mechanical issues after trying to go through snow because of the age of the equipment and where the snow gets under the cars and would create other issues for us. we didn't have a that this time. so we had that figured out. anyway, it was something that i think was the right thing to do from a safety standpoint for our employees and for the customers. the worst thing we could have done is have people out there to get them to think they could travel in a storm like that as we knew it at the time and, b, have to go and rescue them. then we're pulling resources away from basically getting the system up and running. that was the decision. i think it was the right decision to make. >> going -- staying with the safety issue, there are a lot of times you can get into metro system and see a very crowded platform. when you are at the games, the gallery or something like that, but also there are issues when it comes to construction inside

of the stations where there's only a few feet between falling off the edge. have you had any plans to try to address that for safety concerns? passengers trying to walk through stations. >> in the short-term, one of the things we're doing is basically -- we created a new class of employees that are going to work on platforms particularly at the busier stations just to deal with the crowding issues like that and also using police to do that. the reality is in some of our stations, the physical limitations are very tight. it gets compounded when you have either a major event or you have some incident on the rail. so there's clearly that. what we have to do is one of the things that particularly for incidents, is we want to get people to understand before they get down into the station or before they go through the -- into the mess mezzanine.

one of the things we are looking at is putting rail information out on the pylons at the street level. we have electric there. that's one of the things we're trying to figure out. where we can tell people what's going on before they get down there. that's part of the issue. you get people down there and they are stuck. the other thing that we're doing is we have proposed a tap in, tap out. some of the times people come into a station and there's an issue. they already paid and they figure, i'm going to stay because i paid. they wait it out. they are frustrated because they paid and they have to -- they don't get the service they demand. we're looking at a 15-minute gl grace period so people don't feel they have to stay. something is going on. let me go get out and do another plan without costing them. >> i have done that myself. i understand that very much. talk to me about the situations, too.

if i walk in and i see there's a 20-minute wait, i walk out and pull up my uber app. lyft, other organizations are causing competition for you. is there a way to address that? do you find it complimentary to your system? >> i look at that -- let me talk about it at two levels. there are certain things i have no control over. i have no control over the price of fuel. what can i do about that? that's going to impact this uber, lyft and car sharing, all those ipg things impact us. i want to focus on, let us provide the best service we can within that context. that's where we should be focusing. not worrying about some of the things that havei have no contr over. that's one level. the other level is thinking about those as part of an overall transportation plan for region. there's nothing wrong with that. you know? it's not an either or car or any

of that. to me it's all part of a system. so we should think of it as a system. gear towards that. then are there opportunities to use that? are there other things we could be doing that are more efficient by tapping into those resources? not figuring out ways to try to beat them. it's a little different philosophy. >> in fact, i think i read that -- was it giant pea pod will deliver groceries. does metro's problem -- a lot of the issues reflect the larger state of the country's infrastructure, especially transportation infrastructure? are we essentially an example of what's going wrong when it comes to transportation funding and structure? >> a lot of the same trends you see across the country, whether it's transit, highway. you name it, you look at any of the industry groups and they have a laundry list of needs that haven't been the met, have

been kicked down the road. at some point they come to come back to haunt us. look at manhole covers blowing up in the air. there's all kinds of inf infrastructure things that need to be fixed. that's a national debate and it's regional for us. >> speaking of regional, the idea of a dedicated tax has been pushed for a long time with little interest in virginia and maryland. is there any way you think you will see a dedicated tax for the metro system? >> i think that the way that i view the system is we are in a region that's competing globally. i mean, that's where we are. the metro is one of the tools to help this region compete globally. and so unless we start to think in those terms, it puts us in a very difficult position to compete. so with what that means is if we fund on a local level, you will

think more locally. if you fund in a rengional leve, you think regional. you start to have an understanding of what you are trying to do as a region. from that perspective, i think it's important. if you look at the major transit properties around the country, i think we're the only one that does not have some sort of regional mechanism like that. it provides stability and certainty and budgeting rather than an annual budgeting thing we go through. we reach agreement for longer-term agreements. by and large, again, across the country, the reason that you see that is because these are very large, complex, expensive systems to maintain and operate. and unless you have that, it makes it very difficult. >> in terms -- relatively terms, metro is young compared to a lot of the other systems out there in the united states and europe. are there lessons you can learn, for example, from some of the systems in europe that have been

operating for a very long time and don't seem to have as many of the issues we face in washington? >> i think to compare to europe is a little -- we look at transit in this country differently than other places, both in europe and asia. that comparison is tough. there are lessons to be learned. the smart card is one of those. they did in london, for instance. there's lots of things that we can learn from them. i think particularly the funding and the public policy decisions in both europe and in some of the asian countries, they are not applicable here. i think clearly we can learn from other major systems in the country. my experience has been every one of those systems have their issues. i'm sure that if you look deeper, they have very similar issues that they have to go through. we all do because, again, the nature of the beast. but i think if we get at some of the core issues, we can start to

solve -- we should be at a minimum the best transit system in the u.s. both in terms of its age, its meaning to the economy, what it means to the nation as the nation's transit system. we should definitely be there for sure. as we reach to meet european and/or asian models, that's further down the road. >> why aren't we the best one in the united states? >> i think some of it is because we had a new system and focused on the newness and not some of the aging of it. we had a capital construction mentality i believe as an agency over the years. we have now moved into obviously with the except ft. sill vor t r li silver line. you are taking care of the basics. that's a shift for the agency. >> this question is from the audience. the questioner wants to know, there are many examples of

wonderful customer service representatives. but it's often operators who abandon trains or their station and there's no one there to help. does metro have a customer service program? >> i have seen just some fantastic customer service from people that have no idea who i am or they don't know i was there. so they by and large do very well. do they have issues? yes. have we brought the line employees into the solutions? no. that's exactly what i talked about earlier. what i'm trying to build is at the staff level, particularly at the operation of front line people level, is the pride in the system. i want them -- i have said this -- we have a class of new employees that come in every two weeks. dan, who runs that, is here. the thing i say to all those employees is that what i want you to do is when you go out to

watch a game or whatever, if someone asks you where do you work, i want to you say metro and they think, that's cool and you are proud. we have a lot of work do that. i think that's something if you ask someone where they work and they say, under armour, you may have a different view and they may say it a different way. i know we can get there. it's something we did at bwi. if you ask anyone if they say bwi, they are proud about it and you think positive about it. that's the same goal i have here. it starts with line employees. that means a lot of work with our managers to understand that, to buy into that. it means working with in the construct of our -- how we're operating in terms of unionization, labor, making sure there's rules that we abide by there. we have to make sure that the goal here is to be proud in the system. >> can you do that without raising salaries? that's usually one thing that instills happiness in a work

force. >> of course, that's always going to be an issue. i think if you treat people with respect, it goes an awful long way is my experience. they get it. i mean, the money is not always going to be there. i think that we have -- these are great jobs. there's no doubt about it. the employees have great jobs. more importantly, it's building that relationship with the front line employees that we're in this together. that woe're thinking of you. for instance, when i make a decision on blizzards, i'm thinking of them, not just i have to try to do this because that's what other people say i should be doing. it's really thinking about them at the same time. >> speaking of that, you have had some big decisions you have had to make so far. you've been pretty decisive in your three months as the gm. from the snowstorm to the police expansion, others. how do you approach decision making? is it a group effort? do you bring everyone together? is it you saying, we have do this? >> right now it's heavy handed

on my part. i am -- i just came out with a new organizational structure. i am recruiting for a number of those positions. my experience though eventually is i get a tight team that basically is thinking strategically about the agency all the time, is what i want. and then i manage more of a matrix style, which is -- i get out and want all of my particularly managers to do that. one of the things that i have found at the agency is quite a bit of silos and a lot of turf issues. so with the new organizational structure, basically tearing that down so the people that work for me directly that are my direct reports and all people under them are at will. and they will understand what that means is that, you know, either they act as a team or they are not on the team. >> one of the questioners wants to know your personal -- what has been your worst metro fiasco

as a passenger? >> actually, one of the worst was -- it wasn't -- it was understandable. we had an issue. and it was at union station. i had a breakfast meeting there early. then i caught the train down. it was kind of interesting because i had a 9:00 back at headquarters. it was on customer service. in getting -- when i was there, there was a number of issues we were dealing with. but i could not find the people that were managing it. i did not get the sense of urgency of what we were dealing with. and so when i got back to the meeting, you know, when i looked at the pages i was getting, we had train delays and there was things going on. that was it. i sort of lost it a little bit. but i think they started to understand that, you know, a, they had been over the years a little dull to the issues, i think. have i have to bring that into focus

that this is not acceptable, that we need to be proactive when things occur and not just think, okay, i have the trains and they are moving back. it's the customer experience part of it which i did not see. i was lucky enough to be recognized by a number of customers. i was informing them of what was going on. that was probably one that sticks in my mind is one that got to me a little bit. >> you want to tell me your best experience to counterweight that? >> best? i have had so many -- there's one gentleman that's a train operator that's just fantastic in providing information. i asked him to come down to the office. we get to meet him. that's fantastic. i have seen our police do just tremendous work. unfortunately, we had a terrible incident not too long ago on the tracks with an individual. and it was a friday night. and it was a three-hour ordeal. guess what? no one on that line that was dealing with the issue -- most of them were not working. they were off.

