it wasn't about cash bonuses but you didn't put a date on that. i guess that the policy had changed. but what was the policy in 2013 when this issue came to light? >> congressman, i wasn't here then, but i believe that there was wait times as part of people's performance evaluations. and so dr. lynch, am i correct in that? >> yes. >> so there was a potential of a financial bonus if people hit certain, certain criteria. >> sure. >> today that doesn't exist. >> so you allowed -- people were allowed to retire who were under investigation, who were complicit in manipulating

appointment wait times is that correct?? >> i think i said the investigation didn't conclude. before the investigation was able to conclude they retired from federal service. >> but this involves fraud and fraud is a criminal issue. how many criminal referrals occurred of people who were involved in this scandal? >> my understanding, i don't know whether the inspector general can help us with this. was we don't have -- i think h was senator blumenthal ask that the department of justice come in to look at this and they ended up declining on looking at most of these cases. but i know there are referrals from the ig to the criminal division. >> could someone comment on that? >> there are referrals and i know in every case where we suspect something we'll make the referral. i can tell you and this is not my area of expertise but i think a lot of the money that you're

referring to, the bonuses, while inappropriate is not necessarily a high dollar amount and there's not a lot of attraction -- >> so fraud is okay if it's a low dollar amount? is that what we're saying today in. >> not for me. >> really? >> the department of justice, i think there's not a lot of traction if it's a small amount. >> that's disappointing under this administration that that would occur. let me state what is current law and that is if somebody commits fraud but is awarded a bonus, there is no claw back provision in current law. is that not correct? who can answer that? >> i'm not aware of the answer. >> there is no provision. in fact there is legislation before the congress and the position of the va is neutral on that which i find is appalling as a taxpayer and a veteran that

when somebody gets a bonus that they clearly did not earn, should not have been given, that the only provision that the va is able to claw it back is if it is given administratively to the wrong person. but if it is given to the person that is the subject matter of the bonus, even if they didn't earn it, there is no provision or clawback. that law needs to change and the secretary needs to take a position affirmative for that legislation. this is about cleaning up the va. and the secretary was giving a speech in denver last weekend, i think it's two weekends ago they was at where he said that the fundamental problem in terms of the appointment wait time scandal was a lack of training of va personnel. is that correct? was it due to a lack of training? >> i think what the secretary most likely meant was, was that

our system was complex and we weren't spending enough time training. i don't think he would have that was the only factor. there were many factors. >> it had nothing to do with a lk of training. it had everything to do with people that were fairly skilled at manipulating the system. what they did was to make the numbers look smaller to get the cash awards is they pushed veterans out on these secret waiting lists who did not get health care. and there are veterans who died on the secret waiting lists. and you know, i don't know how we ever clone up problems in the va if we don't acknowledge their existence. and i really don't believe that the leadership of the va has acknowledged the depth of the problems that exist here and that's why they'll never been cleaned up under current leadership. i yield back. >> you're recognized.

>> thank you, mr. chairman. i have to ask specifically, in the individual va medical facilities, administrators and/or directors basically have the ability to monitor this with their own facilities? correct. make sure they're the ones that are in charge of doing that. >> monitor the wait time? >> the wait times, they're the ones that do that. >> yes, sir. >> the problem is i see right now -- st. louis is one of our facilitie facilities. in the last 34 months every 120 days or 280 days, depending on -- 240 days by your rule, we keep circulating directors in and out. i ran business for years and if

in 120 days i couldn't get all of my employees names down. i definitely couldn't figure out where the problems were. and whenever -- i thought this was only in the st. louis facility. but our research found out there's 40 facilities that are actually interim directors that are cycling through like this. it's very hard to have oversight if someone isn't there for a long period of time and they understand that's their job. is there anything being done right now to try to cure those problems? >> yes. first off i couldn't agree more. you can't solve the problems of the va unless you have the right leaders in place and they need to be permanent leaders. so we're on the same page. st. louis very unfortunately pe actually named a permanent leader who were coming from sh the. >> no longer available. >> coming from hawaii and because of personal issues he retired from federal service. so now you're back in a national search and we have some candidates. so i am very focused on getting a leader in st. louis.

but i don't count 40. i count 34. that's 34 too many. and so we have national recruitments out in place. it's one of the reasons why we've asked for you support for title 38 legislation. we need not only accountability in this va but we also need market rates that will help us attract the very best tool come to take these jobs. right now there aren't enough people who want to come take the jobs. >> because of salary? >> i think the pa bad press that va is getting, the applications are down 78% from the date of the crisis. these are known to be very tough jobs and the salary is not anywhere near where the market rates are for these jobs. >> i'm pretty sure that nobody wants to jump on a ship that's sinking and that's the problem. our maybe needs to be sealed up and then bailed out in the condition that it is right now. and i think, i think this is a possible -- this just causes a

downward spiral and i think it needs to be cured. now i'm willing to work with you on that. and understand the legislation that we're pushing forward gives the secretary 120 day to look over proposals on what it is that we can do and move forward to try to cure the problems. with that mr. chairman i yield back. >> thank you. i'm going to yield myself five minutes to ask a few questions. doctor w as you know we've been aware of this problem with the trainers and procedures with the schedulers since 2005 when it was first reported on 37 and the independenter general stated in its august 14 phoenix report since july 2005, inspector general published 20 oversight reports on va patient wait times and the va has been resistant to change. i guess my question is, is about

the procedure for responding to and dealing with office of inspector general reports. okay? this is something that i've been working on for years in my position here. is someone actually put in charge of responding to a specific inspector general report? >> yes. i did not do -- when i came into office, a major reorganization of va leadership because i wanted us focused on this morning fixing the crisis. but the one thing i did do was i established a new deputy undersecretary for organizational excellence whose position it is to focus on that. >> there's one spern person -- >> one office. >> so that person will be held responsible for making sure that the inspector general reported deficiency is correct snd. >> well, i will be held responsible and the secretary

ultimately is held responsible. >> but it's difficult because, you know, we've had so many inspector general reports where the secretaries agreed with the report and agreed to change it but nothing has changed in 20, 30 years. you realize that, right? >> i do realize that. >> identify the fact this's no central hiring process for physicians at the va. that was reported i think eight times over 30 years. that problem still exists. no one seems to have fixed that problem. so i want to have where one person is responsible for responding to the inspector general reports. let me ask, has there ever been accountable employee assigned to fix the problem if in your history with the inspector general? >> so there's always someone

assigned but quite honestly -- and i was involved with one of the first 2005 report and we reported it and until 2014 there was really no priority place to it. we reported it in '05, we reported it in 2007. the right words were said, actions were, you know, changes were made. but when we came back two years later we found that nothing had been put in place. >> that's my experience as well. they say we're going to fix it but nobody is actually responsible and name of an individual who name it is to make it actually happen never seems to get fixed, you know. you think that legislation mandating that the va assign a specific accountable employee to fix a problem would be an effective strategy? >> i think the doctor was right that ultimately he's responsible and the secretary -- we make our recommendations generally to

undersecretary of health assigning -- i wouldn't think legislation would be necessary but that's something certainly -- >> by saying there was this problem for 30 years with the ig telling the va they need to have a central plan for hiring physicians, they said that six time over 30 years, the va agreed to them but yet nobody was assigned to fix that problem and it still occurs today that there's no plan for firing physicians in the va. you see what i'm talking about? this is something that's a procedural the way things are done. it's given to some committee, some department but then there's nobody who is actually in charge other than you and you say well, we're all working on it. >> but what i'm saying is that is the organizational change i made. i have a brand-new deputy undersecretary whose job it is to do that. and they put together the office

