>> the house takes up the repeal of the health care law. watch today's debate live on c- span. 02 c-span.org to read that -- go to c-span.org to read more. >> we will hear two entirely different views of the oppose repeal today. coming up at noon and released to congress on 10 proposed changes to the law. speakers from the cato institute, heritage institute, an american enterprise institute. the scene will shift one hour later -- one hour laterthat is . you will see many new faces taking part in this week's house debate, including dennis ross,

representing florida's's district. another new face from florida, frederico wilson. ms. wilson also served in the florida legislature before her win in november. >> it is a new congress and a new way to use c-span. congressional chronicle is a new way to follow congress, your way. research members, time lines, and the texts of committee meetings. >> as you heard, chinese president hu jintao will begin a four-day visit to the u.s. covering it for the financial times, there bureau chief richard mcgregor -- their bureau

chief richard mcgregor. "the washington times." "looking at the news related to the visit." let's begin with what china will want for -- one from the united states. what is the chinese president saying to barack obama? guest: to some extent i think that they would like to cool down the aggravation that has taken over the ties to the u.s. lately. china depends on a stable environment. they depend on trade. really, the relationship has gotten out of kilter over the last few years. they would like tactical reassurance. china obvious as the once parts of america. we want technology from the u.s.. we get to see a deal involving

general of electric, which we could talk about later, which is interesting. they want that tactical reassurance. host: we had one caller that we were talking to about u.s.-china relations. one caller said that he wanted to hear tough language from barack obama. caller: i cannot speak to guest: i cannot speak for the administration, but i would guess that there would be some tough language from the u.s. laced with a lot of cool them. wherever the u.s. looks in the world, it meets china. iran, climate change, north korea, you name it. this conciliatory line towards china has not been reciprocated. china had that moment two years ago, they were in a strong

position and to manage of that. host: how have things changed? caller: -- guest: there has been a backlash. especially in asia. many countries in asia are hustling to get the u.s. back involved in the region in a much more active way. vietnam, trying to be forged ties with the u.s.. -- re-forge ties with the u.s. the same goes for correa, the philippines, taiwan. host: we have heard a lot of discussion about chinese currency that is undervalued by some assessments. what will be said about that issue?

we see that some senators, specifically senator sure, are calling on china to let the currency float. how will that impact of isabella host: -- impact the visit? guest: there is no doubt that china manipulates and controls its currency. you can see that every month. in some sense that is a sign of weakness as much as strength. money cannot come in and out of the money freely. if they did lift their currency, i do not think that they could handle it. it might plummet rather than appreciate in the short term. currency is appropriate and the u.s. will make tough noises

about pat. particularly because capitol hill wants to hear. this is not the number one issue. there are others, technological and the like -- competition issues that the u.s. needs to address. host: first, the chinese president has something to say about the u.s. currency -- calling it a product of the past. guest: he called a u.s.-led global currency product that is a thing of the past. the u.s. dollar, the policy of the fed, printing money -- all of which china feels they want to pull over to their shores to stoke inflation. it is true, but i think that china is exaggerating to put the u.s. on the defensive. the real problem is not the

u.s., but chinese military policy. that is a stick that china can use to be up the u.s. had little bit. and they will do that. host: this is from "usa today." inflation could help u.s. exports? guest: absolutely. if you have inflation in china, the goods automatically become more expensive. it does the job for you. re-evaluation by 3%, putting in inflation and doubling that. host: let's talk about the deal that you brought up between general electric and china. guest: the core of the design is that general lecture will transfer technology to china as part of a joint venture to build

their own plant in china. this is a very sensitive thing to be announcing on a trip by the chinese president to the u.s. -- chinese president to the u.s.. complained about this to the chinese premier recently. saying that we will give you access to the market, we will give you the technology. ge also, in their comments recently, they talked about wondering whether china wants them to succeed in china or if they want to just get that expertise, knowledge, management skills, and technology.

so, generally electric is really sticking out its neck. host: let's take some phone calls and talk a bit more. rodham, a democratic crime. caller: i believe the united states needs to take a much more proactive agenda. like offering tax breaks for anything made in america. taxing the things we are importing. we used to be known as a country that when you bought a car here, it was a well-made car. we have got away from making anything in this country. by shipping those jobs overseas, in america when you want to purchase american blue jeans is more expensive than importing it at a cheaper price.

guest: i think that the u.s. distillate larger manufacturer then china. i also am not sure that tax breaks is the answer. maybe in certain areas, but tax breaks on things made in the u.s. may not be a good idea. there is a host of other things that is just as important in the u.s. for competing with china. let's not use military language like combat. fixing, importing its own u.s. house in order. it is about education. basic research. many of these things would be affected as a result. the second thing is to use global trading rules, which china has signed up for. the chinese used it to attract

business from china. i have no doubt that the u.s. can compete with china but people will have to work harder. host: what do you suspect will be the middle ground? that both leaders talk about? from what i am reading in the papers they both get to publicly announce that they have made some progress here and there? guest: in some ways it is the atmosphere. this is one of those too big to fail relationships. in terms of military strategic stability, in terms of economic dynamism, there is a lot at stake. in our lifetime these kinds of struggles will be going on and beyond. this is like a full-time management issue. there will not be a solution this week. there will not be a dramatic

change. you will see people working harder to manage their differences. there will always be differences and problems. host: frank, independent line. you are next, sir. caller: i really appreciate c- span. i have been listening forever but i do not call very often. there are a member of this year -- by m 62, a white male in arkansas. a number of us are concerned about the demonization of the chinese people. we are trying to put all of the chinese in the same box. this is a vastly different culture. they have given us a great gift. i am afraid that our politics, prejudiced, fear and confusion is going to deprive us of this wonderful gift.

i would encourage listeners to ojitree.com.g look at the wonderful gift of traditional chinese medicine that we have here. have a great day and we wish you nothing but best wishes. host: if you go to the state department website and you look at the population figures, many of you have mentioned the many people there. in july 2010, an estimate was 1.3 billion. education, about 93%.

agriculture and forestry make up about 39.5% of that. richard mcgregor? guest: i agree, there is no reason to demonize the chinese people. their achievements -- mr. this traditional culture, as you say. millions of people have been lifted out of poverty. we should not underestimate the challenge facing that country. it is a massive task. in many respects, they have done very well. host: what is the state of hu jintao's presidency? when secretary gates

went to china, there seem to be a test of military power that they had no idea of. guest: i do not buy that. when hearing about this test, -- maybe he did not know -- but i do not buy that. his most important title is not president, it is party secretary of the communist party. that puts him above the military. the military is a powerful interest group but the political party is still in control. the second point is, mr. hu himself, compared to past leaders, is something of a week later. he is like your super pure crap. -- a bureaucrat. that makes it hard to get a decision.

he has got to persuade everybody. so he is not the strongest leader and people should not expect him to snap his fingers and get things done. host: 20 you think about him joining president obama for a joint news conference this week? reading the papers, he does not do interviews. guest: it will be fascinating. i wonder if it will be a real news conference or just a couple of scripted questions. he is not used to this. generally, he is shielded from the sort of thing. host: he is doing this because of prodding from the united states? guest: absolutely, and i think it is a good thing one reason why, if, china is misunderstood is because we do not know their

people. we do not have a sense of their personality. we do not know what drives them as individuals. we just have this monolithic view which allows people to demonize them. that is as much as their own making. host: front page of "in the financial times" -- they kick off a series looking at china possible global influence. i am curious. your front-page story is, lending to new heights. your third hand line on this is, it is a stark sign of beijing's economic reach. given everything that is happening, what is with the

headlines? guest: and the world bank has been the world of's development lender for the past decade. in fact, china lends more to pour states then the world bank. china claims to still be a developing country itself but it is the largest giver of development aid at the same time. so that just shows you how active they have been in according states that feel like they may have been ignored by the west. chinese diplomacy is not just happening in washington, it is happening throughout the world. host: what is china getting from these poor countries? guest: perhaps diplomatic allegiance, but most importantly, resources. china is growing exponentially. they do not think they can depend on the world market.

they want direct access to it. the same goes for coal, iron ore, copper. they want direct access to these things and they are using the money to get that. host: richard mcgregor is the bureau chief for the "financial times." next phone call. caller: the united states has 1,600 tons of recoverable coal which is enough for the united states. we sell an enormous amount of this to china at this time. if we want to slow down their economy, we could jack up the price of coal and slow down their consumption. guest: i could assure you that that would not work. they have tons of coal coming from other countries.

a coal boycott to china would fall flat on its face, i am sorry to tell you. host: hampton, georgia. caller: thank you for the great job "washington journal" is doing and for giving us an opportunity to voice our opinion. i watch a lot of c-span. i noticed that a lot of people will make their opinions, but nobody will talk about the problems of the united states. host: could you stop right there and repeat that? caller: is it possible, through

the way that exporting is set up, that the debt that china is holding, some of it could come from the importing and exporting? host: richard mcgregor? guest: yes, some of the debt has come from funding u.s. consumption. as far as where the u.s. is a creditor, i am sure there are some countries, but i do not have a list in front of me today. host: burlington, vermont. mike, good morning. caller: good morning. richard, the primaries and for china to grow militarily -- the primary reason for trying to grow militarily --

china is simply reassembling a former empire. china uses money to obtain the resources. the u.s., unfortunately, has used our military to build up the military in four nations to exploit the resources. the leadership in those countries traditionally have been fascist, military dictatorships. south america is reacting to that and they are moving to the left. we have a problem in south america and we also have a problem in sudan. they have the largest pool of oil outside of saudi arabia, and

china is there. guest: it seems in china there is a deep sense of injustice, victimization. frankly, i think it is nurtured a little too much by the leadership to keep it going. you are also right that the u.s. and china were both forged in revolutions, but they were different revolutions. the u.s. had a democratic revolution. china had a traditionally structured communist party still in charge. the biggest gulf overtime has been the difference in their political systems. there are some similarities but the differences are much more important. host: pennsylvania. bill on the republican line. caller: good morning.