this wasn't how they were planning to spend their friday night. they handled a very complex and tragic incident with just utmost professionalism. in dealing with the situation and also trying to get out to the customers to understand what was going on and rebuild the service. to see that -- i'm very thrilled with the passion i see in the people. it needs to be harnessed, it needs to be direct and brought out. but it's there. >> you referenced crime problems a few minutes ago. you seemed to be talking more about transparency with the metro system. currently, information about the crimes, arrests and prosecution of crimes on metro is not available publically. will you make it publically available going forward? >> we will make public whatever we have. it's a little bit more complex than just what we control of this. particularly with youth crime. there's all kinds of rules that i'm still learning about in the

region. from what we do, we will be as open as we can. if it jeopardizes an investigation or a method we're using, we're not going to be open about that. >> same question about transparency, will you make public the terms of real estate transactions after they are finalized and approved? other public agencies do this across the country. >> i see no reason not to. >> i'm getting as many promises as i can from you right now. when will you join other transit agencies with procure awards and the value of the bids on website? >> i don't see any problem in doing that. >> you are making the crowd very happy. this questioner wants to know, why does it take so long to replace bloroken escalators. we have seen stories like in dupont circle. and why do they break so often. >> let me touch on the why part first. we have a lab where we have the

mockups of the he escalators an elevators we have. with escalatorescalators, a lot times -- from a customer perspective, it's broken. it's a breakdown. but the reality is, these are very complex systems that are designed from a safety standpoint. i'm not going to tell you what you can do. there are certain things if you do certain things on the escalators, they will stop ou t automatically. it deals with steps and rails and other things. just in normal usage, it can happen. it shuts down automatically as it is supposed to do. we have station managers have some ability to investigate. but the reality is, you have to make sure it's safe. you take a technician out. we try to keep technicians in an emergency response condition so they can do that. a lot of times what you see with a stopped escalator is that issue. there's another set of escalator issues where we have to replace

escalators. that gets to be a challenge if you have limited access to a station. because we have to think about, how do we get people out of there if an emergency occurs? that's how they have to think about how they stage these things. in terms of rehabilitation of escalators, same issue. we try to maintain them. we replace basics. every few years, we have to do a rehab on them. our breakdown rate is in the 90 -- we're performing in the 90%, 92%, 93%. the reality is if an escalator is broken down and it is yours, they're all broken. if you look at any of our stations, you may be looking at a dozen escalators in that one station that you may as a customer never think about. there are escalators all over. the one you hit is broke. we get it. from the percentage standpoint, they have done a very good job.

we're going to continue that. we're going to continue to try to do that better. >> continuing with a little bit of transparency and openness part, to my knowledge, metro has not released the number or amount of settlements paid for for injury or death that have occurred in the system. will you release that information? do you know offhand how much has metro paid? >> i don't know that. to commit to that one. i don't know what the legal ram if ramifications are on that one. i have don't want to commit on that. >> changing suggee ining subjec. we learned an effort with major phone care years to plug the system with more cell service towers antennas fell through. metro will fund that itself. why was that decision made and why did it take this long? >> sure. i walk in as a ten-year history of this thing. but the reality is, it's not a cell phone issue for us. it's a radio issue.

we have a major radio system above ground and below ground that basically is used for emergencies and the 700 megahertz system. we have to replace that because the fcc says we have to get on the band we are on. we have a project to replace the radio system above ground, below ground. new radio, new cabling, new anten antenna. as part that was as we are in the tunnels hanging our cable for our radio needs, we basically have struck a deal with the carriers to hang their cable. a few years ago, eight years ago, ten years ago it was flipped. there was a business reason for them do that. that business reason has pretty much dried up. used to pay by the minute. you don't pay by the minute anymore. now the other thing is as they try to do it, what they found is it's a very complex environment to work in. basically, you are competing for space to get track space because you are hanging the cables on the walls -- on tunnel walls.

you are moving utilities and/or signage on those things. you have do this in a very small window of time or the customer pays in terms of what we can provide. basically what the arrangement we have now is we have this $350 million project, $125 million or so is in the tunnel portion of it. of that is a subset that deals with the cell phone portion of it. what we have done is struck a deal where they give us cash and they give us some materials in kind. we're going to be doing it as we're doing our radio. it flipped the approach. >> do you see that as a safety issue as well? is it a safety issue for people not to be able to use their phone? >> yes. at a minimum, it's a perceived safety issue because something happens down there, you want to be able to have access. i get it. that's very understandable. yes, we want it from that perspective. the customer would like it to have it for sure. you see it in the stations where

we have it. this is not anything unique to metro. this is an issue for any transit system around the country, particularly the major systems. it's very expensive. it has a major impact on the system when you put these things in. then you compound it with our system with only a two-track system, you are talking out one of the tracks to do it. >> let's talk about the phone app. the ability for riders to tell how long until a bus is coming, how long until the train is coming or if there's a back load at union station, they know that they should walk to the other side to another train. what efforts are making there to make that information available to app developers? >> apparently we had for some reason we weren't sharing as much information as we had. we changed that about two or three weeks ago. to be frank, i hadn't gotten down tho that level. when i learned about it, i said that's ridiculous. we should be able to share whatever information we have in terms of train movement.

the reality is, we don't have excellent information on that. it's based on maybe a ten, 15-year-old technology of how we have been trying to track trains. you can see that on the information displays we have. you might see something that says three minutes. it's measuring where it was in the one gap and it's estimating what it will take to get there. it doesn't understand what's happened between here and there. so we have to create a system that does that. we need do that on our own. we're going to that on our own. at the same time, we want to be able to open up as much of the technology to third party developers to do this. one of the things that i have said repeatedly is for us to try to catch up in some of the areas whether social media, in some of the technology areas, for us as an agency to get there is -- we will always be behind. we just don't have that capability. it's not our core mission. it supports our mission, but it's not our core. why don't we let private sector

people, other people, greater people creative people do that. let's figure out way dozen ths that. we reached out to greater washington to help us. there's a lot of smart people in this area that know more than we will ever know in that area. >> a lot of these things you talked about today, and your yo safety, fiscal management, relight, those things cost money. gets to fiscal management. where are you going to fi ing i money for better technology, fixing elevators, adding security and making safety important? how do do yyou do that? >> manage more efficiently. there's a lot of things we can pick up by managing a little differently than we managed before. there's definitely efficiencies there. there's redundancy in what we do and we need to make changes there. we just have to things that are legacy that we just don't need

anymore. we have to address all those. that frees up some dollars to work smarter i think in general. we can achieve more. but we need to continue to work with our federal partners and our jurisdictions to basically address those issues and make hard decisions. my job is to give them clear understanding of what we're up against and where do you want to chip away at. >> does the fda -- how much does that affect what you are trying to do or does it change what you are trying to do? >> i welcome oversight. i think we have to make sure it's as efficient as possible. we have to make -- one of my concerns is we tend to be very focused on process and not the product. so one of the things@[o8y we di line today is we outlined 732 i think it is literally actions that we're taking.

that's more important to me is what physically are we doing to get the system safer and not sort of the compliance part of the issue. obvio obviously, we have to meet the compliance. we seem to be spending a lot of time and energy on the process versus what are we doing to change the product. so my focus is more on that. i think the -- obviously as the new metro safety commission gets set up, that's great. those are things we should have. the more -- the sooner had a is done in a definitive way, the better. >> there's a questioner who wants to know about what can we done about the 3wbad behavior being from noise, food, blocking exit, people put feet up on chairs. is there an effort to maybe be done with a courtesy campaign or is there a culture problem you see with riding trains that needs to be reversed?

>> i don't know. i've been to movies. i've been to malls. i experience all kinds of things that a lot of public environments. i think we reflect that no differently than other public environments. so, yes, we can make sure that we try to do that, that we p project a certain decorum that we would like to have in the system. but it's a big community. >> you talked earlier about the stakeholders you visited with, news outlets, civic groups, politicians in the d.c. area. this questioner wanted to know, you spent ten minutes with the riders advisory counsel. this is a 21-member group representing the riders in the service area. when do you expect to spend more time with the group? how do you see their influence as representatives during your time? >> they are right. i did meet with them early when i came on board.