of medical inspector, all of the compliance officers, the regulatory officers. >> what's his name? >> dr. carolyn clancy. you know dr. clancy. >> how many reports has he looked at in that position? >> they've been keeping us busy. we've looked at 72 on the wait times alone and you've sent over a bunch others over that. pi would say probably over 100 sk. >> i would like to see the inspector general reports that we's looked at what he has done to respond to those reports. >> absolutely. >> thank you. i'm out of time and i think everybody has asked their questions. we're just about ready for the closing. ms. brown has a closing statement. >> i want to ask ms. draper a question. you mentioned the scheduleder and that perhaps they're not getting adequate training. we all know that a scheduleder

is an entry level job. do you think that the va kneads to do more to upgrade? once a person is trained in that position, if they see another opening, they want to move up. >> yeah, let me back up a little bit. i think training is an issue but i think it's much more complicated than that. there's oversight. the scheduling system is prone to user error. there's a lot of things that familiar tore in to the errors. the scheduliers is industry level. it's the number one or two position with turns over each year. there's not really a good career path for those individuals and what we've heard is that when someone demonstrates a high level capability they're often scooped up and move somewhere else. i think at one point a couple years ago they instituted in some places a gs 6, there was a

career path and my understanding is that doesn't exist any longer. so i do think -- if you put this much responsibility, a lot of pressure and responsibility on these individuals that it is important that they have the support and the training and you know the oversight. as i said in any opening remarks, if someone continues to do the same errors, where's the oversight and what happens when that continues to happen. that's what we sooef seen. it raises the question about oversight and quite frankly whether some of these people pop are able to do the jobs that they're put into position for. >> thank you. mr. secretary, i've gone to the medical schools in the orlando area with the secretary and i didn't know that there were some problems -- because i know we need additional slots. so i'm hoping you'll get back with us and if there's message on our side we need to do, i know we want to do it.

we need the official physicians. if they train and have the residents, they will probably stay in the area >> we'd welcome further discussion on that. >> and in closing, i'm hoping that the veterans that's listening to what we're doing today understand that we are seeing over 2 million additional veterans in 2015 than 2014, over 224 appointments per day. so if veterans need to come to the system, don't be dumbed down by what you hear in here. go and get assistance. go to your member's office, go to the va. with that, you know, we all need to soldier up and make sure that the veterans are being taken care of. thank up. i field back the balance of my time. >> thanks to the entire panel for being here. you're now excused. today we've had a chance to hear

about ongoing problems related to veterans access -- oh, i guess we're going to have the chairman give a closing statement. >> no, no closing statement. i just confirmed with the caribbean health care system that the individual that we were discussing is still on the payroll. >> thank you for correcting that. >> so again, the question is why in the world was somebody who has been convicted of armed robbery still be working at the department of veterans affairs. >> okay. well, hard for me to answer that right now. so i think we owe you an answer. >> please. thank you. >> thank you, mr. chairman. we've had a chance to hear about the vet answer health care that

occur today. as we've disquds the va has not taken the steps needed to improve access care for veterans. until the va stops using the excuse of poor training, begins holding itself accountable, nothing will change. doctor, it seems to me that the i care in my va access declaration are just 0 words. these ideas speak to an intent but to this committee and veterans, results are what count. it's not good substitution or action. our veterans will have to hope that the va gets itself squared away. as we know, hope is not a plan. i ask unanimous consent that all members have five legislative day to resize their remarks and include extraneous material and without objection so ordered. i would also like to once again thank all of the witnesses and the audience members for joining

us today. and with that, hearing is adjourned.

thursday, the head of customs and border protections testifies. we'll have life coverage at 2:00 p.m. eastern time on c-span3 and c-span.org. madam secretary, we proudly give 72 of our delegate votes to the next president of the united states. ♪ ♪

house budget committee chair tom price talked about the federal budget process and how to reform it at an event host bid the committee for a responsible budget. he's calling for a complete rewrite of the 1974 congressional budget act. following his remarks, a panel will discuss the issue. this is an hour and a half. thanks very much for everybody who came today. very good expert audience that we have with us. we're also filming c-span live. >> turn the mike on. >> hello, everybody. again. okay. so we have c-span with us live which is terrific. we have a broad audience. and thanks to everybody here. i see all of the leading budget experts in the city in the room.

thrilled to have you with us. our topic today is fixing the broken budget process. this is a topic that anybody who knows the budget or the rules that guide it is familiar with that there's a whole lot of improvement that we can do, even get budgets done, to fiscal outcomes that aren't always healthy for the country to the fact that budgeting in our country is separate from any strategic economic thinking you might want to do. swl whether it's the smallest technical areas or the biggest broadest and's the oobjective o the budget, there's white a lot we can do. so we have a great panel of experts today who are going to lead a discussion about a bunch of different topics of where we would look for reforms. but what i'm thrilled to do is to introduce our keynote speaker today, dr. price who is not only

shepherding the budget process, he is also doing some really deep and important thinking about reforms to the budget and what they might look like in terms of process. so i'm thrilled that he's joined us today to lead our discussion. so thank you very much, dr. price. >> thank you. >> nice to see you. >> thank you. thank you. [ applause ] thanks very much for the opportunity to be with you today and talk about something that's near and dear to everybody's heart, right? budget reform. how exciting can it get, you know. probably nothing could be more important and less exciting than budget process reform. so i want to thank all of you for coming out today to discuss and share your ideas about this incredibly important issue as we try to move forward with something that i think has a process right now that clearly is failing not just those participants in the process but

failing to country. and that clearly needs to be reformed. so it's an exciting prospect for all of us to kind of try to shape the way in which budget process reform moves forward. i also want to commend the panelists who have spent incredible time and toil and labor in trying to assist folks in understanding what the budget process is, either why it works or why it doesn't work. they've got some wonderful contributions to make today to this conversation. what i'd like to do is just kind of lay out where we are right now, what the challenge is. and do so in a way that hopefully highlights the reason for budget process reform, the need for budget process reform and then talk about some of the things that can be done and split the way forward in terms of policy and process. the budget as most of you know

does three things in congress. it sets the 302 a number, the number that the appropriators can spend on the discretionary side for the next fiscal year. it lays out in the budget window, the ten-year window. it lays out the vision for the challenges that we face. whether it's the majority budget or whether it's the minority budget or the other budget that's offer. oftentimes it's used an and opportunity to say this is how we address the challenges that we face. finally the third thing that it does is something that's not used terribly often but an incredibly powerful tool, the whole issue of reconciliation. a process that allows the congress to address spending or revenue or debt in a way that doesn't make a whole lot of difference in the house to the process but in the separate it allows us to move a piece of leng las vegas forward with a simple majority.

doesn't require a super majority so you can get around the 60-vote margin in the senator. so it's pretty straightforward. ought to be easy to do, right? last year we passed a budget that balances within a ten-year period of time and agreed to it with a senate that doesn't raise taxes and gets us on a path to paying off the debt for the first time in 14 years. first time in 14 years. so if you're keeping track on a score card now, that's one reason -- this that is the first time in 14 years that we need budget process we form and we'll go through some others. it's a red letter date in congress when we do something like that. it ought not be. it ought to be something we do every year. people at home do it, in their communities, places of work or places of worship to make certain that they're on track

and correct course if they aren't. for those on vant of the process, you will recognize this was the fifth year straight that the house of representatives pass a budget that balancing within ten years of time, gets us on a path to paying off the debt. so the very curious among you will say, okay, how much closer are you to balancing the budget, paying off the debt, getting those programs reformed as we move forward. the answer is not that much closer if at all. and the reason that i would suggest to you that we're not that much closer is again another reason we ought to have budget process reform. it's because the budget enforcement, the thing that's able to allow us to make certain that the congress follows a budget that's adopted is extremely weak, extremely weak. we'll talk about some of the things that can be done.

