lake charles, louisiana, mark, republican -- hi. caller: i think it is more it to the point is that he is not a free-market. adding that is the issue. i think everything they do, they have carefully managed by the gover t. i think that is more of the point. host: anthony in trenton, new jersey. democrat. caller: thank you very much. i listen to these republican callers and somebody said the president never ran a business. what was george bush's excuse for destroying so many business

if he had business experience? i think these reasons are just unfounded. the republican party is anti- business party and it is proven by so many tens of thousands of businesses either failing or struggling, people with no job security or worse, no job. i've watched c-span every day and i just saw these policies, to life, these bad decisions one after the other. the republican party really needs to be -- i think we need to be discussing it even in the media more of why the republican party is the party of anti-business, is the party with the bad ideas. the question is kind of -- shouldn't even be asked. we should be looking at other things in the media. you know, it's obvious that the republican party to me, anyway, is anti-business. >> can you give an example, anthony? >> yeah, 675,000 job loss in

december. another 650,000 jobs and so on. we have seen açóñr dropoff in business a year ago, a year and a half ago by 30%. to three jobs. the decisions of the republican party have gotten us here. for anyone to say anything different is silly. for the republicans that say democrat planted the seeds years ago with carper or clinton, and even though the great, strong business policies of the republicans are so strong, the democrats did so much damage we cannot come out of it and that

is where we are and that is just a silly argument and anyone who buys that hook, line, and sinker needs to really look at the facts. host: have you seen any improvement in business the last couple of months? caller: well, i haven't seen much. i don't blame obama. i think the damage was so deep -- i own two franchises, two very successful franchisees. i am lucky that i sold them before it happened but all of my friends that have businesses in the last two years, i don't know one who has not been really hurt. yes, they are still complaining so there has not been all that much improvement but i do not think it is because of poor policy by obama. i think it is because of the poor policies of the republicans. host: thank you for calling in. welcome to "washington journal." this is from the associated press. white house report the u.s. will

likely average 95,000 more jobs each month this year while americans' personal savings will remain high as credit remains tight. next call comes from texas. go ahead. caller: peter beard host: good morning, mr. peterson. been a long time. caller: yes. host: how is everything going? caller: good, watching the snow. caller: you are going to have to move to texas with us, peter. host: i am sure it is nice and warm down there. it is really nice to hear from both of you and thank you for watching. we sure appreciate it. anything to say on the business

front. do you have a small business or anything? caller: i think president obama is doing -- and know what the guy is coming from. going on and on with statistics and bonuses and all of that. i think he has done a good job myself. he is against the wall, peter. he has a bunch of people -- he has blocked everything, not fair. and the president is trying to be fair. host: all right, mr. and mrs. peterson, nice to hear from you peterson, nice to hear from you and enjoy the warm weather. caller: yeah, good morning. by the way, how's that global warming working out for you there, peter? host: go ahead on the anti-business. caller: well, you know, geithner, who's a tax --

>> we'll leave this morning's segment of this morning's "washington journal" and take you live to the white house. >> good afternoon. i think we need a shot clock up here. [inaudible] >> well, you know, the president and the doctor are very good examples. i thought i'd follow their lead. i want to do two quick announcements and then we'll turn this over to dr. roemer, the chair of the president's council on economic advisors to talk about the report, the economic report to the president. the first announcement earlier today, president obama called to congratulate president-elect laura chin chia of costa rica -- chinchia of costa rica. he wanted to congratulate her on working on climate change. secondly, on february 18, the president will meet with his

holiness, the dalai lama. the meeting will take place in the map room here at the white house. the dalai lama is an internationally respected religious leader and spokesman for tibetan rights and the president looks for an engaging and constructive dialogue. >> what about coverage? >> i don't have that. >> [inaudible] >> that is -- the best place that the president felt and the team here felt for the meeting to take place. >> diplomatic considerations. deciding not to have it at the oval office. >> no president has met with the dalai lama in the oval office. i'll turn it over to the doctor who will talk about the economic report that the president will sign in about 20 minutes. >> all right. well, if is a pleasure to be

with you all. you have to know that for a chair of the council of economic advisors there's no bigger day than the day that her first economic report of the president comes out. so, anyway, that is what brings me here. for anyone who's not a devoted fan of the economic report, i thought it would be helpful to give just a little bit of background. so the employment act of 16946 set up the council of -- 1946 set up the council of economic advisors to bring the best professional advice to the president on economic matters. it also mandated that it -- vade it was the role of the federal government -- said it was the role of the federal government to promote maximum employment, production and purchasing power. and that every year the council of economic advisors and the president were to submit a report to congress saying how we were doing. and so this year's economic report is the 64th i believe in this line of classics.

each economic report does three things. it talks about the challenges, the economic challenges that we face as a country. it talks about what policies were put into place in the previous year and how they worked and it lays out the president's economic agenda going forward. i think, you know, i like to think that this year's economic report is particularly important, not because of me but because of the times that we are facing. i think if you think about the economic challenges that we face there's probably not for a very long time been as great a set of economic challenges. of course, these span all the way from, of course, the immediate crisis when we came in, if you remember back to a year ago we were losing close to 800 jobs a month. real g.d.p. was plummeting. our financial system was certainly very stressed and there were real questions about what would be happening. but we also know that there was a reason that the president had run for president on a lot of

economic issues even before the economic crisis. things like stagnated incomes for middle-class families, soaring health care costs. the fact that as an economy we were failing to invest adequately and educating our children for the jobs of the future. investing in innovation and other things that would help us to grow faster over time. so i think that certainly makes this volume particularly important to document the challenges we face. the second thing that i think that's important about the volume is to put down in one place all of the economic actions that we've taken. and it's not a surprise by far the longest chapter in the economic report is on the rescue. just simply because this was an economy in terrible crisis. but it really goes through laying out not just the recovery and american reinvestment act but what the reverve did, the policies for financial stabt, our housing

program. but -- stability, our housing program. but then it goes to the policies put in place in other areas. i think it's so easy when we're all caught up in thinking about what's going to happen with the health care reform bill that's before the house and the senate to remember back that we passed the re-authorization of the children's health insurance program that brought health insurance coverage to an additional four million children. and we just go through all of those kind of accomplishments. we are in the middle of doing financial regulatory reform. let's remember we passed the credit card bill last spring to try to deal with some of the consumer issues there. and so it really is in one place getting a sense of the tremendous amount that has been accomplished. and then of course it lays forward the president's economic agenda. and here -- you know, i think one thing that i think is so important to keep in mind, as an economist the way we think about economic policy is, you know, what is the problem going on in the private market that

creates a role for government? and so talking through, what are some of the market failures in innovation? what are some of the market failures present in our health care system that give a role for government? what's the motivation behind the president's agenda? so i think one of the things again is so helpful to see the agenda as a coherent whole. i think it does paint a picture of a very well-reasoned, very important agenda for moving this economy forward. in ferms of themes, i think it -- in terms of themes, i think it will sound very familiar to you. it's one certainly that the president has talked about, rescue. there are two chapters both on what we've done in the united states, what's been done in other countries. there are three chapters in what i like to refer to as the rebalancing. this is what the president often refers to as getting away from bubble and bust. and thinking where how are we going to grow more healthy going forward and that is things like consumers will be

saving more in the future. and that's probably a good and healthy thing but it raises a question of, well, where is the demand going to come from? so the president talked about the importance of spurring investment, the importance of spurring exports as a way of making sure there is demand to keep people employed. there's, of course, the budget deficit. that's a big part of the rebalancing that at the same time we are going to spur investment, we are going to spur exports. we need to put a plan in place for getting our long-run budget deficit under control. here i think the economic report has a very nice chapter of why our long-run economic -- budget deficit came from, what it does to the economy, the logic for, the kind of fiscal anchor that we talked about or the fiscal target that's talked about in the budget andxd our concrete proposals for dealing with it. i'd also put in the end of bubble and bust financial regulatory reform and it's a very nice chapter talking about

where financial crises come from, what financial intermediation is and why it's important and the logic of the administration's financial regulatory reform proposal. and then finally there are four chapters what the president refers to as rebuilding the economy stronger. wanting to make sure when we come out of this crisis we don't just go back to where we were but to something better and that is exactly health care, education, the transition to clean energy and spurring innovation and trade. all of those are things that we think can make the economy a stronger -- us stronger going forward. the last thing i'll mention just in case if you're remembering about what's important about the 64th economic report of the president -- >> [inaudible] >> well, that's true. but i think much more than that is it is the time that i think it is the time when economic issues are so incredibly pressing. i think that makes it special. i think midwestology is

somewhat different. you know -- methodology is somewhat different. one of the hallmarks is the obama administration is the reliance upon evidence. you win a policy match by not shouting the loudest or taking the most but having the best arguments. i think that's a tribute to this president and this policy process. so in this economic report we tried to put forward the good arguments for the policies that has been proposed. there's some original research in here and also for the first time references so you can see the studies that are behind some of the things that we have been thinking about. and the last thing i'll say is it's prettier than ever before. so first time it's been printed in color. it's going to be the first time staying with our accessibility and transparency. it will be available in electronic form for your kindal and sony reader. so everybody on the beach will be reading the economic report of the president.

ok. >> one figure that just leaps off the page from this report is that even after job growth returns you don't see unemployment coming down to 6% until 2015. isn't that a pretty bleak assessment of six years of the obama presidency is going to deliver? >> the first thing to say this is the same forecast you saw a couple weeks ago when we did the budget. it is the administration's forecast. i think as we described at the time we had, you know, we tried to do an honest, conservative forecast to make sure that we were basing our budget numbers on close to the consensus in a reasonable forecast as we can. i think it is important to realize to certainly when we did this forecast,ñi you know, had a placeholder in there for some targeted jobs measures. but certainly when things were very fluid. i know for in particular the council of economic advisors

are very enthusiastic about the small business jobs and wages tax credit and certainly things that are now moving through both the house and the senate in that kind of area. i think that's the kind of proposal that might have the chance of moving the dial, of being particularly effective. so i think what's really going to matter is, you know, you're right that the forecasts are certainly something to be concerned about and that's why the president has said, job creation, more of these movements are going to be important going forward, to make sure we can get that done as quickly as possible. >> let me add to that, too. as we've discussed the chart i handed out on friday, the hole that we're climbing out of is currently stands at 8.4 million lost jobs, right? again, faking the recession in 1981, 1991, and -- taking the recession in 1981, 1991 and 2001 they don't equal 8.4

million jobs. so what people -- most people i think recognize is the worst downturn in our economy in most memory, 1981, combining that with the most previous two dozen equal -- >> [inaudible] >> doesn't equal the downturn in the economy that we saw. the job growth alone isn't all of it. you looked at, we had the -- i think the statistic i saw that i probably got from dr. roemer wasñi you had consecutive quarters of more than 5% -- more than negative 5% economic retraction for the first time since the great depression. so i think it's important to understand the sheer size and mag any tif of what we're doing -- magnitude of what we're doing. >> you say what the critics are saying this morning what you described as documenting the

challenges is really an exercise in blame shifting, is it? >> no. the fact that we lost 763,000 jobs in january of 2009 isn't blame shifting. it's a fact. the fact that we were, as the doctor said, averaging 700,000 jobs lost a month in that quarter is a fact. the fact that we are now where we are losing in november we had positive job growth but we're getting much closer to the margin of zero, that's a fact. this isn't blame shifting. look, there are millions of people in this country that have lost their jobs. they've lost their job because we had a risky financial system of which the president wants financial regulatory reform to lay down the rules of the road so it doesn't happen again. we had a bubble and bust economy, again, another chapter that we'll talk about where we thought somehow job growth could be predicated on the ability of getting an american

express card or housing loan. that's not going to get fixed overnight and it's never under the president's ideas not going to happen again. what we have to do is lay a foundation for the fact that how do we address for the fact largely for the last decade we didn't create jobs and people saw their wages either flatline or stagnate? those are monumental challenges. whose fault it is will be decided by history. there are 8.4 million people that don't care what history decides. they want a job. >> i just want to add exactly what the entire report, it is all facts. it's simply not -- it's not trying to shift blame. it's just trying to say, here are the challenges that we face. it's fundamentally -- it's what the economic report is supposed to do. it's saying, what's the motivation for the policies going forward? >> what are the numbers -- for

