nd ceo of the mayo clinic all from the "wall street journal" cfo network conference. defense secretary ashton carter told capitol hill lawmakers u.s. training of iraqi forces is moving too slowly. iraqi forces are hampered by, quote, disunity deserters and so-called ghost soldiers. that in a story from the washington times as we watch some of what secretary carter said. execution, however, is a two-way street. our train efforts in iraq have thus far been slowed by a lack of trainees. we simply haven't received enough recruits.

of the 24,000 iraqi security forces, we originally envisioned training at our four sites by this fall we've only received enough recruits to be able to train about 7,000 in addition to 2,000 counter-terrorism personnel. as i've told iraqi leaders, while the united states is open to supporting iraqi more than we are we must see a greater commitment from all parts of the iraqi government. there are positive sides. i met with prime minister abadi iraqi kurdistan president and just last week with speaker of iraq's parliament. they all fully under the need to empower more localized multi-sectarian iraqi security forces and address persistent organization and leadership failures. because of sovereign multi-sectarian iraq is more likely to ensure a lasting defeat of isil, the united

states must continue working with and through the iraqi government in all our actions including our support for kurdish and sunni tribal forces. our efforts need to reinforce in includesivity and multi-sectarianism not fuel the sectarianism which would make lasting defeat of isil harder not easier. the situation in syria is even more complex because of the lack of a legitimate partner and many competing forces there. regardless, we will continue striking isil and syria with a long reach of our airstrikes and operators. we will continue working with syria's neighbors to impede the flow of foreign fighters into and out of syria and iraq. our training mission in syria has been challenging but the requirement for capable and motivated counter-isil ground force there also means we must persist in our efforts. in conclusion, i believe that

success in this campaign can and must be assured. it will take time and require consistent effort on everyone's part. the entire u.s. government our entire international coalition and, most importantly iraqi and syrian people. together, and with your support, including your support for america's troops and their family for which i and they are ever grateful, we will achieve isil's lasting defeat. >> this picture of u.s. army soldiers training iraqi troops is in time magazine. joint chief charms dempsey testified before the armed services committee today. you can see all of the three-hour hearing on c-span tonight or at any time on c-span.org." now we hear about some of the smithsonian institution existing projects from secretary horvath.

he's serving in that position for another couple of weeks. july 1st president skorton becomes the museum's 13th secretary. the smithsonian is located here along the national mall in washington, d.c. where you can get a glimpse of the national museum of african-american history and culture under construction now and expected to open in the fall of 2016. from the house administration committee, this is about 15 minutes. >> i now call to order the committee on house administration for today's hearing on smithsonian institution. we appreciate acting secretary horvath coming and all his staff that's coming in. we appreciate them bringing him. before i make my opening statement, let me just say, i think we've all had an opportunity to look at some of the coolest things here. as you see, it's a bit unusual for committee hearing to have smithsonian artifacts here but

everyone will get a chance after the hearing to take a look at them all. they are really unbelievable. i mean you've got meteorites here, sort of makes you think of jurassic park. the first heart, artificial heart. a picture smithsonian got off ebay of harriet toddman they had to do nothing to it was in such great condition. somebody took great pride keeping that picture. anyway, everyone will have a chance to take a look at these artifacts. we thought it would be a way to sort of set the stage if you will, for what goes on at this unbelievable national treasure at the smithsonian. in fact, i told some of your staff when i leave here i'm going to try to get a job at the smithsonian it's such a cool

thing. i'm kidding. but wow, really amazing. discussion priorities of the smithsonian as well as opportunities and challenges on the horizon. congress established the smithsonian institution in 146 to carry out the will of english scientist james smithson. smithson sought, quote, to found at washington under the name of the smithsonian institution an establishment for the increase and diffusion of knowledge unquote. since that time the smithsonian has developed into the largest museum and research complex in the world with 19 museums nine research centers and, of course, the national zoo. the smithsonian collections include 138 million items which form the basis for the exhibits, educational programs and research activities. last year more than 28 million people visited smithsonian museums and national zoo. 99 million viewed their website. more than 6,000 volunteers

joined 6300 employees for the work of the institution. the smithsonian is much more than our nation's attic. it plays an important role in collecting observing our nation's history as well as advancing critical scientific discovery and research. while the institution encompasses the renowned museums on the national mall which all of our constituents appreciate visiting at zero cost, it also includes research facilities in panama, astro physical observatory, across the united states and strong international presence across the globe. size and scope of the smithsonian enormous opportunities to achieve mission of continually increasing the reach of knowledge. this committee commends the smithsonian for unrelenting effort in identifying future opportunities. one mainly opportunity for smithsonian is leverage collection for education and inspire lifelong learning. education is fundamental to the

smithsonian's mission and certainly one of the most important services the institution -- the institution can provide. the committee is interested to hear how the smithsonian is revitalizing education, increased digital access for 3d printing and plans for expanding those activities. also significant challenges managing complexentity such as smithsonian. one ongoing is serve as stewards of their priceless cultural scientific value, which are not in size, scope and diversity, smallest organisms, insect specimens to various artwork mediums and live animal exhibits. fundamental to achieving institutions mission now and in the future. this committee held a hearing last congress and heard from inspector general who identified collection stewardship as one of the most pressing issues for the smithsonian. management indicated work was

ongoing to improve current collections management and to plan for the future. so we look forward to hearing about that progress. in addition to collection stewardship and education we would like to receive an update on how the institution preparing for national museum of african-american history and culture. that opening which is targeted for completion next year i believe, in about recent announcement as well regarding smithsonian exhibition space possibly being part of a cultural complex in london. the smithsonian institution is cherished by all americans. each of us feels a personal responsibility to ensure success of this valued institution in its continued operation for future generations. the smithsonian is truly one of the great treasures of our nation and the world and we look forward to the institutions continued service. so again, we thank our witness for his attendance. i'll formally intro him in just a moment. at this time i'd like to recognize, our ranking member mr. brady was not able to attend

and recognize mr. vargas our gentleman from california and recognize him today for his opening statement. >> thank you very much. again, i want to thank you. i think my microphone is having feedback issues here. there you go. i apologize for that. thank you, madam chair. i appreciate the opportunity for being here and thank you for holding this oversight hearing and giving smithsonian a chance to show off some of its treasures early this morning as you were noting. again, thank you very much for that. this is a period of rising expectations for smithsonian institution. a new secretary will arrive in a few weeks and smithsonian african-american museum will open in less than a year from now. by the way it is magnificent every time my driver walked by there i get very excited. it really is looking magnificent. also historic national campaign record amount of funds for institution, museum of american

latino within the smithsonian has been recommended by national commission that reviewed by our committee this year. a proposed national women's history museum is about to be studied by another commission and visitors advance levels at smithsonian museum are about on the rise. the value of the smithsonian endowment is record high and cost of admission to american people is still zero. i commend acting secretary. thank you very much for your ability to step in quickly and ensure to continue the the continuity between the period between secretary's departure and doctor skorton's transition out of cornell university. this is a busy season for our constituents who visit smithsonian during warmer months. we off hear from them how much they enjoy the experience. i have to say i was able to go recently to the national portrait gallery and was very excited to see the painting.

