large, but the days of house members, at least, house members and senate leaders getting 90%, if they have been around long enough, they still can, but we changed that law so the average pension has been reduced by more than half. so the average pension now for somebody who retires after a career in the house, still too high, but it is $34,000, ok? i just want you to know. and for the old-timers, under the old system, what you're talking about is true. but some years ago, we reformed that prey so anybody who is in my situation, -- we reformed that so that anybody in my situation, there is no such thing as retiring at that percentage over what you are making. .

>> they control so much. my big concern is that citizens united where there are five of them wanted supreme court justices said that the corporation is like a person and they can dump on limited amounts of money into a local school board election if it will give them some sort of a contract.

i feel that congress serves in the upper echelon or the upper east -- the upper elite they have the money in the can do all the talking. we tried to pass some disclosure through the house and nothing passes the senate, they are so of touch. the point is that it did not pass. it didn't pass because of the union was not considered to be a corporation. i think that it should be across the board. a corporation makes the money and they can spend $1 billion prix >> i will tell you my position on this. -- $1 billion. what i will tell you my position on this. i am open to voluntary contributions from individuals, but that means that if you are

going to legislate it and say that the corporation can do this, you have to allow the individual members of the union to decide whether or not to make contributions. we take corporations off the table. they cannot contribute in the future. if we will do that, then what has to happen in the future is that union members to decide where they will make a contribution and if they will make the contribution. that would require implementation and a situation where you move from the union leadership deciding that they will take and make a contribution on behalf of the members. i think that that brings equity to the system. they can advise the members to make the contribution, but it would have to be voluntary. you bring it down to individuals. corporations do not make a

contribution and a union leadership does not directly make the contribution. individual union members make the contribution. if you do that, you have equity in the system. >> so far, we are not even getting close to that. they talk about pension plans and things like that. if they get away from a combined benefit program to where you can be a chief of police for your and your income jumps of $100,000 in your retirement, but none of that money is funded. we are spending current 20 billions in tax dollars in reserves that were never put there in the first place. >> it is not sustainable. there has to be some adjustment on this. on the state level and on the federal level. >> lastly, wall street has

admitted to 600 trillion dollars in derivatives. -- $600 trillion in the rivers. they are probably only worth $300 trillion three i do not care how much we do here on main street, we cannot get any money here on main street because we are not an emerging market. it is all overseas. we have a big elephant in the room that is called the military. it is not a $600 billion organization, it is a $1 trillion organization if you take the money that is hidden in the department of energy and home when security and the patriot act. we are living under a fascist state right now. >> with respect to the question on the derivatives, one of the things we're trying to do is to create transparency by creating these exchanges where the government will be looking at

both sides of the transaction and all of that will surface. it was lack of trends that -- transparency in derivatives that helped create this crisis. hopefully, that step where everything is out in front will be helpful. yes sir, your question 3 >> my subject is something that we all hear about and that is high school kids quitting high school before they graduate. there is a solution to that i have written to you about twice. the solution is to pass a law that says that you cannot get a driver's license without a high- school diploma. as much as kids like to drive, they would go to school. [laughter] [applause] >> that is an issue for the state government here in california.

it your state senator and state assemblyman will have to -- >> you can push it, can she? >> actually, i respect the balance between the state in the federal government. i will give you the phone number to the state assemblyman. >> it sure would work. >> good afternoon. you recently voted against the bill to help the states that are broke due to the financial breakdown to keep thousands of teachers and firefighters on the job and educating our students instead of on the unemployment line. >> what makes you think that if we go out and borrow all of this new money which is threatening to downgrade our status for

treasuries from aaa status, right now the fed says that this level borrowing is unsustainable. we are going to have a crisis in terms of what happens. it will compound the problem. at what point do some members of the house have to stand up and say that we cannot borrow any more? [applause] if you cannot pay for it all, if you can't pay for it by cutting other parts of the budget, what logic is there for us to go out and borrow more and then give those moneys to state governments? i do not see how it is sustainable. >> there are two answers to this. >> my background is in finance and economics. i am just telling you what logic tells me. >> logically, if they are on the unemployment line, they are not paying taxes and they are

taking unemployment which is going to cost the government even more money. i guess it would be the state government in this case. the other thing is that if we just let these tax cuts to the rich paid into the past -- >> boo! >> go ahead. >> there are too damn ways to balance the budget. you can get more income or you can spend less. if the people that are not on the trauma -- on the job or losing, they are taking unemployment. that is costing the government even more money. >> we are losing. that is what it is important that state governments develop sustainable plans where they are not setting up pension schemes,

those that work against the interest of being able to govern the state, if you set up pension schemes where people retire at close to 100% of their salary at age 50 and age 55, and then you cannot fund the ongoing operations of the state, it is time for the stake to step up -- for the state to step up and say that we better look at the new plants coming forward and adjust to this. instead, what we're doing what we have done. we send more money to the states and they take some of these steps. i do not see how we can continue and methodology where we expand the public sector at every level and it becomes -- you can expect

the private sector to be able to create an of economic activity because the taxes come out of the private sector. i shared with your earlier my concern. -- you earlier my concern. i guarantee you that if you do, you will see less economic activity. fewer people will decide to keep working and they will retire and close it down. this is why you have to look of the total picture of what you are doing. if you look at just one half of the picture, which is the public sector, and i share with you what happened at the federal level, without considering the impact on the private sector, it

won't get to where you want to be long term. >> thank you for your question. [applause] >> i acknowledge that we have financial difficulties and economic stresses in our society and that is sobering and real. my concern is that those dynamics are causing people to overlook or diminish another area that is critically important and that is defense. when i hear people like barney frank propose a 25% reduction in the defense budget and i hear people in the navy say that we need to reduce the size of the fleet from what it is now to 230. i think that taking our economic stresses out on the military is not any good. my niece is an army officer and she says these cuts have run

through her rounds and i do not want to see our guys get shortchanged in this budgetary problem. there is no budget from the congress and they start to slice money off wherever they can sneak it off from, somebody's son, on or brother will be on the back end of the hook -- the bad end of the hook. if we are going to fight this fight to win, we cannot afford to cut the military. [applause] >> i want to make sure that our men and women in the military have the best equipment in the world. at the same time, there are probably efficiencies that we could find just lacking in the bureaucracy. there is a balance in that. thank you for your point. [applause]

>> the question i have to ask is if there is anything on the books at all for a bill that would suggest that only one item be put on the agenda rather than having four or five or six items that would not go along with the original bill? i think that is a big problem because a major bill that is being passed is good for the people, but the smaller ones are not good, so you have to defeatist. that is my first question. i have not heard anything about obama-care. one of the items in that that has nothing to do with health care is for us that our senior citizens, which i am, it is the 3.8% tax if we sell our homes.

many of us purchased our homes along time ago and therefore we are going to become under the $250,000. if i decide to sell my home, i would not only have to pay capital gains, but i would have to pay that 3.8% tax. with that and social security -- i do not even get social security. my have -- my husband had it but i do not get it. with medicaid going up and gasoline tax going up and possibly a value tax that i hope does not pass, all of these taxes are going up. when november comes and we have a different demographic in the congress, will you be able to set up a situation where that

3.8% tax will not come to fruition? >> i will try to do that. your original point on this omnibus legislation, this was something that was not envisioned in the constitution. there wasn't thought given to the fact that members of the house would figure out a way to roll items into a bill that were never heard on the house floor. or that something might be written in conference behind closed doors where it is posted after midnight and the press and public and members of the house and senate do not get to read about in advance of the vote and there is a vote the next day and there is no way to go through it. this means to be changed. we need transparency laws --

[applause] in terms of how long this is before congress. the senate procedures were originally written by thomas jefferson. they should be followed in which every issue is that it in the committee before it ever comes to the house floor and debated. there should not be items snack in in conference. under this legislation, it should be phased out. i concur with you. that is time. let me thank you all for attending and let me think c- span for being with us today. i appreciated very much. -- i appreciate it very much. [applause] >> thanks for being with us. >> hi. >> hi, how're you doing? how is bob?

>> [inaudible] >> in a few moments, the congressional budget office forecast a deficit this year of 1.4 trillion dollars. -- $1.40 trillion. in a little over an hour, a report on the cost of government. after that, kim salazar tours oil cleanup efforts in louisiana and later, the program on the gulf oil spill and seafood safety. on "washington journal," a discussion with douglas elmendorf. we will focus on travel

restrictions to cuba and a series on the new financial regulations bill looks at how the bill is designed to deal with financial problems. we will speak with matt taibbi. "washington journal" live on c- span every day at 7:00 a.m. eastern. >> a couple of live events to tell you about tomorrow morning. the congressional executive commission on china will discuss china and human trafficking. that is on c-span2 10:00 a.m. eastern. at 11:00 a.m. eastern here on c- span, retired admirals that allen at the national press club to discuss the gulf oil spill and what is left to be done. >> one of the things i regret about political and rhetorical live is that every major figure from the president on down is

nearly reading what somebody else in some committee has produced. >> philip terzian road for president carter he is literary editor at the weekly standard. he will share his insights on washington on c-span's "q&a." >> the congressional budget office projects the federal deficit will be more than 1.3 trillion -- $1.30 trillion fisher. speaking to reporters on capitol hill, the cbo director warned about the long-term effects of high debt and forecast of higher unemployment over the next several years. this is a little less than an hour. >> good morning, everybody. thanks for coming. this morning, cto released the summer update to our annual budget and economic outlook.

it is available on our website at www.cbo.gov. at www.cbo.gov. if you have any questions during the day or afterwards, please don't hesitate to find me. are briefer today is our director, douglas elmendorf. he will do a short talk and then will be happy to take your questions. >> good morning, and thank you all for being here. cto released its annual budget update. our current projection of budget deficits is not much different from our previous projection in march. our current forecast of economic

conditions is not much different from our previous economic forecast in january. unfortunately, this is a case where no news is not good news. the country faces serious budget problems and serious economic problems. let me summarize the key points of that report, and then my colleagues and i will be happy to answer your questions. i will begin with our outlook for the budget and then turn to our outlook for the economy. for fiscal year 2010, we estimate the federal budget deficit will be about $1.30 trillion. that is 7 $1 billion below last year's total and $27 billion below our estimate in march. relative to the size of the economy, this year's deficit is expected to be the second largest shortfall in 65 years. at 9.1% of gdp, is exceeded only by last year's deficit of

9.9% of gdp. as was the case last, this year's deficit is attributable in large part to the weak revenues and elevated spending that occurred automatically because of the financial crisis and recession. as well as the policy responses adopted. for the period from 2011 to 2020, it is assumed as always the current law will be unchanged. make that assumption so the projections can serve as a neutral benchmark to help evaluate the effects of their actions. this means for our current projections that we assume that the tax reductions enacted earlier in this decade expire at the end of the year as scheduled. that no new legislation aimed at keeping the alternative minimum tax from affecting many more taxpayers is enacted, and that future annual appropriations increase only with inflation. under those assumptions, the

federal budget deficit will decline substantially over the next several years to 2.5% in 2014. from 2015-2020, it would stay in the range -- projected deficits total more than six trillion dollars over the coming decade. raising federal debt held by the public to nearly 70% of gdp by 2020, almost double the 36% observed at the end of 2007. however, the assumption that current law is unchanged may significantly underestimate actual future deficits. because we presume the changes in tax laws, we project that revenues will reach 21% of gnp in 2020. compared with an average level of about 18% during the past 40 years. because we assume that future

annual appropriations will be in the inflationary adjusted terms, we project that inflationary spending will fall by 2020, compared with 9% of the past four years. if instead our baseline assumptions, the tax reductions enacted earlier in the decade were continued, the alternative minimum tax with indexed for inflation and future annual appropriations remain the share of gdp they are this year, the budget outcome would be quite different. the deficit in 2020 would equal about 8% of gdp, and debts held by the public would total nearly 100% of gdp. unfortunately, the economic picture is no brighter. according to our projections, recovery from the economic downturn will continue at a modest pace during the next few years. growth in gdp since the middle of calendar year 2009 has been anemic in comparison with that of previous recoveries following

deep recessions. the unemployment rate has remained quite high, averaging 9.7% in the first half of the year. such weak growth is typical in the aftermath of financial crises. the united states, a considerable number of vacant houses and factories and offices will be a continuing drag on residential construction and business investment, and slow income growth as well as lost well will restrain consumer spending. in addition, the rapid reduction of the budget deficit that will occur under current law means that the budget will provide much less support to the economy that has been the case for the past two years. the projected drop in the budget deficit from 9.1% of gdp in fiscal year 2010 to4.2% in 2012 would be the sharpest two-year drop since shortly after world war ii. all those forces will tend to

restrain spending by individuals and businesses and therefore economic growth during the recovery. we project the economy will grow by two. % between the fourth quarter 2009 and the fourth quarter of 2010. just 2.0% in 2011, given our consumption at current laws affecting the budget or unchanged. our forecast, the growth of gdp picks up after 2011, averaging 4.1% through 2014. the modest growth in output projected for the rest of this year and out your point to sluggish growth in employment. as a result we projected unemployment rate will fall slowly to 9.3% at the end of 2010, at 8.8% at the end of 2011, 7.6% at the end of 2012, and back to around 5% by the end of 2014. a different fiscal policy will yield different economic outcomes and different budget outcomes.

for example, cbo estimates that most of the tax reductions enacted earlier in the decade were continued and the amt was indexed for inflation, real growth of gdp in 2011 would be 0.6% higher than it is in the baseline forecast. the unemployment rate at the end of 2011 would be 0.3% lower. all are -- under this alternative scenario, real gdp would fall below the level later in the coming decade because the larger budget deficits would reduce investment in productive capital. i want to emphasize that economic forecasts are always subject to a certain degree of uncertainty. uncertain regarding our current bridgette current forecast is large because forecasting growth in economy your porn in -- near turning points is difficult. many developments could lead to

outcomes that differ substantially in one direction or the other from those cbo is projecting. our report highlights some of the ways in which economic growth could turn out to be stronger or weaker than we project. as well as some of the ways in which inflation could be higher or lower than we project. beyond the 10-year budget window, the country will face daunting, long-term fiscal challenges posed by rising costs for health care and aging of the population. continued large deficits and the resulting increases in federal debt over time would reduce long-term economic growth. putting the nation on a sustainable fiscal course will require policy makers to restrain the growth and spending substantially, to raise revenues significantly above their average percentage of gdp during the past 40 years, or adopt some combination of those approaches. thank you. we are happy to take your questions.