the chinese people, like all people, are good people, they are working their jobs. we do not have a problem with the chinese people. as this john indicated, the chinese are communists. what is the united states doing? we are importing a lot of plastic junk, vcr's, computers, and we are exporting cars, gold, iron, metal resources, copper. what else is the united states doing? instead of recognizing the military power of china and

trying to strategizing, as you said -- may be a slip of the tongue -- combating china, the communist regime, instead of doing that we are now fighting a group of tribes in afghanistan. guest: that is an interesting comment. you say that the u.s. is importing plastic, but americans are buying these goods. the military aspect is interesting. china's military might is growing. as it does, it will run up against the united states. one of the fundamental reason why asia has been so successful is because the region has been kept stable by the u.s. military in korea, japan. the career in civil war is not over. japanese tensions are very real.

these areas have been able to boom because of the u.s. influence there. in the next decade, china could begin to bloom. host: on that thought of dominance, a piece in "the wall street journal." a tweet from a viewer -- guest: that is an interesting piece. i think there is some truth to that. as we discussed earlier, i think the u.s. is weak at the moment and they want to take advantage of that.

however, in the u.s., i get the sense that the country has stabilized, compared to two years ago. the u.s. has expertly marshaled its allies in asia. this will be a competition -- come back, if you like -- over the next few decades, and the u.s. has to get it right if it does not want to give up power and influence in the asia- pacific. we should include in that the indian ocean, another area of chinese interest. host: "get it right." how so? guest: you have to nurture your allies, going back to the bush administration and the indian deal. rewater the roots of the

relationships of the countries in asia. but the u.s. will not be strong unless it is domestic problems are fixed. that is the biggest problem that the u.s. faces. host: you talked about the currency issue, whether or not that was a real issue. one professor, according to his research, says that that is not the issue.

host: can you explain that a little bit more? guest: we tend to focus more on the u.s.-china trade deficit. however, with asia as a whole, it has not changed. in that respect, i would agree with some of the points being made there. where i would not agree is it is not just about the currency. one of the most important exports of how the u.s. are to china -- of the u.s. are to china, and increasingly in aerospace.

in the u.s. wants to be careful that it does not build a rival industry in china for what is its iconic, global leading industry. host: bill in new jersey. good morning. caller: one thing i notice about china is they have unfair trade policies. i work for a juice processing plant, so i know. two years ago they started selling -- under selling apple juice on the market. since then they have just about put the american brands out of business. if you look at the ingredients, there is apple juice somewhere in there. it is a small thing, but it is an example of what they're doing. guest: that is interesting.

you make two. there. first of all, it is true that china has state monopolies, increasingly a target to trade policies. the second thing about their apple exports, juice, is fascinating, if true. that would be largely private chinese companies. china has to feed 1.3 billion people. garlic does not sound like much, but the south koreans, it is one of their staple foods, and the chinese took over that market. i do not know if it is true, but it just shows that the power of the chinese extend beyond just plastics. host: talking about rising food prices, what is china's role in that? guest: not much.

they are suffering from it as well. i think the administration is actually pretty freaked out from it. host: will they ask the united states to do something about it? guest: no, they will do the sorts of things that we talked about before, quantitative easing, monetary policy, adding to global inflation pressures. host: windham, connecticut. stephen on the independent line. caller: good morning. we just saw a revolution in tunisia. one of the kicking points was inflation in food. i read in your newspaper about the housing bubble in beijing, the real-estate bubble. could you explain more what is causing inflation?

i really enjoy classical chinese literature. i have always had something of a love affair with china -- maybe more of a love-hate relationship. this is causing problems in north africa. what is going on with that? guest: i do not know if i can provide the absolute answer, but within china, it is chinese monetary easing. china flooded the world economy with crash to make sure the economy did not fall off a cliff. that is the first thing. too much money chasing too few goods, the old explanation for inflation. china has also had all sorts of problems with agriculture in the past year.

there are some shortages of staple crops. some of the prices for the agricultural goods they do in court, such as soybeans, are going up. so it is a combination of factors. host: "the wall street journal" from the 14th. do you need a chinese bank account -- guest: i would like one but i am not in the position to have an account. if you have a residency in hong kong, you can have a renminbi account. their current places where you can get an interest-rate here. -- there are places where you

can currently get a great interest rate. host: until now, we have had few options to hold yaun, but they say -- guest: i will go there later this morning. host: cottonwood, idaho. you are next. caller: i would like to ask about the practice that china seems to have. they go up into those countries and get the resources and lock them up for chinese use. we do not need to fear the chinese people at all.

the chinese government is very communistic and very ambitious. i think they are very dangerous. walk softly and carry a big stick. well, america does not have a big stick to carry any more, so meanwhile, we have to power, while china is going around the world and buying up resources, putting us in an untenable situation. american people, pray and ask god for wisdom on how to deal with china. we need to be friends, but we also need to be cautious about their government. guest: i do not think the u.s. is cowering. no doubt, china is growing in influence and using the influence to get the resources

it things it desperately needs. for whatever reason, when the u.s. went into iraq, it was not to keep the chinese out. but i do not know whether there is much thatat can be done about >> later this afternoon, the house will take up debate on the proposed repeal of the health care law. ahead of that, a couple of discussions about that. at noon, we go to a national center for policy analysis. they are releasing recommendations to congress on 10 proposed changes to the law. on c-span2, house democratic steering and policy committee is meeting to look at republican

proposals concerning health care. >> the house takes up the repeal of the health care law. watch the debate and final vote on wednesday. code to c-span.org -- go to c- span.org to read the bill on line. >> it is a new congress and a new way to use c-span online. research members of congress, and you session time lines, and by video and text of committee appearances. >> paula page was sworn in as main's 47 governor before a joint session of the joint legislature. he is the first republican governor in maine in 60 years. our coverage is courtesy of the maine public broadcasting

network. [applause] >> the chair would asked ann lapage, and the lapage children to step forward.

will the governor-elect please step forward? raise your right hand and repeat after me. i, state your name, to swear that i was aboard the constitution of the united states and of the state so long as i shall continue to a citizen thereof, so help me god. by, state your name, to swear that i will faithfully discharge to the best of my abilities the duties incumbent

on me as governor of the state of maine according to the constitution and laws of the state, so help me god. congratulations, governor. [applause]

>> the secretary of state elect

charles summers ball. the proclamation of the governor's election -- will read the proclamation of the governor's election. >> it is my distinct honor and high privilege to read the following proclamation. the vote given on the second day of november last in the city's towns and plantations in the state of maine for governor, the returns of which have been made to the office of the secretary of state, having been examined and counted by the legislature which has declared that a properly thereof was given to paul richard lapage, that he was duly elected, and being in the presence of the two legislatures in convention assembled, taken

and describe the votes required by the constitution to qualify him to discharge the duties of that office. i therefore declare and make known to all persons who are in exercise of any public trust in this state and all good citizens and their of that paul r. lapage is governor and commander in chief of the state of maine and due obedience should be rendered to his commands as such. god save the great state of maine. [applause]

>> it is my distinct honor to present to you but honorable governor -- the honorable governor of the great state of maine, paul richard lapage. [applause]

>> mr. president, mr. speaker, members of the 125th legislature, gov. bowles bocce -- baldacci, past governors, honored guests, i welcome you and i thank you. mainers have a long tradition of hardworking and working together. as i begin, i would like to thank john baldacci. john and karen and his administration did everything i asked and more to make this transition a success.

[applause] >> we are very grateful and we join all mainers in thinking -- thanking the baldacci's to the city, state, and to the nation. [applause] this morning, when i was up and getting ready to come over, my wife handed me a note from my

daughter. it was very difficult for me to keep my composure. it was heartfelt, absolutely terrific. i just cannot say enough about how proud i am of my wife ann and my family for being there, loving and supporting the for these past 16 months. this campaign started -- the first week, they said, who the hell is this guy? then about in january, they are saying, there is this webpage -- lapage fella out there. then in may they say there is a dark horse out in the field.

then on june 9, they were calling me secretariat. [laughter] [applause] well, first and foremost, i am a businessman who served his community as a mayor, now as governor. my pledge to maine people is simple. people ahead of politics. [applause] i concern, as i enter this new challenge of life, is for the parents try to make a better life for their kids, the

retirees trying to survive and keep their homes on a fixed income, the college graduate trying to find a good paying job, the object and norris -- entrepreneurs who took the risk to takcreate jobs, and most importantly, to the taxpayers who are tired of footing the bill for the bloated establishment. [applause]

it is time to make state government more accountable. keep it is time to deliver value to our taxpayers. it is time to put people ahead of politics. [applause] the word "people" appears in the main constitution -- maine constitution 49 times. you cannot find a single mention of the word "politics, " " republican, " "green, " -- in 47 articles of our constitution, the framers had it right. people.

[applause] partisan affiliations, political leanings, the obsession of winning and losing have been getting in the way of solving our problems. we need a new approach. it is time, here, it starts today, and i need all of your help. [applause] i am willing to listen and work constructively with anyone committed to honest solutions that will benefit maine people. to ensure i get plenty of input, i will be hosting monthly breakfast meetings with groups of teachers, business people,

environmental people, and oatmeal and solutions are going to be on the menu. [laughter] [applause] the last two mornings, the staff has made me oatmeal, and it is piling up because i get up and i run out of the house. it is oatmeal. i intend to reintroduce the capital foriernan's a day. we are going to reintroduce a town hall meetings in all of our counties. [applause] it is my intention for myself and our commissioners to go

around and learn from maine people what they want their state to look like. i will host constituent service hours to meet directly with maine people. come in, share your concerns, provide ideas. if we disagree, i assure you we will talk about areas of common ground so that we can inch forward. folks, i am not going backwards. [applause] while i will listen to anyone, my administration will be focused on making maine work for everyone. there are no favorites, carved out, favors for special interest.

good policy is public policy for everyone in the maimaine. [applause] there is no greater example of serving the common good than sacrifice of servicing men and women -- than the sacrifice of our serving men and women make every day. our freedoms are not free. they are earned each and every day by those who served. [applause] 46 service members from maine

i am honored that the families of seven of our fallen heroes are here today. [applause] >> one family is with us who lost a family member and afghanistan in 2009. starting tomorrow morning,

suzanne will the new receptionist in the office of the governor. [applause] the family of corporal landrieu hutchins is also with us. corporal hutchins gave his life in service to maine and his nation in november up can stand. his wife is due to give birth to their first child in march. all of maine shares the sorrows of our fallen heroes and we honor their service. ladies and gentlemen, please join me in a moment of silence to honor the sacrifice of our fallen heroes and to reflect on the lost their family members

continue to endure each day that we remain free. .hank you one area where we must put politics and special interest aside his our education system. students are the most important people in the classroom. every decision we make, every dollar we spend, must be focused on the individualized needs of each child. [applause] our standards must be higher, administrations must be cleaner. the dollars must go to the classrooms.