going in for needed work, but exciting to see two magnificent paintings there. though i believe anti-nem, it's such a joy to have you here. we're very, very proud of your institution and the work you've done. thank you very much. yield back. >> thank you do any other members wish to make an opening comment or statement. okay. at this point i'd like to introduce our witness horvath. following retirement this year of secretary. he will serve in the position this month. we had an opportunity to have you in our office last month you said it was. you said it was a fast-paced last several months and eye-opening and interesting. but as was mentioned, david

skorton will take over as 13th. as acting secretary, mr. horvath oversees thousands of projects under way within the smithsonian institution. before becoming acting secretary he was under-secretary for finance and administration and chief financial officer of the smithsonian where he managed administrative offices including facilities, maintenance, human resources and financial operations. we are happy to say that's a position he'll be returning to as well following his tenure as acting secretary. before coming to the smithsonian in 2011, his career spanned more than 30 years administration at five different universities. we certainly thank acting secretary for being with us and at this time we recognize you for your statement, sir. >> thank you very much. chairman miller and members of the committee, thank you for the opportunity to testify this morning. in 1846, congress established

the smithsonian as a public/private partnership dedicated to increase and diffusion of knowledge. 60% of our annual funding comes from federal appropriations 40% from philanthropy and other sources. the federal commitment provides the critical foundation for all that we do and is helpful in attracting private support. we are grateful that the continued confidence of the administration, the congress and the american people. i assure you the confidence is more than justified. the state of the smithsonian is skrong. we are making great progress and will welcome our 13th secretary on july 1st dr. david skorton currently president of cornell who will push for even more progress. since january 1st i have been privileged to serve as acting secretary. upon dr. skorton's arrival, i will return to my previous post as under-secretary for finance and administration and chief

financial officer. i will do so firmly convinced that the smithsonian is more efficient and entrepreneurial than ever. it is also more effective operating close-up experiences of what it means to be an american. for example, on may 8th i stood at american history museum to witness world world war ii flyover celebrating victory. i'm sure many of you saw the historic planes flying over the mall. our national air and space museum director general jack daily participated. the former assistant com dant was in the mustang that executed missing man maneuver. the next day some of the participating planes were on display at our air and space museums stephen f. center for all to see. the center also houses among many treasures space shuttle "discovery" which flew over national mall three years ago. online we offer a

three-dimensional scan of the right flyer that any teacher student or lifetime learner can download free of charge. as i looked west that darks i saw our national museum of african-american history and culture rising out of the ground. museum curators have collected artifacts including spirit of tuskegee airplane. the museum is targeted to open in fall of 2016. we continue to implement 2010 strategic man that focuses on four grand challenges. we have an agenda first phase of west wing american history museum reopens on july 1st. the smithsonian american art museum's renwick gallery reopens november 13th after a significant revitalization. we can offer so much to so many people because smithsonian i the largest museum and research complex in the world. with passionate professionals

and volunteers devoted to their work. we have 19 museums and galleries, 20 libraries, 9 research centers, the national zoo and 201 affiliate museums in 45 states, puerto rico and panama. we're open 364 days a year and admission is free. we operate in more than 130 countries. if you can't come to us we're coming to you through digital technology. more than 200 website attract 100 million unique visitors. 606 million followers on facebook and twitter alone. last year our museums and galleries had almost 27 million visits and 3 and a half visited traveling in all 50 states. our collections total 138 million objects including 127 million scientific specimens, 340,000 works of art 2 million library volumes, more than 2,000 live animals and much more. some of those treasures you see

on the table in front of you. we protect and present treasures from star spangled banner to hope diamond, portrait of george washington, t-rex, edison's light bulb to nat turner's bible. we take stewardship very seriously as reported to this committee two years ago. since that time we've made many improvements and completed an in-depth study of collection space needs that will inform our long-term capital plan. our 500 scientists are making important discoveries, especially regarding biodiversity issues through forest geo for global earth observatory network. worldwide partnership monitoring the health of 6 million trees in 24 countries. our new tannenbaum initiative, marine geo seeks to replicate success and assess health of

coastal areas and the oceans. we offer american, asian and african art. we deliver education materials to students and teachers in all 50 states. more than 2,000 learning resources all tied to state standards are available online for free. for 30 years our smithsonian science education center has been improving k through 12 education in our nation's schools through its innovative stem program. we do have concerns about the age of our facilities particularly at our air and space museum, zoo, gallery of art, arts and industries building, the castle and other sites. we will need your continued support in those areas to ensure the vitality of these spaces many of which are historic. our 6400 dedicated employees and 5400 generous volunteers are creative resourceful and dedicated to our mission. that is why for the fifth year in a row smithsonian was ranked

as one of the best place toss work in the federal government. all of us are honored to be part of this great american institution. as we face both exciting new opportunities and imposing challenges we will carefully steward important resources provided by the federal government. again, i thank you for this opportunity and i look forward to your questions. >> thank you very much. appreciate that. you mentioned that you had 138 million artifacts. you may or may not know, the miller family has a bit of history with one of those 1138 million. my husband, who was a fighter pilot in vietnam over 30 years ago delivered f-100 super saver jet on display there. so all the old fighter pilots like to hang around and look at those old jets. that's for sure. remember the glory days there. my first question looking

through the strategic plan here. as you mentioned how you want to increase and revitalize education. i have a particular interest in that, as i think i mentioned when you were in my office, southeast michigan where i come from was really so incredibly hard hit during the painful economic transition our kids could hardly get on a bus to take a field trip anywhere. one of the things we tried to do during that time, many of us, in these areas was to make sure here is this fantastic wealth of knowledge and all of these things happening, whether library of congress, smithsonian, et cetera how we can have resources for the teachers to make that part of the curriculum. kids are so used now to accessing everything electronically. as you mentioned about 3d printers, they really are amazing what they are doing in the schools. could you talk a little about that is part of your revitalizing education portion of your strategic plan and how you can help with education

throughout the entire country here really making sure that kids have access to all of these fantastic avenues of knowledge. >> certainly. the smithsonian at its core is an educational institution. we have these wonderful objects. we do tremendous research. but one of our main objectives get this information out as broadly and widely as possible. we've had a long tradition of education being an important aspect of what we do as mentioned for 30 years through the smithsonian science education center, we've been providing science curriculum free of charge throughout the country tailored to local standards for teachers for students, for school districts. we feel it's important to try and help address issues of stem throughout the country. where a couple come together are

education and digitization. one of the kind of buzz phrases we've developed at the smithsonian, if you can't come to the smithsonian, we want to get the smithsonian to you. one of the start gis to do that is through digitization. all of these wonderful objects we have, we're trying to digitize all of them make them available to people across the country, in fact across the world for students k through 12 higher education lifelong learners, provide these objects so they can be studied and worked with in a classroom and not only in our spaces in washington dchblgt we're working on 3d printing so that not only can you render 3d objects online but also transfer them to printers and have your students create their own models of right flyer or space shuttle. we're, in fact in the middle of digitizing space shuttle at this current time. so all of these activities and

