised members may submit written questions to be answered later in writing. those questions and your answers will be made part of the formal hearing record. this committee stands adjourned.

>> thank you.

news from congress. afternoon. republican representative alan nunnelee of mississippi died today at the age of 56. the fiscal and social conservative was elected to congress as part of the historic republican election wave that returned the who us to gop control in 2010. the ap reports that congressman nunnelee had experienced a series of hell problems in recent months. last june he suffered a stroke while surgeons were removing a tumor from his brain. in addition to chemotherapy and radiation, he underwent physical therapy and speech therapy to try to recover. in washington today jill stein of the green party announced formation of an exploratory committee for the 2016 presidential election. she will use the campaign to reach out to those not reached by the democratic and republican parties. here's a look at the kickoff event. >> 2014's record low voter turnout reflected profound

disillusionment with both parties. so 2016 provides an incredible opportunity to fill that political vacuum and surge forward. the voices of resistance and transformation deserve to be heard loud and clear. and that's why i am announcing today the formation of an exploratory committee for the 2016 presidential election. we will use this exploratory campaign to reach out to young people, to workers employed, underemployed, and discouraged, to front line communities, to immigrants, to communities of color, we'll reach out to women and seniors indigenous nations, the lgbt community and all who have been neglected abandoned,

or betrayed by the democratic and republican parties. and will offer a campaign in service of the justice that they deserve. the green party can do this because we are the only national party that is not poisoned by corporate money. the only one. >> to see the full event and all of our road to the white house coverage, go to our video library at c-span.org and search road to the white house. this sunday on q&a, david brooks on writing an articles for the "times" and the awards he gives out at the end of the year, the sidney awards.

>> sydney awards are given for the best magazine essays of the year. the idea, they always come out around that christmas week, between christmas and new year's. that's a good week to step back and not read instant stuff, tweets, step back and have the time to read something deeper and longer and it is to celebrate those longer pieces. i do believe magazines change history. the new republic which until its recent destruction was the most influential political magazine in the 21st history really changed history. it created progressivism. conservatism barely existed buckley formed national review and gave it a voice. >> sunday night at 8:00 eastern and pacific. >> next, house minority leader nancy pelosi talks about jobs and the economy. at this event hosted today at the brookings institution, she also speaks about president obama's 2016 budget request and

funding for the homeland security department. this is an 1:10 minutes. >> everyone here today, this is a very exciting day. i'm a senior fellow here at brookings. as you know, brookings likes to be in the middle of the great debates of our country. this is going to be a year of really fundamental debates about future, and about what happens to growth and is it shared. and we might actually get around to arguing about what should our government spend money on, and how are we going to pay for it. we have had crises rather than having real arguments about that the last few years, it's a real honor for me to introduce -- joining us today, she has proudly represented california's 12th district for the past 27

years. i'll continue with the introduction, but i want to say a couple things, first of all, please silence your cell phones, tweet up a storm if you want, but silence your cell phones. to tweet it's #pelosiatbrookings. not the "at" sign because that will mess up the tweet. and also, we will be circulating cards for you to ask your questions, i'm going to try to ask as many of them as i can. i want to thank all the folks of brookings who have worked very hard to put this together, as well as speaker pelosi's staff. so nancy pelosi has proudly represented california's district for 27 years. she has led the house democrats for over a decade. the first woman in american history to serve as speaker --

the american recovery and reinvestment act and quite a lot of other legislation as well. as you will hear from the remarks, throughout her legislate ef career, she's been an advocate of clean energy government transparency and accountability. it is such a pleasure to welcome nancy pelosi to brookings. thank you so much for joining us today. >> good morning, everyone, thank you all for being here, it's an

honor, it's really an honor to be here with members and honored guests of brookings institution. thank you, e.j. for your kind words of interdugs ducks, for your leadership in so many ways. congratulations as a senior fellow of brookings with the chair named. how lovely. >> for over 100 years, brookings has been the first name going forward in public policy. can't hear? >> for over 100 years, brookings has been the first word in forward looking public policy. this institution and president 'stro talbot and your fellows have been a strong and steady intellectual resource to private, public and non-profit policymakers across the country. together we can reach all americans in our discussion. beginning this year, this new year, in a new congress, we have both an opportunity and a

responsibility to reflect on our progress toward that america, and refocus and renew our efforts for it. reflecting on our progress toward that america and renew our efforts going forward. reflecting on our progress. six years ago in january, president obama stood on the steps of the capitol as he took the oath of office and issued a call for swift, bold action now. not only to create new jobs, but to lay a foundation for growth. one week and one day later, house democrats passed the american re-investment and recovery act. one of the biggest public investments in our nation's history. the recovery saved or recreated 3.5 million new jobs, revitalized our economy.