basically, i have to spend time with them. i know that. i basically said that at the time that i need to get back and work with them. i think now where i basically -- remember, at the beginning two months or so, i was really in the sort of absorbing stage. trying to take in as much. now i can talk about more what we are doing so i can get more engaged with groups like that. i look forward to doing it. they offer excellent perspective. now, they do provide a perspective to the board. myself but more importantly to the board. it's one of their committees in effect. so that's important for the board to have some direct connection with some of the riders. that's what that does. >> got you. a questioner wants to know the blue line riders have been complaining nonstop since the introduction of the silver line and the rush plus changes that reduce the number of blue line trains. that happened in 2012. four years later, the riders are

crammed on six car trains at 12 minute headway while paying peak fair fares. how do you plan to address this? >> sure. do you want me to talk to martin directly? >> nice. >> the reality is, you know, those decisions were made a dozen years ago by the local governments. they understood that you have a tunnel that -- or a portion of the system that can handle roughly 26 trains per hour. decisions were made a decade ago that that's what they would do. we have to again -- where i need to focus on is making sure that what we put out there operates. that we put it out at the right numbers in the morning and peak and once it's out there it's reliable. that starts to solve some of the issues. i can't undo the construct of that deal because of the

limitations. that's again something that was settled i think quite a while ago. it's the nature of what we have with a very constrained system at that point. >> you have had declining ridership for many years. you have some bullet points. you are talking about what you would like to do to change that can increase the number of people using it? does it have to be wholesale change in how the system operates? >> i think it definitely has to be -- we have to get the basics right. washcog to look at the trends, what's going on. clearly, you can point to some of the issues that we have. you know, this is a complex region. you hit on some of the things impacting that. i think when we look harder at the numbers, some of the core roots and errors where we have joint development, the numbers are up. longer haul routes are down. there's lots of dynamic going

on. i reached out to washcog, help us think this through and think about all the other aspects of it, whether it's land use, whether it's different business and whether you can -- all those things have to be followed so we can start to think differently about what we provide. we continue to try to provide a system from a '70s and '80s mentality, that we're wasting dollars and time. >> we're almost i wanted to end with a few last questions. before i ask the final questions, the national press club is the world's leading pro professional organization for journalists. we fight free press worldwide. for more information, visit our website at press.org. that's press.org. i would like to remind you about upcoming programs. tomorrow, jay phasen, will

outline the organization's conservative approach. one week from today we will host ken barns and henry lewis gates junior to discuss race in america. that night, the national press club will welcome home jason rozion, a journalist held hostage. he will be with us that night. i would like to present our guest with the national press club mug. i would like to remind you not to use this on the metro system to drink out of. >> thank you. >> we have talked earlier about a lot of the issues coming with metro and lot of the issues coming with metro and the bus system and efforts to address those. recently, d.c. started running its streetcar after many years and many failed promises of when it would start running. $200 million i believe is the effort. what are your thoughts on the management of the d.c. streetcar and will you be able to use

metro fare passes when they -- so it's all integrated in some form? >> they are doing a fantastic job running that system. he's a board member, too. they have done a really -- he's done a very good job. i know his team has to get that up and running. i think they did the same approach. they are not going to put something out there until they know it's safe and reliable. that's basically what i think you just saw play out there. so that's very good. we will discuss later on the fare issue. >> okay. will it be integrated? >> yeah. we will work with them to see what makes the most sense once they decide to start to charge. >> okay. i guess for my last question, i will end a little bit early today, you moved from baltimore now here to washington. we have some sports teams that are competing. i would like to get you on the record. are you now a redskins and nationals fan? >> as i mentioned to one of my

board members awhile ago when he asked me that same question, you have a great hockey team and great basketball team down here. >> i guess i could press you a little more. i also know your wife is sitting right there and she's from baltimore county so i will be very careful. thank you. i appreciate that. i would like to thank the national press club staff including our journalism institute staff and broadcast center for organizing today's luncheon. if you would like a copy of today's program or to learn more about the national press club, go to press.org. thank you. we are adjourned. [ applause ]

the commanders of u.s. central command, africa command and special operations are set to testify on capitol hill. they'll speak to members of the senate armed services committee about counterterrorism efforts. that's live at 9:30 a.m. eastern here on c-span 3. and over on c-span, homeland security secretary jeh johnson testifies on the president's 2017 budget proposal for dhs which calls for $40 billion in spending. that hearing gets under way at 10:00 a.m. eastern.

i am a history buff. i do enjoy seeing the fabric of our country and how things, just how they work and how they're made. >> i love american history tv. presidency, artifacts, fantastic shows. >> i had no idea they did history. that's probably something i would really enjoy. >> and with american history tv, it gives you that perspective. >> i'm a c-span fan. jason furman is chair of the white house council of economic advisors. he was recently on capitol hill to outline the president's annual report on the u.s. economy. he also took questions from lawmakers about the national debt, income inequality and federal regulations. this is an hour and 40 minutes. meeting will come to order.

as soon as i turn on my microphone. the committee will come to order. chairman furman, welcome back. we very much appreciate your willingness to come and speak with us following the economic report of the president. it is important for us to understand what is in this and get your take on it and where we are going. it certainly helps us in terms of our policy making decisions going forward. want to welcome you here and thank you for your participation. vice chairman teaberry, ranking member maloney, thank you for your willingness to continue this long-standing tradition we have that the chairman of the council of economic advisors testifies before the joint committee committee. this year marks the 70th anniversary of the council of economic advisors, and the joint economic committee. both of which were created to advise our respective branches of government on a wide range of matters affecting the economy. we appreciate this annual

opportunity to engage in dialogue and look forward to discussing this year's economic report. much has been learned over the course of this slow growth recovery that we're in. these lessons will only continue for the foreseeable future. the current recovery has been slower than priest of previous recoveries and subdued expectations about the economic population and labor force growth have placed additional pressures on federal budget constraints. however, i don't accept the often mentioned assertion that we have entered a new normal of slower economic growth. policy reform seeking to create a better tax system, rein in spending and loosen the regulatory shackles restricting the economy can alter this trajectory by removing some of the structural barriers american workers and businesses face today. in my opinion, a lot of the problems we'd like to solve require us as policy makers to look in the mirror and see how

current federal government policies are affecting our economy. in his final state of the union address this year, president obama stated he wanted to "focus on the next five years, the next ten years, and beyond." however, he admitted one of the most important issues that america faces in the coming years, the financial obligations that will come due over those time frames, and particularly in the beyond. that was not mentioned once in his address and how to achieve fiscal sustainability was not among the four questions the president argued that we as a country have to answer. i found this to be a glaring omission, given how our national debt has risen so sharply over the past seven years from $10.6 trillion when president obama took office to now over $19 trillion. this accumulation of such staggering levels of debt is nothing short off reckless and the situation will only get

worse the longer we wait to address it. according to a recently released report by the non-partisan congressional budget office, in just ten years spending on mandatory spending programs and interest on the debt will consume nearly 99% of all federal revenues. clearly this path is unsustainable. so if we don't work now to correct this disturbing trajectory, our ability to pay for essential government functions will be severely constrained, our economy will suffer, and our national security will be at risk. the cea's report we will discuss today devotes significant attention to inequality as a defining challenge of the 21st century. however, i think it is important to recognize that intergenerational theft is also a form of inequality. a particularly severe one that our children and grandchildren are poised to inherit.

their ability to succeed in our future economy will depend largely on the decisions that we make today. for the american dream to remain attainable for future generations we must accept the reality of our fiscal situation and act responsibly by addressing it immediately. i look forward to discussing these issues in more depth with chairman furman. i will now turn to ranking member maloney for her opening statement. >> first of all, welcome, dr. furman. thank you for calling this hearing, mr. chairman. thank you for appearing yet again before us today to answer questions about the current state of the u.s. economy. i share the overall assessment of the economic report of the president that under the leadership of president obama the nation's economy is back on track after what was the worst recession during the -- since the great depression. we have just completed the best

two years of private sector job growth since the 1990s. we have recorded the fastest two-year drop in the annual average unemployment rate in 30 years. the unemployment rate has been cut in half. as you can see in this chart, we're in the midst of the longest streak of private sector job creation in history, with a record 71 straight months of growth and the creation of 14 million private sector jobs. there are some who look lightly at these achievements claiming that the obama recovery pales in comparison to average -- quote, average, recoveries, as if the economic meltdown during the last years of the bush administration was "an average" recession. is the loss of almost nine million american jobs average? is the loss of homes for nine

million americans average? let's remember, when george bush left the oval office, the economy was in a death spiral. in the final quarter of 2008, gdp shrank at a staggering 8.2% annual rate. the worst quarterly economic performance in more than 50 years. housing prices were collapsing. u.s. households lost nearly $13 trillion. dr. furman, last year you told us this recession was like an economic heart attack. you said the share of wealth lost in the early days of this recession was almost five times as large as the loss and wealth that triggered the great depression. thanks to the bold action of president obama, democrats in congress and the federal reserve, we have steadily climbed back from this

recession. as you can see from this chart, the u.s. gdp has grown in 24 of the past 26 quarters. real gdp has grown by over 14% since the start of the obama administration. the auto industry written off by some as dead has already added nearly 640,000 new jobs since 2009, and it is now exporting more than two million units per year. average housing prices have rebounded to 2007 levels, and household wealth is more than $17 trillion higher than before the recession. this recovery has occurred despite efforts by many republicans in congress. first they opposed stimulating the economy. in fact, every single one of them in the house voted against the recovery act. they demanded budget cuts at

exactly the time when economic theory says government should increase spending to boost demand. the report notes that the economy faces long-term structural challenges. first of all, the baby boomers are retiring. that alone will decrease labor force participation and slow the growth of gdp. we also face the devastating effects of offshoring of american jobs and job losses due to automation and technical changes. these challenges are not a surprise. they have been on economists' radar for years. so what should we do? i agree with your assessment that we need to rebuild the nation's crumbling infrastructure, invest in early childhood education, implement paid leave, achieve equal pay for equal work, and make college more affordable. i want to close by looking at economic inequality, one of the

central issues of our time, and the focus of the first and fourth chapters of the economic report of the president. the u.s. experience has diverged from other advanced countries. since 1987, the share of income going to the top 1% in the united states has been greater than every other g-7 country. every single year. we need to recommit ourselves to policies that expand opportunities and narrow inequality. these policies will pay dividends in the future and help us create an economy that is even more robust, an economy where the benefits of growth are shared across the income spectrum. as you note, giving all people a fair shot will strengthen our economy by boosting productivity and accelerating growth.

