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tv   Politics Public Policy Today  CSPAN  June 4, 2015 5:30pm-7:01pm EDT

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ending two% of gdp, approves the biggest expansion of entitlement spending since the great society, started the entire era of stimulus spending. mr. obama came in, increased it by another 2% of gdp. further expanded our entitlement obligations, drove stimulus spending through the roof. what do these experiences tell us? >> well, i don't know about those experiences in particular, but let me say that right now the end result from 2007 to now, having the debt double, nearly double gdp is something of real concern and it handicaps us going forward. >> in the remaining 23 seconds, reagan recovery, obama recovery, compare and contrast. >> i can tell you that the gdp growth from this recovery has been slow. i don't know if i want to attribute it to one president or
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another, but gdp growth has been slow this recovery, maybe the slowest we've had. >> gentleman's time expired. mr. mole ton recognized for five minutes. not here. mr. norcross, new jersey. >> thank you, mr. chairman, appreciate it. good to have you here, dr. hall, certainly appreciate sharing your views. want to follow-up with a comment you made in your statement to mr. van who willens. you talk about wage growth as stagnation on the revenue side of the ledger, and over the course of the last year this recovery has been stagnant, and i agree with that. i think we all agree with that. i am looking for a better explanation. we look at 73 through i guess 2013, real wages increased by 9%, productivity, the thing you said drives wages was up by 74%. huge gap that has been
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discussed. how do you attribute the difference between back then and now and why that isn't changing based on your comments that with the growing economy, the growing wages. >> right. it has been noticed, it is a concern that productivity growth outstripped wage growth at times. >> massively. >> massively. one part of it is nonwage compensation, things like health care costs and other things. that's been a big part of it. if you take that into account, they get a little closer. but you're right -- >> factually. >> has been a bit of a separation of that, and i think that's an interesting thing. i still think it is fair to say that you still can't get solid wage growth without productivity
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growth. and i think lack of productivity growth is going to hold back wages going forward if that isn't somehow resolved. >> just following your logic, we should have had a massive wage increase, 74% productivity growth, only 9%, i am looking for how did that occur in your opinion following your suggestion that the increase in productivity would give you wages and that didn't happen. >> well, we would have to spend a little time looking at it. offhand, like i say, if you look at narrow wages, that's a bit of it. we have had a bit more of a separation between productivity growth and total compensation growth. >> total compensation takes it
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up 17%. still massive difference. i am leading to trade agreements and '73 and nafta. looking at scoring and whether or not a trade agreement is good for this country, you take certain assumption into effect, wouldn't you? in other words, are they applying and following the rules that have been set up. when you score something, do you assume that the other countries will follow the rules? >> well, that's right. up to now the scoring of trade agreements has been looking at tariff revenue, lost tariff revenue has been driving that. the effects would be different if we did a dynamic analysis of a trade agreement, but you're absolutely right, it does rely on the agreement being upheld on both sides. >> so when we're moving forward, any trade agreements we might enter into you would assume
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they're going to follow the rules as part of that scoring? >> we do our best to estimate that. if the indication is that enforcement may be a problem or some of those things may not be credibly enforced, that could play into scoring. >> is that a maybe? i am saying it is a judgment i can't make because i don't know all of the details of a future trade agreement. >> we are going to run out of time. would you follow up with me, it is not a maybe, you're going to have to assume they're following the rules? i look at vietnam who never followed the rules on wage agreements, yet they're going to be included in this trade agreement. australia, different story. they tend to follow the rules. when you start scoring these things, we want to make sure we are taking into account whether or not you're going to assume
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they found god and are going to follow all of the rules which we find very unlikely. again, appreciate you coming on board. looking forward to future meetings with you and your insight. >> the gentleman's time expired. the gentle lady. >> we are looking at critical things in the country. my colleagues spent time on the debt and the economy. i want to turn to another area related to this, that's impact of interest on our government spending and economy. this past january cbo estimated budget and economic outlook over the next decade that interest payments on federal debt will rise by more than 400%. $827 billion a year by 2025. it is astounding. as one of my other colleagues said, trying to figure out how do you talk about billions and trillions to our constituents
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and even to myself. it is something that's really unimaginable. over these ten years, the federal government is expected to pay $5.6 trillion in interest payments. again, just astounding. what negative effects will these growing interest payments have on our economy? >> first they'll make the debt grow. that will have a significant effect on the federal debt. i think if you do a quick calculation, if interest rates go up by .75 percentage points, a fairly small amount, debt to gdp ratio 25 years from now would go up 25%, higher than the long run average, just the debt alone from that is significant. when you raise interest rates,
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you have all sorts of effects. you raise the cost of capital to workers. that can have impact on wages. by reducing return on capital, i'm sorry, raising interest rates, it effects investment as well. you have economic growth aspects to this. >> as the interest rate goes up, that also means that more tax dollars paid into the federal coffers will be used to by services and help with those things we believe we need to get for those most needy. if the interest rates go up, more money has to go pay on the debt, is that correct? >> that's right. >> so given that, what is the effect of 1% increase in interest rates on the projections, how much worse does this problem become?