it turned the tide of the worse www.economic recession since the great depression. 64 days later on the same day in the house and the senate, quite remarkable, the democratic congress followed up by passing the president's budget a plan for growth and opportunity based on three pillars. investments in health care, in education and innovation, and in energy. our aims were clear. create jobs. reduce the deficit. invest in a stronger future for every american family. believing that health care must be a right for all americans, not just a privilege for a few, we passed the affordable care act. even if there were no other reason to pass the affordable care act, if every american were happy with his or her own health

insurance and health care, we still would have had to pass the bill because the cost of health care in america was unsustainable. unsustainable to individuals, to families, to businesses, large and small, to governments local and apartment the national level. importantly, as documented by the council of economic advisors, the affordable care act is helping to drive down health care cost growth to historic lows. today the affordable care act has delivered newfound health security to 16 million americans and extended the life of the medicare trust fund by 13 years. maybe this is so i can get a drink of water in between. i don't know.

usually now i revert to my mother of five voice to project across the room. recognizing that education has been the indispensable ladder to achieve the american dream. the democratic caucus acted to strengthen early childhood education, deepen our commitment to vulnerable students and dramatically expand access to affordable college education. we pass a g.i. bill for the 21st century for our veterans and their families as part of the largest increase in veteran funding in our history making historic investments in education, health care and economic opportunities. in terms of american innovation, we substantially bolstered our investments. fueling basic research, and

driving forward innovative energy technologies. i'll expand on this in a moment. maybe more than a moment. knowing that our reliance on foreign fossil fuels was unhealthy for our economy, our national security and the air our children breathe democrats acted to make america energy independent. by increasing domestic energy production, and we increased energy efficiency and more than doubled clean energy production. solar power is up by tenfold and winds is up by threefold. in terms of wind, america is number one in the world. this progress is critically important as we address the climate crisis. knowing that the only way for the economy to fully recover, we must recognize that the middle class was the real -- are the

real job creators in america. in a consumer economy, when workers have the wages and confidence to spend, they generates demand and it, in turn, creates jobs. it's about bigger paychecks. this is -- there is an important connection. i talked about the three connections today. this is an important connection about america's economy. the success of the middle class is the most important engine of economic growth and of meaningful deficit reduction. this understanding is consistent with middle class economics, which the president articulated in his state of the union address last month, and the budget he released yesterday. democrats' commitment to middle class economic stands in sharp contrast to the republicans relentless trickle-down agenda the agenda that drove our economy into a ditch.

republicans' economic agenda included massive unpaid tax cuts for the rich two unpaid-for wars and a doctrine of no regulation, no supervision of wall street. it is this radical agenda that precipitated the financial meltdown and shattered our economy. how bad was it? on the night of thursday, september 18th, 2008, the secretary of the treasury came to the capital for an emergency meeting with congressional leaders to inform us of the severity of the meltdown. when i asked the chairman of the fed, at the time, ben bernanke what he thought of what the treasury secretary was telling us, he told the leaders, if we do not act immediately, we will not have an economy by monday. this was thursday evening. that's where we were, september 18th, 2008.

in order to stop the meltdown of america's financial institutions, it was necessary for us to pass the troubled assets release program, t.a.r.p. supported largely by democrats, and later we enacted historic consumer wall street reforms with dodd-frank regulations. far from creating growth, republican priorities drove an economic catastrophe that destroyed jobs, destroyed the jobs, the savings and the security of millions upon millions of america's working families. now, republicans want to take us back to the same failed policies of trickle-down and laize fair. republicans fail to see the connection between the purchasing power of the middle class and the success of america's economy.