[applause] and most of all, we have to find the solutions to make maine the number one state that shows up the standard for education in this country. [applause] i believe we must bring vocational education back as a priority in our schools. [applause] training our young people in a trade while they earn a diploma is a path to a better life. [applause]

in addition, and you are going to find the very passionate about this program, is i believe we need to create a five-year high school program in the state of maine where students can progress with an associate's degree as a heads up going into the work force or as a credit at the university or college level. [applause] i believe this will do two very important things. it allows our youth to be in their support systems one extra year, and it lowers the cost of education, the high costs of education, at the university level. i really hope both sides of the aisle to come to grips with

educating the most important assets in this state, and it is our kids. [applause] approximately one in every three mainers is receiving local government assistance. for the truly needy and impaired, these programs are an important lifeline, and we must maintain them. [applause] while we are very generous people, we do have not the ability to pay for everyone, and

we do have limits on our resources. [applause] the programs in the state of maine in need to focus on maine residents -- [cheers and applause] they must focus our efforts to move people from dependency to self efficiency, and we must -- [applause] and we must, must implement a system that rewards work and progress towards self sufficiency. [applause]

and we need to have a limit. it cannot be a lifetime career. [cheers and applause] 5 recently met a single mother, four children, and a full-time nursing student. jennifer had some very tough times. it jennifer works two or three jobs at any given time, but she has to rely on temporary assistance for needy families and food supplement programs to make ends meet for her and her

four children. seven years ago, she built a home through help from habitat for humanity. jennifer was determined to be a good example to her kids and other single mothers. this coming may, she will be graduating from nursing school. [applause] nearly every day, someone asks how she does it. she tells them all, we will listen. a life well lived does not happen overnight. today, jennifer, all of maine is listening, and i am proud to share your story. your example will be our goal in

my administration and eventually the norm. [applause] ladies and gentlemen, there are so many jennifers in the state of maine who want to move ahead. we need to provide the leadership so that they can all move ahead, and we can all applaud people like jennifer. [applause] mlb ex-wife favorite subject -- business. -- my favorite subject -- business. consequently, mainers born on average 80% of per capita income

in this country. we are failing desperately to make the investments needed to grow our tax base. folks, and my staff get really nervous when i use two words -- quite frankly -- that means i am going off on a tangent. [laughter] only the private sector can create the jobs and investment we need to move this state forward. [cheers and applause]

profit is not a dirty word. [laughter] [applause] in fact, it is the direct and indirect solution to our challenges. the thirst for profit is what drives investment and innovation. without profit, no one would have an incentive to create jobs or build a tax base. profit is what keeps our youth from leaving the state of maine in search for better opportunity. profit is what makes the public sector possible. without profit, we do not have economic activity, and we do not have income to grow the tax base. therefore, profit pays the bills. [applause]

profit leads to more competition, and through competition, we the people end up with more choice and greater value. [applause] every private or public sector job, every program, ery nonprofit, every state service, every advancement in society started because someone took a nickel worth of input and turned into a dime or as of output. it is a trend that has to continue. here are four steps to make it happen. one, simplicity.

it needs to get a lot easier to do business in the state of maine. [applause] we are conducting a state wide red tape removal audit to identify the rules and the roadblocks that prevent us from creating the jobs that we need it. [applause] be mindful, i believe in vigorous regulations and strong protections. however, these safeguards need to be clear, decisions quick, and we need to have a cooperative relationship between regulators and the private

sector. [applause] second, savings. it needs to be less expensive to do business in the state of maine. [applause] everything from licensing a business, health care, workers' compensation, utility costs, or need to go down -- all need to go down. [cheers and applause] business is nothing but daa game. it is the same for everyone. you need to reach your break even point. the costs that we can control

through public policy need to be addressed. we will never reach our economic potential in the state of maine if it is cheaper elsewhere to operate factories that turn would into paper, process the fish into meals, and potatoes into my wife's favorite chips. [laughter] [applause] finally, skills. skills. we need to train the next generation of workers in the state of maine to prepare them for the industry's that will offer the most potential. we have one of the world's best science and math magnet schools

in limestone, maine. [applause] it is run by motivated teachers, motivated students, and affordable tuition so they can be made to work pretty the assistant democratic leader in the house is a proud magna school mom. her son danny applied and enrolled in the school because he had interest in math and science. ladies and gentlemen, today, danny, on the dean's list at the engineering school of the university of maine, who inspires to live in maine. [applause] we, the elected officials, need

to work together to make sure danny hayes and others like he can stay close to home, earned a living, and raised their family. [applause] i get a lot of finally's. here is the next one. scale. we need to provide our industries with competitive advantages in cost, regulatory environment, and trained labor for us to succeed. we are fighting for the future of the state of maine at every single day. on a global basis. that is how we are going to achieve our competitive nature. we need to have balance.

we need to find the right balance between the environment, between education, and most importantly, competitive work force. if we do that, we can return the fate of the state of maine to a competitive contributor to the world economy, and we will be in a position to attract the new industries of information technology, biotechnology, semiconductors, and all of the new world economies. we need to find balance in maine, but we need to do it together. it can only be done if we do it together. the senate, the house, the governor, and most importantly, the people of the state of maine.

[cheers and applause] in closing, i would like to say i ran for governor because i know how to run a business and create jobs. in my experience, to build a team, you make decisions and you stand accountable. i will spend every day of the next four years working to make the state of maine in a better place for all maine people. we will start -- [applause] i will start by asking one simple question. can a governor do it alone? and the answer is simply, again, --

exactly. it is going to take artwork from everyone. -- it is going to take hard work from everyone. i do not care about editorials, opinion polls -- [cheers and applause] or the next election. [cheers and applause] or the next eelection, because frankly, i have for years and a job to do. [applause] in four years, i will stand accountable for the jobs that we create, before the prosperity that we bring to our stake.

being governor is not about me or my administration, it is not about the legislature, not about bureaucrats. it is about maine people. [applause] and i am going to let maine people judge how the state of maine it moves forward in the next four years. thank you for being here, think you for listening, and let's get to work. thank you. [cheers and applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> in washington today, the u.s. house takes up repeal of the health care law. a couple of discussions. the first one is coming up at noon eastern. recommendations are released on 10 proposed changes to the law, here on c-span at noon. an hour later, the scene shifts with a meeting on public proposals concerning health-care starting at 1:00 p.m. a couple of non-controversial bills in the house today. seven hours of debate in a final vote on health care repeal tomorrow. senate majority leader harry reid says he will not schedule a repeal effort if it passes the house.

in the house, many new faces are taking part this week. dennis ross, and also from florida, a democrat, frederica wilson, who also served in the florida legislature. the first discussion is coming up at noon eastern here on c- span. until then, republican plans to cut the budget. ramesh ponnuru, senior editor of the review magazine, here is one of your op-eds. what are you are doing here? guest: i am explaining how republicans ought to go about

entitlement reform. a lot of republicans, led by paul ryan, the republicans from wisconsin, felt strongly you had to rein in the growth of social security and medicare. i am suggesting that is absolutely correct, but it is crucial to do the right way and to prepare the public politically for it. you have to either get the president to lead on this issue -- because it requires a presidential leadership -- or you have to campaign in 2012 and get a new president elected on this platform. you cannot have house republicans' lead on this reform. host: so in the near term, republicans should not be sticking their necks out on this? guest: to prepare the ground,

republicans should cut spending in other areas to start rebuilding their credibility as a spending-cutting party. host: you admit that there is a risk looking like you cannot lead on this issue, which is something americans are concerned about. guest: only in washington do people say that $100 billion is not a lot. it is only in comparison to the size of these enormous entitlements. if you cannot start there, then you are certainly never going to get to those entitlements. you are right in your perception that at the end of the day, unless you have big tax increases, you have to rein in entitlements. host: how do you go about doing this? paul ryan has a road map for america. you did see a lot of republicans

voting to endorse those ideas. guest: there is a lot of caution, but frankly, there are a lot of republicans who are not familiar with the entitlement issue such as paul ryan or other republicans. part of it is the educational process. it is not just a matter of politicians and officeholders educating the public about the challenges and possible solutions, but also in educating themselves and getting up to speed. did you want to talk about the specific solutions? host: absolutely, yes. guest: social security, conceptually, it is the easiest to fix of the two. that does not mean it is easy politically. one solution would be to slow the benefit levels for upper income, high earners. right now, the system is

designed so people who retire in the year 2014, who are high earners get a lot higher benefit level than people who retire this year. the suggestion that many have made is to say, let's keep those benefits level. but have those benefits adjusted for inflation but not grow any faster. host: and he would also establish private accounts? guest: i would prefer those accounts for people to invest some of their social security payroll taxes, but in the current political climate, particularly if we are talking about a bipartisan deal, that is something that may have to go by the wayside. host: cordelia, georgia. go ahead, buck. you are on the air. you have to turn down your television. caller: i would like to find

better who decided to invest with the chinese? they are not investing with our individuals or jobs. what caused us to be in this position? everyone in government that put us in this position needs to be removed and put in people with some common sense. host: we have moved on from that topic, now talking about the house gop strategy. let's go to chris in virginia. caller: i have been wondering what the income of the u.s. is, nobody tells us. i was also wondering how much senior citizens pay into entitlements. this report, we exceed what we pay because of our claims. we are on top of the game.