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>> it becomes significantly worse. you're talking about 30 plus percentage percent to debt in 25 years, it is really significant. i can give you more detail. will give you more in the long term budget outlook. one of the things we do is show you how varying interest rates effects the debt in the long run and do some discussion of that. >> i appreciate getting that information. all it will do is make me stay up later worrying how we are going and how we take care of this. my last point is my understanding from sitting on the budget committee and hearing previous testimony is that the longer we wait, the harder it is. figuring out how to take care of entitlement programs that's the
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greatest driver of our debt right now while we can, before interest rates do rise, will put us in better position and perhaps not put us in a crisis situation, is that not correct? >> thank you. thank you mr. chairman for the hearing. i yield back. >> mr. lieu is recognized. >> thank you mr. chair. thank you dr. hall for 25 years of public service. i am going to ask you questions on dynamic scoring. i believe it is a radical c change in how the cbo is going to score the federal budget and to me it is not radical because of the concept, like the concept as you know is easy, basically people react to changes in
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governmental policy. >> right. >> earlier this year, the house majority passed a rule that said we're only going to apply dynamic scoring to some parts of the budget. my view is math is math. if you're going to apply additional math to some parts of the budget and not others, that will skew the budget, and response earlier in this hearing, you said you would apply dynamic scoring where there's evidence of dynamic effect, but doesn't everything have dynamic effect, whether you spend on education or spending on infrastructure, r&d tax credit, spending on nih for r&d, everything has an effect, isn't that true? >> not sure everything does, certainly many spending items have dynamic effects just like revenue items have dynamic effect. >> and will the cbo go beyond what the house rule is if you believe there's going to be significant evidence of dynamic effect and score it that way, regardless of the house rule? >> well, i believe the house rule asked to use dynamic analysis in both the spending and the revenue side where appropriate. >> it limits the spending side
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though. so let me ask. you have no objection to having cbo score the entire budget with dynamic analysis? gl that's right. we actually have been doing that, you look at the analysis of the president's budget, we do a dynamic portion of that. you can see how we apply it on everything. we do it in the long term budget outlook, macro economic effect. we had a little experience doing that, and this change to us is just sort of a continuation of using a methodology we have already been using. >> thank you. that's reassuring. second question i have is how you do it. so let's say -- i get the extreme examples. say the state and federal government stop funding education, took that money and applied it to deficit reduction. so you would have a numbers effect. then over time, you have a lot
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of uneducated people in america, and that has a drag on the gdp. do you factor that in, education levels of the population, how strong infrastructure is, do you apply those to dynamic scoring? >> we do. that would have effect on productivity going forward, drop in productivity going forward would be a dynamic effect that would not be good for economic growth. >> and it is possible that dynamic scoring will go negative, reverse, right? possible there may be some cuts that actually have a worse effect over time because you're going to have a less productive work force or something else that effects gdp. >> that's right. >> then i have a question about your view of what happened in kansas and louisiana because they applied dynamic scoring in those states, governors of those states said we're doing massive tax cuts, dynamic scoring shows we bring in more revenues than the tax cuts. didn't happen. both states are facing potential bankruptcy. my question is do you think they got the dynamic analysis wrong? do you think the theory if you do massive tax cuts you bring in
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more revenues is incorrect or do you think it is random coincidence if you do a lot of tax cuts, you'll bankrupt your state. >> i don't know the specifics about the states and what they did, but the economic evidence is that there are dynamic effects but not that dynamic effects are so strong that tax cuts pay for themselves. that takes the economic evidence too far, it is just not there. >> thank you. i yield back. >> gentleman yields back. gentleman from georgia, mr. woodall is recognized. >> thank you for being with us today. you were asked earlier you were a homeowner, you confessed to being a homeowner. i am not going to ask if you're a credit card holder, but i want to ask if your model reflects differently the kinds of investments that mr. lieu was talking about, whether it be education, infrastructure, consumption, consumers buying more imported goods. does our model make distinction between government spending on investment and government spending on consumption? >> it does. that's an important distinction. obviously deficit spending on something that gives dynamic
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benefit is different from deficit spending on something that's not. >> when we talk about running up deficits annually, debts over time, the scoring i generally see says if we spend more today, we're going to have a positive effect on gdp in years one, two, three, drag on gdp in years seven, eight and nine in rough terms. is there a way to avoid that impact as we try to balance gdp growth today versus tomorrow? is there a formula that gives gdp growth each and every year? >> it is not a formula but one of the thing that would help is not surprising people, right? if you get a fix, you announce it now and you give it a little time so people can adjust to it. then hopefully you can avoid that push against economic growth, you can avoid that and still get the benefits down the road. it is the idea of getting a plan together, maybe having effects phased in over time so you don't get a drag on the economy. >> let me be clear.
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i am 22 years from retirement. young people think they're more likely to see a ufo in their lifetime than social security check. you're saying whatever we are going to do to address that concern that the same solution phased in over time has less drag on gdp than if that was imposed at some drop off point? >> that's right in the near term, you can have a drop off point as long as you give people time to adjust. it is an issue of timing. faster you fix it, better off you are. if you take time and phase it in, you can hopefully avoid drag in early years. >> i am confused, i have been on budget committee four years, only been in congress four years. we do things one year at a time, we will decide in december to write tax policy for last year. get to a problem we know is
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coming with ten years, but won't deal with it in years one to nine, we only deal with it when it is upon us in year ten. there's economic consequence to short term extensions, to one year policies, to let's wait and see culture that exists on capitol hill? >> well, without commenting on culture, yes, there can be effect from doing that -- >> i feel guilty about the culture, i'll comment on culture if you comment on negative effects that the culture brings. i am thinking about the formulas and i have such great respect for the budget committee chairman and getting to the first conference on balanced budget since 2001. we went after those consumption programs and certainly the sequester went after many of the
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investment programs. i supported the chairman's house passed and conference budget. have you seen alternatives that tried to reduce consumption spending in this country in order to enhance the investment spending in this country that haven't gotten the attention on capitol hill that they should have? have you seen any idea leaders other than the chairman pushing that idea that we are harming our country with consumption and harming our consumption with lack of investment, so let's get the balance right? >> i can't say i have anything in mind. we thought through possible ways of balancing the budget and ways of improving things. some options are things we thought of and sort of detail what we think the impact would
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be. >> i know you worked hard to give us the economic information, not try to drive congress on policy issues, but if i could encourage you at every opportunity to help to beat that drum about the degradation that occurs in the economic system with the uncertainty that absolutely no one in this committee, absolutely no one on capitol hill benefits from, that seems like a place we could come together and make differences you talk about. mr. chairman, i yield back. >> gentleman's time expired. mr. brat is recognized. >> i want to take exception to couple of remarks previously given by the ranking member, get your confirmation it is true. he said in the short run, the republican budget reduces gdp. you said correctly yes, aggregate demand goes down, that's the relationship. but i want to put it in context. equally true, if we go another trillion in debt as milton freedman taught us decades ago and you just create a jobs program, people dig a ditch with teaspoons and fill in the ditch,
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that would also create gdp growth. >> it would in the short term, that's right. >> that would also create growth dig a ditch with teaspoons and then fill in the ditch that would create gdp growth? hrchlt it would >> it would in the short term. >> and i'm just trying to show the context of smart economic growth versus anything that causes economic growth. second remark the ranking member made is that immigration increases would increase gdp growth. that's also a true statement but what most economists use as the more helpful measure is gdp per capita, and would you say that's accurate as a measure of our welfare? that gdp per capita is more important to the average person than just growth in gdp? >> absolutely. that's what's behind household income. >> good. and is it your understanding that in terms of federal scoring, immigration federal
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programs come into play, but if an average person with a ninth grade education immigrates into our country and makes, say, $20,000, pays very little in federal income tax but if they have two kids in school the cost of that is roughly $24,000 to the local and state roughly speaking, and any other additional expenses. and is that scored by cbo, the state and local costs? >> no, we don't do state and local. >> okay, so when he says immigration causes growth, i step that premise, it does increase gdp growth but the average person would not be happy to find the additional tax burden for paying for schooling and all the other programs to go with it. and finally if we can redirect to the slide i think this is probably the most important problem the country faces and provides the ultimate context and background for everything we've been speaking about, the
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$18 trillion in debt, the debt clock and it's spinning out of control and this chart is from cbo and roughly shows by 2032 the four major programs plus interest take up all federal revenues by about 2032. and so i say this over and over to folks. our governor came up with the entire delegation from virginia today, sequesters having painful effects on the military in virginia, we need transportation spending, we need education spending, we need health spending, et cetera. but i just want your confirmation that what this graph is telling us is that under current law and at different budget committee can only deal roughly speaking with one-third of the budget. two third is auto pilot that we can't touch without changing law. and i just want to make it clear that by 2032 under current law with interest payments included, 100% of the budget is auto pilot and there will be very little if any money left for military and all of the regular expenses of
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running the government all else equal. >> well, it certainly gets up to be an unsustainable -- at some point it's going to be an unsustainable level. it's hard to know where it is but it is. >> and i know this is incredibly hard to answer. let's say you've got the debt at $18 trillion. what breaks first? where is the -- i mean, this time it's different harvard had the red light's going off, you said debt-to-gdp ratio is at historical high ss if you throw in this story with that where do you see the first breaking point? >> i don't know. it's like any other kind of debt. when it accumulates, if it's company or household, you know at some point it will break them, you don't know where. >> i'd like to go to the next slide.