six years after the deepest recession of the great depression, the fruits of democratic efforts on the economy are clear. 11.2 million new private sector jobs created in 58 months the longest uninterrupted stretch of private sector growth in our history. we provided a lifeline to save the auto industry, and more than a million jobs, part of that. unemployment rate down from around 10% to 5.6%. deficit cut by two thirds, from $.4 trillion to $483 billion this year. stock market has gone from under 7,000 to over 17,000. manufacturing exports are rising. we've seen reading scores go up, high school graduation rates go up, more young people attending

college than ever. 16 million previously uninsured americans now have affordable, dependable health care, and we extended the life of the medicare trust fund by 13 years, to name a few accomplishments. however, even with all of this progress, working families are still being squeezed. the reason our economy has not had a full recovery is because of stagnant wages. it bears repeating that a consumer economy, in a consumer economy, the middle class are the job creators. we must expand the purchasing power of families, ensure that working men and women enjoy the bounty of their unprecedented productivity. bigger paychecks, better infrastructure, more manufacturing in the united states. we must focus like a laser on strengthening the financial security of america's working

families. once again, there is a need for swift, bold action to reignite the middle class engine of our prosperity. in order to succeed, we must have a healthy respect for another connection. the connection between the public and private sectors. private enterprise is the heart of the economy. generating wealth and jobs. however in order for the private sector to succeed, the public sector must act to secure the conditions in which the private sector can continue to flourish. when the public sector is doing its job, investing in strong education, building infrastructure, maintaining the courts, ensuring public safety, it performs tasks that the private sector cannot perform itself. public sector accomplishments, however that leave the private sector in infinitely better

shape for all americans must happen. congress must grasp again the importance of ambitious goals built into a budget for the future, which is the budget which should be a statement of our values of what is important to us, should be how we allocate our resources. this is the third connection i want to highlight. the undeniable connection between the investments we make today and the success of our country tomorrow. today i believe we must make big bold commitments in four areas. research and innovation back to that education infrastructure and investments in working families through the tax code. innovation is the invigorator of our economy. research creates jobs, launches entire new industries and gives us the miraculous power to cure. however, according to the american academy of arts and sciences, the report they just

put out within the past couple weeks, the united states has dropped to 10th place. 10th place in national r & d investment as a percentage of gdp. of all places, the united states of america. as the report makes clear, unless basic research becomes a higher government priority than it has been in recent decades, the potential for fundamental scientific breakthroughs and future technological advances will be severely constrained. the report calls for our increasing our nation's total research investment to at least 3.3% of gdp. we must meet that need to reduce the deficit of innovation. the president and congress must work together to establish a sustainable growth rate in federal basic research. in terms of education, we know

that to achieve equality of opportunity we must have equality of education. we will always have an opportunity gap, so long as we have an education gap. today is it is clear that one of the most important ways to address the education gap, at education inequality from early childhood all the way to lifetime learning, is with the power of technology, especially broadband. broadband access has more benefits than just enhanced computer skills. it opens the door to a whole new host of new teaching applications and tools enriching the student and supporting a teacher. as recently as 2012, only 37% of our nation's schools had enough broadband for digital learning placing 40 million kids on the wrong signed of the digital divide.

totally unacceptable. we must meet the need to reduce the deficit of opportunity by ensuring that every child in every zip code has the high-speed broadband they need to learn, to explore and to thrive. we must act to close the opportunity gap in education, because we cannot afford to leave anyone behind. and by the way, nothing returns more money to the treasury than investments in education. in terms of infrastructure, the american society of civil engineers last assessment of our nation's infrastructure rated america d-plus. d-plus. after years of disrepair and under investment, we have, according to the american society of civil engineers, $3.6 trillion -- with a "tr" --

trillion dollar deficit in america's infrastructure. what we know is that no maintenance is the most expensive maintenance. modern infrastructure is essential for our country. it promotes commerce. moving products to and from market. improves the quality of life, by moving people to and from work and school more quickly. it is good for the quality of our air and water, it works to connect all of our communities to the promise of the internet with broadband. we must meet the need to reduce the deficit in infrastructure and to do so in an updated and green way. over the years we have proven that policies that leverage private sector capital and expertise with government oversight are successful ways to create better more sustain ablable communities. we should learn from these examples and expand opportunities for public private partnerships.private partnerships.-private

partnerships. we should be putting people to work building roads, bridges, mass transit, broadband, achieve bigger paychecks and better infrastructure, and this is a strong priority in the president's budget. in order to fund these investments that will create jobs and reduce the deficit, we must use the tax code and eliminate special interest tax expenditures that increase the deficit. they are spending. tax expenditures. these loopholes. as woo he close special interest loopholes we can reduce the corporate rate and produce more revenue. we can have tax reform that ensures that all americans pay their fair share. the economic security of america's working families must be our priority. part of these reforms must make permanent and include the income

