the house and in the senate. [inaudible] >> i would think the challenges of managing either the house or the senate, the responsibility of the leadership -- they are working to deal with getting a bill through the house. i am going to wait until they have taken action. >> "mother jones magazine." if you are one of the 8 million americans unemployed, who asks, what is in this budget for me for the near term, short-term benefits, job creation -- what would you point them toward? >> first is the fact that coming

out of december, it was a matter of enormous importance to extend unemployment benefits of that we go into this year having a system that still provides a safety net for workers who are struggling. it is a very important backdrop. secondly, if you look at our infrastructure proposals, headstart, it would come at the beginning with an eye toward creating immediate opportunities. while we are very much -- the recovery is very much in the way an unemployment is going down, we are not satisfied with where we are. we need to do better and have the economy grow faster and have more jobs created. this budget is designed to deal not just with the short-term but with over the horizon to make sure that we have an economy that provides those opportunities.

>> to lead davison. can you elaborate how they can elaborate improve the federal work force with discretionary pay freezes? >> it has been a real challenge for every agency to work in very constrained fiscal -- in a very constrained fiscal environment. as every family has to make choices and every business has to make choices, priorities will have to be set. getting our priorities oriented around doing the things that are most important is going to be critical. i do not think it will be easy. we had a great work force that works very hard and there are additional burdens being put on the federal work force. we've tried to provide growth with those burdens cannot be managed within toes, but we also have to look internally to get

administrative savings in most places. there are more agencies on the domestic side going down than up overall. these are going to be challenging difficult years. yes. >> you of already outlined distinctions between clean water and sewage programs, what did you -- why did you sing aloud programs like that when there are more expensive programs were the impact would not have been felt as much? >> we went to every item in the budget and look for where there were savings that could be achieved. in the case of some of these programs, which he proposals out there that would have deeper cuts. we tried to strike a balance, where the essential work can go on. in the case of life kee -- h liheep, i think i went to why

that was chosen. it really does _ that even where we are investing, we will have to make tough trade-offs to live within our means in the future. it will be challenging and many departments, -- in many departments and challenges that are still important. that is why we think this is a budget that shows that we are tightening our belts to live within our means, that we are achieving savings in all areas of the budget and did not just say domestic discretionary spending, but it is domestic discretionary spending, defense spending, mandatory, revenues -- we think we have a responsible, comprehensive approach to get this to the bottom line. now we look forward to working with the congress so that we can get something enacted that is in the best interest of the american people.

>> now republican response to the president's budget from house budget committee chairman paul ryan and senate budget committee ranking member jeff sessions. they spoke with reporters for a half hour in the visitors' center. >> afternoon, everybody. i am here with senator sessions, the ranking republican on the senate budget committee. the president sent his budget to capitol hill earlier this morning. the need to say this -- we know we have a fiscal crisis in this country. we know we have a debt crisis in this country. we know it is threatening our way of life, our economy, and we need to do something about it.

and everybody, whether right or left, knows the senate you tackle these problems in america, the better off everybody is. our problem is we are running out of roads to keep kicking this can down. what did we get today? we got a punt. the president punted on the budget, punted on the deficit down on the debt. that is not leadership. as an abdication of leadership. americans expect presidents to leave. they expect the president to take on the country's biggest challenges and arguably the biggest domestic challenge perhaps in the history of this country is the crushing burden of debt coming our way. now many people thought, ourselves included, that the president would moderate after this past election. people call it triangulation. this is not a moderate budget. this is not a triangulation budget. this is a budget that went to the left. it would be better to do nothing

than to pass this budget for the sake of our economy, the sake of our future, and for the sake of jobs. we all have to remember that today's big deficits means tomorrow's big tax increases and interest-rate increases. this costs us jobs. this hurts our economy. this causes -- this tells all businesses and entrepreneurs that the more we borrow and spend today, the higher their taxes will become more, the higher interest rates will be for them to borrow to expand their businesses. this is going to hurt this -- us and our ability to get out of this recession, to create the kind of jobs that we need to get the economic growth of winning, to not only help our fiscal situation but to help our economy and the americans back to work. i will quickly go through what this does. you can see that we have a tidal wave of debt. budget, as you can see right here, doubles the debt within five years and

triple set by the end of his budget in 10 years. this budget has a $1.6 trillion tax increase in net. not only did he pass tax increases in the last two years, he is looking for more tax increases on the american economy, on small businesses, on families, and launched a new hours. -- and on to the newer -- entrepreneurs. spending goes up every year. $13 trillion in new borrowing over this budget. smoke and mirrors have been done by republicans and by democrats in the past. so we've seen budget gimmicks from both political parties,

from white house is in the past. this year contains a pretty good doozie. a sense that we will be at afghanistan and iraq levels but we are today. we will have a 10 year afghanistan surge. everyone knows that is not true. the american has already announced his withdrawal dates from these excursions, and he is basically saying if we're not there for 10 years, we will have to ram down spending spirit that will save as $1.1 trillion. when you pull aside the curtain and like all the smokes and the mirrors, it looks to me that this thing has about $8 of tax increases for $1 of tax which spending cuts. -- $1 of spending cuts. you cannot borrow and spend and tax your way to prosperity. unfortunately that is what this budget does. let me simply close by saying this. i served on the president's fiscal commission that he

created this last year. i have problems with some of the reports and findings, but i along with others put out alternative plans. the president in suggesting the fiscal commission gave people like me the idea that we're born to move the ball in the right direction. that that was a constructive step in the right direction. this is a pun. this does not clued any of the significant recommendations from the fiscal commission. it is spending above the levels recommended in the fiscal commission. so the fiscal commission gave us hope that we were going to finally have an adult conversation in washington about how we preempt our debt and deficit crisis. unfortunately, this budget does none of it. this budget ignores the problems come more spending, more taxing, more borrowing, and at the end of the day, if we do not turn this around, it will cost us jobs and prosperity in

this country its credibility. with that i will turn it over to senator sessions. >> thank you, mr. chairman. what us -- what a fine statement of the situation we find ourselves in. i am very pleased in the country should be pleased to have you in a key position that you now hold. the question to me with the budget always has been, will this change the trajectory that we are on? because every witness we have ever had -- they say that we are unsustainable path. it runs the risk of a cataclysmic event and they can happen very quickly just like it did in 2007, just like it did in greece, and they are in the direct -- responsibility of the elected leadership of this country. when you see a danger, it is a duty and responsibility of leaders of their country's to do the things they can avoid that danger. and we definitely are facing the

danger. this is not being made out, it is not being exaggerated. everyone on the bipartisan that commission believes that we are facing a danger. is it too much? when can something happen? we never know. some say that when you reach 90% -- when that leeches -- reaches 90% of gdp, then you lose 1% of growth, and a document over 200 years, country after country who have done that, and they have cataclysmic events in their currency. so the name of that will is "this time is different," because the people in this country said, yes, we've heard about those problems but it is different for us. it will not happen to us. did the president change the trajectory? i do not think so.

the war savings that we hope occurs are $1 trillion in savings. he assumes and shows that he has accomplished another $1 trillion in savings, but those savings -- i discount the war scenario. dislike her came to training, we hope it does not come back and you have another same type emergency expenditure, that is not a legitimate statement. so you have $1 and trillion in savings. we have identified $700 billion in gimmicks. that would reduce that and the actual reduction of our deficit trend to only $300 billion over 10 years. so in the sense -- in essence, is negligible. i saw this article in the "

washington post," erskine bowles was so dramatic, he was chief of staff of president clinton. he has been down the pike before. he has to know that his words with have significant meaning today. the chairman of the debt commission, co-chairman. he said, "nowhere near where they will have to go to resolve our fiscal nightmare." i consider that a major condemnation of what has happened here. there is no reform on the entitlements which of course consume more than half of the problems of the debt that we have. our chairman, chairman ryan, has proposed a solution and what does he get? he gets a tax. i do not appreciate that. i really do not. it irritates me. the one man who has had the guts to stand up and propose some

things that could actually work its criticized by democratic colleagues. count me as your defender because we will have to talk about it. we can do this. let me to say that. i have been working on the numbers, we have added them and worked with them and seeing how to get there. we can get this deficit under control. it is not impossible. and if we do so, it will affect -- it will put the country on a better path, the path to prosperity. the greatest threat to our security at this point in history is our debt. i just met a group of german parliamentarians and that is what one of them raised with me. our security is jeopardized by our debt. i certainly agree with that. we will try to answer your questions. i will do my best. i know our chairman is able to handle anything you could

possibly ask. and so we would be glad to try to respond. >> chairman, when is your budget coming? when will you tackle a entitlement reform and military cuts? >> the way the process words come many of you but the reporters know that we will send the president's budget to the budget office. they will score that budget using their set of numbers. after they do that, that will take them about three weeks. sometime in march we get their base line. then we begin our budget and it comes out later in the spring. april is usually when budgets come out. i can tell you what our budget -- that cannot give you what our budget will look like since we have not started writing it. i have to tell you, we are not interested in punting. we're interested in leaving. we are interested in starting a different course to get this under control.

i think we demonstrated this in the past. it is not too late for america to get things fixed. it is not too late to write our ship and get our economy growing -- right our ship and get our economy growing. but if we keep opposing -- postponing this, there will come and if -- there will come a moment. i really thought, given the president created a fiscal commission, that we would see and enhancement. a step in the right direction and fiscal control. instead, we sought a go farther to the left and if we did nothing at all. that is what is so disappointing. i cannot tell you what our budget will be. you will find out when we write it. when we write our budget, we will show you our budget. the budget cements -- the president said his budget.

we submitted to cbo. we get the baseline and then we write our budget. that is why -- that is how the process will occur. i cannot tell you what our budget will be because they have written it yet. -- we have not written it yet. >> there are some that talk about the possibility of some significant deficit-reduction package. you think those comments provide opportunities for bipartisanship? how they blend with what the president -- how do they blend with what the president has said with a margin steny hoyer is one example, but as democrats did not have their voices heard in the submission of this budget. this budget is a hunting -- punting budget. because for more spending, which they call investment, and a lot of new taxes.