dr. furman, thank you once again for appearing before the committee. i am eager to hear your testimony and congratulations on an excellent report. >> thank you, ranking member maloney. now we turn to introducing our distinguished witness, chairman furman. he is chairman of the council of economic advisors. previously he served as a principal deputy director at the national economic council and senior vice president of the world bank. he has also been a senior fellow in economic studies and director of the hamilton project at brookings institution. dr. furman earned his ph.d in economics and master of arts and government from harvard university and a master in science and economics from the london school of economics. thank you for joining us. we look forward to hearing from you on your report. >> thank you, chairman coates. vice chairman, ranking member and members of the committee. we are excited to be here today

to talk about the 70th annual economic report of the president, something that the cea and this committee have had a chance to do many times over the decades. this report's overall macro economic theme is that 2015 was a year of continued growth for the u.s. economy in the face of substantial headwinds from abroad. ranking member maloney cited a number of the statistics, the strongest job growth in -- two years of job growth in a decade. the largest decline in the unemployment rate in 30 years. the longest streak of private sector job growth on record. the unemployment rate has consistently fallen well faster than what anyone would expect, falling to 4.9% in february 2008 as compared to forecasts which as recently as 2014 had expected

it to stay above 5% through 2020. at the same time, the laborforce participation rate has been relatively stable over the past year as improving economic conditions partially offset the drag on participation from the retirement of the baby boom generation. and perhaps most importantly, over the past six months, nominal hourly earnings for private sector workers have grown at their fastest pace since the great recession although more work remains to be done to boost wages. our domestic progress is all the more notable in light of the substantial headwinds that the united states faces from the global economy. the international monetary fund estimates the global economic growth was 3.1% in 2015. the slowest since 2009 and continuing a trend of falling below expectations. the united states had the highest growth rate of any major advanced economy, but slowing

growth in a number of large emerging markets weighed heavily on the global economy in 2015. weak growth abroad served as a drag on u.s. exports with exports subtracting 0.1 percentage points in gdp growth in 2015, a substantial shift from the half point exports had been adding to growth in 2013 and '14 and we expect these head winds to continue into the year 2016. particularly in light of these adverse global developments it is important that we work to strengthen domestic growth by boosting productivity and dynamism in the u.s. economy. it is also important that we work to ensure the benefits of economic growth are shared broadly, and to this end, the 2016 economic report of the president lays out the president's agenda for inclusive growth. despite progress since the great recession, the unequal

distribution of income, wealth and opportunity remains one of the greatest challenges facing our economy. it's not unique to the united states, but it's more severe here than in other countries around the world. some of the increase we've seen is a natural consequence of competitive markets, the result of differences in productivity as technology evolves. but some of the increase may reflect the rising influence of what economists call economic rents. the income captured by companies and workers beyond what their productivity justifies. the apparent increase in rents in recent decades and their overall increasingly unequal distribution have contributed to overall inequality without boosting productivity providing opportunities to improve both efficiency and equity in the u.s. economy. the president's agenda includes making competitive markets work better by increasing opportunity and combating the trend of

rising unequally divided rents. competition most effectively promotes economic growth when it is open to the widest pool of talent. the president is promoting equality of opportunity by investing in education, supporting children in low-income families, and ensuring a fair criminal justice system. the president also supports policies to make markets more competitive by reducing overall economic rents through promoting more open and competitive markets, balanced intellectual property rules and a smarter approach to occupational licensing and regulation among other policies. other sections of this year's report lay out additional steps we can and should take to ensure a strong domestic economy, including expanding trade, invfting in technology, investing in infrastructure and invfting in children. i'd be more than happy to talk about these or any other top particulars that you are interested in. thank you. >> mr. chairman, thank you very much. i want to apologize for having

to leave shortly. the senate has called for four consecutive votes which will take considerable amount of time. i'm going to ask my question to you and then turn this over to mr. teeberry, our vice chairman who will recognize miss maloney as ranking member. then in this somewhat byzantine order of who came first and which chamber you are from and what is your seniority, we will try to do a fair allocation of back and forth. and i have someone here who has studied assiduously and is an expert trust me, with people in and out and back and forth it can get very complicated. mr. chairman, i came to office a long time ago. one of the very first critical votes i had to face was the decision as to whether or not we would raise our debt ceiling limit to over $1 trillion.

people say, wow, that must have been 100 years ago. no, not quite. that was 1981. today we are at the $19 trillion mark. look, let's take the politics out of this. we had three years of balanced budgets at the end of the 1900s before we came into this new millennium. under both republican control and democrat control, we have seen an ever accelerating plunge into debt. we know that the darth vader of the future economy is lurking out there waiting to collect the bills. we know that from cbo, the projections going forward are dramatic relative to the way sdrigs discretionary spending shrinks. cbo said in ten years we will as a current trend be at 99%

of our budget will be consumed by mandatory spending and interest coverage. this obviously is unacceptable. we know the baby boom era has been descending upon us. we've known this for decades. so if we can take the politics out of all this as to who to blame and who's responsible and simply say we now, whether you are a republican, democrat, conservative, liberal or in between, on this spectrum, we have a common challenge that has to be addressed. it has been pushed down the road over and over and over. it is becoming increasingly a hindrance to our economy and ability to grow to provide for our national security, pave roads, to build infrastructure, to provide for health care, research and -- you name it. you name the functions that are necessary to be addressed. so i wonder if you would tell

us, what is the next president, regardless of who that is, what is the next president and the next congress -- what do they need to do to finally stand up to this looming crisis to put in place a long-term solution that is feasible in terms of what -- how we need to govern but will put us on a path to more fiscal responsibility and avoid this coming wall that we're going to hit if we don't take action. i may not be able to be here to be -- hear your final answer on that but we'd like it for the record. i'd appreciate it if you would address that. that's my only question. then i'll turn it over. >> thank you very much for that question. i think i agree with the premise of almost everything that you said. i think it is important to put this in context. our deficit was nearly 10% of gdp when the president walked

in the door. that as a consequence of a very severe recession. deficit has come down to 2.5% of gdp which is below the average of the last 40 years -- >> but we know it is going to spike shortly. right? >> absolutely. that's due to a combination of deficit reduction and also a strengthening economy. the former cbo director recently co-wrote a paper in which he argued that the fiscal outlook over the next 25 years is a challenge, but is less of a challenge than it looked a couple years ago, in part because of the steps we've taken, in part because of lower interest rates. but more does need to be done. deficit will rise as the share of gdp, the debt will rise as a share of gdp. our approach is a balanced approach of measures on the spending side including entitlements and measures on the tax side which are predominantly not about raising rates but

about cutting back on tax benefits for high income households, many of which are economically efficient. the last thing i should say is ultimately our goal is to see the debt to gdp ratio on a downward path and stabilized. one can accomplish that both by lowering debt, but also by raising gdp. so steps that strengthen our economy are really important part of how we need to deal with our debt and deficit as well. >> thank you. we finished 12 seconds behind my time so i need to pass this on. again, apologize for having to leave. hopefully to be back as quickly as i can. >> thank you. >> thank you, mr. chairman, i will recognize the ranking member, mrs. maloney, for five minutes. >> thank you very much. a major focus of the economic report of the president is widening economic inequality. and your report argues that extreme inequality will be a macroeconomic problem, a drag on

productivity and growth. please explain to even those who aren't concerned about the growing gap between the haves and the have-nots, why we should be concerned about inequality and why is vast inequality everybody's problem. >> thanks for your question. and i think there's a number of reasons. one of the clearest is that if you have inequality of income, you're going to have inequality of opportunity. and if you have inequality of opportunity, there's talent that could be contributing more to our economy but won't get the shot that it should get because lacking educational and other opportunities. so, we'll miss out on the innovation and creativity we need to push us forward. >> okay. as you noted in your testimony, the share of income going to the

top 1% in the united states is much higher than in other g-7 countries. and why has the experience in the united states been so different from the other g-7 countries? >> all of our economies are facing similar forces in terms of technology and globalization, and those have played a role in rising inequality across the advanced economies. one thing that's happening in the united states, though, is we have made less of an investment in education that would let our workers keep up with the skills that would complement the advances we see in technology or to take advantage of globalization. so, that's one reason why we've seen an increase in inequality. i think also institutional changes matter. the fact that the united states has a minimum wage that is very low by the standards of the g-7, has been eroded substantially by inflation has also been a contributing factor to the increase in inequality.

>> many people understand that expanding economic opportunity for women in the workplace and paying them fairly is the right thing to do. why is it also good for the broader economy? >> one of the challenges we face in our economy is a demographic challenge that where an increasingly aging society and that has slowed the growth of our labor force. one of the ways to increase the growth of our labor force would be to incorporate both men and women in the workforce and when you take steps like more flexible workplaces, more subsidies for child care, reducing the tax penalty on secondary earners and other measures along those lines, paid leave, all of that helps bring more women into the workforce and helps us overcome some of the demographic challenges we have built into our structure. >> and people understand that programs like head start and universal pre-k are an effective

tool for helping children succeed in life. what are the economic benefits for allowing all of our children to have this opportunity of pre-k? >> recently economic research has been taking advantage of studies that follow children over a very long period of time, after public policies, and they found that high-quality preschool, for example, raises future earnings substantially. and raises them more than enough to justify the initial cost of the program. high-quality preschool also, by the way, helps women's labor force participation. so, it helps today the family as a whole and balanced work and family and then it helps the children later on. that's true of a wide range of interventions, the earned income tax credit, supplemental nutritional assistance program and medicaid all have been shown to have long-term benefits for children in terms of education, earnings, and health.