tax credit and the child tax credit. policies that are set to expire in 2017. initiatives with bipartisan support that strengthen the budgets of working families. and we did this with president bush in his stimulus package. this has bipartisan support. if these policies are allowed to expire, nearly 16 million americans, including 8 million children will be pushed into or pushed deeper into poverty. we must also in that regard strengthen the child care development tax credit which is in the president's budget. to further help families, the ranking member of the budget committee, chris van holland has proposed several bold proposals on the table. these proposals include a ceo employee paycheck fairness act. a saver's bonus to support retirement. instituting a .1% financial transactions fee, and provisions

restoring respect for hard work in the tax code. they're being reviewed by our members. with tax reform for the middle class, we can put more money into the pockets of working families. and again, ignite the engine of middle class consumers demand that drives growth and tonight for everyone.for everyone. a strong middle class is the bedrock of our prosperity, the backbone of our democracy. this animates the connection between public action and private success. the connection between growing paychecks and reducing the deficit. the connection between our investments today and our success tomorrow. for us to achieve a bright and durable future for our country, we must embrace the fact that the financial security of our

working families, is both a measure and the engine of our nation's success. it's a simple truth. when the middle class succeeds, america succeeds. our recognition of that truth guides democrats' action in orchestrating the recovery and it is the purpose that our economy needs today. we must achieve bigger paychecks, better infrastructure and manufacture more products in the united states. only by laying a firm foundation for growth, which the president talked about in his inaugural address based on ambitious goals for our future can we secure and maintain a vibrant middle class only by focusing on working families can we reignite the american dream and step into a new era of american prosperity. thank you for the opportunity to be with you this morning, i look

forward to your questions, thank you so much. [ applause ] >> i just want to say we apologize for the state of that microphone, but it was actually a set-up to show you'll allow know obstacle to silence your voice. welcome this morning. i am very tempted to ask you about the impact on the middle class of what is clearly one of the most important news stories in the country right now. i refer to pete carroll's decision to call a pass at the end of the super bowl. it is clear that this has done wonders for the morale of the middle class in my native new england. you can pass on that issue if you'd like. where i'd like to start -- you can -- >> i see by the paper it was the offensive coach who called the

pass but pete took responsibility, as a good leader. >> know you can be re-assured that no decision you ever made will be as second-guessed as that one. i wanted to start sort of big with the president's budget. i think you can make a case that it's his most aggressive effort to influence the direction of public debate in some ways since he took office. he's made this effort at a moment when republicans control both houses. i wonder if you could talk a bit about how -- then you have the proposal out there. how do you decide to put forward what democrats would do, if they could, if they controlled both houses again, and how you will influence the outcome of what will inevitably -- if we're going to have a budget at all, inevitably some compromise between the president and the

democrats and this particular republican congress. >> when we talked about what we would do, we talked about what we have done and now we have to go forward. because other things need to be done. i believe that the president's budget does have within it, many areas of common ground. infrastructure has never been a partisan issue. we've always been able to put forth strong infrastructure legislation. until the president suggests it then of course it became a little bit different. but i do think that the urgency is there. the opportunity is there, public and private partnerships. again, it is an issue that's usually been non-partisan. not even bi-partisan. non-partisan. relating to children and the rest in the tax code, those are priorities we put forth with president bush in his stimulus one. he wanted to just use the tax code and he was very accepting

of proposal we had for fundability for low income tax credit, child tax credit and the rest. these have been issues that republicans have supported. the issues that relate to sequestration. this is probably the fundamental point in the budget that the president put forth, he would do away with sequestration, which is -- anyway, we'll do away with it. and that is something that has appealed to republicans. i'm not here to speak for them, but i'm just saying in the past they -- >> that would actually be interesting. >> would do away with sequestration of where we had caps that we need to get away with if we're going to have growth. they want to do that on the defense side and we support obviously we all support a strong national defense, but also remove the caps on the

domestic side as well. so whether it's the overarching nature of it which is to do away with sequestration. there probably could be common ground, whether it is building infrastructure of america, investing in education, these kinds of issues are really -- shouldn't have any partisan aspect to them. i think that while the president has staked out a very strong budget, which i do believe is a statement of our national values of what we care about there is a distinction between his budget and the republican budget in terms of social security, medicare, all those things. but on the other hand, but on the other hand, there's plenty of common ground to find some solution. as i said in the opening comments, we have to have pride we take in our issues, we have to have humility about finding common ground where we can find it. >> in your remarks, you stressed