$13 trillion added to the debt? we're. to spend $46 trillion of the next 10 years? this is not an austere budget. this is not getting the budget under control, keeping taxes low, and growing economies. these democrats, and there are democrats they want to tackle this problem, but their voices were not heard in this process. i hope to. >> i had made remarks at one of our budget hearings not long after the president's state of the union, and i agree that -- criticize the remarks as not leading. chairman konrad, it has been through this many years, he paused and said, maybe we have to lead. so there is some hope that we can come forth with some ideas an agreement that could make a positive difference. but with the senate being what it is, it will take a number of

votes from the other side to pass something that would have some teeth to it. >> your is today if the president's budget was doj in the house. and you wanted to see it first. >> that was debt on arrival. he raises spending everywhere. he raises taxes everywhere. he increases borrowing. the trajectory of this budget is in the wrong direction. it would be better than we did nothing then pass this budget. i like to think there are some democrats in this town of want to get serious on spending. the debt crisis is caused by spending, not taxes. let us go where the problem is, spending. i like to think that there are some democrats out there -- and i know that there are -- to get an agreement to work on this. this required by partisanship at the end of the day, and we were

hoping for a centrist budget today to a dance that kind of a dialogue. we get everything but that. >> why can republicans address entitlements? >> wait until our budget. >> what about the spending cuts announced this week? >> maybe not in the budget war. this is discretionary spending. we're doing a bill this week because for the first time since the 1974 budget act, the democrats failed to propose a budget this year. there was a lot run over this year from last year because they did not pass a budget. after a fiscal year, spending, which took about discretionary spending not mandatory spending. the only purview for the march 4cr expiration is discretionary spending. what we're doing is having a great debate in congress and how much spending we should cut.

how cool is that customer a year ago, we were talking about how much more spending to increase. now we're in the debate on how much to cut. just in a few short months, we've done a great job in changing the culture of spending to reducing spending. by now that particular issue talk about is discretionary spending. in the spring, you can deal with all the other issues such as entitlement that you described. that is when we put our budget out. >> are there areas you would like to target? >> when u.s. what we're doing this week, that is discretionary spending. i can talk about what areas we will do it but we have not written a budget yet. it is premature to talk about what will be in our budget, given that has not been written yet. >> the me say one thing that is important in fair to say. chairman ryan has proposed a complex, far-reaching plan that deals with entitlements and

brings this country on the road to a sound economy. he has been open about that. we're here today talking about president's budget. i know the president is happy if you all ask, what is your plan? the law requires the president to submit a budget. he is one week late. we call on him to do it last week. this is the difficulty. now we are faced on something as complex as entitlements, as deeply as emotional as title months -- as entitlements, and the president is not even in the game with a mark suggesting nothing to be done? my wife said to me when i complained, do not blame me. you asked for the job. he asked for the job. i am sure that he would rather rigid rather not have the debt crisis that he is finding, but we need his help.

>> looking ahead your colleagues think that it would be foolhardy to propose entitlement reform if the president has not stepped up first. as the chairman of the committee, which you recommend that they go ahead? >> i have been proposing entitlement reforms for quite awhile. we have to have a family conversation to get consensus. writing a budget, you have to get a consensus of the least 218 people. we will go forward once we get our base line in march, to get a consensus as of tutored 80 people to write a budget. it is impossible for me to tell you what that is. but we did not ask people in wisconsin or around the country to send this to congress to represent big government. we asked people to send us here to fix problems and address solutions. but he put it this way, janet.

i was involved in the tarp negotiations in 2008. senator sessions was. that was an ugly situation. that surprised us. we did not see it coming. but the ask you this -- if you knew your president or your congressman knew it was coming, saw scope, timing, and nature, and knew it was important to prevent the economic crisis from happening, which wiped out savings for millions of seniors and put our economy and a great recession, if they knew it was happening and could prevent it but chose not to do so because it was not the politics, what would you think of that person would think of your leaders? crisis is coming. we know its timing, we know its nature, we know its scope. we know what is going to due to our economy. seedy hotels is without a shred of doubt. giving the next generation of a lower standard of living. we're giving our children and grandchildren a diminished

country. if we do not put up a solution soon, we will compromise jobs and the economy today. by tackling this fiscal challenge, we can grow the economy today, create jobs, and give our kids a better country. that is what we're supposed to be doing here. and you see our leader, the president of the united states, seeing this, knowing that, acknowledging it, and ducking it, that is why we are so disappointed today. >> can you talk about broad brush what you are for? there are republicans that say, the president has proposed one year and 10 years. are you going to try have a balanced budget within the next two years? would you go beyond the $4 trillion of the fiscal commission? >> everyone wants to go into what our budget will be. we do not have a baseline.

a lot to answer your question but i do not have answers for that. we're talking about the president's budget. we're not just going through that in looking at all of these numbers. a look at the fact that the: the baseline as $1.7 trillion in higher revenues because of economic growth. when cbo looks at this thing, i have no doubt in my mind, based on where cbo has, that the deficit and debt, interest on debt will be much higher than what even though in the inomb and the president -- omb and the president is climbing. >> the president is wanting to cut the joint strike fighter. is that something you think -- >> people have difference of opinion. i've always taken that position. i have always had that vision --

position. >> you have praised him for putting a comprehensive and title -- entitlement reform. >> i think his plan can work and would work. it is far better than we are today. i believe that we could achieve greater discretionary spending reductions today than even his plan calls for. i intend to give personal attention to how we work to put our great medicare, social security programs on a sound footing. that needs to be done carefully. we need the input of the president. he cannot just be thrown on the floor. we need to work together to achieve that. i am prepared to do that. >> can you comment on how coherent the republican proposal actually is?

>> cut, which cut spending and grow the economy. next question. >> you of referred to this not having any specific recommendations of the fiscal commission. speak more specifically to which things are missing from this that should be on the table. >> none of them are in here. there are $333 billion above discretionary spending we have not cut into the micro details of this budget. we just got it this morning. but none of the entitlement reforms proposed, none of the tax reforms proposed, none of the discretionary caps and cuts are in this. in the metrics used, that the president gave to the fiscal commission, they are not accomplish with this budget. >> for you saying that in your budget -- >> i have always said we do not

need a second engine. >> i was not asking about the engine. on entitlements, are you committing to entitlement reform in whatever shape it will be in? >> how many times? i am not talking about what we have in our budget because of the have not written that. obviously we think in time, reform, that is the biggest we think entitlement reform is the biggest slice of the pie. can i get into the details of how will work because we have not written it yet. everyone knows that we have to tackle entitlements. next question. jonathan. >> by going after non-defense, but are being so--- but are being so high on non-defense discretionary, will there be any appetite among your own conference to deal with defense? and secondly, about expedited

decision bajaur >> -- expedited decision. >> i would like to get something done around. i like something bipartisan. chris and i have talked about some agreement on how to do that. the president supported it version of this in the past. i would like to see some change to that, but that is a tool, not a big toe, but a tool in the step -- a step in the right direction. the number we brought to the floor is $60 billion below the obama request. the conservative republican house is bringing discretionary spending is throughout the year is $60 billion below where the president requested that ago. this budget has $70 billion below. we want to take that seriously. i think that is something we will take a look at. you cannot go $700 billion for

an agency and not expect ways to occur. we do not have peace right now. it is a dangerous world that got more dangerous recently. there is room for savings within the section of our government. did you have one? >> [inaudible] high-speed rail. >> we are not a fan of high- speed rail. we are sending a high steel rail -- rescinding a high-speed rail in this year's budget. that is something we disagree with. we disagree with high-speed rail. i can tell you about the wisconsin plan. to call it a boondoggle would be generous. we're rescinding funding this

year. we do not think it is a good investment. >> i think it totals $120 billion over period of time. the president's proposal in the state of the union to have within walking distance of every american, 80% of americans, it is a bit ambitious. and i raise that question about the thing that comes to my hometown of mobile, amtrak goes through three days a week at 1:00 a.m. going east and 2:00 a.m. three days a week going west. not a lot of people use it. so there are areas of the country that could use better rail. no doubt about it. we should move forward with that but this plan is way too ambitious. >> others have passed and oppose the program. the bill we are bringing today or tomorrow to the floor rescinds that money for ohio and wisconsin. we think that is the thing we ought to do in the future. thank you everybody.

we appreciate it. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> secretary of state henry clinton spoke about the budget. she began this 15-minute briefing with comments on egypt. >> first, let me say that i just came out of a very productive meeting and lunch with the speaker. i greatly appreciated his gracious hospitality and the opportunity we had to cover so many issues on the minds of

members of congress, the administration, the american public, and indeed the world. as we discussed, this has been an historic several days. all of us have been inspired to see the egyptian people lay claim to their own future. it is also clear that egyptians have a great deal of work to do in order to get the full promise and potential of their efforts realized as they look toward a future that will give each egyptian the right to the bill his/her god-given potential. and we look forward to working with the congress in the coming days to ensure that we have the funding and the authorities necessary to support the egyptian people. events in egypt show how important is that we have a global diplomatic presence, it presents the will be ready to handle crises, prevent conflicts, protect american citizens overseas, and protect

american economic and strategic interest. now, you see this not just in egypt, not just in afghanistan, not just in yemen, but in mexico and so many other places around the world where our diplomats and development professionals are working every single day to promote america's security, interests, and values. the state department and usaid are on the front lines of just about every national security challenge we face. and we are promoting american jobs and advancing economic opportunities for americans as well. to be successful at these vital tasks, we need the resources to do the job. otherwise, we will pay a higher price later in crises that are allowed to simmer and boil over into conflicts. whether it clear about the deep concerns we have regarding the

fiscal year 2011 spending bill moving to the house floor this week and what those funding levels would mean for the vital work done by state and usaid. state and usaid would face a 16% cut from fiscal year 2010. we would be forced to scale back significantly our mission in the frontline states of iraq, afghanistan, and pakistan, where we work side by side with the american military. we would also be required to roll back critical health, food security, climate change, border security, and trade promotion efforts abroad as well. we certainly understand the tight budget environment. i had the privilege of serving here for eight years in the congress. we have to undertaken over the last two years our own sweeping reform efforts to put taxpayer dollars to -- to work more effectively. but the scope of the proposed house cuts is massive.

the truth is that cuts of that level will be detrimental to america's national security. and i shared with the speaker a letter i sent today to appropriations chairman rogers which lays out our concerns about the fiscal -- about the fiscal year 2011 bill. i'll be meeting with members of congress and testifying on the hill to highlight the president's 2012 budget. how we reach 2012 is just as critical. we need to ensure that 2011 and the process surrounding it does not pull the rug out from under the civilian experts that are working in every corner of the world to pursue america's security and interests. i think the speaker for his leadership on egypt and in the very constructive advice and counsel that he has provided to the administration. i remain hopeful that when members consider the national security and economic consequences of these cuts, they

will chart a different course. it is somewhat frustrating when what usaid and the state department are doing in these frontline states is not classified as security. and there is a different category for security discretionary funding than what is called non-security discretionary funding. and of course, you talk to any number of a prt in iraq or moving in with the marines in can heart, and they clearly are part of our national security efforts in those countries. we can still reach a bipartisan consensus and move forward together. we worked closely with the last congress to protect our security and advance our values and interests, and i am confident we can work with this one as well. so happy valentine's day, and i would be glad to take a few questions. [unintelligible]

