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he can be financially and physically exhausting for care givers. i can say as a working mom and someone whose father is about half his 89-birthday, we feel the squeeze.

last week during a meeting of the middle class task force, the president and vice-president highlighted several innovative new programs we have developed at hhs through our administration on aging. reo family caregivers, whether it is help with counseling and information about caring for elders, or an adult day care center where they can drop off transportation to get a senior to the doctor or a store. this investment is going to give caregiversñiñi relief and help m keep loved ones at home for as long as possible. finally, this budget extends the relief we provided last year for states and communities facing devastating budget cuts. this will help states maintain essential supports and services at a time when working americans need them most. there is no question that the hard-working people of this country have been tested over

the past few years. it is stated the union address, president obama urged americans to rise to the challenge posed by our current difficulties and pledged that as a country we would face these challenges together. i believe this budget lives up to that commitment. we target relief directly to the working americans who need it the most and makes long-overdue investments to strengthen our health care and public health systems, keeping us all help the more secure. at the same time, we recognize the fiscal challenges facing this nation and take our responsibility to the american taxpayer seriously. not only do we attack waste and fraud aggressively, but our leadership team has worked to eliminate programs that sound good on paper but tonight result. i want to thank you for being here today. now the rest of our team and i will be happy to take some of your questions. please identify yourself and the outlet you represent when you ask your question. remember each of these people

will be available for more detailed and specific analysis immediately following today. >> how does the budget handle the sustainable growth rate, and is there anything you would like to comment on the sgr? they have to prepare for the cut and i thought you would want to comment on that as well. >> we've assumed in our budget that congress will once again intervene, so our budget is based on a zero growth rate for doctors, and not the 21% cut for medicare services that is looming at the end of march if congress does not act. there been a variety of measures considered, a short term, longer

term -- but we are confident ñrthat they will act on that. the president felt it was in for -- important that the budget reflect those costs. yes, sir. and then there is another man. >> you give the national institutes of health of 1.2% increase,ñr and do you feel that that is adequate to preventçó te concern that all of these people do and whatñr project get two years and then it goes away? çó>> there is no question that more is always more. but i think in this restraint budget time, an additionalñi

billion dollar investment is something u the president feels and we certainly feel that advances are critically important. recovery act will be multiple o

terms of jobs and access to stimulus. yes, ma'am. >> i am with kaiser health these. f you could expandçó on the comparative research? do have specific goals and how that could be spent, and could that research determined coverage decision in medicare, medicaid, or otherxd federal health programs? ñiñiçó>>ñiçóxdñiñi i know thered ñiçóñicommitmj>+ reflected by n increase in the patient-centered research which we fill but only research which we fill but only empowersñ  our buyers to make the best possibleñi decision about e technolog]#je)qñijfçó treatment, but it also does a great deal to

dr. clancy, i don't know if you specific areas. there is no specific linkñi andi the the house or senate bills -- in either the house or senate bills to determine that, but certainly i think along the way, it anticipates that having the best information, usingñi not oy theñi most effective strategieso ñihelp us dramatically improve quality, part of the health reform effort all along. yes, back here. çóñiçq7ñi>> national public ra. a lot of information on the health care overall bill now stalled required discretionary funding, and some of the

preventative health care measures. what would you do, given the idea that this was domestic discretionary freeze is? >> i don't think that there's any question that both in the recovery act and in some early bills passed already in the obama administration, there is a new platform for health-care bills in this country. so absent any thing in the health reform legislation, we have an historic first time ever investment in prevention and wellness, in those communities and state grants, about to be released. the reauthorization of the children's health insurance programçó in shores up to anothr 4 million american children and those outreach efforts are underway. states have already stepped up and provided, even in very tough budget timesñr.

and help technology, is+ transformational to move the health careñi system from paper files to electronic files. it allows much better collaboration and coordination between providersñiçóçó and redg medical errors. s a huge investment continued on in the indian health services, which is certainly good. cobra, and help provided in the recovery act, and medicare services provided to the state, and going for most state fiscal years, which ends march 30, so that will hopefully take it through next fiscal year for the states. it laid a platform out. the work force issues that major funding in the recovery act.

we made additional investments in the budget for more scholarships, more nursing scholarships, middle help professionals -- there is increased investment in community health centers. we're reforming the health system, that work is under way and continues on even though the discussions on health reform itself are continuing. yes, sir. >> american medical news. can you hear me ok? is there a patient repeal or delay in the pay cuts? çó>> that is the 10-year cost fr

fixing it permanently. the budget assumes allocation for the full 10 years. ñi>> i'm with "inside health policy." i had a question about community health center funding, one of the largest line items, also prevention and wellness -- prevention of wellness. >> i hope that we do not prevent wellness. [laughter] >> prevention and wellness. maybe you could talk about the other part of it. >> i have to get to a meeting. and when asked one of my

assistants about the community health centers, and then an update on the prevention and wellness. >> of the $2.5 billion that is in the president's budget for community health centers, that reflects a round approximately $290 million increase over the last year's funding. çóthose dollars are allocated or a few key areas. continued support for the currently 1100 help centers across the united states, which include about 7500 sites associated with them. in addition, those dollars pickup and extend support to the 127 community health centers that were funded through the recovery act and that are being

funded through the recovery act. in addition, we have $25 million allocatedçó in the total amounto support behavioral health services at community health centers. that will goes to about 125 community health centers, so those are new dollars specifically to our rich and strengthen the april health services. we also want to see imbedded in that proposed amount funding for an additional new 25 health centers. that is what sets behind that total dollar amount that you just cited. and then i will let someone else speak to the prevention. >> the investment mentioned in the budget builds on the stimulus funding which was $650

million over two years for patient well the spirit that is in several different baskets. the first will be announced in the very near future, $119.5 million to the states divided into a formula grant, a competitive grant, to reduce tobacco use, to improve nutrition, and increase physical activity. and for approximately 40 communities, including urban areas and rural areas, programs that will be announced this month. building on the president's budget, it allocates $20 million for large cities, up to 10 large cities to implement programs to reduce tobaccoñiçó use, physical activityñi increase, and with gd policy changes, which can save a lot of lives for less money as

well as more diplomatic initiatives. >> yes, ma'am. >> a follow-up on the question of the sustainable growth rate. what impact you think that will have on medicare advantage rates, to be proposed later this month? >> we have assumed and i think the doctors community assumes and congress assumes that they will do what they have done the last number of years and not implement a draconian cut in dr. rates. i am gathering that medicare advantage plans have also assumed that provider rates based on their current structure -- i cannot imagine that they would factor into their rates for programs going forward that

there would be a significant cut in provider rates. yes, ma'am. >> reuters. your agency states that your budget helps to build the foundation for health insurance reform. to be clear -- does this assumed that congress will pass health reform legislation this year? >> there are no specific features in this bill that have that assumption built in. but i think that the president made it clear in the state of the union that he does not intend to walk away from health reform. i know that conversations continued with the house and senate leadership. so while there are not specific budget allocations based on an implementation strategy, i think the platform is there for health reform to move forward. yes, ma'am.

>> "wall street journal." to follow up on the health reform inçó this budget, you mentioned additional medicare funding and the budget. are there other provisions did you decided to include in this budget, given that the bills are stalled in congress? >> as you recall, the increase to states was not in either the house or senate health bills. he was in the house-past jobs bill, passed earlier this year. the presidencies that as a critical measure of states are experiencing major budget downturns. his inclusion of this in his 2011 budget is his way of making it clear to governors that he supports this effort.

whether it is a job bill that passes the senate, which could mirror what the house has done, or whether it is health reform or another vehicle, i think this is the president's statement that this is absolutely essential. but the house to pass this in its jobs bill. >> i am interested in the fda medical studies to increase medical privatization. what sort of tools are you referring to? >> i would love for dr. hamburg to mention that question. >> we are now getting an increase of $1.4 million. this is to spur our core commitment to promote and protect the health of the public

in terms of medical product safety. it involves a number of important elements. one is to continue our efforts to ensure safety and quality in terms of the medical products that are developed and made available to the public. an important component of that is recognizing that in the 21st century we need to be active globally. the import of either drugs or other medical products or active ingredients involved in medical products becoming increasingly -- coming increasingly from overseas. this funding will give us an opportunity to make forward progress in that domain. also to continue to strengthen our efforts had global marketing surveillance, and the monitoring and understanding of safety

issues once the drugs or other medical products have been approved and are actually out in the communities being used by people. we did very successful studies and take rather seriously the requirement for approving drugs based on data of safety and efficacy, but we know it is very difficult -- different when you're studying a medical product in thousands of people, versus being in the marketplace and millions of people using them. we have others that we will be able to undertake -- undertake as we see this increase in funding for patient safety. >> i'm with a peak. just wondering your opinion compared to the polls of the health care legislation in congress.

how far would you say this budget goes in achieving the objectives of covering costs? >> i would suggest that is not an either/or. i am hopeful that it will be both. a combination of efforts that are contained in this budget which certainly go a long way to strengthening the public health infrastructure and to provide additional coverage with the children's help out -- and community health centers, but in no way replicates the efforts in health reform legislation to reach out to the 30-some million americans who have no health insurance at all and those who are woefully underinsured based on price. i think it is, as i say, a platform seeking different

strategies and goals. but this budget, absent help reform, will still leave a major gap not only of affordable coverage for many americans, but makes very little change in the cost trajectory which right now is crushing families and business budgets and government budgets. i would suggest that we need both. there are major investments in patients centered research which will help them informed doctors. the implementation of health technology is a big step forward but it does not change dramatically the cost trajectory were certainly fill the coverage gap or provide security to a lot of americans who have health insurance now but who are really at the mercy

of health insurers to make rules day in and day out that kick people out of the market and limit coverage. >> time for more? >> you mentioned that the budget does not make specific provisions for health reform. i wondered whether there are any provisions for medicare and medicaid cuts? and if so, what would be the magnitude of those cuts next year? >> the president's budget does not have any brand new medicare or medicaid cuts. both the house and senate bills have proposed changes to medicare and medicaid, but there are no new cuts in the budget. ñi>> sir, have you ask a questin

yet? someone who has not answered -- ask a question yet. the head. -- go ahead. >> an update on your plan to implement a new state health administrator? >> sure. we've had extensive interview processes, and the processes under way. the good news is that we have incredibly able leadership at both the centers for medicare services, and with sandy, who is joined a team who is running the medicaid side of the shop. as a former governor who worked

with this office frequently, it is a night and day difference in terms of the implementation and collaborative strategies on medicaid. we are aggressively pursuing a new leader. we hope to have someone named in the not too distant future. but in the meantime, cms is in great hands. thank you all very much again. i think that we will be available if you have specific questions for them. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> no veterans affairs secretary eric shinseki on the 2011 budget request for his agency. this is about 45 minutes. >> ladies and gentlemen, secretary of veteran affairs, the honorable eric shinseki. >> good afternoon, everyone. thank you for joining us for today's budget rollout. we will be sharing with you the