what's the evidence that this is an ineffectual process. you all have your long list but let's tick through a few of them. the debt, 19-plus trillion dollars in debt, 76% of gross domestic product from debt to gdp ratio which wouldn't be necessarily that bad if in fact we were moving down but in fact we're moving up. congressional budget office projected that by the end of the ten-year window 86% debt to gdp ratio continuing to rise. deficits, we had about $130 billion increase in deficit from last year to this year, about $544 billion that was revised downward a little bit recently by cbo but still a significant increase from last year. that's the annual deficit. that's what gets added to the debt. and then increases that $19 trillion number.

growth in the economy. we've seen significant decrease in growth over the last few years and the projections aren't comfortable for the last majority of the public. the average growth rate in our economy over the past 40 to 50 years has been 3.2%, analyzed growth, the kind of growth that it takes to continue to keep the economy moving and jobs being created, the projection is 2.1% analyzed growth over the next ten years. a 30% to 35% reduction in the rate of growth in our economy. in the interest on the debt, we're now paying $235 billion each year on interest on that $19 trillion in debt and that's at relatively low interest rates as you all well know. the projection within the ten-year period of time is that we approach over $18 billion in payment interest on the debt each year approaching a trillion

dollars. now what difference does that make in why do any of these numbers make any difference? well i guess that's another thing i would like you to take home. these aren't just numbers on a page. these are numbers that affect real lives and real people all across our great land so that every dollar that's spent in covering the interest cost is a dollars that can't be used to buy a car, to pay the rent, to buy a house, to send a kid to school, start a business, expand a business, all of the things that the american people say they want are harmed by the fiscal situation that we find ourselves in that i would suggest is a result partly if not in large part of the budget process that we vo right now. that's another reason that it's important to move toward budget process reform. the larger picture of governance, the power of the purse and the like must be talked about always. there's a sense across this land that the power of the purse is

wained, a that executive branch assumed more and more authority over the past number of years through republican and democratic administrations. the power of the purse is important. jam madison wrote this power of the purse may be the most complete and effectual weapon with which any constitution with arm the immediate representatives of the people for obtaining a redress of every grievance and carrying into effect every just and sal tear measure. it means that this if the folks closest to the people, the representatives of the people do not have in their quiver the kind of opportunities to be able to hold the government to account, to be able to make certain that the hard earned taxpayer dollars out there aren't going for things that the constituents, the citizens of these great land want, if they can't use the power, it's no longer the power of the purse and consequently i suggest we

find ourselves where we are right now. what's the way forward. from a policy side to get things in a better fiscal situation from having to numbers look better on paper, you can basically do three things. you can raise taxes to increase revenue to the federal government. that happens. the pet project of our friends on the other side of the aisle. it tends to increase revenue to the federal government for a short time and decreases it because it decreased the economic activity. you can decrease spending which tends to be which we believe ought to be the most appropriate way from a tax and spending standpoint. but let me suggest to you that the congress has done a good job of holding discretion nal spending down over the past five years. we're spending less right now than we did in 2008. that's a flat line on total

discretionary spending basically between 2008 and now. now the total spending that's occurring at the federal government level is increasing significantly. or the third way to do it is to grow the economy. to get that 2.1% number up to the 3 or more percent number. every 0.1% growth results in a $325 billion reduction in the deficit. every 0.1% increase in growth results in a $325 billion reduction in the deficit. if we grew at 3.1% it's likely we would decrease the deficit by $3 trillion. that's real money staying in people's pockets as opposed to coming to washington to fund programs or to pay the interest on that debt. but let me suggest that the kinds of things that i just was talking about are the symptoms of a broader problem.

and that problem is the process that we utilize to budget and to spend money here in washington. i want to talk a little bit about budget process reform and the topic addressed by the panelists here. we budget in this country under the '74 budget act written 42 years ago, written by a lot of folks who, well-meaning but the effect of the budget act has been in essence to spend more and to grow government. and i would suggest to you that that's no longer the premise upon what we ought to budget. we ought to have a can fault that spends less and decreases government if we don't do our job. right now if congress doesn't do its job the spending continues. it increases more and more. let me raise fundamental questions for budget process we form. the budget committee in the house of representatives is going to be going through a process in the next months to

come forward with a piece of legislation that will bring about what our goal is, a complete rewrite of the '74 budget act so that we have a defult that actually spends less and decreases the size of government if continue is unable to or it's not possible to get them to do their job -- get us to do our job. what are some fundamental questions that we need to answer. first, why is the majority of spending unable to be reached? we spend about $3.8 trillion each year. two thirds of that is on the mandatory side.

at home i get this all the time. aren't those programs unsustainable? yeah. what does that mean? that means they will not be sustained. it's irresponsible and reckless not to address the unsustainable projectio projections. but the budget itself isn't able to touch those because that's on the mandatory side of the budget. the number, the only thing that's able to be enforced on the budget side is that 302 a, the discretionary number. what about the unauthorized programs. we've got a proo says right now where the majority of the nondefense discretionary spending in this country, the majority, over $300 billion each year is unauthorized.

that means that the committees in the congress have not said to the appropriators you ought to spend money on this. this is a priority. you ought to spend money on this. in fact they haven't done -- most of them are programs that have lapsed but significant problems. like the state department for example is an unauthorized department. you can't not appropriate money for the state department. but we ought to at least make certain that congress is looking at the spending that's going to the state department year after year and holding them to account. that's one of is the responsibilities of the legislative branch. what role should the executive take in all of this. a big fanfare every year when the president sends his budget up to capitol hill. we chop down a lot of trees to make sure we're able to print the budget. and then where does it go? kind of sits on shelves. through both republican and

democratic, it's fallen on deaf ears. what is it that we need out of the executive branch in order to have the ledge lay ty branch, the people es a branch to be able to write an appropriate budge. is it just information or truly a budget. what are the forcing mechanisms that ought to be put in place to make sure that congress does or job. right now there's not any significant penalty for not getting a budget done. we're living that right now as we see that the 302 a was set with an agreement last october and consequently that's not the kind of oomph or inertia of members of congress believe that getting a budget through is actually consequential. that ought not be from our perspective. we ought to make certain that they're forcing mechanism to get the job done. what should be role of the

congressional budget be? are there inherit biases? many of us believe so. many believe that it's impossible to get to the right answer with the information that the congressional budget office gives us. not because they're bad folks. not because they're ill equipped. it's because in many instances the rules that they appropriate almost make it so we can't get to the right answer. what should the role of the budget office be. how often should we budget? there's a big push to create a biennial budget. for those folks who have been in congress just since 2010, this ought to shock you, since 2010 not a single appropriations bill of the 12 appropriations bill that have posed to be done annually, not a single one has gone through the conference of the house and the senate and passed and sent to the president. not one. that's 60 opportunities. 60 opportunities to do an appropriations bill and congress has been unable to do so.

so should we make that every two years? so that we decrease by half the number of times that we fail? or should we streamline the process to a greater degree and allow either more time or more focus on the work that needs to be done? what about the baseline? what should we measure or spending against? should it be current law? should it be current policy? should bit zero baseline? should we require the agencies to justify every single dollar that they spend? is that possible? what baseline should we measure against. so often right now we measure against a current law which means if you decrease anything, the increase, even though you're not spending less but you lower the rate of increase, that's considered a cut, which only in washington is that kind of rationale used to describe it as a cut. what should fiscal targets be.