>> when the united states congress instituted automatic spending cuts in 2013, did it help or hurt the economy? >> that hurt the economy. it created a fiscal headwind. >> well, my time has expired. thank you. >> thank you, ranking member. good afternoon, chairman. thanks for joining us today. in his letter to congress introducing the erp, president obama says, and i quote, i have never been more optimistic about america's future than i am today. however, the chart that i have hopefully on the screen here in a second shows that path growth projections from the administration have not lived up to expectations. they've failed. and that now by the administration's own estimates the long-term growth potential

is meager at best. so, the red is omb's forecast. the solid black line is actual. and the dotted black line is the new projection going forward. and then the blue -- various blue lines are other nonpartisan organizations. you can see the growth -- gdp growth is between 2% and 2.5% which is below the historic averages. as you know business investment is essential to economic growth, job creation and rising living standards. it has slowed dramatically in the last two years. so, you describe an optimistic and a pessimistic view of the future trend in business investment within your report. so, are you optimistic or pessimistic? >> thank you so much for that question. of course, i'm optimistic. and that optimism depends, you know, both on the inherent strengths of the u.s. economy and also the policy measures

that we can take. you know, if you look at the unemployment rate -- and i had shown that chart in my initial presentation -- that has consistently fallen faster than our forecasts. interest rates have come in below our forecasts. and the goal of these forecasts is to forecast the budget deficit which has also generally come in at less than what we had expected. so, a number of things have come in ahead of expectations. i think you're right, though, on the business investment across all the advanced economies -- the uk, the eurozone, japan has, you know, has not been, you know, what we'd like to see. and i think a lot of that is the consequence of the very deep recession. the bright spot within business investment is research and development by private companies is the highest it's been as a share of gdp. >> you mentioned the importance of gdp growth to the chairman, mr. coates' question regarding

our debts, our long-term debt. larry summers who you know recently talked about secular stagnation, his hypothesis, sees low capital investment, slow labor growth and slow technological progress as lasting conditions long term. is secular stagnation the same as the pessimistic view in the erp, or how do you explain it? and do you agree with it? >> i guess i interpret secular stagnation as a specific economic hypothesis about long-term equilibrium interest rates and the like. i think it has a number of problems in its application to the united states. i think it may help us understand places like japan and the eurozone. i don't think it applies to the united states. that being said, i think the impetus that we need to take big, bold steps like invest more in our infrastructure are very much true and we would have a brighter future if we did that.

>> okay. last question. i got a chart up here. i was disappointed the erp does not address what i believe is the limiting effect on economic growth potential from a whole host of the administration's actions and policies like increased spending, debt, failure to reform the tax code and the regulatory burden through regulations. for example, on this chart it shows historic and projected greenhouse gas emissions including the effects of the president's clean power plant, specifically the paris pledge. these policies and regulations aren't even mentioned in the erp, and the administration's apparently turned away from the "all of the above" energy strategy that it was once in favor of as it now closes power plants and shuns natural gas and nuclear power. we've also seen this administration pour on new financial, labor regulations, environmental regulations. aren't those holding down economic growth and aren't there massive costs associated with

such decline in emissions, for instance, on this chart? and these policies, none of -- none of them, which i just mentioned, are included in this economic report. shouldn't the erp discuss the most important issues impacting our economy and explain that some government policies might constrain economic growth? >> i -- you know, to some degree when you don't see something on the report, it's just a matter of space and we already imposed 430 pages on you. you mentioned taxes, last year, for example, we had a long discussion about business tax reform and i hope you would find a lot to agree with in that discussion, the importance of lowering our rates and making our international system more competitive. we just didn't repeat it again this year. it's not that it's not important, just a matter of space. on regulations i suspect we see it a little bit differently, certainly our analysis on the determinants of investment growth in the economy finds a trajectory of investment growth

we've seen is very well explained by a traditional model that doesn't take into account the regulatory changes and the performance in the u.s. economy is very similar to other economies that have different regulatory trajectories, so i don't think they're a very important factor in explaining this macrophenomenon. >> thank you, my time is expired. mr. beyers recognized for five minutes. >> thank you, mr. chairman. the report notes, quote, while the investment has been low the rate of payouts to shareholders by nonfinancial firms in the form of dividends or net share buy-backs has been rising, nonfinancial corporations are now returning nearly half the funds that could be used for investment to stockholders. one possible explanation provided by the report is that, quote, the rise in pay as to shareholders may be related to the decline in the start-up rate as young firms are more likely to reinvest their cash flow than mature firms. the report also notes the lower investment growth and higher share of funds returned to shareholders suggest firms had

more cash than they thought they could profitably reinvest. however, the rise in share buybacks predates current economic circumstances. senator baldwin among others has pointed to a 1982 s.e.c. rule that provided for a safe harbor for manipulation liability at the beginning of the explosion of stock buybacks. prior to 1982 buybacks were a very limited use of corporate profits and buybacks as we know can make earnings reports look better and improve short-term executive compensation and foster short-term thinking in the corporate governance. can you compact -- comment on the impact of this and other regulatory changes have contributed to the current investment environment and should we be seeking to limit buybacks as a means of promoting private sector investment? >> uh-huh. so, thank you for your question. i've certainly seen the hypothesis put forward that that 1982 regulation has played a role in the rise of buybacks. and it's certainly the case that buybacks have risen over time.

it's not just a recent phenomenon. i haven't seen -- reviewed the research in terms of assessing that link, so i don't have an opinion on that. i'd be happy to look into it a little bit more and get back to you. i think, you know, one of the most important questions for us to ask, though, is what can we do to make sure companies have good things to invest in and make sure that we have a really dynamic system in which new businesses are being formed and coming into existence. and if you have a large, mature company that doesn't have great investment projects, i'd rather that money go back to the shareholders and the shareholders can allocate it to some other part of the economy that could be of higher efficiency. so i usually step back and look a little bit less at, you know, where the money is going and a little bit more at what's shaping the business decisions and the business opportunities in terms of the real investment prospects they have. >> great. great. thank you very much. the erp contains a very interesting discussion of the impact of economic rents as a driver of inequality and i liked

your simple definition was economic rents is income by companies and workers beyond that which their productivity justifies. rent can also be created by market consolidation and regulations which favors specific business or sector of industry over competitors. can you recommend policy approaches to address the undeserved rents? >> sure. one is something that with senators lee and senators klobuchar held a hearing on a few weeks ago which is occupational licensing, the fact that at the state level 25% of occupations you need a license to get that reduces your ability to move between jobs if you are one of the lucky people with a license, it lets you command a premium. land use restrictions that drive up the cost of living in certain areas also create rents both literally and in the economic sense. greater degree of competition is important in this regard.

but, you know, the other thing i'd say is some rents are inevitable and it's a question of how they're divided. a higher minimum wage or expanding workers' voice including labor unions would fe help make sure when you are dividing the pie it gets divided a little bit more towards the labor end. >> thank you. mr. chairman, we keep hearing about mandatory spending continuing to increase and at some point in our lifetimes it will be 100% of federal revenues. do we have a plan to address the long-term thinking about what we're going to do to maintain a meaningful discretionary part of our budget? >> we currently have much lower projected health care both level and growth rates going forward than the projections six or seven years ago and that's in part due to the affordable care act and in part due to a set of changes that were under way in our health system and continuing

to implement that which is most of the job of our administration is really important. we could also take additional steps modeled on that that bring down the cost of health care, helping to reduce premiums, extend the life of medicare and reducing the pressure on discretionary spending that you cited in your question. >> thank you, mr. chairman. i yield back. >> mr. paulson is recognized for five minutes. >> thank you, mr. chairman. thank you for being here. following up on the report and, you know, it's interesting to me because some of the numbers you cited and that the other side often cites in terms of numbers and the economy's back on track, we've had the fastest, we've had the best and we've had records. here's another number that i think is really critical. the u.s. bureau of labor statistics announced that for all of 2015 -- all of last year -- that we had u.s. productivity, labor productivity rose only 0.6 percent. so, this is the fifth year in a row where that growth has been

below 1%. so, since 19 -- since the u.s. started collecting this data, going back all the way to 1947 up until now, there's never, ever been such a poor five-year stretch because we've had five years in a row where it's been below 1%. so, knowing that's the case, this is really important, the link between increases in labor productivity and the average u.s. standard of living, one example now estimates, for instance, because of the annual increases in labor productivity of 3%, if you had 3%, the average standard of living would double in just about 24 years here in the united states. but now if you compare that to the last five years we've had [s with low productivity growth, we've actually changed it where the average standard of living won't be doubled until every 139 years. so, 139 years to double our standard of living. so, these are numbers i think that are behind what many people feel or sense, they feel it's the disappearing of the american dream.