>> i will start. i am a reporter with modern healthcare magazine. i was going through the first box which talks about the effects of the new health care reform law. i was wondering if you could talk about that. -no later in the report there is a couple of paragraphs on what impact it might have on the labor market. can you summarize what effect the new reform law will have? >> in the keyword or less. those of you have not had a chance to look at report, there is a box on pages 6 and 7 that summarizes the budgetary effects of the health legislation enacted in march. there is a box later in the economics chapter that summarizes the effects of the legislation on supply and demand for labor in economy. in addition, in appendix a to the report where we discuss changes in a report for the budget since march, there is a

link the and repeated discussion of the aspects of the health legislation. the short description of what we have done is that we have taken the estimate of the legislation that we made with our colleagues on the tax committee in march and subtracted that to what the projections would otherwise have been. our view of the effects of the legislation has not generally been altered, but it is true that in incorporating that into the baseline, we have done so consistent with our new economic forecast and a variety of technical assumptions. for a number of aspects of the law, one cannot separate out any more the effects of that legislation from the effect of all the preceding law. when you project medicare spending on physicians or hospitals or other things, we do that based on the totality of law. there's no easy way to know how

much is due to the law as it exists waked -- as it existed last february versus the way it exists today. there are other categories that established a new flow of spending or of tax receipts that appear separately in our tables and will appear separately in the budget over time. in those cases, one can observe changes in our forecast of the effect of the law and we will eventually be able to observe what the reality turned out to be relative to the projections. in the cases where rican identify the changes, the new economic and technical assumptions make only a small difference relative to the estimates we produced in march. i want to emphasize this is by no means a complete reassessment of the legislation because we don't do it that way. is now part of the beverage of law, and we estimate

complement's of spending and revenues based on all the law that exists. based on the pieces that are observable, we see no reason to think those pieces have changed very much, and we see no reason to think if we were to do a complete estimate that we would end up with a substantially different answer than we had in march. >> could you give us an update on your estimate of the overall cost of tarp and if that has changed from last when you did? >> the cost of tarp now looks to be lower than it did in our previous estimate. i believe our previous estimate was that car would cost a total of $101 billion and then $9 billion. it is now down to $66 billion.

it reflects changes in law, reduction in the amount of funds available through tarp that was legislated earlier in the month, which plays a role as well. >> do you have any different assessment of the cost of tarp as it pertains to the auto industry? >> we know how much they contributed. >> in terms of the economy, can you give us some idea of this divergence between the baseline assumptions you are required us versus the more likely scenario, and what impact that had on your economic forecast in 2011 and so on? also, we have seen the recent

low in 10-year interest rates. i wonder if that has any impact that are not foreseen currently. >> on the first question, as i said in my prepared comments, we prayer b.g.e. prepare projections based on current law. is not our place to build in some gas on our part on what members of congress will choose to do. on our part. where they have proposed a the changes in current law, we thought it was important and useful to give our readers some sense about how some set of possible changes would affect the budget and the economy. in economic terms, what we chose to use for this alternative was the alternative fiscal scenario that we developed as part of our long-term budget outlook that we released in june.

but that scenario, -- under that scenario, essentially all the tax cuts enacted in the decade are extended except for those applying to taxpayers with high incomes. the threshold to the alternative minimum tax are indexed to inflation, medicare payments to physicians don't drop the way they are expected to under current law. those of the most important assumptions that matter in the near term. there are others that matter more for the long-term analysis, but those are the important ones. we looked at economic forecasts would be different under that alternative set of fiscal assumptions. we offered our estimate as arrange to try to reinforce the view that this is a very uncertain business. we did our original estimate of the effects of the american recovery and reinvestment act on the economy, which provided ranges.

we have done the same thing here. the alternative scenario provides considerable boost to economic activity in 2011 and beyond for a few years. it represents a very substantial increase in budget deficits relative to the baseline projection of deficits, and over time, the negative consequences of very high levels of federal borrowing build up. by the end of the decade, we would expect gdp to be somewhat lower under that scenario than under the baseline projections. >> also there is the recent low in interest rates. >> we completed this forecast about a month ago. the economic news since then has been more negative than we had anticipated. we note this in the report.

if we were putting the forecast together today, we might be slightly less optimistic about growth in the second half of the year. i don't think the news has been dramatic. the decline in interest rates, in part that reflects people's assessment of the weaker economy, and the other indications are the things i describe that would make our forecast less optimistic today. the current interest-rate itself helped to stimulate economic activity. all else equal about the economy, it helps to encourage borrowing. spending, it was just reported that mortgage refinancing is moving up strongly, and that helps to provide more disposable income for households and more spending. declining interest rates by itself is good news, but in this case it reflects an assessment by market participants that

economic data had been a little weaker than expected. that news caused us to weaken our forecast a little bit. >> as you point out in your report, you are forecasting the debt held by the public as a percentage of gdp in 2020 would be almost 70%. can you put that in historical context? is that higher even than in world war ii? >> u.s. debt at the public was over 100% at ge peak at the end of world war ii. 7% of gdp, our baseline projection for 69% of gdp, our baseline projection for 2020, puts it back to where it was in the early 1950's. it is an extraordinarily high level of debt by our -- experience of our country over

the past 65 years. there is also an extraordinarily difficult situation in which we find ourselves. the unemployment rate picture on the front of our document, going back to 1950, is nearly as high as it was at its highest point in the early 1980's. the significant part of the run- up in the debt from its historical average has occurred in just a couple of years, the last fiscal year and this fiscal year, attributable in large part to the economic conditions and the policy responses -- a very worrisome budget projection of arises from longstanding features that we have talked about year after

year, rising healthcare costs and the age of the population. now it is compounded by the sharp run-up in debt due to the financial crisis and a severe recession. it is a combination of the underlying, long-term problems that we have this short-term economic downturn, which is the most severe in decades. it has led now to accommodation of the levels of debt accept not quite high. -- that is now quite high. >> back on the tax cuts that are going to expire. you are talking about if they are extended indefinitely. did you look at what would happen if they were extended just for a few years? >> i should have made that clear before.

the alternative scenario we in this report is a permanent extension of those tax cuts. we did not in this report look at the effects of a short-term extension. in the report we issued in january about policy options for dealing with economic weakness, trying to raise output and employment, we looked at the effect of short-term extensions on those tax cuts as well as the effects of a number of other policies and proposals. at that point, we focused on the bang for the buck, in a sense. the increase in gdp or production and unemployment that would otherwise occur per dollar increased budget deficit through higher spending and lower taxes. in terms of that bang for the buck, extending those tax cuts were at the bottom end of the

.cale of effectiveness bi significant amounts of money involved go to people with fairly high incomes. if those people receive a temporary tax cut, they are not likely to spend a very large share of that, in our judgment. other policies that we examine in the january report that focus the flow of money were at people further on income distribution or focus on hiring specifically are some of the sorts of things were more effective for dollar budgetary impact and extending the tax cut and a broad based way. >> how can you make assumptions on spending about wars in iraq and afghanistan?

>> our baseline projections for discretionary spending, both defense and nondefense, jump off of the latest level of funding provided by the congress. for this report, that includes the supplemental appropriation passed a few weeks ago. we simply take the levels of funding for the latest year and grow those over time with inflation. that is not take any accounts of whether the specific deployments of troops will change over time. however, we do show in a table in the first chapter some alternative scenarios and their effect on the budget. alternative scenarios for revenues and for non-defense discretionary spending and for defense spending.

with that purpose, it is on page 24. we look at two alternatives, and these are somewhat arbitrary. many other paths are possible. one in which the number of troops deployed overseas in iraq and afghanistan in related operations, or something else that might arise to follow those actions. 30,000 by 2013, and that option would reduce discretionary spending by $1.20 trillion over the 10-year period. we have another option that reduces the number of troops to 60,000 by 2015. that saves $900 billion, roughly. one thing i would note regarding that is that the baseline projections don't take account

of the possible savings to reductions in those overseas deployments. neither do they take account of other pressures that might lead policy-makers to want to raise defense spending over time. particular we have written other reports discussing the effect of wearing down a lot of the equipment purchased in the 1980's, ships and planes and other sorts of equipment that are wearing out. if the congress chose to try to maintain the size of the current u.s. navy or the number of planes flown by the air force, there could be more money required to do that and is incorporated in our baseline projections, so i think it is a case where there are risks are pressures building on both sides. >> could explain the discrepancies of this fiscal year between cbo projection and

the projections -- >> there is an of appendixb that talks about the difference in the projections. the difference for this year is not exactly small, given the scale of numbers involved. we anticipated deficit of $1.34 trillion. our estimate is $62 billion lower. part of that is our assessment of the outlays that will be made by various departments over the remainder of the fiscal year. it is customary for departments to be optimistic about how much more business they will get done. those numbers below into the omb estimate. our numbers are traditionally somewhat lower. >> they did not know how much

would be out late for fannie and freddie -- outlaid for fannie and freddie. >> i did not look at the way they pitched their number. >> there is well then on and off split there, so you can see our on budget compared to theirs. it is about $60 billion difference. there is very little revenue difference. >> it seems the difference in the outlays is $44 billion in mandatory spending and $35 million in discretionary spending. >> it looks like we are on track

to have a larger debt that will be financed at higher interest rates. what does that mean for consumers who are financing their own business? >> so far, the very large increases in federal debt over the past three years has not pushed up federal interest payments very much because interest rates are so low. all overpate that's time, that interest rates will rise. we showed the projection for treasury rates, but we also expect -- that will occur in large part because of the strength of the economy. households and businesses will begin to borrow more themselves, putting more pressure on the supply of funds. it also occurs in part because the federal government will be borrowing. the increases in interest rates will make it harder for

households and businesses to obtain funds. they will have to pay more than they otherwise would, and that will raise the cost of mortgages. it will raise the cost of business loans and so on. we have not tried here to separate out that parts due to the federal budget due to other economic conditions. a very important factor in interest rates in this country is not just actions of the u.s. government and u.s. businesses and citizens, but also the actions of people overseas either in lending money to this country or not. the projections are one of the many uncertainties, but i think we have a good deal of confidence that rates will rise over time. >> i wonder if you can address the flip side of the bush tax cut question.