[unintelligible] >> when you were first lady 16 years ago, we had a republican congress that imposed very deep cuts, particularly in the diplomacy and foreign aid sectors. is this reminiscent of that? did you communicate that to the speaker in your meeting today? >> i think that what we learned -- and certainly i think the lessons from the 1990's are very important today -- is that we cannot recede from our presence anywhere in the world. what we are living through is a historic period where all kinds of changes, some of them in support of american values and some of them directly opposed to american values, are occurring. and i think it is important not to keep to have -- not to have to keep learning those lessons. one of the reasons we are in afghanistan today is because we

left after the soviet union left and fell. and we learned that lesson. it is expensive. it is particularly painful when we see young men and women losing their lives. the injured -- being injured in the pursuit of americans security, interests, and values. but we cannot go back to where we do not have a strong american presence in order to assert american leadership and influence the course of events. so i am hoping that we will be given the resources that we need in order to fulfill the missions. how would give you one quick sample. in iraq, as our troops leave, there will be a savings in direct military expenditures that will total about $45 billion. we are asking about $4 billion to make sure we have a civilian presence to continue working with the iraqi government in order that the enormous

sacrifice that our men and women in uniform made and that this country made to try to give iraqis the opportunity to chart their own democratic future is not lost, because we are not the only country that is going to be in a position to influence what happens to iraq in the future. so i give that as one example because i think it is a stark one. we will be saving many billions of dollars, and in return, we need a commitment and investment of far fewer billions of dollars in order to establish the robust civilian presence that is required. that're receiving reports their thousands in treats all around iran right now, the opposition party headquarters possibly under siege. there are thousands of protestors. all lines are being jammed. can you comment on iran, and what is your message to the iranians in the streets tonight? >> the me clearly and directly

support the aspirations of the people who are in the streets in iran today. all to the crisis in egypt, we had three very consistent messages -- we were against violence, and we stated it often and we communicated it directly to egyptian authorities. secondly, we supported the universal rights of the egyptian people. and third, we stood for political change that would result in positive outcomes that would give the egyptian people a better economic and political future. we believe the same for iran. we are against violence, and we would call to account the iranian government that is once again using its security forces and resorting to violence to prevent the free expression of ideas from their own people. secondly, we support the universal human rights of the

iranian people. they deserve to have the same rights that they saw being played out in egypt and that are part of their own birthright. and thirdly, we think that there needs to be a commitment to open the political system in iran, to hear the voices of the opposition and civil society. and i would add that what we see happening in iran today is a testament to the courage of the iranian people and an indictment of the hypocrisy of the iranian regime, a regime which over the last three weeks has constantly hailed what went on in egypt, and now, when given the opportunity to afford their people the same rights as they called for on behalf the egyptian people, once again illustrate their true nature. so our nature has been -- our message has been consistent and remains the same.

we wish the opposition and the brave people in the streets across cities in iran the same opportunity that they saw their egyptian counterparts seize in the last week. >> can you tell us what the speaker said to you when you told and that these cuts would hurt national security and the state department's operations abroad? >> the speaker has traveled to many of these places over the course of his career in congress and has kept up-to- date by consulting with our military leadership. he knows that we have to support our government's efforts in our frontline states, and those efforts are both military and civilian. our strongest supporters, as the speaker mentioned to me, are the leaders of our military and our defense department -- secretary gates, admiral mullen, general

cartwright, and so many others. why? because they understand that if we do not have a robust civilian presence in these frontline states, we cannot make the progress that we're seeking. the strategy in both iraq and now refined and furthered in afghanistan -- clear, hold, build, transition -- the military is responsible for clear. we are both responsible for hold. we are responsible for build and for transition. our colleagues in the defense department have been our strongest supporters and the speaker is well aware of that. >> a question on how the u.s. is going to keep the military from getting too comfortable and forgetting about democracy? >> one of the most important relationships that we developed over 30 years with egypt is the relationship between our military and the egyptian military. many of the officers have been

educated in american military schools. there have been close collegial relationships built up over this period of time. i think the egyptian military demonstrated its very strong commitment to the people of egypt in its restraint and its support of their right to demonstrate. they are now being asked to assume a responsibility that was not in the guidebooks for young officers -- how to lead a country through an orderly, peaceful, meaningful transition to a democratic future. the steps they have taken so far are reassuring, but there is a long way to go. the united states has made it clear that we stand ready to assist in any way appropriate. the ongoing dialogue between our defense and military leadership with theirs has been very fruitful, and i expected to continue.

-- i expect it to continue. but this is a very challenging moment for the egyptian military. thus far they have demonstrated a seriousness of purpose and a commitment to pursuing that kind of transition that we hope will lead to free, fair elections, but also in addition to elections, a broad buy-in to what democracy really means. as i have said many times before, democracy is not about one election where whoever wins never ones that have another election. you need an independent judiciary, a free press, an independent support for minority rights. there is just so much else that goes into what democracy represents. but we're going to continue working not just with the military, with civil society, with a broad range of representatives from across egypt's full breath and depth on the economy and academia, the

professions, and every other aspect of their very exciting commitment now to a different future. thank you all very much. >> president obama is proposing of 1% increase in state department programs, not including transition programs in iraq. republicans are proposing to cut the state department budget by 16%. administration officials will testify on capitol hill tomorrow about the proposed budget. jacob bloom -- jacob lew will be live before the house budget committee. it is chaired by paul ryan of wisconsin. also live at c-span3, the senate finance committee will hear from health and human services secretary kathleen sebelius

about her performance proposed budget. democratic senator max baucus is the chairman. this year's deficit would be a record $1.6 trillion under the budget proposed monday by prison obama. in the long term, mr. obama is planned to cut the deficit by $1 trillion over the next two years. in a few moments coming to hear more about their department's budget from defense secretary robert gates and then help and housing service secretary civilians. after that, president obama and the head of the white house budget office, jacob lew. on "washington journal," we will take your questions and comments about the president's proposed budget for the next fiscal year. congressional debate about what to do for the rest of this spending it. our guest will be john cranford

, republican representative jack kingston, a member of the appropriations committee, and allyson schwartz, and it is live on c-span every day at 7:00 a.m. eastern. during the briefing on next year's proposed budget, defense secretary robert gates said temporary spending measures for this fiscal year are hurting the military. he also told reporters about the pentagon's plan to cut $78 billion from the 2012 budget. these budget decisions took place in the context of the

nearly two-year effort by this department to reduce overhead, cull troubled programs, and rein in personnel and contractor costs, all for the purpose of preserving the fighting strength of america's military at a time of fiscal stress. the goal is not only to generate savings that could be applied to new capabilities and programs, but for our defense institutions to become more agile and effective organizations as a result. in all these budget requests, if enacted by congress, we will continue our efforts to reform the way the department does business, fund modernization programs needed to prepare for future conflicts, reaffirm and strengthen the nation's commitment to care for the all- volunteer force, including training and support, and ensure that our troops and commanders on the front lines have the resources and support they need to accomplish their mission. the department's comptroller, mr. robert hale, and attended general perry spencer of the

joint staff will explain the components and particulars of these requests following my remarks. as we begin what will be a week of debate and assessment of this nation's investment in national defense, i also want to take the opportunity to touch on two related issues pending with the congress. first, this department has been operating under a continuing resolution going on five months, resulting in difficulties that may surge into a crisis, depending on what happens on the hill during the next few weeks. exactly a year ago, the president requested $549 billion to operate the department of defense during fiscal year 2011. if forced operate under a full- year continuing resolution, the department would only receive about $526 billion, a cut of $23 billion. the damage done across our military from that reduction would be magnified as it comes halfway through the fiscal year.

i raise this today because i'm concerned that the debate of the the defense budget in recent days and weeks is becoming increasingly distant from strategic and operational reality -- distant, in other words, from the real world. in fact, suggestions to cut defense by this or that large number have largely become exercises in simple math, divorced from serious considerations of capabilities, risk, and the level of resources needed to protect this country's security and vital interests around the world. i realize that in the current fiscal environment and political environment, it is unlikely that of the defense department will receive the full amount originally requested by the president for fiscal year 2011. based on a number of factors, including policy changes that led to lower personnel costs and reduced activity forced by the continuing resolution, i believe the department can get by with a lower number.

however it is my judgment that the department of defense needs an appropriation of a lease for $540 billion for fiscal year 2011, for the u.s. military to properly carry out its mission, maintain readiness, and prepare for the future. the second issue i would like to address is the ongoing debate over the jsf extra engine. as most of you know, the president and as they did the president and i as well as the department's senior military leadership, have consistently and firmly expressed our opposition to continuing this costly program. we consider it an honest -- and unnecessary and extravagant expense, particularly during this contraction. the congress has not spoken with one voice on this matter. the department has been operating this fiscal year under ambiguous guidance at best. given the situation, i decided to continue funding the jsf extra engine on a month-to-month basis. i did this not because we had

to, but because we chose to give the congress the opportunity to resolve this matter as part of its ongoing debate on the budget. however this also means that american taxpayers are spending $28 million a month for an excess and unjustified program that is slated for termination. the president, the military services, and i continue to expect -- oppose this extra engine, and when the current continuing resolution expires, i will look at all available legal options to close down this program. it would be a waste of nearly $3 billion in a time of economic distress, and the money is needed for higher-priority defense efforts. with that, i'll take a few questions on the budget, and then turn things over to mr. hale and general spencer. tony, this is your bread and butter. we'll go the first. >> and my penny, sometimes. -- panini, sometimes.