president's fiscal year 2011 budget and the advanced appropriations request for the department of veterans affairs. this budget request provides the resources necessary for us to continue pursuing the two overarching goal is that the president provided to us a year ago. the first is to transform va into a 21st century organization. and at the same time ensure that veterans have timely access to benefits and quality care from the day they take their oaths of office for the first time until they are laid to rest. to that end, our 2011 budget addresses on focusing three critically important concerns for veterans. first, short processing time for receipt of current benefits and reducing the backlog in disability claims. second, improved access to health care services, and

finally, in the downward spiral that results often enough in veterans homelessness. va is fortunate to have public servants that are both talented and skilled who are able to generate the good ideas and then creatively implement them. for this type of talent in the continuing support of congress, i am confident that we can achieve our goals of providing a sensible, high-quality health care for veterans. our program -- i am privileged to share the podium with the deputy secretary. he has been our leader in watching the process. he came to was with broad experience in both the public and private sector. and he and i both share a commitment to deliver president obama's vision for transforming the veteran affairs department into a 21st century

organization. with that, i call on the deputy secretary. >> good afternoon, mr. secretary, and thank you for that kind introduction. we do have an enduring and sacred mission at the va. today is a watershed moment for our nation's veterans. as secretary shinseki said, this $125 billion budget request for 2011 and advance appropriation for 2012 are landmark figures that will provide the resources that we at va need to get the job done. one only has to look at the shifting dynamics of health care in the needs of our veteran to understand the need for va to have the capacity to serve veterans enhance. the president's fiscal 2000 year -- is all year 2000 budget in

the advance appropriation will give us the tools we need to act quickly, effectively, and compassion lead -- compassionately to meet the needs of our veterans. when combined, the president's 2010 and 2011 budget request for discretionary va funds are 20% above the 2009 enacted level. va has in 20111 of the largest increases of any department -- va has in 2011 one of the largest increases of any department in the government. we need to protect the dollars and our veterans stress. we will continue to transform va by working as advocates for veterans. this budget will improve quality and access and cost of health

care services and benefits. we will address the backlog and strengthen our infrastructure and i.t. an acquisition, and by most importantly, investing in our people. as you will see in the advanced appropriations for 2012, we will help to bend the help need cost curve. we will work to improve our services and access in a cost- effective manner. we see this as a contribution to meet the challenge that our nation faces to reduce the growth of health-care costs. the advance appropriation for 20 tell represents all 44 activities. as needs arise, it can be changed. our assistance secretary is going to give the details of the budget proposal. what we hope to take away from this briefing is an overview of the financial plan for our department and administration

fully committed to meeting the needs of our veterans. with this budget proposal, president obama has sent a signal loud and strong to our citizens soldiers, from the greatest generation to the latest generation, that we will meet their needs and we will keep our commitment to them. now, ladies and gentlemen, is my great pleasure to introduce mr. john gingrich, a former private sector ceo in are enormously effective chief of staff. -- and our enormously effective chief of staff. >> mr. secretary, deputy secretary, thank you for your leadership for the budget process. it is my pleasure to introduce the man who took over as deputy assistant secretary for management in late february of last year. it is currently serving as the acting assistant secretary for management and chief financial officer.

he is responsible for the financial management of va's budget as well as the department performance management, enterprise assets management, and he sustained very busy. but he is also very experienced in the federal government. as the cfo at the department of commerce, and at the national institute of standards of technology, as the cio and cfo of the irs, where he was accountable for tax receipts and the oversight of over $10 billion in operating budget -- and here at va, where from 1994-2000, he served as the first cfo and of the vfa. let me also introduce the rest of the panel today to answer your questions regarding the 2011 and 2011 -- 2012 va

budgets. we have the acting undersecretary for health. acting undersecretary for benefits. acting undersecretary for affairs. secretary roger baker, the assistant secretary, and the cio. the executive director of office of acquisitions, logistics, and construction. tammy duckworth, government affairs. without further repairs, let me turn it over. -- without further ado, let me turn it over. >> good afternoon, everyone. first, let me thank the secretary and deputy secretary and chief of staff for taking time this afternoon to kickoff our rollout of the budget, and thank you for spending this next

45 minutes with us where you can be informed of the president's budget for our nation's veterans. our format today -- i have 17 slides that i will present to you to walk you through the highlights of the numbers in the budget as well as the policies that are included in the budget. i will save some time at the end for questions and answers, and that is why we have the insistence secretaries in the undersecretaries joining us to answer your questions in this much detail as they need to so that you can get the answers that you expect today. let's go to the first slide in the presentation. as deputy secretary has said, the 2011 budget supports president obama's vision to transform the department of veterans affairs into a 21st century organization. the priorities in the budget are focused in three key areas, and those areas are access, claims

processing, and eliminating homelessness. the next slide shows the highlights of the budget request itself. when you look at these numbers, you will see that the budget clearly reflects president obama commitment to our nation's veterans. this is the second year of the largest increase in the va budget. when you measured the increase in the discretionary budget of 2009, the increase is 20.3%. the highlight within that 20.3% includes a discretionary increase of 7.6% in 2011 that is made up of an unprecedented increase in the budget for the veterans' benefits administration, which goes up by 27% between 2010 and 2011. and also an increase in the

medical care budget that totals 8.5%. our priorities remain the same as they were when we rolled out the 2010 budget last year. those priorities are benefits and claims processing. within benefits in claims processing, we take a moment to talk about in terms of entitlement and discretionary spending. for entitlement spending, the president's budget includes $15.8 billion in new money for 2010 and 2011 to pay the claims related to the new agent on presumptions. -- agent orange presumptions. at that $13.4 billion, the vast majority is for retroactive claims that we had processed and to pay out to veterans and their

families. for 2011, the claims estimate is $2.4 billion, and that is also included in the budget request. turning and our eyes to the discretionary part of the benefits and claims processing, the 27% increase that you have heard reference several times already to date amounts to $460 million, it is going up that amount between 2010 and 2011. that will provide as 4048 more fte. they will be used to process an additional claims related to the agent orange presumptions as well as the increasing trend in non-agent orange claims that we have seen. our second area of focus is the

advanced appropriation that is included for vha, which assumes and on erected -- an uninterrupted stream of expense. colossuses our next priority. included in the 2011 budget, there is an increase as part of our five-year plan for eliminating homelessness. it brings the total for our effort to $799 million in 2011, it just short of $800 million. this $800 million in 2011 will be used for permanent transitional community-operated and va-operated housing programs, and our reach -- and outreach programs for low-income veterans.

access continues to be an area of focus and priority for the department. let me highlight three components of the access strategy included in the 2011 budget. first, teleheatlth --it will improve our access to care and quality of care, especially for veterans and rural areas. we will be activating 39 major construction or leases across the country that will provide new services to veterans to meet their healthcare needs. these 39 projects are located in 17 states, and the projects include the opening of a new hospital in las vegas, a new polish trauma center in san antonio, and the opening percenters.

-- the opening of new centers. our national cemeteries, we will implement a new policy that will improve access and improve access to our cemeteries by lowering the population threshold that we use in our planning for establishing new national cemeteries. this change in policy will allow us, beginning in the 2011 budget, to plan for 5 q and national cemeteries. last but not least strengthening the management across the department. our budget includes new initiatives that willñr strengtn management, including a $24 million government-wide presidential initiative to improve the acquisitions work force. this has been the park -- our part of this, but this is being

made in the various departments and agencies across the federal government as the budget calls out today. this is our component of that government-wide presidential initiative. it includes $21.6 billion to further strengthen the department of level management, including $4 million to help us manage the nationwide implementation by establishing an office to manage it in the department. it includes over $3 million for benefits in our general counsel's office, which will allow us to handle cases before the court of appeals in a more timely manner and also increase timeliness in the publication and distribution of secretarial regulations. $2.8 million will enhance our alternative dispute resolution, which is good for va and our employees, and it will save our nation's taxpayers money.

also included under management is a 10-year extension request for enhanced use lease program. for those of you familiar with the enhanced use lease program, it has been win-win for va and the veterans, and the authority for actually expires. we're asking the congress to extend that for another decade. the final focus under management is to improve our discount -- our construction management in the department by working on the major construction budget. that will ensure that all projects, no matter how large or small, will have a proper level of project management devoted to them. that is the highlights. let's move to the numbers. the next slide is a pie chart that shows the major components of the budget, focusing on

between the discretionaries components and the entitlements components. the 2011 budget requests is $125 billion. it includes both mandatory spending for entitlement programs and the discretionary programs. i highlight the entitlement programs at the bottom half of the chart. they amount to almost 52% of the budget for 2011. that is a total of $64.7 billion. what do we buy with that money? 3.8 million veterans and survivors will receive compensation. they will receive pensions. 829,000 veterans and their families will receive readjustment benefits. 6.9 million veterans and family members will be covered by our va life insurance program, and to wonder 40,000 service members

and veterans will receive va guaranteed loans in fiscal year 2011. that is it for the entitlement program highlights. for the discretionary piece of the pie chart, it totals almost 42% of our budget. the major components of that are critical care and medical research, making up the vast majority of that amount. and what we're getting for this 42%, for the first time in its history va medical program will treat over 6 million veteran patients. our next light moves us into the details that underline the pie chart. the shows with the levels are for 2009, 2010, 2011, and the deltas between 2010 and 2011. this is here for your quick reference.

what i am going to do right now is not focus on each specific appropriations account, because that is what the rest of the presentation will do, walk us through each of the slides in more detail. on the slide, focus at the bottom. in the bottom to boxes and follow those lines across the table, you'll see that the total va funding for 2011 is actually a 10% increase over 2010. mandatory increase is 12%, and the discretionary increase totals to 8%. i would also direct your attention to the last slide on this table, which is 2010 agent orange supplemental. it will be included in the 2011 budget to pay for the cost for additional claims coming in for the new agent orange presumptions. that amounts to $13.4 million.

part of what we do with that money his staff the department of veteran affairs. this is the total fte that this budget will buy. in 2011, we will have fte level of 28,003 that is almost a 6000 increase over 2010. the major pieces that make up that 6000 increase our that just over four talbott -- 4000 fte to help us address claims processing. as well as adding nearly 1300 fte in our medical care programs. let's move from fte into the actual account level details. the medicare budget authority is presented here in billions of

dollars. the slide includes both the 2010 appropriation request as well as advanced appropriation for 2012. the advance appropriation is an increase of $2.8 billion over 2011. more specifics about the funding in 2011, our appropriations request is made up of two components, 48.2 billion in direct appropriation and $3.4 billion in collection 3 toll increase, $4 billion, 8% over 2011. $54.3 billion, the $0.6 billion of that in our direct appropriations, and another $3.7 billion we will collect through our medical care cost recovery programs and other services.