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i think you're possibly familiar at the bottom it's probably too small to read but it seems like we could do more to provide numbers through cbo and through our committee work to illustrate how dire this situation is that this chart presents. an economics professor estimates the total fiscal gap, roughly the difference between all projected spending and revenue in current dollars is more than $200 trillion. so i just gave the $127 trillion, he does in the the infinite horizon calculations and, by the way just for political purposes cotton runs a purple institute right? it's not blue or red. >> the gentleman's time has expired the gentleman from indiana is recognized for five minutes. >> thank you, mr. chairman, and thank you dr. hall for being here. i've enjoyed listening to your testimony and also to the answers to different questions that have been asked.
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is i want to talk about interest on our debt. interest rates a little bit and then also appreciate your comments about $18 trillion of debt and what that does to our economy and what it does to the future of our country but before talking about the interest could you talk a little bit about the sequester and and maybe how it relates to our military readiness? our military spending. but then is that the greater problem or are entitlements the greater problem that we need to fix? because as mr. pascrell was saying earlier, the fact that we had a balanced budget in the late '90s when president bush came into office 9/11 did occur and we did have to -- we had some extreme situations that we had to deal with. but i don't think that that can be the only place we blame for
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our high number of debt. i think it starts pointing tonight-to-and sequester has shown we've seen military spend dog down defense spending go down but we haven't done anything about the other two-thirds as congressman brat was talking about. could you talk about that? >> well, sure, the most obvious thing coming is the effects of the aging population. that's just going to happen. that has significant budget impacts and the rising health care costs which is also related somewhat to the aging population. so no matter what else happens those things are going to push the debt higher and there are a lot of ways you can sort of -- folks can work on that. we've tried to give you some options. but those issues didn't exist till now. >> okay cbo's report on health
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care cost, cbo recently released its project of health insurance premiums for the 2016 period. is that something that you -- can you talk about that? as i talk to folks back home they're seeing a rising cost in premiums and out-of-pocket expenses. are we seeing -- could you just touch on that a bit? >> let me put in the context. one of the challenges for cbo with the aca was because we didn't have any experience with that. so when we're trying to estimate the likely impact, to be honest we're relying on theory. now what's happening is we're starting to get experience and real data. going forward that's got to inform our estimates of the cost going forward. and what we saw early on was we saw some drop in premiums we didn't forecast and but what we're going to continue to do is keep monitoring those premiums and monitoring things and if it looks like premiums are not
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falling and they wind up going up more then our forecast we'll adjust. >> and my concern is that folks at home aren't seeing wage increases. that it's being -- it's very slow. we're seeing some large companies increase. the minimum wage for the companies but as you mentioned earlier there needs to be a tightness in the labor market which i think in indiana we're seeing that because companies are having a hard time finding that. but to go back to the debt and interest interest is going to surpass our defense spending over the next 20 years. is that still the projection from cbo? >> i don't remember. if that was the projection i suspect it hasn't changed. >> what can we expect when interest rates do go back up? how are we as a congress supposed to handle the debt service tomorrow a debt that's
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only going to continue to rise. >> well, if you want to avoid the debt getting out of hand, getting to an unsustainable level, you've got to make some cuts. you've got to manage spending or manage revenue or you've got to do something. >> well, thank you for your candidness. it's really appreciated and appreciate the chance to ask you a couple questions, looking forward to working with you on this committee and welcome you to your position as well. >> thank you. >> gentlelady from tennessee is recognized for five minutes. >> thank you, mr. chairman dr. hall, we so appreciate your time and your willingness to work with us. i think we all realize that we have some spending issues and budget issues and it is constituents that want us to get these addressed. i think they're tired of the bureaucracy feeling as if they are immune and exempted from
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having to work within a budget and i just -- i think they're encouraging us to be bold in the work we're doing. i want to ask you specifically about the inspector general report. and we've been doing some report on the council under the inspector general integrity and efficiency reports and and i have looked at fiscal year 2013. and they have quantified $56 billion worth of savings. and we have had a project going on in our office where our staff and interns were working and just the window from 2011 to 2014 they found $97 billion that could be utilized that -- with these inspector general reports. these quantify the waste, fraud
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and abuse. so as you all look at the budget, does cbo take these reports in waste, fraud and abuse into consideration and how does that play into your cost estimating and your budget process? >> sure. we do take the ig reports into account when we can and it's a matter of estimating the costs properly so it's clear that there are issues like that that's part of the cost estimate. but one of the tricky things for us is scoring efforts to bring waste and fraud into -- under control. there are scoring rules with respect to that that make that a little tricky for us. >> okay there was a report that cbo issued in 2014 regarding the budget efforts and the effects of reducing waste fraud, and
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abuse with health care tracks. so is cbo looking at or studying waste, fraud and abuse on a broader level and are there plans to release any future reports in this vein? >> at the moment we're not currently conducting any research like that. we are, of course, happy to discuss the possibilities of such. >> let me ask you this, then -- could you capture savings by utilizing some of these? capture savings and use them for bought tear offsets by tightening efforts or changing the way you utilize these reports or integrate these into the budget process? >> there's actually a score keeping role that makes it a little bit tricky. if it's -- if it's a new proposal and it's something that
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we can take them into account. if it's simply increasing spending on finding fraud waste and abuse, the rules don't let them count that. >> about a couple of other questions i'm going to just submit to you dealing with interest rates and deficit reduction because those are items that come up when we're talking with constituents in doing our town halls and the good thing is people are watching closely what is happening with the budget they're very concerned about the fiscal operation and are working in a more forthright way as we determine our budget processes. i yield back. >> the yes lady yields back. the gentleman from mr. palmer is
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recognized for five minutes. >> thank you, mr. chairman thank you for being here. i discussed the impact of revelations. a little over 15000 per household household. should be taken into account when the cbo looks at its economic projections. know that the president's office takes a look at that, i think it only captures the costs. is there any consideration that cbo have taken into account? >> no i don't think we've ever done research on the possible impact of regulation.