>> on procurement, the budget last year projected $120 billion in procurement. this year's request is $113 billion, the same request as 2011. there is no growth there. worm dollars migrated to operations and maintenance and health accounts? >> know, you cannot just take the top lines and compare them like that. for example, there have been some procurement programs that have been cut, like the efv, like the slamraam. there are a variety of puts and takes, but there are a number of new investment programs, modernization and procurement programs that are in this budget that went above the original program of record. for example, a new bomber for the air force. five new ships, five additional

new ships for the navy. modernization of the ground vehicles for the army. there are a variety of new starts. in some of them, there may not be big procurement dollars, but they are big investment dollars looking to the future. we're going to provide, we are asking for $500 million for darpa for cyber-research. there are a number of new areas we are -- where we are beginning to invest. i would say that almost all of the $70 billion that the services kept, that they realized through their efficiency savings, are being put into modernization programs. >> even though there is not a major increase from the 2012 request to the -- from the 2011 request to the 2012 request. >> right, because there are some things in the procurement that

were cut. that every procurement dollar was golden. >> speaking of procurement dollars, and any possible slowdown in u.s. arms sales to the middle east amid the current unrest that brought down leaders in tunisia and egypt? >> is that a budget question? that is a very curious budget question. i don't think they have fms in the budget. nice try. [laughter] >> you met today at lunch with a number of congressional leaders on this topic. i am wondering if you would give us your assessment after that meeting, whether there has been -- whether you sense any movement toward some sort of solution on the budget coming out of this meeting that you had. and secondly, i will not be nearly as obtuse, but if you -- we cannot ignore what is going on the middle east. i'm gwen asked you to give us a couple of sentences on your assessment on the military taking control in egypt and what

your comfort level is with that movement toward democracy. if it spreads across the middle east. >> i will not -- i am really not in a position to characterize the views of the members of staff or at that lunch. i would note that for the most part, much of the information we gave them today, we gave them six weeks ago. another is a little discomfort in some quarters on the hill about these announcements and the question of transparency, but the reality is, the members of our committees got significant information on the fiscal year 2012 budget six weeks prior to any other committee in the congress. there was a lot of information

that we were already aware of. there really was not much discussion at all at the lunch about the politics of the budget. there were a number of questions for clarification sake, we are really nothing beyond that. i have two hearings this week, one in front of the house arms services committee on wednesday and one in front of the senate armed services committee on thursday. i have every confidence that i will have the opportunity to express myself in great detail about egypt at those two hearings. >> he said he would explore all available resources. what exactly are you talking about, and this is the line in the sand? >> i let the statement stand as

i put it, there are some options available. my hope is that there will be a debate about this on the floor of the house this week. and that members will address this directly. my hope is that particularly the new members who are interested in fiscal responsibility will see this as an opportunity to save $3 billion for the taxpayers that can be put to better use. >> i understand you want to speak to congress first, but what can you tell us, if anything, about your role in dealing with the field marshal over the past few days?

you may be the only person in the administration that had spoken to him. i think it is a budget question, believe it or not. budgets deal with the operational uncertainty around the world. it all comes together. what is in the budget now that deals with the middle east and what can you tell us about what you have been up to over the last few days? >> i will simply say that the budget affect our operations and maintenance all over the world. certainly the overseas contingency operations funds are efforts in iraq and afghanistan, but i will wait until wednesday to talk about egypt. wickes the overseas contingency

budget increases this year. i am wondering how much of that forecast will drawdown in july in afghanistan -- is it supposed to be based on the on the ground conditions at the time? >> first of all, there is a fairly dramatic reduction in the overseas contingency operations budget from fiscal year 2011. it was $160 billion. fiscal year 2012 is just under $118 billion. it is a drop of almost $42 billion. what we have done is what we have done in the past. we have budgeted in fiscal year 2012 for 98,000 troops. it is a conservative approach to

budgeting. since we don't know how many troops will be reduced during the course of fiscal year 2012, as i told members of congress today at lunch, it just makes more budget sense to do this conservatively and budget on a straight line basis, and then depending on the size of the drawdowns, that may be money we just do not spend. because we have no idea what's the size of the drawdowns will be because there will be conditions, we decided to budget conservatively, but that is not to say that we will have 98,000 troops at the end of fiscal year 2012. i will turn it over to the

experts now. >> health and human services secretary kathleen sebelius also spoke with reporters about her department's budget for next year. nearly $900 billion. this is about 45 minutes. >> good afternoon, everyone. welcome. i am the assistant secretary for public affairs. welcome to the humphrey building. thanks for joining us as we released the president's fiscal year 2012 department of health and human services budget. today we are joined by the department's leadership, who will help us what do the president's proposals. i am pleased to welcome the deputy secretary as well as the heads of the secretary staff division to receded in the front row. i would like to introduce to you the leader avert divisions your joining me on stage.

administration for children and families, administration on aging, agency for health care research and quality, tom friedman from the centers for disease control, peggy hamburger from the food and drug administration, the indian health service, national institutes of health, office of inspector general, and substance abuse and ill health services administration, an assistant secretary for financial resources. it is my extreme pleasure to introduce the secretary of health and human services, kathleen sebelius. [applause]

>> our greatest resource is the wonderful people who work here at hhs. the doctors, nurses, middle health professionals, social workers, and thousands of other dedicated professionals to shape our department's policies and work hard every day to deliver vital services to the families across this country. the budget we are announcing today will help america when the future by giving families and business owners more freedom from rising health costs and insurance abuses. by keeping america at the cutting edge of new cures and treatments, by ensuring that our children are prepared as any in the world when they start school, and by slashing waste and fraud in medicare to

strengthen it for the seniors today and tomorrow, it will move us one step closer to the american ideal of a society in which every man, woman, and child has the chance to reach his or her potential and make a meaningful contribution to family, community, and country. at the same time, the budget recognizes that we cannot build a lasting prosperity on a mountain of debt. years of deficits have put us in a position where we need to make some tough choices. we cannot invest in the future unless we also live within our means. in developing this budget, we look closely at every program in our department. when we found ways, we cut it. and programs were not working well enough, we redesign them to put a new focus on results. in some cases, we actually cut programs that we would not have cut in better fiscal times. you can visit our website to

read the budget in its entirety, but for now i want to share some read highlights before i take some of your questions. over the last 10.5 months, we worked round-the-clock with our partners in congress and states across country to deliver on the promise of the affordable care act. thanks to the law, children can no longer be denied coverage because of their pre-existing health conditions. families have new protections in the patient's bill of rights. businesses are beginning to get relief from soaring health costs, and seniors have lower cost to access to prescription drugs and preventive care. the budget builds on that progress -- on the process by supporting innovative new models of care that improve patients' safety and quality while reducing the burden of rising health costs on families, businesses, cities, and states. it makes investments in our health care work force and community health centers to make quality, affordable care

available to millions more americans and create hundreds of thousands of new jobs across the country. over the past half century, america's economy has led the world because we lead the world in innovation. to make sure it that does not change, our budget increases the funding for the national institutes of health. new frontiers of research have the promise to unlock revolutionary treatments and cures from diseases ranging from alzheimer's to cancer to optimism. our budget will allow the world's leading scientists to pursue these discoveries will keeping america at the forefront of biomedical research. because we know there is nothing more important to our future than the healthy development of all of our children, our budget continues significant increases in funding for head start and child care.

as science shows us the success in schools is significantly enhanced by high-quality early learning opportunities, which makes this one of the wisest investment we can make as a nation. our budget also aims to raise the bar on quality, supporting key reforms that transformed the nation's top tier system into one that fosters both help the development and get children ready for school. it proposes a new early learning challenge in partnership with the department education that will promote innovation in early education. these investments are a critical part of the president's education agenda. it helps us give every child the chance to reach his or her full academic potential and ensures that american workers remain the best in the world. at a time when so many americans are making every dollar in the family budget count, we need to do the same.

that is why our budget provides new support for president obama's unprecedented push to stamp out waste, fraud, and abuse in our healthcare system. an effort that more than pays for itself, including returning a record $4 billion to taxpayers in 2010 alone. for example, our budget will allow us to bring the very successful strike force model to up to 20 cities across the country. altogether, our conservative estimate is that this investment will yield $10.5 billion in medicare and medicaid savings over the next 10 years. return of about $1.50 for every $1 spent. we have made eliminating waste, fraud, and abuse of priority across our entire department but we know that is not enough. over the past few months we have gone through the department's budget program by program to find additional savings opportunities where we can make our resources go further.

for example, in 2000, congress created a grant fund to help 13 states expand health coverage. given the work we are now doing under the health care lot to expand access to affordable curve across the country, we have cut out this program so we do not duplicate those efforts. another example is cbc funding to help states reduce chronic disease. previously, this funding was split into different disease categories. you get one red for heart disease and other grant for diabetes and so on. -- 1 grant for heart disease. a lot of these conditions at the same risk factors like smoking and obesity. now states will get one comprehensive grant that will allow them the flexibility to address chronic disease more effectively. the budget we are releasing makes tough choices and smart, targeted investments today so that we can have a stronger, healthier, more competitive america tomorrow. that is what it will take to win

the future and that is what we are determined to do. so again i want to thank you for being here today, and i and the rest of our team will be happy to take some questions from you. wait for the microphone, if you would. >> can you tell us how the budget handles or addresses the sustainable growth rate position payment and where the savings are supposed to come from to pay for that? >> what the president has proposed, a 10-year fixed to the sustainable growth rate that cost about $370 billion. in the budget we are releasing today, two years of that 10-year proposal are paid for, essentially additional savings in the drug area and with waste

and fraud. there has been some misreported information that somehow there are additional provider cuts that actually pay for the sdr fix, and that is inaccurate information. he looks forward to working with congress to talk about that longer-term strategy, to make sure that we fund the entire program. as you know, it dates back to 1997. it has been needing a permanent fix for a long time, and we need to have a longer-term conversation with congress about what happens beyond 2014. >> just to clarify, the drug you mentioned, can you please specify does it mean preserve vacation of generics will be required? does it mean increased use of it

generics is going to be required under medicare? >> no, there is not a requirement for that. it deals with some of the savings anticipated and it talks about -- i want to make sure i get this right so i do not give you incorrect information. i will ask alan murray to give you the specific details. >> there is a number of proposals in medicare and medicaid to offset the first two years of the sgr. the specific drug proposals have to do with making sure that those medicare and medicaid get

the best prices for drugs. i think that is where most of the savings are. i wish we had a better list here. >> we can give you the information to follow up. i am sure ike -- sorry i do not have the exact information. >> i was curious about the cdc proposal, the proposed figure for cdc itself and how that compares to current your level funding, and whether you tap into the prevention fund under the help lot to help pay for the cbc budget. >> i am going to ask the head of

the cdc to answer those specific questions. >> the cbc budget proposal for fiscal year 2012 include significant resources for the prevention and public health fund which would support better information for prevention, better programs to reduce tobacco use and obesity, to supporting state governments and improving the ability of state governments to detect and respond to problems. at the same time, the basic appropriations for cdc, as every agency in the u.s. government, has experienced reductions to come with an overall spending limits. [inaudible] >> the prevention trust fund include expenditures to reduce the future burden of illness

funded through cdc, and most of that money, about three-quarters of it, ins of going out to state and local governments or state and local partners. there is not overall a one-to- one reduction or replacement of the cbc budget with the prevention fund investments. there are details that need to be gone through line by line about that. >> i had some arc budget questions. >> it looks like some of your budget took a hit. research is down 26 mou dollars. what programs are affected by that? it looks like there is some patients centered help research money here.