and it's probably why 72% of the public feels we're in a recession right now even though technically we're not. so, i'm not a doctor, but, you know, one of the rules we have in medicine is do no harm. in terms of that question, to what end do you or the administration -- what thoughts have you given, what analysis have you provided, or do you acknowledge that the cumulative effect of a lot of regulations on small, on medium, on large businesses, has had on a lack of productivity growth and the effect that that is having now on the lower standard of living in the united states? >> thank you for your question, and i think you're right to identify productivity as one of the biggest challenges our economy faces. an analysis by the san francisco fed put the date at around 2004 when productivity growth started to slow. it's something we've seen, as i've said, in other context across a range of other countries. the united states -- and one of the reasons i'm optimistic about

the united states over the last ten years we've had the fastest productivity growth of any of the other g-7 economies but we've certainly not had enough, as you said. that places a big role in terms of what future we can expect for wage growth and so i think the most important question is what steps can we take. i would suggest expanding markets abroad through steps like tpp, reforming our business tax system, lowering the rate and reforming the base, investing more in infrastructure, investing more in research and development are -- and bringing down our deficit to free up, you know, more private capital for investment are five really important steps we could take to increase our productivity growth. >> i would agree tax reform, expanded trade opportunities and sell more american goods and services overseas, get the money back home. but what about the regulatory environment? i mean, do you acknowledge or do you -- have you done analysis just on the weight of regulations from a cumulative effect that that has actually had? it's a consistent message that i

hear from my employers that i visit with in minnesota all the time. >> i don't think the -- i think it's very important to get regulations right. and one of our jobs at cea is to participate in the process by which executive branch regulations are reviewed, and we take that responsibility very seriously and work hard to get the benefits as high relative to the costs as you possibly can. often that means doing regulations in a way that is flexible, that uses market mechanisms. i think if you do that, it can be consistent with a stronger economy and strong productivity growth. >> thank you, mr. chairman. >> thank you. congress marnman delaney is recognized for five minutes. >> thank you, mr. chairman. i also want to welcome chairman furman and thank you for your very intelligent report and testimony here today. it also has pretty significant throw weight associated with it, so it's a great work product as usual. i was going to ask about

economic rents but my friend from virginia already covered that, so i wanted to go back to a point raised by the chairman, the paris accord. thinking about this debate about economic growth as it relates to how we position the country around climate change. so, when you think of two postures, one that is more forward leaning as it relates to climate change, in other words, setting goals like 50% clean electricity by 2030 or various goals that are achievable based on current technology, but aspirational, you know, stretch goals versus not taking these steps, right, and not putting the proper incentives in. how do you think about that as it relates -- putting aside environmental stewardship, but just as a pure matter of economics, which posture will drive greater economic growth for the united states? >> i think acting as soon as possible to create as predictable a path for the

future and one that as you said is achievable but a little bit of a stretch to make sure we're challenging ourselves is the thing that makes the most economic sense, especially in a world where most other countries -- most every other country in the world is doing the same thing, and so some of the progress we've seen in solar energy, in wind, in conserving energy, all of that is helping to make sure jobs are located here in the united states. >> and when you think about job creation opportunity in carbon-intensive industries versus noncarbon-intensive industries, what does the data suggest in terms of both what is likely to bring economic growth but also this notion -- and i may be wrong about this. but my sense is that the carbon-intensive industries have become much more automated and, therefore, are not actually driving labor and, in fact, they're net even as they produce the same amount of energy they're net reducing their labor

participation in the industries versus the clean energy, green energy, whatever you want to call it, would actually tend to be more labor intensive. >> right. >> do you have a view on that? >> that's my understanding as well, that a lot of the traditional carbon-intensive industries are very capital heavy. it is a continuum, though. so, natural gas, for example, has carbon, but it has half as much carbon beginning to end as coal would have and we've had substantial increases in natural gas production that's helped create jobs in our country and i think that's a good thing and something that we would welcome and encourage and it's also something compatible with how we're trying to hit our goals for climate change. but then solar and wind and a range of renewables and the set of industries around those, as you said, are very labor intensive. >> when you think about economic risk or threats to american prosperity, if you will, because as we've seen from the economic performance this country has

realized across the last seven years particularly relative to our competitors, which this might be one of the greatest periods of time where we've outpaced the rest of the world in terms of how well we recovered from the financial crisis and how well our economy is doing relative to other places and how less dependent we are on other parts of the world so things happening in the developed world are affecting us less than anywhere else. when you think about the threat, mark carney, the chairman of the bank of england gave a speech about a year ago that one of the rinks he saw to financial markets was, in fact, climate change because there might be a point in time when people actually -- it may not be when some of the catastrophic effects occur but people come to the view that it will be a reality and there's a dramatic repricing of assets based on that. how do you think about that in terms of risk to our economy if we don't deal with it in a prudent way?

you have macro views as to how much climate change could hurt our economy? >> the administration has a social cost of carbon. it's an estimate of how much each ton of carbon costs us economically. our estimate is about $40 a ton that we use as an input into the rule-making process. that estimate does not include the uncertainty risks associated with climate change and that's a lot what mark carney was talking about in the speech you were referring to, and that might be a larger and more consequential cost than just this. on the other end, the somer you deal with it the cheaper and more efficient it is. if you waited 30 years it would be quite costly to our economy. >> thank you, mr. chairman. >> thank you. >> senator lee is recognized for five minutes. >> thank you, mr. chairman. thank you for coming to testify today, and i want to thank you also once again for coming to testify on occupational licensing. just last month in the judiciary committee.

i'd like to speak with you about innovation and get your thoughts on a piece of your report that focused on the potential job market effects of robots. it seems that we might be nearing a really significant technological inflection point, one that could have profound implications for our economy. boston dynamics continues to release videos of robots with incredible mobility and coordination while industrial applications involving machine learning and analytical algorithms at some level simulate cognition, continue to advance. some observers have suggested we're on the edge of a new wave of innovation and this new wave of innovation might be similar to that which was spurred on by the invention of the internal combustion engine, for example, which effectively led to a really sharp and economically

significant decline in the use of horses. first of all, as policymakers, should we be thinking about automation as a discrete issue or is it better thought of as a piece of a larger challenge involving globalization, trade, and a number of other similar factors? i'm referring in particular to the challenges facing lower-skilled, lower-income workers and their jobs. >> i think that's a great question, and it's something that i know i grapple with all the time. i think to some degree that's all one set of issues, but i think automation brings it to the fore in a very direct way. in theory automation shouldn't present any problem at all. we've had automation for thousands of years and we always find more jobs for people. but in practice that can come at a cost either in terms of inequality if you don't have the skills to benefit from it or some people who get displaced don't find another job and, you know, you might call it transitional or temporary, but that could last for decades. >> right. right.

which is part of why i raised the question here, this one could be different in some ways and i was looking to try to stay ahead of the curve. now, your report estimates a high likelihood that jobs today paying less than $20 per hour will eventually be automated. there doesn't seem to be a hard timetable -- >> right. >> -- or projection. but is that accurate? >> that's accurate, and we were drawing on research that was done at oxford in that regard. mckenzie has also done their own research that reaches similar conclusions to what's presented there. >> you know, the current administration, of course, supports raising the minimum wage and obviously every policy has trade-offs. that's what we try to hash out in these debates and one of the things that we discuss in this committee the economic implications of policies like that one. but if low-paying jobs are the ones that are most threatened, most potentially threatened by automation, doesn't raising the

minimum wage just raise the cost of low-skilled work and incentivize employers to accelerate the process of automating these jobs, the very jobs that we're perhaps most concerned about? >> the evidence that i've seen for moderate increases in the minimum wage phased in over time, similar to the types of proposals that have been put forward in congress, has found that they don't have adverse effects on employment. but certainly if you were to raise the minimum wage to $30 an hour, you know, i would expect you would have a trade-off. >> at some point you're going to get there to a trade-off and perhaps when you factor in the effects of automation, that trade-off could end up being significant. >> i think it's important it's part of an overall strategy that makes sure our workers have more skills and more productivity. >> got it. and i want to be clear, i'm not trying to get you to disavow the president's policies here. i know that's not something that's going to happen, certainly not in this forum and not in your current position. what i'm asking is if our goal

as a society is that an honest day's work should earn an honest day's wage and machines are going to make it harder, and in some cases perhaps impossible for low-skilled, entry-level americans to find an honest day's work, doesn't the basic design of our social safety net have to perhaps look a lot different than it does today? >> i think it certainly has implications for how we design our social safety net, and i think that's an important conversation to have. i wouldn't throw out the lessons of the last 50 years, and we have a certain idea of what's worked and what's not. i think minimum wage has worked. i think earned income tax credit has worked. but i think we should be thinking hard about these questions going forward as well. >> okay. thank you very much, mr. furman. thank you, mr. chairman. >> thank you. senator klobuchar is recognized for five minutes. >> thank you very much, mr. chairman, and thank you. sorry that senator coates and i

have had a number of votes going on here. i appreciate the words about the improvement of the economy. i think we've all seen that. our state is down to 3.8% unemployment, but we also know there are challenges. you raised one, mr. chairman, about income inequality. we have challenges for workers that are retired and have issues with their pensions. in fact, right behind you there, who i am going to meet with later, sherman lemitainan who is from northern minnesota, spent his whole life, started as a janitor and then a teamster, has issues with his pension because of a decision that is inordinately affecting a lot of states in the midwest that we're trying to work on. but another issue up in northern minnesota that i know that you're well aware of is the current employment situation with the iron ore mining affected by the overproduction in many countries combined with illegal steel dumping that we know is going on.