95,000 payroll creation and that's a pretty tepid growth. and i'm just wondering, are you saying if you get the jobs bill that you think the jobs growth can be stronger than that or does it already assume that? >> the first thing is that 95,000 very consistent with the forecast. i think the blue chip asked a very yes. they think on average in 2010 it will be 116,000 jobs a month. we are in the range of the other forecast. it's our best estimate going forward. it didn't take into account a specific form. we have a lot of certainty what's going to come out of congress. when we did the forecast there was a lot of uncertainty of exactly what would be proposed. it's certainly the case. the reason we're proposing things like small business lending, the jobs and wages tax

credit, energy retrofit program is because we think those will be particularly effective. i think what the president's going to do is put in place the best that we can working with congress and then see if we can get better performance. of course, that would be what all of us would be hoping for. >> can you also respond to the republican argument that what is holding people back from hiring is the uncertainty about legislation on health care, cap and trade and things like that that's making businesses more cautious? >> i found our jobs summit really useful. the main uncertainty they face is the economy. it's not legislation. it's not any of that -- i think that's what the president is focused on. i think the more we can get

good growth like we've seen in g.d.p., i think that's going to help with a lot of the uncertainty. >> does your jobs report forecast, that 6%, does that assume no jobs bill gets passed this year? that means no new stimulus? >> this is the forecast that went into the budget. certainly it's designed to be a postpolicy forecast. >> assume that some jobs -- >> that we had in the 100 billion kind of targeted thing but it didn't have the format. one of the things i tried to discuss is we have some things about good format. >> and there was another number that came out today and i assume it's addressed a little bit. are you concerned that this number is going to keep growing since there was so many -- you guys put some temporary halts in it and now over the next few months it's going to grow and when does it stop growing? >> certainly foirks are a big dish foreclosures are a big

issue. it's discussed in chapter 2 on the rescue but also chapter 4 kind of going forward. what do we think is likely to happen, sort of as we go back to full employment? obviously housing has been a major part of where in crisis started with the decline in housing prices and the problems certainly there. that's why we've had a very aggressive housing program and, again, that's described and certainly in detail in chapter 2. i think going forward that is certainly -- you know, that is one of the head winds we're facing. part of the reason why even we are seeing growth, a part of the reason coming out of this recession, most people are forecasting a number like 3% g.d.p. growth in 2010 is we do know we are still facing head winds. it's just been a terrible recession and part of that is the financial crisis. part of that is getting lending back. and certainly part of that is going to be the persistent problem in housing. i think that is going to be

something that we're working against. we do think we have good policies in place, but it is going to be something that we are going to have to be working to deal with it. >> you say overall it's a conservative forecast. there was a time when you issued a report about 8% or 8.5% unemployment would be the max and, of course, it went up to 10%. was there an effort here being overly optimistic so you didn't get burned politically down the road? and has anybody in a senior position, the president or anyone else, we are on the side of conservative rather than burned politically? >> i think the truth is we don't have a crystal ball. every year we try to do an honest, reasonable, conservative forecast to make sure we are basing our budget assumptions on the best of possible forecast that we can. we try to inform our decisions by looking at what other people talk about. you know, one of the things i do want to mention though -- i

think i mentioned at the budget press conference and peter orszag said -- that's an economist for i told you so. we did take a lot of heat for our g.d.p. forecast and our unemployment forecast. the unemployment forecast, we did not forecast how high the unemployment rate would go. we actually were remarkably accurate on the g.d.p. forecast. so actually when we have the numbers in we now that over 2009 real g.d.p. grew by .1%, .1%. our prediction would have been for .3s%. we were quitexd accurate on the g.d.p. forecast. one of the things we talk about in the economic report is how this recession has been unusually hard on the labor force and the degree to which the usual relationship between g.d.p. growth and the unemployment rate has broken down somewhat and that the unemployment rate has risen much more than one would have predicted based on the behavior of unemployment.

>> we had occasion to talk about this on many outings here. nobody predicted what we saw at the beginning of the first quarter of 2009. nobody saw 763,000 jobs lost. in fact, we didn't see 763,000 jobs lost because there was a revision that took us from 740,000 to 763,000. so these numbers are constantly being revised. i think the bottom line is when dr. roemer and dr. bernstein came out with that, nobody -- nobody had a full grasp of -- us included, how deep this was. that is not to blame anybody. that is the severity, the slope which we saw job loss was unforeseen, not by us but virtually everybody that enters into the type of forecasting that these guys enter into.

>> you will see a table in chapter 2 that shows you what other people were forecasting at the same time we were doing our forecast to kind of give you just the facts on the degree to which the world was changing very quickly. >> every day. >> i have one minute before i get to -- >> we have to go. >> we have to get this baby signed. >> the report talks about inequality but doesn't make any specific recommendations on it. how serious should the z treating that right now? >> well, i think that is an issue that i know the president feels deeply about. we have a whole chapter on strengthening the american labor force because that's where we certainly talk about nerms of in recession the degree to which different demographic groups, young people, blacks and african-americans, all of it has seen higher unemployment rates relative to the average. i think very much the message of that chapter and i think it's one that the president talked about is how important education is in trying to even

the playing field and try to prepare all of our children for the good jobs in the future. so i think that's certainly a big part of where i see our economic agenda trying to make roads in that area. >> we have to let the doctor go. >> thank you very much. >> the president raised a point the other day and secretary sebelius wrote that letter saying, justify all that up. in response me said basically it's a healthier people are opting out and getting cheaper coverage elsewhere so we're losing money. are you satisfied? >> one of the -- i think they made a $2.7 billion profit last year. maybe that's -- look, when

health care inflation goes up 4% to 5%, when a company makes a $2.7 billion profit and increases rates in the individual market by nearly 40% i think there's some explaining and investigation that needs to be done. i think it explains more than ever of the case that the president made on the individual market why that's so important, creating a national exchange, national pool can have a greater amount of purchasing power. one of the things that the health care reform bill called for is obviously needed in this region of the country and quite frankly throughout the country.

i will look through and get a more detailed response to the letter. i have not seep the response that they wrote. just, again, understanding that health care inflation is not nearly prizing at that level. their profit looks quite nice. i think more needs to be explained on how that number was derived. >> the white house explained a crackdown in iran surrounding the anniversary of the revolution and there have been reports of a crackdown. i'm wondering if you could give your reaction on what's going on? >> we continue to monitor events as they happen. around try to get the best available information understanding that a lot of media, google and other internell services have been basically unplugged. i think the president was very

clear in his speech in oz low that we stand by the rights of iranians to express their rights freely and without intimidation of violence. the iranians have gone out into the streets to do just that in a peaceful way. we will continue to monitor it and continue to express our condemnation and dismay for any violence that should result as -- should happen as a result of the exercising of those universal rights. >> you mentioned the google suspension. have you heard directly from google about this? >> i'd have to check with n.s.c. on it. i saw some emails around this yesterday. i don't know if ÷h"t was based off of news reports or based off of something that n.s.c. had gotten. >> the head of iran yeas atomic

energy agency --ñiñr iransi ato energy agency said that the president took wrong steps. he said, "the consequences are beyond the imagination of anybody. don't test iran." any reaction to that? >>ñi well, look, i think iran h made a series of statements that are far more political than they are. they are based on politics, not on -- the iranian nuclear program has undertaken -- has  undergone a series of problems throughout the year. quite frankly, what ahmadinejad says, he says many things and many of them turn out to be untrue. we do not believe they have the capability to enrich to the degree to which they now say they are enriching. i'd also say this. if they are serious about a -- about the peaceful use of their nuclear program, then what they should have done was taken more

seriously the offer on the tehran research reactor understanding that the increase in -- the increase from 3.5% to nearly 20% was what the united states and the iaea and its partners offered as part of the tehran research reactor so that medical patients could have access to these medical isotopes. iran cannot replace and continue to operate the t.r.r. at its current pace. so then not taking the iaea up and its partners up on a very commonsense offer leaves quite frankly the world to believe that iran has other ideas. that's why -- and i would say this. the reactions -- the actions of iran have led the world to be more unified than at virtually

any other point in the past many years. they have made actions through their statements. our partners in the p-5 plus one will look forward to taking those next steps. >> [inaudible] >> well, you saw yesterday the treasury institute, some sanctions on the irgc, and obviously the next phase in this, the president talked a few days ago, this is a multifaceted -- and there are more phases to this including the united nations. >> followings up on that. why should iran -- disobey what the united states and the anne anne and the p-5 want with respect to the move from treasury yesterday. >> jake, as you said, the

president is working through and with our partners on making that happen. this is not going to happen like in times square when the ball hit zero. this will take some important time. but understand this, jake, our allies in this are more united than they've ever been. based on the statements and actions. we believe that the chinese have and will continue to play a constructive role. they worked with us, again, very constructively on the u.n. resolutions dealing with north korea. and we believe and i think they believe it's not in their interest to have a worldwide arms race. it's not in their interest to economically have an arms race in the middle east.

>> it's not really an answer as to whether they're onboard. >> we are working with them and our partners in the p-5 plus one. >> when will that process start? >> it already has. >> when will the public process start? >> writing this and devising this has already started. >> whether or not china will support sanctions but what kind or are you working on whether they'll support? >> i am not going to get into the back and forth of diplomatic negotiations, understanding, again, that it's in everybody's interest not to have an international arms race. >> this is a difficult time with china and you have some problems that you are talking about right now. you need china's help on iran and many other issues. why perceive with the dalai lama meeting which you will know will infuriate them? >> we said this all along. first of all, we talked to the chinese about their currency in beijing.

we talked to the chinese about the dalai lama in beijing. we talked about internet access and internet freedom with the chinese both in shanghai during the town hall meeting and in bay -- beijing. we think we can agree on issues that are of mutual interest but have a mature enough interest that we know that two countries in this country will not agree on everything and we will have -- we'll have those disagreements. >> there are a couple of things in the news that i wonder if you can comment on. one, you talked about the general is in pakistan? >> no. >> and the other one is there has been some reporting about the haiti recovery with bill clinton being asked to head up that effort -- >> i will check on that. i don't have an answer on that. >> the question that i asked the doctor not looking back so much of the incorrect --

understandably, perhaps, incorrect projections on unemployment but whether or not anybody in the white house has advised her to -- >> no. of course not. of course not. >> that's never come up? >> of course not. >> to what degree does the administration, not just based on the report, atributes the jobs growth of the 95,000 to the recovery act and any other legislation that the president is pushing? >> well, look, i think that -- and i ask see if the doctor -- i doubt she's broken it down to that degree. obviously she has, c.b.o. has underscored the job growth we have seen under the recovery act. i think the recovery act has spurred economic growth that we've seen two quarters of positive economic growth. we did this. we would never have jobs growth without first having economic growth. so, look, i think the recovery act has created additional jobs

and created an environment for economic growth that we believe will ultimately lead businesses to add to their payrolls. >> will the white house respond favorably for federal disaster aid for states in the mid-atlantic, maryland, d.c. and -- >> i don't want to prejudge what they might ask for. there's a process whereby those disaster declarations come from the state or in the district's case, the mayor, to fema and all those are evaluated. obviously we have seen an extraordinary amount of winter weather here in the mid-atlantic. having shoveled my driveway now what seems like 10,000 times, i could testify to that. i don't know what each locality will ask in particular for. the process is that those

declarations come from the state and locality in the case of the district of columbia toe fema around -- and then they're evaluated there. >> is the president happy with the snow removal? and i bring this up because the federal government has been closed for four straight days. >> look, i'm reminded, again, as i shovel my driveway, that there are no statistics on record. if this has happened before it was before they kept record of snowfall in the winter. i think what we have seen here is extraordinary. look, i obviously it has been an overwhelming weather event. i know that o.p.m. and others are working to try to get as

much cleared so that the federal government can open again. >> is the government considering asking federal workers to make up their snow days? >> let me check with o.p.m. i need to check with o.p.m. on that. >> ok. [inaudible] >> because he's the luckiest man on the planet. i told him that over the weekend. you should never leave. it's a great deal. you have a huge driveway and it's my -- my back is killing me. jonathan. >> as christina said, the longest chapter in the economic report is chapter 2 in response to the crisis and the president's message at the beginning of the report is unusually long. do you think this is a political document and are you using this as a justification

for policy rather than a state of the economy? >> this is the first time it's been an owe tated with references of where the facts are derived from. this is the state of the economy and where it's headed. 763,000 people in january of 2009 lost their job. i don't think you need more evidence that something needed to be done. if nothing was done, that hole would be far deeper. one of the things that this report helps you all know is

the severity of what we are dealing with. the recession started mathematically in december of 2007. we are still at a period where we still have not seen consistent, positive job growth. this was economic devastation, again, unseen since the late 1920's. >> senator bond accused the white house of using john brennan he was doing your role -- >> let me just address that. >> ok. >> let's understand this. john brennan has been working in counterterrorism for more than 25 years. right. first as a c.i.a. agent. hired by president george w. bush to work at the c.i.a. and then to stand up the national counterterrorism center, ok. we asked him to stay on. i don't have the slightest idea what political party john brennan is a member of.

i've never had a political conversation with john. i know in. john is there each and every day working in his office to try to do everything he can to keep the american people safe. and i would suggest whether it's to senator bond or to others on capitol hill that these are decisions best left to people who have an understanding of counterterrorism, experience in counterterrorism and law enforcement rather than to politicians on capitol hill. >> but his specific accusation was he was being used in a way that a press secretary is supposed to do. he was anunsiating -- >> i don't think he'd like to hear what he already knew. he'd been told that abdul mutullab was in custody on christmas day. i'll ask senator bond of how

the f.b.i. deals with suspects. it would have been obvious that he would have been read his memoranda rights. i don't know if bond was confused or whether he doesn't want to admit the facts. >> when will the president sign the debt limit bill? >> i think either the end of this week or over the weekend. i would say this. i think that that bill also contains something exactly he has spoken about many times, paying for what you do. >> will it be done publicly? >> i don't know what the coverage is. >> regarding google, is there any concern that iran's actions following google's dispute with china could indicate that regimes are now going to be targeting u.s. companies and internet freedom in general as a means of tighter control?

>> well, i think that's been happening for quite sometime. i don't think this is -- i don't think -- i don't think access to the internet into open communications is something that has just happened recently. i think this has happened for a while. you heard the president in shanghai speak out about it as it related to china. i don't have specifics to the degree which google brought any of its concerns to us about what was happening in iran. >> so not whether it'sess can lating or -- whether it's escalating? >> i'll check with n.s.c. >> the president is meeting with secretary state clinton today, i guess she's going to the middle east this week. will he be setting any goals for her for that trip? >> look, this is part of their weekly meeting. i'll assume there will be a number of topics that will be discussed. she and others are traveling in

the next few days and few weeks to the middle east and we want to continue to make progress, get these two parties back at the out. >> in is a report out of demascus that they have accepted ambassador there, robert stevenport. can you confirm? >> i will check. i don't have anything on it. >> the president told bloomberg business week in the context of the conversation about dealing with the deficit and the commission he's going to set up. the point is to make sure all ideas are on the table. i wonder if you can talk about solutions? that was right up to the interview that suggests the context would be willing if he would raise taxes on those americans earning more than -- >> well, i don't want to prejudge the commission because the whole point of it is to make sure that all ideas are on the table and let's see what folks can come up with.