guest: the question about china is relevant here. one of the reasons we have this economic situation with china is because we have decided to have a government that gives out more in benefits than it takes in taxes. under that system, you are going to have a situation where a large part of that national debt is financed by other countries, including other countries' central governments. in terms of what the elderly have paid in, people have, throughout their working lives, paid in, and people feel entitled. that is the reason we call them entitlements. the problem is, the math does not add up. the current generation is taking out more than they ever put in and we have a situation where future generations will have to put in more than they will take out an order for the books to balance. host: you said social security

was sort of the easy one when it comes to an entitlement programs. the other big one is medicare. do you endorse paul ryan's ideas on medicare? politically, can you not touch that issue at all? his basic strategy, which was partly the idea of a bipartisan commission from years ago, is to convert medicare into a premium support program that helps people buy private insurance. it is essentially voucherized. if they want to buy a gold- plated policy, they can pay a bit more. if they want a cheaper policy, they could save some money. i think that is the direction that policy needs to go in. you could quibble about the

important details. host: a former reagan economist writes -- medicare beneficiaries would buy private health insurance with the vouchers. these amounts are considerably less than spending per enrollee in 2022. so there is a cut in spending off tright off the bat. this means the real inflation adjusted voucher amount would fall continuously. to reduce the shortfall,

beneficiaries would either have to pay out of their own pocket or pay for private insurance over and above what could be voucher.foby the guest: that is the point, to generate savings. it is a little misleading to talk about this in terms of historical trends in costs. a large part of the point is to change that trend by encouraging a new marketplace in which cost savings is preferable. as this went through congress, i do not think you have something structured as a quick, sharp cut. second, i do not think the prices would increase as much, so the gap would not be as large as people think. host: a conversation over spending kicks off this week. you heard c-span radio talking

about it. the debate is expected to begin on wednesday as the rules committee takes up legislation directing paul ryan to set up spending for the rest of the year. democrats complain that spending levels are set up through a committee process and that republican leaders are directed to much power to mr. ryan. what are you hearing about where cuts?may make chip guest: i think congressman ryan will get his rule changes. there is not one committee that is even responsible.

everyone has a responsibility, so therefore, nobody has responsibility. what republicans are going for right now -- they are going to take some things off the table and have across-the-board cuts on everything else. i do not think they are going to try to get into a line by line, let's get rid of this program, and so forth. host: jacksonville, florida. proves. -- bruce. caller: good morning. i have worked for 46 years, i paid in through social security, medicare, when they started charging for it in the 1970's. i am still paying for medicare now through my social security check. my employer paid in, but as i said, i go ballistic when they

run medicare and medicaid in the same sentence. in all my years of work, i have never seen my fica, social security, medicare tax. if you want to fixed social security and medicare, and if you never paid into the system, you never get anything out of the system. guest: i agree that medicaid is a seserious problem. in some ways, the need to act on that first. politically, it makes sense to act on it earlier, but it is carrying so much trouble for state budgets because it is a joint federal-state program.

i think you need a more clear and defined responsibility between federal and state government, and a cap on the growth of that program. host: in "the wall street journal" this morning, they talk about that vote happening on wednesday to repeal the law. it says republican governors -- you suspect this will be a big fight? guest: absolutely. the bulk of the increase in enrollment from the people who are meant to get insurance under the new law is from an expansion of medicaid. that is already causing trouble for states. host: what can congress do? they have this vote to repeal it, and then they will go after

it piece by piece. what do you expect republicans to do? guest: i think your question implies that democrats will be strong enough to block these actions. not, the president would ultimately stand in the way. the next thing to do is to have a series of politically charged fight over these things. one thing that makes sense is, in the new health care law, you have cuts to medicare advantage, which is the most market- oriented part of medicare, which has a pretty high satisfaction rate among the elderly. one thing republicans will be tempted to do is restore those funds and pay for and by delaying the implementation of these new benefits. therefore, you create a logger time period id which to fight to get the entire obamacare program -- longer period of time

a fight to get the entire obamacare program repealed. it is giving more to seniors and taking away from others. and we do have a problem about the fact that the budget is this prioritized for the elderly. that is true. however, a move toward a more market-based health care system is worth the advantage. host: dori in chicago. good morning. caller: good morning. the democrats and the bill that obama just signed, the tax-cut bill, they put in a provision that the pentagon only needs to buy solar panels made in the u.s. are the republicans going to try to repeal that?

and number two, social security is not contributing to this deficit now, at all. why are you picking on social security? host: ramesh ponnuru? guest: right now that may be the case, but in a couple of years, it will start to spend more than it takes in. the growth rate of that shortfall is pretty rapid. if you are looking at it over any kind of time horizon longer than the immediate one, it is a problem. keep in mind, nobody is talking about cutting battle that loss for people who are currently retired, or even those who are near retirement. we are talking about changing the program for future retirees so that it is a more affordable program. host: how do you respond to

those who say that medicare is not the problem, it is a health care problem? here is paul ryan on his blog. guest: i would say one of the reasons we have a health care problem is because medicare is structured in a way that it can offload a lot of its costs on the private sector. medicare is governed by a series of the fact of price controls because the government uses its vast pressing -- purchasing power to set prices for the

medical industry. that distorts the entire health care marketplace, changes prices in the private sector, offload some of the cost to the private sector, and that is some other reason why you have the high cost escalation. medicare is a huge program and it is very hard to isolate its attacks within the health-care marketplace. host: an e-mail from a dealer about reforming social security. guest: there is a very large -- lively debate, i am sure you know, about the defense budget. even people on the conservative side are saying defense should not be sacrosanct.

there is some waste here. that need to be cut. no question, the pentagon is a government bureaucracy and government bureaucracies, by their nature, are inefficient. host: this morning in "usa today" -- our economic stability goes hand-in-hand with security. ventura, california. caller: good morning. i would like to make a couple of comments on social security. when it first started, it was meant for working people. now it seems like anyone who is a drug addict, obese, illegal alien, any time anything happens, they get social

security. social security is one of the best programs we have. it is being ruined. the politicians should be put in jail for how much money they stole out of it. guest: i think he is talking about the ssi disability component. there are questions as to whether or not that is being abused. my understanding is, even if you fix that, you still have this shortfall because you have just got the benefit levels and tax levels out of whack. in terms of stealing -- one point that is often made -- the trust was supposed to be accumulated. the idea was we would save that money for when people retire. that did not happen because the

government spent all the money. that is a legitimate issue. host: here is the latest edition of "the national review." ramesh ponnuru is the editor there. here is an e-mail from a viewer who takes issue with your argument. guest: some republican did campaign on the idea we needed to make these changes to social security. most of them did not. they do not have a mandate on this. the other point i would make is, boehner said that in

contemporary american politics, the president needs, and you cannot accomplish this big, structural change without presidential support. next phone call. arizona. paula, go ahead. caller: when you talk about the wealthy, what exactly do you mean? and i do not agree with means testing. you should be able to get your social security benefits without means testing. how would he go about testing it, that they have a retirement from their company, that they have investments?

exactly how would you go about this means testing? guest: that is a good question. currently, your social security benefit levels, the amount a retiree gets, is based on a formula. the key variable is what was your income during your working years. the more you made the more you paid in, up to a certain level. the cap right now is $175,000 a year. the more you paid up to that level, the higher benefit you get. you can change that formula so that you still get more the more you put in, but it is not going to be growing as fast as it is under current law and will not bankrupt the system. the idea is not that you do not get what you put in. the idea is you get what the system can afford to give you based on what you put in.

host: newton, north carolina. betty, good morning. caller: i have a question on social security. i draw from social security because of certain things that have happened to me. why do we not get a raise? they said spending has gone up in the past two years. where do they get the information from? we need this little bit that we get. i worked hard to get social security. like the man said earlier, there are some who do not deserve it, but the government cannot go after everyone. guest: i think what you are referring to is that the fact there was no cost of living adjustment for two years. there was actually a decline one year.

when that happens, your benefit levels stay the same. so the real value of those benefits go up. and you do not get another adjustment until prices have gone up to adjust for that. i would guess that next year there could be a cost of living adjustment, depending on what inflation does. there are many arguments as to what the best measure of inflation should be. should there be a measure tied specifically to things that people who are elderly tend to buy? even if you look at those measures, on average, the purchasing power of a social security check is as good or better as it was a few years ago. host: if you continue to see if the price of food go up, gasoline, those types of items, so you could see the politics changing? guest: we could have cost of

living adjustments kovach up. host: next phone call. caller: i would like to know why no one is mentioning not welfare. -- is mentioning welfare. women have the right to choose, but they have to support the people that they bring into this country. in new york, they do not have to go back to work. there is no birth control or regulation. host: is welfare the biggest entitlement? guest: no, and we actually had some reforms. those have made it a much salient -- a much less salient issue. host: next phone call. caller: we are looking at cutting the budget and right

away we talk about social security and other entitlements. i wonder if we could look at the possibility of cutting foreign aid? charity is nice, but you cannot do that when your own family is going hungry. host: this is "the washington times" and a story about the house budget, what republicans plan to do. it says the u.s. provide more than one-fifth of the united nations's annual budget. guest: one economist used to say that foreign aid is rich people giving money to people in poor countries. that is one of the depressing features of budget politics, that the public will say, let's balance the budget by cutting foreign aid. the math does not add up.

host: what is the percentage? guest: i do not even know the number. it is always a tiny number. low single digits. host: nashville, tennessee. mark, go ahead. caller: there is no such thing as the liberal media, as people talk about. when obama is the first president to take control of the white house, he took control of banks and corporations. what the media is doing now is preparing people to lead the rout publicans get medicare. thank you. -- people to let the republicans get medicare. thank you. guest: actually, they have not

been very tough on the financial industry. host: president obama rights in an opinion piece -- within the paper, they have this story. writes -- williamson right

guest: there is this myth that there was this huge amount of deregulation that took place under the bush administration. which is not true. you had this increase in corporate finance under sarbanes oxley. you have corporate accounting scandals. although no one noticed, a big increase in regulation under the americans with disability act. you have a child product safety regulations. now the obama administration is talking about having regulations on carbon emissions, although congress had never passed anything on global warming. so we have a regulatory explosion. it is useful to talk about the

cost effectiveness. but i think the rubber will meet the road on the last thing i mentioned. if the government decides to clamp down on carbon emissions without a congressional vote, i wonder how much administrative review could be achieved? that is real dollars we are talking about. host: phone call from oklahoma. republican line. caller: we want to cut spending so much, why not just get rid of welfare spending for those people who are just living off of it? everyone else is struggling to survive with what they have now. why don't we have it so that they cut that, so that way, the spending will go to the necessary things we need to be spending on. guest: earlier, i was talking about how you could not get a lot of savings from welfare, but you can actually get a large

amount of savings if you cut corporate welfare. there is a lot of spending that benefits companies -- agro business in particular -- making more than the national average, who will not be heard without the subsidies. an economist at "the wall street journal" has talked a lot about passing a law that says no federal payments to companies that have more than $1 million in sales a year you can have contracts with the government, but no benefits, no export- import benefit dollars. i think that makes sense. host: we have 15 minutes left with our guest, ramesh ponnuru. next phone call from florida. peter, independent line. caller: in florida, there is supposed to be a trust fund.