>> fiscal year 2012 budget has a strong investment of $65 million in work to promote secretaire, including over half of that going to developing and implementing evidence based approach to reducing health care associated inspections. the reason the number went down is that for a while we have included investments in research on a buy rating application of health information technology for the impact on quality and safety and are working very closely with the office of the the the national court -- the office of the national coordinator. patients entered health research has two parts, a total of $46 million. 24 million of that comes by law. the rest is in -- 16%.

i would be happy to talk to you more about that offline. >> cms is going to get an increase of $600 million and its head count will rise by about 900 people compared to fiscal year 2010. how much of that money and personnel will go toward implementation of the affordable care act? >> i will ask dr. berwick to deal with a lot of those specific questions. a lot of implementation is throughout our agencies, everything from increasing training of new providers to new

research that is being done. of the agency's have features of the affordable care act that have impacted their budget. we are looking at an increased number of beneficiaries both in medicare and medicaid, and lots of changes in the affordable care act that indicate both of those programs. >> the president's budget has a total of $465 million devoted to implementation of the affordable care act. about $330 million of that goes to cms. the total headcount increase is distributed between some additions due to the incorporation of the office of

consumer information and insurance oversight. that murder occurred a few weeks ago. -- that a merger occurred a few weeks ago. this is partly an expansion of normal operations and the incorporation of the center for consumer information and insurance oversight. >> ellen has the details for the sgr. there are mostly to ensure that medicare and medicaid get the best price. one is to allow hhs to audit as often as it would be cost- effective and allow medicaid to collect penalties from drug manufacturers for noncompliance, fraudulent noncompliance and requires all

drugs to be properly listed with the fda. >> on that note, it looks like the pharmaceutical proposals would cut $12.9 billion, of which the biggest one is to prohibit brand engineering drug companies from the nut -- delaying the ability of new generic drugs. the pharmaceutical agenda agreed to $80 billion in cuts, and less than one year after it is passed, you are adding to that by $12.9 billion. that does not seem fair. >> we think that the beneficiaries of medicare and medicaid and the taxpayers of

this country deserve to have the best possible outcomes, with the most effective and cost effective medications. this is a move in that direction. >> this is a question for commissioner hamburge. fda had anticipated increase funding in 2011 and had planned number programs based on that. i am wondering how the agency has been spending, given that the did not receive the funny and likely will not receive it. how did that factor into the plans for 2012? >> we have all been in a continuing resolution mode and we have been moving forward, fulfilling critical elements of our mission and waiting for greater clarity on our budget.

it is a little bit of a confusing time when we are talking about several different years of budgets all at once. we are simply moving forward and fulfilling our core responsibilities and implementing critical programs and policies, including new legislation that has provided us with additional responsibilities in the last couple of months. so we are busy, but i don't think i can provide any more specific details to your question. >> as a follow-up to that, that made it clear that the president has given us all the charges and responsibility to live within what has been a discretionary budget freeze as far as the administration was concerned. this budget being presented is slightly below the 2010 levels.

no one went to 2011 levels because we did not have a 2011 budget. what we are looking at is making cuts in some areas and making investments in other areas, and overall, coming in with the budget slightly below 2010. all the agency leaders with me on the stage today and all are operating division leaders who are here in the audience have all worked on that strategy, that we have to figure out a way to not only accomplished the earlier missions but accomplish the new missions that have been given to us over the past two years, and there are new missions throughout this department and additional beneficiaries to rely on the services that we deliver, whether through the agency for children and families or through cms.

>> i am curious from your standpoint, a lot of the funds to implement the apa were guaranteed by the act itself for automatic funding. how much do you feel is at stake in the budget process? >> the major responsibilities to implement the affordable care act which is a lot of the united states, it clearly rest within this department. we are working with agency partners, treasurer, department of labor among others to implement the law. there is no question that it becomes exceedingly difficult without resources to fulfill

that responsibility. having said that, we feel very strongly about the american public, that they deserve the right to take advantage of the benefits that the law anticipates. we now have high risk pool set up around the country. we have employers participating in the early retirees system to make sure that that portion of care stays in place. we have seniors, 3 million seniors who got a $250 check and now will begin to see a 50% decrease in their prescription drug costs when they hit the downhole, as well as annual wellness check ups. we have the website set up. we will continue to implement the law and the same time as making the case for adequate resources. what we have tried to do, and you just heard about the foursion of the center's

insurance oversight and consumer information, the inclusion of the new class act in the agency on aging. it is not to set up front office duplication, budgeting, and overall things that did not need to be in standalone agencies. we have tried and will continue to try to find efficiencies wherever they are, but clearly resources will be important. >> in the fda budget, there was a mention of seeking more fees for food oversight. there is a food reinspection feed which i assume is part of

the previous act, the third- party inspection. there is $270 million in additional funding for food. i am wondering if that is in anticipation of getting more money for food fees from congress? help us depart -- pick apart where the the budget is actually getting cut or whether all the seeming cuts in here are actually being replaced by moneys from the aca. >> we want to be wildly helpful. let me just address the food issue briefly and then i will let the others follow up. in the food safety legislation was being considered in

congress, there were various proposals about user fees. it is said to said that what ended up being passed was part of the new bill, significantly less than was estimated needed overtime to fully implement the food safety legislation, to conduct a number of new investigations that are called for to stay on the timeline. while there are some resources that were part of the original legislation, i don't think anyone in the industry or our office feels that that is a sufficient amount of user fees to fully implement the scope of that legislation. i think is safe to say that that conversation will continue on into the future, to make sure that the fda can fulfill the responsibilities of this new food safety regime that was put

in place during the last session. >> i think the secretary covered it pretty completely. there were moneys but they were limited. reinspection was one area where there were moneys. there have been discussions of user fees, but they were not in the final legislation. we have to be able to continue to work with congress. the consortium of individuals including consumers and public health professionals, an industry that supported the original bill all care very much about seeing it fully implemented as congress has asked us to, and over time, we need to address very seriously the issue of resources. this 2012 budget is a down

payment on our ability to implement the food safety legislation that we are already working toward in key areas, but it will be an ongoing process. we will be working with congress to ensure full funding. i am not assuming anything, but i am hoping the congress will understand that in order to implement both -- continue our important efforts to protect the -- american people in terms of food safety and reduce preventable illness and death in this country, and also preventable cause in terms of the economy from foodborne outbreaks that could be prevented. we need to move forward with all of our fiscal programs.

>> the easiest way to think of it is in three different categories. there are new programs that will prevent illness and death and did not exist before, and will be supported largely through public health funds. within the prevention fund their new programs to reduce hospital also said infections, to strengthen the capacity to detect, and to reduce the leading causes of illness and death in the united states. there are real decreases in other parts of the cdc budget in a variety of areas, ranging from prevention what grants to some of the environmental health areas. there is the third category

where there were existing programs which are being reformulated. we will be allowed to continue those programs with prevention dollars through the budget -- though the budget authority decreases. overall for the entire agency is about level. >> thank you all very much. the agency leaders will be available for more drill down on specific budget items, but thank you for being with us today. [applause] >> for the low income home

energy assistance program which was cut in half, it says that energy prices will be significantly lower this winter than they were this year. where did those numbers come from? >> of leavitt says that the the burden of energy -- i believe it says that the department of energy are forecasting that energy prices for this winter will be slightly lower than they were for 2008. but they will do is return the program to the funding level of 2008 for previous years. it will be back to the point where home heating costs are roughly where they are compared to where they were back in that time.

>> what are those numbers? is there report i could look at? >> we can provide you with that. >> the budget here has [unintelligible] paid for for two years. some of that will be paid for through some medicaid reductions. what is your message to positions? it seems like there is help on one hand but pain down the road. >> the president is completely committed to fixing the sgr over the long run. the main idea is to continue to work with congress as hard as we can to get a fix in place, and we are committed to that.

[unintelligible] >> we are working very hard with the states to see our way through to daylight on the medicaid side. we have been reaching out and trying to communicate as well as mccann with every state to come up with solutions that fit that state, and we will continue to do that. >> i know in the budget there seems to be a decrease in the funding for prepared nests -- prepared this for health emergencies and so forth. in the overview of the budget there seems to be a suggestion dness --ehow prepare it bes

>> we did make cuts in two state programs. at the same time we are working on a vigorous development of medical countermeasures to address every type of incident. >> the budget proposal does include a significant reduction dnessublic help prepare a nes dollars. there is also an increase in expenditures to replenish and rebuild the strategic national stockpile. >> will also be working to coordinate those two programs so they are more aligned in the sense that you can do more with less, making it easier for states to apply.

>> where are the funds for the initiative to develop new technologies? >> the secretary announced a plan last year to more rapidly develop medical countermeasures which includes work at cdc and fda. i should have said fda first. >> on health-care fraud portion, you say it will pay for half [unintelligible] of the for two years. can you get more specific? you must be expecting to get huge savings for that to be enough to pay for -- >> making sure medicare is the

best prices -- we also have increased the dollars in the budget that we are going to address fraud and abuse in medicare and medicaid. >> of fraud and abuse work is maturing steadily. we will be much better able to spot patterns in abuse and fraud. we are engaging in preventive work now to be able to register people before they get into the program to avoid criminals up front. the returns are enormous. i've seen numbers as high as six or seven to one.

>> some of the money came from new proposals, legislative proposals to audit manufacturers of drugs and ensure the best prices. there is also don't delay legislation. the money that we saved per our fraud and abuse activities, unfortunately we do not get credit for except in general terms. we don't get budget scoring or savings that we could use elsewhere, unfortunately. the medicare trust fund recognizes those savings. >> what is the budget status of the proposed national center -- national center for advancing transitional sciences. >> it is described in the

president's budget proposal for fiscal year 2012, and from our perspective it is an opportunity based on exceptional transitions in terms of scientific opportunities that make it possible to bring together a number of components of nih into the new center and to accelerate the process of understanding how better to deliver on translation needs. there is a great deluge of opportunities right now pointing us toward new potential therapeutics and the opportunity to have a center that focuses on that has been an idea that many people have embraced in the administration and in both parties. it is described in the president's budget. we are in the process of carefully consulting with constituents to make sure that we have the details right. in the president's budget, the actual precise numbers are not yet listed. that will be coming shortly.