>> ok. >> so what the president was saying which i think the president will set up a commission. the president is not a member of that commission. the president is not going to prejudge the outcome of a commission that he's setting up on an issue that's as important as getting our deficit and debt under control. that's up to the commission. and i would say this, major, i would hope that -- rhope that republicans, many of whom supported this commission before they had to vote on this commission and then they magically didn't support in commission, we hope that when the president signs this executive order and announces his picks for this commission that they will demonstrate their seriousness in dealing with an issue of this magnitude by taking part in that commission. >> [inaudible] >> the snow goss us a little off track so it will take place in the next 10 days or so.

he's not a member of this commission. i think the president has demonstrated cutting taxes for middle class families and holding the line on -- the president doesn't believe our economic growth should be predicated on raising taxes on middle-class families. but that being said the president's just not going to get in the game of prejudging the outcome of the commission that one hasn't been set up and hasn't met. i think -- >> opposed to any tax increase for those outlined in the campaign? >> he won't prejudge the outcome of the commission. i was going to check on that but i'm not. >> a lengthy conversation with savannah and todd this morning about the lapel. i want to ask you about that. if abdul mutullab -- would you handle it the way it was -- this case is handled? >> look, i'll say this.

we are quite comfortable how this was handled. i don't want to get into hypotheticals, major, because this case is different than what happened on september 11. this case is different than the details what happened with richard reid. it's hard to compare apples to oranges. >> there's always a look back and in the process of looking back -- >> absolutely. >> have you found for improvement or methodologies that will be executed differently? >> i know that john brennan is -- has been tasked in a process to implement changes. based on the president got on intelligence failures and the president asked for us to examine all of what was done that day and the days after to ensure that we were doing this

the best way possible. >> moveon.org all agree that the president was wrong when he said he does not begrudge wall street bonuses? >> the president didn't say that, major. >> i'm saying that they said he said. >> i don't begrudge people's success or wealth. >> the question was -- >> you and i talked about this four times the other way. the president on five different occasions, just as i emailed you yesterday, causing you to re-examine what you said based on the interview was that the president was talking about in that sentence, as he's done many times, about the -- he does not believe the federal

government should be setting salaries for a business in america. he still believes that. >> does restill remain comfortable about the analogy he made with major league baseball players, yes, they make a lot of money. no, many of them don't make the world series but none of them has to do with the financial crisis? >> not many baseball players has to deal with the financial crisis. the point he was trying to make is there are obscene and shocking salaries and obscene and shocking compensation that don't match what happens with your performance. hold up. let me finish my answer. the president has said there ought to be -- these ought to be based on performance and not risk faking. [inaudible] in a sense that, yes, they are in stock rather than -- there should be a say on pay. shareholders ought to be able to weigh in on this.

salaries that you are talking about with baseball and others are shocking. >> obscene bonuses -- >> the president has spoken repeatedly on these bonuses and find them extraordinary and shocking. >> he asked -- >> he said extraordinary and shocking specifically. >> are thee obscene, are they an offense? >> the president doesn't have a different view on bonuses yesterday than he did 10 days ago or 10 months ago. they're -- >> types of the ones that were not linked to -- >> ensuring that bonuses are paid in that way is a movement in the right direction, right? does that justify the level of these bonuses when through -- only through the taxpayers' assistance would these banks even still exist? of course not. >> senator corker said he

wanted to help the financial regulatory reform bill. senator grassley is helping in the jobs bill. how do you account for this apparent bipartisan good will? >> well, the snow may indicate that it's all frozen over. well, look, i think -- let's take these individually. look, the finance committee has worked -- is working in a bipartisan way on a series of measures to create an environment where hiring can take place as well as to extend things like unemployment compensation and health care for people that have lost their job. senator corker has been very active in this process, in the process of financial reform. i think there are certainly many in this town that want to deal with the problems that people face, whether it's

creating jobs or whether it's ensuring that we have rules in the road -- rules for the road that protect against the type of excessive risk taking that led to the near collapse of our financial system and with it our economy. i hope that many have learned the lesson that you hear and see people talking about all the time and that is that they want this town to put aside its pity arguments and move forward on what's important in their lives. the president used an example the other day about senator mcconnell and appointments. during president bush's tenure there were six nominees that were sitting there for a month or more. this president before today's action in the senate had 63. as he said to senator mcconnell, both a quantitative and a qualitative difference.

i think that all of these are examples of things that are important to people's lives that they tpwhreeb washington should put aside, -- believe washington should put aside the petty games. >> people talk about these things all the time. the president has been talking about them more and more this year. are they responding to that kind of political pressure from the president? >> i think they're responding to both the political pressure of the president. i think they're responding to the political pressure from the american people. they have -- the president went to capitol hill to -- try to go to capitol hill to talk to the republicans about the recovery plan. as we talked about in here, they put out a statement opposing that plan before the president even got to capitol hill. the president spent a lot of time trying to work with republicans on health care only to have very few respond. the president will continue to try to do this in an effort to

demonstrate to the american people that this town is capable of solving the problems that we face. >> one question on haiti. i wanted to ask you just to go back to iraq for a minute -- >> go back to -- >> iran. >> ok. >> given what's coming out of the iranian leadership in the past week, has the president had any sort of rethink about the whole concept of engagement with iran because -- >> we wouldn't be here -- we would not be here unified in the p-5 plus one were it not for engagement. >> i understand that. putting aside the argument -- >> putting aside that we were at a point in which those countries have never been more united and more forward in dealing with the threat from iran. >> china and what they're going to do. >> ok. you wanted me to leave aside the -- >> i want to put aside the united front in the p-5 plus one and ask you to look

specifically about the relationship with the iranian regime as a whole between the united states and iran, do you see any difference there that perhaps has come from an engagement, do you see any rethink about whether there was any -- >> again, i think it demonstrated to the world that -- it demonstrated to the world that these were decisions that weren't going to be made by the united states or by russia or by china. these were decisions that were going to be made by the iranians. now, sometimes it's been confusing. sometimes they've accepted ideas and agreements only to come back a week or so later and not accept them. and whether or not -- whether or not there is one or two voices in iran speaking for the iranian regime or whether there are many conflicting voices, i'll let -- i'll let others decide. but because we engaged, it

demonstrated to the world that the choices that iran made were choices that it alone had to vouch for. the tehran research reactor is again a good example that they are going to run out of the medical isotopes that they need to treat those in their country that could be helped by this. .

>> the believe the haitian situation got carried out in a judicial process? >> i have not had a lot of time to look at the patient-judicial process. they have had contact with the haitian judicial system and with those missionaries. i would give that it to state bird .

>> do you know the vice president was in favor of a partial partition of the country but the president differed. >> it was about getting our troops home which we intend to do in august of this year. >> the agreement was signed before the president took office. >> the political pressure that the president as a then- candidate helped to bring out. we will long debate iraq. we will long debate whether had a very important moment in our efforts to root out terrorism, particularly in afghanistan and that border region with pakistan whether we took our eye off the ball. we will debate that long after

we're gone. thing people come to the conclusion that no single event took our eye off what needed to be done in order to occupy a country that did not have a single member of al qaeda. the vice-president has been deeply involved in fixing the political process there so elections can be held and our troops can come home as scheduled this summer. >> if you are an iranian, you are hearing about more sanctions. >> we will leave the last few minutes of the briefing and remind you can see all of this later on our program scheduled and you could watch it on line at c-span.org. we are taking you live to a senate hearing on the federal budget and the deficit with shortfalls projected years into

the future. there'll be testimony today on how big deficit can be before the company -- become financially dangerous to the country. kent conrad is chairman of the committee. live coverage on c-span. >> we intended to do this yesterday. we had to put it off because transportation was not functioning. witnesses could not get here and members could not get here. other colleagues will be joining us. there are members within certain caucus is going on and they are discussing important jobs legislation but they will join us as we proceed. those of us from north dakota feel right at home with these conditions. in fairness, this city has done a remarkably good job given how much snow has fallen here.

i have found that once you are able to get your car dugout, you can move around. hats off to the d.c. government for doing a remarkably good job in extremely difficult conditions. our hearing today is titled " setting and meeting an appropriate target for fiscal stability." we are joined by a very distinguished panel of witnesses dr. alice rivlin is one. i cannot think of a better group of witnesses for a hearing like this one. dr. berlyn is the director of the greater washington research at the brookings institution. she is co-chair of the newly established bipartisan policy centered debt reduction task force brig they are doing very important work. it could not commit a better

time. choose a former vice chairman of the federal reserve, a former omd directors and to was the first director of the congressional budget office. what a remarkable series of contributions. dr. rivlin brings an incredible amount of knowledge and experience to the table. dr. macginnis is director of the fiscal policy program. she appeared before this committee last november and provided very valuable testimony at that time. we are delighted to have her back. dr. penner is co-chair of the committee on the fiscal future of the united states. he is also a former director of the congressional budget office. he is someone who has very high credibility in this committee. we are very pleased to have topenner with us as well. special thanks to being here.

i think this is a critically important hearing because we are about to work on a budget resolution for either the next five or 10 years. we have not made that determination yet. in addition to that, we also have a commission that will go to work to try to come up with a plan to be voted on by the congress before the end of this year this should get us back on track. this hearing, i think, is very much in line with a larger challenge we confront this year. we focus today on the question of what is inappropriate target for long-term service fiscal stability for our nation. in an ideal world, our budget would be fairly close to balanced most of the time. given the tremendous long-term

fiscal challenges we confront, we need to determine a level of deficit and debt that is sustainable over the long term. our goal must then be to adopt policy overtime to keep our deficit in check and at or below those target levels as much as possible. if we fail toñi confront our burgeoning deficit and debt,ñi e put our nation's economy at risk with consequences that could be far worse than anything we have seen in recent times. each of our witnesses has been involved in efforts to identify such a fiscal sustainability targets. we have an idea panel that is considering the subject. i would like to begin briefly by outlining the problem we face and some of the fiscal stability targets that have been proposed at its core, our fiscal problems stem from an imbalance between spending and revenue.

we can see that spending in 2010 is projected to be over 25% of the gross domestic product of the united states, higher than at any point in over 60 years. as measured by the gross domestic product. meanwhile, revenues are projected to be 15.6% of gdp, the lowest they have been in 60 years. whatever solution we adopt over the long term will have to involve both spending and revenue. they both contribute to the problem. they both have to be part of the solution. this next chart shows the deficit as a percentage of gdp under president barack obama's budget over the next 10 years. we can see that the budget is expected to drop from 10.6% of

gdp in 2010 to 3.6% in 2018 and begins to creep up again after that. the deficit would never drop below 3.6% in gdp as the administration said as a goal mix -- last year. when the cbo examines this budget, we will be even higher, i wager. we have to consider whether 3% of gdp is inappropriate target in the first place. the next chart i would like to put up shows that many outside budget groupsñi have identified 16% debt to gdp levelñr is appropriate. to be clear, that is the public,

not the gross a general desperate we are approaching this year -- will be measuring gross federal debt, a debt of 90% of gdp. we have not been that high since after world war two. the next chart shows the gap over the next 10 years between projected deficit under the january baseline and that 60% of the gdp level. clearly, the debt cap is growing dramatically. the debt held by the public will reach 88% of gdp by 2020 under this alternative fiscal scenario. the next chart summarizes some of the fiscal stability plans being proposed. there is a goal stabilizing the

level at 60% of gdp by 2018. reducing it further over the longer term. the committee on the fiscal future of the united states proposes a goal of stabilizing the deficit to gdp level at 60% by 2020 to per. the center for american progress proposes an overall budget balanced by 2020. they estimate that -- this call will stabilize debt as a share of gdp 65%. the center on budget and policy priorities proposes annual deficit of no larger than 3% of gdp. that is a lot of numbers. that is a lot of things to try and get your mind around.

i provide that background to show there are different goals that people have in mind, that there may be inappropriate level of debt to be shooting for. i am not here to endorse any of those plans today. i want to highlight the six-step plan for achieving fiscal stability provided by the o peterson-pugh committee because it provides a time line. this will stabilize debt by 2018 and reduce the deficit to ensure the economy over the longer term.

none of this will be easy whichever of these goals is adopted. it is interesting how similar the goals are. many of them are focusing on the debt to gdp of 16%, publicly held debt. stabilizing the debt at that level will require very difficult decisions. as i said the last hearing, i went through an exercise and i will be sharing that with my colleagues of trying to get to 3% of gdp by the fifth year of this budget and then to balance before the end of the 10-year period, and i can tell you it is daunting. it is really striking how tight the -- how tough the decision will have to be to accomplish a goal like that. it is really striking. how tough things -- the

toughness of the decision to be made. >> mr. chairman, may i ask you a question on that? >> yes. >> as i recall, the president's budget projected over at least the next five years if not over 10 or 15 years, does not even bring down the deficit to 3% of gdp? is that correct? >> that is correct. getting to 3% by the fifth year, that in and of itself -- the president's budget has some tough things in it. that does not get down to 3%. and then it starts going up in the second five years as a share of gdp. as i said, if one seriously goes for the exercise which i have asked all our colleagues to do before we get into the budget.