the pride you and democrats take at what you accomplished particularly in the first two years. notably, i affordable care act and recovery act, otherwise known as the stimulus the auto rescue. yet, these programs have never sort of captured broad popular support, at least in the polls. democrats have argued over and over that without the recovery act, the recovery might not have happened or would have been infinitely slower. the affordable care act has covered an awful lot of americans, yet we still have not sort of grabbed the public the kind of majority of support you had hoped for. why? >> it wasn't messaged properly. but i have to say it is interesting to me to see all of our republican colleagues who speak out against the recovery package show up at every ribbon cutting and every groundbreaking. 15 15,000 projects. the statistics are staggering in terms of roads and mass transit. all the things that came from

that. again, our fault that we haven't communicated. i think there was a reluctance to -- people wanted to make sure the public knew that reducing the deficit was a very high priority for us, and therefore, the jobs would come with the bill, but not to boast of what the investments were early on. we should have messaged it differently, as we should have messaged the affordable care act differently. >> on this point about the deficit, one of the striking things about what the president did and in general what the democrats is doing now, is they seem much less captive to the deficit debate. it's almost as if that debate took hold so quickly that the things that needed to be done to get the economy moving were kind of pushed off the agenda. can you talk about where the deficit is now, relative to the desire to get the country moving and deal with the long term and the long term? >> in order to reduce the

deficit, which is really important to all of us, you have to have growth. you can talk about cutting investments, and you can talk about raising revenue and all that should be on the table, but you must have growth. and you can't have false economies. anybody who thinks that by cutting education, they're going to reduce the deficit is dead wrong because nothing brings more money to the treasury to reduce the deficit than the education of the american people from earliest childhood k through 12, beyond graduation lifetime learning workforce. you have to make a case to the american people about why certain investments are about the future and reduce the deficit. and, from the day the president took office until now, the deficit has gone down two-thirds. $17.4 trillion. what is it? $485 billion. still too high, we want to take it down. but i think the public is understanding that growth and

bigger paychecks for the consumer, working class families to inject demand into the economy, to create jobs that brings revenue to the treasury. so there has been a large -- 70% of the deficit has been reduced since the president took office. it isn't any less a priority to reduce it further but there is a recognition more clearly that growth job creation is an important part of it not just by cutting investments as we go forward. >> i want to remind everybody that there are cards in the room, and i should start getting them soon. please submit your questions, i want to invite people to tweet if they wish. #pelosiatbrookings. i want to ask you, what was the first thing that came to your

mind when paul ryan talked about envy economics. but more generally i'd love to know what -- how do you react to that sort of argument? he made an interesting kind of juxtaposition where on the one hand he talked about rising inequality. and then he talked about democratic economics as envy economics. >> we don't have time to go completely into the republican budget. it's not a statement of values that most people would identify with when it comes to how we invest in the future and the rest. but let me just say, that is really so wrong. when i saw it, i thought, stale. yesterday. that isn't what this is about, nobody begrudges sick people success. people recognize that people take risk and succeed it creates wealth it creates jobs. and that's a good thing. what the concern is that we don't want that to happen at the exploitation of the worker.

god bless everyone for their success. god bless everyone for their success. but not, again at the exploitation -- i don't want to paint everybody with the same brush, but what we saw on wall street leading up to 2008, what we saw on wall street, that was just not right. now again, not everyone on wall street can be painting with the same brush. but we saw a situation where people on main street were seeing the value of their homes or even their ability to keep a home, the education of their children, the stability of their jobs their savings were all diminished because of what happened on wall street. when we passed the t.a.r.p. people said, oh, you just did that for wall street, not for main street. no, we did it for our economy. it is probably the toughest vote i ever asked members to take. and they paid the price for it because, again, not something clearly explained to the american people what the connection was between that

t.a.r.p., bailing out the banks and lifting up our economy. it was interesting because if i just may, on that score because this was a big deal and not something that we should go back to. but again -- and by the way even adam smith wrote a different book. what was his book called? "the theory of moral sentiments." i wish he had written one book, "wealth of nations" and the theory of moral principles. all in one book. because he took about the responsibility of people to each other in the other book. so when i say laize faire, that's what the system is about. but it is not about there's no cop on the beat and look what happened. a meltdown where the chairman of the fed, an expert on the great