the increase in 2012 his $2.8 billion over 2011. take note that the advance appropriation relies on 2012 numbers in this budget, being a floor, if you will. in this we go through 2010 and through 2011, the administration will have another bite at the apple for 2012. a year from now we will be standing here presenting the 2012 budget, and if we think these 2012 figures need to be adjusted, we will do so at that time. in terms of workload for the medical care appropriation, as i mentioned, 2011 will be the first time we have gone above 6 million veterans being treated. in 2011, outpatient will total 5% over the 2010 estimate. in 2012, we expect 6.2 million

new veterans, and that will total almost 87 billion, off 5% increase in workload from the 20 -- over the 2011 estimate in 2012. selected programs that may be of interest to you are on the next slide. i will leave this with you as a reference document that you can use later. mental health, you will note, that the dollars in the 2011 budget are 9% more than 2010, and that increase continues a rate of 6% in 2012. operation in during freedom and operation iraqi freedom, that is noted on the second line of this table, which shows that the increase for this better and cohort to be 30% higher in 2011 been 2010, and another 6% higher in 2012.

i also want to highlight the women's veterans budget. an increase of 9% in 2011, and 12% for 2012. it is worth noting that the emphasis including in this will be enhancing primary care for heart patients women veterans. -- for our women veterans. the 2011 workload for our veterans, 6 million, a 2.9 percent increase over 2010. and another 2.5% increase is reflected in the table for 2012. the second line of the table focuses on priorities seven and eight veterans. between 2010 and 2011, and 8% increase in these veterans that we will treat as we continue to expand our health care to

priority eight veterans. just looking again at the veterans cohort at the bottom of the table, included in the numbers above. we are highlighting of 14.8% increase in 2011, and an increase of 12.9% in 2012 oef/oif veteran patients. we expect 39,000 of these patients in 2011. let's move to medical care and medical products said it research. these total in millions of >>. -- fees total in millions of dollars. this is what we are requesting an our appropriation in addition to what we may bringñi in in 201 other sources. we're continuing our investments

in medical care research by requesting by the under $90 million in 2011. when combined with the increase requested in 2010, this is at 50.7% increase in medical research over two years in the president's budget. we will be of a fund 3345 fte. our research projects include rural health, access to care, and we are also looking to continue to conduct the investigations that demonstrate our ability to enact large-scale changes in clinical practices in acute and chronic disease areas such as mental health, regenerative medicine, and others. our next like texas and the veterans' benefits administration. the discretionary increase of 1.7%, those funds will primarily

increase the number of claim a judicatures and support them as we address claims processing and our backlog. the driver of this increase is the continuing trend of increase in applicationsçó and to the compensation program as well as the increase the workload that comes with theñr new agent orane presumptions. in addition to compensation, it is worth noting that this budget includes other important activities such as the continued implementation of the post-9/11 g.i. bill, one system that will replace our current paper- centric claims environment, and the management program which will provide enhanced access to the va for veterans.

with the money begin in 2011, you can see what we are doing in terms of staffing vba in the next slide. this is a 24% increase fr. it is important to note that the way we're count fte in that 24% is that there arefte in vba in 2010 that are funded out of one- time recovery act money. that doesn't -- that goes away at the end of 2011. what we're measuring from the mark are permanent fte in vba that do not include the one-time recovery act funding. this program will go up by 3914

in 2011. that includes 1870 doctors that will be funded so that recovery atfte currently on board can stay and stay permanent in the future, as well as 2049 new doctors. those numbers make up the 3909 teenfte increase the to see on the table -- those numbers make up the 3900 anninefte increase the to see on the table. it is funded in this budget and includes project re-engineering as well as investments in information technology. vba and going to the national cemeteries, the budget authority is in millions of dollars, and

sustains an increase that was provided by the congress in 2010, including an $8 million increase over the president's budget this year. when combined with 2010, this request is at a 9.1% increase over 2009 funding levels. where roughly average in about 4.5% increase in that budget over the past few years. within that total, a thenca budget will provide for the following -- $3.4 million to address workload increases, $3 million to pursue renewable energy projects through the use of wind, solar, and geothermal efforts, a $39.9 million for efforts to maintain va cemeteries as national shrines, and there's also a component in our minor construction funds that funds national shrines. when combined with this effort, is $61 million in 2011.

going out to the i.t. component of our budget, our funding is frozen for information technology in 2011. that reflects our strategy in va under our chief information officer to bring greater discipline and oversight to our program management. we're comfortable with this freeze while we take the time to make sure that when we commit to deliver a project to the program, which delivered on budget, on time, and it has the functionality that our customers come to expect. the overall height t investment represents 2.7% of the total va budget. in terms of the major buckets and what they find, medical programs, $1.3 million, corporate systems, $527

million, in our agency development, $158 million, and staff and administration at $966 million. let's move from i.t. infrastructure to our building and our capital infrastructure and our capital programs, on the next slide. the new budget authority we are asking for is 1.7 $5 billion to read it breaks out by line item in the table that you see below the graph. a large as peace is a major construction, and we have a look -- a couple of slides to talk about major. let's talk about the cemetery grants and minor construction. .

three of those are ongoing projects were this budgeet continues to rebuild those facilities, and two of those were new projects. the three projects that are ongoing are renewed tertiary care facility in colorado, and new medical facility in new orleans and in palo alto california, trauma care. the new projects we are requesting funding for designed

in 2011 are a plantain alameda and replacement facility in omaha, nebraska. the request fully funds graveside expansion at two national cemeteries. the first in pennsylvania, and the second in washington. the major construction budget also includes an expansion at arak los angeles, calif., -- our los angeles, california location. there are additional line items including improved facilities security, resident engineer staff, planned acquisitions for a national cemeteries, and a variety of other functions and activities, so that ends the presentation of slides. you have a supplemental slides

you can take away for reference, and now we will go into the question and answer portion of our presentation today, and i believe our first question is coming from rick of "army times." >> i have a question of whether the budget is too big, too small, or just right, because this building there is more that needs to be done, and we are already -- they still think there is more that needs to be done, and we are already hearing nothing is guaranteed and they are going to try to come back and cut it, so can you give us some idea of where you are at in terms of is this the smallest budget you can do? are there more things you can ask for? >> to play off of your analogy, this budget is just right. if we look back at the

highlights, 20% increase over two years, 27% increase to address one of our top priorities, almost $300 million to help our plan to eliminate homeless veterans, and 8.5% increase in medical care as well, so this budget for 2011 and 2012 was established to treat those veterans who come to us to treat their health care while maintaining quality and safety. it provides an unprecedented increase in vda which shows the seriousness to which the president and secretary are devoting too claims processing as well as expanding the policy in our cemeteries so we can provide more internment for our veterans and their families in the future.

our next question is coming from jintao of "the new york times." >> could you explain in more detail the request on agent orange compensation for the first year? it is something on the order of $13 billion. is that retroactive, and could you explain how that works? does that number come down considerably over the coming years? >> the number does drop off because a lot of those claims are retroactive, but i am going to turn that question over to mike for a response. >> there was a court decision some 20 years ago. the decision requires us to reject any time we had denied a claim -- requires us to -- any

time we deny a claim and it is found to be presumptuous, we're required to adjudicate the claim with the effective date originally filed, so that means we're going to be paying benefits to veterans that go back some 20 years, and that is why there is such a large payout in 2010. >> i believe our next question is from cnn. >> could you talk a little more about the timeline for implementing software for the g.i. bill processing and medical claims processing? when will that happen? also, what is the goal for hiring for next year or this year? >> i will turn the first half over to our c.e.o., and then we

will talk about the plan. >> the goal for the new software for the long-term solution is to introduce first functionality on april 1. we will be testing it at that point and then full functionality on june 30, so we go in the fault to processing for those benefits. i was not clear on the medical claims site. on the medical side, are you talking about the paperless system? we are currently working a number of pilots in the paperless center for 2010, and in 2011, we have a substantial chunk of dollars in the budget to field new systems in a number of offices between 2011 and

2012. we have committed to have the paperless process in by 2012, and we are committed to that. >> some were already on board. these were employees we hoped to regain, so that was from an age our standpoint. the other 2000 will be bringing on as -- for men age are -- that was from an hr standpoint. the other ones which will be bringing on as soon as possible so we can train. we have been bringing in people over the years, so we know we have the infrastructure to do it. we have money for training and

also for those people, so we're pretty confident we're going to be able to do that. >> our next question from government executives. >> a question regarding overside of project management. when did you expect to launch the va-board website -- va website where services can watch? >> it has already been launched. i need to give you a link to that. we did a soft launch which allows people to stumble across it. we have not done the basidia. >> thank you, is there any -- we have not done any promoting. >> thank you, and when the u.s. plan to sign the deal? >> i could not talk about anything that would be

acquisition sensitive, but that does not the type of thing we would have on that website. >> thank you. >> kb has some questions. >> we have answered all those questions, so that concludes the formal press conference. thank you very much. >> thank you all for coming in. if you have any other questions, please let us know. >> more now on the fiscal year 2010 budget from education secretary arne duncan. this is a little less than an hour. >> welcome, to those of you who are regulars. a lot of familiar faces. apologies for not having enough chairs for everyone today. thank you for cramming in and grabbing spots where ever you can. we are here to talk about wanted to dole -- talk about data

systems, in particular an 11- year-old reading about history. i am very pleased about the turnout to talk about that, so thank you for your interest. we're here to talk about what is in the screen but -- the proposed 2011 budget, and we know it you have lots of questions, so we will leave plenty of time for that. the agenda will include comments by senator duncan perry and we also have our director of budget services, who has just come from the press called with the secretary, and then we will have time for question and answer. we only have one microphone. it is over here, so the people

on this side have the advantage. if you have a question, you might want to plan to migrate over here at some point. if you do come to the mike, speak directly into it. we're transcribing today and want to make sure we get everything down accurately. we are very pleased with the investments the president is proposing to make in education in this budget to meet both fiscal -- having the highest portion of college graduates by 2020 and to secure our economic future. this is a heavy investment in adult education and early learning, and to do it, we're really determined to build bipartisan grass-roots support as well for reauthorize saying

the secondary education act to promote a well-rounded education, foster competition, and give states and districts as much as possible. our role will be put to provide the common definition for success. we are going to talk today about how we propose to go about this. we are now getting instructions on the fact that remote for her power point only goes forward and not back, so we are a forward-moving agency always looking to the future, and we have our special guest yet? >> [inaudible] >> i told these folks about using microphones. i have nothing left to say. >> can you tell us any jokes? >> i have only one.

i am very serious. the color is green. it is always exciting to see what it is going to look like. sort of the color of money this year, so add that to your collection. we have been talking about different shapes and colors, so we look forward to your description. you can e-mail that. this is always a fun time when you are wasting for the secretary. why don't we move into his presentation. i look forward to hearing from friends who are watching, so why don't we pause when arnie and

arrives. you have a clicker, so why don't you get started? >> he should be here shortly, and i will try not to upstage him too much. i will lay out in terms of the president's budget being unveiled. as you know, since you have your green books, the president's budget includes a $49.7 billion for discretionary funding for the department of education with a $1 billion reserve fund that would come into play when congress passes the reauthorization of the trend secondary education act -- trans secondary education act.