i have best everybody. do your on exercise. see what decisions have to be made to achieve any of these goals that have been proposed i think it will release over people. -- i think it will really sober people per it is clear that the longer we wait, the harder these choices become. the chart i want to show shows one example of the magnitude of difference in the level of deficit reduction required if we start gradually phasing in changes beginning in 2012 versus waiting three years longer. in this example, waiting three more years to begin phasing in changes results in additional $580 billion in deficit reduction needed. the final chart is summarizing the point that the bottom line is that we are and on -- we are

on an unsustainable course. before most experts have come before us to tell us desperate treasured -- treasury secretary tim geithner said our debts are unsustainable. the cbo director said the federal budget is on an unsustainable path for the omb director said our path is unsustainable. the federal reserve chairman, mr. bernanke said we cannot allow ourselves to be in a situation where the debt continues to rise which leads to an unsustainable situation. the former treasury secretary said it is clearly unsustainable the former head of the gao, general walker said we are on imprudent and unsustainable long-term fiscal path. the former chairman of the federal reserve, mr. greenspan said the federal budget is on an unsustainable path. do you noticed the similarity,

unsustainable, unsustainable, unsustainable? i know there is a sense of denial among our colleagues about the seriousness of this threat. i see it every day. i have just come from açó meetig in which i see it. this is tough. but it has to be dealt with. if we let this get away from us, we will rue the day. we will rue-the-day. we will regret for ever the consequences to the country. we have to face up to this. whether it is through the commission that the president proposed or some other method, we have got to deal with the consequences of a failure to act. we have to act, the sooner the

better. the economic security of our nation depends on and with that, we will hear from our witnesses. i will go to you, dr. rivlin, thank you for being here. it would be hard to have a more perfect background and you ha ve for helping us understand what needs to be done in this circumstance. please proceed. >> thank you very much. i am really glad to be here because i greatly admire this committee for your persistent effort to focus the attention of the congress and the nation on the dangers of the projected increases in the public debt and the importance of moving the budget onto a sustainable trajectory. i thought it was a shame that the commission that you and commissiongregg proposed did not pass. i hope that the president's commission will receive strong congressional bipartisan support.

those of us who care deeply about this issue cannot give up. i reallyçó appreciate the opportunity to be here today. as you have pointed out and so many others, on any reasonable set of economic assumptions, the u.s. budget is on an unsustainable track. there really isn't any disagreement about that or about the reasons for it. in the next decade and beyond, federal spending, driven by the impact of an aging population and rising health-care costs on medicare, medicaid, and social security, will rise substantially faster than the whole economy can grow. it will be faster than the gdp. revenues in any set of tax rates will grow only slightly faster than the gdp. there will be a widening gap. these projections are not new. they predate the financial

crisis and the current recession two or three years ago, deficits, while inappropriate in a prosperous economy, were a manageable size. the debt was not off the charts. it was around 40% of gdp. the warnings of this committee and the rest of us about the bigger deficits looming in the future work just not gaining traction. the financial crisis in 2007 and 2008 and a deep recession that has precipitated, have changed the budget outlook dramatically. the deficit, as you pointed out, peaked at more than 10% of the gdp and the debt has soared to an estimated 54% of gdp this fiscal year and climbing. the big deficits will receive, as the economy recovers and a

temporary spending measures expire. they will not recede far enough. moreover, the double impact of aging and medical spending which we once thought of as a long one problem is already driving deficits and debt higher and will accelerate by the end of the decade. solutions must be found and soon. as our debt mounts, the risk grows and their creditors, especially the foreign creditors, who own and our debt, will lose confidence in our ability to get our house in order. we have to take action very soon to arrest the debt buildup. stabilizing the debt increase seems to be a sensible goal. the 60%, while magic number, has

certainly gained credibility. two high level groups that you mentioned including both republicans and democratic budget experts, have recently recommended stabilizing the debt at 60% by a date certain. the crucial question is, by when? one could take another number but 60% is good enough. the peterson-pugh commission of which i was a member suggested getting to 60% by 2018. that is very aggressive. the other national academy commission suggested a slightly more gradual trajectory to get there by 2022. even this more gradual trajectory would require substantial changes in current budget policy.

i believe that a credible politically viable plan to stabilize the debt must have two characteristics. first, as you pointed out, it must include both reductions in projected spending and revenue increases. it must have the support of the leadership of both political parties. the widening gap between projected spending and projected revenue is too large to be closed by either spending cuts or revenues alone. given the rapid aging of the population especially in the near term, the high demand for medical care and other necessary and widely supported functions of government, i believe it is unrealistic to bring the growth of spending into line with the growth of gdp in the next decade. in addition, our tax system is extremely inefficient and complex but part of the gap

should be closed by reforming the federal tax system so that it produces more revenue with lessñr drag on economic growth. no one needs to tell a member of the senate that partisanship has grown more extreme in the last few years. neither party wants to take the lead in proposing a unpopular policies such as cutting the growth of entitlements or increasing revenues. putting the budget on a sustainable track requires unpopular actions and the only way to accomplish them is for both parties to work together. i have personally never been a big fan of commissions. it would be much better if the congress could stabilize the debt by using its regular budget process. a bipartisan commission with

fast-track authority seems to me is the best hope for serious debt reduction right now. i hope it will be an opportunity forñr the congress to reconsider its rejection of the conrad- gregg proposalñr or to teach --o treat the president's proposal in a similar manner. meanwhile, as you mentioned,? te former chairman of this committee and i have launched a bipartisan debt reduction task force that we hope will demonstrate that republicans and democrats can work together to produce a sensible and viable debt reduction plan. under the auspices of the bipartisan policy center, which was founded by senate leaders, we have launched an effort that we profoundly hope will show that crafted a bipartisan

deficit reduction plan is not an impossible task. we have recorded an impressive group of citizens, former elected officials, and budget experts, i will attach a list, and we will report by the end of the year. we hope to support the efforts of an official commission whether statutory or created by executive order or whatever. in any case, to make our recommendations available to the public and to the congress for further discussion and debate. we will be happy to assist this committee in any way that we can. thank you, mr. chairman. >> thank you very much for the testimony and thank you very much for the effort because the clock is ticking. this is the time. one of the things i want to emphasize is that senator gregg and i to join together after two years of working together on a proposal, we are delighted to get 53 votes on the senate.

that is a majority but all of us know it takes a super-majority to pass. we would have passed that everyone who had been an original cosponsor had stuck with us. we had a number who did not. we had a number of others who committed to supporting it who did not. that leaves us with a circumstance that either we go back and offer a statutory ñicommission again with the hope that some others will be persuaded to join us or the president goes forward with his executive order commission which has now been buttressed by a very specific pledges by the speaker of the house and by the majority leader that the recommendations of the commission will be brought to a boat in the senate and house. that is a very, very important difference from the way other commissions have operated. ms. macvginnis, welcome and

proceed with your testimony. >> thank you so much. it is a privilege to be here again. i think it is such an important topic because this is moving toward helping people understand the specifics of what it will take to put the budget back on a sustainable path. i want to talk about the need to pick a fiscal goal and had to think about the right goal and had to think about the right policies to achieve that goal, the types of policies that will be needed and the consequences of failing to act. the need for a fiscal goal -- clearly the budget is on an unsustainable path. we can all agree that we would not like to find out what the disaster might be. there are a number of reasons to have a specific goal and the first is to reassure credit markets that the u.s. is serious about controlling its debt and independency from borrowing.

cutting budgets or raising taxes can be destabilizing announcing a credible plan can have positive economic effects. beckham actually buy you some time. the second reason to commit is to allow policy makers to say no. even when there are new priorities that are compelling and have lots of good points and you want them in the budget, we can no longer afford to deficit-produced. it elevates the issue of coming up with a plan even before other policies are paid for. it looked raises that would topple priority. having agreed upon goal allows comparisons of the trade-offs between devin approaches. the health care reform only addresses health care slightly parted much greater sacrifices will be at -- will have to be found. if the plan protect all

beneficiaries over a certain age been people who are younger will have to sacrifice more. it is much too easy for anyone to demagogue. people can say one plan or another will cut and it is not fair to compare those against the option which is being on an unsustainable course. this is a way to level the playing field of options. i would also like to thank you and senator gregg for the really important work did on putting forward the plan for the commission. i am sorry that some of your colleagues changed their mind and did not support of but i hope we can turn that into reproductive mechanism to move forward. in terms of picking the right goal, there is no single right goal. one commission recommended stabilizing the debt at 60% of gdp by the year 2018. over the long term, we think we need to bring the debt down closer to historical levels at below 40% because of the fiscal

flexibility you need to have by not having excessively high debt levels. that is one thing that helped us respond to the economic downturn. we base the 60% target on international, economic, and political factors. global markets are most likely to embrace a plan that has xdinternational capabilities. we b nr ve it is the most ambitious andñiñi[o economic ad sensible target that can be achieved in the timeframe, given the significant risks of high u.s. debt. a less-aggressive target might beefoñiçó insufficient. xdwe are worriedçó that if time ti to the plan and change course in the middle of it. ñithe goal requires two pieces - bringing the debt down to a reasonable level of 60% and then stabilizing it so it does not come back up of the longer-term. i think it is quite likely you need to have different kinds of policies to achieve those goals.

the medium-term target will be policies that could be intimate -- implemented more quickly. they could come on the discretionary budget side. when i have the opportunity to talk about the commission, the bottom line was that the most important thing is that a structure of the commission --ñ committee of a widespread by in. the same principle applies to a fiscal gulf are the most important thing here is that there is widespread buy into it so we can have that first step and move into the specifics of how you achieve it. what ever fiscal goal we end up picking, the starting point really matters. it will be greatly affected by whether policymakers let policies that are slated to expire do so or whether they renew them or pay for them or whether they are made permanent.

if we assume the fiscal goal is to stabilize the dead as 60% in 2018, it would require roughly $1.50 trillion over nine years. it would take $5 trillion under current policy. that shows you the huge additional debt that is layered on by extending policies without attempting to offset the costs. we include a budget blueprint that is purely illustrative. it shows all the policies that we lay out under both scenarios that will take to get the 60% target. it is here and included in murray's remarks. i want to put forth a couple of principles. the first is that changes should be conducive to economic growth or at least minimize the degree to which it hinders growth whenever possible.

the second is that spending growth is the crux of the long term budgetary problem but that both spending and revenue will both have to be part of any budgetary solution. thirdly, reform should not focus on the driver's of growth for the long term. finally, the sluggish economy should not be used as an excuse to delay coming up with a plan even though we need to be sensitive about implementing a plan to quickly. the committee for responsible federal budget does not endorse specific policy changes. i will go ahead and speak on my own behalf. i think it is important to talk about specifics because the kinds of things that are in the political discussion now are much smaller than the types of policies it will likely require. policymakers and the public have to come to an understanding of what it will take. some of the most promising policies i would recommend our

first, raising the retirement age. i would like the expectancy increase because we cannot afford people to support people as long as we can currently under these programs. increasing the age as positive labor market affects. secondly, restructuring some of our entitlement programs so slow the growth of benefits for people who need them the least. you can either reduce benefits across the board or you can reduce them more for people who need them less. i certainly think we should do that in terms of social security and ways to slow the growth of benefits of the opera and and in medicare, it makes people to contribute more to people's benefits if they can do so. we will have to do more on health care. no matter what happens with health care bills that are being considered, they have not done enough to control costs and take a lot ofçó pressure of the restf the budget. it is important that we look at the pieces of the medicare reforms that would be most

likely to slow the growth of health-care costs. that wouldçó include the medicae commission, tax treatment of employer-provided health care, and we need to have a rational discussion in this country on who should pay, for health care. we are constantly shifting it around. we need to have a more sensible discussion about it and bring people closer to the costs so in control them. reintroducing discretionary spending caps makes sense. in the past, discretionary spending grew faster than the economy. that even excluded defense spending. to ensure that tough decisions are made, we could have strong, enforceable spending caps which have been the traditional counterpart to paygo. nobody thinks that they replace and actually budget deal but

they can have us stay on track. broadening the tax base is a critical piece of this. right now, the tax base has exemptions, deductions, exclusions, tax expenditures lead to $1 trillion less in revenue collected by the federal governmentt.. i think we can do many reforms on the tax base and simplify it and make it more efficient, make it more progressive. finally, even after all spending cuts have been put in place, it is very likely there will still be a budgetary gap. we will have to talk about what kind of broad tax reform should be on the table. it is likely that discussion will look at a number of different revenue options from increasing rates to a transaction tax. you see more of that discussion going on in europe. that could go to an energy tax. my preference would be to look at an energy tax or cat and

trade which does not return all of the revenues back to families or businesses. if you cannot get there on spending, you have to fill it in with revenues. what is the most be efficient way you can do that? the higher taxes are, the more they can hurt the economy. we want to be thoughtful about that. i think a budget deal should be enforced with a debt trader. it would be a trigger that we recommended our commission report was one that is broad based and applies equally to revenue and spending. traders have not been effective in the past. one reason is that many parts of the budget are exempt from the trigger. we want to have a trigger that is uncomfortable enough that nobody wanted to pull a possible that if it had to be pulled, it could be put in place. secondly, we have the expiration of the 2001-2003 tax cuts coming up. that can serve as a very useful lever where we can extend the

bulk of the tax cuts. the laying doing that until we have a budget deal in place makes a good deal of sense. if we continue to give away the sweeteners in the budget, that makes it harder to take the tough medicine. finally, the risks of inaction is becoming more apparent every day. we hear what moody's and other credit agencies are warning. we know that excess of debt can harm the economy in terms of interest rates and jobs and standard of living. the most prudent course of action would be to commit to a credible plan as quickly as possible and to phase in gradually. if we do not get our fiscal house in order, we know that we will face some sort of fiscal crisis either a steady deterioration of our standard of living or abrupt crisis. clearly, nobody wants to see that happen.

i think the committee for holy this hearing. -- for holding this hearing. >> thank you for a really excellent testimony. dr. penner thank you for being here and we appreciate all the effort you have extended helping us understand the alternatives going forward. please proceed. >> thank you, mr. chairman. i would like to thank the committee for the opportunity to testify on this report. it was organized by the national research council and the national account -- academy of public opinion. i share the admiration of the work and it is a privilege to be here. like a number of other reports, this one makes the argument that today's budget policies are indeed on the sustainable. you have heard that argument many times before.