now it is in the general fund mix together. social security has been broken, they have been tried to break it. my other question, do other countries have socialized banks? host: peter, are you still there? guest: we were talking about the talk -- trust fund question earlier. the problem is, it consists of ious from the government to itself. it is not that the government is not going to make good on its obligation. people are, by and large, going to get their social security check. even if worse comes to worst, they get a fraction of what they were expecting. the problem is to make good on those ious, the government has to cut spending or raise taxes. they have to do that whether or not there is a trust fund.

host: here is "usa today" with the latest gallup poll. if you look here, the favorable opinion for president obama has climbed to 63%. you write about obama having the advantage. evicting the president will not be easy. what do you make of those latest numbers? guest: is not surprising that his numbers have gone up a bit. he has had a decent couple of months. most people like the extension of the tax cuts and unemployment benefits. there was very strong approval for his speech last week. even many conservatives supported that speech and thought that he did a good job, including this conservative. even if you look away from the

day to day polls, i think that the thing that republicans are feeling, confident about their chances in 2012, they need to keep in mind that the obama approval rating even in his worst days have never gone below the 40's. a pretty decent for and that he has got. you have a blindfold with respect to the future. is the economy better? are those numbers higher? the 2012 race is much different from the 2010 races. you have the favor of obama for re-election. host: who is the strongest gop contender?

guest: you have got a cluster of people. mitt romney, mike huckabee, sarah palin. they are the people that republicans have nationally heard of. there is a chance for someone who is not part of the national landscape to become familiar. that person might be the governor of indiana. they have got to start moving in the next couple of months. caller: this social security thing, we can fix it. maybe if we started to take out taxes, let that grow before you

go to college. the jobs in this country, are we driving american made vehicles? we used to be a country of patriotism and i am afraid that we have become a country of greed. guest: shutting off competition from other countries and making it more expensive for people to purchase consumer products, like cars, clothes, and food, is not the way to go to make this a richer country. that is a strategy that has been tried many places and does not have a particularly good track record. for the other idea, making it harder for people to start families and making it more expensive to raise children is

going to be a long-term solution either. especially since we are depending on the children to become a part of the workforce. host: republican line, california. caller: i think that california is, in its financial crisis, instead of electing someone chris christie -- we went out of our way to let someone -- every elected official in the state of california is a democrat now. we are facing a deficit window of 18 months. we could probably take all of the new england state despots.

the example of cutting spending in the federal government, i would suggest that has a lot to do with programs and transportation. other politicians in the fast rail for the state of california. guest: i do think that high- speed rail is a boondoggle where the federal government pays the state's to do investments that neither one of them would do on their own. the question of the states will be a serious problem. as unappealing as the answer is, it will the eventually be a

provision for federal law and states to go into bankruptcy. otherwise the states will be lining up for federal money. host: is that an issue that they are going to face in government this year? guest: entirely possible. this fire wall for federal taxpayers cannot put the other states in hock. host: what is the issues -- what are the issues they're facing? the obligations to workers?

host: this issue is taken up in "usa today" this morning. below that the president of the american federation of state, county, and municipal employees have argued the opposing view. lincoln, rhode island. jack, independent line. we are listening. caller: good morning. i have a question. how many people in this country makeover $109,000 that tells me that the lower class pays for their whole lives and the rich does not pay anything. this is the social security system. does that not seen little unfair?

guest: you would have to be pretty rich to be done paying social security taxes after the first three months of the year. keep in mind how much you pay in if you are making $150,000 per year, you are only taxed for the first $109,000. the program is set up so that there is a relationship there. you have this fundamental question of fairness. by raising or eliminating that tax and not putting in higher taxes, you could eliminate the shortfall. but possibly you could do more damage to the economy as that would be a serious tax increase and you would not solve the entire problem. host: bob, houston, texas, democratic line. caller: good morning.

i would like to rescue -- do you know what the amount of tax -- i would like to ask you -- do you know what the amount of tax contributions were by the corporation's 25 years ago? guest: i do not have those figures. host: what is your point? caller: i am old enough to know that corporations use to contribute 30% of the total tax collected by the government. do you know how much they contribute today? host: tell us. caller: it is less than 10%, is it not? guest: the interesting thing about corporate taxes is that america has gone from having one of the lower corporate tax rates to having one of the highest corporate tax rates in the developed world. not so much because the rate has

changed, but all of these other countries have been cutting their corporate tax rate. possibly because you have a more competitive global marketplace year and companies making these corporate location decisions come to their countries to make investments in their countries. i think that this is maybe one of the things the caller was getting at. there is a loophole in the tax structure so that collections are not as high with tax rates seeming as just. why not reform this? we get a single loophole and bring that corporate tax rate down. so, not to be naive, but i think there is potential for bipartisan cooperation. possibly bringing in slightly more money to bring down the corporate tax rate and make these companies more competitive. host: are you hearing that as a

potential package? guest: charlie rangel, who was the head of the ways and means committee, he did have a in his tax reform proposal a corporate adjustment along those lines. something that republicans have been talking about. senator mccain was talking about lowering the corporate tax rate from 35% to 25%. you do have that potential for cooperation. host: robert, indiana. good morning. caller: how are you doing? host: doing well. your comment? caller: comment and question. i was looking at the debate over reducing benefits on social security. especially the disability part of it. i am very concerned about that. i am on the couch every single day. i am not competitive in the work

force. if i was to get better, what would i do? where would i go? where would i turn? guest: by was talking about the question raised by the previous caller about the possibility of private use in the program. all of the proposals i have seen, some of them talk about increasing the anti-fraud division. sometimes even strengthens programs for the deserving beneficiary is. i find it impossible to believe that anything could get through congress and the white house that would do anything other than that. host: the house debate kicks off the day. the vote is expected tomorrow. this headline is from "the washington post."

host: what is your reaction to that? guest: i think that this study is on its face absurd. the idea that 130 million people, that the insurance industry is just not going to sell them affordable policies because they have pre-existing conditions? it is just not believable. this is the sort of thing that an administration with a vote that it wants to influence puts out for public-relations reasons. regardless of the sense of the underlying assumptions. host: democratic line, southgate, michigan. caller: thank you for taking my call this morning. with all of these jobs going overseas, higher tax rates,

people not working, not paying in because they are now working, the corporation's are finding new ways to hide their money t >> questions live every dayo at 7:00 a.m. eastern online any time at c-span.org. we tyke you live to a discussion on the health care law debate that's coming up, the repeal. this is the national center for policy analysis as they release their recommendations to congress on the proposed changes to the law. you'll hear from representative heritage foundation, american enterprise institute, and others, including former c.b.o. director, congressional budget office, doug holtz aikman. this is john goodman. live coverage here on c-span. >> so serious and so severe that congress will have to reopen the health care law and make major changes to it even if there are no critics around. now, i want to briefly go over 10 of those major problems in

the bill and then each of our speakers will address certain parts of it. number one is an impossible mandate. all of us will be required to have a plan, the cost of which will be growing at twice the rate of growth of your income. you don't have to be an economist to know that if you're forced to buy something, the cost of which is growing at twice the rate of growth of your income, eventually it will crowd out everything else you are buying. now, barack obama did not create this problem. this problem's been going on for four decades. the last 40 years health care costs have been growing at twice the rate of growth of our income. and the united states is not the worst case in the world. in fact, per capita real growth of health care costs in this country is right at just a little bit under theure peaian average. this is a problem -- the european average. this is a problem for the entire developed world. but even though barack obama

didn't create the problem, the bill that we passed makes it worse because what it's going to do is going to lock us into that very unsustainable path. if we continue on the path indefinitely into the future, by about mid century today's young folks will reach the retirement age and health care will have crowded out everything else they consume. so when you reach the retirement age you'll have nothing to wear, no place to live, nothing to eat, but you'll have really great health care. i assume that is not the goal that we all want to reach. the problem with the bill is that it takes away from the private sector many of the tools that are now there to allow you to control health insurance costs. limiting the package of benefits. more cost sharing. all that goes away and we are more or less locked into a path that is unsustainable and undesireable. then we have a bizarre system of subsidies. the hotel down the street has a

lot of workers making only $15 an hour. they are the maids, bus boys, garden folks. according to the congressional budget office, if these people make it over into the health insurance exchange that will be set up under the new health law, they will be able to acquire a health insurance plan for a family that costs $15,000 and the government will pay almost all the premium. then if they have a lot of out-of-pocket costs the government will reimburse them for those and the c.b.o. projects the total benefit that they will get is about $19,000. on the other hand if these employees stay with the hotel and get their insurance from the hotel, the only subsidy they get is the subsidy that's currently in the tax law which means the ability of the hotel to pay premiums with untaxed dollars. but since people at this page level don't pay income taxes, we are really only avoiding here

the payroll tax. the ability to do that is worth a little more than $2,000. so if marriott insurance the subsidy is a little over 2,000, if you get over to the exchange they could have for free something worth $19,000, where do you think people are going to end up? the economist in me tells me they'll find their way into the exchange. if the marriott employees don't do it but the other hotel employees do, marriott's going to find it hard to compete in the marketplace with labor costs 50% higher than all its competitors. i don't know what firms are going to do, but i can conceive of a world in which firms completely reorganize in order to take advantage of these new subsidies. the strangest thing is if marriott has an employee that makes say $90,000 or $100,000, that employee gets no subsidy if he goes into the exchange. if he gets his health insurance from marriott, however, marriott again gets a subsidy that's now

in the current tax law the ability to pay premiums with pretax dollars, avoiding the payroll tax, but for the higher income employee, also state and local income taxes and the federal income tax, and those tax subsidies are about equal to almost half the cost of the insurance. so higher income employee will want to get his insurance from the hotel. the lower income employee will want to be in the exchange. what do -- what are employers going to do? are they going to end their insurance plan for all the lower income employees and pay a fine? or are they going to fire them and try to treat them as independent contractors or temporary workers? we don't yet know but we know they are going to be faced with a lot of very, very important decision that is are not going to be good for the job market. not the kind of labor market situation that gives employers confidence they know what is going to happen. we have a health insurance exchange that creates perverse incentives for the insurers.