this is going to be a new rival on the nih stage. we hope by october 1, 2011. you may remember that this is a proposal initially which came from senator specter which found broad support in the congress and which is authorized but had not previously been appropriated. there is a proposal of $100 million for this, which gives nih some new authority that we are excited about in terms of the kind of grants that we can support and partnerships we can carry out with the private sector. it gives us some proportion of those funds with the same type of lexical -- flexible authority to move forward quickly when things are going well. all that is something we are

quite excited about. we'll do this working with the institute's. a large number of drugs are currently out there with nih support. we hope to capitalize on the way science is going for to make that even more efficient. >> we will have more detail but it numbers before the appropriators mark of their bills this spring. >> which pay 40 expect to get the biggest opposition either from industry or capitol hill? -- which of your pay-fors do you

expect to get the biggest opposition from? >> there have been some wise choices made about where they will come from. i need to study more carefully to give you more specific answer. providers will be feeling the pinch. we want to carefully monitor reactions in some of the areas where they will be pressed. we will stand very close touch with them. -- stay in very close touch with them. >> phasing down the provider taxes over a number of years, and the total on that is $18 billion? >> correct. >> is it true that that money is now going to have to be picked up by the states, you are shifting some of that money were those provider taxes are no

longer going to go to the states? >> the cap does not begin to decrease until 2014, at which time there will be exchanges under the affordable care act. it will not start to reduce until after the new authorities in the affordable care act are implemented. >> but it is right to read it that way, that the states will be out that money after 2015? >> the states would be limited on the amount of money they can use by a provider tax to match medicaid payments, that is correct. >> one thing to keep in mind is to look at the whole package with respect to provider taxes. there will be a decrease in what

the states cannot recover, but as the affordable care act kicks in, the federal government is picking up 100% of those additions. >> [unintelligible] >> it goes down gradually to 90% and stays there for the long haul. >> it goes up to 6% next year. >> dr. collins, the office of director is $122 million extra this year. what are you going to do with the money? >> the office of the director has a number of important components that are now located in there. that includes the common fund,

which was initiated by my predecessor. it is a venture-capital space for a starting programs which no single institute might be actually able to initiate, but which could have benefits for all of nih is successful. the common fund by law is expected to grow at the same rate as the overall nih budget. that is part of it, but there are funds in there for the offices of research on women's health, the office of disease prevention, the office of aids research, the office of rare disease research, and others that are currently located within the director's office. all those together add up to a substantial contribution, but it is divided up into enterprises that are focused on biomedical research. the human genome money is in the national human genome research institute, but every institute at nih is these that

-- deeply invested in genomics. it is the core of out -- how we learn about how life works. >> if we could go back to the cdc for a second. your list 100 movie dollars in administrative cuts. can expound on that and what does it mean? >> the cdc has used contractors over the years, and we find that actually using regular employees is more cost-effective than using contractors. by shifting from contract work, we have funded existing dollars and were able to reduce resources and increase usage of

-- use of teleconferences to limit travel. we felt that though there will not be painless, administrative savings are always preferable to programmatic reductions. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> secretary subereous will be the second berman had to testify on capitol hill to mar -- it can ones that live on c-span3 at 2:30 p.m. eastern. the committee chairman is max baucus of montana. later, the white house budget director will testify before the house budget committee. that is also live on c-span3 at 10:00 a.m. eastern. obama is proposing a $3.70 trillion budget that calls for more than one trillion dollars in deficit reduction in the next decade. over the next several hours, you'll hear more about the budget and reaction to it, beginning with the president.

the head of the white house budget office outlines the administration's proposal. after that, reactions from republicans on the budget committee. later, more about the budget from secretary of state clinton and defense secretary gates. first, president obama speaking at a school near baltimore. >> good morning, everybody. i am here at parkville middle school and center technology outside of baltimore with secretary arne duncan and budget director jack lew. i came on a day when we are unveiling our budget and i am doing so for reason. i just want to thank principle but the parker who was showing

us around as well as the eighth grade science teacher who just visited with inner classroom. over the last few weeks have traveled the country, talking about what we need to do to win the future. we talked about the need to invest in innovation, so the next big idea is discovered here in the united states of america. we talked about the need to invest in high-speed rail and high-speed internet so that companies to move goods and information will move it faster than ever. this week i will be talking about the need to invest in education in places like parkville, so that every american is equipped to compete with any worker anywhere in the world. these investments are an essential part of the budget my administration is sending to congress. the jobs and industries of our time will take root here in the

united states. our people will prosper and our country will succeed. i am also convinced that the only way we can make these investments in our future is if our government starts living within its means. we start taking responsibility for deficits. that is why when i was sworn in as president, i pledged to cut the deficit in half by the end of my first term. the budget i am proposing today meet that pledge and puts us on a path to pay for what we spend by the middle of the decade. we do this in part by eliminating waste and cutting whatever spending we can do without. as i start, -- as a start, i have called for a freeze on annual domestic spending over the next five years. this freeze would cut the deficit by more than four hundred billion dollars over the next decade, bringing this discretionary spending to its

low share of our economy since dwight eisenhower was president that we repeat that. because of our budget, the share of spending will be at its lowest level since by eisenhower was president. that level spending is lower than it was under the last three administrations and it will be lower than it was under ronald reagan. some of the savings will come through less waste and more efficiency. one example, by getting rid of 14,000 office buildings and government on properties we no longer need, we can save taxpayers billions of dollars. when it comes to programs we do need, we are making them work better by demanding accountability. instead of spending first and asking questions later, we are rewarding folks inside and outside government to deliver results, and making sure that

special interests are not hogging up spending, i have -- there is a bill that outlaws earmarks. it would mean cutting things that i care deeply about. for example, community action programs for low income neighborhoods and towns, and redevelopment block grants that so many of our cities and states rely on. when you walk the walk in terms of fiscal discipline, these kind of cuts will be necessary. i am looking forward to working with members from both parties to take steps beyond this budget freeze, because cutting annual domestic spending will not be enough to meet our long-term fiscal challenges. the only way to truly tackle our deficit is to cut excess of spending wherever we find, at

domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes. what we have done here is make a down payment. there will be more work that needs to be done and it will require democrats and republicans coming together to make it happen. we have begun to do some of this with cuts in the defense department's budget plan. by adding tax breaks for orlin gas companies, and threw billions of dollars in savings we will use to make sure doctors see reimbursements and stay in the system seeing patients. while it is absolutely essential to live within our means, while we are absolutely committed to working with democrats and republicans to find further savings and to look at the whole range of budget issues, we

cannot sacrifice our future in the process. even as we cut out things we cannot do without, we need to invest in areas that will have the biggest impact in our future. that is especially true when it comes to education. right now, school is preparing our kids for the jobs and careers of the 21st century. school nurtures but children are passionate about and prepares them for success. students in the magna program start out by taking classes, gradually focusing over the next couple of years. the most popular subject at this school is engineering. that is important because today the most common educational background for america's top business leaders is not economics.

it is not finance. it is not even business. it is engineering and math. critical thinking. problem solving. these the kinds of subjects and skills our kids need to achieve success in the 21st century. it is why we are spearheading a drive to prepare can thousand new math and science teachers over the next five years and train 100,000 more current teachers in those fields. we are pushing for a race to the top in our schools that has led over 40 states to raise their standards of teaching and learning for less than 1% of what we spend on teaching and learning each year. we are protecting the more than $800 increase we added to the most widely used federal scholarships, making the choice to put them on a firm footing for years to come. we are on track with the goal i set when i took office. by 2020, america will again have

the highest proportion of college graduates in the world. i know the american people understand why this is so important. i think that those of us who work in washington need to understand why these investments in the future are so important as well. i mentioned in my weekly radio address a letter i recently got from a woman named brenda. she is a mom and a special ed teacher in missouri. her husband lost his job when the local chrysler plant shutdown. money has been tight for the family. they had to sacrifice little things they could do without. one thing brendan knows she cannot afford to sacrifice is her daughter rachel's education. that is why she is looking as we speak for a second job to help put rachel through college and ensure that the money is there to help reach a with her future. family true for brenda's

is true for the larger american family. education is an investment that we need to win the future, just like innovation is the investment we need to win the future, just like infrastructure is an investment we need to win the future. to make sure we can afford these investments, we are going to have to get serious about cutting back on those things that would be nice to have, but we can do without. that is what families across the country do every day. they live within their means and they invest in their families' future. it is time we did the same thing as a country. it is how we will get our fiscal house in order, attract new jobs to our shores, and when the future in the 21st century. thanks very much, everyone. >> the white house budget director says the president's

budget proposal cuts or produces more than 200 programs and shrinks defense spending by more than 5%. this 50 minute briefing begins with what has economic adviser austin goolsbee. >> thanks for coming. austan goolsbee will go over the economic assumptions and take questions. then jack will come up and say a few words about the buzz and take your q&a. >> as a prelude, we thought we would get assumptions out of the way. the forecast has to be locked in as of mid-november of last year.

it predates the tax bill. many of the private forecasters upped their forecast based on what was in the tax deal. most of that is not in the forecast. real gdp growth on a year-over- year basis in the administration -- we are forecasting 2.7% in 2011, 3.6% in 2012, 4.1% in 2013. our growth rate in 2011 is lower than the consensus of private forecasters surveyed by the blue chips. we anticipate catching back up. our medium-run forecast is a bit faster. it is within the central tendency that comes out of the

fed fomc forecast of last november, the reasonable range in which they drop off the highest and lowest. it is in the center of that central tendency. over a five-year period, the typical recession since world war ii has been followed by a growth rate of a little less than 2.2% over two years. this is lower than the typical recovery. we assume that because it is harder to get out of a financial recession. the unemployment rate in our projection is that at the end of 2011 it would be 9.1%. by the fourth quarter of 2012, it would be 8.2%. that was obviously made in mid- november. the unemployment rate currently stands at 9.0%.

unemployment is likely to flush away through the year. any revisions we come up with will come out at the mid-session review. for inflation, we are predicting that in 2011 cpi inflation will be 1.3%. it will decline from where it is now. it is in line with other professional forecasters. in 2013 and the long, we go back to something like the fed and 2% deflation level. if anybody has questions, i can answer those. otherwise, we will switch. >> [no aud[inaudible] >> as you know, running the budget machinery is extremely onerous. you can only have one forecast. we have to make a policy

forecast. as of mid-november, we have included the middle income part of the tax cut getting extended for a year. but as you know, we did not anticipate that the tax deal in november -- in november, we did not anticipate the deal would be as significant as it turned out to be, just as most of the private forecasters did not. we have not gone back to figure out that exact thing. there is in the analytical perspectives volume a sensitivity analysis of if the gdp growth rate is better or worse, what is the impact on the deficit. i think it is a little less than $100 billion. president speculating against changing the forecast, we will review it.