should we adopt fiscal targets. we can only tax this much, only spend this much as a percent of gross domestic product? what should that ratio be? should we have a balanced budget? what kind of fiscal targets should we have. and then finally the whole issue of a regulatory budget. we've done a lot of work exploring what we believe is now an important aspect of governance and government rules coming out of washington. the estimate right now is that the regulatory rules that are in place cost the private economy, costs men and woman across this country in their jobs and businesses $1.8 trillion a year, $1.8 trillion. that's about six times the amount of the corporate income revenue that comes into the country. that ought to be looked at. that's not looked at by and large by the legislative branch. you've got the sense across the country that the bur clatic

system in washington is ever expanding and increasing and coming out with more and more rules and regulations. those are questions we ought to be asking ourself. the budget committee is going to be holding a number of hearing between now and july 15th when we break for the conventions this summer to explore many of these questions, and i hope that you all will take the opportunity to communicate with me as chair with budget staff to let them know what you think we ought to be doing from a budget standpoint. this is a great opportunity and i believe an exciting time to be able to put in place positive reforms in the area of budget process. it's a time when both parties ought to be able to join together and do so. nobody knows who the president is going to be. everybody knows and understands that the budget process isn't working as well as it should. shouldn't we come to an agreement on what the reforms ought to be that would make it so the process would move much

more smoothly and allow us to fulfill the responsibility to our constituents across this great land. thanks for allowing me to share a few words and a dpu issues and perspectives with you this morning on budget process reform. and i'm happy to -- you're certainly welcome to applaud. yeah. [ applause ] thank you. i'm happy to take some questions. i got one right down front. and i think a microphone is coming. >> thank you. i heard your speech before in the aei on some other places. in congress, senator or house, they're busy with legislation, but state or local government, a lot of times legislation -- what i mean is it's not really

working for the general public, except as an appropriation to benefit a few. and currently if you're busy for a budget, the social issues are there, nobody touch it. nobody care about it. so a lot of the crime, not the abuse and other ways, other corruption, including in the budget, maybe they have fraudulent charges, and maybe they have a lot of fraudulent transaction of public/private partnership or economic development. whatever of transportation. can see a lot of problem, the people pay but not really in a way they receive. >> got a question? >> my question is can you really work on the real issues people are suffering, trim those costs and budget and you don't have to

do the legislation budget but cut the budget down. >> yeah. this is a great point. but the concerns that the person people have in so many ways the addressed by congress, the role of the budget committee is not a -- is not a policy committee. and that's one of the challenges that we have in trying to get across to folks why we're having the difficulty in degetting a budget moving forward and getting budget enforcement so that the things that we have in the budget are being approved by the authorizing committees. so all these committees, education and workforce are the committees that are responsible for the kinds of reforms that you have identified. the role of the budget committee is to identify the challenge, identify the problem and say these are some potential ways that you might be able to address them. but the budget committee is not the committee that puts in place

the lettigislation or even props the legislation that the house or other committees work upon, but it's an important distinction, for many folks they aren't quite certain what the budget committee actually does so i appreciate the opportunity to explain that. >> a lot of the people i talked to, that's a no-brainer for them, it should be a balanced budget, why is this important at all? >> we run the gamut in town for those folks who think you don't need any spending restrapt at all, which is why we're where we are $11 trillion in debt. there's others who believe

there's a reasonable amount of debt to carry each year, and that that's able to be sustained over a period of time. and i might actually agree with that if we weren't $19 trillion in debt and 76% of debt held by the public compared to gdp or over 100% of gross domestic product and total debt and not moving in the right direction, i believe strongly that we need a balanced budget. and how do you get there, is the question, what are the rules in place that enforce that, but fiscal discipline is absolutely imperative if we're to get our house in order. and the reason for that is not so that the numbers line up on a page and the bottom line is that money in equals money going out. the reason is that when you're not doing that, you're taking

away the opportunity of americans to realize their dreams, for the greatest number of american dreams to be realized in a fair and compassionate system is what we're after. that doesn't work if you're taking a trillion dollars a year within a relatively short period of time to pay the interest on the debt. that's money taken from the american people to do nothing but pay the interest on the debt that has incurred. so, yeah, i think we must have a balanced budget and i think fiscal targets are appropriate. yeah? >> thank you, pl chairman, i was glad you talked about gdp growth. because all growth from world war ii has come from investment from gdp.

>> these are the resources that we have, and close to the top of that list ought to be money for research and development and to allow young people to realize their dream through an education process that works. sadly, what we do is we get the list of things that we think we ought to spend money on and it just grows, and grows, and for those young americans to realize their dreams precisely because we have not been able to willing to make these decisions in this town. should those things be a priority? without a doubt. are we making them a priority

now, in a responsible way, i would suggest that we are not, and because spending on those types of projects and so many others are actually threatened because we have got a growing mandatory side, growing automatic spending side. the mandatory spending that i mentioned which is now 2/3 of the federal budget that less than 10 years will be three-quarters, 75% of the spending in this country will be mandatory spending, that's something nobody has any control over unless we get with an administration that's interested in reforming those programs, so those ought to be priorities, but they can only be priorities when we have a school of discretionary moneys that we actually have control over and appropriate responsibly and i would suggest that we're not doing that now. one more. you've got some very bright people who are going to weigh in on all these things in just a

moment. >> eric wasson at bloomberg news. there's some very interesting questions, first of all, how do you link the budget with the entitlements. and my question there is there a danger of going over a cliff? and how do you enforce that and how do you force a budget action, institutionalizing no budget, no pay, and are you wishing you had that this year to get your colleagues to go along with your budget? >> i'm looking forward to the hearings that we have on these issues, but i think that it makes sense to have the mandatory spending, for lack of a better term on budget. i think it's important for the people's representatives to be able do weigh in annually or at some interval, to say yes, this automatic program is something that we think needs to be continued and in this structure, so that we hold the agencies to

account and make certain that the program is actually working. there's so many things in our federal government right now where we measure the success of the program by the amount of money going in, not by the output of that program. there's so many things on the social welfare side where we spend more and more and more money that we're not getting the outcome that any of us desire. so the answer to some of my friends here in town is to spend more money, so that means we're not doing our job in terms of holding the agencies accountable. for example, i'm not endorsing this, but these are the kinds of things that have been talked about. if for example the congress doesn't finish their appropriations process and a continuing resolution, which is not a very responsible way to budget, but if a continuing resolution were to be put in place for the next fiscal year or a portion thereof, which is simply spending at the rate that

you spent last year with all of the policies in place, then that ought to tick down over a period of time so there ought to be some increasing pressure on congress to actually do their job, so that makes some sense. thank you for the opportunity to be with you, and i look forward to the report on the discussion and also look forward to your ideas as we move forward on this incredibly important opportunity. take care and god bletsz. . >> as we make a transition to our panel which is going to be led by kelsey mcduff, you can come in and have a seat. and if you really run out of seats, you can take these big comfortable chairs in the back and the speakers will turn around. >> i see there's another seat over there, maybe two in the

middle of this area here, if anyone wants to move over. thank you again to chairman price for doing this. and all of our panelists, i'm going to start out by introducing everybody, and each one of our panelists will have a few minutes to give a presentation and we will go to questions. we have paul posener, he leads the university center on the public service. his mess recent book the pathways to power, which was recently released and he was formerly with gao, leading their budget and intergovernmental work for 14 years. and we have maya mcginnis, wh s who's -- maya is an expert in all things tax and midwesteamer policy and she has worked with

candidates and members of congress and we have doctor stewart butler, he's a senior fellow at the brookings institution, prior to joining brookings, maya spent seven years at the center for policy association, and economic policy studies, he, i'm sure is well known to many of you in this room. and we also have dr. marvin faulk. his research aims to improve performance of federal budgeting by the criteria of efficiency, equity and stabilizations, and w prior to that, until 2010, he directed the pugh reform agency as part of the public trust. and as dr. press mentioned, i am a repter at "the washington post" and cover fiscal policy here in congress. >> thank you, kelsey, and thank

you all for being here, i think there's one thing that we all can agree on, which is the budget process in some way, shape or form is broken, we wouldn't be here if we didn't really believe that. i start off all of my lectures with my students on my class on the federal budget saying unlike social security, health care or food aid, the budget is the one thing that politicians have to do every year. well, apparently not every year. so there's an exception right there, showing everything about the budget is the exception to the rule. but i think we can tick off a list of things that don't seem to work, the disproportionate attention paid to discretionary spending, even though it's a declining share of the total resources, the fact that the targets we're using aren't necessarily symbolic or -- most of the budget is off-limits, there are walls around mandatory tax expenditures and the like