if cuts are to lapse, we have heard the argument that revenue will put a crimp on economic growth because it will damage small business and so for. can you address that argument? >> i think report does not address it on the flip side. addresses and on the front side, or maybe vice versa. the basic protections here follow current law and as in the tax cuts expire. we tried to illustrate the effect of an alternative policy by supposing the congress instead chose to do something else. it was the alternative scenario used before. economic growth would be stronger next year, unemployment would be lower next year. also as i said, over time, that is a good deal of extra borrowing that would have a

negative consequence to the economy. you get some sense of the magnitude about the extra borrowing. going back to the table we talked about earlier, page 24 and 25, this is a budget effects of selective policy alternatives. the top half of the page is for discretionary outlays and the bottom is what affects the tax code. there are several sets of numbers. there is the extension of the tax cuts, extension of other expiring tax provisions, indexing for inflation, and the bottom set of numbers is accommodation of extending and the alternative minimum tax. you'll notice the numbers are larger than the numbers in the other pieces. there's an interaction effect. if one just extends some cult it

does not lose as much as otherwise. the combined effect is to raise the deficit by a belt $4 trillion over the next decade. in the alternative scenario we excluded the people with higher incomes. this is an extension of all those tax cuts. the budget deficit over the next decade would be instead of six trillion dollars, in the neighborhood of 11 trillion dollars. a very substantial difference that over time would have significant negative effects on the economy. >> you also talked about the possibility of being able to do short-term stimulus to measures while still putting in place

something that does more for the long-term deficit outlook. does this lead index tax cuts expire fallen to the latter category? >> including the presentation i made to the physical commission, it i said to them there is no intrinsic contradiction between providing additional stimulus today when the unemployment is high and many factories and offices are under use, and imposing fiscal restraint several years from now. to do that, to provide additional stimulus in the near term and additional restraint later on, one needs to develop a somewhat subtle fiscal policy. so a temporary extension of

these tax cuts would not quite fit the bill, because it is not providing any additional restraint later on, relative to our baseline. whether it is the best way to provide stimulus in the short term is not for the cbot judge. and now that according to one metric that we used, which was the effect on gp per dollar of water budget deficit, it was not particularly effective. there are other objectives, other criteria that members of congress would use in making that sort of decision. it is a method of providing stimulus, but again, it only would provide additional restraint later on if it was done. our baseline projections assume that all the tax cuts expire as scheduled. $6 trillion in projected deficits is assuming revenues 2020.in 20 to an

with those assumptions, the deficit is as low as $6 trillion. if the assumptions were revised, the deficit would be higher. it would require stringency beyond the things built into current law. >> last year you said when comparing your projections to the administrations, there was a poorly the difference due to the way you treat fannie and freddie. was that just a one time, 2009 issue, or is that difference going forward? >> the conceptual difference persist. for the conservatorship that the

federal government established for fannie and freddie, it took direct control over the operations we g8 it is the judgment of cbo that they should be viewed as part of the federal government for budgetary purposes. when we assess the budgetary costs of the conservatorship, we made an estimate of the expected losses, adjusting for market risk. it is my experience over the coming years -- when we look at the cost of fannie and freddie on an ongoing basis, we assessed the subsidy we think is provided through the guaranteed loans and other factors. omb, in contrast, views fannie and freddie as not part of the government for budgetary purposes. when they assess the cost to the budget of what is happening at

fannie and freddie, they look only at the cash transfers being made from the government to those entities. the cash transfers or an intergovernmental transfer. those differences in treatment lead to substantial differences in amounts. for this projection for fiscal year 2010, in this report, because omb will report the fannie and freddie effects on the budget, they will report on the ultimate total for the budget the cash transfers for the past year. our estimate for fiscal year 2010, we have used cash amount. so there should not be a surprise from that when the total scum then, because for the year which is almost over, in an

effort to enhance the clarity of what is going on, we reported the numbers here on the same basis we expect omb to report them. looking ahead, our projections 32020 include fannie and freddie on this market value subsidy basis. that does differ from the amounts we would project in terms of cash transfers in the amounts omb has projected for transfers. the differences are not huge. >> the mean in the future? about $10 billion a year. >> so about $10 million a year difference going forward because of this difference in ethnology. at the beginning it was very different, because we book and

our projection this onetime cost for taking things into the government, which omb did not. >> has your estimate on a cost of the stimulus package change? >> only slightly. on page 12, it talks about the update on the budgetary effects of the american recovery and reinvestment act. there are two changes to our estimates. . . tion. in this case it rescinded some of the budget authority originally included in the recovery act. since our original estimate, the economy has been a little weaker than we expected. the unemployment rate has been higher than we expected. that has led to higher costs for unemployment compensation for the emergency benefits that we

had originally expected. at the same time, the costs have been reduced. the net difference is very small. our current estimate is that the act will cost in totaled $814 billion. we had originally estimated $787 billion. so is slightly more expensive than we had originally estimated. i should also say that the money is going out the door, both in terms of additional outlays and reduced revenues, at a pace which on balance across all the provisions is very close to what we and the staff and the committee estimated last february. there had been some criticism at the time that the money would flow faster than our estimate showed.

it looks very close to what we had judged early on. when we made the original estimate, reviewed some aspects of the bill as generating very rapid blows of money and other aspects generating more gradual flows of money. if you look at this table, the two areas where there was a good deal more money yet to go out and has gone out today are from the transportation department and the energy department. those are to the areas we anticipated the money would flow more slowly because of the difficulty of making effective use very large increases in expanding -- in spending.

experience has shown that it takes time to set things up. >> just eyeballing your comparison on page 56 and the one that seems most potentially at variance. is that within the range you expected a difference, or is any of that expected by the differing assumptions of what happens on the physical side? >> our economic forecast is quite close to that of other forecasters for 2010. we anticipate significantly slower growth or real gnp in 2011. if instead one took our four

best and at the effects of the alternative fiscal scenario that i described, then our forecast for 2011 will look much closer to that of outside forecasters. we don't know in every case what other forecasters are assuming. they are making some assumptions of their on a we do not always know exactly what they are. if one assumes that most forecasters expect much of the tax cuts from 2001 and 2003 to be expanded, that explains the difference between our forecast for next year and that of most other forecasters. there may be specific issues about the it ministration forecast. in general, it is important in evaluating all these numbers to remember the importance of that assumption about fiscal policy.

it is the assessment of how the law is likely to be changed. >> we think real gdp growth next year will be up to 1.7 percentage points higher than 2.0%. are there other questions? >> there alternative scenario implies certain extension of all the tax cuts. x as you understand, many alternatives are possible. we wanted to give a sense of -- a quantitative sense of how a significant difference in policy might matter. we developed a scenario in other contexts or long-term projections.

here is a permanent extension of those cuts. >> on unemployment, there is some talk that the jobless rate has not bounced back as much as expected given the rate of gdp growth in the last year or so. is there really expectation -- where you stand on that possibility that there will be some kedge of growth in joblessness? is that a relationship that was the rise to correctly? >> the unemployment rate has been higher the last couple of years than any economic models would have predicted, given the behavior of gdp. a number of economists have wrestled with that puzzle. it has been partly resolved by

downward revision to real gdp growth, annual revision to the national income accounts. it still seems higher than we would have predicted, given the level of gdp. there are a number of hot-button issues for that. even the current estimate of real gdp growth is not right. another reason our assessment of the potential level of gdp growth is incorrect. when one thinks about the unemployment rate, i am sure there are important economic models. one is thinking about an alternative path to dtv and if we had the alternative path wrong, we and others would have a different estimate of how much the employment rate in the future would have risen. it also could be particular things that have happened in this recession, the long-term unemployment rate, a share of

the labor force out of work for more than 26 weeks has risen to an unprecedented degree. there is is very striking picture on page 42, a figure 2- 11. this is the long-term unemployment rate. we have gone back 60 years. you can see the level long-term unemployment relative to the labor force is well above its previous peak and way above the experience we have had over most of the. . -- our most of period . we now -- our projection of the unemployment rate after we think

we are back to the potential level of output is 5.0%. a couple of years ago it was four 0.8%. we of actually nudged up our projection of lower german unemployment rate in part for this reason. there is a box in the economic factor that talks about lingering effects of the recession. this is one of the effects we discussed there. i think it is very uncertain at this point how significant the longer-term effects will be. there are more straightforward effects through lower investment. it lowers our assessment of potential output. that is more straightforward because it is more familiar and the possible effect on the labor market of long-term unemployment. we have talked in other reports

we have done about the need in this recovery for there to be new jobs, because many workers have lost their existing jobs and have no prospect of going back. these new jobs member are people living in different places with different skills than the workers who have lost their jobs. i think that is a matter of very significant concern. it is also matter of very great uncertainty. >> there is no expectation of a catch up are a snap back in terms of greater than expected employment growth, given expected levels of ddt? >> we think the unemployment rate will eventually get back level -- down to the level that is sustainable. at some points the excess increase unemployment rate comes off. i don't know what the timing of that will be. we have a slow decline over the

next years partly because of slow upward growth. between now and 2014, the excess will come down. maybe it's worth saying that most of the increased unemployment rates we observe in this country is traceable to the decline in output. there was some excess beyond that, but we think principally what will need to happen to bring the unemployment rate down is that we will need to have growth of the demand for goods and services and then growth in production. that requires additional workers and the use of offices and factories that are not being fully used today. >> there may have been a structural shift in the labor market causing that effect. >> i think we are concerned about that. there are different sorts of structural shifts. part of what has happened is

that we have a construction sector in this economy that was very large a few years ago. it was much larger than is likely to go back to being, even when the economy recovers. there are significant numbers of people who have worked in building houses in 2006, for example, who are not likely to be doing that at any time in the foreseeable future. in part it is because certain sectors of the economy were hit very hard. the unemployment rate has risen much more for men than for women, more for those who have left education and for those with college degrees. so there is a structural shift in that sense. the jobs will be in different places in that future. there is a related but different factor which is that people who have lost their jobs and are out of work for a long time may end up with a weaker attack of the

labor force. their skills will depreciate over time and some of the habits of work will be lost. i think there is a different sort of structural change which is the concern that these people will have trouble getting back into the labor force. that concern is accentuated in a different sector of the economy. all those things play some role in hide the unemployment rate reedy and how high the unemployment rate is now. those are very difficult factors for us to assess quantitatively, and we have made our best estimate, but it is very hard to know. >> if other things occur to you, you know where to find us. we are very happy to answer your

questions. thank you very much for coming today. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

reform. welcome to the cost of government 2010. this is the day of course when all of us finish paying for the total cost state and regulatory of our levels of government federal state and local. this 231 days so far and 2010 that we've had to work in order to pay for the total cost of government. federal, state and local spending and regulation. we have a great series of speakers and great panel.

what i wanted to do is start off by taking a look at what you have in your handouts to lock everybody threw them so you see what is there. obviously you have the cost of government report. you have a summary of the cost of the fed report. top of your handout, speaker lists along with our many biographies for people that might want to know that. this is also the order speakers are going to be presenting. we have 14 ways to reduce government spending. this is largely derived from testimony that we submitted to the obama deficit commission earlier this year. these are concrete substantive ways we would propose to reduce the government spending substantially. we've got the ought to testimony itself right underneath that. incidentally by the way that testimony is on our website and it's been updated since then with several new ideas since we submitted it and that's going to be a continued a document we are

to update with good ideas as a way to combat the smith that there's not a very good substantial large practical ways to cut government spending. we are plenty of stating that over the course of the fall. we've got a one-page on the joint committee on the reduction of the nominees and to the expenditures known as the bird committee which is a very successful kind of antiappropriations committee from the middle part of the 20th century, which is incidentally one of the 14 good ideas. we have the quick stat on a transparency in the states and local government. we've got six months to go on till the largest tax hikes in history. this is every single increase that is going to be happening in january or has already happened. we have a one-page how the small business sector is affected by large low-income tax rate hikes scheduled to go into effect in january if congress and president, do nothing and that's all the handouts so for now i will turn it over to the person

who runs the center for fiscal accountability who will start us off. >> thank you. as ryan mentioned i am the executive to detroit center for fiscal accountability. i want to welcome all of you on behalf of cfa. of course in 2010 that falls today, august 19th as rye and mentioned that means working to injured 31 days to pay off the cost of state, local and federal spending and regulation. today you will hear from the report general who will discuss the findings and how we come to this late cost of government day and what that means for taxpayers. we are grateful of course to have a panel that will comment on specific policies have brought us to this point on the august 19th cost of government day and hopefully elaborate on ways forward to an earlier cost of government day in the future. before we begin i would like to

see three governor norquist presence of the tax reform commission and the rest of the staff for their support and editing and researching the cost of the government a report. i would also like to think panelists for taking their time to provide an always is on the various costs of government. while the cost of government day is a reminder of what exactly it is that is demanded of us to sustain above is an importer reminder in the starting point regarding the size and scope of the government. ..

>> good afternoon. at the cost of government day. happy as he can be when it is in august. so what is cost of government day? cost of government day is the day of the year that americans have been able to pay off the burden of government, both spending and regulatory and begin to earn for themselves. this year that day is august 19. that means for 231 days americans have toiled to pay off the burden of government. another way of putting this is the burden of government has consumed 63.41% of national income. so how is cost of government day calculated and what are its components? cost of government day is calculated by dividing the cost of government by national income and cost of government is broken up into two major components, the cost of spending and the

cost of regulation. those can be further broken down into two sections, state and local and federal so you can see here on this graph there is state and local spending, federal spending and state and local regulations and federal regulations. so, a little bit of history here. their earliest week calculated goes back to 1977 and here you can see the cost of government day for the last few years. so, why is it so sudden and so steep, why is cost of government day jumping so much. the simple answer is two things, spending and regulation. this year, everything has kept up. federal spending has kept a high level. regulations have increase. state and local have increase. a weakened economy is the dominator in the equation and so together these things have pushed us back a full month from two years ago.