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a lot of what makes it tricky is you need regulation and the issue is what becomes too much regulation. is what becomes regulation that has a tradeoff with economic growth. >> you raise a good point right there, that you need regulation but what you need is certainty of regulation and there's a number of studies throughout that indicate that when businesses know that they're going to be regulated and know what the regulations are, it doesn't have a negative impact. we're seeing that played out in the economy now. how would you respond to that? >> i mentioned earlier there is economic research and the fact that that can have an impact.
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and i don't know how much they focused on the contributions to that. >> i think there's no work out there, i can't remember if it's from university of chicago or the london school of economics about that aspect of it be s but i think it's something that cbo should take into account. there's also a report about a couple of states, louisiana being one of them, that used dynamic scoring and it's justification for tax cuts at the state level but i just want to run this proposition by you because state taxes are considerably lower. is it possible that the benefits of the state tax cut would have less of an impact on discretionary spend inging and investment spending or that impact would be nullified or muted because of higher federal taxes, regulatory costs such as what we're experiencing now.
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our energy costs our health care costs, our higher federal taxes. >> well, yeah that's one of the difficulties. but it certainly is dynamic projection is understanding the dynamic effects of thing. it's not that easy to estimate. >> for instance in alabama our state income tax rate the highest level is 5%. that's very little compared to the highest rate when you consider that blue cross/blue shield just announced their premium rates are going to rise by 26%. that's significant when you take into account the increase in energy costs especially for people on a fixed income when it's consuming for people who learn than $32,000 a year a quarter of their income. when you take into account the
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state taxes are usually fairly insignificant, particularly on the income tax side relative to the cost imposed by the federal government would it not make -- would it not be true that whatever tax cuts you have at the state level would be pretty much wiped out by federal policy. >> that's possible. >> and one last thing, you were asked earlier if you have -- if you own a home. you said you did. you were asked if you had a mortgage. i would like to know if in ten years the interest on your mortgage will be the highest single household budget item. >> i have a fixed-interest mortgage so, no. >> so the answer is no. well, that's good. that makes me feel better about you being the director of the congressional budget office. mr. chairman, i yield the balance of my time. >> gentleman yields back. gentleman from arkansas is recognized for five minutes. >> thank you mr. chairman. and thank you dr. hall. i see that you taught at the
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university of arkansas and i wanted to point that out for the committee. >> i did. >> appreciate you being here today. you made an interesting comment about how delaying solutions to our problems compound the problem. and we know that those solutions haven't been implemented in quite some time and our problems are getting worse with too much debt, with too much continued deficit spending and we've seen the graphs that show what this is going to do to our interest on the debt and we've seen the graph that shows the amount of mandatory spending and discretionary spending. but when we start looking for solutions to these problems and we start drilling down on some of these mandatory spending components, and specifically if we look at the affordable care act, if i think of it in two components. you've got to exchanges which provide premium support for those who fall in the 138% to 400% of the poverty level
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bracket. and then you've got medicaid expansion which 29 states and d.c. have participated in the medicaid expansion and it pays insurance or health care costs for up to 138% of those -- those and 138% of poverty level. so unlike traditional medicaid for disabled beneficiaries nursing home patients with children, the aca is for able-bodied working-age adults and my question is do you know the split on the numbers of aca participants in the exchange and those in the medicaid expansion and also the budget impact for each population? >> i don't offhand but i can follow up with you. >> okay. i happen to have looked at some of that data and i believe there are more people in the medicaid expansion population than those affected by the exchanges than were anticipating the court
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ruling in the "burwell" case that would affect those under the exchanges but would do very little to affect the larger population of those in the medicaid expansion population. and since you don't know the number, you probably won't know the answer to this question but i'll ask it anyhow. would you say that it would be fair to say that medicaid expansion under aca is costing more than the exchanges if there are more people in the medicaid expansion and more money has been expanded? >> i don't know offhand. >> all right. well, when we look at that medicaid expansion there's also an incentive premium in there that the budget director even stated here in this committee that that premium was put there to entice states to expand medicaid and again, the medicaid expansion has only been done in 29 states and d.c. whereas the exchanges are in all
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50 states. and under traditional medicaid, the federal government only pays an average of about 57% of the cost for traditional medicaid whereas under the expansion, the federal government pays 100% of the costs for those in the expansion population. it will be backing off to around 90%, which is still a very large premium, again, for able-bodied working age adults. our numbers show that this premium alone is about $300 billion over ten years. have you seen any other areas like this under the mandatory spending where you know, there seems to be these premiums or enhancements or things that would make our mandatory spending continue to grow which also makes our deficit spending continue to grow which makes our debt problem even worse. >> yeah i don't know.