and i've really appreciated the recent moves of the administration to try to be more aggressive in the enforcement, including adding nearly 40 new inspectors to the ships from the budget money we got last year as well as working on the enforcement actions including some new tariffs today. could you talk about that industry and what's going on and what you think the future is? >> yeah. thank you. and that's -- this is an issue we do pay a lot of attention to, senator. the backdrop for this is that the substantial global overcapacity in steel, and that steel capacity is 70% outside of oecd economies, much of it in oecd economies, much of it in economies that have made very heavy state investments in supporting their steel industries. this overcapacity has collided with a collapse in worldwide demand for a range of

commodities and products, including steel, and the result has been a 35% decline in steel prices in 2015, which is having a significant impact on our industry and on your state among others. we have, as you said, taken 149 anti-dumping and countervailing duty actions, 40 of them in 2015 alone. the highest rate of actions in at least 14 years. that has contributed to the fact that steel imports are down 13 months -- 13% over the last year. and we're going to continue to rigorously enforce our trade laws, including taking advantage of some of the new tools that congress gave us with the customs enforcement bill that the president signed i believe

last week. it's important to understand that it can't -- that domestic trade enforcement is an important part of the answer, but international coordination is also critical. u.s. imports represent only 10% of global exports and we need to be working together with other countries, both importing countries, who are dealing with many of the same issues our economy is, as well as steel exporting countries like china, to push on their overcapacity. >> very good. well, as i said, it's -- the president's chief of staff came up to northern minnesota. we've had thousands of layoffs, and it was really helpful to have him there. and i'm going to ask you more on the -- in writing some questions about this pension issue. but could you just talk in general about the importance in a volatile economy, you've got on one hand the millennials dealing with the economy and having trouble saving because they don't have that kind of structure in place. >> right. >> that we once had. and then you have some seniors

who have retired but things change with their pensions and it makes it very difficult for them. >> yeah. >> could you talk about just the importance in general of retirement. >> retirement security is very important. a lot of people are not prepared for retirement. and retirement security is enhanced when you're depending on multiple sources, social security, of course, being one, private savings being another, and pensions. pensions include both defined contribution and defined benefit. defined benefit have faced a number of challenges in our economy especially in the multiemployer segment and that's an important issue, and the pension benefit guarantee corporation plays an important role in helping to make sure those pensions function as well as they can. >> okay. and, you know, this issue with the central states pension plan, which we can talk about more in the future, is affecting two-thirds of the 400,000 participants are going to have their pensions reduced as high as 70% and so it's a real big concern in northern minnesota which is the same place where all the layoffs are occurring especially, so thank you. >> okay. thank you.

>> congressman grothman, recognized for five minutes. >> thanks for calling on me, and chairman furman, i'm honored to have a chance to be in a committee you're testifying before. one of the things i think we can all agree about is the labor participation rate is a little bit disappointing. when i get around my district, one of the big complaints employers have they have a hard time finding employees, okay? on the other hand, they also feel that there are major competition for those employees is the government itself because of all the government benefits that you get if you don't work or don't work as hard as you can. you mentioned that the unemployment rate has dropped during the obama administration which it has, but at the same time the unemployment has dropped s.n.a.p. enrollment has gone up by 12 million, okay. so, it seems as though we're

paying people either not to work at all or not to work to their abilities. could you comment on whether or not you feel all of the benefits out there that are available to you if you're making less money are contributing to the low labor participation rate or contributing to people not achieving their full potential. >> right. so, thank you for your question. for men between the age of 25 and 54 their labor force participation rate has fallen nearly every year since the 1950s. so, this is a very long-standing phenomenon. for women since the late 1990s. this happened even though we changed our social assistance system to be much less something that you'd get regardless of whether or not you were working to something that you pretty much in most cases really requires you to work to get. in fact, many elements of our social assistance -- >> i'm going to take to a certain extent you are talking about earned income tax credit there which requires you to work a little, but as soon as you work more than a little you begin to take it away, but go ahead. >> i was going to say the evidence on the earned tax

credit is it does increase labor force participation because people deciding whether to work or not work, it's a several thousand dollar difference, and then, you're right, there's a phase-in range and a phase-out range and those could have an effect as well but those appear to be dominated by the large amount of money you get as an additional bonus for working. >> i'm going to disagree with you. but i'm going to mention another problem we have. economists have found there's a correlation between stable two-parent households and better outcomes for families. it's not difficult to come up with hypotheticals in which people are losing over -- a single parent could lose over $30,000 a year by getting married. do you view -- and i'm hearing examples of that in my districts, parents saying my son can't get married, we lose the benefits, that sort of thing. can you think of anything you can do in the remaining time of this administration, any plans for the future that you can suggest for future

administrations, to do something about this huge marriage penalty we have right now? >> thanks for your -- thanks for your question. president bush passed meaningful marriage penalty relief for many middle-class families which president obama signed into law on a permanent basis. there's a substantial marriage penalty in the earned income tax credit that was reduced in 2009 that we just made permanent on a bipartisan basis this past december. and then one of the proposals in the president's budget which i alluded to in response to a question from ranking member maloney gets at the fact that secondary earners often face higher tax rates in the united states than many other countries and it can discourage them from working and so we have a tax benefit for secondary earners that we've proposed.

>> will you agree, though, we still have over a $30,000 penalty, say, for a single parent making -- a couple kids, making 10 to 15 grand a year if they do marry somebody making 40 or 50 grand a year, do you agree with those figures? >> i think for most middle-class families we don't have a marriage penalty in the tax code anymore because of the steps -- >> i'm not saying the tax code. the earned income tax, the s.n.a.p. program, the -- >> that's higher than i would have put the number at. in part because we have taken a number of steps, but there's certainly more we can do. >> okay. yeah, i'll have to get you those figures. i'll give you one more question. before you talked about the fact that you felt we cut spending too much in whatever, 2011, 2010, it would have been better not to. okay, so i take you are not a keynesian economist, you believe that deficit spending improves the economy. in the budget that president obama has recently submitted to congress, you also have a larger deficit. it always kind of makes me wonder about you folks. i love all people. but if the time to run a deficit is when the economy is weak as

it was in 2010, 2011 and now that we've had such a long period of time of lower employment, though our incomes aren't what we want, and you're still running a large deficit, is there ever a time that economists such as yourself would suggest running a surplus? >> the goal that we have in mind is having the debt on a declining path relative to the size of the economy so that you're shrinking it relative to the economy. that's not something that under current law we would achieve. it's something that additional steps, including greater spending reduction and reducing tax benefits especially for high-income households would help us achieve. >> the gentleman's time has expired. senator casey is recognized for five minutes. >> thanks very much, mr. chairman. thank you for being here. >> thank you. >> and we have -- we have a day when folks are voting in the senate we're voting, so i'll probably have just one question, but i think it's a critically

important topic. we could spend hours on this one topic. and i'm glad that you have in your work, in the report, in the work of the administration, focused on what we sometimes call early care and learning. early care meaning quality, affordable child care, and learning, of course, pre-kindergarten education. i noted -- i think they're both essential. and obviously there's a relationship between the two. i noted on page four of your testimony you said, and i quote, that one of the chapters focuses on, quote, disparities in opportunity that appear at an early age in the long-run benefits of investments in the education, health and well-being of children. then you go on to talk about the gaps in the early -- early health and cognitive skills of

children. and then you conclude by saying, quote, research demonstrates that direct investments in children can help close gaps and these important outcomes can have lasting positive effects, unquote. then you have a chart there about cognitive skills, kindergarten versus fifth grade. i've been working on this issues for years. and i think the connection between learning and earning is -- is not only demonstrated, but it's something we should bear in mind, that if kids learn more now, meaning when they're in those early years, they will literally earn more later and frankly we're all better off with that investment. so, i guess i wanted to ask you, number one, is just can you walk through some of the benefits that you see maybe purely from an economic or workforce perspective on making those investments in children in the dawn of their life. >> yeah, thank you so much for that question and bringing up

that issue, because i think that's a really important chapter of the report and a really important example of how we can both promote productivity growth which we've been talking about in this hearing and make sure that that productivity growth is shared more widely. when you do an economic analysis of these types of early care programs and early education programs, you find that it has two sets of benefits -- one is actually an immediate benefit because it enables the parents more often than not the mother to work more if she chooses to do so. and it facilitates greater income for that family, which itself is important for a learning environment for that child. and then the second set of benefits, the ones you've talked about, are a robust connection between education as young as 3, 4, 5, and how much you earn at 20, 25, 35 years of age. and when you look at, for example, just the extra tax revenue collected on those future earnings, that is enough to repay a substantial portion,

if not all, of the initial cost of these programs. i'm not suggesting that we take that into account, you know, in budgetary treatment of them, but in evaluating, you know, whether or not it's a good idea to undertake those programs, that's certainly relevant. >> i know there are a number of studies that show the return on investment, which is really extraordinary, sometimes it's you spend a buck on high-quality early learning, you get back multiples of that. sometimes into the teens. >> yep. >> so, it's -- it's significant. i will, in the interests of time, because i have to run, but i'll yield back 1:07. >> thank you appreciate it. mr. hanna is recognized for five minutes. >> thank you, chairman. i want to say that i couldn't agree more with senator casey. the arne duncan strong start for children act, past secretaries i've supported that and pleased to be the lead of that in the