many, many more we're focused on again, to try to play important role in forwarding education across the country. >> could you tell us a little bit, i guess the national zoo are biggest visitors. you have more visitors there than any other things but museums, air and space i believe. visitors. >> air and space and natural history are neck and neck. >> i understand the outer envelope, if you will, of the air and space is in need of some serious structural repairs. maybe you could tell us a bit how you're planning for that and what we need to be aware of here. >> certainly. we have a long-term capital plan. 12 million square feet of space. keeping those buildings vital and functional is an important priority for us. a renovation with building

systems of air and space had long been on our plan. we envisioned it being next big priority following completion of natural museums of history and culture. as we begin process of assessing work we need to do and doing our feasibility study we unfortunately uncovered the fact the outer envelope the facade comprised of tennessee pink marble is actually thinner in size than it should have been. after 40 years of wear and tear it is starting to crack and bow. we've now had three independent assessments by experts and they have all concluded that that stone needs to come down and be replaced. it's just too thin to be repaired. so all of that stone will need to be replaced. that's in addition to other work we contemplated we would need to

do anyway, upgrading air handling systems, completing repairs on the roof and the like. the building opened in july of 1976. it was built with a notion we would receive about 3 million visitors a year. we now receive about six or seven, so it's received a lot more wear and tear than was envisioned. obviously our knowledge about what it takes to maintain pleasures and delicate objects like this advanced as well. unfortunately we're looking at a price tag of probably $500 million to fully renovate that building. it's a process we're currently in the process of design on. we would hope to begin trucks on the renovation sometime in 2017. our plan is to try during the course of that renovation to keep portions of the building open to the public.

again, since it was one of the most heavily visited museums in the world and one of our most heavily visited we don't want to take all of those objects off line if we can possibly avoid that. >> wow that is a huge price tag. >> okay. appreciate that. chair recognizes mr. vargas for questions. >> thank you very much madam chair. i can't help but get excited when you talked about your family's involvement with the smithsonian. i'd be remiss it say in san diego we have affiliated museums. we also have san diego air and -- aerospace museum affiliated with smithsonian. it's the same thing there. you get a lot of the pilots not only hang around but also teach the kids how to work on planes an repair them, create them. it's really exciting. i've had a chance to go there a few times. they do a great deal. i would be remiss if i didn't

thank smithsonian. i think there's four or five institutions in balboa park that are affiliated with smithsonian. talking about if citizens can't come to smithsonian smithsonian will come to them. i know you've done that with affiliated museums and in san diego and i'm sure throughout the country. i do want to ask a couple of questions. does smith have position on museum with american latino museum? if congress were to authorize it, could smithsonian absorb the work involved with the project? >> should congress authorize and approve funding for smith american latino museum we would be honored to add such a museum and we would do everything in our power to do an exceptional job delivering museum to the american people. >> thank you. second question. what effect has sequestration

had on smithsonian's operations over the last few years, if any? >> the budget area uncertainty around the federal budget has certainly forced us to do a lot of scenario planning and rethinking about priorities and potential programs. we were able to weather -- we were able to weather sequestration that was implemented a couple years ago because we had done a lot of preparation, but we knew if there were long-term and additional reductions made we would have to fundamentally rethink some of the basic operating premises of the institution. as you might imagine given some of the facilities challenges like the one just mentioned

previously, we are obviously keenly aware of how important continued strong federal funding will be for us to not only deal with some of those more acute problems but allow us to continue to push forward in terms of digitization care initiatives, expansion of care education programs and the like. so at present we continue to develop a number of different strategies depending on the levels of funding. we've also spent quite a bit of time and effort to ensure that our ability to raise nonfederal funds, private funds through philanthropy, sponsored project support and other means are as advanced and effective as possible. >> thank you. by the way a little pet peeve of mine, sequestration. i wasn't hear when they voted on it comes from the latin term, to set aside. that's why you sequester a jury.

doesn't mean across the board cuts. a pet peeve of mine. i don't know why they use that term. anyway it's a term they chose. we're all very excited all of us about the opening of the african-american museum next year. are there any special events around it the public should be aware of? >> we're in the midst of planning for grand opening of the museum next fall and so we're at the early stages. we intend to begin preliminary events leading up to that. the museum itself is not waiting for the building to be finished. we just opened a new exhibit in american history to begin showing some of the collection that's been amassed over the course of the last several years called through the african-american lens. i would encourage everyone who has an opportunity to go and see it. so in expectation of the museum

opening and not just generating excitement from the seemingly day to day changes that take place in construction, we're trying to do programming and the like to get people excited and ready. >> my time is up. thank you, madam chair, appreciate it. >> thank you. mr. mr. harper from mississippi. >> i hope everyone got to go to the national portrait gallery. an incredible location and thanks to all involved in that. there's always a concern on the upkeep of buildings and making sure we don't defer maintenance. that happens sometimes because somebody is not there.

i know we have a new museum that's been talked about that will open next year. a very exciting time. there are others being discussed. there's also a concern as we go forward and build new museums we have the ability to maintain them and do the upkeep and maintenance. so this is going to be a major lift. as far as families, air and space museum is one that everyone likes to go to. it's very special. there's from my district meridian, mississippi, the airplane called ole miss for which they set the record for longest time in the air 27 days back in 1935. and their partner mechanic inventor friend invented the shutoff valve so you could safely transfer the fuel, which even today with just some minor modifications is still what's used. have you single engine plane

with catwalk built around it because they had to climb out and service the engine during flight. during construction we're confident that will be fully displayed. anyway, that's another deal there. it's true. every exhibit has a great story. and so we're very thankful for that and those opportunities there. how do you forces going forward? i know chairman miller discussed this. you're planning on keeping this open at least in part during those construction years. how many years will that air and space renovation take place? >> we are still in the midst of detailed design and planning. right now our best estimate is it will take about 4 1/2 years of renovation time. we will try to do it in phases through the building. it's a little complicated

because all of the building systems are integrated, but that's part of the challenge of what we're trying to study at this point. again it is very important to try to keep portions of that building open as much as possible so our visitors can benefit from the tremendous artifacts. >> other buildings are aging as well and will have those needs as well. is there a plan for which we'll make sure we don't wind up with a big hit where maybe you see doing these along in stages where we don't wind up with $500 million one time or over a few years major renovation? >> yes. there are a couple of examples where we had been doing that over the last several years. the natural history museum everyone knows the dinosaur hall is currently closed. that's partially driven by the desire and need to renovate that

portion of the building as well as do some needed maintenance on the artifacts. we've taken the same approach at american history. so back in 2008, we reopened the center core of the building, now "the star-spangled banner" hall. we're working on the west side of the building and are very excited about reopening the first floor of that renovated space in july. we've taken the same approach at the national zoo. so to the extent in some of the larger more complex buildings where taking on the entire building would be astronomical in terms of cost we've tried to parse them out. in some cases, like the air and space museum, because of the way the building was built, it's not practical to close portions of it and work on it at various points in time. one of our biggest challenges is making sure that we kin to