government has grown very, very quickly in the past couple of years. so that is the basis of cost of government day and with that i will turn it back to you. >> thank you, then. now we will have the president of americans for tax reform grover norquist address the ballooning growth in government. as ryan mentioned you have at your seat 14 different solutions to stem some of the government growth and grover is going to cover some of those now. grover. >> today can be ready depressing if we just talk about love how expensive government has gotten in the direction. it is not only the 231 days it is that it is jump 30 plus days in the wrong direction. we are working in month more to pay for the cost of government than we were two or three years ago. and that is scary. certainly has done a lot of

damage to the economy. so what do you do about it? i have a series of proposals that americans for tax reform has put forward and i am enthusiastic because i see public support and popular support for a number of these ideas. the first is to bring back the byrd committee. this is a really good new bold idea. senator harry byrd conservative democrat from virginia in 1942 said that we need is a committee in congress like the appropriations committee and waits in mideast-- will means committee to his job is to reduce unnecessary expenditures and in order to help fund world war ii the government actually agree to this. it was a bicameral house-senate committee that came up with $30 billion in reductions that actually took place. do you ever wonder why we don't have the civilian conservation corps? this is the committee that did it in. the works projects administration why did that go away after, why did that not continue forever and ever since

it was put enduring the great depression? the answer is this committee said enough is enough and they got voted down. so, i would recommend that we reconstitute it. senator thune of south dakota has put in legislation to this effect as one of his proposals. i would simply add one additional idea to that, that we ought to have not a bicameral house and senate joint committee which is what they had in the past that a house committee and a senate committee because the house and the senate may over time have different ideas on how excited they are about reducing spending and they think either house should be able to put ideas forward and demand votes on them. again, these are real committees with real subpoena power. second, an idea that was put forward by mr. obama but not enacted and that is the requirement that any piece of legislation that spends money to be on line for five working days

so if the government has a bill that is going to cost money, it has to go on line for five days before the house can vote on it, on line for five days before the senate can vote on it and if they amended or change it or do anything to it, that it needs to go up for another five days before it is voted on again and finally by either house. the purpose of this is to make sure we don't ever again have thousand page bills. the only reason to have a thousand page piece of legislation is to hide unacceptable things in it. otherwise you pass 100 page bills and everybody would applaud wildly at their wonderful piece of legislation. a 1000 page bill is an advertisement we have hidden some bad stuff in here and you can't find it before you vote on it in 25 minutes so a five-day waiting period machen began the fact that read, obama and pelosi took their promise and threw it out the window tells you a lot about how important and powerful that is in terms of how it would save money. we would never have had the stimulus bill passed in its

present form if they had been up for five days and the american people could have gone through it, found the shards of glass. they would have never pass government-run health care if people had five days to look at it. they wouldn't have passed t.a.r.p. if people had five days to look at it. you can bet that a lot of it would have been taken out. third, the importance of putting all government expenditures on line. this is an idea started with governor perry of texas, all government contracts, all government expenditures on line so people can see all spending and see out can be done more effectively. fourth, two term limit appropriators. when congress created the new budget rules and 74, they said you can only be on the budget committee for six years. why? they thought they had put all the power that committee. it turns out maybe because they are term limited that is not

where the power is or they guess the structure on. appropriators people come to washington d.c. i am going to be a spender of other peoples people's money, it changes their out leg and if they have souls that corrupts their souls. it changes the nature of who they are. if they think their job is to spend money. doing it for six years our sense is that their souls will be less-- and people could spend sometimes as appropriators and sometimes as legislators. sitting congressman and senators should not be an allowed to named buildings or monuments after themselves. urging that we block grant all education funding and welfare funding to the states and allow 50 states to compete to provide those services at the best cost themselves. that way we have 50 experiments. if we would have done this with welfare years ago we would have avoided 60 years of damage to families and neighborhoods. seven, bringing in pay equity.

right now the american people have finally figured out and it has been twice on the front page of u.s. today which is like eating and jay leno's stand up routine. it remains everybody knows this now. twice on a my front page of u.s. day today has been a lead story saying government workers make more money than you do. the numbers on that of the federal workers, if you look at their pay and their benefits and attention that has been promised to them. their average $122,000 a year. state and local workers pay benefits and pensions added together, $80,000 a year. private sector, $61,000. if you had pay equity, if we paid people in the government what we paid people in the private sector we would save for taxpayers over $500 billion a year. those decimal places are in the right ways, $500 billion a year and over payments to government

workers compared to what people in the private sector get and as you know much of that is hidden in the pension and benefits. similar to that, number eight is requiring that all federal employees and we certainly urge this of state employees as well do a job that can be done by the private sector if the job is listed in the yellow pages somewhere. it can probably be done in the private sector, to compete those jobs out. simply by competing them, many times during the clinton and bush years the government workers would win the bid but they would do so by reorganizing themselves and saving taxpayers money, and simply having those bids has saved about a third of what we were paying to do those jobs. harriet's foundation has estimated bidding them all would save $27 billion each and every year. night, we should look to do what the governor of minnesota poll and he has done which is to have a policy of only replacing one

out of every two or three government employees to retire so you are not talking about massive layoffs that scare people or irritate the unions, but simply saying we are going going to use attrition to reduce the cost of government. repealing the davis-bacon act would eliminate the law which requires overpayment when we build roads. we could have a quarter or a third more or better or safer roads and bridges if we didn't have this act for the same amount of money. we should return to the freedom to farm act, which phased out farm subsidies which worked well before it was brought to an end. 12th, lead defense cuts on the table. one of the things that is very expensive during the reagan years was that he wanted to spend more on defense and when you want to spend another dollar to buy a dollars worth of missiles, first of all it cost $2 but it also requires to give new york another bus or another subway in order to get the-- or your missiles so all efforts

come with an expensive anchor attached to them and that is the domestic port aral spending that congressman and senators attached to what they they have usa must pass must pass piece of legislation. and therefore, efforts to demand we are going to do x., y or see on defense spending our commitments to spend more on port aral spending in other zones. and then lastly, not doing any more emergency spending. if it is an emergency have been on said-- offsetting expenditures from our existing programs. this was done well and effectively by a republican legislature against clinton's interest in spending money but it is a protection that they dropped when they had a republican president under bush and we should go back to that regardless of who runs the house or runs the senate. if it is an emergency to across-the-board reductions in other things to fund the emergency and if you have got

troops in another country it should not surprise you nor be an emergency if they are still there in june. so real emergencies have to be real surprises, so those are the lists of real-time reforms that would save hundreds of billions of dollars, and that is why we feel comfortable at americans for tax reform, the study done by the foundation but americans for tax reform as candidates to commit not to raise taxes. why would you consider raising taxes with the hundreds of billions of dollars of overspending that can be wrestled to the ground already on the table. thank you. >> thank you grover. we will not turn our attention to our panelists will discuss some of the findings in our case studies and explore some options forward, to call some of the costs and a lot of the policies we have been discussing today. first up will be james capretta, former associate director at the

white house office of management and budget. he will be discussing the costs associated with the health care bill that was passed this year and another focus for a steady. with that, james. >> thank you very much. ii am jim capretta fellow at the ethics and quality center. i'm also director of obamacare watch, so we are watching this new health law very carefully, and it is central to both the cost of government day this year as well as the cost of government day in 2015 and 2020 and 25-- 20205. this bill has lots of costs built into it that will materialize within the next decade. the administration is fond of pointing to the congressional budget office estimates of the new health law, as an

advertisement that they say is actually a fiscally responsible bill. now, a cbo of course is required to assess legislation as it is written including budget gimmicks. if they are written into law and implausible assumptions that they are written into law, all of that has put in there to create the appearance of balancu start with a cbo process as a starting point for examining what this bill will do you reveal an awful lot so let's do that. first, you can tell by just the very top topline numbers this is the largest expansion of government obligations in decades. in other words, as all the evidence that benjamin was putting forward and grover was talking about in terms of cost of government day going in the wrong direction, we already knew it was going in the wrong direction and in this past march they piled on the biggest expansion you are going to ever

see probably in our lifetime. it is a very massive expansion of government and here come a couple of the reasons why. first the medicaid program by 2019, will have 16 million more people enrolled in it, 16 million people just by the end of this decade. there is also a new entitlement program that will have an additional 19 million people in it. this is according to cbo, by 2019 so between these two expansions medicaid in this new entitlement program, that is an additional 35 million people on a new health entitlement program according to cbo. by the end of this decade. the cost of these to entitlement expansions will be by 2019 according to cbo, about $210 billion annually and it is expected to rise every year thereafter at a rate of at least 7%, actually of some of the gimmicks that word in the bill it would probably be rising at eight or 9% a year so we have

created another entitlement expansion that is going to grow on the future just as fast as medicare and medicaid have grown or the last 50 years which everyone now knows of courses burdening the current budget in one of the main reasons why the cost of government day keeps inching back. so, between these two expansiona very large entitlement expansion on top of what is already and the books, and let's face it this is very likely to be a lowball estimate, and one of the main reasons why is that cbo assumes a very low dumping mike you the right word of employer, employers dumping workers into the new subsidized insurance system. now they do that for a number of reasons that i don't actually agree with but they assume a very few single-digit millions of people end up migrating out of job base plans to get the coverage they been exchanges. holtz-eakin former director of cbo a few years ago, did another

study. he looked at it independently and through his analysis he is able to indicate that there is likely to be at least 35 million more people who will benefit from the new subsidies by going into the government-subsidized system. 35 million more people. so instead of having between medicaid in this new coverage expansion 35 million going and we are talking 70 million more americans going into this new entitlement according to doug's estimate. that would add another $500 billion just in the first 10 years to the cost of the bill. many millions more people will be taking advantage of the subsidies. on average ballpark, let's say it is another $50 billion each year so instead of $210 billion that cbo estimated we are talking $260 billion even there that is likely to be a lowball estimate of the fiscal consequences of this bill because as i indicated at the beginning it is filled with

gimmicks and sleight-of-hand. let's look at a couple of them. first they supposedly pay for all of this by cutting medicare payment rates to hospitals and other institutional providers of care. that is one of the main ways they say the bill is neutral. but of course, if you look at the details, what they have done is take the solo that they were actually below the medicaid program by the end of this decade according to the chief actuary of the medicare program who actually works for the president of the united states. he is looked at these numbers and said it is completely implausible that the political system is going to allow medicare's payment rate to get access to care to go below those of medicaid. medicaid rates are so low today, the network of providers willing to see medicaid patience is very very constrained. it is probably along the order of half of the positions that will actually willingly see a large number of medicaid patients and certainly the hospital network.

you can imagine of medicare rates go that low and all the medicare beneficiaries are also finding it difficult to find physicians who will see them, the political is not going to stand for that so price-cutting is not cost-cutting and health care per se and that is what this bill does and supposedly uses that to make these costs go down. lastly, on the gimmicks side i also can't not mention the class act. this is a long-term care insurance program put into the bill. this is a gimmick of all gimmicks. the only reason they put it in the bill was that it supposedly created $70 billion in additional revenue in the first 10 years of this program but of course that $70 billion is needed after the first 10 years to actually pay claims on long-term care insurance when they come do. they have double counted these premiums. take that out of the equation, again the bill's cost and the burdens go out. finally, let me just mention quickly that even if one worked

-- were to assume this this is neutral it is already clear it is a massive tax increase on the american people. i don't think people focus enough on this. this is a 700 lien dollar tax increase that just passed in march. $700 billion in new taxes. there is a .9% medicare increase in a 3.8% tax on investment income, and a 40% tax on high-cost insurance plans, new taxes on insurance premiums drug manufacturers a medical device companies allah bush will be passed onto consumers and of course don't forget the new mandate on individuals that don't buy insurance and employers that they don't provide qualified coverage. you put all that into the package and this is a gigantic new burden on the american economy that will destroy jobs. fortunately, the cost of government report indicated most of this doesn't happen until 2014 and so there were two

national election cycles between now and then. the final word here has not been uttered on what was passed in the self-love. the american people will get to have that as they usually do. thank you. >> thank you jim. moving on we are going to have veronique de rugy talk about regulations and the financial regulatory overhaul. he discussed obamacare, the huge entitlement that is going to overhaul the health care system supposedly. that is also going to contribute to the exploding cost of regulations and the economy, so veronique. >> hello. it is a pleasure to be here. my name is veronique de rugy. i want to claim the ad title of the most-- person in the country and it is because 10 years ago or 12 years ago almost they moved the cassette did not like

the government, and so i have been a little shellshocked the last two years. so i am here to talk to you about the financial regulation. we face-- there are a lot of things we know about this regulation. even though i can't he leave they pulled the same trick that they pulled out with health care when they figured out when they started implementing it and in fact it will take-- put an actual cost on that bill. i mean it is a 2000 page bill and there is a lot of things in there. some of the things we know of course is the power of the federal government to break banks. it creates a new consumption protection agency again showing that the federal government is the strong conviction that consumers are idiots at best. it restricts banks from doing what they should be doing, and

knowing what their business is and prevents them from using their own money and it creates a lot of other powers and rules. these are 300 rules we are talking about. it is quite gigantic. what it doesn't do of course and which is problematic is address the cause of the financial crisis. one of them being that they were already a lot of rules because while we have the feeling that there is this massive increase in regulation today, i mean we have to remember that it is not as if they want regulation. in the last eight years under bush, the direct cost of regulating the economy, that is like the one you can measure when you look at the money that is going to pay for agencies that actually regulate and enforce regulations, the cost just to regulate the financial institutions have drawn by 30%.

it is not nothing. it is important so this is on top of massive increases in regulation. it doesn't address too big to fail. it doesn't address freddie and fannie, which holds trillions of dollars on toxic assets. and so, one of the things that we know, economists are a little fuzzy about trying to be able to actually put a number, a firm number on the cost of a regulation. be no egg in how to the direct cost of passing these regulations and how much the agencies are spending but it is very hard, and we don't have very good numbers. we know it is just very, very big. however there are a bunch of economists that actually looked at these costs in the consequences of this new specific regulation. for instance there is a new study by the university of chicago daniel evans and josh wright-- wright and they find new job creation will drop by