with the reserve fund, it is almost 10, and with that, here is the star of the show. i really just got to your first point. i just talked about the overall increase. >> good afternoon. i will start from the start. this morning, the president released his fiscal budget. this budget includes a 7.5% increase in congressional spending, one of the largest increases ever proposed. at a time when most government spending is being frozen, the president is investing in education. he sees it as the key to our economic future, and this budget isn't clear reflection of his deep commitment to education. the budget lays out a new vision

for reforming education system, improving schools, and increasing college access and completion. it has invested in education on every level. it is a cradle to career agenda, one that starts at birth with the ultimate goal being to graduate from a two-year or four-year institution. the president understands america's economic security depends on improving education. in 10 years, the jobs they are looking to fulfill will require a college degree or professional certification. the budget also signals a bold new direction for education policies with more competitive funding, more flexibility, and accountability we will develop in partnership with democrats and republicans in months ahead. all told, the budget includes

$49.7 billion for the education discretionary program, an increase of $3.5 billion for 2010. this includes an increase in elementary and secondary education act, also known as no child left behind. it also signals efforts to redesign accountability, so its focus on high school rates of success in college and the world of work. the commitment to strengthening the current accountabilities system will be based on the outcome and closing achievement gaps. today, the standards are too low, and the system does not provide incentives to raise the standard. as many of you know, the opposite is true. it also does little to reward progress. we want accountability reforms that factor in students' growth, progress in closing achievement gaps, proficiency towards

college standards, high school graduation, and college enrollment rate. that is a lot to track. we recognize that, but we want to be smarter about accountability, more fair to students and teachers, and more effective in the classroom. we need to learn from these factors and act on them. my staff and i have traveled to all 50 states on listening and learning to our last year. we have heard so many -- and a learning torah last year. we have heard so many complaints. -- the learning tour last year. we have heard so many complaints. now we are coming back with some ideas. we welcome an additional input, feedback, and more ideas as reauthorization moves forward. we will work with congress to redesign accountability, to reward growth, and to give states the encouragement they need to adopt higher standards.

under their proposed budget, the president will send congress a budget amendment with an additional $1 billion to provide incentives for successful schools. he will also provide additional money for assessment and after- school programs. the president is trying to advance reforms elsewhere by including 1.3 $5 billion, $500 billion for the invest in immunization fund, more money for school turnaround, charters, school safety, and programs around teacher and principal preservation. one area is leadership. basically, we are proposing a fivefold increase there. we want to do lots of work there. the proposed budget reflects the broader commitment to efficiency, cutting red tape and holding ourselves accountable.

this budget consolidates 38 education programs into six funding streams and eliminates six others that duplicate other programs or do not have a national impact. by doing that, we can save $123 million. we can save another to lead to $17 million by eliminating earmarks. one goal -- we can save another b$270 million by eliminating earmarks. the best legislation will comment local level with great teachers, great principles, great states, not from here in washington. our role is to provide a common definition of success, not the subscription for success. we will advance that goal. we will create a limited federal role in education. we will raise standards for all students, supported and

rewarding effective teachers and leaders, turning around low performance goals, and helping schools develop a well-grounded education. we have boosted funding by nearly $205 million for things like history, languages, and the arts, because we understand children need so much more than reading and math tuesday's successful and be engaged. let me shift to higher education. the budget includes $173 billion in loans, grants, tax credits, and work study to help students go to college. that is enough to help three of the five college students and incorporates everything to end student lending subsidies to banks and shift billions into higher education and early childhood. that proposal passed the house and awaits senate approval. under the proposal, the national pell grant will rise $160 and

automatically rise the rate of inflation plus 1% annually over the next decade. the bill also has $10.6 billion to improve and modernize community colleges and $3.6 billion to raise college completion rates. lastly, the bill provides $9.3 billion for grants over the next 10 years to improve early learning programs. as you know, the president set a goal that america will once again lead the world in college completion. to reach our goal by the end of the decade, we need to improve the quality of education at every level, from birth to the end of college. this budget puts us on a path to success. it also includes much more, such as an additional $250 million for special education, more money for english-language programs. more money for other colleges

does serve minority students. more money for school safety, school health. there are also $210 million in the neighborhoods program, which is a competitive grant program whose goal is to build upon the success of the harlem children's fun. the program provides social services for school improvement to transform whole neighborhoods. we expect to find of 210 pilot projects for the fiscal 2010 budget. these additional resources will help the pilot programs get their start. lastly, there is more money for expanding educational options in charter schools, comprehensive systems of choice. let me close by saying the need for reform is absolutely urgent. today, more than 25% of our nation's high school students fail to graduate. about 50% of incoming college

students need remedial education. many drop out. others cannot keep up or cannot afford to stay in. millions of jobs go unfilled each year due to a lack of workers, and american students are falling behind other countries in critical areas in ♪ like math and science. they have done a great job in closing achievement gaps, but there is much more to be done to get on with the important work of teaching and learning. the president knows we have to educate our way to a better economy. he has called on students and parents to take better responsibility and to join together in this effort. we are working from both sides of the aisle to develop this system of education that affects everyone. everybody wants to work together. it does not mean there will not be disagreements from time to time, but we all share the same

common values, so we are hopeful reauthorization will not happen, and we all move forward with an aggressive reform agenda in the months and years ahead. thank you so much. [applause] >> thank you. i will not spend a lot of time at the presentation. i just want to go through a few highlights that emphasize some of the things you mentioned and then open it up for questions. some of the information you have in the books in front of you. as the secretary mentioned, the total increase would be up to $50.7 million. just to fly some things he mentioned, the budget supports $9.3 billion over 10 years for

the early morning challenge fun. it also contains continued support for idea preschool grants. we will also continue to look for ways to prioritize early childhood education as we have done with respect to promise neighborhood, raced to the top, and i3. our investments will complement increases for the child development grants and head start budget that is being released today as well. in terms of elementary secondary education priorities, there is a $3 billion increase for programs with a plan of of to an additional $1 billion upon reauthorization. some priorities mentioned by the secretary i will cover briefly again, including additional funding for school programs.

we have $900 million in the school improvement fund, and also, in our funding that is contingent upon reauthorization, we will propose additional funding for rewarding high poverty schools that have made extraordinary progress. there is additional funding for innovation. we are asking congress for 1.3 $5 billion to continue a raise to the top investment and have asked for authority to also run the district level competition. the budget asks for $500 million to continue the program to identify, validate, and replicate successful intervention. $150 million of that funding would be devoted to stem initiative, and all of that would be looking to prioritize

strategies that focus on education technology. we are also proposing additional funding for a charter and other innovative school models and additional funding for public school choice. another area for focus is instructional teams, a big focus on teachers and leaders. we have a net increase of $350 million for teacher and leader strategies, including new investments in programs that will recruit and prepare leaders to operate in school turnaround programs. an additional funding to promote the development of teacher evaluation systems more effectively evaluating teacher quality and reward teachers who have been successful, identified them as successful teachers.

another area of focus is supporting student success, so we have a total of $1.8 billion for programs that provide non- academic support and help children succeed, including a continuation of the 21st century learning program and also a new successful help the student initiative and a $200 million increase for promise initiative. we're also providing resources to make sure students have access to well-grounded education, so we are consolidating existing fragmented investments. we will have an additional funding stream for literacy initiatives, and then over $200 million investment in programs designed to ensure other poor academic subjects are

integrated into the education of students, so in promoting the idea of teaching, art, history, financial literacy, and last but perhaps most importantly, continuing to focus on ensuring students are collagen career ready, are maintaining -- we are maintaining investments focused on disadvantaged students with an increased focus on the ward system but also significant -- on the award system. we also have a focus on migrant students, homeless students, english learners, but we purposely did not include those in our consolidation effort and are maintaining those formulas.

we do shift the balance between formula and competitive programs. under the 2010 budget, $20.8 billion is formula-driven with 4.2 invested in funding streams. the budget will be 20.34 formula-driven programs. -- 20.3 for formula driven programs. we have lost the slide, since i was told i cannot go backwards. here are the programs i mentioned earlier, which we are not consolidating, but we would like to work with congress to insure these programs are more focused on the outcomes for the students they are designed to help, so we will be looking to work with congress on that. we do have an increase in existing competitive funding for

the english learner program, which is designed to help ensure we can tackle improving teacher quality for english learners and invest in research around strategies for improving english lerner's success. as the secretary mentioned, the budget contemplates historic increases in student aid, including an increase in the pellett grant, as the senate -- on the pell grant. this includes the student loans programs as well as the administration program across the board to make the tax benefits -- the college tax benefits per minute. we're also looking to improve on the existing income based repayment programs and those student has to pay more than 10% of discretionary income on

student loan payments. students who enter into public service jobs have their balances forgiven after 10 years, and others would have their balance forgiven after 20 years. this is just recapping. most of the numbers our request would make available -- $156 billion in new grants and work study of systems, providing three out of five students with a paid. -- with aid. nearly 15 million students would receive aid under the president's proposal. we would help graduates manage debt through an improved income- based program and increase the telegraph. that would grow over the 10-year window to $6,900.

the budget also supports the $2.5 billion over 10 years for minorities serving institutions as well as of 5% increase in discretionary funding for these institutions. the budget supports the $10.6 billion over 10 year investment in the american graduation initiatives. it focuses on improving community colleges, including infrastructure investment in community colleges as well as an online initiatives and $3.5 billion over five years for the college access and completion fund, which is designed to complement the program and to insure students not only get to college but actually complete college, so with that, i will turn it -- a will open it up for

questions. >> i had to bring this down so i could feel as tall as arne. there is a microphone right over here, so if you have a question, directed -- it is that way. on this side, it is a longer trip for you. let's focus on questions and stay away from advocacy for particular things this afternoon. why don't we start with mary? >> i am with the american association of schools. this is going to seem completely off for me, but i have a clarifying question. the state education technology grant is described from the back as being consolidated into the effective teaching and learning curves of a well-grounded education, but it is not listed in the section as one of the consolidated programs, so if you

try to do an apples to apples comparison, it actually looks like an elimination of the program and an elimination of $100 million to education technology, and i know there is talk about in fusing it, but if we are comparing apples to apples, i am trying to figure out how that is a consolidated program and not and eliminated program. >> we consider it a consolidated program because we are looking for the activity currently funded under the education technology program. it is little more complicated than some other programs because we are looking to do it on multiple fronts. it is something we want to fuse into our funding stream wherever possible, so it would be something we would look at in context of money for teaching and learning of a well-grounded education, so ensuring as the funding is being competed out there is attention and focus

given to strategies to deliver content. we are also looking at it to ensure that at the state level there is capacity for identifying innovative use of educational technology to improve instruction for disadvantaged students. it will be a big focus of funding, and there it will be more focused on more innovative tools available to improve outcomes for students, so it is infused through multiple programs as opposed to just moving into one new funding stream. >> i am trying to reconcile the program consolidation elimination list with the way you handled the other programs. it was not listed under the well-grounded education. >> it is in the longer description of the well- grounded education program.