the arguments are in a prepared testimony. as recommended in the report, our committee believes that congress should set a target for the vast gdp ratio and not exceeded. we believe that a prudent target would be 60 percent signed to the gdp of debt. that the nation experienced good fortune while holding the debt to this level. that would be wise to lower the target further. the choice of 60% as a target is a matter of judgment. the committee would have to balance the risk of choosing a higher target against the political difficulty involved in getting to something larger. the higher debt to gdp ratio means running higher deficits. it makes the arithmetic is easy. the gdp rose at 5% per year, at 60% target implies holding the

deficit to 3% of gdp. it went to 80%, the deficit would be 4% of gdp. as the target for the deficit and debt to gdp ratio is raised on a government would draw on a higher proportion of available supply and domestic and foreign savings and interest rates would rise. there would be less available to finance u.s. private investment and that would mean lower productivity, growth, and otherwise and lower wage growth and lower standards of living. to the extent that foreign savings is used to finance deficits, americans would have to devote a growing proportion of their income to paying interest and dividends to foreigners. american living standards would suffer. a higher debt to gdp ratio also runs the risk of a total meltdown in the market for our bonds. problems would arise if the

ratio was pushed above the target. potential buyers of bonds would doubt our ability to put this policy back on a sustainable path people want to see what could happen next. they should look to ireland and greece. ireland has been forced to raise taxes quickly and cut spending. pei has been cut by more than 50%. tax increases and tax cuts have amounted to 5% of gdp which is a huge negative stimulus. greece may be bailed out by the eu but i suspect that any lender will impose harsh conditions on their fiscal policies. it raises the question, who would bail them out? would be the imf? what with the american people

think about our policies dictated by a lender? this suggests that it might be much letter -- better to choose the target considerably lower than 60%. however, when you look at the policies necessary to get even to that level, they are extremely difficult politically. i believe that the most important contribution of our committee was to outline a rich menu of policy options that would get us from here to there. rycroft the options into four packages. at one extreme, the committee asked what spending cuts would be necessary to stabilize the jet -- the debt to debt gdp ratio of the total package were maintained at historic levels between 18% of gdp. that package is called the low- spending option. the committee estimated what tax increases would be necessary if finance currently -- currently

promised so security and medicare benefits while other programs did not. there would have to be a slowdown in health costs because they cannot be allowed to consume the whole of such a slowdown could be put off for a long time. two middle path difference -- deferred by which the benefits were maintained for the elderly population parade in the past, it was relatively generous to the elderly, spending on infrastructure, research, and other types of spending had to be constrained while the other middle path, non-elderly spending could be treated more generously. the fourth package was put together for a lesser conservative. the numerous policy options contained in those packages could be put together in an infant variety of combinations.

the rate of growth, so security benefits be should be held to the level it can be financed with current payroll tax structure. it involves reducing the indexing of initial benefits for the 70% of earners. also switching to an experimental price index which has been developed by the bls and which most people expect to grow more slowly in the long run it is important to differentiate an absolute reduction in the purchasing power benefits compared to today's level from a reduction at the rate of growth. although the package seems to be good, it would more the maintain the purchasing power of today's level of benefits. it would reduce replacement

rates considerably to the lowest levels from its current level. the rate of growth in health spending had to be held to that only by the aging of the population. all other causes of health costs growth had to be wiped out. we divide pulte options into two categories -- those that can be readily scored byut teh cbo and those that are too uncertain. it would probably involve using every option mentioned in the chapter to some degree to achieve the health target for the low spending path. to the degree that options with on certain effect actually work, the score all options should be implemented less painfully. another more radical approach to

achieve the health cost target would be to put medicare and medicaid on fixed budgets. fixed budgets are used in the universal coverage system for canada and united kingdom and -- in canada, every possible must work on a budget and positions are limited. -- and positions are limited. a different approach to a fixed budget would be to use the voucher system for the elderly. the value of the voucher would vary. medicaid could be put on a fixed budget by shifting to a block grant the loan spending option also implies severely constraining all other spending. the low spending defense that would allow the pentagon to maintain the current personnel policy but would allow very little investment in new weapons systems.

it would allow small foreign intervention, nothing as large as the current efforts in iraq and afghanistan. all other non-defense spending would have to be lowered considerably below today's share of gdp. the package attempts to maintain current benefits, the high spending option, two different financing mechanisms are proposed, in one we disproportionate raise all tax rates on till you hit 50% for the top rate. that happens by 2020. we don't want to go above that because of the inefficiencies and inequities that would cause. we introduce a value-added tax at that point. that would be at less than 1%. ultimately, it would reach 7.7% by 2014. in the other approach, which i think is more preferable, the

income-tax is radically reform, almost all tax expenditures would be eliminated. the employer-provided health exclusion would be capped. there would be only two rates, one at 10% and the other at 25%. they would rise temporarily but the elimination of all the tax expenditures, especially those related to health, generate so much revenue inñi the long run that the rates could actually be lower over time. besides large increases in income tax revenue, the high spending scenario would require a doubling of the medicare hi tax, considerable increases from social security payroll tax, the payroll tax cap would be gradually raised until it covers 90% of earnings. the payroll tax rate would have to go from 12.4% ultimately to

14% by 2000 a.d. and there would have to be a second-tier surtax that did not argue any benefits. that would started 2% and would rise to 5.5%. this high spending option would raise the overall federal tax burden by 50% compared to the 17.7% of 20008. it would continue to rise at a better if you had a reasonable estimate of state and local taxes, the u.s. tax burden which is now considerably below oecd, would go significantly above the average of the mid-century. speaking for myself, when you see the extraordinary spending cuts that would be required to keep the tax burden constants and the extraordinary tax

increases that would be required to keep all of our promises to the elderly and others, i cannot help but agree with the invest -- with the chairman that's a mixture of those two things would be required. i certainly am not speaking for the committee on that point. we had these two middle options which differed in their degree of generosity to the elderly. i can discuss those in detail later if you like. the testimony concludes that by looking at a lot of process changes that the committee considered, we don't think that process changes can cure the problem all by themselves. we do think they might be helpful in helping the congress deal with this extraordinarily difficult task. thank you, mr. chairman. >> thank you for that excellent

testimony. thank you even more for the outstanding work to lay out specific options. if our colleagues go through the exercise you have just gone through and the one i went through with my staff, it would be so sobering to them. i think it will help advance the need to act soon. we need to begin the process. we know that within the midst of an economic downturn, in terms of economic policy that is good, you don't cut spending or raise taxes. those both have a tendency to further jeopardize recovery. very soon here, as recovery takes hold, we have to pivot and focus like a laser on this death threats. all of you have made that

abundantly clear. senator sessions has joined us. committee. i am delighted he is here. i want to recognize senator sessions for any opening statement he might want to make. >> thank you. >> then, we will open up to questions. >> first, thank you for the series of hearings you have been holding, mr. chairman. we have been hearing from some of the best people and the world and in america for perhaps the biggest threat to we have -- that we have to our country at this time. i look forward to working with you and i believe we will have to take some steps. you notice that we should not cut spending or raise taxes in a time of economic downturn. the real question that we have is how much can we increase

spending? the $800 billion that was passed over my objection -- every penny of that will add to our debt. i truly believe that we did not get the kind of job creation and economic stimulus that was projected for reported and that many people predicted. mr. becker wrote that we should hope to get $1 of stimulus for $1 invested and we are well below that that is why i opposed it. reality has indicated that. i would state to you that the wise thinkers sitting there -- and adults before other members of my party this is a big issue

which is very personal -- i am not for a permanent increase in the size of the united states government. i believe we have a culture and history and heritage of limited government and we have accelerated our debt situation through a number of bad decisions in my view. now, the answer is we have to have a tax increase. this will raise up the percentage of gdp that the government extracts every year. i don't like that. you may say that we're willing to cut a little bit but you have to raise taxes a little bit. i'm not too sure about that. that is not what my people are saying. they think people waste and spend -- they think that government waste and spends too much money.

i am being honest. we have a big problem. this is not and -- this is not an easy thing for me to vote for a tax increase. this is deep into what i was the center to view on behalf of my constituents. i think a lot of other people feel the same period what we can do? i don't know. we have to deal with the reality or laying out for us. thank you for the support. dr rivlin, thank you for the bipartisan bill. i think we got 17 democrats that voted for that, close to the 60 votes majority.

maybe we can somehow get that across to pass it. finally, the containing of spending is always next year. we just have one more year to keep this keeping going. that is concerning to me. i think we have to look at this year's budget and make sure that not a dime is spent that was not critically important. thank you. >> thank you, senator sessions. what we have is a circumstance in which those who are on the more liberal side of the spectrum don't want to change the trajectory of social security and medicare by nickel. and we have those on the more conservative side of the spectrum don't want to raise taxes by a nickel.

we are in a circumstance, i believe, that will require both. i personally believe we will have to do more on the spending side long term than on the revenue side because if you look at the long term trajectory, the reality is that i think more will have to be done on the spending side than on the revenue side. i believe that if we really set the kind of goal we need for the country in terms of level of debt, that if we did it on the spending side of the equation as dr. penner, said, the cuts would have to be so deep that it would not be sustainable. . .

the undeniable fact is, we are going to double the number of people eligible for social security and i have had people who are on the more liberalç se of theç equationok a(a-w3 me d

and social security and that is my hold gold2-- that is whatçóy çw3if they are seriously conced about medicare and social security beneficiaries, they better get seriousç about how e deal with an utterly ì(lc on. çqlpñthe fact is, both of theme cash-today. medicare is going to go in solvent in eight years. social security is going to be insolvent not far behind. both of them are now putting çpressure on the general fund because we 0 out of the general fund, the trust funds of medicare and social security, moneyç that we borrowed from. we have borrowed in this out -- in1e hundreds of billión"ç of dollars. that has got an immediate budget effect.

those who just focus on the publicly held debt -- i think it is important to repeat. 9the 60% of debt to gdpçç isd on the publicly held debt. that is the debts that we owe the public. it does not count the moneyñr tt çwe owe the trust funds. when you look at all of the debt, certainly from a budget perspective, the reality is the debt that is the gross debt of the unitedç statesçç includet we owe to theççi]ççxdok pub. it also includes what we owe to the trust funds. when you look at it on a gross debt basis, we are already going to have a debt that is going to be 90%ç ofçççt( product of the united states.

çxd90%. we have not been that high since world war ii. çççof the shareççç of they heldçq debt, our debt is goingo be over 60%. most of the witnesses here t)sr-ation goal ofç 60% of gdp. i think that is a worthy goal. ççw3çççthe publicly held d. again, it is a very important for members of this committee to know from a budgetary standpoint, that the gross debt has to be very much on our minds. we have to come up with the money to pay back those trust funds and that can only come out of current income. let me go to theç witnesses. let me ask you this question. ççyou have done the scenariosd

i applaud you for goingç throh and actually comingç up with alternatives -- alternative scenarios. it is sobering. you are well known as conservative financiallyç. you are somebody that has been very clear with respect to the long term trajectory. when youç go through the effort to come up with a plan that stabilizes the debt at 60% of gdp, it is a whole lot of very unhappy choices. isn't that the case? >> yes. any reasonableç path involve significant changes oni] -- to sacred cowsç ofw3ç the social çsecurity and medicare. as i said, i think that some increase in the tax burden.

i think the best way to go about its is through radical tax reform becauseç the way economists see it, the inefficiency of the tax system depends on the marginal tax burden. if we can get rid of tax expenditures, we can lower those rates below the day's level and still raise additional revenue. >> let's be very clear. when we're talking about that, we are talking about things like the interest deduction on mortgages. we're talking about the fact that today, the health-care benefits are untaxed. q --ç benefit from our employes are not taxed. that is $2.50 trillion, by the way, of tax benefits for health care over the next 10 years.

that is real money. it grows geometrically over time. let me ask you, we're going to have to deal with social security and medicare. medicare cannot be allowed to continue to grow at its current rate without swamping the whole system. those who say they care about medicare beneficiaries, and i believe all of us do, those who say they careç about social security beneficiaries and those they say who -- they care about the tax burden on our taxpayers, isn't it true that we are headed on a courseç that threatens all those interests? >> yes. çw3çiok think we should not ee

the painç involved inç this to muchçw3 because as i]iqç notn in our most severe cuts to social security, most of the population ended up with higher real benefits than they did today. that was not true of the most affluent. in either of their middle ground scenarios, the real value of ççbenefits does continue to gp over time. >> social security is the easiest one here. >> that is true. with regard to medicare, that is much more difficult, both conceptually and politically. we do not know how well the options would work. politically, for very obvious reasons. çóbut again, after youç do whae can to get rid of the inefficiency and the major

driver here is the technological change, which makes health care more expensive every year what we're talking about is improving the quality of health care over time. we should not lose sightt(ç of that. i]qçit would be easy to finance quality of health care we have today, but it is what is promised for the future that is so difficult. >> let me go right to the 800- pound gorilla. ççwhat would you recommend too this committee and to the medicare and its threat and insolvency? ç>> -- it's threatened

insolvency? >> that is the hardest question. i think there are a lot of partial answers. we do not know how effective some of the things that have been suggested in terms ofç making health-care system more efficient can be, but they ought to be tried. certainly,çç putting inçótmw÷a picks the best ways of changing the reimbursement rates soç tht they favor better, more efficient, health service delivery and cannotç be overridden by the congress, which has been happening time after time, as you well know. [çother kinds of ways of reducg

the rate of growth of medicare spendingokçç, we are lucky --e have a very inefficient help system. that -- helped system. compared to some other countries, we have very large opportunities to make this system more efficient in the near term. in the end, we are going to have to worry about rationing. i do not think we are going to get there for a couple of decades probably. we have the opportunity to be more efficient. >> let meç ask you this questi. we wrote the congressional budget office and we said, whatç would be the most effective things that we could do to contain explodingç costs in health care? their answerçç wasç clear and compelling. çthey said, you have gotç to n to tax cadillac plans.

you have toç reduke!the tax çw3ççyou haveçççóçm%b$xç y system. instead ofçiñt paying for procedures, you have got to begin to pay for quality output. important things you can do. do you agree with that? >> i agree with that and i think an enormous opportunity was lost by the obama administration in not embracing senator mccain and his notionçç that tax exemption should be gradually phased out. yothat is a better approach thn itççç taxing the cadillac pl. çççç>> i marked it a littlet there. -- i morphed it a little bit

there. >> you could do it either way. it is really important that we not have the government savoring -- favoring excessively generous health plans, which encourage people to use too much health care and encourage the provider to deliver it in an inefficient manner. çthe other piece is all of the things that go with making health care delivery system more efficient. not all of which we know yet. we need to experiment with that and figure out how to do it better because it can be done better. >> we know it can beoç done better. in this country, we have systems that have the best outcomes. cleveland clinic, mayo clinic.