and there's no concerted review available to bring together how all those programs interact in areas such as higher education, low income housing and all the various other programs that have been policy goals that we care about. we say we have a unified budget, but we really have a vulcanized budget, and in some ways the 1974 apgt had a vision that was very different from this, it was of a comprehensive way that congress would tackle priorities, it would take them on through the special set of committees they created, it was in some ways an experiment creating a shadow set of committees that could somehow bring the rest of congress to bay, turns out it probably was the other way around, the budget committees are influential by exception, only to the extent to which the leaderships adopt them as their pet projects and to affect leadership reforms as the budget committees really gain

leverage, a lot of us would like to see that change to some extent. a lot of us would like to change a budget where we periodically get to enact priorities and change priorities and the like. i'm going to talk about one proposal along those lines recognizing that reformers experiments are likely to take 20 years to reach fruition, so i have a nice longestati guestati period. it's the product of the work of the national budget round table that myself and maya and stewart butler still share where we meet together and talk about these kinds of issuings. basically the question is, can we somehow give renewed life to that vision that congress had in 1974 that we can in fact make hard choices again in some kind of concerted way of looking at

our priorities. the notion that this is difficult particularly for a polarized congress that we all particularly have to agree on. but isn't it better to start working on approaches today to do more rationalized budgeting so that they're on the shelf and been tested rather than wait for that inevitable fiscal crisis. the cao -- show that the debt will grow 20% to 30%. you'll be in disbelief that that kind of thing could happen. it's a question are we going through a period of a continual crisis oriented budget. this process of port stole ofol many other nations do this as an

annual process, the oecd, nations like netherlands, australia, across the board, have taken on pieces of their budget which they look at all -- so we looked at the question of could we do something like this, and i might add that these oecd processes and making real changes that not only achieve substantial savings, in some ways our motto has been inacted by -- the one said that budgeting should be on focusing on weak claims and not weak claimants and ideally we would like a budget process that is performing as well as others and make decisions? some ways accordingably.

we would look at what collective outcomes are they achieving in terms of access by students to higher education, in terms of states and parent spending on education and a variety of other outcomes that we care about and we would look electrcollectivel whether those portfolio programs are working, whether these programs offset one another, as they often do, or whether they complement one another. and whether there are some areas that appear to be more effect tiff than others. that's the notion of this, that we would take pieces of the budget periodically, when i say we, i mean both the executive branch and the congress, to have kind of a special deep dive, if you will, and to look at how we're doing as a nation.

i understand that among budgeteer budgeteers we are often fond of proposals that are not correct and this may be one of them. but let me give you an idea of why this proposal may be better suited to the times than some of the others. when we take a look at areas that -- and tax expenditures. these are broad based areas of reform that many have proposed valuable and valiant reforms that are often olympic divers, they're beautiful and they make no splash, really doomed in some sense to fail in the political life. and they threaten too many interests because they're so cross cutting. what we like to think is that portfolio budgeting could tap into those areas that we agree

on as a nation. we agree that there should be effective food safety coverage in the united states. we just don't agree there should be 15 programs across many different agencies covering it. we agree that we would possibly move to some sort of integrated certified food safety agency, like many other agencies have. we agree that we need some programs affecting higher education. so the question is can we kind of through this portfolio process do a concerted effort, budget reform to really focus and galvanize the congress's attention on this. one other point and i'm going to finish here. recognizing this is not a natural act for congress to do, to bring together a variety of programs under a single roof and for special analysis, i would suggest that this is exactly why

the budget committees exist. they have the cross cutting perspective and really the analytic tools with the budget functions and functions that we really have never fully utilized. to bring about such a review, possibly in concert with the authorizing committees, it's been done before, the budget committees used to convene task forces periodically in their long life, and 2000 being the most recent to focusing and take deep dives on issues, so that's the proposition, that the budget committees could possibly find a new role in this area, acting with other committees to put issues on the table and have what i call a performance based reconciliati reconciliation, where each of these portfolio areas that is given a fiscal target that has the possibility of not only being motivated by fiscal goals but performance goals at the same time. i would like to see the executive branch honing in on this and we all will sing "kumbaya" together.

we'll talk more about this as we go along, i'm sure. >> maya, you're up next. >> thank you, so i mentioned a couple of the fiscal budget problems i see at the outset. when thinking about what to talk about, i couldn't decide. one of the biggest problems is that the budget is not used as a strategy, that's why i'm really intrigued by paul posener's work in this area. there's no mechanisms, there are no consequences, as a result the budget is just no longer taken seriously, and everyone can agree that the fact that this country is operating without a budget on a regular basis, is an unacceptable spot to beginni wi. we have very few programs that

put us on a -- and as a result it becomes very difficult, the whole budgeting process to lead us in the right direction, but i'll put all those aside. i'm going to talk a little bit about budgeting for the long-term. and one of the failures, almost like our political system, but our budget cycle is doing a huge service. our budgets, when you have a budget, there's multiple budgets, there's the president's budget, and the house and the senate's budget. what you're doing each year is always on that first year, and that leads us to a lot of outcomes, a big focus in budgeting is the discretionary portion of the budget. one part of the budget that the appropriations process takes place. we have seen with the sequester that's been going on for the past year, focusing on big

spending is not the area of the budget we need to be concentr e concentrating on. that's not where they take blase, it focuses all the smart talent that's thinking about what's going on with the budget, that isn't as important for the long-term fiscal health and it leaves a lot of the rest of the budget out of the whole process. and it focuses us on short-term fiscal measures, our fiscal health, our country not as good as it was before. our debt is now at record levels, at twice what it was, now that it's 74%, 75% of gdp, we came out of recession where the real concern was what do we do to get the country back on track. we had big problems with the deficits, the biggest problem wasn't reduce those deficits immediately. how do you gin up the economy,

and put those -- we end up having a lot of talk about budget numbers in that year. and that i think kind of ends up -- these two different topics, one which is austerity, austerity is what we have seen on other countries where au austerity be forced on them to get their deficits back down. we haven't had to be in that situation, despite when we wreak havoc on the global economy, we don't have o'have this -- we have the luxury of time, we can think about medium and longer term challenges, that instead of worrying about austerity, raising taxes when it would harm the economy, we can put on medium and long-term plans, but because our budget doesn't focus on that, we end up doing these short-term measures which are

not productive for economic policy. it opens up the door for budget gimmicks, all the time people say here's all the savings we going to have in our budgets. in these first years, we're going to cut taxes more, but in the years to come, what zwael actually is going to help the deficit and the debt, but this first year we're going to make it a little bit easier on yourselves, so you the windows allow for some real gimmicks, so those people who are thinking about budget process reform should really think about the time horizons, the longer term issues there's a bunch of different ways that can be done, i'm not going to mention all of them. the first thing is just make sure that our budget tear numbers are stretched south. let me also say i think this

issue is also more important now because we're in -- it's been going on for a while, but as the aging of the baby boomers are happening, as demographics are guiding our budget so much, we really in the past, and now we're feeling the brunt of it. we should have been looking at all the long-term promises, here we are, the numbers are exploding, we knew that was going to happen, but because we weren't as focused on the longer term, we weren't as focused to get out ahead of that issue. so i think the first thing is just more information. the budgets are such dense documents, weeding through them, it really matters what you put in summary tables, i think we should put in the cbo long-term projecti projections, one of my favorite documents, i'm sure you all love the document as well.