>> but in terms of programs that were streamlined, it is not listed, even though in the back it said it should. >> what i am saying is that it is more complicated because it is being infused into multiple funding streams as opposed to just one. >> good afternoon. i am mark ames with the national association of secondary schools. a question about the structural teams. there are a number of consolidation programs that are supposed to be consolidated. namely, improving grants and school leadership program, and this is a really important focus on school leadership. it could be a really nice robust increase, but i am concerned i did not see something i was hoping to see, and that is that with school leadership and

federal funding, only about 8% of federal funds have been used for school leadership, because it has always been used. with this consolidation, is there going to be a language that specifically designates funding? >> yes, $170 million. to recruit and prepare a effective leaders with a focus on preparing leaders to turn around schools or also in our proposals related to the new formula funding stream for a effective teachers and leaders asking for a grant recipients to show in a concrete way that they are focused on leadership -- teacher leaders as well as administrative leaders. >> does that fall under one of

the specific breakdowns? >> all three of our funding streams that are dedicated to teachers of leaders have a focus on teachers and leaders, but under the pathway initiative, $170 million would be dedicated to leaders. >> is very dedicated funded stream under one of the other programs? or is the state craps? >> for both the state grants and innovative fund, it is not part of the funding, but we are going to ask recipients to demonstrate they are improving their capacity of around the effective leaders. >> i am sure all packer with the committee for education funding -- joel packer the committee for education funding.

in the back of the book you list programs if it is not authorized. i wonder if you can explain that a little more. >> it is our hope reauthorization will move forward, and we will be able to allocate funding as the budget proposes, but that is under the current structure, what some of our priorities would be. >> it is my understanding that the dead ministration is not proposing at this point -- the administration is not proposing at this time formula changes in title one. >> not at this point. >> on page 5, it talks about programs. it mentions $1.2 billion for graduation promise grants for high school, which i do not think isn't the house -- it isn't the house. >> that is under consideration

in the senate. >> that is something you are supporting, and there is nothing in the budget that relates to school renovation or modernization? >> no. >> please be as direct as you can into the microphone. >> i will do that. the usual suspects. let's do it this way. you had mentioned when you were talking about the priorities and fy11 requests, one thing you mentioned was instructional teams, and then you talk about school success. i would throw in their affective teachers and the definition, and then i look through their nc programs like school counseling programs that are being -- and i see programs like school counseling programs, and

specifically school counselors and psychologists, and i think we believe those people are a critical part of concerts -- instructional team, and also should be included as part of the definition of the effective teachers, since they cannot be effective without all the support personnel around them, so i wish you could comment on how we are going to deal with ensuring the school district has the appropriate staff. >> the funding and affective teachers and leaders state grant program could be used on other school staff beyond teachers and leaders? we ask congress to modify the language so performance-based compensation could be given to

all staff and not to the teachers, and our proposals moving forward would continue that. we also would see the news successful help the student program for nonprofit organizations to apply for funding, things like school counseling and providing non- academic support as well, but it is something the instructional team funding would also be able to support to be able to improve non-teachers. >> 1 follow up. on those consolidated programs, would we assume those programs would be allowable uses, or how would that be done? >> that might bnot be the case

in every instance, but in many instances, that is the case. >> this is a follow up to the question. the teacher partnership grants -- you have taken that money in consolidated it to a new funding stream. $150 million has just been let out in grants with the new program partnership between k-12 districts. what would happen with the five- year grants? my second question is, are you also moving the accountability provisions into this fund so all preparers would have the same accountability? >> the current program fund if grants have been awarded, we would provide for a continuation grande within this new funding stream --

continuation grant within this new funding stream. the new system is $255 million, which is more than double the new stream, so yes, we are looking at the new programs to ensure there is a system of accountability for teacher preparation programs. >> that would be the same for all of them? >> yes. >> thank you. >> first of all, i want to go thank the and ministrations for an increase on pell grants. my mother taught me to be grateful, so i am thanking you. i would like a general explanation on the pell grants

proposed. if you could explain to as the rationale behind it. >> as you know, pell grants operate a lot more similarly to social security and medicare then it operates like title once. the basic theory is we will allocate a certain amount of money, and when that is gone, that is all there is to spend for that purpose that year. every eligible suited is entitled to the amount of money they are eligible for -- every eligible student is entitled to the amount of money they're eligible for, so we switchback between shortfalls' more often than surpluses. it is the president and the secretaries sends the most responsible way is to move to the mandatory side.

>> would this attached possibly to the senate? >> at this point, we are putting forward as a proposal of two congressional leadership to decide how to do it and when to do it, but what is most important is we get maximum funding in the hands of students, so we will work closely with them on any legislation. >> an important part would be taking care of the shortfall on the mandatory side of the budget. that seems to be a general principle of the administration going forward. >> yes, that is our proposal, and we will work with congress to ensure we do take care of the shortfall. >> thank you very much. >> i am with the national governors' association. first, we would like to continue to thank you for the stabilization fund. that has been incredibly helpful

to stave off cuts to education, and states are facing difficulties. in terms of assessment, i have two parts. first, in terms of common assessment, as you know, a number of states have already signed assessment. it is -- is the trend to support this? the second part, on page 20, you talk about migrating assessment to college ready standards. can you describe more the division of the department as it relates to this? >> the details of the application of the grant program under the race to the top assessment initiatives are still being determined.

our lead under the program is working on this. she has been gathering inputs from experts across the country around that, so i can tell you those are the types of things we are still working on. we're very encouraged by the work of the national governments association and ccf around the set of common standards and would like to ensure as we move forward with those standards there are high quality assessments all andigned to the new standards -. we do not want national standards, but we want a way to give support to the state-driven process. >> i am pat smith, and i would like to ask about income-based

repayment. if i understand the numbers, for existing loans, it is costing about $1.7 billion, but in the future, i am not sure what it would be, and i assume the reason it costs at fault is because of the subsidy for subsidized loans in the first few years, and if that is not the case, i would be interested in learning that, too. >> the total cost is $8 billion, and there are always costs if you have defaulted or other things, but some of the loans would be canceled. that is the cost.

>> it is a mixture of those things? >> correct. >> i am with the national council. i have a question about the english learner program which is currently entitled three. i understand it sound like a majority of the funding will be formal of funding, but do you have any idea what the proportion would be in terms of actual numbers versus formula? >> i cannot tell you the $50 million increase we have will be dedicated to national activities competitive funding. >> thank you. >> i have a quick question about the gifted and talented program. as mentioned earlier, the

competition which opened up last year and only has oneyear of funding. can you explain what would happen if this were to go through? >> there is funding that would cover that. >> following up, what would you say are the top to take away is they're working on this year, especially concerned with increasing school choice. >> there is a clear indication education is a priority for the president and administration, and there is a focus on

rewarding success and looking for ways to provide additional flexibility with respect to how funds are used. we think under the current fragmented program structure, folks at the state and local level have dozens of programs they have to keep track of to make sure they are in compliance with whether state and local actors in the program, so we think by setting up a new framework that focuses on key areas to have the greatest leverage, that we will become less compliant-driven and more supportive of innovation and hopefully help folks of the state and local level be more focused on education as opposed to program compliance. >> the funding and the budget

proposal is good if not commendable. i am a little concerned about the flat funding for title one. we see our schools hitting the funding clip, contemporaneously with when -- with the program, and i think there is a certain concern about holding back a billion dollars until we get a political consensus. i do not see any proposal anywhere that holds back increases in child nutrition funding, although the child nutrition funding reauthorization is certainly delayed. i do not see any proposal to hold back the medicare and medicaid funding, or waiting for health legislation to pass.

i am wondering why the legislation will flat land until we get a political consensus? >> obviously, the budget does contain a very substantial increase in funding for secondary education, regardless of what happens. the president and secretary felt additional funding could be very effectively used once reauthorization is complete, but we are supporting significant increase in the mean time. we provided $10 billion in funding for title one to deal with state budget cuts. as you know, there is legislation moving through congress that is cackling the job -- tackling the job issue, and we will be working closely with them to do our best to

support creation of jobs, prevention of unemployment, and to help stabilize state budgets. >> i think theñi state stabilization fund for education that is currently pending would be great. that does not entirely replace the education stabilization fund, which was substantially more than that and certainly does not replace the $10 million in title one, but when you hit that funding clip, the fact that ñrcontemporaneously, you would hit a flat line for title one, i think that continues to determine. >> we have five minutesçó left f time. >> the international society for technology. i would like to explore a little bit in termsçwi of the strategys you expect to use in order to

you expect to use in order to move programs you areñi findingñ ñrñi --çóñi strategies you expect toe in order to move programs you areñi funding. i would like to hearñiñi about e teacher quality programs and the focus on leadership. little movt into the digitalt( age with thoe programs. xdñiñiwhat is theñrñiñi commitme administration to be sure weñr o not put on hold yet another generation of students and teachers? >> we would likeñi to work with reauthorization of the secondary education program to ensure there is a focus on building capacity both that the state and district level in terms of the use of technology, also to ensure students are gaining technology literacy skills they need to be successful in the 21st century.

we will be looking to fund innovation in this area in a big way through the i3 program. we're also currently working with similar funding streams to ensure we areñr maximizing fedel investments and learning as much as we can, so it is really something we're working to make a concrete part of the funding stream and would like to work with you asñi we develop this proposal and get more specific and get your input on how we can to improve on this. . ñr

we want a larger streaming funds available for people toñi promoe arts education, history education, financial literacy, anbar metal literacy, with the real focus on interdisciplinary teaching so we can help schools and districts figure out how to effectively teach other subjects. >> thanks. carmel, did you want to say anything about rural and other

districtsçó? >> i will say that the secretary and the president are committed to ensuring that the move to competitive funding streaming does not result in by its results for particular districts or communities due to geographic location. we're looking for ways to for these new competitive streaming funds to ensure that rural districts and other small districts have a chance to compete on an equal footing. we want some ways that we're talking about, ways to provide competitive priorities to small districts, and another possibility to run separate competitions based on district sizes. those are ways that we're committed to working with those folks to make sure that we get it right. >> thank you. anything to add to that? >> all of the material is on the web at edu.gov.