depression. been bran ben bernanke. an expert on the great depression. tells us there will be no economy by monday. stunning. stunning. and so when paul ryan says that, i want to quote him a chairman of the standard oil of new jersey. few decades ago. chairman abrams. he talked about stakeholder capitalism. capitalism where decisions are made by management that took into consideration share hldz of course, the community at large. at that time we had wages 30 times -- the ceo was making about 30 times what the workers were making. 30 times. productivity would rise. ceo pay would rise. workers wages would rise. when we moved to something

called shareholder capitalism where none of those other considerations at large, the customers, the workers, were part of the decision. shareholder capitalism went to 100 times ceo pay versus worker pay. as i say a right angle going in the wrong direction. and that -- so it is not about economic envy. we just don't want a risings tide to lift all yachts. we want it to lift all boats. god bless you for what you have, but let's all share in the prosperity of our country because the productivity of the american worker contributes -- contributes to that. so i think that's cute but it's not -- it's not a fact. it's just not a fact. everybody wants to succeed. and they don't begrudge other people success unless it is crushing them. >> i like one of the headlines

of the event, leader pelosi urges congressman ryan to read all of adam smith. >> i have some great questions here which i am about to get to. i want to ask one more question. maybe i'll ask it in two halves so i'll sneak in two questions. the first is when you look at a lot of polling, there are two things that come out i think on public attitudes. on one hand, there is a lot of skepticism about the way the economy is working. there is a lot of general support for democratic ideas on the economy. on the other side there is a lot of skepticism about government itself and that government itself can't really fix that. the reason i want to link it to the second question is that, democrats -- and this goes back to your days campaigning for

your dad in baltimore -- always counted on the support of working class people of all colors, white, black latino. democrats have had a particular problem with white working class people. it seems to me some of it may relate to the first half of my question. so i want to ask you a, how did democrats, especially -- they've got the white house but they were a minority in congress restore the country's faith that congress can succeed at some of these things and win back some of these work rg class white voters. >> what happened in 2007 scarred people. it scarred people. and they have in terms of the confidence they need to have consumer confidence to invest and that. i'm not particularly interested in whether it is democrats or republicans. we just want a policy that works for america's working families.

and i think because of that scarring then, people are feeling more optimistic about what's happening in the economy now but they are not -- the scarring has had them hesitate to think it's going to last or that something else couldn't happen. and that's not necessarily only government. that's the private sector as well. and they see people trying to repeal the volcker act and dodd-frank and some other thing. so it is part of the debate as well. in terms of the role of government, that's been a debate in our country since we were founded. it's always been what is the role of government, how much do we need how much do we need at the federal level. does it work. and that's the lively legitimate debate of our country. what i would say is different about the republicans now is it's not about a degree of

government. many in the -- imai'm not talking about republicans at large in the company. just the republicans in congress. are not supportive of governance. governance. so it is not a place of where you are on the on the spectrum, they don't believe in governance, science and barack obama. they had a trifecta growing about being opposed to everything that is proposed and in their messaging, with the analyst's money and all the rest of that that has affected the thinking of people, but also we haven't messaged what we -- and quite frankly, the breakdown of the -- not the breakdown, but not putting into perspective the rollout of the health care act was not a good thing, people said, well, it doesn't work.

yeah, the system works and 16 million people are into it. it's like the refrigerator keeps your food cold, the light's not going on, but the foot is cold. that's an issue we have to address, you know as well as i, that many of the people you are describing had social issues that took a little path away from the democrats, whether it was guns, god and gays, but a lot of that is diminishing, i maintain whatever it is about the social issues if you have a strong economic agenda that gives hope to people that they can get good paying jobs, good paying jobs, and give them that confidence, that is the winning argument and that's one that we make the differentiation. now, believe me, and i mean this from the bottom of my heart, if the republicans would come around to places where we could come together on these,

elections wouldn't be so important. as long as they intend to engage in trickle down laissez laissez laissez laissez fair -- i said once to the press, they make adam smith look like a piker. what's a piker? that must be a generational thing. they don't -- it's so far beyond what our responsibility is in order to protect our middle class and all that that involves. some of it was cultural issues that took people away from us, even though everything is improving, they have that scar from '08 and they're not ready to fully embrace what is happening they see government