3.2%. the ability for consumers to borrow will drop by 2.1%. then the institute of international finance has estimated that the reform will reduce gdp by 2.6% up to five years and lower unemployment by 4.6 million jobs. if you take cbo numbers alone, cbo's knowledge of this bill is likely within five years to reduce the number of jobs by 1.5 million. anyway, these are all the things that we no. but i want to actually talk about something that we don't really talk about and i think is one of the major problems that we have with this new regulation. whether it is health care, and this one in particular. it is the uncertainty that the bill raises in the economy. one of the things we know right now is that banks, taxpayers, families are not doing much in

the way of investing, consuming. they are pretty much saving their money and this is a problem. what we need for this economy to get back on its feet is for entrepreneurs and banks and the economy to start doing what they used to do, take risks in an environment that is very risky and uncertain. what we know is the federal reserve has shown there is $1.8 trillion of money, of capital capital sitting on the sidelines that banks would invest, that institutions won't invest and do anything with, and we know from the business roundtable that the reason is because of all the government intervention. and also this bill. more importantly, it is going to take a very long time for us to actually be able to get this uncertainty to go away and from banks and financial institutions to have a clear vision of what this will do to them.

how do we know that? well, it is roughly, first we are talking in the new creation of an agency, the consumer protection bureau, right? they still have hundreds of rules to write so right there, and we also know there is very little restriction on what this bill can do. this is a big deal. hundreds of-- which means firms are unlikely to do anything right now because they don't know what they are going to be hit with sin. that is just one. but we also know that they have, lawmakers have 120 something reports to write, so this is going to take a long time. sarbanes-oxley, a much smaller bill, took roughly two years and according to some estimates, it is going to take roughly 10 times that time to actually get some clarity and getting all these rules out.

so, this is pretty much 20 years of uncertainty to some degree for financial firms before they can actually know which type of environment they operate in. and this is a gigantic cost that no one talks about. thank you. >> thank you veronique. it is an important point to be made that is a look at cost casa government day it is relative to the size of the economy. all of these policies put forward costs more. they also cause the economy to constrict. that of course is going to lead us to a later cost of government day. another policy that has been contributing to cost of government day of course our energy policies. we have david kreutzer from the heritage foundation to talk to us about renewable standard.

>> thank you. free as the wind unfortunately does not apply to wind energy, and too many policymakers seem to think it does and when you see the voting very popular to have renewable electricity standards are renewable energy standards because they think well once we get these windmills put in or the solar panels it is all gravy from then on out and don't they last forever and so on. of course they don't. renewable electricity standards were part of every one of a proposed cap-and-trade bills. that is how popular they are. states, some of them have already enacted their own renewable electricity standards and eight renewable electricity standard requires a certain minimum fraction of the electricity provided by utilities to come from renewable sources. and the renewables are defined by degrees not to include nuclear, not to include conventional hydro which are the two major producers of non-co2

emitting and you would think close to if not renewable electricity, so we are primarily left with biomass, which provides some renewable electricity at reasonable cost in some places but not an expandable scalable way. the primary source, if we have a renewable standard that goes up to three, four, five, six, 15, 20 whatever percent the cheapest of the ones allowed by those making the definition is onshore wind. solar is also popular though and much smaller scale and much higher cost. their problems, the main problems with these renewable sources is first of all the technology just isn't there yet and they are very expensive. another problem is they are not reliable. every kilowatt of electricity going into the grid has to be matched by a kilowatt coming out instantaneously. there is no petty cash fund for

electricity. and the grid operators have a constant battle balancing the input and the output. and they have very fancy models, making predictions that look at the weather, typical usage and afternoons versus mornings and so on and planning which source of electricity they are going to have on line at various times during the day. they cannot count on wind and solar because when the only produces electricity when the wind is blowing and solar when the sun is shining. the eia, energy information administration, has made some projections of costs for the year 2016 for various types of solar, that is onshore which is the cheaper. offshores the more expensive. solar thermal which is the cheaper of the solar surface and solar loadable tick which is more expensive by a lot. but they didn't make any adjustment for the reliability. everybody you talk to knows you have to back up these two

sources, wind and solar, with natural gas combustion turbine which is the most expensive of the natural gas. it is a jet engine. you can turn it up and you can turn it down so 10 people turn on their toasters double the storage drop you need to turn on something quickly you don't start using the coal. you have got to turn on one of those jet engines and that is relatively expensive. also the best sources for solar power are in the southwest. the best sources for wind power are in the corridor running from the dakotas to texas and that is not where people live for the most part. so the transmission costs will also be significantly higher for these renewables than for conventional sources. at heritage we went ahead and adjust to the energy information administration numbers for those additional costs and here is what we get. the typical measure would be megawatt hour of electricity. for onshore wind it is $177 per

megawatt hour. for coal, it is $78 per megawatt hour. for offshore wind it is 218 dollars per megawatt hour versus coal, 78. for solar cells it is $423 per megawatt hour versus the 78 for coal. and at the current prices are the projected prices of natural gas being more efficient natural gas combined cycle production, it is very close to the coal. so if you look at the conventional natural gas and coal right now it looks like they are much much cheaper than the renewables are going to be. now how does this play out in terms of a family of four monthly energy bill? it take to get all of their electricity from coal, the family of four average electricity bill per month would be $189. if they had to get it all from onshore wind, which would be to

logically impossible because of the reliability part and just using the costs we have here, it would be $339 per month. from $189 to 339. the solar cells which we have lots of politicians getting their pictures taken next to solar cell plans. i feel like screaming stop, stop. we have heritage are developing the solar index to show which states are least likely to get anything from it. solar cells if you get all your electricity from solar cells would be $718 a month versus 189 for coal. so, that is the problem with renewables. it is just too expensive. what happens when it is a half a percent. hardly anybody notices because you get 99.5% from the pretty cheap stuff. you are averaging the last% two or three times as expensive, get spread out so you don't see much of an impact on the bill. people don't kick back and they don't press back.

when it starts to go to five, 10, 15% you are going to see dramatic increases, pretty dramatic, 10 to 15% for residential and significant ones for the commercial. in addition to technological problems. we have modeled a renewable energy standard that starts at 3% at 2012 as a 1.5% each year until 2035 and we see unemployment jumps by hundreds of thousands of jobs in the first two years. millions of jobs ultimately. the gross domestic product because you have made this and put so much more expensive is hundreds of billions of dollars per year. on a family of four bases gdp drops by $2400 on the average year between 2012 and 2035. and when you make the economy less efficient government revenues go down, government expenditures go up and the national debt rises and on a family of four bases by 2035 there would be an additional $10,000 in national debt.

i look forward to your questions later. >> thank you david. next we have benson vernuccio. we talked about how the exploding cost of our public workforce is putting more pressure than ever before and taxpayers. he is going to talk about the exploding cost of state pension funds. >> thank you maddie and thank you for having me. this is the fun topic. this is probably the most significant problem facing the state today. you have states like new york, new jersey, california, illinois that are in crisis mode over their state personnel public pension costs. estimates of pension fund underfunding on the state level can reach up to $3 trillion today. in california alone, the public pension funds are underfunded by

535 billion dollars. that is billion with a b. to put things in perspective that is greater than the gross domestic product of poland or saudi arabia. that is $35,000 for every household in the state. teachers funds are estimated at, teachers pension funds are estimated at being underfunded i almost a trillion dollars. $933 billion. the city of cleveland, cleveland alone to fully fund their pension plan it would cost more than busing kids to school or paying for their textbooks for a year. in milwaukee, the union blocked fully funding the pension cuts-- fully funding their pensions. in milwaukee they were seeing a 48 million-dollar deficit in their school funding. the cities simply sought to make

the teachers have co-pays like everyone else and benefits. small expenses, taking a few pension cuts. the teachers union balked. they said no. as a result, 428 teachers were cut. what was the union funding for instead? getting full funding for and other medicines of this sort to their health care plans. what are the reasons? first, lavish promises. as grover already pointed out, pension funds and employee compensation passes the private sector. that investing in overestimating returns. instead of estimating a normal, reasonable rate of return like they do in the private sector which is usually around 6% most states operated on estimating getting seven, eight, nine or greater percent return on their investment.

pension spiking. public employees at the end of their career working overtime, working to public jobs to replace-- inflate their salaries. in new york, a sheriff who was make in $60,000 a year did overtime 291 hours of overtime in one year. he had $134,000 per year, which his pension will be then based on so instead of being based on the 60,000 it is based on 134,000 for the rest of his life. double dipping. some public employees will retire and the next day go back to the exact same job they were doing before they retired, so now they are getting not only attention but the salary they were getting before they retired. a police chief in utah retires from his job, making $107,000 annually. he went back to work the same

day and got the 107,000 annual salary but guess what? now he gets to kick in a pension. so, who pays for the bill? we pay for this. this is why pension funds are significantly underfunded. so what is the answer? the first answer is, stop doing defined contribution plan. stop allowing politicians to kick the can down the road, not telling taxpayers how much they are spending and losing it for another generation. when a politician makes a promise to a public employee union, they are not paying for that year. their children are going to pay for it. the taxpayer children are going to pay for that and they are doing this because they are underestimating the returns. second, we have to eliminate pension spiking and doubled it thing. it has to be eliminated immediately. it is contractual. the next contract, don't allow the public employees to engage

in this practice. third, we have to reduce the pension. we have to reduce the pension promises. we can't do it for retirees. current retirees are extremely difficult. new employees coming into public jobs can do it from day one. current public employees that have been working on the job, extremely difficult to cut what we have party promised them by but as soon is that collective bargaining agreement comes up as soon as you renew their contract you have to cut the pension. i am sorry, it is difficult and these are teachers and these are firemen that they are making more than people in the private sector. these are also transit workers and government bureaucrats and also administrators so you can forget that. if we don't do something we are going to see a financial collapse. it is that serious, it is that difficult. it is going to happen in the state or is going to happen from the bailouts from the federal

government. either way you are going to pay for it. thank you. >> thank you any. lastly we will hear from mario lopez the president of the senate leadership on. mario is going to offer it unique perspective on how the cost of government day impacts communities. >> thank you maddy and thank you to u.n. you and to grover and everyone at atr for the invitation to be here with you today. my name is mario lopez. as maddy said i am president of the hispanic leadership on. we are dedicated to promoting doublet policy solutions limited and government and individual freedom and we want to focus the way, i know you have heard some from fine speakers so i will be very brief but i want to focus

on the government spending and debt, the impact on small business and what that means for the rapidly growing hispanic community and the united states. small businesses often overlooked as the economic engine that drives the american economy and american job creation. a lot of times we forget it is small businesses that are creating jobs in our communities. small businesses are a vital part of the american dream and account for two-thirds of the jobs that are created in the united states. for american latinos, owning a small business represents the height of what it means to pursue economic opportunity. it is a chance to provide and improve your own life, provide for the future of your family and of course for your children. according to the census bureau hispanics start small businesses at a rate three times that of a general population. the number of hispanic owned businesses for example, again according to the census euro rose 33.6% from 2002 to 2007.

receipts of those businesses totaled $345.2 billion, which is a 55.5% during that same timeframe from zero to 207. hispanic owned businesses accounted for 23.6% of businesses in new mexico, 22.4% of businesses in florida and 22.7% of businesses in texas and incidentally though all three of those states are substantially above average, in the rankings of the cost of government day state rankings that you have been reported in front of you. so we see examples of small business under attack. the more government taxes, spence, regulates and grows the less opportunity there is for small business to grow and create jobs and the less opportunity there is for someone to create a small business of their own. we heard a little bit from gem jim on the obamacare example, and obamacare is just one area

where small businesses are being under attack. they will face higher taxes, especially in the form of the dreaded individual employer-- excuse me, the employer mandate which is going to be a huge cost of government moving forward and is going to be backed up by a penalty of two to $3000 per employee so those costs are all going to be tacked on, not just of course with the small business in itself but also to consumers. i want to point out especially that hispanics are a very young population and the united states. not only are they the largest minority population currently, but they are also the youngest. the medium ages 27. for whites it is 41, for asians it is 36 and for african-americans it is 31. one quarter of all newborns in the united states are hispanic. in 11 states minorities represent a majority of

elementary and secondary public school students, and all these numbers are likely to grow as the population rises to nearly 55% by 2030 and almost 60% by 2040. all of us try some fundamental points that we should keep in mind when we are talking about economic issues. debt a definition has to paid back. government cannot create wealth, but it can certainly destroy it. at the same time, people who are today driving our government spending and debt through the roof, those same people are saying going to be knocking on the doors of future generations demanding that they give up their dreams and pay more for the reckless policies that the government necessarily demands. the burden of paying for out of control government spending will disproportionately fall on on the american hispanic population because of that ovulation compared to the rest of the country. i just want to wrap up quickly by saying the pursuit of the

entrepreneurial spirit is one of the factors that may begin a of america the greatest country on earth and if we want to see the united states of america remain the greatest country on earth than we have to protect the ability of people of any back round to own small businesses, to allow those businesses to thrive and create jobs in their communities and provide opportunity and prosperity for themselves and their families. thank you. >> thank you mario. with that i would like to open everything up for question-and-answer and remind our panel is once again that you can repeat the question anyone ask you so we have the media present so everyone can hear that. does anyone have any questions for any of our panel is today? >> to pay for one share of government created cause.