>> thank you for starting a week with us and we will talk to you very soon. >> throughout the overnight schedule, we're showing you briefings on the budgets for 2011. it includes a three-year spending freeze on several programs include -- excluding military and homeland security spending. tax cuts for families making

$250,000 will expire. there is a $100 billion job measure, and spending would be increased on energy infrastructure. -- energy and infrastructure. president obama today proposed a budget of nearly $4 trillion for the fiscal year 2011. his comments are next, followed by a briefing with peter orszag. and little less than an hour, white house press secretary robert gibbs takes questions about the political aspects of the budget. and later, more about pentagon spending with robert gates and the chairman of the joints chief of staffñi -- joint chiefs of staff. on "washington journal" tomorrow morning, rick maze of a look code -- of "army times,"

danielle pletka from the american enterprise institute, and we will hear more about the proposed budget from vermont senator bernie sanders, and janet murguia will focus on issues affecting latinos. "washington journal" is live every day at 7:00 a.m. eastern. a couple of light in advance to tell you about tomorrow morning on the budget request. defense secretary robert gates and joint chiefs chairman admiral mike mullen testify about the pentagon's spending before the senate armed services committee. that is at 9:00 a.m. eastern. at 10:00 a.m. eastern here on c- span, timothy geithner are testifies before the senate finance committee.

now, president obama on his now, president obama on his budget request forñ  fiscal year 2011. plan proposes a three-year freeze on non discretionary spending. this is 10 minutes. >> good morning, everybody. this morning i spent -- i sent a budget to congress for the coming year, reflecting the serious challenges facing the country. we are at war, our economy has lost 7 million jobs over the last two years, and our government is deeply in debt after what can only be described as a decade a profit for -- a profligacy. 10 years ago, we had a budget surplus of more than $200 billion, with projected surpluses stretching out over the horizon. over the course of the past 10 years, the previous administration and previous congresses created an expensive

new drug program, passed massive tax cuts for the wealthy, and funded two wars without paying for any of that, all of which was compounded by recession and rising health-care costs. as a result, when i first walked through the door, the deficit stood at $1.30 trillion, with projected deficits of $8 trillion over the next decade. if we had taken office during ordinary times, we would have started bringing down these deficits immediately. but one year-ago our country was in crisis. we were losing nearly 700,000 jobs each month, the economy was in a freefall, and the financial system was near collapse. many feared another great depression. so we initiated a rescue, and that rescue was at -- was not without significant cost -- it added to the deficit as well. one year later, because of the steps we have taken, we are in a very different place. but we cannot simply move beyond

this crisis. we have to address the response -- the irresponsibility that led to it. that includes the failure to rein in spending as well as a reliance on borrowing -- from wall street to washington to main street -- to fuel our growth. that is why we have to change. ñiwe have to do what families across america are doing -- -- save whqe we can so that we cannot afford what we need. we will not be able to bring down this deficit overnight, given that the recovery is still taking hold and families across the country still need help. to do what it takes to create jobs. that is reflected in my budget and is essential. the budget includes new tax cuts for people who invest in small businesses, tax credits for smallñ@cusinesses that hire new workers, investments that will create jobsñi repairing roads ad bridges, and tax breaks for retrofitting homes to save energy. we will continue to lay a new

foundation for lasting growth, which is essential as well. just as it would be a terrible mistake to borrow against our children's future to pay our way today, it would be equally wrong to neglect their future by failing to invest in areas that will determine our economic success in this new century. that is why we build on the largest investment in clean energy in history, as well as increase investment in scientific research, so that we are fostering the industries and jobs of the future right here in america. that is why i am a prop -- i am &uincrease in funding for the education department. and this is tied to reforms that raise human achievement, inspire students to excel in math and science, and turnaround failing schools which consign too many people to let lesser future, because in the 21st century, there is noñi better anti-povery program than a world-class education. that is why we eliminate a

wasteful subsidy to banks that lend college students, and use that money to revitalize cup -- community colleges and make college more affordable. by 2020 we will once again have the highest proportion of college graduates in the world. these are the investments we must make create jobs and opportunity now and in the future. and in a departure from the way that business had been done in washington, we actually show how we pay for these investments while putting our country and a more fiscally sustainable path. i proposed a freeze in government spending for three years. this will not apply to the benefits folks get through social security, medicaid, or medicare. and it will not apply to our national security, including that of -- benefits for veterans. but it will apply to all other discretionary government programs. and we're not simply photocopying last year's budget. greasy spending does not mean that we will not cut what does not work to pay for what does. we have gone to every spending

line by line, item by item, looking for inefficiency, duplication and programs that have outlived their usefulness. that is well -- that is how we freeze discretionary spending. last year we found $17 billion in cuts. this year, we have already found 20 billion. some of the cuts are just common sense. we cut $115 million from a program that pays states to clean up mines that have already been cleaned up. we are also cutting off our service economic development program that strayed so far from any mission that it funded a music festival. and we're saving $20 million by stopping the refurbishment of the department of energy science center that the department of energy does not want to refurbish. other cuts, though, or more painful because the goals of the underlying programs are worthy. we eliminate one program that provides grants to do environmental cleanup of abandoned buildings.

that is a mission i support, but there are other sources to achieve it. we also in a minute and $120 million program that allows folks to get the earned income tax credit in advance. i am a big supporter of the earned income tax credit. the problem is, 80% of the people who got this advance did not comply with one more of the programs requirements. so i am willing to reduce rates in programs i care about, and i'm asking members of congress to do the same. i am asking republicans and democrats alike to take a fresh look at programs they have supported in the past to see what is working and what is not, and trim back accordingly. like any business, we are also looking for ways to get more bang for our buck, by promoting innovation and cutting red tape. we consolidate 38 separate education programs into 11. last fall we launched the "save

words" to solicit ideas from federal employees about how to make government more efficient and more effective. a number of these ideas, like allowing social security appointments to be made online, made it into our budget. even though the department of defense is exempt from the budget freeze, it is not exempt from budget common sense. it is not exempt from looking for savings. we save money by eliminating nss defense programs that do nothing to keep us safe. one example is the $2.5 billion that we're spending to build c- 17 transport aircraft. four years ago, the defense department decided to cease production because it had acquired the number requested -- 180. yet every year since, congress has provided unrequested money for more it c-17's that the pentagon does not want or need. it is waste, pure and simple.

and there are other steps we're taking to rein in deficits. i have proposed that the on big banks to pay back taxpayers for the -- i have proposed a fee on big banks to pay back taxpayers for the bailout. we're reforming the way contracts are awarded to save taxpayers billions of dollars. and while we extend middle-class tax cuts in this budget, we will not continue costly tax cuts for oil companies, investment fund managers, and those making over $250,000 a year. we just cannot afford it. i've appointed a bipartisan fiscal commission, a panel of democrats and republicans, who would hammer out concrete deficit reduction proposals over the medium and long term, but would come up with those answers by a certain deadline. that is an idea that had strong bipartisan support, originally introduced by senators gregg on the republican side and conrad

on the democratic side, it had a lot of republican co-sponsors to the idea, and i hope that, despite the fact that it got voted down in the senate, both the republican leader mitch mcconnell and republican leader in the house john boehner go ahead and fully embrace what has been a bipartisan idea to get our arms around this budget. that is also why we are restoring pay-as-you-go -- a simple rule that says congress cannot spend a dime without cutting a dime elsewhere. this rule helped lead to the budget surpluses of the 1990's, and it is one of the most important steps we can state to restore fiscal discipline in washington. you can read more about the budget at budget.gov, very easy to remember. but we cannot continue to spend as if deficits do not have

consequences, as if waste does not matter, as if the hard- earned tax >> -- a hard earned tax dollars of the american people can be treated like monopoly money. we cannot. in order to meet this challenge, i welcome any idea. what i will not welcome -- what i reject -- is the same old grandstanding when the cameras are on, and the same irresponsible budget policies when the cameras are off. it is time to hold washington to the same standards families and businesses hold themselves. it is time to save where we can, spend what we must come and live within our means once again. thanks very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> white house budget director peter orszag briefed reporters on the budget request. he is joined by the chairman of

the economic advisors for about 45 minutes. >> good morning. thank you for joining me. i want to give you a brief overview and then i'll turn it over to my colleague, the chairman of the economic advisers, to describe in more detail the economics behind this 2011 budget which we released this morning. this focuses on three things, jobs creation, middle class security, and putting the nation back on a path to fiscal sustainability. before turning to the details of the budget, let me give a little bit of the context and background. we just came through a year in which a second great depression was averted. at the end of 2008, real gdp was declining by more than 5% on an annualized basis. at the end of 2009, it was increasing by more than 5% on an annualized basis.

although real gdp in the economy is now expanding, the unemployment market remains too weak. the unemployment rate is 10% and there are now 7 million fewer jobs than in december 2007. that is why this budget includes important investments to spur job creation now, including the jobs and wages tax credit that the president spoke about last week, and including key investments in the drivers of longer-term economic growth -- economic -- education, innovation, and moving toward a clean energy future. let's also do a little bit of background and context on the budget. in january 2009, the situation that was apparent at that point involved two key features that are still the case. one was a significant increase in spending from 2008 to 2009, and the second was significant outyear deficits. most of it -- both of those were already apparent before the

administration took office. in particular, on the first case, in january 2009, several weeks before the administration took office, the congressional budget office issued an economic and budget outlook. it showed an increase in spending as a share of the economy from 20.9% in fiscal year 2008 24.9% in 2009. it came inñi slightly lower than that, 24.7%, but this significant increase in spending as a share of the economy was already apparent at the end of 2008 and in early 2009. second, we also faced not only a 2009 deficit that was in excess of $1.30 trillion, but a medium- term deficit in excess of $8 trillion. that came from two primary sources. the first was a set of policies -- the 2001 and 2003 tax cuts

and the medicare prescription drug benefit -- that had not been paid for. that amounted to almost $6 trillion with added interest costs over the next decade because those policies were not offset. and second, the effects of the economic downturn amounted to about $2.50 trillion because when the economy weakens, tax revenue declines and certain types of spending automatically increase. those automatic stabilizers again added about $2.50 trillion to the projected deficit over the decade. that is an explanation of the situation in which we found ourselves in in which we continue to find ourselves, but it does not explain the path forward. so what in particular are we doing to bring the deficit down from roughly 10% of the economy in 2009? several things. the first thing is to make sure you do not dig the hole deeper. we're particularly pleased that the senate has not joined the house in embracing a proposal that the administration

embraces, so-called statutory pay-as-you-go legislation. that is to embed in law the common sense principle that any new proposals or new tax cuts need to be offset so that they do not cause a deterioration in the budget deficit. if we had lived by this simple principle over the past several years, we would be facing an outyear deficits that would be roughly 2% of the economy, and that as a share of the economy would be declining rather than rising. second, the economic recovery, which will ultimately take hold, will help to reduce the deficit from about 10% of the economy to about 5% of the economy by 2015, because tax revenues will recover and those automatic stabilizers on the spending side will also decline. our goal is roughly 3% of the economy, which would balance the budget, excluding interest payments on the debt. to get from 5% to 3%, we have a

series of proposals. the purses that we put forward its pacific steps to reduce the deficit over the next decade by $1.20 trillion, which would move us from 5% of the economy in 2015 to four four -- 24%. the steps include measures such as the financial services fees, which raises $90 billion over the decade, helps to repay taxpayers for the full cost of tarp, and also by imposing the tax on our largest financial institution to help discourage the leverage that was partly the cause of the financial meltdown that we experience. we also allow the 2001 and 2003 tax cuts to expire forq those with incomes above $250,000 in 2011 and thereafter, as scheduled by the legislation. that reduces the deficit by almost $700 billion of the next

decade. as a part of our effort to move toward a clean energy, we eliminate fossil fuel subsidies. and in addition to all that, we have a three-year freeze on non-security discretionary spending, which will reduce the deficit by $250 billion. it is not across the board. some agencies and programs are going up and other agencies and programs are going down. in addition, we are investing an additional $3 billion in education, because that is one of the keys to future economic prosperity, even while we are reforming those programs for example, taking 38 existing, duplicative programs, consolidating them into 11, and putting more emphasis on results rather than just funding. second, we are investing significantly in research and development, including more than $61 billion in fiscal year 2011, which is up 6%, because research and development and innovation are also key drivers