>> would the think of the projection they made this year? >> into the forecast go the gdp, the unemployment rate, and others. on the short run gdp forecast, it is fair to say our forecast predates the full budget deal of december in the tax deal and the blue-chip and others have revised up since they came out. with no further questions, i will turn over to the main event. >> thanks for reviewing the economic assumptions. i will say a few words about the

budget and be happy to take questions. the budget we sent to congress today it is irresponsible plan that shows the can live within our means and invest in the future. it cuts spending and the deficit. we have more than $1 trillion in deficit reduction, 2/3 in spending cuts. we will reach a sustainable deficit by the end of the decade. the government will no longer be adding to our debt. the share of the economy -- we are going to stabilize the deficit. the goal, to put it simply, is for the deficit to be in the range of 3% of our economy by the middle of the decade. reducing the deficit is a crucial step for us to take. at the same time, we need to invest in areas where if we do not invest it will undermine the ability to generate economic

growth in the future. we need to out build and out innovates of the economy will create jobs in the future. let me offer you some of the details of how our budget does this. on the domestic discretionary side, we have a five-year freeze which will save $400 billion over 10 years. that brings spending on this part of the budget down to a level it was at as a share of the economy when president eisenhower was in office. part of the cuts are in the outdated programs, things that are duplicative, and things we would choose to cut because it is the right thing to do. part of the cuts are not going to be in that area. the zero things we would not do, but for the fiscal chon as we face. we have enumerated many of them. we have reduced community block grants, cutting the community services block grant in half, cutting the low income home

energy assistance program by $2.50 billion, cutting the great lakes restoration initiative by $125 million. these are things that in a different environment we would not be looking at making these reductions. we took almost $1 billion for state revolving funds from water treatment plants. in total, we have more than 200 terminations and reductions. we have a book which i am sure many of you would get a copy of that lists how we get $33 billion in savings this year alone. the savings are not limited to the domestic area. in the national security budget, we are not freezing budgets. we are making serious reductions in defense, which has been growing faster than inflation and more than -- for more than a decade. our budget bring spending on defense down to a lower growth

level. that means $78 billion in savings over the next five years. it means we will have to reduce certain weapons systems we cannot afford and that the military does not believe we need for our national security, things like the c17 tanker aircraft and the marine expeditionary vehicle. if you look at spending for iraq and afghanistan, they are in the overseas contingency operations budget. these come down considerably in 2012. because of the withdrawal of troops from iraq, if you look at the savings in that area, overall spending in defense cuts down by more than 5%. we are not going to be able to get back into the kind a sustainable situation we need to just by cutting discretionary spending. but it looks at mandatory spending and a look at revenue.

let me highlight a couple of areas where we have savings in those parts of the budget. every year for the past many years, action has been taken in two areas. one, the alternative minimum tax, where there is a bipartisan consensus that middle-class taxpayers should not fall. another is in medicare, where there is a bipartisan consensus that we should not cut what we pay doctors. they might stop treating medicare patients. we have dealt with it for most of the last decade is to put the expense on our national credit card and to kick the can down the road. we cannot do that anymore. in the case of the alternative minimum tax, we have a specific offset that would keep it from hitting middle class families for three years. it would reduce the value of itemized deductions and cap them

at 28%. it would take the value of itemized deductions back to where they were in the reagan administration. we think that is responsible. it is a first step toward putting -- toward cutting back on the spending in the tax code. we put that in this budget as a way to paper the alternative minimum tax for the next three years. in the case of medicare, we have $62 billion of specific savings in different parts of the health budget which would pay for a two extension. last year in december, congress worked on a bipartisan basis to pass a one-year extension and pay for it. that was the first time it was paid for. it was the right thing to do. what we have done in this budget is we have said here are offsets to pay for it. we have to work together so we can do with it on a longer-term

basis so it does not become another year to year charge. i would like to talk about a couple of aspects of the budget that i call the stewardship area. one is the pension benefit guaranty corporation. we have seen over the last few years that the federal government risk to taxpayers of having to bail out entities is something we want to avoid in the future. in our budget, we have a proposal to give the corporation the ability to set premiums, which are now very low, in a way that matches the default risk. participation is voluntary in the pension benefit guaranty corporation. it would shift the burden of the risk from the taxpayers' back to the companies that get the benefit. it would reduce the risk that there would be a need for a taxpayer bailout in the future. unemployment insurance -- this

has been a tough time. each of the states has a fund. they have been heavily burdened by the recession. we would have a two-year moratorium in federal increases in unemployment insurance taxes. because the state funds have borrowed from the federal government, those automatically would go into effect without the moratorium. we would give the states two years to get their funds back into shape. that means the next 10 they need to draw down, there would be in a financial position to do so. once we are well into the recovery, we adjust the wage base in the unemployment system so that in real terms it stays where it was set in 1983 under president reagan.

the president has called on congress to work on tax reform to eliminate special interest loopholes. this would not only it leveled the playing field, but it would make american companies more competitive internationally. while it does not contribute to the deficit in the short term, the president continues to say we need to work together to find a solution to the long-term issues in social security so the next generation can rely on their benefits. one must work together in a bipartisan way to keep this contract with the future. this is a budget that lives within our means so we can target critical areas where we need to invest in the future and in building our infrastructure. even in the areas where we invest, there are very tough choices. i would like to mention education and the program in

particular -- the pell grant program in particular. we need to have a future work force trained. the cost of the pell increases has been more dramatic than it was expected to be. we do not need to reduce those annual grants, which are $5,000. we have put in other equations which have substantial savings that will make it possible to protect those increases. one is a provision that says students should get programs -- pell grants for the school year, not summer school. a few years ago, the program was

changed so summer school was treated the same way. it cost several billion dollars. we cannot afford that. we are not sure what the cost grew that much. we need to protect the basic pell program. we think summer school should not be eligible. one pell grant a year. we need to make sure graduate schools continue to have access to student loans. we need access to be available as possible. we would start interest accruing while in school, but it would not be paid back until graduation. in k-12, we reward innovation and success.

we can emphasize competition and really emphasize rewarding things that work. we eliminate 13 education programs outright. to invest in the industries and jobs of tomorrow, we invest $148 billion in research and development. this supports our goal of putting 1 million electric vehicles on the road by 2013, doubling our share of electricity from clean energy by 2035, and reducing energy use by 20% by 2020. we eliminate 12 tax breaks that now go to oil, gas, and coal companies. we also have a comprehensive surface transportation bill which creates jobs and has a $50 billion up-front investment. this will support high-speed rail and consolidate 60

duplicative programs. the investment here is significant and will require we work together on a bipartisan basis to make sure it does not increase the deficit. the budget also has a number of reforms would change the way washington does business, putting more federal funding up for competition, cutting waste, and reorganizing government so it better serves the american people. the budget cuts more than $2 billion in administrative overhead, things like travel and emergency contact services. it is based on the race to the top model and applies that to programs from early childhood education to college. it applies it to allocating grants for work-force training programs and for the way we

encourage commercial building efficiency. we also set up a process that will enable us to quickly dispose of excess federal property so we can save billions of dollars by not holding on to property we no longer need and that could be useful in the private market. cutting spending and cutting our deficit is going to require us to put political differences aside. it will require that we were together. we need to make sure that we are making the kinds of cuts we need to get our deficit under control. we also need to make sure we are not cutting the things that are vital to the future growth of the economy and how we create jobs for the future. with a responsible budget, we are on a path toward having a sustainable federal budget where the deficit's come down to a level where we are not adding to

debt. it is a program where we will live within our means and still invest in the future. why don't i stop there and take your questions? >> [inaudible] >> in does accomplish the task given to the commission, which was to bring the deficit down to 3% of the economy so we would have a sustainable level of federal financing in the future. second, the budget draws heavily on the ideas of the commission in areas like corporate tax reform, medical malpractice reform, a government reorganization, and handling of

surplus property. many provisions reflect the good work done by the commission. i think the commission did something important. it put on the table a lot of ideas, brought some degree of bipartisan consensus, and started discussion of the things that ever been very contentious. the president in the state of the union tried to distinguish between the down payment and working together on the long term solution. this budget is a meaningful down payment. if we can accomplish what is in this budget, we will set both the federal budget and the economy in the right direction. in the areas for the long-term future, there has been a lot of discussion on things like social security. should it be in the budget? i want to make clear that social security is not contributing to the deficit in the next five or 10 years, or considerably beyond that.

it is something we need to address in the long term to make sure workers in this generation and the next generation can rely on their benefits. the president said in the state of the union and will repeat in the budget that he wants to work together to have a conversation about how we can do this in a way that meets our values. i think there is a lot of things in this budget that prove the commission did very important work and there is still important work to do. >> [inaudible] >> the process gets going today with the president sending a comprehensive budget to the congress. it is a comprehensive budget which puts all areas on the table. it accomplishes the goal of stabilizing our deficit. we look forward to working together on all the areas that are covered.

>> on medicare payment to doctors, it cuts $63 billion of that. it looks like medicaid provider taxes are the biggest line item, about $18 million in the second one. there are cuts of $12 billion of appeal. can you explain those budget items? >> a little over 30 come from provisions which we consider to be program integrity provisions. there are 16 of those provisions. they are things like making short health provider has been paid properly. it puts in place mechanisms to make sure we only pay once for each service and that each service we paper is covered in a legitimate charge. i think a little more than half

of the savings are things that our program integrity issues which i would hope are not controversial in terms of either the political debate or the industry. in the area of medicaid, there is two provisions that have particular savings. one is a provision that says that if states are coming in for federal matches we should make sure we have calibrated the match so there is a real dollar being paid for a real dollar that is being matched. that is what the provider tax would do. another piece of the medicaid savings -- as we look up beyond the implementation of the affordable care act and look at a time when there will be less uncompensated care, we need to collaborate with disproportionate share payments to make sure we are actually giving payments to providers who are treating people who do not

have insurance. the third basket is in the area of pharmaceuticals, essentially saying that medicare and medicaid should have access to things like genetic and biological drugs. i think all of these things fit into the category in an area where everything you do, people study closely. we should have a serious discussion and accomplish them. >> can you please identify yourself and your outlet to make this easier for everybody? >> i am from video news. what are you proposing for veterans care, particularly gi housing and medical? the know if the republicans are proposing any veterans cut stacks -- do you know if republicans are proposing any

veterans' cuts? >> we have not cut back in a serious way on benefits to veterans. we have worked through the process of forward funding to come back in and backfill where the forward funding was not adequate to fund levels of current need. it is a little bit confusing sometimes to look at the va budget because it comes in two pieces. i think this is maybe the first year this has been necessary. and we have been making sure va has the money it needs to do some of the important reforms they are doing to improve the quality of service. >> this weekend, i did not have time to look at each of the specific proposals.