address the most pressing needs and try to use the combination of both maintenance as well as facilities capital funding to be as thoughtful as possible and keep our buildings. >> my time is almost over. let me ask you this 138 million items, probably more not everything we probably want to keep. i'm a bit of a pack rat. i don't want to throw anything away. when you're deciding new items to go into the collection, if you could just quickly, is there a bake criteria you have or how that's decided on? >> certainly. we look at the importance of that object to the collection and the particular discipline that it supports. we ensure we can safely and effectively keep it. we make sure we have the expertise to study and tell its

stories. >> not everything makes the cut. >> not everything makes the cut. >> thank you very much. yield back. >> mr. davis. >> thank you chairman miller. i wish you well on your next endeavor going to work for the smithsonian, as you mentioned. please, sir, check her references. don't cut my mike. that's just vargas. first off i want to say thank you, mr. acting secretary. my twin boys who are 14, going into the ninth grade were part of a large high school group out last week and enjoyed some of your facilities. some of the feedback was that obviously besides hanging out with me going to the smithsonian was actually one of their favorite activities. it's something we see many folks and families go through every day here. what you do on a regular basis i think this committee hopefully today you understand what you do and what the many

men and women at your facilities do on a regular basis to show what our nation is all about. thank you for that. education was take key point of your opening testimony. notice you mentioned some of the stem programs smithsonian works with school districts throughout this nation, especially k through 12 education. can you actually go into further what you do with the smithsonian to ensure our students who may not be able to make it out here to washington, d.c. or to other facility in the nation, how do they have access to your facilities and how do your stem programs work and how do teachers who may not be involved with them know how to contact you to get involved? >> we have tremendous educational resources at the smithsonian. some attach to the specific museums, research centers. some are coordinated in more central ways. one of our big initiatives

across the board and, of course, in education is to take what we have and get it to folks regardless of where they are geographically throughout the country. so smithsonian science education center for 30 years has been putting together curriculum that is tied to state standards that teachers and school districts can implement and use to teach science to kids have k through 12. it's hands on learning and supplemented by a number of lesson plans and activities that can be downloaded. all of that material is provided for free. we have a large smithsonian traveling exhibition service which takes smithsonian content throughout the country. and so at many museums, large and small across the country you can benefit from the same kind of content you see in

washington, d.c. at your local museum throughout the country. more and more we're trying to put a lot of our material online so that even if you're not using some of the more formal materials we provide, a teacher can download information, can use a variety of support material that we provide to integrate into their classroom. we view education as central to the mission and as a way of really enlivening these objects and telling our story and using them in a way that helps inspire kids of tomorrow. >> i appreciate what you do to make that happen. again, for many students who don't get a chance to come out here and experience what we see and sometimes take for granted on a daily basis, what can we do as an institution to help encourage more activity and more usage of your programs? >> well, i think you're doing

it. the more that we can engage people in our facilities in our programs to understand richness and depth of what we do together we can learn places where perhaps we aren't filling a gap where we could fill a gap. we recognize we can't do everything but we believe that we can have a significant impact on improving delivery of stem education education, telling history, teaching history, particularly history of american experience. >> one last question, do you have an idea estimated percentage of how many school districts you're putting stem program into nationwide? >> i can give you specific numbers as part of the final testimony. i don't have those numbers offhand. but we make available to anyone

that wants them and actively engage with folks across the country. >> thank you very much for your time madam chairman. i'm going to yield back so our star pitcher from the congressional baseball game can have time to ask questions. >> thank you very much. mr. walker our star pitcher. >> thank you, mr. chairman and mr. catcher. i'm fascinated by smithsonian over the years. something that predates even our civil war by nearly 15 years. i believe you've been there about five years. is that correct? >> yes. >> four years? one of the things you talked about, i've got a couple of questions i want to get to something you brought up i want more information on. we talked about african-american museum opening. what is the open date? do we have that projected? >> it's fall of 2016. we don't have a specific date yet identified. >> my question specifically regarding that, exhibits in history there will we remove

those some george washington carver, talking all the different inventions and what an amazing man he was. do we remove that from smithsonian or duplicate it? can you talk about that process? i don't want one missing, or one or the other, do you understand where i'm coming from? >> we on pretty frequent basis move collections around our various museums. the american art museum actually tells the story of america through art as opposed to specific historic artifacts. so we'll sometimes move paintings from there to the american history museum. so there will be times when certain objects will move back and forth depending on the nature of the exhibition that's on or particular story we're trying to tell. so things will move around on a

routine basis. >> i appreciate your answer. my concern is that we make sure all getting a great history of people with ethnic backgrounds, hitting one and not hitting another one. a lot of technological advances in thees last few years. can you discuss strategy connecting smithsonian, continue to make it attractive to the younger generation. we see so many times in corporate world or background ministry world where we don't make adaptations to connect with the next generation. can you talk about is there a marketing strategy? how do we move forward with that. >> it's a big thrust for us, ensuring that we have an institution that appeals to people who look like me and people a lot younger like my son. one example of what we've been able to do is the recently renovated and reopened cooper hewitt museum in north.

we closed that museum three years, fully renovated it and reopened it in december to great fanfare integrating tremendous amounts of technology into the visitor experience. so there's a new object called the pen you can get when you walk in the door. as you go along through various exhibits you touch a part of the exhibit and it down loads that object into an account for you which you can then, when you're finished, e-mail to yourself and continue to curate your collection because you only had a limited amount of time at the museum. we're looking at the african-american history and culture museum as well, to integrate tons and tons of interactive and digital experiences into the more traditional experience of physical objects. we're taking it seriously. >> do you find a difficult

balance. you don't want to dumb done historical aspects of it. that's the process as far as balance. that is a fair assessment? >> i think what we're looking for are opportunities to amplify the objects. one of the latest apps we created in natural history skin and bones. it's very cool. you take your phone, look at a particular skeleton. on your phone that skeleton comes to life. can you see what that object skeleton looked like when it was on the ground. it does some virtual reality movement. so we think the technology can really enhance the experience by giving you a much richer opportunity to dig in and to learn more about it. >> appreciate you guys working hard to be proactive. thank you, mr. chairman. thank you, yield back. >> thank you. >> thank you very much. talk about skeletons let me just ask you a question here about the natural history the

dinosaur t. rex exhibit. it's too bad you've had to close the entire dinosaur exhibit down. i guess i understand that. when is it all going to be open again? >> 2019. >> yes. >> you can't open any part of it without all of it opening? >> no. all of the renovation is pretty expensive we noticed to do to what is a fairly large piece of the building. the exhibits themselves, schedule tans are undergoing fairly sensitive restoration as well. that's pretty painstaking work. what we're trying to do through technology is satisfy the dinosaur itch a lot of people have. that is one of the most popular exhibitions we have. >> it really is. >> one last question and we'll

conclude the hearing here. we've had the opportunity to talk about the possibility, going through the process of going to london. tell us a little about that so we have it on the record you're looking into the process. i know your regions have talked about it a bit, whether or not that is something a good idea, appropriate, deferred maintenance on other facilities, should we be doing that and what is the reason for it et cetera. >> certainly. as you might imagine, we are presented with lots and lots of opportunities on a regular basis to do interesting things. this opportunity in london was of london about a year or so ago. his vision in the redevelopment of the facility that housed the 2012 summer games includes the creation of a cultural and educational quarter that would be populated with a number of

cultural and educational institutions and his desire was to have smithsonian be part of that. it's an interesting idea. it certainly is interesting to think about doing something in the land of smithson and early on we considered it and went back to them with a certain set of criteria. first, we would need significant amount of support in order to do this. secondly we would not ask congress for any additional funding to support this so it would have to be something supported by private funding and we would have to be sure that within the mission of the smithsonian, i think we were able to satisfy ourselves on the mission centricity of it. a lot of that is focused on scientific research.