the other thing is, what numerator and denominator are you actually using and how do you break down the numerator? the denominator i assume is personal income, which is $12.3 trillion for last year. and then the numerator is $5 trillion of spending, it dea table 3.1 and then you are adding $2.5 trillion of indirect costs on top of that? >> so, let me make sure that i get all of your points. so, we use net national roddick. the numerator in the equation is you are starting with what will be called cost of government, both of spending federal, state and local and in the regulatory so those are the two parts of the numerator. does that answer your question? >> what actual reference are you

using? are you using, likes tax foundation for their spending freedom day which is never mentioned by the media which was may 21 of last year, they were taking bea table 3.1, which was $5 trillion of total spending for the last year. are you taking that and then adding $2.5 trillion approximately of indirect costs? >> we do get a lot of our spending data-- data from bea. [inaudible] >> that is actually explained very well in the report itself, but it is based on analysis by dr. martin crane. he actually did some stuff with a small business administration that went in and discuss how do we actually figure out how to put an easily quantifiable number on regulation which is something that is most at the time this. that is the hidden cost a lot of people have a hard time seeing and unfortunately hasn't been addressed very well so that is more explained there. >> let me ask you about the

denominator. is a $12.4 million for this year? >> i don't remember the number off the top of my head. >> i am wondering, the one thing i didn't hear about was the bush tax cuts, and i'm wondering how much is it going to cost the government if the bush tax cuts are extended? >> the tax rate reductions from 2001, 2003 certainly if you look at the rate reductions on cap gains and dividends the economy grew rapidly after they passed. they actually raised more taxes than before so there are some tax changes, tax increases that do actually lose money and some tax cuts that game the government -- make gain the government money particularly sensitive issues like capital gains have historically done

that so you have a tax credit, the government will lose revenue. there are a couple of arguments here. one is low marginal tax rates, and perhaps the most important thing you can do with you are worried about the deficit is to have faster economic growth. a 1% faster growing economy, growing at 3% instead of 2% get you $2.4 trillion more in revenue over a decade, so you really want to avoid slow economic growth. with faster growth, stronger growth, more jobs, wyatt income, unfortunately the government gets more money with which they can do stupid things with but the cost of economic growth, the good things and opportunities for people and to avoid more deficit spending. but there is a cost to faster economic growth and that is the government playing with more money. i think it is important to maintain a lower marginal tax rates to avoid what is a looming

tax increase, january 1, 2011, the largest tax increase in the history of western civilization. they will not be helpful, and i know there is some argument from some on the political left, they intend to ask this then, sunday for some people but they couldn't fix it anytime in 2007 when the democrats have the majority of the house and senate they could have done it anytime in 2009 and the president or in 2010 and they happen so one might wonder whether they intend to do it at all in the future. >> what about people like alan greenspan who says that you know he very much favors these tax cuts that you know not with borrowed money. >> i saw alan greenspan speak at aspen and why he is depressed because he doesn't think this congress is capable of reducing expenditures. he may be right that this but

alan greenspan is old enough to remember we have elections every two years and we are not stuck with this congress forever. and this november, this is an opportunity to change the house house and/or the senate to stop the bleeding. that doesn't mean you turn everything around with one house or the other. you can't perform things if you don't have 60 votes in the senate and majority of the house and president but you can't stop the bleeding. and as we saw in 1994, when the republicans took the house and senate with the capacity to stop new bed things, that alone was fairly helpful in turning economic growth around and getting stronger economy. so, we have been talking about spending. on the other side, if you open the door to tax increases, you never get the spending restraint, because the whole point of having a conversation about tax increases or suspending reductions is so tax increases day on the table and it forces a large government,

the advocates of larger government will constantly come back to tax increases. only if you take tax increases off the table, as chris christy the new successful rock star governor from new jersey of all states, who has stared down the labor unions, and defended taxpayers, only because he took tax creases off the table would be allowed to have a national state and national conversation about spending restraints. when under reagan in 82, tip o'neil said how about this? we will cut $3 in spending for every dollar of tax increase you give us. reagan mistakenly cut the deal. the tax increases were real. the spending reduction never happened and then bush, who must have not been paying attention during the reagan years walked into the same track-- trap, 1 dollar of tax increase for every $2, 1 dollar of tax increase for

$2 a spending. spending increased after that deal faster than i was expected to before the deal so there wasn't any net spending reduction. there were tax increases, so step one to all of the spending reform ideas that have been discussed tiers to take tax increases off the table. if you don't take tax increases off the table you never get to the conversation on spending which is why the advocates of more spending always want tax increases on the table at some capacity. >> is there any reason why do you guys measured your data and calendar years as opposed to fiscal years? >> the data was more continuous that way. that is the simple answer.

>> it makes sense to people that way. most american families don't think about their year in terms of a fiscal year. they don't understand if you are talking from january 1, making the budgeting your helpful. >> mr. lopez mentions the difficulty fiscally of having such a high percentage of young hispanics in the country and the effect eventually on the pension system. would we be wise to import more aging spaniards? would that do it? >> now, i don't think i mentioned the effect on the pensions but i would just say that it is not necessarily a burden to have a younger population.

it is a good thing. the problem is when you have a lot of government spending and debt all that stuff has to be paid back so the burden of paying backpack is going to disproportionately fall on the group that is younger. >> thank you. >> one of the battles for taxpayers when congress reconvenes next year's defense authorization bill and there is a theme for the presidents pushing-- i wanted to see if you have any thoughts on the level of exposure to the taxpayer to insourcing or canceling the federal contracts for private-sector firms and then having federal do the exact same work most often for commercial activities. can anyone address the level of exposure to taxpayers? >> i am not sure if you want to talk about this but i am going to say it is going to be the coming theme in the next couple of months.

it is gaining visibility, how much we are spending on government employees and government work, and secretary himself mentioned how this insourcing thing was in saving them as much money as he is hoped and it is something that will continue to resonate as they see what the government is putting out there and paying for it to be done in the private sector. do you have anything to add to that? >> the question was what do we think of insourcing, right? well, there is an interesting challenge on this. if you look at insourcing, all that the people that want to do that are crediting is how much we are paying government contractors and write down how much we could be saving by bringing them inside the federal government however what they are not usually balloting is that when you are creating a new job inside the federal government you are saddling permanent new costs on taxpayers ed are much greater than the cost of the contracting you just save money on. we had a separate study if you want to talk to me afterwards i

can give you contact information where we found that the median real after inflation caused of hiring a new federal employee is about $4 million over the course of that employee's career and that is a mid-gf level employee with a normal 40 year career. that is about $4 million after inflation so that is the counterbalance the people always need to be able to say against here is how much money we are going to save by not paying contractors any more. >> and a more questions? one more, sure. >> an individual with a 50,000-dollar income, using a 10,000-dollar deductible, something like that? >> we are going to have to do a lot of things and certainly moving toward-- that is part of

the program in some sense. there is a bit of income testing in the premiums paid for part b which is physician services and part d, but the real problem with medicare is bad, it did think what you are alluding to is right on which is that we need to move in general across the board, not just the medicare population but for everybody toward higher deductibles and more consumer use of their own dollars below the deductible so there is more cost sensitivity on youth services. there is lots of talk when they are passing this bill about how to make health care more efficient. they call the delivery system reform. ..

as we move into september. thank you. [applause]?

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] [no audio] >> welcome back to the subcommittee on energy and the environment. let me begin by making a unanimous consent request that all members be allowed to submit statements for the record, and many questions which they would likto submit the witnesses who are testifying here today. without objection, so ordered. our next witness is dr. ian macdonald. dr. mcdonald is a professional -- a profess of oceanography at florida state university. he uses satellite technology to locate natural oil releases on the ocean surface. thank you for coming dr. mcdonald. whenever you feel comfortable, please begin. >> i am a professor of oceanography at florida state university, but today i am here

of my own accord. i have 30 years of professional and private experience travelling around, cruising on, diving to the bottom of the gulf of mexico, and i deeply and fiercely loved this ocean and its people. i thank you for your exemplary service during this catastrophe. i would like to comment briefly with a critique on the noaa report that we discussed earlier. i feel that this report was misleading. although it was done by very competent scientists, without any side station to the scientific literature -- and a citation to the scientific literature, it is impossible for someone reading this report to check the numbers that are there, and we have concern about those numbers. as i think you very ably

demonstrated in your examination, we really can only account for 10% of the oil that was discharged, the four 0.1 million baels their discharge, but to burning and scanning. the balance of the oil that may have been in the environment, there may be 10% that evaporated into e atmosphere, but the balance is still in the ocean. the question as, how does the partition that was done, the separation into categories that was done by the oil budget, is really pretty theoretical at this point. there are findings that come out and i think will be called into question. there are five times the number of barrels released as or in the exxon valdez disaster. this oil is going to be very resistant to a further by a

degradation. it is going to be in our environment for a long time. i think that the imprint of the bp release, the discharge carlo will be detectable in the gulf of mexico for the -- the discharge, will be detectable in the gulf of mexico for the rest of my life. it is not goinaway very quickly. i would also like to comment on an aspect of this bill that has not seeped -- aspect of the spill that has not received a lot of attention, and that is the methane gas that has been released. we know that the well was very rich in gas. we have good numbers o that from the flow rate technical group. if we take those numbers, in units of mass equivalents or barrels of oil equivalent, it

turns out that the oil plus the gas is equal to 1.5 times the oil alone. in other words, if there are 4.1 barrels of oil released, the actual discharge is in excess of 6 million barrels when you combine the gas. some of debts, much of this, still remains in the ocean. i would contend that for the purposes of the oil pollution act, this followed should be included in our assessment of how far this spill when down. -- went down. and would also like to comment on the so-called resilience of the gulf of a mexico. there has been a massive dose of hydrocarbons in the gulf of mexico ecosystem. there's been talk about the resilience of the gulf of mexico. might concern is not about a wholesale die off, but for a depression, a decrease in the

productivity and the biodiversity in the ecosystem. this might be, if we had a 10% decrease, this might be very difficult to demonstrate scientifically. it might be even harder to prove in a court of law. nonetheless, if we sustain this impact over a number of years, it would be as severe effect. my greatest concern is that some of the damage may be so severe that we y have a tipping point effecthat will overwhelm the resilience of the ecosystem. this unfortunately has been the case in the sound that was affected by the exxon valdez spill. i have drafted as part of my submission here a list of species that i think we should be watching closely.

these include some of the big species, the shrimp, t tuna and so forth. they also include more humble members of the ecosystem such as the lawyer crabs, clams that are so abunda on the beaches. we need to be watching populations through time, not just next year, but for years to come. may take several years to notice the impact. a healthy environment has to support the species. if we watch those species, we will know how the gulf is doing. is my time up? >> yes, but you will have time during question and answer period to elaborate. our next witness is the president and sole owner of dina blanchard seafood -- dean blanchard seafood, the largest dockside shrimp a broker in the united states and the third largest in the world. thank you for coming. whenever you feel ready, please begin.

>> thank you for having this. i want to say that i visit your state regularly, and reminds me of grand isle. we are here to talk about seafood safety, and we have a few concerns. basically, i have taken a moment to outline a few of my concerns. as an independent seafood owner, is the seafood product is put onto the market that is later determined to have made the consumer ill because of oil and your dispersants -- and/or a dispersant contamination, the will be the responsible party? of that is our major concern right now because we are having a problem getting liability insurance. i am responsible for moving about 300 milln pounds of shrimp, and i have never seen

anyone get sick. pretty much everyone in the seafood business is born and raised in it. not just decide one day i am going to be a seafood guy. we have good people in our business, and we know the shrimp. i am hoping that will keep the public's faith. i will not but nothing on the myself. i tried to stop eating shrimp, and i felt like i was going to die. i had to start eating it again. i have a feeling that if i get sued, i am going to be the one paying the bill. is another concern that we have, commercial fishermen have to fill up their boats, by ice and salt and all.

they are afraid the open waters will be cled once more, or that they will find contaminated seafood and they will have to dispose of it. it is difficult for an out of work fishermen to pay for these expenses without a confidence in the government keeps opening and closing. without that confidence, and bp's press release says that virtually althe recoverable oil has been recovered. now, you can get oil. you want to get good trip, you can catch that too. i told every fisherman that when you bring me the productit will be scrutinized 10 times more than it has ever been before. if you think that anything is wrong, do not bring it to me. i will not buy it.

al will not take the chance of getting sued or getting someone sick. the last thing i want to see is that i got somebody's sick or a pregnantoman, that would be hard to live with. i will make sure that will not happen. we have a difficult time locating insurance companies that will sell less insurance. -- sell us insurance. i am scared of someone trying to make money off of this. that is the scary part. basically, we in the seafood industry have very little trust in the government. when i tried to sell seafood, i say that the government said that the see thousands of tests and everything is alright.

i told them that it is the same government, but it is a different branch. that is some of the problem that we have. we appreciate the help for people like you that maybe we will get down to the bottom of it. i firmly believe that all of the seafood that i have seen so far is safe. i eat seafood probably six or seven times a week. i have not had any problems with the seafood. we are hoping that the government is doing the right job and making sure that everybody is safe. maybe we can all get through this one day. thank you. >> thank you, mr. blanchard. thank you for being here today. our next witness is mr. a. c. cooper jr.. he is a fisherman and the vice

president of the louisiana trappers' association -- shrimpers association. we thank you for coming mr. cooper. enever you are ready, please begin. >> i this want to talk a little bit about the damages done to our community. >> mr. cooper, could you move the microphone in. >> yes sir. we have reports of new mirror -- numerous fish kills. they are saying that the oil is not there. we know it is there. i work in one part of the space r two months and we wear has met chutes and gloves -- where hazardous material suits and gloves.