house and every possible matrix suggests that universal pre-k or as near as we can get to it is one of the best investments a society can make. but on another matter, the -- you talked about corporate inversions that are high corporate tax rate vis-a-vis other countries. and you mentioned you believe it's an issue. how would you correct it? because one of the -- it's kind of the issue's been demagogued i think by both sides in ways that aren't helpful. you know, certainly i have my opinion about it. but what would you like to see happen, doctor? >> sure. i think there's a good way to address it and there's an even better way to address it. the good way to address it would be to take a simple step of banning the practice of merging

with a smaller foreign company and changing your tax domicile overseas and thus claiming the set of benefits associated with being an overseas corporation. that's a step we could take today, and it would reduce inversions. the even better way to deal with it would be to do that at the same time that we make it more attractive to investment in the united states by reforming our business tax system, lowering the tax base -- >> ultimately one isn't effective if you don't do the other? >> i think we could do -- i think it would be -- the change -- the inversions are happening so quickly that i don't think we can afford to wait. and if it's going to take a long time to reform the tax code as a whole, then i would just deal with the inversions issue by itself. i think that would be the economically prudent thing to do. the even better thing would be to reform the business tax

system as a whole to make it more attractive to be here at the same time that you're making it harder to invert. >> ultimately, i mean, we're talking about larger businesses being co-oped by smaller ones. >> exactly. >> but you also can't stop the reverse, and the idea of building an environment that makes it fundamentally attractive to be here, which chairman brady supports i think, is really what we should be considering. and the fact that we have the highest corporate tax rates, or among them in the world, is a fundamental problem when you look at pfizer and johnson controls and others and apple and the conversation that ensues. i want to ask you, though, about something that i'm disappointed. i'm afraid that we're not going to be addressing this year, and that is the trans-pacific partnership. and i'd like to give you an opportunity to talk about it in any way you'd like without, you know -- without rendering an opinion if you don't want to, but the idea that we're not taking up this conversation is

deeply disturbing to me regardless of where it goes. so -- >> yeah, thanks for that. as i said in my opening statement, one of the challenges facing the u.s. economy is that it's hard to export, increase your exports to a world where growth in the rest of the world is slower. in that environment one of the steps we could take that could help make it easier for us would be to reduce or eliminate 18,000 taxes that our exporters face when they try to export to abroad, the tariffs that these 11 other countries in the tpp have. one study found not just that there would be substantial benefits from doing tpp, it also found that if you wait a year to do it, you lose $94 billion. you lose more than $600 or $700 per household in our economy. so, i think it's not just important to do, it's important to do it as expeditiously as possible. >> you hear the conversations on the street that unions are against it, but i find that very much people are uninformed or misinformed. what do you say to those people, doctor? >> i say the united states is a very open economy. it's very easy for other

countries to sell here. what we're trying to do is break down the barriers that our companies face to countries around the world. we also have very high standards in our country, labor, environment. this would ensure that other countries are raising their standards and put us in a better position to compete on a level playing field. >> so, that the net is a big benefit. >> the net is a big benefit for workers. a big benefit for productivity. a big benefit for our economy. >> how come we can't get the message out? it doesn't seem to be getting any traction. >> it's something we've been trying to communicate and make it tangible, this is about cutting taxes on american exporters and american exporters support higher-paid jobs.

>> thank you, doctor, my time has expired. [ inaudible ] >> my understanding that congressman byers has some questions. >> chairman furman, on this committee, we've often focused on the lost economic gap between a perceived or a titular 4% growth rate, versus the 1%, 2%, 2.5% we have. we look past over our lifetimes we have higher raters of growth. but i keep reading in various newspapers and magazines, absent some dramatic disruptive new technology, the manufacturing revolution, the i.t. revolution that we're destined to long-term growth rates between 1% and 2%. your perspective? >> growth rates are a function of two things. one, how much is labor growing, and the second is how much is productivity growing. labor is growing more slowly than in the past for demographic reasons.

if you look during the 1980s, for example, and you look at the growth of the population between age 25 to 54, this is the group of people most likely to be working, that was 2.3% annually. now the growth in the population in that age bracket is negative 0.1percent annually. this is a pure demographic factor. not working, not working. it's just who is alive in that age range. so the baby boom helped propel our growth forward. that's turning into a retirement boom, and for that reason the labor component of growth is lower today and is going to be lower in the future. the second component of growth is productivity. and there's a big debate that you alluded to within the economics profession about what the outlook for productivity growth is. i think no one really knows, and it depends on what inventions

people have in the future and if i knew what inventions people would have in the future i'd go out and invent them myself and probably not be before your committee today. i think there's a lot of reason to think we have a lot of potential. there's a lot of exciting technological developments in our economy, a lot of questions about how to apply them and make sure we're using them as well as possible. but i certainly would feel better if we were investing more in research, infrastructure, trade, business tax, you know, all the different steps that we should be taking. lower deficit, all different steps. >> thank you very much. one more question. china's lost about $800 billion in currency reserves over the last 12 months. what are your views on the drivers of this capital outflow? do you expect them to continue? and how about china's reserve adequacy? and really, what's its impact on our economy? >> that's certainly a really

important question. and china has, you know, suffered from not always communicating its policies as clearly and as transparently as we would like to see them do and as the market would like to see them do. and one consequence when you don't have transparent market-oriented policies that are communicated clearly is that you can see various abrupt changes in financial markets, so i think that's part of what is going on with china. china still has very substantial reserves. they have i think more than enough wherewithal to deal with the economic challenges that they face. the question is are they going to, you know, make sure that they're doing the right reforms, the right transparent policies, communicating them in the right way such that they are taking advantage of those resources to address the challenges they have. >> thank you, mr. chairman. mr. chairman, i yield back. >> thank you. congressman grothman. >> kind of going a little

different than the way congressman hanna went here. i know there are countries around the world that want to get the kids as soon as possible in the loving arms [ inaudible ] away from their parents. in your report you emphasize that the head start is a good way to improve -- improve economic success in children. your own hhs has found that head start has little or no impact in the long run across 22 different measures and that actually 3-year-olds who attended head start were doing worse in math than their peers. i know that the brookings institution -- were you affiliated with the brookings institution? >> yes. >> came up with their own conclusions that head start wasn't up to snuff. given these studies that show that maybe head start wasn't that great and maybe it's best to leave the kids with their parents, and head start is for

poorer kids, not kids across the board. why do you keep pushing the day care stuff to get the kids away from their parents? >> in the report we review several dozen studies conducted over -- of programs over a few decades, and, you know, any given study is going to have a different finding. we show that in broad terms they consistently find positive results. a number of these studies were authored by a nobel-prize winning economist jim heckman from the university of chicago who happens to be a republican as well. that's not relevant for evaluating his research, but i think this is a widely accepted finding in the economics profession. certainly high-quality is important. you don't want to just do -- you know, you want to pay attention to the quality of what you're doing, not just anything. >> you're familiar with the

brookings deal, too, right? >> yeah. >> i think it was brookings. there are studies out there, hhs, brookings, that it doesn't work out that well. i'll give you one more question. i am alarmed by the growing income gap in this country and one of the things that i think contributed to it was the quantitative easing by the federal reserve which as far as i can see is pushing money to almost the most obscenely wealthy americans and kind of feeling you're going to grow the economy that way. i realize you don't have direct control over the fed, but could you comment -- do you think it was a mistake in trying to juice the economy for the fed in essence to financially benefit some of the wealthiest or i guess wealthiest americans? i guess their idea was they thought it would trickle down, but do you think that was a mistake? is there a moral problem with that? wouldn't you have thought it would have been better off if we'd had kind of base the

currency at least give more money to the working stiff? >> i don't comment on policy actions at the federal reserve. we think it's better for them to undertake those independently. but congress granted the federal reserve a dual mandate in terms of employment and inflation. and i think, you know, any steps they take consistent with that mandate are, you know, ones that i would agree are in the best interests of our country. >> so, you agree with -- am i wrong in thinking that quantitative easing in so far as it gives an immediate benefit to somebody, gives an immediate benefit to the big wall street banks? >> there's a large economic literature on the sources of inequality, and i don't think any major economic research thinks that monetary policy one way or the other is an important part of the explanation for changes in inequality. >> okay. thank you for the additional time, mr. chairman. >> congressman teaberry. >> thank you, chairman. thank you, chairman furman, for being here today and your sincerity on this difficult pocket.

i want to associate myself with what senator lee said. i worked at mcdonald's my first job and i was really excited about six months in when i got a minimum wage increase. i got an increase in my pay which wasn't very much, but the impact, good for me, wasn't so good on that guy -- the two guys that got hired after me, because they lost their jobs. and i think that's what senator lee was talking about. but let me give you a better example of what i was thinking about when he was talking. my next job in high school was pumping gas at a gas station. i'm dating myself here. you can't get anyone to pump gas anymore at a gas station. you do it yourself. and i remember the owner, a small businessman, telling us, most of us in high school and college, that the biggest cost driver his business was us and so we better perform. and i didn't have many skills in

high school, but i learned how to pump gas. well, today that job is gone. and many service areas we find in our economy, employers trying to figure out ways to reduce cost. and one of the few areas through technology that they can reduce cost impacts those high school kids that don't have those skills that they have yet to learn. and we have in our state of ohio, it's reflected really in many other states, more and more individuals with a lack of skills not being able to find those service jobs that once were plentiful when i was a kid. in urban areas it's even more where we have meaningful