of economic activity. and third, we are investing in clean energy -- more than $6 billion to move toward the energy sources of the future, working in concert with elimination of fossil fuel subsidies so that weekend the eight -- so that we can become the world's leader in green energy. all of these moves the deficit in 2015 to roughly 4% of the economy, which is as i said, above where we want like to be. to get the rest of the way, there will require a bipartisan process, which is why we are calling for a bipartisan fiscal commission cap -- commission tasked not only with addressing our long-term fiscal imbalance, but also producing plans that will balance the budget, excluding interest payments on the debt, by 2015. let me note that all of this has to do with deficit over the next decade, making key investments in job creation today, reducing the deficit by $1.20 trillion of the next decade, while investing

in education, innovation, and clean energy. we also face a long-term fiscal gap, driven primarily by health care costs. one of the reasons why the administration has been so focused on comprehensive health reform legislation is that it would not only reduce the deficit over the next decade, but perhaps as importantly or even more importantly put in place the infrastructure and the policies that will help to constrain costs and improve quality in the decades thereafter. unless we do that, we will continue to face a very substantial long-term fiscal gap. and with that, i turn it over to christy to go to our economic assumptions. >> as peter suggested, i'm going to take just a few minutes to summarize the key economic assumptions underlying the fiscal to 11 budget. -- 2011 budget. the council of economic advisers takes the lead in a process that includes the office of management and budget and the department of treasury to

forecast that goes into all the budget projections. our forecast was finalized back in mid november, on november 17, and so it is based on data through the middle of november. i should say right up front as the professional forecasters in each of our offices who contribute to the forecast frequently say, we are economists and not soothsayers, and all forecasts have to be understood to be subject to substantial margins of error. and i would say, particularly in the wake of the severe downturn such as we've been through, usual patterns surely provide less guidance than in more ordinary times. but we've attempted to base the budget projections on our best estimate of what lies ahead. first let me talk about our forecast for real gdp growth. in this discussion, i am going to focus on fourth quarter to fourth quarter percent changes, because i find these the most rate for to interpret and to compare.

the administration forecast growth of 3% in 2010, followed by growth of 4.3% in both 2011 and 2012. now our estimate of growth in 2010 is virtually identical to the consensus of private forecasters surveyed by the blue chip economic indicators and is right smack in the middle of the central tendency of the federal reserve's federal open market committee forecast that was released back in november. our medium-term forecasts are also within range of the other forecasts, but i think here is true there is substantial variation across the different forecasts. now, as ashley shown in chart 2- 5 of the analytical perspectives volume, our annual gdp growth projection for the five years after the gdp trough is 3.8%, similar to that 4.2% historical average during recoveries.

the forecast that the congressional budget office released last week was considerably more pessimistic about both 2010 and 2011 either of the administration forecast or the blue chip consensus. and as cbo noted in its release, they are required to make forecasts under the assumption that none of the recovery act provisions are extended -- no new jobs bill enacted, and all of the 2001 and 2003 tax cuts expire at the end of the year. cdo's report was careful to explain that under the assumption that some of these policies will be extended, its forecast would have looked much more similar to other forecasts. for the unemployment rate, the administration projects that we will in 2010 with an unemployment rate at approximately 9.8%. by the fourth quarter of 2011, it is projected to be a 8.9%.

by the fourth quarter of 2012, 7.9%. these estimates are again in the range of other forecasts, both for the short and the medium term. now our projections of the unemployment rate reflect the particularly severe toll of this recession on the labor market and on american workers. to counteract the painfully high rate of unemployment and to accelerate the recovery of the labor market, the president has called for a number of targeted actions to jumpstart private sector job creation. among these is the small business jobs and wage tax credit that he announced just last week. finally, let me say a word about the inflation rate. here i am going to focus on -- it's measured using the gdp price index. we project that inflation will be 1% over the four quarters of 2010, 1.4% over 2011, and 1.7%

over 2012. i would say that these projections are lower than those of some forecasters, and higher than others. the low levels of projected inflation reflect the affects of continued high levels of slack in the economy. under these conditions, we see little risk of noticeably increased inflation. at the same time, inflationary expectations appear to be quite well corp. -- quite well anchored, and so we do not project rapid decline in inflations or deflation. the administration anticipates that the inflation rate will level off at about 1.8%, squarely within the federal reserve's long run projection range of 1.7% to 2%. well there's certainly no question that the past year has been incredibly difficult for the american economy and for the american people. because of the actions taken over the past year, the trajectory of the economy is

greatly improved. as peter mentioned, real gdp expanded strongly in the fourth quarter of 2009, and shows every sign of continuing to grow steadily. however, as our forecast makes clear, the path back to full employment will take time and continued vigilance. the president is committed to taking every responsible action to exhilarate job creation and speed recovery. thanks. >> i think we will now open it up to questions. there are wireless microphones for folks asking questions, and i see a lot of hands up over here. why don't we start right here? >> the assumptions you had were frozen from november 17? >> yes. >> that did not include the fourth quarter, the 5.7 number that we got on friday? >> absolutely not. >> is that when you decided that you have $100 billion in stimulus funds -- job funds,

excuse me, my mistake. i don't know why anyone would make that mistake. $100 billion that is driving your forecast real 3% growth. you're not getting toward the house version of $154 billion? what is the placeholder there? >> i will do the placeholder. but to ensure the question about locking down. >> we certainly locked it down before we got the fourth quarter gdp number. >> and then quickly on the placeholder, we have $100 billion in a jobs package that includes $33 billion for the new jobs and wages tax credit that the president talked about to spur small business hiring and increases in wages. and there will be other components forthcoming. >> so that placeholder did influence the modeling? >> we anticipated that there would be some additional job activity in doing the economic

assumptions, yes. >> and it would not vary that much whether the number is $100 million -- $100 billion or $154 billion which mark >> i think you're comparing -- let me answer the question more directly. the house has $155 billion. that is not completely apples and apples with regard to our $100 billion placeholder. >> but the assumption that you guys have does include additional jobs money in the range of $100 billion? >> yes. >> do any of the projections in the budget either for to any 11 or in the outlying years assume that, since you locked this down the 17th, assume that some version of health care reform or even incremental health care reform, such as i.t., would be signed into law? >> we took a simple approach. since both the house and senate had passed legislation, we took the average of the two. he will see the net deficit impact from taking the average

of the house and senate legislation. that is slightly north over 10 years of $100 billion in deficit reduction. so it is a very small share of the more than $1.20 trillion in deficit reduction contained in the budget. and that does not include the impact of winding down the wars in iraq and afghanistan. if you included that, you are well north of $2 trillion in deficit reduction. >> my question is for dr. romer. pardon me, i've got a cold. can you explain a little bit about what is driving your optimism on gdp? you seem to be all little bit further than consensus on gdp, but with a lot -- but in line with consensus on unemployment. the oilers i think the first thing to say is, as you pointed out, we're smack equal to the consensus in 2010. for 2011, we rate can within the range, say, that the fomc put

out in the november forecast. we are higher than the consensus. i do want to come back to historical experience, because certainly one of the things that i mentioned is coming out of past recessions, average growth in the five years after the gdp trough has been some 4.2%. we are actually over that same five-year period. our forecast is 3.8%, so i think we're being very true to history, if anything, erring on slightly below the historical average. so we think, based on what we are doing, the policies in place, what we see happening, we think that this is a reasonable, honest forecast. >> i think i remember last year, you give a forecast on unemployment the was a little bit more optimistic than some others were saying, and you indicated that you had information or data that others were not looking at. you have data or information

that is driving your gdp forecast that others are not looking at? >> certainly. but the talks about last year. last year one of the things i was talking about very much is that we certainly had, we thought, better assumptions about what the policies that we would be put in place would be. we knowledge that like many forecasters, certainly our unemployment forecast for last year was lower than it turned out to be, and i certainly think that reflects in large part just how, as i mentioned before, how severe this recession has been on the labor market in particular. one of the things that is also true, the behavior of unemployment has been unusual, given the behavior of gdp. the thing -- i cannot help, since we've been pulling the numbers on this -- when we got the fourth quarter number for gdp, we now know what actual gdp change was from the end of to designate to the end of 2009, it

was 0.1%. last year are forecast was for it to grow 0.3%. so on gdp, i think we were remarkably accurate. the blue-chip at the same time was -1.5%. >> that is the economist version of "told you so." [laughter] so the budget identifies the high priority performance goals that agencies submitted but it does not say whether those goals will lead to an increase in funding for the agencies. can you talk about whether you are proposing additional funding in the areas that agencies identified as important? >> yes, the high-performance goals, which are new this year, were fed into the budget process and will continue to play a key role. we are integrating those goals

with funding streams to make sure -- and holding agencies accountable for progress on the goals. so, yes, the goals will -- are and will be reflected over time in funding for each agency. >> i was curious about what you read into the fact that you're raising taxes to the tune of nearly $1 trillion on the upper- income families, a lot of tax increases on multinational corporations, and yet you are doing some spending cuts, and yet you do not get the budget down to below 4% of gdp. does that tell you -- what does that tell you mathematically about the ability of president obama to keep his pledge not to raise taxes on families under $250,000? what is the commission's

construction on taxes below $250,000? and i am also curious -- you have got a debt burden of 77% of gdp by the end of this decade. do you think united states can handle that without courting a financial crisis? >> first, one of the reasons why -- let me start with the first question. i think what that reflects actually is the debt of the medium-term deficits that, as i mentioned, reflected the environment that we faced even at the beginning of last year. you have to remember -- $5.80 trillion, because of the 2001 and 2003 medicare -- tax cuts and the medicare prescription drug benefit were not subjected to paygo. we're now saying they have to be subjected to paygo. $2.50 trillion >-- we're taking

steps to try to mitigate the economic downturn. we do face a substantial medium- term deficit problem. and what we have said is that we put forth proposals to get as part of the way there. the commission will have to get the rest of the way there. we've been very clear about our stance is on taxes, and frankly, and other spending proposals also. the commission is not even been named yet. let's let it do its working see what it comes up with. >> all things are on the table? >> we've been clear on our position on taxes, but we have to let the commission -- it has not even been formed yet. let's let it do its work. over here. >> can you clarify when the pledge to cut the deficit in half, are you taking -- my memory is that it was a nominal number, half of $1.30 trillion, the number you said with the deficit on the date the president took office. so does that mean $650 billion

by fiscal year 2013? and, if so, if you have not hit that in this budget, you're over that. >> the projected deficit was 9.2% of the economy 2009. we had 4.2% by 2013, so we're cutting that deficit more than half as a share of the economy, which is the way that economists typically evaluate deficits. >> and then on the three-year freeze, when you said it would be held for that share of non- security spending to 4 to $47 billion, i was looking on table s-four -- i do not see that figure. can you reconcile that? if you look at the bottom of table s-four, at the very bottom on page one under 52, it says "memorandum funding for appropriated programs, non- security," and you see that $447

billion in 2010. and we see below that in 2011 and then if you continue the freeze, $446 billion in 2012 and 2013. and let me pause on this because there has been some misconception. what is clear from that table is that you see in 2009, there is a bump up in spending in that category because of the recovery act, which again was necessary, a key part of moving from minus 5% to more than 5% on economic activity. our freeze is not all of that higher base. it is off of the basic 2010, which excluded the recovery act. the argument that we raised prices before putting something on sale is misleading. we're going off of the base that excludes that bump up. >> what would you say to federal employees who are slated to get an increase, significantly lower than the increase in previous years? and the budget calls for the hiring of several hundred thousand workers over the next

four years. in what areas or agencies do you think those people will be hired in? >> federal employees will get a one point -- of 1.4% increase in their sours, which i think to a lot of americans sounds pretty good. it reflects a formula that is used to compute wage and salary increases, and is lower than it has been in the past because inflation is lower than it has been in the past, and so it follows from that observation. with regard to expansions in federal personnel, they have over the past couple years been disproportionately in the department of defense, the department, insecurity, the department of veterans affairs. some areas where we are expanding the workforce include the acquisition workforce. we have $500 billion in federal contracts. over the past eight or nine years, those contracts have doubled in size. the acquisition workforce has stayed constant.