when there's new policy proposals, looking at the long-term effects of those is quite important. when we look at vauf sets for something, something that's oog go to help the committee, what you really went are the kinds of policies that will save more over time and grow with time. you want to have those projections included. third we could think about actually having some requirements that don't permit fiscal worsening over the long-term. so you could put in some budget rules, there are some that exist, you should strengthen them, you could put in more about what you're not allowed to do today that would make the fiscal situation deteriorate over time. the fiscal -- i'm not so worried about the deficit this year, i'm really worried about the fact that the debt is headed up indefinitely, and i would like to talk about ten and 20 year targets you would want to put

on. i always ask why we allow ourselves to have a budget that promises more in spending as a share of the economy down the road than we're willing to support today. so if we have promises in our budget that say spending in the future is going to be 25%, 35% of gdp, but we're only allowed to collect in revenues 19% or 20% today, we are actually forcing future generations that is -- i'm not saying whether the government should be bigger or smaller, that will be a fight that goes on forever. but we shouldn't be able to commit resources that are so sizably above what we're willing to pay today would be a fine budget rule to put in place. budget does seem like a dry, arcain topic. this is not at all an easy issue. i think one of the really big goals is, don't try to put

budget process reforms that stack the playing field for one side or the other, republicans and democrats are going to continue to disagree about a ton of different things, is size of government, the best measures to get there, their priorities, you don't want a budget process that -- budget process reforms that both sides see as sfar, and that will hopefully make it easier to make some improvements. >> we have shuffled seats a bit. but i think the plan was for stewart to go next. >> thank you, kelsey. as maya has just emphasized, process is important, rules are important. rules shape the way the budget happens as they shape other things. and as the chairman said, about roughly 2/3 of spending in the united states right now is in the form of mandatory programs, which have very different rules in terms of how they are

developed as the rest of the budget. and the social security and medicare programs, the major entitlements for the elderly are now roughly half the entire federal budget itself. and that's really important in terms of its implications, it means that these programs are on autopilot, whereas major and important programs like defense, like money for the homeless, for students and so on, are argued over every year in the traditional budget process itself. meanwhile these other entitlement programs, like the mighty mississippi keeps rolling on, without any -- unless there are major changes made in those programs. paul has also mentioned the national budgeting round table that the three of us with maya are on, is an organization that really kicks around ideas on the

budget process, and we argue over them and some of them are -- some are put together in proposals, some of which you have in your documents and one of the things that's not yet reached the stage of being published, but maya and i are working on an idea of the whole area of the entitlement programs with the process of turning the entitlements or taking the entitlements together and turning them into a real long-term budget, a 25 to 30-year budget, which is more similar to the way we do discretionary programs in the sense of that this is a real number as opposed to a projection. this idea really has four elements to it. it terms of what would happen. first of all, a congress would enact a 25 to 30-year budget for all the major entitlements, principally, of course medicare,

and medicaid, so it would enact a 25 to 30-year budget of tax revenue. and taxes in a sense are similar to entitlement in that we make changes in the tax code, we guess at what the impact will be on revenue, but there isn't a budget per se for the revenue side. so in that sense both sides of the equation would be included. the third element is every four years there would be a formal reassessment of that long-term budget, congress would in a formal way re-evaluate it, look at it in compare son to what's going on in your economy, what can be sustained, what other major goals there are, and make kind of mid course corrections to this long-term budget which would give us a real picture of what the major entitlement would ro look like. then the third element is a

trigger mechanism of some form that would keep us to that long-term budget. so if it dropped below or above, there would be a correction that would be built in automatically. unless congress in one of these four-year reassessments made a change to it. so we would have four very fundamental elements which are quite different rules than we currently have today. many countries, they don't have it in quite the form we have talked about, but certainly as maya what mentioned and others have looked at the long-term budget generally for their countries and think about it a lot more than we do in this country. if we were to do this and try to put in place a long-term budget of this nature for entitlements, there's clearly some issues that have to be thought really hard about. i just want to mention two. one is can a congress really bind congresses way into the future as to what should be spent on, say, medicare or social security or other

programs? not in a constitutional sense. the constitution does not allow a congress to do that, to require or to put in supermajorities and to force constitutionally the future congresses to stay on track. it could produce rules, however, and say that unless congress were to change these rules, this will be the rule in the future. the only way such rules can be sustained is for there really to be a broad consensus that they make sense. so part of the reason for including revenue as well as entitlement spending is that both sides of the aisle have a good incentive to see some control, some sense of what these are going to look like way in the future. the second thing to maybe consider, is can you really have triggers, can you in fact effectively keep a budget on track over this many years?

well, i think you can, although it's not absolutely clear what the best way is to do this. some people argue that there should be automatic changes in programs, and in revenue, say, maybe for example automatic changes in tax rates, if the revenue fell short of what was in the budget. or that there might be changes in payments in the medicare program. some of you in the audience might already be thinking, well, that doesn't work too well with the sustainable growth rate and the dark fix and so on. that is one way to do it. another way would be to have an external body that watches over this long-term budget and if it starts to get off track in any profound way, that there this external body would offer some solutions, and these might be subject to an expedited consideration by the congress. a fast track up and down process. we had that in place essentially

for medicare with the so-called ipap. not a popular body, but we do have that. another way to do it might be to combine an external body that might come up with a set of, a menu of way of staying on track for a long-term budget and maybe a supercommittee within the congress itself, a much more powerful version of the budget committee, you heard from the congressman, the limitations that are on the current budget committee. but some kind of either strength and budget committee or some combination of the budget committee and other leadership individuals to say, well, among those options, or if you have the outside body being the default option, then the supercommittee might modify that and put it into place, but if they didn't, then the outside body's default proposal will

take precedence, so there are various ways to do this, to stay on track in the long-term. let me just say in conclusion, that when you look at the budget process in the united states, it's really hard to think that it's a serious process, first of all, if we don't actually pass budgets, as you heard from the very beginning, as you heard from the congressman. but it will be a budget if 2/3 of spending are not really subject to an d a annual analys so in a sense, is this really a budget if spending is not looked at in any concrete way. so that's some of sort -- and rethink that in the kind of proposal that we're developing a that we reach a reasonable compromise between assuring certainty to people who are planning for their retirement, the older i get, the more important i think it is, in

terms of being secure in the future, but also recognizing that you can't just have 2/3 of the budget essentially out of control given the concerns about the deficit and the debt especially in the future. and that's why we think that a long-term budget of this nature for these major parts of the mandatory programs, so-called entitlements is a crucial part of getting a revamped budget act into place that could -- can successfully keep our budget on track and do so realistically within the constraints of the economy and of our other objectives and goals for our federal budget. >> okay, thank you. and last we'll turn to dr. marvin phillip and after that we'll do some questions, i'll ask a couple and then we'll turn it over to the audience. >> so maya asked me to talk about -- so maya asked me to

talk about tax expenditures today and their treatment in the budget and i can only begin to say something about this by first thanking lynne berman with whom a wrote a piece on budgeting for tax expenditures, lynne has heard in papers and a lot of people in this room agree that it is a wonderful experience. it certainly changed my thinking about tax expenditures so thanks to lynne. so the second thing i want to do is thank maya and the committee for setting the five-minute rule. you probably don't know that but today there is a five-minute rule, and there's a woman that you can't see, when she raises a stop sign, i think that's a great idea, especially for a discussion of budgeting, because to have a constraint on valuable

resources, in this case time has a nice way of giving incentive to people to follow the rules. >> and who do you think broke the rules? >> in support of that rule, i actually gave these brief remarks a title. and the title that i thought would be appropriate would be 4 1/2 things to remember about tax expenditures and budget reforms in the hope that i could get in each one in at least a minute. you know what tax expenditures are, they are well known by everyone in this room that they relate to preferential tax treatment afforded some activities relative to a normal tax structure. and by that we include exemptions, exclusions, deductions, deferrals, credits and so on. i think the rule of thumb, the best way to remember what a tax

expenditure is, if you don't mind writing it or entering it on the 1040 form, it's probably a tax expenditure, now we come to the facts of those things we don't mind disclosing on our 1040. the first in fact is that these are really big. a few dollars here, a few hundred dollars there, you add it all up and pretty soon, as someone once famously said, you get to a trillion dollars. so the annual value of tax expenditures exceeds a trillion dollars, which is more than, about 25% of total cash spending, which is more than 5% of the gross domestic product, the value of all economic activity in the country, these things are really huge. they're big. the second thing to remember, and this is what i had trouble with for a long time.