this would be the first opportunity for the smithsonian to be able to tell the story of america abroad so it has a tremendous amount of appeal in that way. we indicated that we would need to have space provided to us. we could not raise funding for that, and the mayor and his team have identified a significant amount of private support and enable that to happen. the final piece of the assessment that we're in the midst of right now is really looking at the financial model that we would need to implement and whether it would be able to sustain us for a long period of time. so we're still in the investigative phase. we're excited about the prospect. we haven't made a final decision, and as you might imagine, we've been in close contact with dr. thornton to make sure that his input is part of the overall process and that he feels comfortable with the progress or the decisions that we're making.

>> thank you very much for that and i want to be kept in the information loop as that process moves forward certainly. i think that is a very interesting idea. without objection i would say all members of our legislative base submit to the chair additional information. the answers might be made part of the record. we appreciate your attendance and appreciate your service. your continuing service at the smithsonian. we want to thank as mr. davis said, all of the employees of the smithsonian. some of those who are here today. we have a tremendous group of dedicated individuals who really make it all happen there. so we certainly appreciate it. the hearing is adjourned.

senator bipolar cassidy of louisiana has introduced legislation and it will require ethanol. the epa is moving to require $9 billion to 36 billion gallons by 2022. e.p.a. official janet mcskab will testify about the proposal life 9:00 a.m. eastern here on cspan 3. at noon on cpsap 3 several

presidential candidates will speak at the faith and freedom coalition conference including marco rubio, rand paul and ted cruz. the house approved a rule change earlier this year that requires the economic effects of legislation to be included in a bill's official cost to the treasury. it's called dynamic scoring. reportedly the rule change promises to make it somewhat easier for republicans to advance bills of an overhaul of the tax code such an overall effect of the legislation would generate tax revenue and require less offsetting revenue to make up for cuts in income tax rates. congressional budget officer keith hall outlined a new rule at the heritage foundation today. this is 1:20.

good afternoon. welcome to the heritage foundation and douglas and sarah allyson auditorium. we thank you for joining us. i would ask everyone here in house to be so kind to check cell phones one last time to see that they have been turned off as we prepare to begin and, of course, our interview viewers and cspan viewers are reminded that comments can be sent to us at any time along with questions to speaker at heritage.org. we will, of course, post the program on the heritage home page following today's

presentation for your future reference. hosting our discussion is david burton who is our senior fellow in economic policy in the institute for economic freedom and opportunity here at her training. he focuses on tax matters, security law, entitlements and regulatory and administrative law issues. before joining us here he was a general counsel of the national small business association. he has been chief financial officer and general counsel of the alliance for retirement prosperity and was a partner at one time in the arg gus group a public policy and government relations firm. his areas of expertise in finance and tax include posts he has held as vice president for finance and general council of the new england machinery as well as manager of the u.s. chamber of commerce's tax policy center. please join me in welcoming david burton. david? [ applause ] >> good afternoon. our subject today is how the cbo

will implement the new dynamic scoring rule recently adopted by congress. we have a genuinely excellent panel to address this subject. now the term dynamic scoring means scoring that takes into account the real world economics of major proposed policy changes when estimating the budgetary effects of those policies. this contrasts with the past practice of using static scoring, that is scoring which assumes that the economy will not change as a result of major tax or other policy changes even though we all know that they will. what it's really about is moving congressional scoring to what bill beach once called reality-based scoring, making sure that the scores used by policy makers are accurate or at least as accurate as we can make them rather than knowingly using factually incorrect scores scores that sometimes even get the sign wrong. i'll never forget when senator

packwood in the 1980s asked the joint committee on taxation to score a 100% tax on incomes over $200,000. the j.c.t. came back with an estimate that said such a tax proposal would raise hundreds of billions of dollars. now in reality of course there are only two tax rates that will raise no revenue, zero tax rate and a 100% tax rate. such a proposal would have really lost hundreds of billions of dollars. for the first time, both the cbo and jct must conduct dynamic scores. house rule 1308 requires it and so does section 3112 of the concurrent resolution for the fiscal year 2016 budget adopted by both the house and the senate. in relevant part the concurrent resolution reads quote, during the 114th congress any estimate provided by the congressional budget office under section 402

of the budget act or by the joint committee on taxation for major legislation considering the house of representatives or the senate shall to the greatest extent practical incorporate the budgetary effects of changes in economic output, employment capital stock and other macro economic variables resulting from such major legislation. now major legislation in the concurrent budget resolution and in the house bill basically is defined as 1/4 of 1% of gdp which is roughly $45 billion in gross budgetary effect, or major legislation can be designated by the chairman of either the budget committee or one of the tax rating committees. the heritage foundation has been promoting dynamic scoring for a very long time, particularly with respect to tax policy scoring. this is because dynamic scoring

will enable policy makers to better understand the impacts of proposed policies and make achieving pro growth policies less difficult. the earliest reference i can find on our website was a 1996 paper by dan mitchell, although i know that heritage has gone active on this issue long before that. in 2005 heritage published a book on the subject called the secret chambers of public square, what can be done to make tax analysis and revenue estimation more transparent and accurate. i collaborated with bill beach and marcos to edit that volume. most of what's in it unfortunately, is still highly relevant today. regarding tax scoring, there's relatively little disagreement about the underlying economics of the macro economic of tax policy changes but there is significant differences about the magnitude of the effects. the primary risk in tax is that jct will systematically under

estimate the growth effects of good or bad tax policy. with respect to spending there is, in my judgment significant disagreement in certain respects about the economic impact of spending policies. issues include whether a tanzian type stimulus effects are real or whether spending generally has' negative impact. the neoclassical growth impacts, rate of return analysis with respect to infrastructure enhanced expenditures such as education and job training and lastly incentive effects, for example, the impact of phase out of means tested programs or disability programs or unemployment insurance and life. our panel today is first rate. first, we're going to have annie morton who's a chief economist with the house budget committee, and bill beach. they're basically going to tell us how we got to where we are