a reported oil to the coast guard and i brought them out there and show them that it was there. this has had a catastrophic effect on our community and our way of life. we do not need to let this late because bps or to step out and they are trying to get out now. we need to stay on top of things. if we let them leave now, we will be in deep trouble. everyone says that it is over with.

it is going to come back on us. the process of having a waiver, open areas in the marsh, they making us sign waivers saying we caught them in open marsh. who are we going to make be responsible for that? is b.p. going to step up and be responsible for what we have to do? who signs for us? so we're going to wind up with the burden of having -- we can't

make any money. august 16, the season, i went out. knowing i would catch a couple thousand pounds, 10,000 pounds. i caught 500 pounds of shrimp at $1.25. my father is 75 years old. he still does it. my sonnings do it. i don't see any future in it. the way things are going now, we may not have a future. b.p. needs to make sure they step up and keep this industry going. can't afford to keep going. one shrink broke in this chained we lose our industry. this is something we have been doing all our lives.

who do we go to then? i just want to make sure they understand that. we are not happy with what's going on now. it is not going. i brought the coast guard. i brought b.p. and showed them. whoever says they are going, as you heard today, they said 35% was going before, 95%. it is going to come to our shores eventually, somewhere, if not in louisiana, somewhere else. thank you.

they never had a plan put in place to deal with something like this. we just can't allow them to believe that the coast is clear. they can retreat without having to pay for everything that -- >> let me say one more thing. you heard me talking earlier about five-mile bumpers. when i found out the season was open in that area, it was open where i found the oil at and they are talking about a tradeoff. the only tradeoff we feel they gave was to our industry. shrimp, you know, they are all bottom feeders. that's where it went. to the bottom.

>> thank you. mr. cooper. now we'll hear from mr. mike voisin. voisin. he's the chief executive officer of motivatit seafoods, an oyster processing plant in humana, louisiana, a family-owned business. the voisin family has been involved in the seafood industry since 1770. mr. voisin serves on the louisiana wildlife and fisheries commission, the louisiana oyster dealers association and the louisiana oyster task force. we welcome you, mr. voisin. >> thank you, mr. chairman. and good afternoon. the opportunity to come before you is a pleasure today. and thank you for this opportunity. >> may i also say that in congress there are two places that everyone thinks has a very funny accent and one of them is louisiana and the other one is from boston. so this is a gathering of

those. the other 48 states, they all think they speak plain english but we know our accents are the authentic ones. so welcome. >> thank you, mr. chairman. our company has an oyster farm in south louisiana which surprises about 10,000 acres of water bottoms. we produce anywhere from 45 million to 75 million individual oysters annually. on the bottom we have two to three-year classes of oysters or 135 million to 225 million oysters at the water bottom at any time. in addition, you mentioned my relationship of the wildlife and fisheries association of louisiana. louisiana is second only to alaska in total seafood landings.

in 2008 our commercial fishermen harvested 1.25 billion pounds of seafood which represented nearly $665 million in value. meanwhile, $3.2 -- 3.2 recreational fishermen took to the water completing a total of 24 million fishing trips. the deepwater horizon oil spill is clearly an ecological and human tragedy that will surely affect not only the fragile habitats where fish and shellfish are harvested but the very core of the community that brings these iconic del cassies of the gulf to the tables of america. the gulf community is one built not only on the bounty of pure waters but on the backs of small business men and women whose families, -- we worked with other groups who the environmental protection agency as well. we strongly supported the precautionary closures at the outset of this tragic event in

order to ensure consumers continue to have access to seafood maintained with the quality and safety that's expected in the gulf of mexico. now as we did then we supported regulators as they reopen those same waters and continue their ongoing efforts to protect consumers. we agree that closing harvest waters which could be exposed to oil was the best way to protect the public because this prevented potentially contaminated seafood from entering the marketplace. closures made with the intent to ensure seafood was the safe as possible were balanced with not closing any fishing areas unnecessarily. and as a testament to that system, we know now that no contaminated product has made its way into the market. waters are reopened only when oil from the spill is no longer present and the seafood samples from the area successfully pass chemical testing. century analysis testing is heavily established, verifiable and highly scientific is a

heavily viable and scientific way to detect contamination. that testing continues aggressively as well. in fact, f.d.a. has collected 5,658 specimens. and noaa -- as well as noaa. all of these samples have been 100 to 1,000 times below the threshold levels for any marge ip of safety -- margin of safety relating to any human concern. the gulf seafood industry applauds the administration for taking the lead on the coordination of the comprehensive, multi-agency response. and we appreciate the collaborative leadership of noaa, the e.p.a., including the louisiana department of health and hospitals. we appreciate them working with the federal government and we're confident that any every necessary step is ensuring to make sure the continued safety of seafood source from the gulf after thousands of tests, the

public should not be concerned about the seafood safety of gulf seafood. we've seen all the media reports which stand in contrast to all the federal and state testing we have seen. it is absolutely critical to the gulf seafood community that a consistent and precise message continues to be delivered to the consumers who may unnecessarily shy away from this otherwise very healthy product. the gulf of mexico has 600,000 square surface miles of water during the 100 days or so of this event, the mississippi river carried 1,600,000,000,000 gallons-plus in that gulf of mexico. we know it's 5,000 feet deep. probably more like 10,000 to 13,000 feet deep. there's a lot of water out there. we, of course, responded with doctors, m.d.'s and we've spoken to scientists. we've educated ourselves and understand that the demons

rabble risk is dispercent is negligentable. and we hope further studies will be able to help consumers better understand that challenge. i'd like to thank you and the administration for all the efforts that you're putting forth to make sure that we continue to do the right things relating to this seafood concern. thank you, mr. chairman. >> thank you, mr. voisin, very much. and we thank the members from the louisiana delegation, mr. melancon and mr. scalise for their work in helping to make sure that we keep b.p. accountable and the government accountable to ensure that the innocent victims of this continue to be protected. our next witness is dr. lisa suatoni. she is a senior scientist in the oceans program at the natural resources defense council. she earned her ph.

d at yale university. we welcome you, dr. suatoni. >> thank you. thank you for this opportunity to testify. mr. charron, community communications -- mr. chairman, recent communications have been optimistic. we're hearing the pieces of the puzzle are falling together. the picture depicts it better than many of us feared and that we have turned the corner. however, previous experience from other oil spills tells us that we are only the beginning stages of this event. from an ecological perspective. that the story is necessarily complex. and many unanswered questions remain. in my testimony today, i will focus on three recent actions from the federal government that have raised concerns. first, the tradeoff associated with the use of dispersents. as we heard from dr. onassis today, the e.p.a. conducted a

recent texas tological study on the dispersent corexit. that corexit had much lower toxicity from oil itself and that the mixture had equal toxicity to the oil, at least to test species. however, with the release of these findings, the federal government concluded that the picture is becoming clearer. the use was an important tool in this response. while it may be tempting to conclude that the use of corexit was an important tool in this response. while attempting to conclude that the use of disperseants was a wise conclusion, we think it's premature. we think it is unwise to use, to form that conclusion on the basis of two texas tological studies and observations in the field that corrects it.

as you pointed out, you raised many important additional questions today and there are additional ones too. what portion of the oil that would otherwise ended up on the coast didn't because of the use of dispersents? where is the chemically dispersed oil? is it involving ecosystems deep or the ocean canyons? is it more able to get in the food chain than the oil alone? is it getting into the food chain? is it possible for the disperseant to biomagnify in the food chain? these are all outstanding questions. it is clear that the use of chemical disperseants is a tradeoff but not at all clear that we understand what tradeoff we've made. on the remaining oil in the environment, we've already heard a critique from dr. macdonald about the oil budget. they agreed with him, that the

assertion, that 75% of the oil is no longer in the vimplete is an overinterpretation of the data and misleading. because of the uncertainty associated with the biodegradation of the oil, we don't know how much oil remains in the environment. this needs to be directly measured. if you do a more direct interpretation of the federal oil budget it reveals that 50% of the oil may remain in the environment. that is over 100 million gallons or nine times the exxon valdez oil spill. that is a lot of oil. in addition, the federal oil budget appears to be a preliminary budget that was perhaps prematurely released. it was released before peer review. it was released without any discussion of the precisions associated with those estimates. it is a partial tally of the hydrocarbons in the

environment. again, as we've heard today, it didn't contain methane, which scientists believe comprised half of the total hydrocarbons that went into the environment. and it was a partial analysis of the fate of the oil. for example, it didn't provide estimates of how much oil went into an oil slick or what proportion of the oil made it to the coast or what proportion of the oil is now on the sea floor. as presented, the federal oil budget was a partial snapshot of the oil in time. it doesn't directly address where the oil was, where it is going and how long it will remain in the environment and, of course, it didn't address the ecological impacts. to fully understand the risk of the remaining oil or the impact to the environment, this picture needs to be filled out and the oil budget needs to be refined. relating to the safety of seafood. recent statements from the federal government made today,

in fact, assure americans that the open fishing grounds and the seafood in markets have no oil in them and present no health hazard whatsoever. again, many important questions remain. my colleague, dr. gina solomon, who is in the health program at nrdc highlights three primary concerns that we have. first, much of the data on contamination of the gulf seafood are not publicly available, so scientists cannot independently review the findings. noaa has released data on fewer than 100 of the samples of the thousands that they say they have. and only on finn fish, not on shrimp. second, the seafood monitoring that is currently being done may not be adequate in terms of sample size and in terms of failure to monitor heavy metals, which you discussed today, and the disperseants. third, assumptions used in the

f.d.a. risk assessment fail to adequately account for exposure to polycyclic aromatic hydrocarbons to vulnerable populations, such as developing fetus, young children and subcystens fishing communities. and that is because of the questions you raised about the weight of adult males. in conclusion, the gulf oil disaster represents -- is the largest oil spill in u.s. history. we understand that the government wants to turn the corner and wants to signal that the gulf is on its way to recovery. however, the facts simply do not bear that out. there is still a huge amount of oil in the environment no matter how you interpret the federal oil budget, everyone agrees with that. it does a disservice to the gulf region and to the public at large to diminish the problems that this oil presents to the

health of americans and the ecosystems of the gulf of mexico. the government needs to take the time to do careful study, to assess the fate and the effects of this spill and greater transparencies warranted. in the end, we believe that this followthrough is the only thing that will keep this catastrophe from being such a big disaster. >> thank you, doctor, very much. now we'll turn to questions from the committee. i'll begin with you, dr. macdonald. i think there is a lot of concern about how far the oil and methane from the spill has spread in the gulf. how long it will remain and what harm it could cause? i know these questions are areas of active research for you and for the broader academic community.

can you give us a brief overview of what academic scientists are finding in that regard? scienti? this weekend today, we have seen the release of a number of careful studies. one by the university of south florida reporting on the results of the research and they careful study of the oil budget by a scientist at the university of georgia in athens. these show aspects of the spread of the oil and the compounds. this is the best science i have seen yet out of this process. the mmittee documents the

spread of polysaccharide hydrocarbons. lisa m. of of the components. they have a very large plume of this material spreading to the southwest of this bill. in that report, a document some 6%-7% of these released from the well was included in that plume. this is 1,100 meters. if this is a tracer, that suggests that we don't know very well what happened to the balance. the upper layer to the ocean may have received a bigger dose of oil than we are presely worried about.

we do know from work that has been done that the oil spread over an area of many thousands of square kilometers and as it emulsifies, this rain sound articles of oil. this became more concentrated as it reached the coast. for this is what the findings are from the document. they found oil on the bottom everywhere. either you are very unhappy or there is a lot of oil on the bottom. many plants have been made in this hearing. >> while this hearing was ongoing, this release the study and this is a snapshot from the middle of june and what they

found was a plume of oil from the -- 1.2 miles long, 650 feet high and a depth of 3,000 feet. microbes are degrading the plume very slowly this means that oil is persisting for longer time cent thought. we don't know how toxic this is or if it poses threat. they did not find areas of severe oxygen completion, that is dead zones. that explains the discrepancy

because of their use. i just wanted to put that on the record. mr. cooper, how many years have you been shrimping? >> 35 years. >> have you been out shrimping recently? >> -- >> did you see anything different or unusual in terms of the waters? >> not in the area i went. these were clean areas we did not have enough shrimp. >> can you tell me how about the

long-term impact? >> we are concerned with the shrimp. as dr. cooper says, the will is present in ground and the might be more exposure. >> this requires the right to survival of seafood. you have to be concerned. this is one trending ship, i'm sure that you have gone up before. this one event does not tell us the whole story. if they cannot catch it, all of

the protection and the vigilance and efta was not because of the seafood industry. >> are you convinced that there is no oil open to shrimping? >> i did find oil in them. >> is there ia way that you can be sure that there's a oil and not in the water? >> in one of the last days that i work, we found it. we called the coast guard and bp and have them come out there.

the coast guard would not come. i went to a town hall meeting and i broht it before them and invited them to see what i found. they did come and i showed them. they said that this is of recoverable oil. they have opened that day of for trolling. >> people are raising concerns about the quality of the seafood simply because they want to continue to collect checks from bp. can you deal with that issue for us so we can understand. how should we be doing this tension?