if you charge everybody the same premium regardless of health care costs, everybody's incentives are distorted. the person who has health problems and is going to look at the prumeums -- premiums and say health insurance looks cheap to me, they will tend to overinsure. the person who is healthy will look at those premiums and say those are way too high i'm going to underinsure. over on the provider side, the incentives are even worse. the incentives for the plans are to avoid the sick and attract the healthy. here in washington at open season time in the late fall, what kinds of ads do you see in newspapers? you see ads of young healthy people with children and the implicit message is if you look like the people in these ads, we want you in our plan. you are the people for us. but you won't see any ads saying if you have cancer or heart disease or aids or some other

expensive to treat condition, consider us. contrast that with the all-state ads for auto insurance you see on television. remember the phrase, you're in good hands with all state? what kind of picture do they have? they have a catastrophic scene, something bad has really happened, what all state is saying to you we know you don't care about auto insurance until you have an accident. but then when the really bad thing happens, they are saying we'll take care of you. in health care, however, it's the other way around. we are giving insurance companies an incentive to attract the healthy and say to the sick and potentially sick, we hope you don't get sick at all, if you are, we hope you go someplace else. this is like going to a restaurant that you know in advance don't want you. you don't want to erect a health care system in which insurers have incentive to avoid people who have problems. we already have a model by the way where this works so much better and it is the medicare advantage program where we have special needs insurance plans

actually go out and try to recruit senior citizens with high health care costs. because they know they are going to get a premium that's much higher than the premium paid for everyone else. we have in this law perverse incentives for individuals. we have a fine for being uninsured which is quite frankly not nearly great enough if you want to make the premium completely independent of people's expected health care costs. in massachusetts today, people are going bare while they are healthy. signing up for health insurance when they get sick. the number of people doing that is increasing each year. small problem for massachusetts right now but huge problem for texas where a hospital in dallas they sign medicaid patients up in the emergency room. doesn't matter that much for medicaid because it's taxpayer funded anyway. taxpayers end up paying the cost of the care whether they sign up or they don't sign up. but if you can sign up blue cross patients in the emergency room, blue cross isn't going to survive very long in the health

insurance marketplace. we have made promises that we can't possibly keep. according to congressional budget office estimates, we are going to insure about 32 million people who would otherwise be uninsured. if the economic estimates are correct, if those people go out and try to double the amount of health care that they have been consuming. we have millions of people, 90 million on the last estimate, that will have access to preventive care with no deductible and no co-payment. benefits that they didn't previously have. to give you some idea how bad that is, economists at duke university estimated what would happen if everybody in america went out and got all of the preventive care that is recommended by the preventive care task force that's going to set the standard for the new health plans, and their estimate was that the average primary care physician in the united states would have to work more

than seven hours every working day to provide these services, essentially providing services to mainly healthy people, leaving very little time left over to take care of the sick. what i'm describing is a huge increase in the demand for care. but in this legislation we did little or nothing about the supply. early on there were versions of the bill that had line item expenditures to produce more doctors, more nurses, so forth but all of that was zeroed out on final passage probably to keep the cost of the legislation down. the c.b.o. guys probably figured, if we don't have more doctors they can't deliver more care therefore we can't spend more money. in any event what we are going to have is a large increase in demand, no change in supply, that's a huge rationing problem. in this country as in other countries we don't primarily pay for care with money we pay for time. the time for care will go up

everywhere in everyemergency room, primary care physicians office, office of most specialists. in that kind of environment it's not going to be good. if you are in one of the plans that pays below market rates. if you are elderly or disabled on medicare or medicaid, or in massachusetts a lot of the plans that are subsidized also pay really low rates, so if you are in one of those plans you are going to be less preferred. you are going to be at the end of the rationing lines. one of the really strange things about this legislation is that most people in congress who voted for it were left of center. what's going to happen in my opinion is a redistribution of benefits from low-income to higher-income people. this bill forces middle and higher income people to have more generous health insurance than they wanted. once they got it they are going to act on it and when they do they are going to crowd out the poor, the elderly, and the disabled, the most vulnerable part of society will have an

increasing problem to access to care. seniors in particular are going to have a difficult problem because we have in this legislation a requirement that we cut payments to doctors and hospitals well below what private sector is paying, and that gap rose over time. so according to the medicare actuaries, by the end of this decade, medicare will be paying lower rates than medicaid. now, in most places, including the city where i live, medicaid patients have real difficulty finding doctors who will see them. and all too often they are going to community health centers and safety net hospitals for their care. the elderly may be there as well and if medicare payments drop below medicaid, the elderly may be behind low-income keams in getting their care. -- families in getting their care. there are large burdens here for the states that will be difficult for them to meet. and i suspect they will respond

by trying to game the system. this legislation does nothing to solve the problem of portability which is the biggest problem that most people have. there's nothing in the legislation which creates truly personal portable health insurance. and finally, this legislation overregulates both the patients and the doctors. if we really want to solve health care problems, we want to get rid of waste in the system, want higher quality care, then we need patients and doctors who ferret out waste and get rid of it. they are not going to do that unless they have incentives to do so. the current system gives them no incentives. the new system will make those incentives worse. what we need to do, if we want lower cost, higher quality health care system is make it in the self-interest of every patient, every doctor, every nurse, every hospital administrator to do just that. lower costs and raise quality. now, i want to turn the program over to my colleague.

this program is by the waco sponsored by the heritage foundation and robert who is here today was very kind to help us put this program together. but the first speaker i want to turn to is douglas who used to be the director of the congressional budget office and he is currently the president of the american action forum. doug, will you come to the podium. let's give him a hand. [applause] >> thank you very much for the chance to be here today and for throwing this event. obviously this is a central piece of legislation and one that ought to be examined very closely. i want to echo the remarks that john made about the impacts of the law from the perspective of health policy, but i was taught one looks at legislation you should also look in the context of the nation's problems. and the problems the nation faces today are an economy that

is badly underperforming and the need to generate jobs for americans, and a federal budget outlook which is in and of itself so threatening as to really cast in doubt the future prosperity and freedom of americans. this legislation is quite damaging from those perspectives. first of all the health care sector is now 1/6 moving toward 1/5 of the economy. everything john said about improving incentives in that sector would constitute improved economic policy, getting higher quality in care for less cost, improvements in efficiency, are things we ought to support as a matter of economic policy in the united states. the health care object yoifs notwithstanding. -- objectives notwithstanding. on top of that there is still the rest of the economy. if you look at the law it promises to raise $500 billion of taxes over the next 10 years. i don't think there is anyone in the room when asked gee if you want to create jobs should we

raise $500 billion in taxes over the next 10 years, i don't think you'll get an answer of yes. in and of itself strike a sub sanction portion against this legislation. some of those taxes will show up in the form of reduced incentives. there is a so-called medicare tax, a surtax on investment income for high income americans. it's a pure increase in marginal tax rates. has nothing to do with medicare. it's just an increase in taxes that will damage exactly the same kinds of entities that were the subject of so much discussion and the recent debate over extending the 2001 and 2003 tax laws. these are the small businesses and the entrepreneurs in america who will ultimately create new firms and generate job growth. embeded in this bill are damaging incentives for those individuals. there are taxes on medical devices, on insurance companies, all sorts ever inputs into health services that will lead to higher costs for those services when health services are more expensive, health

insurance will become more expensive, we'll see premiums rise both because of the cost and taxes on health insurance companies. and when those premiums get more expensive, you'll see that bottom line show up in every small business in america. every businessman will have to do the calculation that says, i've got to pay my workers less to cover the cost, the premium increases i'm seeing. every worker as a result will bear the cost of this bill. there will be some workers, those in particular minimum wages, where you can't lower their cash to offset the increase of premiums, we'll see those jobs go away. it will be the low-income workers who are primarily damaged by this bill and economic incentives in it. this is a recipe for less jobs in america. it's a recipe for slower economic growth. now, that's just putting the $500 billion of taxes in. if you layer a $1 trillion in spending on top certainly will make things better, right?

i don't think so. there is nothing about sending ow checks for $1 trillion worth of subsidies that will generate jobs in the united states. nothing about that has been a successful path to improve economic performance. i believe that the nature of those subsidies, i want to echo what john said, in addition to the real efficiency costs and the growth impacts of this bill, there's some deep unfairness associated with the way these subsidies are distributed. the example he gave is a very real one. you have two people who are otherwise identical, 2016, you have one woman making $70,000, gets her insurance from her employer and gets only the tax benefit from the employer-sponsored insurance. another making $70,000 goes to exchanges gets $7,000 in federal subsidies. that's an inequity that's so profound i don't believe it will be allowed to persist. one of the things i'm nervous about is a future congress will fix that inequity by giving everybody $7,000 and making the bottom line cost of this bill so

much more expensive than it already s i want to turn to the budgetary implications they are very close related to my concerns about the economic incentives. there are many ways to look at the budgetary implications, but the one i would just ask you to begin with is the simplest one, set up two new open-ended entitlement programs that will grow at 8% a year as far as the eye can see. 8% a year is faster than the economy is going to grow, it's faster than any notion of revenues will grow. we'll set up two new programs that will grow faster than the economy for as far as the eye can see, and we are supposed to believe it reduces the deficit. it is impossible to make that claim with a straight face. we have c.b.o. estimates of budgetary impacts which show deficit reductions in the bill. but i think it's not widely understood that those particular estimates are fraught by nature of the rules under which c.b.o. is forced to operate.