and a few other things. then we're very pleased to have the cbo director steve hall, and curtis dubais, our senior research fellow will speak. let me take one second and introduce very briefly each of the four speakers and then we'll get immediately to the program. keith hall has been director of the congressional budget office since april 1st of this year. previously he was a senior research fellow at george mason university and before that at the bureau of labor statistics. 2005 to 2008 he served as chief economist for the white house council of economic advisers. andy morton is with the house budget committee. he served in the agriculture department, chief economist of the senate agriculture committee and as an analyst at the cbo. dr. beach is chief economist of the senate budget committee. previously for 15 years he was a

director of the center for data analysis here at the heritage foundation. he has also served as the president of the institute for humane studies and senior economist at sprint. i've known bill longer than either of us would care to admit. he's a fine economist and a true friend of economic liberty. curtis dubais is a research fellow here. previously he was a senior economist at price waterhouse coopers in tax foundation. please join me in welcoming andy morton. [ applause ] it's a pleasure to be here. i'm going to kind of briefly make a few comments briefly on a few areas i'll provide a little background on new macro eem knock mick scoring rule in the 2016 budget resolution conference agreement and not too

much but maybe a few comments/thoughts on how this rule is likely to work to play out going forward. so in terms of background, i started out in my professional career following more doctorate at cbo working on cost estimates in agricultural policy area so i have a bit of a background currently when it comes to congressional skoorg. let me start off by a little technical background in this area. cbo and i think jct as well they have for years included behavioral responses in their conventional cost estimate. now at the micro economic level or in some cases market level when they score spending and tax-related legislative proposals. so on the spending side just as an example, cbo estimates how farmers might change their crop

production decisions if the government changes farming support levels or crop insurance subsidies, that type of policy level. on the tax side jct has for years estimated how individuals or businesses will change their behavior at the micro economic level in response to changes in tax rate and other tax-related parameters. however, these conventional estimates as david mentioned they also assume very importantly that the overall level of economic activity typically measured by gross domestic product does not change. so that is the conventional scoring approach assumes that the overall size of the economy does not change due to legislation that's in front of the congress. now as david also mentioned i think we intuitively -- i think most of us if not all of us would intuitively agree at least that major legislation can and

almost certainly would affect the general economy. historically though we haven't incorporated dynamic scoring, or as we like to say, dr. price my boss likes to say, macro economic scoring. historically we haven't done that for proposed legislation for the most part. there have been concerns i think it's fair to say, about the technical difficulty of doing this kind of analysis the appropriate models to use. even if you agree on the model, the appropriate magnitude or key parameters that are necessary to make this kind of analysis. however, i would say, and i was chatting with john tailor about this after our hearing today at the house budget committee i think it's fair to say that the economics profession as a whole has very -- is greatly advanced its capability in this area, its modeling capability its

analytical capability generally and i think cbo and jct have also been part of that, and particularly, at least in the case of cbo, i follow cbo for the work that i do most closely, and we have others that work more directly on tax policy, but i think cbo has taken a step forward as well in recent years, particularly when it comes to longer run economic modeling. in fact in recent years cbo has been in practice this enhanced capability in certain instances it's produced macro economic analysis with budgetary feedback associated with the president's budget illustrative fiscal policy scenarios and also more recently the fiscal plans envisioned by the house and senate budget resolutions, both the house budget last year and the house and senate budgets in this year's resolution and also the conference agreement and

publicly released those on cbo's website. now as david mentioned cbo, however, has generally not performed macro economic scoring of proposed legislation. the major exception to that convention in recent years of course, has been cbo's what i would call a partial macro economic score of the senate immigration billing. but pursuant to a house rule that was in place through the 113th congress, the joint tax committee, jct, has provided on a supplemental basis macro economic analysis to the extent practicable again of each of the ways and means committee reported tax bills as supplemental information to their official conventional phase cost estimate. that's been going on for a number of years, so jct has

gotten quite a bit of experience under its belt i would say, in the area of doing this for proposed legislation, this type of analysis. house budget committee chairman price, my boss, has been interested in macro economic scoring for a number of years and in my view has been a leader on this issue as well as have been a number of other republican members in the house. dr. price has a pro budgeting act which the house passed in 2014 would have extended the jct supplemental information analysis to direct spending and tax legislation generally and would have also provided for not only macro economic based estimates through the 10-year window but also into subsequent decades, the other 10-year window. dr. price's bill also it set a marker in that there were

concerns raised in the house early on on this, how are we going to do this in an operational and practical way. are we doing didactic scoring or macro economic scoring for every bill as it comes through and cbo and jct dotel us that it does take more time to do those types of estimates. we have to do this for every bill. dr. price's approach, his approach at the time and his bill back in the previous congress was to provide supplemental information and particularly for major legislation. so he defined major legislation for the purpose of macro economic scoring requirement as having -- adding a gross budgetary effect conventionally measured on gdp of at least 1/4 of 1% of gdp in any year of the 10-year window. that actually i think elements of dr. price's bill as it has

turned out and played out in the house, they have become important elements of what the house did in january in the new congress. the house decided with this new congress that with the capability having advanced with getting more experience to both this kind of analysis to both jct and cbo the time has come the logical next step and to do these estimates more accurately for major legislation to require this for major legislation for both direct spending and revenue legislation. so that's what the house has built into its rules package at the beginning of this new congress. and then the budget resolution came along bill and i worked on this provision a great deal and i think it's fair to say that there are some differences. i won't go into the weeds on this right now, but there are

some slight differences. but the budget resolution provision is very similar to the house rule and the important thing is it will apply in the senate as well as the house. now that bill will address how exactly that's going to work out in the senate, it is going to be used in the house for official scoring when the time comes with respect to major legislation. now as far as how will the rule work going forward, you know that's -- it's -- a couple of things to say on that ground. first of all, we have dr. hall here so i think i'm going to leave most of that to him but i will say we don't know -- we haven't yet tested this new provision in practice with a specific piece of legislation. i think that's going to happen in the fairly near future. i can tell you preparations are being made at j.c.t., at cbo and

we're watching this very carefully i think in both of our budget committees in both chambers. a couple of issues in terms of getting ready to roll this out that i'll briefly touch on. in terms of quantifying the macro economic effect of the piece of major legislation i suspect that in fact there already has been i think there's going to be a great deal of discussion about what are the appropriate models to use and i think there's going to be a striving to determine what are the consensus estimates for the magnitudes of the key estimating parameters. that's very much in progress. in terms of display issues, that's going to be important as well. how will these estimates be displayed for the congress? cbo and jct will need to provide estimates of the bill's impact on outlays, revenues, and

deficit in the applicable years inbe inclusive of macro economic effects. so, yes, we're going to want to look at the pieces but we're going to need to know the bottom line in terms of each of those major budgetary aggregates and they're going to need to be point estimates because that's essential in the way that the congress does the scoring for legislation. i think jct is already off to a very good start as they have been doing this work on a supplemental basis for a number of years. i think cbo is off to a very good start as well and they're being -- i want to commend them for being very transparent in how they're proceeding with this and look forward to hearing more. >> thanks, andy. andy morton and, indeed, all of his colleagues have been great partners in this experiment. i would like to thank all of you economists for being here in the audience today. those of you who are not economists are very much in the position of one of the students