it is not hard to figure out that oversight of those contracts has not kept pace with what it should be. we are investing in a variety of things to try to improve oversight of what the federal government buys, including cracking down on no bid contracts, trying to bulk up on bulk purchases of goods and services, and also expanding the acquisition workforce of that we have better oversight of those contracts. right here. >> did both speaker pelosi and minority leader boehner are saying that the pentagon should be included in the spending freeze and there is a great deal of waste in contracting. why is defense off the table? >> we need to remember that defense is not off the table in terms of fiscal constraint, but in terms of inclusion in the freeze -- we are at war and we need to make sure that we adequately fund our troops while

we are at war. that having been said, there is significant constraint that is being imposed under secretary gates' leadership. a couple of examples -- last year read this time, we had proposed canceling the f-22 fighter jet. i think most of the people in the room at that time, which was a different room, but that's okay -- at the time they thought that that was completely unrealistic and would never happen. we succeeded not only in canceling that but also the presidential helicopter. secretary gates has made it very clear that he does not think additional purchases of c-17 cargo aircraft or other programs -- for example, the alternative engine for the f-35 fighter jet -- our military is necessary and that we could do a better job by canceling those programs. we're going to be pursuing those kind of deficiencies in the bids it even while making sure that our troops in the field are adequately funded. >> and does the decision not to go to the moon not send a message to our rivals that we had given up?

>> not all. let me be clear about what is happening at nasa. the constellation program, over budget and behind schedule, was intended to do what we have already done, which is return on man or woman to the moon. we believe in the future of human space flight. we believe that nasa can inspire americans and lead to scientific advances. so we do have a small budget increase for nasa. what we're saying is let's redirect that towards longer- range r&d, advanced robotics, research and development, and find those new technologies that will allow us to go further in space and not just repeat what we have all written in -- what we have already done, especially in a program that is behind schedule and over budget. we in the back there. >> i have a question on the bipartisan tax panel. in your past life, i think your institution was certainly involved in that and they called

for looking at two sacred cows, mortgage interest deductions and employer-provided health care. some of that is addressed a little bit in the health-care bill. but looking forward, as you start this bipartisan process, it is something as sacred as that on the table? >> we put forward the proposals that we favor both on the revenue side and the spending side of the budget. the commission is not even yet formed and i think one of the important principles here is that we need to respect the work of the commission and let it do its work. and that is what we intend to do. >> some advocates of the fiscal commission, while pleased that you are going in that direction, would like to see more from the administration in terms of starting to talk about the tough choices that are going to be necessary. was there any consideration when you put the budget together to either pay for some of the extension of policies, like the amt or the bush tax cuts, or not permanently extending them?

>> again, we have $1.20 trillion in deficit reduction contained in this budget, and a lot of painful choices that have already been put on the table, and that we of are discussed in some of them. so is more necessary? sure. but we think that to get the rest of the way there, and to get the medium-term deficit down to where it needs to be, requires a bipartisan process and that is what we're pursuing. >> hi, peter. about the mortgage deduction and the charitable deduction, last year when that was proposed for this year, 2011, it seemed as though even among some democrats on the hill that there was considerable resistance to that idea, especially in a slow mortgage market or a slow housing market. are you confident that you can get enough support in congress for that? it seems as though that is one of the sacred cows that we've been talking about. >> let's be clear about what we're proposing. we are proposing to limit

itemized deductions for the top -- under the top 5% of taxpayers back to the rate that applied when ronald reagan was president. i think that is important to put in context. they're going to be lots of questions about the political economy of what can get enacted and what cannot. how would return to the point that last year many people were skeptical that we would succeed in getting a lot of the terminations and reductions that we have put forward at that point. we record the fight for the things that we put forward because we believe we need additional job creation now and significant deficit reduction in the al years, and i think that reflects the priorities that not only the president has put forward but makes most sense for the economy at the whole. [inaudible] >> there have been conversations with the hill on lots of topics, not surprisingly. let's go over here. >> an hour ago, the president

spoke about the nation being at war. can he give us a sense of your war spending, how much increase there is been this year? and does it include any common sense budgetary cut to which the president spoke about? >> even war spending is subjected to the same scrutiny that the base defense budget and other spending is. for fiscal year 2011, we have put forward a proposal for $160 billion to finance the wars in iraq and afghanistan. and that is roughly level with the all in costs for 2010. we in the back. >> peter, you talked yesterday about a glide path. can you discuss the challenge of trying to turn the tap off in a gradual way so as not to kick the legs out from the recovery? >> as i mentioned, we face two substantial challenges -- a jobs deficit, more than 7 million lost jobs since december --

december 2007, and a fiscal deficit with large outyear deficits, 5% of the economy, even after the economy has recovered. one of the challenges of the we need to get those deficits down in the future so that we do not choke off economic activity and job creation. but we want to make sure we do not do that too quickly or we will repeat the mistakes of 1937. remember what happened then, when the economy was beginning to recover, the nation moved to consolidate the deficit too quickly, and you threw the economy back into recession. we do not want to do that. we're seeking a fairly smooth path from roughly 10% of the economy today down to the level say at 4% of the economy by 2015, putting us within shooting range of fiscally sustainable path. and one more will be necessary, which is why we're creating a fiscal commission. but we do not want to act too rapidly to bring down the deficit because that would exacerbate the jobs deficit.

so we're trying to find this balanced approach in which we have a smooth glide path from 10% down to a more sustainable level, and i think that is what is reflected in this budget. but here. >> [inaudible] the present said that he has read paul ryan's budget proposal. i am assuming you've read it. wanted to know of that is the case. wanted to know in your words what you think is the biggest deficit -- the biggest difference between your plan, your vision and his? and could you answer jonathan's question about the sustainability of the debt? >> let me answer that first. one of the reasons we're creating a fiscal commission is to get the deficit over the medium term down to a level that it has a stable debt to gdp ratio. that is important and would be reflected in a balanced budget, excluding interest payments on the debt. that is the first point.

i would note, however, that for right now in 2010, private borrowing has collapsed, long- term -- long-term interest rates on federal securities -- so the 10-year interest rate remains below 4%. the u.s. treasury is basically the last borrower left standing. in the severe economic downturn that we have been experiencing, that is exactly what should happen because it helps to bolster the economy in the short run. but as you go out of time, and farming -- private borrowing picks up, you want to make sure that you're getting ahead of the fiscal deficit problem, so that you're not substantially crowding out private activity. now with regard to representative ryan, have a lot of respect for him and i have read the plan that he put forward. it is worthy to delve into that for a moment, because it provides a contrast. his plan succeeds in addressing our long-term fiscal problem,

which is a significant accomplishment. but let's examine how he does that. he takes the medicare program, and those for -- and for those 55 and below turns it into a voucher program, so that individuals are on their own health care market. and the voucher does not keep pace with health care costs over time. so it is not surprising that if you shift dramatically, both in terms of risk and expected cost, obligations from the federal government onto individuals, you can reduce the projected cost. he introduces individual accounts, privatization into social security. he has significant changes to the tax code that would provide large tax benefits to upper- income households, while shifting the burden onto middle and lower income households. he eliminates the tax preference that currently exists for employer sponsored insurance. so it is worthy of pausing. he is put forward an interesting plan. there are many aspects of that

that are worthy of further discussion and debate, but it is a dramatically different approach in which much more risk is loaded onto individuals and in which the medicare program in particular is dramatically changed from its current structure. >> the president was supposed to receive tax reform recommendations in december and that was delayed indefinitely. is there a possibility that that could be folded into the fiscal commission's review, or is it just on the back burner? >> i would imagine that it will be folded in the fiscal commission. i would imagine that -- again, the commission will be examining a variety of things, including tax reform. >> [inaudible] how was wondering if you can give a dollar value for the improvement in the economy and how that will affect the deficit -- the 10% down to 5%,

do you have a dollar figure for that? >> their various ways of calibrating that, but to repeat, economic recovery moves the fiscal deficit from 10% of the economy to 5% of the economy. to scale it for the sake of argument, the economy is roughly $15 trillion, so a 5% improvement would be about $750 billion. >> some jobs are going to be created and some are taken away for the federal labor force. can you give us a sense of scale of the number of jobs at stake? >> with regard to what? >> the federal labor force, the changes in government hiring. >> i do not have a set of projections. we could perhaps get back to you with the underlying assumptions. there had been in increases in the federal workforce of the past years, which are in the area that i mentioned earlier -- the department of defense, the

department, security, the department of veterans affairs, for example. we have time for one more question, so why don't we make this one the last one? bubblers' mr. orr said, i was wondering if this budget is reflective at this point of any of mr. st. -- >> mr. orr said, i was wondering if this budget is reflective at this point of any of mr. zients' efforts to improve performance management within the federal government? >> absolutely does reflect his work, who is the nation's first chief performance officer and also the deputy director for management at omb -- in a variety of ways. the federal government is going to spend nearly $80 billion on information technology. there are huge improvements that can be made and that are being made in the management of those i.t. investments, including, for

example, the i.t. dashboard, where you can go online, click on individual i.t. projects, see whether they're behind schedule or not. he is already leading -- for example, the department of veterans affairs, it led them to cancel some i.t. projects that were just being poorly managed. i already mentioned acquisition and reform of our acquisition workforce in contracting for that is another thing that the performance team has been working a lot on three federal personnel and hiring, that team is working with the office of personnel management to simplify and streamline the hiring process and also provide easier checkpoints so that those applying for federal jobs can check online to see what is happening. so you see the area that has already begun the improving government performance, feeding into the federal budget. so i think that with that, i want to thank everyone. if you have questions -- additional details, the president said is available on budget.gov, and i think our

press folks are available if you have additional questions after this. thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> throughout the overnight schedule, we showing you briefings of the presence nearly $4.30 trillion budget request for fiscal year 2011. it includes a three-year spending freeze on federal programs, excluding military homeland security spending. the 2001 and 2003 tax cuts for families making over $250,000 will expire. there is $100 billion jobs measure, and there will be a spending increase on energy and infrastructure. in a few moments,