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i'm sorry. >> the time i allotted for you to answer questions has been quite short today so i appreciate your testimony i would appreciate if you could go back and find some answers to those questions and get those to me and mr. chairman i yield back. >> gentleman yield back. gentleman from south carolina mr. sanford is recognized for five minutes. >> yes, sir, i thank you for your time as well. a couple quick thoughts. i wanted to follow up on my colleague from virginia's thoughts with regard to what our colleague from maryland has suggested about the republican budget. and in it he said, you know, the republican budget will slow economic growth. what my colleague attempts to get at in virginia was the why. and i think he used the analogy of, yeah you can go hire a bunch of teaspoons to fill in a ditch and dig it out again that would add economic growth but ultimately not make us more prosperous. would another way to characterize this suggestion by my colleague from maryland be
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that of if you continue down this road -- in other words p if you go on spending money that you don't have, if you don't impose the financial constraint that the republican budget was ultimately about, yeah, there might be a little bit of slowdown short term but there will be much greater consequences down the road by not addressing the entitlement and spending issue that this country is confronting. would that will be a fair characterization? >> that's right. i think that's part of our basic message with the long-term budget outlook. >> i also want to go back to your words earlier. you said that the debt issue will have significant affect in growth at some point. but i want to go back, again, my colleague from virginia he mentioned the book "this time it's different" one professor
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from harvard. i think he hasn't done a lot of work work, with the future generations of america today. i think it was interesting, their observation was that we are facing the most predictable economic crisis in the history of man if we continue to do nothing to address the debt and deficit in this country. so i think that -- again i'm not trying to -- it doubled under the bush administration, doubled again under the obama administration. this is not a partisan issue. but this is a flat out economic and numerical issue that is going to have unbelievable consequences to the american public if f nothing is done. could you just explore just a little bit more deeply when you think we'll get to that point
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from which there will, again be severe consequences. >> this is one of those things that's difficult in communicating because nobody has a tipping point. you know it's got to be there somewhere but there's no real consensus as to what is the tipping point when it's going to happen. i would liken it to looking at any business that's losing money money. at some point -- >> okay, but just because time is so limited. might we say this? the effects of that tipping point would be, one, in all probability substantial in the terms of the dollar. if you look at tipping points around the globe when countries had a debt spiral severe consequences for the currency in question. there have been severe consequences generally with regard to borrowing capacity and interest rates in a spike that impacts that mortgage, the person's ability to buy a home. also real impacts to the way of
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life because there's generally been an economic drag which is rogoff was trying to get at in his book. you would say there will be severe consequences if we go past that tipping point wherever it might be. >> that's right. yes. >> and coming back just for one second, if we're somewhere around 2025 2032, which is not way off, we're talking 10 maybe 15 years off. at that point which we only have enough money for interest and entitlements and nothing else, could that be a likely spot at which you indeed financial markets say wait a minute, this is unsustainable, we're not going to loan you more money if you're at this spot. could that -- narrowing probability, could we be getting close to as little as maybe ten years out? >> you know i don't know. >> conjecture, i understand that. but would it be reason to say
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financial -- if you believe the financial markets anticipate, we're going to get to a point in just ten years where there's only enough money for interest entitlements, do you believe the financial markets anticipate it could well be inside of ten years that we're looking at such a tipping point? would that will be reasonable conjecture? >> well, certainly part of it is they have to believe you're going to address it. that factors in. that's one of the reasons why the debt-to-gdp ratio doesn't tell you everything. you have to have credibility that it's going to be worthwhile to continue. >> gentleman's time has expired. gentleman from arkansas mr. womack, is recognized for five minutes. >> thank you, mr. chairman, as my colleague from arkansas has already stated, your bio includes a stint at the university of arkansas. go hogs, welcome to the hearing room. mr. mcdermott from the acting ranking chair's position a moment ago opened his line of
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questioning about your house and if it's okay, i'm a fellow arkansan, you can truck me that i'm not trying to trick you. if i get too personal let me know. nice home? >> sure. >> we've already established you took out a mortgage. was it the nicest home you looked at? >> no. >> so there were nicer homes? >> well, i dreamed when i looked at the other ones but realistically that's what i could afford. >> so there were nicer homes bigger homes. >> yes. >> probably some in some gates communities. just a lot of amenities you would like to have had. you dreamed so why'd you buy the house you got? >> it's what i could afford and what i could -- it was a loan i could pay back. >> so when you went to the lender they were interested in your ability to repay? >> that's right. >> how novel.
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wsh any other considerations in what you were doing say main innocence and upkeep newt costs, taxes those kinds of things? >> oh, absolutely. that factored in our decision. >> you might have had kids going to college that might take a bite out of your disposable income. all those things. and your lender was interested in that, too, wasn't he? >> yes. >> but as mr. mcder not said the house is a great investment. so if it's a great investment, if it's something we ought to do as homeowners is buy a home and invest, it stands to reason we oughting to go for the best thing that we can without regard to our ability to repay. but what you've basically stated in the -- and i know it's kind of a crudely simple comparison that i'm making here is that the
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people that are lending you money for an investment like that are vitale interested in your capacity to repay that loan and if you could not demonstrate a capacity to repay that loan you are probably not going to benefit from that loan, correct? >> that's right. >> so as mr. sanford and others on the dais have stated our creditors must be interested in our capacity to repay, don't you think? >> yes. >> do you think there's coming a point in time that they may ask of us to start doing some things like looking at our budgets as everyday americans look at their budgets and start doing away with cable and expensive vacations and unnecessary costs that might be as mr. woodall would articulate to the consumption side and not necessarily to the dmvsment side, don't you think our creditors are going to be expecting us to do that? >> yes. >> don't you think they're kind
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of looking at that today -- as a matter of fact, i think it's under this president's watch that we have taken the only downgrade in a rating agency, at least in my lifetime i don't know if it -- ever, i suppose and that downgrade was basically a reflection of congress's inability and the leadership of the country's inability to come to terms on a long-term program that would keep us from getting to the point where we're going to have to suffer extreme measures. is that correct? >> i don't want to speak to their decision i don't know what their decision was based on. but that certainly should be a consideration. >> in the remaining time i have, it's already been said a number of times but one of the things that frustrates me as a member of congress is our inability to completely wrap our arms around the solutions that are going to take the long-term implications of all of these programs, whether they have investment grade or otherwise off the backs
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of the next generation and when i looked at that slide a minute ago and projtsed out to 2032, i have a two-year-old grandson who turns two this month. before that young man can vote the debt load and the amount of pressure that the mandatory programs are having on the discretionary budget will be more than we have to be able to even afford discretionary programs and that young man even before he has a chance to vote has not had one thing to do with creating that problem so i'm like the rest of my colleagues. i'm in search of solutions and i this i the time to do it is now. >> gentleman's time has expired. mr. yarmouth is recognized for five minutes. >> thank you very much, mr. chairman. mr. hall welcome, congratulations on your position and i wish you well and look forward to working with you. one of the things that -- i won't say keeps me up at night
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because i have a very easy time going to sleep but what i think about a lot is how this body which moves at its optimum efficiency at about 10 miles an hour can make policy in a world that's moving at 100 miles an hour. this manifests itself in so many areas we dealle with in the energy field and education field and medical field where things are changing soeing so rapidly and those have repercussions for government and taxpayers in our federal budget. i remember several years ago when treasury secretary tooigt was here and we were discussing long-term projections about deficits and costs of medicare and medicaid and so forth and i asked him at that time how reliable would you say projections going out 30, 40 50 years would be. and he said i don't think projections past five years are reliable. . of course that doesn't make your
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job easier and -- nor does it make our job easier. but in your statement talking about the transparency of your modelling is -- that's kind of the segue to that issue and i am concerned about how somebody in like cbo would model forecasting in some of these areas when things are changing so rapidly. just look at changes in the forecast of health care costs and medicare viability have changed in the last few years. so i guess my question is we've talked about modeling and asked questions over the years about how cbo reached these various conclusions and i don't think that any of us really understands how that process comes about and now that we are
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going to use dynamic scoring apparently both on the tax side and spending side it seems to me that there needs to be a great deal of consultation with the congress about the modelling that is used. i know that risks putting that question into a partisan dialogue but my question would be how do you plan to continually modernize your modeling system and what if anything should congress be able to -- what imput should congress have in your modeling decisions? >> to me one of the fundamental things that we need to do, especially with something like dynamic scoring, is transparency.