of wesley claire mitchell, famous economist who taught the history of economic doctrine of columbia university in the 1910s and '20s. the student was having a very difficult time with the subject. reading ricardo and endless 19th century economists who can't write and came up to wesley claire mitchell after one of the most tedious lectures everlasting hours, i would assume, and said, dr. mitchell, how can you stand this topic? this is just -- this is just awful? and mitchell looked at the student and said i have a very high tolerance for this topic. so i hope you have very high tolerance for this topic this afternoon because from the weed tops i am going into the weed bottoms. i think it's important that one of us speak about the mechanics, and these remarks are intended directed at keith and his colleagues, but they're intended

not to be, in a sense, a cookbook for them, but based on the experience that we acquired here at the heritage foundation and other organizations outside of government over the years in scoring, i thought it would be useful to say a few things. so the implementation of macro economic scoring which we also call honest accounting and some other people call dynamic scoring, so there's many terms for this constitutes a major enhancement in the scoring practice of the cbo and the joint committee. during the pendency of the current budget resolution cbo will be asked to augment its current practice with certain legislation with a dynamic scoring. moreover, it will do so in real legislative time. that is, macro economic scores will not be research products, rather, they will be cost estimates produced in time for the consideration of legislation. this scoring technique also qualifies as major because of how it will change established conventional scoring operations and models. that's a crucial point in my view. macro economic scoring is not an

additional costing technique in the sense that building a new addition to a house adds to the total square feet of the dwelling, rather it is an improvement to cbo's scoring program much like installing a new and more powerful engine into an automobile improves the car's performance. and, finally, the implement of macro economic scoring contacts a major initiative for cbo because of the controversy surrounding them. this controversy probably stems in the parts of some claims from tax reform advocates that macro economic scoring will reduce all costs of all tax reforms. it is, likewise, probably stems from the claims of some who oppose tax rate reductions that is a technique designed to justify tax cuts for high income taxpayers. in my view neither of those are true. cbo's challenge will be to implement the scoring technique while correcting such expectations and puncturing them. let me develop a couple of these points in the next six or so

minutes. let me first talk about routine macro economic scoring. cbo has long maintained a macro economic model and employed analysts with extensive training in macro economics to run these models. they have a good foundation. indeed, the office has an entire division macro economic division devoted to the macro economic problems the cbo needs to solve, baseline economic forecasts and projections are the biggest ones and they're used in the all important cbo spending and revenue baseline that andy and i work with. they also analyze, as andy said, the president's annual budget commission. they answer a number of macro economic questions that arise during the legislative session. cbo often points to its analysis of the senate's comprehensive immigration reform legislation as an example of its capabilities in the macro

scoring realm over the course of six weeks cbo successfully applied its macro economic models to immigration legislation and produced a final cost estimate that incorporated economic feedback. so in essence we have track record. despite this success in the capacity it demonstrated to create macro economic scores research products like the office's immigration work or recent analysis of the minimum wage increases tell us little, actually, about cbo's ability to routinely produce macro economic scores. difference between research and routine. while routine production of such scores clearly requires the macro model cbo used to produce immigration and minimum wage estimates, several other elements need to be in place to support in time production, in time production of macro scores. and we are really in the weeds now, right? if any of you want to leave the room, just hold your hand up.

so let me mention, two. one, model selection. in the research setting, analysts will spend a lot of time determining the appropriate model to use for the particular question being posed from among many possible sometimes competing models. in routine dynamic scoring however, which comes at you in rapid succession, it is best to settle on a couple of models that are capable of addressing a wide variety of legislative propose salgs and to use those models for most, if not all, of your scoring projects. secondly focus on science and mechanics. whatever models employed for routine work, it should carefully reflect the mainstream economic thinking and be sufficiently detailed to handle a widely diverse set of assumptions. so you have to have a model that reflects the science that's in the mainstream and a big model to handle all of the projects to

be thrown at it. that's hard to get. the goal of reflecting the mainstream of economic thinking builds into the maintenance of scoring models the discipline of constantly updating the model specifications to reflect the evolving reviews of academic economy. you keep the eye on science so that the model is sharp, at the edge, at the correct edge. that keeps the modeling teams focused on the economic science on which the model is built. second point, integration of models. so model selection is difficult, but integration of models is also something you need to be thinking about. there exists a deep misunderstanding among many who have followed the debate in adoption of macro economic scoring that it creates a second score to accompany the current conventional score or, worse that, it requires cbo and jct to produce a range of macro economic scores, each of which would be produced by a separate macro economic model.

neither of these are envisioned or supported by the scoring rule in the joint resolution. the -- we can't have two scores on the floor when we're involved with legislative debate one score. the introduction of routine macro economic scoring allows additional information to enter into the creation of the cbo or jct final score of major legislation. it is an enhancement of the current scoring practice, not a competing or a new layer on current practice. it corrects an information bias in current scoring which would remain deficient without macro modeling and that information is about the general economy. so when you don't include changes in the size and shape of the general economy the pace, you're not biased against doing that you're creating a bias because you don't -- you're not including all available information. i'm not saying they're biased. we all use bias in kind of a

pejorative sense. it's like if you walked around with your left eye closed, you wouldn't be getting all of the information that you could. now we're going to have both eyes open. that said, the new scoring rule not only enhances current scoring practice but it also reshapes some aspects of conventional modeling too. let me just cite one aspect. the conventional models that andy talked about frequently contain data and equations designed to capture how policy change might directly or indirectly affect the behavior of individuals and organizations. so you might have a labor model that -- you might have a labor model that's a conventional model that would have things like will taxes rise will people work more or less. almost all of these feeder models that feed into the macro model create equation sz that are essential for the accurate analysis of policy change. they have to have them. it would be an error however to leave those parameters or

assumptions in the underlying feeder models untouched once they start to interact with macro model. macro model may have labor force elasticity, micro model may have labor elasticity? do you count them both or do you integrate the two? so not only are you putting a new modeling practice in place, you're changing your underlying or existing modeling practice. it's a comprehensive field adjustment that occurs because we're not adding a new scoring existing scoring technique. finally, let me just say a word about communication and display. policy makers in the general public look to the cbo for point cost estimates. even though there's widespread recognition that the conventional estimating models produce equally legitimate estimates depending on the application of different and valid behavioral assumptions. even so cbo has chosen to produce point estimates in nearly all of its work of

conventional modeling. let me just translate that. cbo produces point estimates all the time. if you're on the cbo website you're seeing one after another after another. keith won't tell you today, but i'll bet you he would tell you if you asked him privately. i'm really putting him on the spot. there may be more than just one answer to those models but they have to choose one. so that's a display issue. so let me just conclude with that point. back in 1975 the cbo was created in the 1974 budget and empanelment act. budget control and empanelment act. so in 1975 alice rivlin and her colleagues began to put together the conventional models. they had discussions with the hill, they had discussion with economists like me and andy on the hill. there were oversight hearings. there was all of this interaction that occurred before