>> we know something about how they do it. it is about to "spreading into other systems. >> with respect to medicare, i want to go right to the 800- pound gorilla. what do you think is the -- what are the leading alternatives for us to consider? >> i tend to always balcoç -- 3 bow toç ethe cbo. i]clearly, our tax practice for health care is driving up the cost. it is putting us into insurance systems that are demanding more health insurance and less in wages which is not a rational policy. it is unfortunate that we have not been able to go at that head-on.

i am of the camp that you pull that back as much as possible. basically, the things that makes sense -- paying for it out, rather than procedures make sense. çóyou have to understand that there is a second step of that. it is not that youqç just studt and put the report on the shelf. the need to limit what health care would be compensated. rationing does not have to happen immediately, but we cannot make it a bad word. rationing happens in a system like this. you cannot have everything paid for in an on limited way. we need to be able to have a discussion about this and what should be covered and by whom. health care is one of the most explosive discussions that is out there and i do not think that we need to go to any extreme right now because there are so many inefficiencies that could be wrung out. it needs to be acceptable to

talk about the trade offs in health care. >> we had an excellent hearing tuesday. one of the things we discussed and we should get on the same page about is why eight -- what do we mean when we say debt to gdp ratio. what is the best number? the european union uses 60% of debt to gdp ratio. in a meeting we had with some german leaders, they count local government debt in that as well. is that right? i did not know that.

secondly, i assume there 60% would include the internal debt, the non-public debt, too. i do not know if they have such a situation. ours is driven by the unique accounting procedures that we use, i think. when we discussed this with the american people, what is the best number that we should start using? i have used it simply because nobody disputed that that was a bottom-line debt figure, but what i have learned in the latest flap over health-care xd and myt the president understated the cost of his plan, cbo did not score the internal debt. since we now know that medicare

and social security are on a -- and insolvency trajectory, -- it is very real, not like it was 20 years ago. don't we now need to reevaluate by utilizing the gross debt rather than the public debt? >> i think you are stuck with using both numbers because they have different significance. both are important. if you talk about the public? -- if you talk about the public debt, that is really what we owe to the public, including other countries. roughly half of its is owed to other countries. they hold our debt. it is important --

>> when you say other countries, it is that individuals or nations states? >> is mostly a nation states. -- is mostly nation states. it is governments and central banks in other countries. china, japan are the largest ones, but not the only ones. it is important to keep that in mind that that portion of the public debt becauseç that makes us very vulnerable to the policies of those countries and it is one of the reasons for worrying about the public debt. i think different reasons for worrying about the total debt because we are now at the point at which we are going to have to start revealing that debt and that means that we will be buying? those -- buy back those bonds in

order to make sure that the social security and medicare payments are made. that total debt is important, too, and i think you cannot oversimplify the thing by saying there is only one important number. there are too important concepts and to import numbers. -- there are two important concepts and two important numbers. internal debt, the public debt, inexorably because both of our trust is not in surplus. it is that the danger of the internal debt? >> that is exactly right, sir. i want to point out that when

we come in this report, due our baseline, that the baseline implies that the debts and the trust funds will be gradually be sold so that trust fund that because -- becomes public debts. it is not all that many years since we go on where the distinction between the gross and net debt essentially disappears because the two biggest funds, social security and medicare, are empty over time. >> to keep it from being too awed by it, cbo scoring -- cbo is scoring in their surging of the public debt the transfer of internal debt to public debt. non publicçq debt, we do have somen sort of a projection of the

direction we are going. when we increase the internal debt, i do not think we can suggest that that is not a cost and increase in the debt of the country. following up on that, social securityççó -- i did not know f this has been fully proven economically -- if we had a 1% greater growth rate than our projections now have for the american economy,ç the social security would not go into default. we know that growth makes a big

difference economic growth in the economy. when you raise taxes, it diminishes growth. dr. reinhardt testified that the level of debt we are in will take us to a reduction in economic growth by 1% of gdp, which is a stunning figure, if that is accurate. i think that all the panelists agreed that it is accurate. it seems to me that we are caught between this damned if you do, damned if you don't. i think we need to contain spending now, not let this money get out the door like the stimulus package when you get so little for it.

make sure that every dollar gains something in terms of growth and increases -- what you are thinking about, the comment about growth and the size of debt -- >>t( growth is a very good thin. we're all for growth. the more the economyw3 grows, te easier it will be to solve this problem. one of the illustrations is what happens several decades after world war ii where we had a very large debt. the economy was growing rapidly so that over that period, the debt to gdp ratio came down primarily because the economy grew so fast. not primarily because the debt came down right after the war.

after that, it was primarily the growth that was doing that. i just wanted to say, one thing about social securityçw3çw3xds good for bringing in revenue but our benefits are tied to wages. çgrowth pushes up wages. unless we changeç the wayç the formulas areçq calculated, groh does not help us all that much okt(on social security. >> do you believe that the index fan rather than wages? >> it is not exactly a question of fairness. if we're going to bring down the rate of growth of social security benefits in the distant future, not for people who are retired now, then i think we could index the benefits, the

initial benefits,t( to prices fr people above thei] middle or above the 60th percentile. that would be one way to do that. it would be to phase in and indexing it would be less generous for people at the top then people at the bottom and that would help a lot. >> thank you. çków3fortune magazine had foue top investment peopleçç. three oft( the four said the new normal is low growth and the attributed to low growth for the next decade to debt. productivity, technological

advances, could be the breakthrough that could help us not do this, but that was pretty grim. these are people who are telling their customers how to invest their money and they were notçó optimistic about the future. çç>>çç here is my recollect. i was going overçó this with soe intensity lastçó year and myç recollection it was if we had 1% more growth than the actuaries are estimating, they are estimating very low growth for the next 50 years in the united states. it was 2% or something like that.-"aif you had 1% more ecoc growth, that takes care of about 75% of the problem. here is the dirty little secret. from a budgetary standpoint, it does not take care of the problem at allç pourel.

çwe still have a circumstance where we have barred from the general fund. we have borrowed from the social security trust fund. that money is going to haveçço be paid back. the only way it can be paid back is out of current receipts. this is what i thinkç most of r colleagues, a concept that they have not gotten their mind around, this is going to have a significant effect on the rest of the budget because we have been in this very happy circumstance where the general fund has been able to borrow from the social security trust fund,ççç $180 billion a year. çnow that is ending. that source of money isçç endg because social security is cash-. it will be permanently cash-in 2016. now where is that money going to come from? where is that money going to i]começ from when the situatios

reversed andç the general fund has to start paying off these bonds that represent the bar a wing that has occurred? occurred? >> we are headed for a very different budget circumstance. >> to, chairman. thank you for holding this hearing. -- thank you, chairman. çmy questions would like to fos on the doctor. i want to thank you for being here. thank you very much from -- for presenting from your report. it is the first time that i have seen a budget document address

the value that can be achieved from reform in the health-care delivery system. he put it in the context on pages 85, 86, and later on, 95- 12. --ç 102. if we are in fact engaged in achieving those very large opportunities to make the system more;ñk efficient in the near t, if we are engaged in capturing those, it is my understanding that because they are systemwide reforms in many cases, if a hospital increases quality, reduces infection conceivably

20, we are no longer -- conceivably 0. it is not just the medicare system that saves. is everybody who is paying for health care that saves. i would like pç ask you if we are good atç that, and i take e numbers beingq about $700 billin in excess costs andç waste and1 trillion a year in excess costs and waste,ç if we can get a significant chunk of that -- and i know it will take timeç. it will be an ongoing learning process. çisn't it true that many of the benefits of that will fall outside the medicare and

medicaid system and will help with the overall burden of health care that the economy has to bear helping private companies that are buying in the private market in parallel with the assistance of medicare and medicaid? >> i think that is absolutely right. you can characterize medicare options into two categories. one is the sort of options that you're talking about. if we can get rid of infections in hospitals, reduce the readmission rate, that would help the whole system, including private insurance. there are, however, other kinds of options, like increasing the eligibility age for medicare, that are essentially means of shifting costs out of the privateç sector. >> that, to me, it is one of the

focuses on the delivery reform. it is a win-win. because people resistç that and build new devices to prevent it, you are actually adding to the health care costs in some of the circumstances. as the insurance mechanism develops to try to continue to gain the system, it creates additional cost for people. it is important to me that you said it. it is discouraging in a sense that they're only two pages and five pages out of a whole volume when i consider how valuable it is. this is the high water mark in the budget discussion. i know that senator conrad are extremely keen in getting this statutory commission going. i single greatest reservations about it is that i worry that it

will be populated with a lot of people who'd are fiscal -- people who are fiscal economic people, but who do notç have te specialized sense of how the delivery system reform can and must take place. did you not understand the executive management function -- they do not understand the executive management function. cbo really could not score it effectively because of the nature of the process. we look at this going forward, people say, if we could just check some people off of medicare, we could count the savings right away. it is harder work to do the other thing. therefore, there will be a bias. it is the bloody civil war surgeons' bucket of tools and a more modern doctors tool kit with modern technology and

pharmaceuticals and things like that. we can do it the modern way, but there seems to be a huge fire wall between the people who understand delivery system reform and people who are looking at the fiscal problem. i see almost no overlap. how do we break down and penetrate those silos and get more expert discussion? >> i agree that the system is terribly inefficient and that if we could improve the efficiency, we could save enormous amounts of money, i would not want to say it is easy either. the fact that we do not understand the the cost savings that go with a lot of these proposals suggest how hard it is. we've got to do our best to learn more. maybe that can be done to some

degree through various experiments and so forth. >> i agree with you, but i am a little less discouraged. i think there are quite a lot of people who are thinking very seriously about systemic reform and about budget problems at the same time. one of them is might brookings colleague mark mcclellan. i believe you know him. he and others are definitely in this camp that you described of people who deeply care about the delivery system reform, but care about the economics as well. >> i want to try to populate the fiscal prudence camp with more of those people who understand that and to make sure that that is the way we proceed first on

this. as the chairman said yesterday, it is a critically important point that he made, you can go after medicare with fiscal knives anytime you like. you can overnight cut benefits, you can overnight use the bloody civil war toolbox. in a crisis, who knows what people do? what is different about -- what is different about the delivery system reform, it will take time to develop it. the ongoing learning process has to take place. every minutes, every hour, every day that goes by that we are not very deliberately engaged in that is time lost against whatever day of that reckoning might be. it could be an abrupt crisis that provokes this. we do not want to waste time

between now and then. i would urge all this to be as proactive as possible. that includes the obama administration. i hope they're not waiting around for the health-care bill. >> for those who might be listening, one of the greatest frustrations i have had in being a participant and a witness to the health-care debate is a big chunks of the news media pay almost no attention to the things that the people who are most knowledgeable about health care have told us were the most important things. cbo told us phasing out the favorable tax treatment for health care is one of the most important things that needs to be done. it also said one of the most important things that need to be

doneç is this reform of the delivery system. did you see any of the national media spent 30 seconds on that issue? on reforming the delivery system? to stop paying for every procedure. instead to pay for quality outcomes. did you see one story that talked about that? i did not. instead, they chased every rabbit, everything that the side show, most of which does not matter a hoot. i do not know what is happening in the culture, but when we have the the national news media obsessing on michael jackson and obsessing onçó side issues and giving no basisç of information to people to make judgments on things that really

matter to our economic future, we have a very big problem. çmyç plea to the national meds a look, i knowç is a ratings ge on television. i get it. you have some -- you are using the public airwaves here. you have some obligation to talk about things that are in serious and really matter to our future. >> thank you, mr. chairman. thank you for having this hearing. the topicç -- let me stay on health care for one more moment. i may not agree with you on the politics of this, doctor, but cutting medicaid may notç be a terribly unpopular thing. i do not know. we're certainly having a hard time extending health to our states now. where it will have a major impact on medicaid budgets in

maryland -- my point is this. if we are looking at a sustainable budget, one could say that the federal government could cut back on its commitment to pay for part of health care, whether it is medicaid or medicare or other health care programs. that certainly would reduce our federate -- federal budget deficit. that would be the wrong thing for us to do from the point of view from our economy. it would be the wrong thing for us to do as to what is right for the federal government to do. on the economy, if we make it more expensive for businesses to pay for health careç, they will have to compete internationally. it just makes it more difficult. if you're looking at small businesses, they are already having a tough time paying their health-care premiums. if we use -- if we don't do

something to make it easier, it is just going to cost us jobs. a lot of people in maryland today are withholding purchases, withholding going to a restaurant or buying a car, because of their concern about health care bills. medicare does not cover enough and private insurance does not cover enough and a lot of people do not have coverage and they have major gaps in coverage. i am just concerned as we talk about what we are going to do about entitlement reform and how are we going to deal with the projected huge deficit that we see at the national level and i am concerned about that. i hope that's we -- i hope that we will listen to what senator conrad and senator white house are saying. if we do not find a way to bring down health-care costs in america, but instead just trying to look at the federal budget, we would miss the opportunity to