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we don't want to give you a number so you can criticize pit being too small. we want to be transparent and interact with experts. we're happy to talk to you, we've given presentations to staff and we're happy to do that. and it had whole goal -- we all have the same goal i think and the goal is to produce the best estimate possible and i think the dynamic part of this helps us produce the best estimate. >> the only thing i would say before i yield is that the problem is that your estimate ss while done as accurately as you can make them are still highly
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inherently flawed. most of them will require revisions. meantime, we have to mange investment decisions or taxes decisions and in the case of as mr. mcdermott talked about earlier, medical research we may miss real opportunities to do something that will not only benefit millions of americans but also have an incredibly positive impact on the budget looking at things like alzheimer's research which all accounts indicate are very close to yielding some real significant progress curing that disease and reversion of the mental deficiencies and eshd be, in my opinion, investing far because of the downstream savings is roughly $200 billion a year spent on alzheimer's would be worth it to achieve. thank you for that and good luck and i yield back. >> gentleman's time has expired. the gentleman from new jersey is recognized for five minutes. >> i thank the chair.
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thank you for being with us today i just came here from another hearing, financial services on xm bank and that something. are you familiar with the writings of friedrich bast i can't tell at all? >> i know the name a little. >> he wrote an essay -- i was thinking of this at the other hearing and it applies here as well seen and the unseen. seen is the immediate and it unfolds with causation, the unseen occurs over time and unfolds over a period of time. in thinking about that back over here, i don't know whether he got his writing from earlier writings but if you go back to earlier you see in second corinthians that we are focused on the hear and now or should we be focused on the internal. if you focus on the hear and now that is only the transient. we should be focused on the eternal. and i think about all that comes
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into play when we're talking about spending and our debt what is transient and what is eternal. now, you have or rather the cbo's office has in january put out their budget in economic outlook projections i look into that and see what is seen and not seen, the public debt held will reach 79% of the economy by 2025 and i've asked this question before and answers are always no i assume you'll say the same thing, when the cbo takes into account the potential for other things -- do they take into account other things when they come into those projections or work off of a gaysline? if the answer is yes they work off of a baseline do they take into account potential for future war? potential for emergency military spending with can't foresee? the answer is -- >> no. >> no, right. did they take into account what those projections future recessions that may come in the
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future and the answer is -- >> no. >> no, because you can't see them. do you take into account future large expenditures for new government programs that we haven't even thought up yet? and the answer is -- >> no. >> right. so we've seen and what we get is a report is only what we here and now know. but some of those other things are not considered in the actual report, is that correct? >> that's right. >> so if all of those things occur the actual projections would be what? a lot -- >> different. >> different and if you did those expenditures on future wars and recessions how would we classify them? worse off, i would say worse than they are right now. one of the other ones, do we take into account the interest rates are not as projected but they are because of these factors could be higher than what we're projecting right now? >> on that one i'll tell you yes because the long-term budget outlook, one of the things we do
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to worry about just exactly what you're talking about is we go through scenarios. what if interest rates are higher? what if interest rates are lower to give you an idea of how our forecast changes. >> i thought your answer was going to be yes on that. so if the cbo's forecasts are correct in ten years we will be spending $827 billion on interest payments alone give or take a billion dollars, is that correct? >> yes. >> and what could we be doing with that 28$827 billion if we were not just spinding it on payments to investors? the banks? >> not my decision but -- in other words. >> in other words, the answer is we could be spending more on all the other things we talked about spenting, whether it's infrastructure or health care costs or if you believe in educational costs, those other things could be funded by it but we can't because we'll be spending it on. >> on the debt. >> and on interest payments.
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also until this report the cbo projects federal tax revenue will grow, so that's an upside, by $3.2 trillion over five years, up to $5 trillion and 25%, that's an average of 4.5%, 4.7% is your projection, correct? >> that's right. although i will give you one caveat. we assume there's no change in marginal tax rates from inflation so we have a bracket creep in there. and whether or not you think that that bracket creep would be allowed. >> so things could be worse. >> that's right. >> but even if they stayed the same our projections on spending side are what? worse than that? we'll be spending more than that increase in revenue so we'll continuously get into a worse situation than we are right now, is that correct? >> yes. >> to the scene on all these things is what we know as far as we what we spend, the unseen is what the eternal. and the eternal is on our children and grandchildren and what we can actually foresee is that a future increasing debt
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and an eternal death for them of a less prosperous and growth of economy for our churn and grandchildren. is that correct? >> that's correct. >> dr. hall, i want to thank you for appearing before us. be advised members may submit written questions to be answered later in writing and those questions will be made a part of the formal hearing record. any members who wish to submit questions may do so within seven days. we look forward to working with you in the months and years ahead. this committee stands adjourned.
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former texas governor rick perry announced today that he's running for president, making 10 the number of republicans currently vying for the white house. we'll have his remarks tonight at 8:00 eastern on c-span. and we invite your thoughts on rick perry's presidential announcement, you can leave your comments on our facebook page and on twitter @c-span.
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the new congressional directory is a handy guide to the 114th congress with color photos of every senator and house member plus bio and contact information and twitter handles. also, district maps a foldout map of capitol hill, and a look at congressional committees, the president's cabinet, federal agencies and state governors. order your copy today. it's $13.95 plus shipping and handling through the c-span online store at cspan.org. international negotiators face a june 30 deadline for an agreement with iran over its nuclear program. the foundation for the defense of democracies hosted a discussion about those talks that are currently under way in vienna. we'll hear from members of the iran task force, including former senators evan bayh and joe lieberman. this is an hour and a half.