having played a role in what happened in '08, either by omission or passing tarp, which they didn't like, but we had to do it, that was a bitter pill that i -- probably worst bill i ever had to ask people to vote for in terms of the public not having a clear understanding. we supports president bush in that, the republicans abandoned him, it was overwhelmingly a democratic vote. we worked closely with president bush, the voting rights act, whether it was issued that related as i said earlier to tax credits and the rest, whether it was an energy bill, one of the biggest energy bills in the history of the country, he wanted nuclear, i wanted renewable. we had one of the greatest bills ever. we did a number of things including tarp with him, and i only wish that the republican leadership in the congress would give the same respect to

president obama and try to find common ground on issues. >> if i mispronounce anyone's name, i apologize. rachel from inside health policy asks, what do you believe is the democrat's best defense against piecemeal attacks on the affordable care act by the gop, what will the democratic strategy be in the face of the king/burwell supreme court lawsuit? >> in terms of the second part of the question, some of you may know, i know some of our friends in the press asked me this so many times who are here today, when it was -- the case before the court originally, i said, we're going to win. i was wrong, i said it would be 6-3, it was 5-4, i did say we would have the chief, i have confidence about what will happen with the court, the case is -- they're saying we can't

give subsidies to those who are not in a state marketplace if they're in a federal marketplace in states where they don't have a plan in their states, then that was not covered by the bill, i don't see how that's a constitutional issue, i think for the same reason they approved, the verdict was what it was, the decision was what it was before it will be this time. to your first part of the question, how will we attack the piecemeal. this bill has won this, you can't have -- you can't say, we're going to eliminate discrimination against people on the basis of pre-existing medical condition, but then not say we're going to have a mandate it all goes together, you have to bring down the cost

as i said earlier, that's one of the main reasons to have the bill, even if we had no other reason, was to bring down the costs, the republicans say, i'm against discrimination on the basis of pre-existing conditions and women and i don't want lifetime caps and annual caps. you can't say that, unless you have the oneness, the integrity, the integral relationship of the different parts to the bill. that's -- it's almost sillty for them to say that, without having the mandate which is seth to the bill and that's just the case we'll have to make. endless money came in fire and brimstone, carpet bombings, death panels. abortion, you name it, things that had absolutely nothing to do with the bill, and that really poisoned the well and we didn't have an anti-dote out there early enough, i may have read a book about the subject

and the whole messaging thing, i may, i don't have time right now, because it's -- as president lincoln said, we have it in his book in his own handwriting, public sentiment is everything. you can't assume the public will understand this is in their interest or this and that, the public is wise, but they have to know. god bless the public -- our country is so strong because of the wisdom of the american people, the productivity, ingenuity and optimism of the american people, you can't allow the other side with endless money, at the time when insurance companies didn't want the bill to pass, but now have become team players in it, too define what the legislation was about, it's so exciting, we talked about lincoln, let's talk about our founders, life,

healthier life, liberty, pursue your happiness. that's what this bill enables people to have, a healthier life to pursue their happiness without being job locked because a child is bipolar, so they can be free to start -- self employed, start a business, be a -- engaged in the arts, change jobs, have mobility to pursue their happiness, it's a great bill and it brings down costs. lists aspirations, breaks down costs and you can't take pieces of it, any bill we pass can be subject to scrutiny to say, how can we do this better, that better. we're always open to that, but not something that totally takes the heart of it and undermines it, it's too important. this is as important as

medicare, medicaid, ain affordable care for access for all americans. it's a great thing, we're proud of it. >> we have five minutes left, and i have one question i want to close with, i'm going to combine two people's questions here, and ask you my last question which is a personal question, personal for me this is from athena jones of cnn who very wisely is on top of the day's news. will you weigh-in on the vaccination debate? should they be required? and the second is, working families from the department of homeland security could be affected by congressional inaction because the immigration fight that the republicans want to have, are you concerned this funding battle will go down to the wire. will there be another c.r., i wanted to ask, steve low man in

the audience said, what messages did you take from the 2014, vaccination, homeland security and 2014? >> on the vaccination issue i'm sympathetic to the concerns and i've met many, many hours and tried to facilitate conversations with families who have had concerns about vaccines and how that affected children, be it autism or otherwise, it is a public health issue, and the fact is, children should be vaccinated. it could be a generational thing, when i was young people had polio, a vaccine, to prevent the spread of disease, i think that again -- i support the public health decisions that call for children to be vaccinated. on a separate note, we should do