remedy a real problem with our economy. i feel the same way that the chairman feels about coverage on this. to me, and i hopeç the presidet will set up -- successfully bring together democrats and republicans, i hope it will clearly be non-negotiable. you have to bring down the growth rate of health care costs. it has to provide affordable coverage for every american. that is what we should agree on. that is how you can have a fiscally sustainable federal budget. if you do not do that, the problems will be greater in the future. i know that you were referring to the medicare now and medicare would be an issue, but i think that if you look at some of the proposals that are being suggested around here, i am concerned that we could get

from the commission using the civil war tools to solve a problem where we should use modern technology. >> i do not disagree with that. the most important thing to do is to reform the delivery system and to make the health care system more efficient and effective for everybody. >> i thought we're all saying the same thing. i think we are. we'll talk about the federal debt. -- we all talked about the federal debt. i like to remind people, let's go back and take a look at what happened when we had a growing economy. /+you supported and i supported theçok statutory pay as you i we should have had that we had a

balanced budget. -- when we had a balanced budget. we could not have tax cuts that were not paid for. at least we would have some fiscal responsibility. now we are paying a heavy price as a result of itç. you also have another majorç problem and that is lack of savings in america. [yloçduring our growth time,d not save. instead, we build up equity in our home. ççó/m%ççkçççmy question , here we are, still in the aftermathç of the worst recessn the federal governmentç has a criticalç role to?jtçt ççw3e çrecession creating jobs. part of which is fueled by federal spending. we also know that we want consumer confidence for people

to spend and yet be want to look at reducing federal spending and increasing personal savings. how do you reconcileç those to differences? -- those two differences? >> let me start quickly. i think you have to do two things at once. you have to do what is necessary to get us out of the recession and you have to start by enacting very soonç measures tt will bring downç spending and bringç down theç rate of growf spending. ççwe're not going to bring don spending. jt downçñç?bço÷(w3çz7 the rae thatq has to include the entitlement program. bringing the death -- stabilizing the debt is not

going to be possible right awayç i]on just theçt(ç spending si. d55yk0câ+k have some more revenue.ç çç>> i basically agree with . i do notw3i]ç think the conflict between theçó short and the long çw3çrun isçó severe as a lijtç ut.3çrun isçó severe as a lijtç iwwvn beç implemented,ç startingç 2 i]as our reports suggest. w3ç[kçñriç think that may eh o@fnq l situatin and whether it willçç apply ie future regarding tax changes and spendingç changes. if you could reducexd that uncertainty, it wouldç help a considerablm @mount. ç>>çç bothçç you and senate

ì(lc points. çthe number one thing that we neeeç to do to get the fiscal situation underç control is to slow the growth of health-careç çcosts. unfortunately, for me,çç i wao be somebody who does not have to understand the technical piecesç of health care. but you cannot be an expert without learning about health care. çwhat i would hope that we woud see is when we go back to revisit this is everybody that understands the importance of combining health care reform and budgetary reform really goes çback and read emphasizes those pieces that we saw in the cbo report. the more that we get out of healthç care savings over time, the less we have to go to all the other pieces of the budget. i think that is really

important. i want to speakç about a point that senator sessions was making about mistrust of what the two this. one of the things that he was a concerned about is that republicans looking at democrats and feeling that they are trying to push an expansion of governmentç so that when we deal with a budget compromise, it puts taxes back on the table. during the bush era, when we decided to cut taxes, the other party could sort of see that asç the same way. that changes the negotiations. the resultsç -- the result is a horrible high level of mistrust. itç makes coming up!gith a kind of compromise so difficult. e try to convene mef both parties to talk through these things and think about 1

canxd work on and at this point, it is very hard. i]t(things can get dicey. there are three things that are really helpful for members to do together. qone is pick a fight -- oneççs pick a fiscal goal. çis that at one is not to insut different ideas for helping. encourage people to come'oç uph all of the ideas that they have said[)that we can then have a çdiscussion on the trade-off betweenç those reforms insteadf çsayinge3çzvççmççw3, wl security. the third is this exercise that you can do in your office. every member needs to sit down and see how they would achieve the fiscal and think of something that would reassure credit markets. when you get into the policies, you realize, everything hasw3 to be at play here. this is not earmarked reform.

this isççkçç really big sl changes that we have to think about. in terms of stimulus, i am a)>l?'465dñx;kd?z çbut was necessary. oki was incredibly concerned abt where the economy was heading. i do not know if the right thing is another stimulus or jobs package right now. i know it should be economically motivated, not politically motivated. we should not put a bunch of unrelated things in the package. it should be temporary.-"athat. these are temporary policies. i doç think now that we have sh a high level of debt, it may be worth thinking about offsetting the cost ofç stimulus measures over a long time period. if there is something me to do q÷7[ towo# do, you do it.

ççttçit should beç repaid ov. the debt does not really care what the dollars are borrowed for. çççin the end, we are bumpinp need to figure out a way to bring down the debt once you get the economy strong again. >> i thank you for that response. it is good advice. a lot of what you are saying is what our chairman has been urging us to do. çç>> even if one does not gete balance, in some ways, it is less important than finding a way to get the debt stabilized, which is the testimony of this çgroup after a lot of work that

they have done. a more appropriate of gold in reachingç a balance the stabilization of the debt -- a more appropriate goal. çw3we're at the debt level thas going to be too high. çthat exerciseç is a very daunting. i say to my colleagues,ç please ydíñ[júpp30ó-p÷ member or you a staff, the show your member, what does itç takeç? it is not just dealing with earmarks. it is1e not yet been around the edges here and there. çit is going toç take boldw3 s to deal with this challenge. mçit is going toç take bigç3

and it is going to take politicalç courageççç becaus every hot-button issue that isìq it is social security, revenue, medicare, all of them. +c ÷çhistory is going to judgew3 , whether orç not we were up to the country? çççyççu)(p& hide? ççççhistory will judge. .ççw3ç

qa political control switches. sometimes we haveç been in control. x@ #o]ç/7]çw3 forth again. we haveç to find aç way to ds together. "vuúy;mwhen the political windsd -sfi5[çç thisw3 is no joking around. >#=nçççi just urge my collea's makeççççç this -- make ourt efforts toç work together and y toçç come up with solutions. i know we can do it i know is

going to take all of us to do it. i come fromç a farm state. one of the most heavily dependent states -- i am ready to takeç onç farm supports ano reduce what was in the bill that i just helped pass. that is how serious i am about doing what has to be done. it is time for all of us to get çout and face up to this debt threat. any final thoughts? >> thank you for this. we have got to confront the problems and you are doing so. ççççw3ççr>ççóçi cançl 'sqgús%m@fi.

ççççv'[çñrhe was only in thw years. it took me number of years to begin to understand some of the complexities. 1ñq!m the calls for a job stimulus over the next several years, what is not stated is that there is $100 billion -- all additional debt. ççall that would be emergency spending. çour president is going to have to lead on thisç issue. he cannot tell us toç -- thatoe health care bill is going to

save money. he cannot tell us thatç this bl is $170 billion when it is $270 billion. we have to get straight about it. mr. chairman,çç i have one çquestion. ççi think you said it, doctor, when we surge our debt from $5 trillionç to $17 trillion in 10 çyears,%qç that is the publi. that is borrowed from our individual countries and that is money that would otherwise be available to be loanedw3ç intoe commercial economy creating jobs and it crowds outç and drs

up borrowing costs for the private sector. that is one of the factors that dr. reinhardt was mentioning. >> i think you summarize my point very well. the money we borrow comes out of something. there is no free lunch. whether wexd use domestic savins to borrowçikmççç or use fores to borrow, it will ultimately reduce the standards of living. çi do not think you can get around it. whether the line is as brightçs 90% and that ratio, i find that a little hard to swallow. certainly, the higher the deficit,ok the more it impacts

negatively on their potential to grow. çi wasç actually trapped in mr on tuesday trying to get to the gorge restored to find that there was no food. -- to the grocery store. i got to hear the hearing on c- span. you're talking about the difference between the public and the private debt. the public debt matters when you are looking at the private market. when you are thinking about job growth, the debt dependency is a real threat to it because you're taking away the capital that could go to job creation. we need to weigh those trade offs. is right to point out that the committee needs to be aware of the total debt. that is the one that affects what we are committing to in the future and we are allocating our resources.

. .

>> it would be disastrous. >> i agree. maybe we can refrain from making it more bad. thank you, mr. chairman. >> i want to thank the witnesses. i deeply appreciate you coming up during these conditions especially. i very much appreciate the effort and energy you have put into your testimony today and the committee has certainly benefited by your expertise and your thoughtful consideration of these issues. with that, we will stand at adjournment.

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> the white house council of economic advisers to a report of the average is -- but -- and the

economic stimulus s sabre created about 2 million jobs. that was signed into law about a year ago by president obama. since then, of the $707 billion approved, just over $333 billion has been committed 107 $9 billion payout so far. to learn more about those projects and amtrak spending, go to c-span.org/stimulus. >> tune in to "book tv" for a president's way -- presidents' day weekend, including henry paulson talking on the 200 -- of the 2008 economic collapse. how the atomic bomb change the presidency. afterwards, this will be aired sunday night and all day monday. books on american presidents --

for the complete schedule, go to booktv.org. >> his film was the focus of a recent controversy on the supreme court. that is sunday night on c- span's -q &a" >> is the only collection of american presidents painted by one artist. cd collection on line at our website, american president's .org. >> earlier today, mahmoud ahmadinejad spoke to a crowd and talked about conflicts with the western world of the country's nuclear program and had announced iran had produce it for stock of 20% enriched uranium. he still claims iran is not producing a nuclear bomb.

this is one hour and 10 minutes. >> is quite clear that no individual and no nation cannot actually achieve interaction with the world and the prosperity of the world community is interwoven, since the time for is like resolution and the victory of the revolution, it was quite clear that the arrogant powers as the international squanders that pros -- that oppose the -- and hamper any reformist measures, they opposed the orientation -- has been 31 years they have

been opposing the islamic resolution -- the islamic revolution. there also hampering the progress of this great nation. for two reasons, have opposed freedom and prosperity. the first reason is related to the characteristics of the iranian nation. they know that the iranian nation in the course of history , the iranian nation in the course of history, due to its great civilization and culture has managed to influence all regional and international [unintelligible] each time they have had the

opportunity. they know the iranian nation for centuries, particularly after the advent of islam, they have been a flight of errors of civilization and know very well major parts of the region and the world are being influenced by the civilization of iran. -- they know well that the iranian nation has the capacity to get engaged in regional and international management and it plays a constructive role.

it is the most influential region in the world. any power that can control the interactions in this region and the relations in this region can influence international and global relations. our region has three important features. the first feature of this region is that this region is the birthplace of all cultures and sustainable civilizations' of humanity. it is the place where all of the divine profits have been appointed as messengers of god, speaking on human civilization, culture, and morality and since they are all indebted to the efforts of hard work of

[unintelligible] 1 should refer to major minerals and natural energy resources of this region. anyone that can dominate the energy resources of the middle east region has attained the tool for dominating the whole world. the the level it -- a dilapidated colonialism of britain by dominating the resources of the middle east managed to dominate major parts of the world -- world war ii, its outcome, the victory by the

then alliances was due to the cheap energy resources, the domination of the resources, they plundered these resources and use that for the war and detained at victory and the same was true about world war ii one. -- about world war i. geopolitically speaking, this region has the greatest potential for political influence in the region. [unintelligible] one can actually -- in the course of history, power, a group, or a government

dominated this region, it actually dominated the whole world. in the meantime, powers and empires that did not play a role in this region as they were rapidly wiped off the political scene of that time, the occupation of palestine, the establishment of the criminal zionist regime, the absolute support by certain western countries and supporting the atrocities of dishonest regimes, and the fake receive -- fake regime, they try to make baseless grounds and spread lies and take away for

dominating this region as they eventually dominate the whole whorl than -- all world and then they have imposed this malicious regime on the regions of the nation. people of iran, the influence of the people of iran, the role of the people in iran in a regional relation -- it is quite clear to the hegemony powers that some the iranian nation has the capacity to massively influence all regional relations and interaction. they oppose us because through dominating the middle east region, they seek to dominate

and independent iran, a free iran, a powerful iran is considered as an impediment to their objectives. this is the secret by and the opposition of the iranian nation in the past 31 years. they want the iranian nation to be kept week and be under the domination of the atrocious dictators and at the same time eliminate the independence and freedom of iran. they believe under freedom and independence and prosperity, ground will be paid for the progress of the iranian nation and the creation of new movements.

they oppose the freedom and oppose iran's republic nature. it is freedom and republicanism that has emanated from the genuine culture of islam. they oppose such things and say under no such conditions, ground will be paved for the blossoming of the iranian nation. to summarize, one can say group dominating our region, they want to guarantee head -- they wanted guarantees hegemony over the world and iran hampers their progress. the nation of iran is a great nation and creates grandeur and glory and they oppose the grandeur and glory of the

iranian nation. speaking of other topics, other topics are pretext. the nuclear issue, our progress in biotechnology, human-rights, and regional issues, these are all pretext and the cover-up for hiding the objectives of the domineering powers in this region. all of you have seen the double standard policies and i do not want to repeat them. but let's have a review and see the past 31 years. what goals have they achieved and what was the objective of the iranian nation? let's take a glance back at the years before the victory of the revolution and the early days.