when you tell c.b.o. that you are going to pretend that an inwebbing wit as the one i described will last forever, they have to take fast value. when you tell c.b.o. we'll cut money out of medicare year after year after year having done nothing to change the basic economic model under which the services are produced and thus somehow have a miracle occur, they have to assume that's true. but if you take away those rules and look at this in any realistic fashion, our estimates have been that the bill would reduce -- would increase the deficit by $500 billion the first 10 years and $1.5 trillion in the second 10 years. that's a really important thing from both the future of the economy and a fairness perspective. the reason this bill was so offensive in my view from a fairness perspective has to do with every one of the young people in this audience. this bill is the biggest generational money grab in american history. it forces every young american to buy insurance and thereby pay

for the costs of those who are older and sicker than them and then having done that, when they get to the end of their working careers, they'll inherit the debt, the trillions of dollars in debt this bill will produce and be saddled with paying that off as well. from any perspective of fairness-e-eness -- fairness, that's simply wrong. it comes at a time when it's also dangerous. let me say this, regardless of which one of the particular forecasts you look at, the united states is in a fiscal situation that sun precedented in its history. over the next 10 years we are likely to run deficits that average nearly $1 trillion by the end and average over $600 billion every year. at the end of 10 years we'll be running a $1 trillion deficit, $900 billion of it will be borrowed. interest on previous borrowing. we'll be in a position where borrowing just to pay for the interest. that's a recipe for financial disaster. along that path we will meet the

technical criteria for downgrade as a sovereign borrower. that was the fiscal outlook before we passed this legislation. this legislation will make it worse. i stimulate that introducing -- stipulate introducing a damaging bill to a dangerous situation is not going to generate jobs. we have a package here which is damaging from every perspective and very hard to support. thank you. [applause] >> very good. thank you, doug. thomas miller is a former senior health economist for the joint economic committee. he is now with the american enterprise institute. if you are interested in health policy and you go on the internet, you look at the journals, it's hard not to find tom miller everywhere you look. let's give him a warm hand. >> thank you very much, john. there's a lot of repeal and replace work to be done. i have some other material outside on those other issues.

you can find them also at www.aei.org/, you should slash it, repeal it or replace. coming soon also with my co-author, bob moffitt, and grace, why obamacare is wrong for america, harper collins, march 22. anniversary time. look for it. but today john asked me to focus on something else. how to improve the health care delivery system and health care quality through political and governmental ways and means. first of all we have to change how we define and talk about the issue. the two key measures should be health outcomes and value. health care quality too commonly is viewed in process terms how to execute a predictable flawed, somewhat more efficient manufacturing process instead of a personal balancing act in determining the best combination of costs and quality for which you as a consumer, patient, third party payer, or taxpayer subsidizer of health are

actually willing to pay. there is no single setting that these are just right or even unquestionably adequate for everyone. it doesn't mean there aren't some institutional process no-brainers, but that's not the big story on how to get better value. we have to reach beyond the conventional health care delivery system per se because a wide range of factors and actors shape our health. that means looking beyond our miyopic bias towards dwelling almost exclusively on health care financing, health care -- health insurance, and fighting over the political flow of dollars without considering what they achieve in terms of better health outcomes. two individuals have exactly the same health insurance and differences in health both initially and after getting the same diagnosis can be vastly different compared on where and who they go to for treatment. how they make decisions as patients. and a host of other factors early in their life that brought

them to that particular point. we always forget to look for the health outcome keys that are lost further away from the health care funding lam post. -- lamp post. let's first be more humble about simple guaranteed answers but particularly through the distorting evidence-free mechanism of national health care politics. the patient protection and affordable care act is only the latest though perhaps the worst incarpation of promising what's unbelievable and delivering what's sadly all too predictible. in the fly over land of the law, devoted to the unicorns, future health delivery form miracles or science fair projects that never got ute of the exhibition hall, we have various new iterations of prepackaged centralized command and control dedicts from the usual source who is issue the previous ones who failed outright or aggravated the system's pre-existing chronic conditions. the latest establishment declay is every idea for controlling health care costs and improving

quality is in the law. well, it's true that just about every bad idea made its way in there because who really reads that stuff anyway? certainly not members of congress. but they manage to leave out a few important ideas bike choice, competition, personal responsibility, truth in labeling, market pricing, respect for personal preferences, incentives for better performance and decisionmaking, double entry bookkeeping, and even arithmetic. so most of the health care quality experts are trying to sell a message -- most americans don't want to hear or believe. yes, we plane a lot about health care costs, too much, even though we usually only see a fraction of the full expense directly or there are too many other barriers in the way to getting more of what we want when we want it. but a vast majority actually think the health care they receive is excellent or good. just look at the gallup polls, most recent health care survey from last november. that's partly why you'll hear politicians talk a lot more in

public about high health care costs or expanding coverage of the uninsured then pointing proudly to the patient protection affordable care act health care delivery provisions. the less exciting realities of our health care system though extent in many important ways it's not perfect and very different approaches could improve its value balance, consistency as consumer friendliness, its accountability, and more honest choices pushed forward in a more competitive and transparent marketplace. it's real, unsubsidized, affordable. here's a simplified menu. first, throttle back, a good bit of the overbearing counterproductive regulation to get between the needs and resources of patients and the capabilities of health care providers. two, guarantee a socially acceptable floor of health care services for the less fortunate but stop pretending to subsidize so much of everyone else's bills when it becomes wasteful rounds of dollar trading through

clogged filters. three, stop pretending that all care must let alone can be high quality and provide equally to everyone all the time. instead, let's encourage more competition. in seeking eafer delivering care whose value can be used to improve from wherever it is at the moment. to do that we can't just imagine the miracles of a totally unfettered free market, although a freer one will help. we'll have to rely very, very carefully on some public policy changes that can help private parties compete in measuring and reporting better how different parts and parties in the health care system perform so they can then be rewarded differently for doing much better or not doing as badly as before. i have written about this at length elsewhere and the new health law is not totally more ronic -- moronic about this. but it remains far too fix ated on a lengthy politically determined set of consensus standards that by the time they

are derived will be either too weak, too unrealistic, or outdated, and perhaps all three at the same time. while other provisions in this law will drive us toward a more concentrated marketplace that is less competitive but more politically dependent. the short alternative version is patient providers and other payers will need better information, not more information. we can't expect it to be perfect. we can't measure everything, or maybe not even most things. but we should use what is the best available within limits of current data and measures while acknowledging those limitations and then just try to shout out the quality. then check the costs, decide what you want to waste your money on. or pay for some other dimension ever patient experience. we need information much more about provider performance than about insurers and the insurance they offer. and about physicians not always at the group level and particularly more so than a big

box hospitals that vary within them. the information needs to be a combination of measurable health outcomes or intermediate market for them, and the relevant episode of care. the value combination that matters not just quality cost or price alone, but a subjective preferences are important as well. this whole area is complicated, contentious, and illusionary, and full of caveats but we ignore it at our peril. let's add some competition in what matters in health care that comes outside of government channels basically have to do to aggregate data, but then we have to allow it to be accessible to other parties to determine what matters. thank you. >> thank you, tom. mike cannon is director of health policy studies at the cato institute. some months back he recruited a university of economy economy

professors -- professor to show us how we should handle the problem of pre-existing conditions. we had a lively discussion of it at my blog and i have asked him to tell you about it today. please welcome michael cannon. [applause] . >> thank you, john. thank you-all for coming. i may have to leave before the question and answer meered so if anyone has any further questions about my remarks, i want to encourage you to visit the website, www.cato.org. you may have heard today that the department of health and human services release add study that says about half of nonelderly americans have a pre-existing condition and that repealing the health care law known as obamacare would mean those folks would have trouble getting coverage, but obamacare, they tell us would guarantee that those folks would get coverage and the care they need. there are a couple problems with that study and these claims. the first one is that a

government survey conducted just a few years ago found that only 1% of americans had ever been turned down for health insurance. that's consistent with other research. research by the rand corporation that looked at likely regulated individual insurance markets such as california found that lots of people with pre-existing conditions get insurance even when the insurance company has the ability to deny them coverage or charge them higher premiums. it's a tricky thing, really, to get people to keep the promises that they make to sick people. this is true whether you are talking about public health insurance programs, private health insurance. but let's look at the record. in the 1940's, the federal government backed a horse that doesn't even make a promise, a long-term promise to sick people. i'm talking about employer-sponsored health insurance. if you know the history, you

know this market is the creation of government. in the 1940's, the government through a series of accidents decided that the employer-sponsored health insurance would be exempt from payroll taxes and income taxes. which creates a huge tax break for employer-sponsored health insurance such that a corresponding penalty if you want to purchase insurance on your opponent, if you want to purchase insurance on your own it can cost some people twice as much for the same or less coverage. compared to getting that through an employer. sths the horse that the government decided to back but you notice, if you think about it, your insurance plan, you get through your employer, does not provide you a long-term promise to take care of you when you are sick. they only promise you to provide -- they only promise to provide you medical care so long as you are connected to that employer. if you get sick and cannot work, you lose that health insurance and you are on your own.

the individual health insurance market, researchers have found, even -- only when very lightly regulated, provides more secure health insurance than employer-sponsored health insurance. for people with high-cost illnesses, they are as likely or more likely to keep their health insurance and not end up uninsured than if they had insurance through an employer. so that's the situation that the government created when it decided it would make -- increase access to health insurance. nine out of 10 people with private health insurance into this employer-sponsored health insurance market where you don't even have a guarantee from an insurance company they'll take care of you over the course of the long-term illness. another government solution, we have heard a little about this one today. the medicare program. about 20 years later the government decided we are going to provide secure health insurance to people in old age so they created the medicare program for people over age 65.