but i am persuaded it's true. they are equivalent to cash spending for almost everything. so almost equivalent, i'll save the almost until later. but david bradford, a deceased economist made this point, i think brilliantly with a proposal that he made some years ago, she whe was proposing to r the size of the benefits, but he didn't want to whack the benefits that people got, and what he came up with was the weapons supply tax credit, so under his proposal, which he offered facetiously, don't take this seriously, what he offered was that the department of defense would henceforth not pay cash for its ordnance and --

supply the -- tax collections drop, outlays drop because all that, we have heard a lot today about things that are in the offoffbudget, tax expenditures are really off budget, they only show up in a budget in fact in a dress allocated reduction in revenues. so in fact, that's exactly, bradford's point, which i guess is a third thing to remember. they're big, they're equivalent to cash spending, and they're virtually, not quite, but virtually invisible in the budget. the fact is, when we adopt these tax expenditures, all that shows up is that we get a reduction in budget outlays, we get a reduction in revenues, there's no change in anything else.

and it doesn't look like these things have any cost. at least to the budget folks, people making budgets decisions. and in addition, we use language to kind of re-enforce our attitude toward tax expenditures, we call them tax cuts, we call them in some cases, letting people keep their own money. and that suggests to me, at least, that these things are costless, that how could it cost something to let people keep their own money? even jon stewart, on the daily show got it right, got it wrong. he was criticizing the president for talking about spending through the tax code and criticizing him to say in fact that's where we raise the money, not where we spend it, what's wrong with this guy? but in fact i think the president had this exactly right. when i say they're almost invisible. i'm not neglecting that portion of analytical perspectives,

which you have all read, is it stable back there? tax expenditures by program, the joint committee on taxation produces another such table, but that information is not salient to budget makers. like a lot of other things that we have been talking about today, like which kind of costs are really controllable in the budget right now with respect to, say, entitlements or with respect to long-term spending that they in fact are missing in action. it's very easy to ignore the existence of those spending equivalents that are large in the budget. so what? so what if they're distorted? if we were all perfectly rational, you know, economic man, economic woman, economic person, it really wouldn't

matter where those numbers were. if they were on the front page or they were tucked in analytical perspectives, rational decision makers would ferret them out, find that information and use it in their decisions, but humans aren't like that, we don't work that way. an example that's -- oops, my time is almost up. there's a common example that many of us have encountered in real life. volunteer firefighters, they're not paid, they're happy with that. they have got these t-shirts that many of them wear that say pride not cash, we're doing this to discharge our civic responsibility, but they incur hahl of expenses, so occasionally, a township will propose to pay them for their expenses, that's hard to get through, especially in this day and age when budgets are stressed. so you can propose to do that,

you can't get that through a legislative body. if you just change the proposal slightly to say we're not going to pay them cash, but we're going to give them the equivalent in tax abatement, either for personal property or real property, you have a much better chance of getting that through. so the point that i'm trying to make here is that if information is not salient, is not present, is not on the table when you're making budget decisions, it doesn't matter if it really exists, it could be, you know, wherever it is, if it's not present, if it's not salient, it's probably not going to be taken into account. and it adds to fiscal illusion, we end up with inefficient choices, probably at least in the article that's berman and i wrote, the bias goes this way. with tax expenditures being

nonsalie nonsalient, you have a bias toward cash spending, you also have a bias in favor of total spending. the bigger point about the treatment of tax expenditures in the budget, is that the way numbers are presented, the way information is communicated to decision makers matters for decisions. we are not all calculating fully rational individuals who get all -- every bit of relevant information. it has to be easy to make better decisions. and that rule is one that i think has application to the control of entitlement spending as well as tax expenditures. and i guess the half is, it doesn't have to be that way.

the way we do budget accounting, the way we put the budget together is not written in exodus or chances are only 1 in 5 they're in leviticus and if it's not providing us with the information we need to make better decisions easier, then we should start thinking about changing it. now thomas soul says something often in writing and aloud that makes a lot of sense too me. he says there are no solutions just trade offs. for every difficult decision. that's clearly the case here. and so what berman and i offer is not really -- we do describe it as the solution, it probably isn't, but at least in this case, it seems to me that the

tradeoffs appear favorable enough that we ought to reconsider how we treat cash expenditures in the budget. >> we have about 15 minutes to go questions and actually i wanted to start with the political questions. in this political climate where we just on friday missed the statutory deadline for passing a budget, is it realistic at this point to be having a conversation about total reform of the budget process or is there reason to think that there are smaller incremental things that can be done now to improve the outcomes that we see?

we know the political leaders are on a supply chain, knowing that threor four years down the road. that's when it will open, whether it opens because of a crisis or a political revolution, who knows? but i think it's incumbent on us as budget enforcers to feed that supply chain now. >> jim, i can't believe you're leaving without a question. we'll all get a long e-mail with all these thoughts later. i don't think it makes whole lot of sense to make a big revision of where you -- you'll make incremental reforms in the wrong direction. we're going to redo the entire

1974 budget act. i think we developed what it should look like, a budget process that lays out a strategy, that includes fiscal goals that has an evaluation of what's working and what's not, that has consequences if you don't act, perhaps that inspires bigger, broader changes, at least you could do what the consequences are of not acting. >> can i follow up quickly? how do you develop that broader strategy, that broader plan in a political climate where you have house members up for election every year, and the moment they are elected, they start going through the process of becoming re-elected. >> we really need process reform not -- put policies in place that are sustainable. that's much trickier around

election cycles and anyone who talks about doing something responsible gets punished during that election routine. there may be an opportunity for people to work together on the hill and actually, especially in a year where very little is getting done, take some time, study the acts and start looking at what the reforms a major overall could look like. >> maya nailed it. >> si think, i agree, maya nailed it in a way. when we describe what maya said, is what yogi bear said, if you don't know where you're going, you're going to end up not knowing where you are. i think the idea of a 30-year budget is very important. it's not necessarily going to take place any time soon. but to get people thinking differently about entitlements.

it's very important to get large constituencies who are affected by any change sort of into the room together, and say, look, we understand your needs and desires and your fears about how changes might affect you. let's start having conversation about how we maximize your hopes and minimize your fears in a way that the country as a whole and the budget system. there's an organization called convergence which is beginning to assemble those groups to have that kind of conversation. and most of us on the table have been involved in the beginnings of that conversation. i think now this actually is in a period, in a sense, because you know you can't get something fundamentally done, it actually does focus the mind in a way, and say, okay, let's now get back to basics and think through, what would you have to

do to prepare the ground, for when the politics are right, you've got the constituents talks about arp, obviously a long-term budget and things like that, so i think it's a great opportunity for actually beginning this conversation. >> i wanted to draw a thread between a couple of themes that came up here. we talk about the long-term budgeting, we talk about looking further out into the future, but the chairman also brought up the concern with what he referred to as institutional bias at cbo, and i assume his point there is about the hammock scoring, my question is how do you address both of those concerns and how do you keep the confidence levels on all numbers at the level that you're seeing, i think across the aisle, there's a -- model that exists right now

and it's ability to correctly predict how we will spend money and what a budget should actually achieve over time? >> i think there's always going to be criticism of whatever model you use, whatever approach. i think that kind of goes with the territory with regard to cbo, i think one possible solution might be for cbo to acknowledge that there are perhaps some alternative models that are good enough, i mean meet the test of reasonableness that the projections of those models ought to be published alongside cbo's most confidence assessment of what things will look like. that would essentially mean that cbo's role is not like the semifinal arbiter, but is the high priest with some other priests, with what it says in leviticus, and that might be a