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>> good afternoon my name is ray tacky and i want to welcome you to the first meeting of the iran task force. it's hard to welcome you to an inaugural meeting of a group that has been around for a year now this group came together about a year ago and its mission was to advise congress on the entire range of issues on nuclear matters economic sanctions and essentially parameters of a good deal on how to get a good deal. during the period we have produced ten memos, the copies are become there. it's a distinguished group of individuals who are members of the task force. the task force is co-directed by me and mark divowicz. the west way to introduce him is to have a boxing analogy. mohammed ali ever said about joe frazier "if god calls know a holy war, you want joe frazier with me." if god ever calls you to a holy
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war, you want mark with you. other members are john and i'll introduce him in a second who is a member of the task force and will preside over today's meeting with the co-chairs, to be distinguished from the task force co-directors and the distinction is they're much for distinguished. so i'll turn it over to john for conducting the rest of this conversation. thank you. >> are we on? okay. thanks, ray and thanks everybody for coming. a great turnout is a testament not only to the importance of the subject matter but also the stellar panel we've assembled today. if a final deal is reached with iran, it will constitute the single most consequential national security agreement that the united states has concluded since the end of the cold war. not only implicates the vital
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interest of the united states, it touches issues many of our closest allies in the middle east view as nothing less than existential. literally questions of life and death for the security and well-being of their nations. of course one of the more notable features of our policy with respect to the iranian nuclear issue with are played in the development. absent the bipartisan majorities in both chambers that pushed relentlessly year after year on the need for increased economic pressure to get iran to negotiate seriously i doubt we would have ever established the extraordinarily effective sanctions regime that we now have. and without that regime, of course, the possibility of achieving any kind of satisfactory diplomatic resolution to this problem would almost certainly have been close to zero. as one who worked in a former
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administration that did at times actively resist the congress's push against iran, i think there's no doubt in retrospect that congress more often than not got this issue more right than a lot of people in the executive branch and consistently so. it better understood the urgency of the issue it better understand what it would take in terms of u.s. privilege to make serious diplomacy possible and it was also frankly consistently a better judge than a lot of other people of what have the international traffic would bear in terms particularly of the reactions of our partners in the p5+1 to any kind of determined u.s. effort to escalate crippling economic pressure against iran. so with that important history in mind i hope today that in addition to the discussion of the emerging deal itself we'll also be able to talk about the role of congress and the crucial days, weeks, and months ahead. another important feature is the role of intelligence. our ability to figure out what's
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happening in the iranian program has always been vital but under this emerging deal with iran it looks as if it will become even more so. that's because an agreement that a lot of us once hoped would have at its heart the dismantlement of much if not all of iran's critical nuclear infrastructure has now evolved into an agreement that looks like it will be more about monitoring that infrastructure. and that's going to impose a very big burden on the u.s. intelligence community for years to come to act as the early warning system that will be able to detect iranian violations with high confidence and in a way that provides decision makers with ample time to mount an effective response. let me go ahead and introduce our distinguished panel briefly. most everybody here i think knows them well and as ray said we're very honored to call all
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of them co-chairs of the iran task force. senator evan bayh from indiana served two terms in the u.s. senate. following term two terms as indiana's governor. in the senate senator bayh sat on several key committees concerned with the iranian nuclear issue including the banking, arms services and intelligence committees. welcome, senator. great to have you. senator joseph lieberman from -- excuse me. senator joseph lieberman from connecticut served in the u.s. senate for 24 years, including as long time pivotal member of the arms services committee and as the chairman of the homeland security and governmental affairs committee. no exaggeration to say that senator lieberman was a truly pivotal voice in virtually all the major national security and foreign policy debates at the united states engaged in since the end of the cold war including the iranian nuclear program. so it's an honor and privilege to welcome senator lieberman.
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finally, we also are pleased to be joined by retired air force four star general mike hayden. at the pinnacle of his long and distinguished career general hayden served first as head of the national security agency for almost 10 years and then as director of the cia for almost three years after that. he was a major player at the highest levels of the u.s. government and all of the historic events and policies that took place in that difficult decade that followed 9/11. i was lucky enough to have a front row seat on occasion to watch him at work in those days. he's an amazing professional, great public servant so thank you for being here, general hayden. the way it will work is that i'm going to pose questions to the panel in hopes of getting a number of good issues and insights on the table. that goes for about the next 35 to 40 minutes. then we'll open it up to the floor for perhaps another 30 minutes or so for questions from the audience.
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i will -- let me dive right in and ask your thoughts about the iran deal. assuming the deal does get done -- and i'd be interested to hear your thoughts on how likely you think that is but assuming it gets done, what's your assessment? good deal? bad deal? too soon to tell? senator lieberman? >> thanks john, great to be part of this ftd task force and honored to be co-chair with general hayden and senator bayh. everything that i have heard about what's happened in the negotiation s negotiations tells me this will be a bad deal for the united states of america and for our allies. if it comes out other wise, i'll be pleasantly surprised but i think the odds of that happening are remote. and just to state it suck sincely and you touched on this in your opening comments.
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what i thought began as an attempt -- i'm not against negotiations. one negotiates with one's enemies to reconcile differences. but what started out as a negotiation that intended to remove step by step the a very difficult economic sans ss on iran in return for iran terminating has something something quite different. not w standing that we entered the negotiations with the advantage that the iranians were suffering from these economic sanctions and what we seem to be talking about now is is a serial suspension of most of the
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economic sanctions in return for not the elimination or end of the iranian nuclear weapons program but a kind of dialing down temporarily with some hopefully monitoring how extensive it will be i don't know. we're dealing with an autocratic repressive regime that states its antipathy for the united states for israel and not so openly expresses its antipathy for most of you are closest allies in the arab world and they know it. as a result of the agreement they're going to end up having an enormous flow of capital come back into them with which -- i'm going to control myself because i'm going give my two co-chairs time to speak. these negotiations have been going on as if they were in a bubble and there was no -- the negotiators had no awareness of
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what was happening outside. the iranians continue to kill and jail their political opponents. they're tremendously repressive of dissent. they put this "washington post" reporter on trial and they have gone through -- we used to talk about the islamic republic of iran as an expansionist hegemonic power. it has expanded during the time of these negotiations throughout the region to the great detriment of our values, of our allies and of ourselves. so i'm very pessimistic about this and i think at this point there's only two things that can save us from a very bad consequential agreement. john, i want to pick out something you said because i think it's really important. this is in my opinion the most serious consequential international agreement that the united states has entered since the end of the cold war. it has that much of an impact on
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us. and there are only two things that at this point i think can save us from this terrible agreement. one is the intransigence of the supreme leader of the islamic republic of iran who, indicted,eed may not allow robust inspections and i don't know how we can accept an agreement without that. the second is the congress of the united states, thanks to the bipartisan legislation that bob corker, bob menendez and glen cardin and others introduce and enacted. i'll stop there. i'm happy to talk about congress's role but congress's role is unique and critically important in the days ahead. >> thank you. senator bayh? >> thank you, john and let me echo my friend and colleague joe lieberman's remarks about it's a pleasure to serve with general
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hay din and hayden and senator lieberman. i think it's highly likely we'll get a deal unless the iranians are completely intransigent. i think it's likely that in the senate you would get 60 votes. i think a significant level of skepticism about the efficacy of the deal will be in order. it will be very difficult to verify their compliance. it would be very difficult to have sanctions "snap back" into place following their loosening. i think you'll even get interpretive differences. we saw some of this after the announcement of the preliminary agreement where immediately both sides took differing interpretations about what the words actually meant. and so it's difficult to verify and enforce a deal where there there may just be -- they miff superficially papered over fundamental disagreements but then immediately retreat to their representative positions shortly thereafter. so i think it will come to a vote in the senate. my own guess is that there would
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be -- as all of you are aware, the senate has to act affirmatively and so there may be a filibuster against that. my guess is there would be a filibuster. to get to 67, to actually override a presidential veto, that would be a very difficult matter, particularly when you get up to 65, 66, 67 votes. but regardless, you could have an agreement going into affect where two thirds of the american congress, about, roughly, a little less than two thirds a clear majority would expect would have expressed significant reservations. about the agreement. and that's -- that's a very difficult position from which to be operating internationally, particularly with another presidential election going on. the iranians are going to wonder, what does it mean? do we go forward now, try to push the envelope or hold back and wait to see wheno the next president is going to be.