>> we want to give them incentive to go fishing. we should let the fishermen fish, even though they will have to go to different grounds give them an incentive to go out. bp took the approach that there were one to do a pr program and do the simplest thing that works for them. they have never tried to pick up the oil. i talked to many people who said that they found oil, they contacted bp, bp told them not to try to pick up and go the other way. i've been dealing with this for over a hundred days. >> why do you think that?

>> it is cheaper to sink it, out of sight, out of mind. all of this seafood is probably being tested more than any other product in the world. i don't believe beef, pork, or any seafood in the world, we did see fit from foreign countries that personally i would not eat and it is being grown in a sewer and they check 2% of it. 40% is rejected. that is one thing i want to bring up. all of the seafood is -- within the other product in the world. whatever agency is tested them,

they give us the paper and return to this product is good. question know that is why we're having this hearing. >> that is what we are hearing. >> if they were held accountable, people have trted the government agencies. >> there are many people who will be made accountable. we are going to move to this entire process. we are not going away. he will make sure tt all of the lessons can be extracted to.

we want to make sure the lessons are learned and implemented and are to protect the public. do you think it you are being ked to work in an unsafe environment? >> this is unsafe. yes, they will make us where has met suits. how can you send out fisherman there? in somereas, yes.

they put him back in the water, they can go to work. don't have the area to work. we are opening and closing the seasons. we pretty much had to do what they had to do. >> they are is smaller than normal size this week. there are other changes, aren't there changes that color the smells, the spot? >> in this area, no, sir. >> would you like to inject your thoughts at this point? >> thank you, mr. chairman.

there are two small areas in south louisiana that have will and that is where mr. cooper actually goes. we have 7,500 miles of shoreline in louisiana. only about 400 miles of those our oil. seafood from throughout louisiana is safe. its wholesome. there can be questions, >> you are saying that the seafood which is being sold as safe but there are many areas where it is caught and sold and this is not safe. >> is this, outside of

louisiana, this is safe? >> this is put into the commercial market. 87% is currently open to the harvest of seafood. that occurred last week and it is the result of the testing protocols. we know that we talked a lot about the protocols and the oil testing. looking at the risk assessment, i took a look at it d in terms of oysters, oysters are consumed at about 1/4 pound per capita consumption. in the risk assessment, we used a number between 9 and 10 times per capita consumption on an annual basis. we figure that exposure at five years, we have the per-capita consumption by 40 times and the

exposure in five years and we're looking at the risk of illness of o intend thousands which is potentially look at it as one in either hundred thousand or one in a million. that is being magnified significantly. we are meeting by 100 to or he thousandfold all of the criteria in the reopening protocols. >> i just want to clarify. you are not representing the areas that the federal waters are now closed and it is safe to eat the fish in those areas? >> i did not say that, sir. in the open waters where they are harvested and sold, i would feed it to my kids and wife and we do eat this often. >> in those other areas, where he would not feed the fish to your family, in the waters that

are now closed. >> and the waters that are now closed, we cannot. >> the bottom line is that as they do the reopening and go through the protocol, absolutely i would see that to my family. >> can you give us a comment? >> i have been eating them. >> i would definitely eat them. i don't think there's a difference which in what is open and was closed. >> can you comment here and divide the question here for us in terms of what you believe the safe and what is not safe and tell the american people should be doing this. >> i wouldertainly need to them as well i have the occasion sometimes. my concern remains the product

safety -- productivity, not the safety. a three and a 50 mile statistic is part in but it could have been worse. you have some on the bottom farther out. as you go to the east, you see a lot of oil, mississippi, alabama. when is the book of short and take samples, they are finding this very well, they are finding it in the marshes, won her 50 miles did get a lot of march. the edges of these, where the draft is, my concern is that this goes back 10% or 5%, that violates these channels. that means the flow of water is greater. that means that the rest of the wetlands are greater. we have a tremendous amount of

work to restore the gulf of mexico. we had a lot to do, now we have a lot more. my concern is the productivity and the ecosystem. i believe in protecting our safety but we have heard the comments on this question. >> i would like to emphasize that long-term monitoring is imperative. what we learn from the exxon ldez is that oil that gets into the coast is toxic for decades. any time it gets disturbed, it can get into the environment. the coast fisheries, it is important that they continue to monitor for the exposure.

>> was anything that was of concern to you that you heard on the opening panel from the government officials? what do you think needs more attention? >> a few things stuck out. one was that they are only now developing tests to determine whether this person some bioaccumulation. that is something that we shod have known since their common tools in oil response. another thing that you know we are concerned about is that the risk assessment used by the fda is not adequately conservative for a specific hon. populations. it was reassuring to hear that they were open to be considering that margin of safety. i would say with regard to

seafood safety, this is a primary concern. >> is there any concern that you had in the testimony that you would like us to continue? >> thank you, mr. chairman. in response to my colleague, i feel that the risk assessment and the protocols for reopening basically are much more conservative than there should be to any concern related to. i think that this has gone way beyond what would the conservatives and i described this a moment ago in my answer. >> even though you heard concerns about heavy metals, that is not a concern? >> having spent countless hours

talking to ph d's and doctors relating to this end all of these things through shellfish, i personally think that there is no concern relating to those although we should be concerned. >> there have never been any studies on the subject, you have no concern? >> no, i do not. >> do you have concerns? >> regarding the government report, testing for heavy metals and the other issues that are unresolved to if mine concern is 40 gulf of mexico. i have not yet heard from noaa. an enormous dose of oil was given.

mother nature is being made to clean up our big mass and i think that mother nature suffers for it. i think that we need a permanent fund for the restoration, the understanding, and the sustenance of the gulf of mexico system in perpetuity and i don't hear that. i would like to hear that. >> mr. blanchard, mr. cooper, everyone, once -- they want the gulf to rebound. your industry did not cause this mess. you're likely harm some -- livelihoods were harmed. what did each of u.s. the federal government to do to help establish the safety of cal seafood and to help reassure

the consuming public about the safety of call seafood. you heard the question that i posed to to the government panel that appeared here earlier about the need for additional tests to help address some of the issues that have notdefinitively addressed the metabolism of the oil, the effect of the long-term impacts that this disaster could have on the quality and productivity of seafoods in the gulf. do you think that those should be priorities? what did you like the government to do? >> i did not like what i heard of of the government. i would be going to the worst place and checking that first. the governmentays, we just

checked the open places, why don't you check the close places? no one seems to be checking? we have been severely harmed by this? since this happened, i got my secretary to look athe bills we paid, we paid $480,000 in bills and have received $165,000 in payments from bp. i heard the president say that he would not let our cash flow be interrupted. why is no one holding the be accountable to come in and make it right? >> this committee would like to work with you, we want to make sure thatbp stands for bill pay.

>> as far as what is going on in the gulf, they're trying to take the money that we made working with bp offer far claims and that is not fair for the fishermen. we are cleaning their mess. now they will hold us. that is not fair for what we have just done. now this will go against all of the claims but they did not think about ing something like this. that is not called for we expect them to do their job. >> thank you, mr. chairman.

we believe that this is critical to the gulf and their survival in the gulf. the state of louisiana has requested $407 million for a 20-year test program. we will continue to monitor the health. more importantly, one of our great challenges is the brand of the gulf of mexico, the brand of the gulf seafood. we have seven generations of familyhat have plied the waters in louisiana. people need to understand. there are no questions about what is in the market. there might be questions about fishing areas that are closed. we should ask those questions. this is wholesome and safe, this

is a tremendously conservative science. we need to convince people about this people instead of ordering oysters on the half shell, they are having chicken or stake. need to overcome that. 100 + days of oil gushing and the right hand corner of the televisi screen has branded us as something other than what we are. we will meet that challenge. this is a very small part of the whole gulf of mexico. we need to look at the whole. this is 200 gallons of oil that has escaped from the situation. we need to have the microbes that will eat oil. that was not the case in relationship to the valdez

incident where they don't have the warm water. >> would you like to see more testing in the areas that have the heaviest concentrations of oil right now? would you like to see that implemented now said that we will have that information in the long term going forward? >> i believe thathat is happening. more is better. >> we heard on the opening panel that there was no intensive program to do that. would you like to see at? >> i would support that. i have been on conference calls with a have reported they are doing testing in closed areas. i've been on conference calls with the fda as well. that is what ey have indicate, the testing of the seafood products in those areas. they have done oil plume testing

and they have indicated that they are continuing to do that. >> you want them right now to be testing the fish inside of the area? >> i believe that they are. >> you believe it is important for them to test the fish inside of the most loyal to areas? >> absolutely. >> that helps. >> we ask each one of you to give us

tones of the communications and analyses coming out of the federal government. there is a desire to rush to judgment. to turn the corner and accelerate the analysis of the impacts the oil has had on the ecosystem. and it is of great concern. according to the oil pollution act, the federal government is required to fully and fairly assess the impacts of the oil spill and we hope that they take the time and do the necessary comprehensive study that is required to get that done. >> thank you. mr. voisin. >> thank you, mr. chairman.

the gulf of mexico states -- the state of louisiana, one i lived in, have been challenged in the last five years by five major events. this spill being the most recent significant event. we will be scarreded, but we will not be broken as a result of this. the seafood community is a viable community. my family left france under exile orders in the 1770's, went to canada, was kicked out of canada. so far we have not been kicked out of louisiana and hopefully that will not occur. we will be resilient. are not rd necessarily in the rough seas that y have but whether or not you bring the ship been, i hope that the federal government continues its efforts and doubles them if appropriate and needed to bring that shipped in to have safe seafood and a clean and healthy gulf coast.

the gulf is a viable place to lift. seafood is wholesome and safe and harvested from the gulf of mexico and we want americans to know that. >> >> we are testing our correction and this has been depleted, we want to see what is happening to our fisheries. last season, it opened, this was available and it will happen. that is one of the things we would like to see. >> thank you. >> i have had a product that was always known as the best because this was the best. i would just like the perception

of the american public to know this is the best again. in our business, we don't work 925, we work 5 to 9. i pretty much what my life back. they took everything that i work for all of these years and one company doesn't know what they're doing or they cut too many corners and they put me out of business. this just ruins my whole life and no one is being held responsible but meand i did not do anything wrong. i am so confused. i gto work, like i always do. until youave lived through

what we have been living through, i know what will happen. every night i go to sleep, i cannot sleep. i know how many squares i have and the ceiling. i hope that the gernment makes bp clean everything up and everything returns by to normal and the american public has confidence that the seafood that we will buy, we will not sell or anything. the last thing we want to do is get anyone sick. we will do the best we can to make sure everything is alright. >> to you and m cooper, we thank you for coming here. >> thank you. we know that you are individuals who have a tremendous amount at stake care. it is at any point tomorrow,

next week, next month, you can just dial our number here on the committee to help you personally with your own family situations as you are going forward we will give you the number to calls soon as this hearing is done so that you know someone will be behind you. >> bp will have to pay a fine and my concern is that fine to be dedicated to restoring the gulf of mexico. ot disappear into a treasury somewhere. i hope that the houses of congress can work together and the parties can work together to guarantee that the money that is paid here goes into permanent

restoration projects such as restoring marshes, better enforcement of coastal runoff, those are all things that have to happen to make our goal for whole again. that is what we all want. in order to do that, if you will have massive support from the people from the gulf of mexico. >> i would like at the house of representives just three weeks ago and did adopt one appeal and recommendations to the oil spill response bill that we passed on the house floor to create a new trust fund for oceans so the funds raised from trillions in our ocean will go towar protecting and improving our oceans. the senate has said that they will take up the legislation

when they return in september, that is always problematic. we did in the house of representatives take the recommendation and implement them and hopefully the same will be true in the senate so that they can go to president obama is best. what we have learned today is that the oil is not gone, the oil remaining in the gulf waters are washed up on the shore and this is equivalent to 10 exxon valdez size spills and could not be much more. most of the gulf has been reopened to fishing but to the industry is not in the clear. long-term impact on stocks remained unknown, one contaminated catch makes it to to market and makes people sick and then the reputation and credibility of one of america's most important fisheries will be

in jeopardy. we must engage this issue with continued caution and vigilance is necessary. we have seen some premature celebration. the dispersed will is not the same as the oil which has disappeared. data, formulas, algorithms need to be made public so that independent scientists can verify the conclusions that are now shaping the debate on what to do now. we need to test fishing stock in the closed fishing areas now so that we understand what is going on now. that will help us in the future to protect the fishermen, to protect the consumers in our country.

we must spend the money now so that in the future, there are no questions that are examined and we insure that the compensation is given to those who needed as long as possible until we make everything as safe as possible. all of that in my opinion is going to mean something that this committee and the american people need to be vigilant to make sure this is in place so that people i the gulf of mexico at the end of day are made completely whole. bp will try to walk away as fast as they can. they low balled the bill and the first week and they said it was $1,000. then they said it was 5,000 barrels. they knew in the first week that it was a huge spill. it turns out,