way of diffusing this so that you keep solid models up being used, but allow some deviation, and some room for maneuver, that might be a way to deal with this. >> it took too many years to say anything more about that, the i think cbo does a great job within the confines of what they have to work with. we need to get -- we need to change those confines, would be my judgment. but that's -- i don't have anymore to add. >> so not snknowing exactly wha dr. price was referring to, the fact that baselines don't treat spending and revenue in a parallel way always. i think you want to look at both of those and you want to, again, back to my belief that budget processes only work when both

sides believe that the outcomes are not prebaked into the rules. when it comes to dynamic scoring, there's no question you need some kind of analysis that shows the growth effects of the different policies that you would be picking and there's no question that we don't know how to do it yet, we don't know how to make those projections, but we should be looking at parallel estimates, you have the traditional static estimates and you also have dynamic estimates but that would bonn the spending and also on the budget side. but public investments are one of the biggest drivers of economic growth and we have a budget that favors consumption, this is not a recipe for long-term growth search you're able to look at the growth -- at least to inform our decisions i think would help us pick more pro growth and sustainable policies on both sides.

>> i mean i would say that i think budgeting has gotten more difficult since cbo was formed, we're focusing more on the long-term, where budgeting is much more focused on the economy, and so the questions that the cbo has to take on are much more -- in my view, it's a miracle that such an agent has been able a to with stand the crucible, but also be the model for national organizations around the world that are increasingly adopting cbos. so i think the challenge really is, how can we create analytic tools but without having them become decision rules, when analytic tools become decision rules, the pressure on analytic -- you really earn your money as an analyst, as maya said, sustain an approach where you're presenting multiple options and really letting the

political leaders make those decisions and that's where they belong. forcing those decisions to made by and an littic agency and having them mechanically be translated into budget figures is a real risky path. >> we'll open it up to a couple of questions, introduce yourself and let us know who you would like too answer the question. >> gary clark, i just wonder your -- i know that senator enzie is doing budget tear price controls, is there any sympathy from the minority ranking members? >> i -- as far as i snow, there's definitely sympathy for it. i don't know that there's necessarily agreement on what direction to head. >> i don't think any of the discussions have been public enough that we have a sense of where we're going, i think there's a lot of sympathy from a

lot of different people that the budget process needs to be improved. it may stop there, but my guess is they'll be able to find some areas to -- >> tax reform is an area that everybody agrees needs to be done, but the goals for both sides are a little bit different. >> back there? >> thank you. hi. my name is tom aerosmith, taxpayer and subscriber to "the washington post." and i thought simpson bowles was a marvelous piece of work and i think maya and her committee had a lot to do with that, it's good to have some ideas in the supply line. is simpson bowles are some suggestion such as simpson bowles still a viable approach

and what would it take to get that dusted off and moved ahead? what you're proposing here as far as budget redpoform, would t be a help in that regard? >> i can speak to sort of what we think a lot about that, wafs i also share your belief that simpson bowles was a tremendous blueprint was a -- growing the committee and protecting the vulnerable and getting us in a fiscal place that wouldn't derail the recovery was an incredible opportunity and there are a lot of people who believe that. and it sort of reflects how broken government is, that we weren't able to move something like that forward. i think there's always an opportunity to go back and look at those policies. we know we have to look at all parts of the budget. we know we need to raise revenues in a way that will help grow the economy, that health care costs need to be

controlled, that we need to do something to put social security back on a sustainable path. one thing i do think is that it may prove and this is the debt issue demonstrates how broken government is right now. it may be easier to do this in'sein's pieces. you can imagine breaking our budget into a number of pieces. what he did last year, we had a budget in place that was supposed to save $5 trillion, but we did was we added another trillion to the debt. stop making it worse, that's the first piece, we know we need to do something about social security, we know we need to fix health care, tax reform, that's something that's getting a lot of attention right now. we need to reassess our budgeting priorities, how our resources are spent, looking at investment, the fact that we spend 6 on the elderly for every

1 we spend on children, and is that the right ratio. and what we're trying to talk about budget -- let's do it all at once and let's fix this problem for this country and if we were to put ourselves on a sustainable fiscal path, it would open up so many fiscal opportunities, it would be so much better in the medium and the long-term. but if we're not able to do it all at once, maybe we can do it in pieces. i think a key is bipartisanly, each one of those pieces has to be addressed by the republicans and democrats together. >> maya is right on target there. in our history, we really have never had a budget commission that has succeeded. we have had pieces, the base closure, because members of congress wanted to be bailed out on that, they wanted to have someone else make those painful

issues so they could run for cover. one of the other issues is the property and plant equipment for federal agencies, there's a proposal to have a commission, an executive branch to close certain agencies and field properties. but we resort too much to the notion that a process sex with a commission is going to help us out. political leaders getting together, taking accountability for something, ultimately if that old-fashioned form of government we have is going to have to work. >> we have time for one last question. if there's somebody -- right here? >> i'm, sorry, you already had a question, is it okay if we go to somebody who has not already had a chance? go ahead, ed. we can speak after.

>> hi, blake folksman from the federal reserve board governors, i would be interesting in hearing from anyone on the panel if anyone's in support of a balanced budget amendment. just as a taxpayer, i see -- there is a fringe benefit of having both fiscal and flexible fiscal monetary policy. so how would you try to square that circle if you want to have responsible fiscal budget but also wanted to have some flexibility there to address the ups and down for the macroeconomy. thank you. >> do you want to -- >> no, i think there is a need for targets. and i would say the targets should not be pal balanced budget or not, i think the targets are more debt, as the chairman said, he would be for a

deficit of 3% or 2%, if the debt were down, the debt is the critical variable and we have talked about this too. the notion of having debt targets -- i'm worried about a balanced budget that it starts locking away, and even if you have have an exception, we have seen how the politics of gaining approval of a minority that holds you possible is just more difficult. i think the ability to mount the kind of anti-recession programs that we did in 2008, i think our economy would be much less nimble as a result. >> i'm not as opposed as i used to be, but i'm still not there yet, it's too blunt an instrument, what you want to two is have the deficit targets and the debt targets are the things that really matter. and from a political economy perspecti perspective. in this case, i regularly see people talking about budget balance, budget amendments to avoid talking about how you

actually get there. i want to talk about the simpson bowles, when i hear politicians talk about a bba, but they're not sure how you plan to two it. one, i think its too blunt from where we are and i would like to shift to the policy discussions to get us there. >> could i have one sentence? states do balanced budgets and they use rainy day reserve funds. it's not inconceivable that the federal government could adopt a policy that had to anticipate future needs to run deficits and budget it accordingly. >> i mean, i'm also drawn to the idea of a balanced budget amendment principally because others seem to fail. but the other panel itseists ha made very good points, because

it's not clear what you ore aiming at, a sustainable situation, having debt under control. therefore it may be not the right instrument, it's a simple instrument, that people can understand essentially what it means, but it doesn't necessarily make it the ideal. i suspect that the congress would be finding all kinds of interesting and novel ways of getting around such a balanced budget. there's an infinite reserve of innovation when it comes to figuring out things like that. so i think i really come down more where maya has said, it's really important to get the s substance right, what should the budget look like and what are our goals in that budget, rather than locking ourselves into just a balanced budget which may end up with massive increases in taxation at certain times, or

massive -- that's a very blunt instrument when we should be using much more subtle instruments to get where we want to go. >> thank you all for coming today and thank you maya, and thank you for the committee for responsible federal budget. >> coming up wednesday morning,

represent dif robert pit -- he'll tell us whether he thinks the 2016 presidential candidates are well versed on the issue.