the models which we now accept as they're great they were finally settled. we're at that same point right now. we're not again just adding on, creating a new settle models out there, we're changing the core practice of cbo and the joint committee. core practice is changing. so, be patient with us. we haven't donnie scoring yet. there's not a failure. the failure would be to do this too quickly and to do it wrong. let me start by saying these slides are already up on the cbo website so you can get them there. i can. this is close enough. i'll try. at the bottom there is a link. we've set up a little spot on

our website with all of our papers and stuff on dynamic scoring. if you want to see some of the work we've done, background work, you can see that. let me start by -- turn it on. ah. okay. just as well. i'll go without the slides. the first point about scoring and cbo. let me mention one thing. this is the issue much doing a macro economic effects analysis, which is how cbo refers to a dynamic analysis. in terms of scoring we produce more than 600 formal cost estimates a year at cbo and we

produce between 5,000 and 6,000 informal cost estimates, right? so, first of all, using dynamic scoring in all of those is not possible. it takes too much time and, anyway, the effects are probably too small to show up on the dynamic scoring in any event. one of the important aspects about the budget resolution, very important part is that it sets the requirement up for things that are fairly large. that 1/4 of 1% of gdp, that works out to be $45 billion in budgetary effect in a year. that's a good standard for two reasons, all right? one is we can't do this every time so we need to pick the big ones. the second thing is the dynamic effects are probably only going to be significant on the big ones anyway. that works out just fine. and at this level i don't know i haven't done an exact count. we probably had three, four, five estimates last year that

hit this criteria. there's not going to be a lot of work. and also, any designation by one of the chair men of the budget committees can ask us to do this analysis. >> all right. >> still not behaving? >> still not behaving. oh, well. the slides will be available. i don't really need the slides. >> okay. >> use your hand. >> my hand? okay. let me talk in general about my view of the macro economics. first of all, it's really not controversial in the economic profession that there are dynamic effects right? from -- from either spending or taxes. that's not controversial. the tricky part is the accuracy. and let me give you an idea from my perspective. i spent some time in the statistical agencies. you know, blf, i spent some time in commerce, and when you

estimate a piece of statistical data, when you're estimating gdp, two things you're looking for. one is you're looking for an estimate that's unbiased, so your revisions go up as much as they go down once you get more complete data. the other is accuracy. you want the revisions to be small. with a dynamic scoring in my view, you've got two was of looking at it. i think you've got a similar sort of analysis with it. if you know there are likely to be dynamic effects and you assume the dynamic effects are zero. you're introducing bias into an estimate, right? but by introducing dynamic scoring and getting something that's hopefully less bias, you may introduce more error, more uncertainty in your estimate. that's a legitimate tradeoff to worry about. you can't worry. you can't make a decision that you don't want to have a dynamic analysis because it introduces too much error. you can decide you're going to accept a little bit more uncertainty. you can get something with less bias, right? it's a reasonable think to think

about. cbo at one time not doing dynamic scoring because it made sense. now starting to do it. now hopefully it will get something that's more -- that's got less bias in it. second thing i want to say about cbo is macro economics that are not new to cbo. we've been doing them for several years. we've been developing models for seven years. to a large degree we've got our act down in terms of work force models. we produced our latest long-term budget output that used our dynamic model. we looked at the budget outlook for 20 years looking at the macro economic effects and i can tell you in that particular estimate we took into account the macro economic accounts of rising deficit of increased taxes on wages the effect on labor market increased number of transfers and we took into account a decrease in investment

all out of this -- out of the budget forecast going forward. so we took all those things into account. the one that dominated was the increase in the deficit in the long-term budget outlook, but all of those things were part of dynamic scoring. it's been routinely in the analysis of the president's budget. it will be -- and both of you guys already mentioned the immigration bill. it's an important part of the immigration bill of course, because you had something that changed your labor supply. you can't ignore dynamic effects if your labor supply is changing. that was an important thing to include. ing one of the things that is important with starting in with a macro economic effect analysis is transparency. we've now had a couple of presentations. if you look at this presentation, i've got some detail in there. i'll talk about the detail as well as we go. we actually had our -- one of

our meeting of our economic advisory panel on friday. we made a presentation on macro economic analysis. we've talked about the models we've used. we've talked to them about the parameter value in the models and we got some feedback from them, too, about how we were going to talk about the results when we did the results, the idea being asking -- asking the economists to understand, what sort of transparency would help them understand what we're doing. and in my mind the early role of transparency for sure for us is if we produce a score and use a dynamic analysis it's not helpful to us if you say the score is too high or it's too low. we want you to tell us which parameter was wrong. are we using a description of labor market as too responsive not responsive enough. using the right model. we want the stuff to help us improve things in the future. it does two things i think for us. one, it helps with the

credibility. right? this stuff can be a black box unless you know exactly what kind of model is being used parameter values. it helps you criticize us in helpful ways. one of the things that we certainly need to think about is improving this over time getting our act together, making estimates, seeing how we're doing and actually taking criticism when criticism is needed. the estimates in particular we spent a lot of time now looking at labor markets because one of the most important dynamic effects is what happens to labor markets. if you all recall one of the things we did in the aca was we found some results where the labor market hours worked were declined by 1 1/2 to 2% with the aca. what does that tell you about the dynamic effects of the aca? you have a declining labor market, that means it's going to be a drag on economic growth so

you know which direction, sort of where the dynamic effects are going to be on that. other things of course, the other effects, we're doing some work now. we've done a lot of work on the labor supply. actually done some work on the effects of government investment. how to invest. one of the things that's going to do is that's going to help inform us on the spending side of things on the dynamic analysis part. at some point we'll release that and we'll have some estimates in there and you folks will get an idea of what that looks like. in terms of the actual modeling, the trouble with dynamic modeling is it's obvious, right? any kind of modeling, but dynamic modeling in particular. the economy is really complex right? whatever model you use, it's too simple to really capture what's really going to happen with precision in the economy. but, if you can make an estimate right, if you can base

it on empirical work, you have value. our two workhorse models are, one, it's a solo type growth model. the other it's a life cycle growth model. the first one the solo type growth model is probably going to be our workhorse because it's got enough -- it's complex enough but it's also simple enough so it's something we can use fairly quickly. and both these models are forecasting not just output they're forecasting potential output, right? so in determining potential output, the amount and quality of labor and capital are important, all right because it affects work, savings and investment. productivity is important. federal investment impacts productivity which impacts macro model. the amount of national savings

is in part on federal borrowing. all of these things are in these models. the solo-type growth model first of all, as i say, is based on real empirical data. based on elasticity, where we're looking at the impact of previous changes in policy previous changes on economic variables, and so it assumes that people base their decisions about working and saving primarily on current economic conditions and current policies. that said. it's more shortsighted than other models, but in a way anticipation of future policies is in there in a general way because within the ee lasslasticityieselasticities when taxes changed people changed their plans. anticipation of future policies is not explicitly in the model, it's in ther