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the allies in the region, we have a real risk of this touching off a nuclear proliferation, surely in saudi arabia possibly in egypt and turkey. that could be an unintended consequence of this that would be really destabilizing. and the other thing that it's difficult to disaggregate here as hard as we might try is the other behavior that irain is engaged in outside of the context of their nuclear program. as we're all aware, they do fund hezbollah. they're deeply involved in the civil war in syria, deeply volved in destabilizing yemen. to the extent, they're clearly going to be pushing for as much immediate sanctions relief as they can get, a fancy way of saying how muffch money they can get. you can bet some of that will find its way into supporting activities that would not be in the snalshnational security interests
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of the united states. you can have balance that off any good the agreement could accomplish. the ongoing missile program those missiles can only be designed to hit either western europe or the continental united states. eventually, we need to be clear eyed about what going on with that. when you kind of drill down through all of this, we have to have a national debate about what is the essential nature of the iranian regime? are they a normal national state, essentially. we had very difficult relations with the former soviet union in the communist peeriate but they weren't sue sudicidealsuicidal, and we could deal with them. is there something about the iranian nature that will continue to have them be an aggressive regional power working actively against the national security interest of the united states, undermining our allies and quite possibly not living up to the agreement that they have signed and eventually getting a nuclear
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capability. surely, after ten years under the agreement, possibly sooner if they're willing to cheat. and is that something, as a country, we think is consistent with our national security interests? my own view is that that would not be consistent with our national security interests. but i think therein lies answering that question, what is the essential nature of their regime, how are they likely to move forward and there's an abundance of evidence what they're trying to do is get what they want and pay as small a pry as they can, and at the end of the day it's not good for us or our allies. >> yerl hayden. >> i get to say, i like to association myself with the distinguished senators from connecticut and indiana. i really mean that. let me take a little more narrow view. i totally agree with senator bayh's characterization. we were chatting about it over our sandwiches that we're kind
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of focused now over the national debate, but the problem is iran with the nuclear weepens. i actually suggest that the problem is iran. the nuclear weapons question is an important but seb setubset of the broader question of iran. we need be very careful that an apparent revolution of the nuclear question is then, to mislead ourselves that we have suddenly solved the iran question, which i think lingers for a very very long time. i also need to mention in the executive branch inch the last administration, we left this as an ugly baby for the new guys. if you had only done what we laid out this would have been finished in the first term. we didn't have any such plans. i fully recognize how very, very difficult this is. all of that said after john's first question i do think we're trand trending towards a deal. i think the dynamics of a notion
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notionation, as many of us feared, has created its own energy in the direction of a deal. the dynamics being so strong i think we have gone from if we were ever at no deal is better than a bad deal i actually think the surblshcircumstances under which we now operate because of the energy and investment put in this is any deal is better than no deal. and i fear that's what we'll get. senator bayh mentioned interpretive differences. i really would call your attention to that as we go forward. we cannot allow either government to paper over what remained our significant differences in terms of what has been agreed. i got asked after the four-page white paper that we put out, what did i think of what the white paper contained, and frankly, after only a day or two off of watching the responses from tehran, i had to say i don't
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know if we agreed to anything. one needs to be really careful about this, particularly in the most narrow lane i'll talk about, which is the intelligence lane, which is the verification lane. we have really got to hammer unarguable verification procedures into any agreement. because i'm here to tell you that unilateral american intelligence will be insufficient to build up enough confidence, in my view, that an agreement is being honored. in other words american intelligence is good. in other words american intelligence is going to tell you a lot but to get to the level of competence you will need to legitimate action will require an invasive inspection regime that must be negotiated before we agree to any such treaty or arrangement. let me stop there. john, i know there are a lot of
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other questions that we'll get to. >> let me just follow up quickly with you on this question the nature and scope of the inspection. regime and particularly the military sites and the ability to access and talk to iranian scientists if not iranian decision makers involved in the nuclear program. whether you put on your cia director's hat, i wonder if you can sketch out for us just do you actually need what everybody has called anytime anywhere snap inspections that include military and sites? what kind of interviews, how far would you want to go into the irabian weapons nuclear bureaucracy to get answers to your questions, and i mean because it seems to me the president is asking our intelligence community via the iaea, i suppose to have an ability to almost
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instantaneously detect iranian violations. i wonder if you could expound a little bit. >> yeah, i do think anytime anywhere inspikzections are absolutely essential. i was president obama's cia chief for about three weeks when we were waiting for leon panetta to get confirmed. actually attended the first meeting he had on iran. and the president turned to me and said, general, how much leu and heu do they have or meu, and i said to the president mr. president, i actually don't have the answers to those questions, but for a moment let me give you a different way of thinking about this issue. and what i said to the president was, sir, i don't think anybody in my community thinks that there's an eelectron or neutron that's ever going to end up in a nuclear weapon. what they're building up in facilities are competence and technology, and to go ahead and move to heu requires them to
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cheat so badly that it could be detected or to kick the inspectors out. therefore, what we believe would happen in a breakout is that they would simply take the technology from nutons and replicate it at a secret military facility. it's there in that facility that the heu for a weapon would be en enriched. at the time i told the president, we knew, a secret nuclear facility. we knew it was under construction. they didn't know that we knew. but that's the scenario we always pictured, john. so how do you -- so i'm an american intelligence officer, right, and i'm going to go to the president with really bad news. we actually have a name for this. we call this the dynamic of the unpleasant fact. okay. so you know when jim clapper or whoever is in jim's position gets to walk in and say, mr. president you recall that war you promised to start in the persian gulf?
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guess what? today's the day. what is the burden of proof on the american intelligence community? number one, to come to that judgment, number two to get the american political leadership to accept that judgment, and number three, then to sell that judgment in one way or another to a broader international community without giving up critical sources and methods? this is really hard john. and so the presence of inspectors, the ability to go anywhere at anytime i think, is absolutely essential. >> even with all that i mean how do you think about this one-year breakout time that the administration has put so much focus on not only the ability to detect but as you say, the ability then to mobilize an effective and quick response within the scope of a year, perhaps getting the rest of the international community to come along to something that could include a military attack.

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