we must conduct research and studies. 31 years ago, they were the indisputable powers of this region of the world, apparently opposing blood, but in reality, they work convergent. blood, after dominating the whole world and squandering the humanity of human beings, they were both after creating slavery. one was chanting a slogan of supporting the laborers as it sought to actually turn all human beings into week laborers of a hegemon x system. the others chanted the slogans of -- it was after converting

all nations into laborers of major global capitalists -- in order to accelerate the process of consumption of production and spelling buckets of major war capitalists, they even forced to women and children to do what they wished them to do. they actually wanted to create modern slavery. everyone chanted a particular slogan. but that was after trampling upon the real prestige and personality of humans and tarnishing the divine characteristics. the world was divided and every nation of government had to

follow one of them otherwise it lacked identity. if one wanted to actually get rid of them, of you had to [unintelligible] and there was no other third option. one was worse than the other. it distributes -- it contributes to these destruction of moral values. each blood has its own slogan. speaking of monotheism, up profits and [unintelligible] speaking of honesty, friendship,

purity, faith, brotherhood, and the genuine nature of humans as they try to actually set aside the values as they resorted to seeking power and the prison pants they attach to much importance to wealth. they killed more than 120 million individuals in the past 100 years and made it many more homeless and injured. they created a distinction of classes and imposed in securities more than 80% of the people of the world were living in poverty conditions only a few

people were feeling their pocket and made manufactured an atomic bomb and created threats posted to the whole world. lives of the people were trampled upon. due to the blessings of god and the islamic resolution -- islamic revolution, within a short time, the eastern wing of this domineering system that is marxism and communism was destroyed and collapsed and it became part of history and due to the blessings of god, it will never revive again.

the people are chanting slogans in support of the leadership. the western wing of this inhumane system is facing a deadlock. it is a practical deadlock in the culture and military minds. they are all facing a deadlock. hopefully the system and god's willing and the system will

collapse. they have claimed a spot at the end of history. they have announced they have reached the climax of you and him of human perfection. they have reached the end of history of their lives. you see in the past 31 years, what as the iranian nation that? every year, a major step has been taken forward.

the victory has been achieved. the iranian nation has reached a new climax. i want to remind you of the early days of revolution. we were a nation that had just got rid of colonialism dictatorship and we had just tasted real freedom and independence. but we were fully deprived and oppressed from the the military and economic side. we did not have a remarkable position. i do not want to remind you of bitter realities and remind you of the degradation and post upon

us and -- degradation imposed upon us and accept degradation against the iranian nation. the lack of progress from 150 years due to colonialism. we were not even able to inform the world's people of our views. we were a forgot bid should -- we were a forgot nation, a first-class nation, they thought they could upgrade the iranian nation within a short time and this was announced by them. they had made plans and they actually took action with this purpose and it was coordinated and they act in a coordinated

matter. but due to the blessings of god and the culture of islam and the right path of the imam and the governance of the supreme jurists, today, from a scientific point of view, the iranian nation has made considerable progress. iran is on the path of scientific progress. our field of biotechnology makes a new progress, discovers a new medicine, discovering new treatment methods, they come up with new innovations every week.

in the field of space technology, once we were humiliated and they said iranians just have to make cuts. they humiliated us and claimed we cannot make progress in the field of space technology. but you see today are scientists are making good progress in the field of space technology. you see our scientists just sent living organisms to space. they made use of advanced equipment of turtles, a mouse, and several roaches and worms or

sent to space. they made measurements end all they data was sent back to earth. these are measures for paving the way forward. the presence of iranian astronauts in space. thinking of the latest technology -- we have made progress in the latest technology. our scientists have acquired the latest technology, the fundamentals of laser technology and they're going to make

progress at manufacturing new equipment to provide the iranian nation with such equipment. gaining access to laser technology will revolutionize the technology and medicine and physics and chemistry and all other sciences, we are having astronomical progress. in the nuclear field, you are aware of the nuclear progress. due to the blessings of god, iran is witnessing scientific progress in the field of technology due to be innovative

iranian young people and scientists. everywhere you hear news of new progress. from the economic point of view , a poor nation, dependent nation, based on their own reports, they say the nation has turned into an economic power, having a 17th ranking and with implementations of this plan, because of the subsidy come within five years, we will stand in the 12th ranking with few economic powers. >> major investments have been

made. just yesterday, you would as a single case. [unintelligible] you see the whole country has turned into a workshop for investment. the economic activities and exuberance going on in the field of construction and in the construction center -- constructions that -- construction sector. [unintelligible] today, the situation has changed. many rural areas enjoy basic welfare and electricity and we have schools, health,

communication facilities and activities are going on in villages that were on the verge of destruction. i do not want to ask for figures and statistics. you are all aware of them. spike how westerners' plunder our oil and gas resources, more than 90% of the population that assets from natural-gas and, in fact, people make use of the existing resources. the culture of the country, i want to probably announce that in the next few days, we are going to have a celebration for getting electricity to all villages that have a population

of more than 20 households. in the fields of culture and art, the same is true. today, we are witnessing the blossoming of culture and artistic activities and sports. every day, you see new progress. you go to set them up. you look at the condition of music, literature, writing novels, the field of sports and different cultural sectors, it ron is making progress. this is what the westerners are afraid of. everybody knows thanks to the blessings of god, iran is the

most important and the biggest power in the region and is inspiring for all regional and independent global nations and governments. they know that iran is a unique state, the most powerful, but it is a confident and cultural power. the power of brotherhood. the power of humanity, and the power for motivating humans and making humans aware of human conscience. they know they cannot do anything without iran. they all know well that they are more dependent upon us and due

to the blessings of god almighty, today, the convoy of iranian nations can't -- brought -- prosperity is moving forward more swiftly and no power can resist the progress of the iranian nation. the people are chanting slogans in support of the president's remarks. we also face certain problems. but we have faith, we have our beliefs and we believe due to the blessings of god and hard work of our young people and a great nation of iran, we're going to overcome all the

difficulties with no doubt. the future belongs to the iranian nation. the enemies and ill-wishers of the iranian nation have no chance for victory. i want to say a few words about the recent issues between us and them. they have opposed iranian progress since the very past. at every juncture, they tried to

go on with their schemes. they are using the nuclear issue as a pretext. their warehouses are filled with a clear weapons and, in fact, they have requested certain individuals in this region was nuclear weapons states support such atrocious elements in this region and they are chanting slogans that they want to prevent the spread of it their weapons. they monopolize all technologies and they want to hamper the iranian nation and advanced technology. i just want to shed light on the

issues again. at a particular time, they said you should not have nuclear fuels and [unintelligible] they tried to yell at us and shouted and make use of the disposal for a certain time and say you should shut down your activities, but due to the resistance of the iranian nation and supreme leaders and also do to blessings of the imam at the time, our nation managed to attain victory. iran became a nuclear state.

later, they said they want to cooperate. in geneva, they said they want to cooperate. we welcome this and said you have tried to counter the iranian nation and what was the result? why don't you engage in interaction and set of confrontation? we tell them this is to their benefit. in fact, we tried to provide them with an opportunity in order to correct their attitude. you know well they have all the regulations and all of the members, in case the member is in need of 20% pule, all of the members are obliged to help unconditionally.

other members must provide the fuel. if the efforts are aimed research, medical purposes, humanitarian purposes, all members are obliged to cooperate. in order to give them an opportunity to correct their attitude and take steps on the correct path, we gave a letter to the iaea and said we are in need of 20% fuel. whoever wants to provide us with the fuel -- the agency informed us that [unintelligible] the united states and russia said we have facilities and when

negotiations started, we said this is not obligatory. fu -- a fuel belongs to ourselves them based on the regulations, you have to give us the fuel. they insisted [unintelligible] to show our good will and, we can calculate the amount of fuel that must be given and must be received. as soon as the entrenchment is completed, we can engage in the process and they said no. you should give us the fuel. we take away the fuel and later we will obtain the fuel for you. see what happens.

we are the purchasers and based on the regulations, they should provide us with the commodity unconditionally. it is a tradition. if you want to order a commodity, you are the one that sets the foundation. it is the opposite here. if the hegemonic nature, they insist at first you should give us the fuel, we're going to take away the fuel and later we will provide you with the fuel and they started: with a cheap at see it and say they wanted to take the fuel claypan they claim we want a feel for manufacturing a nuclear bomb. this belongs to the bush era.

our response was quite clear. we told them we do not trust you. that is based on our historical experience that has since started engaging [unintelligible] once again, they tarnished the prestige of the agency do to their expansionist policy. based on the iaea regulations, they are proposed to provide us with the fuel and [unintelligible] why are you claiming you want to hamper iran from making an atomic bomb? they thought that through the propaganda from the media they thought they have weakened the

iranian nation and they are going to give more chance to the iranian order to be imposed wishes of the world. because they use a threatening tone, and once again shows they have no honesty. the lack of confidence is true and we have the right to lack trust. they said they're going to give this up. they set a deadline and our response is quite clear. the iranian nation will never given to bullying and ecological remarks and has no fear.

we told them the fuel for the reactor is aimed at medical purposes. the fuel from 25 years ago is running out. we do not have much time. we have to obtain the fuel. for this reason, if you have provided us with the fuel, it's ok. but if you do not provide us with the fuel, we will produce the fuel ourselves. either give us 20% to and

receive the money or give the fuel and receive 3.5% fuel and that was the generous proposal by the iranians. but once again, they lost their chance. they thought the iranian nation had been weak and and we told them if you do not give us the fuel, we will produce the fuel. they did not believe. they started acting in a joking manner. they made remarks and even did not care about the patients. you remember severed -- several months ago, a virus was mutated in the lab to sell madison. this is their nature. this is the nature of those who

want to eliminate purity in human life. we were forced to actually produce the fuel ourselves. i want to tell you today that the day before yesterday, [unintelligible] i want to tell you that with the blessings of god, i want to probably an ounce the news by the head of the atomic energy organization was that the first convoy of the 20% feel was produced and provided for the scientists. due to the blessings of god,

this process will continue fulfilling demand, fulfilling meeting demands of the country. [unintelligible] they started mocking us and repeating the old remarks that are of no value anymore. but when they realize the process is a serious one, they started questioning s again. it seems today they are in a weak position. they are in a position of an ecological and lost less for a visit -- a loss position. they're not in a position to make such remarks. the second point is in the

middle of their statements, they announced that the u.s. is interested in obtaining the 20% of fuel. very well. whoever provides us with a fuel, we will purchase it, not -- even the u.s.. we do not have a problem. you have a problem with iran becoming a nuclear state and you should direct your behavior. they say they are going to sell it to us and what is the problem with iran producing radio madison. you can purchase it from us. we are going to produce the medicine and you can purchase it from us. why should we purchase it from you?

they speak in such a way as if several hundred kilos of 3.5% uranium is taken out of iran then it would be a major victory for them. you can compare 20% feel. we're going to give it to you. we are going to see that the ongoing progress of the iranian nation is not going to be hampered by such activities. we are manufacturing several kilos of such materials, stockpiling them, and in the near future, god willing, we are going to increase threefold our

daily production. they should do something in order to create trust in the iranian nation and other nations. they should listen carefully. if we were in their place, and ordered to show our honesty, we would have obtained a 20% fuel and appreciated the iranian nation. that is the regulation enacted by them themselves and they could have observed the regulations. a number of nations could realize there is a bit of honesty. they launched a ballyhooed. iran, with 20% of fuel, will get one step closer to the manufacturing of a nuclear bomb.

i think they are either uninformed or they pretend to be uninformed or is illiterate. we have some signals, people in it lower classes -- we do not believe that president of the country such as the u.s., britain, are the head of the government of germany is so uninformed and illiterate in such a way. all of our feels is kept under monitoring of the agencies and is it possible to manufacture a

bomb under iaea supervision. if it is possible, announce this so that everyone would know. meanwhile, we all know, even right now, we have the capability to produce fuel with high enrichment. why do they think by producing 20% and richmond, why do they think something has happened? we have the capability to go on with enrichment, but since we are in no need, we have no enrichment. third, they should listen carefully that we are not lawyers and cowards like you. -- lawyers and cowards like you.

-- liars and cowards like you. >him[unintelligible] c-span.oryou should hire skilled scientists to explain what is being done. our activities are transparent. the bomb is manufactured by those who have not [unintelligible] and are not under supervision. those who are worried about the future and think about deceiving other nations need the nuclear

bomb. i want to draw your attention to this point. they should know our nation is so courageous that's in case it tends to make a nuclear bomb, they will make the bomb and it will have no fear. when we say we do not manufacture a bomb, we mean it. we do not manufacture a bomb. we do not believe in it. we do not believe in manufacturing a bomb. but if you want to manufacture, we have the courage.

if you think a nuclear bomb can save you, you can keep it. if you think a nuclear bomb, eight you -- if you think a nuclear bomb can save you, you should keep it for yourself. you should know you are making a mistake. we oppose your management bassett in the world. we oppose your bullying the policies. we are told your policy of imposing your views, we oppose sure plundering policies. we oppose your methods of administering the world filled with discrimination, it is inhumane. we have the courage to announce this and you should have the courage to say you want to dominate the region and the iranian nation that not permit

you to do so. this is a source of dispute. the whole world should know they want to dominate this region and the iranian nation will never allow them to dominate this region. you are spreading unreel remarks and causing distress. you want to cause disputes among nations when there is talk of an iranian satellites, you frown in television interviews and claim there is a threat of a satellite

carrier rocket, you claim you are in danger and when there is medical progress toward nuclear progress, when our use become champions you feel danger. in which direction are you heading towards? any progress -- you are opposed to any progress under different pretexts. you should -- they will not allow you to retain your hegemonic objective. you cannot dominate the world through lies and the whole world should know they're facing difficulties.

that spread to the other parts of the world base. they engage in different games and if they want to cover a political and cultural fiascoes, they want to externalize their problems, but they should know they cannot do this and hopefully do to the blessings of god they will suffer a crushing defeat. i am officially announcing that the era of being a superpower and bullying has come to an end in the world.