well, medicare does provide secure access to health insurance for the time being. they do it in part by -- medicare does it in part by being completely fiscally unsustainable. there is no way we can keep providing access to the type of medical care that seniors have been accessing in medicare for the past decade. in addition to that, one of the way that is medicare is so financially unsustainable is that 1/3 of medicare spending goes towards care that doesn't provide any value whatsoever, doesn't make the patients healthier or happyier, and along the way medicare causes most of the serious quality problems we see at the u.s. health care sector. the problems of uncoordinated care, medical errors that cost tens of thousands of fatalities each year. the problems of a lack of electronic medical records and other health information. a lack of comparative

effectiveness research. obamacare solution to this problem how do we keep the promise that is we made to sick people is essentially government price controls. when they talk about eliminating discrimination against people with pre-ex-ising conditions, they are telling insurance companies we don't care if this patient costs you, $50,000 to insure, you can only charge them $10,000. the average premium. that doesn't eliminate discrimination against peoplele with conditions. all that does is it creates a $40,000 incentive for insurers to find other ways to discriminate against those patients. to deny them care, to avoid or mistreat them so they will leave that insurance company's books and go to another competing insurance company and bring down that insurer's bottom line. this sort of thing happens wherever we see these price -- obamacare-style price controls. it happens in states like new york that have had these price

controls on the books for a long time. it happens at the federal employees health benefits program where many people here get their health insurance which operates under the same sort of price controls as obamacare. and this happens -- this sort of discrimination will reach you whether you are rich, poor, or anywhere in between. one half is instead of with the h.h.s. tells us in the report today, 1/2 is the chair of nonelderly americans who would be hurt immediately by obamacare price controls, and 100% of the people would be hurt over time by the price controls. this is a problem, how do we keep can commitment we have made to the sick? widely markets are helping to lower costs than any government solution. they can do more through innovations that give patients total satisfaction guarantee. even if you get sick ail have the freedom to switch insurers

and resources to do so if your current insurer tries to skimp on coverage or care. if it doesn't keep its promises to you when you get sick. but this innovation and other innovations are going to be impossible, other innovations we can't see are going to be impossible so long as obamacare and government price controls remains on the books. thank you very much. >> rob moffitt is senior fellow at the heritage foundation, he's been involved in the health care field for as long as any of us can remember, and he is a tireless worker, let me tell you, if you email him at night on the workerned, he'll probably answer you. he never quits working. a worm welcome to bob. -- a warm welcome to bob. [applause] >> thank you very much, john. ladies and gentlemen, there's a lot of work to do. we are faced with a great task

in front of us. we are we are entering into what amounts to today and tomorrow the second phase of the great national health care debate that is going to go on for quite some time. let me focus on just a couple of items related to one of the most important issues facing the country which of course is the challenge of entitlements and as a part of that is the challenge of the medicare problem. medicare issue. this is january, 2011. this year the first great wave of the baby boomers turns 65. over the next 18 to 20 years medicare is going to experience the largest single demand for medical services probably that we will -- something that we have never seen before in terms of the tremendous demand for medical services in the medicare program. the size of medicare will double in the next 20 years, really.

at the same time, as you all know, public knowledge, nobody disputes it, we are faced with a potentially critical shortage of physicians. not only primary care physicians but gare trishans as well. the law acknowledges this and starts to pay physicians more in certain underserved areas, but the gravity of this is greater than most of us -- greater than most members of congress really appreciate. indeed one of the striking facts about this debate has been the hostility collectively of the medical profession, forget the representatives of the medical profession, or the lobbyists for medical professionals, the medical profession itself, the hostility of the medical profession to this law. there is a reason for that. american doctors are becoming

demoralized. they are demoralized because more and more of them recognize they do not have control over their professional life. they are more governed by regulation. they are faced with an expansion of government payment. and most of the problems, including medical malpractice problems, have not been addressed. getting back to medicare, there is something else that is remarkable here. while you are seeing this massive expansion in coverage and at the same time tremendous addition of public costs in health care, medicare is at the same time simultaneously undertaking record breaking reductions in payment to doctors and hospitals and other medical professionals. the center for medicare and medicaid service says that this is going to result in a savings of $575 billion in the initial 10 years of the law.

what does this actually mean? we have never actually been here before with a tremendous demand for medical services among the large and growing aging population and such a significant reduction in medicare payment. but absent medicare reform, the payment reductions of this magnitude will threaten seniors' access to care. that is not my point of view. that is the view of the actuary of the center for medicare, the center for medicare and medicaid services. absent further legislative intervention, the projected medicare savings will not enhance the solvency of the program. indeed, there was a wonderful letter addressed to senator jeff sessions of alabama by goug elmandorf 2010 where he said the unified budget accounting shows the majority of the savings

under the ppaca would be used to pay for other spending and therefore would not enhance the ability of the government to pay for future medicare benefits. end quote. without an escape valve for senior citizens, the provisions of the law are going to guarantee that we are going to see greater access problems over time. the c.m.s. actuary does not think that these massive record breaking medicare reductions will actually survive, but in any event if we actually were to go down this road, we certainly want to have access for senior citizens to private sector options that many of them do not have today. it doesn't make sense to cut, for example, medicare advantage by $136 billion and reduce their access to those private plans or to maintain the existing limitation on senior citizens' ability to go outside of the medicare program and contract privately for medical services

that they need. we have to go in a very different direction. ladies and gentlemen, we are entering as i said today and tomorrow, the second phase of this great national debate. but one thing we love to keep in mind is congress has direct responsibility as the board of directors for one of the largest programs, the medicare program, and they have got to figure out a way to get this financial house in order. right now medicare has an unfunded liability of over $30 trillion. please tell me is there any member of congress who knows right now how we are going to handle this financial challenge? does anybody know? the truth of the matter is, nobody knows. but we are facing this and many of you are young people and you will in fact pay the price for inaction in this area. there is a way out. we have to think about restructuring medicare, changing it from the existing open-ended entitlement that exists today to a program which in fact is based

on real competitive insurance. and tie premiums and adjust premiums and subsidies in the medicare program to income, to get away from what we have today . we should provide the beneficiaries with a wide range of choice in health care plans and options and at the same time make sure that in future medicare -- future medicare system that we will expand access to physicians and reduce the number of physicians who say they refuse to take medicare patients or accept new medicare patients. there are ways to do this. my own view is that many of you are enrolled in a program which is actually quite good in terms of organizing health insurance benefits, the federal employee health benefits program. but the key element of it is it is driven by two free market principles, consumer choice and direct competition. many of you can do what many americans cannot do and that is if you are dissatisfied with

your health insurance package, you can fire your health insurance plan. that's not a bad option. it's not a bad option for the future of our senior citizens as well. they are going to have to depend upon us to make good decisions to give them access to the quality care that they deserve. thank you very much, ladies and gentlemen. >> thank you, bob. that was very informative and very good. now i want to open up the floor for questions. if you will tell us who you are directing your question to. let's have a hand up. well, let me just begin by asking this question, do the panelists believe that senior citizens realize what has

happened to them under this legislation? what do you think will happen with the medicare provisions? will we go forward? will we carry it out the way the law is written? or will it have to be changed? who wants to take this one? >> i thought it was very interesting that both the actuary at c.m.s. and the director of the congressional budget office both publicly stated in formal official correspondent -- correspondentance to the congressional leadership that they did not think that the medicare payment reductions were sustainable over time. both the c.b.o. anti-c.m.s. actuary. we have never really quite gone here before at this level of payment reductions. so i think that whether this survives or not i think is highly unlikely in my view that these kinds of reduction also

survive. >> let me address this question to doug. what happens when you have a bill with a huge expense and the way you thought you were going to pay for it doesn't pan out? >> nothing good. this has been the history of entitlement programs in the united states. they are launched with fanfare that includes their budgetary soundness over time. enrollments expand beyond what was originally envisioned. benefits are added to what was originally envisioned. the incentives are such that no one is ever going to impose things on programs that cost beneficiaries to scrimp or save. that wasn't the point. we have these enormously bloated programs. that's been the history in medicare and medicaid. it is likely to be the future of this law unless we change course.

we end up where we are today with enormous structural deficits that are so large and so troubling that they literally threaten the capacity of u.s. economy to provide a higher standard of living in the future than we have now. and that is something we simply cannot do. >> john, we value currency when we have economic imbalances, you can also devalue health care either explicitly or indirectly. >> suggests that about 30% of the spending in medicare is wasteful. goes to -- it's spent on care that provides no particular goods to people. my first question is, doesn't that suggest that there is in fact a lot of fat to be pulled out of medicare? if so, how do we do that? my second question, i don't know if you saw the health care study

published last month looking at el paso, texas, and looking at variations in medicare spending and they found that versus variations in private spending, they found variances do exist in medicare spending don't seem to exist in private spending at least in those two locations. my understanding is that the administration, a lot of the plans for obamacare were based on the idea that the same sort of fat existed in private insurance and private health insurance. so what does this suggest about the future for the law about reform and how -- >> well, the fat is crudely as an aggregate. this action was done 15 years ago. people are rediscovering it there is less variation in private sector health care than there is in medicare. there was an older study in the mid 1990's which look at the fehb program where there was less variation on a regional

basis. the tendency of researchers, the bias in the field, you go where the data is. we had medicare data and you could show this kind of crude variance and then you concoct a lot of theories around it. it could be true that the nature of the medicare program lends itself to more of that waste and variation without actually measurable elements. there are two principal ingredients. put the money in the hands of the patients and consumers. who is the only person who would receive the cost and value of the person who actually receives the care? we have that distorted. and the second is we do need some type of even though they are imperfect markers has to what's better, what's worse of the time. not perfect. we are building a lot of metrics which may not tell us that, but that's at least the general direction in which to go. is there waste? yes. can you find it right here on the map in this particular area and bin point it and get that passed politically?

probably not. you might have to decentralize that set of equations. >> let me just add one thing to that. tom's answer was very good. there probably is 30% waste in medicare. maybe there's more than 30% waste. when you get a hospital bill, it doesn't say on the bill these items are wasted. if it did we need to get rid of the waste. the problem is that you don't know where the waste is. what we really mean is there is waste, some bright entrepreneur, really efficient hospital administrator, efficient group of doctors could have done this for 70% of the cost that was actually expended. unless they have an incentive to do it, they are not going to do it. we are not going to get rid of waste unless it's in someone's self-interest to do it. yes, sir. >> the new congress should even attempt to fix this legislation? do you think that it's possible to fix this law? or do you think that tweaks as a whole really can't make a difference? the whole thing has to go? >> do any of you want