>> we talked about a sputnik moment for the u.s.. what do you think balls into sputniks spending? if the republicans and don't give it, what is your recourse? >> i think the $148 billion in research and development is the core. education is part of the as well. i just came from a school in maryland, where the president announced the release of this budget. it was exciting to look out of hundreds of students whose favorite subject is science, math, and engineering. they are getting the education they need to be able to get the jobs of the future and build the economy of the future. it is not just the r&d part of the budget.

it is also education that is part of how we prepare to deal with the cutting edge. we spend more than any other country on r&d. which targets are spending those areas where, with a little bit of a push, the united states can get a step ahead and be the most competitive going into the future. we can get back to you with specific numbers that pull together parts of the budget. >> it is interesting to hear you say that social security -- >> can you speaking to the microphone? >> it was interesting to hear you say social security is not contributing to the deficit. why is social security still on the table? isn't it solvent until 2027 with the money seniors have paid into it? >> the president has said we need to make sure that people who are working today can count

on the benefits being paid when they retire. it is not an urgent moment to do epoch. it is not anything that is going to happen this year or next year. it is the right thing to do it in advance and look way down the road. it would not effect the short- term budget horizon, but it is still the right thing for us to do in the right way. the president laid out in the budget principles we think reflect the right way. >> victoria jones, talk radio news. he said it would require all sides to put their political differences aside, but both sides of congress are very entrenched in their views. house republicans intend to cut $100 billion in the next 7.5 months. isn't this wishful thinking on your part? >> i think it is fair to say

that every side begins with a deeply held view. we have our own deeply held views. it is also true that looking ahead, we have a hard time predicting when the moments of coming together are. last november, no one predicted congress and the president would come together and do something important and historic in passing the tax bill we passed last december. both sides had to come off of positions that would make it so there could not be an agreement and find the space in the middle. i think that is the pattern of how you work in a bipartisan way. it was true in the 1980's and it is true today. we have put down a reasonable and comprehensive plan. it is our plan. we understand that is the beginning of the process. we do not have a monopoly on all wisdom. we look forward to working with the congress. there is no doubt there will be challenging moments. we have to work together in the

interest of the american people to reach agreements where we could agree. >> why not take a step in this budget and do something about it? >> there has been a lot of discussion about what the best way to move forward is. but history is a pretty good guy. in areas which require bipartisan consensus, i think you'd be hard-pressed to find a moment where either side going forward with a dramatic plan -- i worked on social security reform in 1983. it set the process back, not forward. it took years to get back to the point where the parties could come together. that was facing a financial crisis at the time. the president has tried to set a tone for the discussion so that we can engage in a responsible

way. i believe that is the way you have effective discussions. i think we have done what is most constructive and most productive. >> "boston globe." you said this reflects the president's priorities in education and those things. what would the president say to a low income elderly person in massachusetts who cannot pay a heating bill? what are you investing in wireless and not helping her pay her bills? >> you are asking why we make a reduction in the low-income energy assistance program. this is a hard cut that has real impact. if you go back to 2008, the program was funded at roughly $2.50 billion. we had a huge spike in energy prices and the program doubled to $5 billion.

we are now at a price level that is close to where we were before that increase. looking at our fiscal challenges, we cannot streamline the program at $5 billion. i hate to talk about history and the old days. i helped create that program in the late 1970's. it has done good for an enormous amount of people. it was never meant to be an entitlement program. funding for acquitted based on needs. balancing our fiscal challenges and the funding change from 2008 to now, we made the tough decision. we have said in our documents in the budget that we will keep an eye on where prices go. but we cannot just cruise at a

spending level when we are trying to make these difficult savings. in terms of investing in the future, i think we have been very clear that we need to create more opportunities to invest in education and innovation, and in building the infrastructure for the future. we have had tough tradeoffs. >> speaking of those things, could you give us a one-year number for these types of new investments? what is the total amount in 2012? but this temporary programs, permanent programs, or mx? >> we have 2012 funding levels in our budget. in the case of the infrastructure program, we

proposed real authorizing the service transportation bill. that would be a multi-year commitment. as far as the total, we can get back after. >> "politico." you said in your opening remarks that we would be paid for what we spend every year in this budget. most of the savings you pay for that fix are coming in the out years, not the years when you will be fixing the payment level. presumably, you will have to find another solution, which would get to the same problems we have with the payment rate in the first place. >> under the way budget scoring rules work, you typically look at the savings in the entire window. you can apply them to spending

in any one of the years. by locking in savings over 10 years, we are paying for the two-year extension. as far as the future goes, we need to redouble our efforts in this window. we have three years to pay for fixes come to work together to come up with a sensible reimbursement approach, which we pay for on a more permanent basis. building in a window of four years should give us the opportunity to do that. where you have a bipartisan consensus does not make sense. three years should give us the time to figure out how to pay for it. we are paying for the two year extension. i am distinguishing that from dealing with the permanent fix. it is a very significant down

payment. >> it appears you are anticipating a growth in the federal work force of about $15,000. to what would you attribute that growth, and are there any specific areas in which you expect expansion? >> there are many agencies that are shrinking. there are few that are growing. the growth is in areas that for the most part relate to new activities, for example implementing regulatory reform. it requires new personnel and the treasury department, at the s.e.c., at the commodities futures trading commission. if you look agency by agency, you will see it is not a story of broad-based growth. it is in most cases pretty concentrated.

>> at a time when your friends in the house are talking about cutting $60 billion this year, it looks like your policies are increasing deficits in 2011 and 2012. i am wondering if that is a reaction to the state of the economy. is it intentional? the think it risks antagonizing the process? republicans are still reacting with a certain amount of disappointment. >> 2011 is not a set of policies. it is the effect of policies already made. we have a bipartisan agreement in september -- in december to pass an important piece of legislation, which is one of the reasons we're seeing greater economic growth and faster job creation. it was the right thing to do, but it had a clear consequence. it increased the deficit in a

number of ways. we have the payroll tax holiday, which is putting $1,000 in the average family's checkbook to spend this year. it also extended provisions that would have expired. had they been extended for a normal year, some of the expenses would have fallen in the following fiscal year. the concentrated all the expenses in fiscal year 2011. there are a lot of things making the deficit go up. it is not policy we are making in this budget. it is a reflection of policies made there is some tale to the tax agreement we are seeing the -- the tax agreement. we are seeing the end of some of the extensions of the last few years.

there is a general agreement that putting the brakes on right away is not the challenge. if we were to be able to make enormous savings right away, you would start worrying about the impact on the recovery. the question is what is happening as you get into 2012, 2013. are we putting in place policies that will get us to that sustainable level of deficit? we think we have a sensible mix of policies. they do grow over time. once we look in the five-year freeze, it has real impact. the path in defense has a real impact. the entitlement savings of $62 billion go on, as to things like the tax provisions that paper the alternative minimum tax.

>> "washington journal." can you walk us through how the 2/3 calculation is made? if you look at the $1.10 trillion in deficit reduction, i can see the freeze money. are you counting the debt service money as a spending cut? where are the other spending cuts beyond that? >> the spending includes the freeze, the mandatory savings, and all the other spending programs. on the tax side, it is a net #. it is showing depth a third of the $1.10 trillion in deficit reduction is the net tax increase. we have a considerable number of provisions that would reduce revenue as well. when you go to the tables with detail, there are some things that lose revenue.

that gives us the savings. that is 1/3. >> [unintelligible] >> i am not going to walk through all the numbers. i just gave you the structure of it. it is net savings and net tax cuts, with the interest payments intercalated. >> when it comes to awards you lay out on the table but the new -- but do not count in some ways, but do in other -- the tax cuts -- it is a little confusing what the theory is here as far as what is in baselines, what is in the budget, what is counted

toward the deficit. is there some overall way of explaining how you ladies out? >> that is a good question. i can see that it is a little confusing. there is a lot of aspects of bass lines that are confusing. -- of baselines that are confusing. the budget assumes the middle class tax cut is permanent and the upper income tax cut is not extended. we do not count the savings from letting the top brackets go back as part of our savings. that is in the baseline. on the were spending, spending for afghanistan and iraq is in a category that is called overseas contingency operations. we see that coming down from 11 to 12. that is reductions in outlays.

we do not know exactly what the levels will be, but we have estimated that to be $50 billion in the out years. that will be high or low depending on what we are. the budget is not the place for a precise estimate that implies what you're levels of activity will be. on sgr, we assume it will be fixed. on the amt, we have only taken credit for fixing the part that we have provided offsets for. in the baseline, the amt is assumed to be fixed, but it is not assumed to be paid for, except for the offsets we have provided. i hope i walked through them in a clear enough way.

>> you mentioned earlier that you had not made any republican counterproposals. in terms of what you are facing in these negotiations, there are deep divisions within the republican conference in the house. do you feel at the moment that you have a coherent bargaining partner? how would you rate the complexity of these upcoming negotiations? >> i think we need to see how things play out this week as the house takes up the 2011 appropriations bill. it is clearly a very deep set of reductions. there are provisions in it, some of which overlap with things we

looked at. i think it is a little early for us to be responding before we know precisely what they are going to do. this is the first step in the process. there will be opportunity for the white house to engage. i think it is always complicated when you have the house and senate that are likely to have different views, and a white house that will have to work with them to reach a consensus. what we do have agreement on is that it would not be prudent to shut the government down. we look forward to working through these differences a little bit more in the house and the senate. >> people are saying they want the leadership. >> i think the challenges of managing the house or the senate, or the responsibility of the leadership -- they are

working to deal with getting a bill to the house. i am going to wait until the have taken action. >> "mother jones magazine." the budget seems to reflect the state of the union theme "winning the future." the unemployed ask what is the short-term benefits. what would you point them toward sex >> first, the fact that coming out of december it was a matter of enormous importance to extend unemployment benefits so we are going into this year with a system that provides a safety benefit for workers who are struggling. secondly, if you look at our infrastructure proposal, the fact that we look for a head start that would come at the beginning is very much with an

eye toward creating immediate opportunity. i think that while we are very much of the view that there is recovery under way and that employment is going down, we are not satisfied with where we are. we need to do better. we need to have the economy grow faster. we need to have more jobs created. this budget is designed to do with the horizon to make sure we have an economy that does provide those opportunities. >> julie davidson. can you elaborate how agencies can balance all the initiatives with discretionary and pay freezes? >> it is going to be a challenge for every agency to work in a constrained fiscal environment.

as every family has to make choices and every business has to make choices, priorities will have to be set. getting our priorities oriented around doing the things that are most important is going to be critical. i do not think it is going to be easy. we have a great work force that work's fairy hard. there are additional burdens being put on the federal work force. we are trying to provide growth, but we also have to look internally to get a ministry to savings. there are more agencies on the domestic side going down than up. these are going to be challenging difficult years. >> you have outlined things for sewage treatment.

those are relatively small cuts. what made to single out things like that, when there are more expensive programs and? >> we went to every item in the budget and looked for where there were savings we could achieve. in the case of some of these programs, we see proposals out there that would have deeper cuts. we have tried to strike a balance where we think the essential work can go on. i went through a rather detailed explanation of why the funding level was chosen. i think if you look at the way we are managing our resources in education, it really does _ that even when we are investing we will have to make tough tradeoffs to live within our means. it is going to be challenging in many departments to contend with resources that are either frozen or shrinking, and challenges

that are still important. that is why we think this is a budget that shows we are tightening our belts to live within our means. we are achieving savings in all areas of the budget. we did not just save domestic discretionary spending. it is defense spending, mandatories, revenues. we have what we think is a responsible, comprehensive approach that gets us to the bottom line. we look forward to working with the congress to get something enacted that is within the best interest of the american people. >> [unintelligible] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> and republican response to the president's budget from house budget committee president paul ryan and senate member jeff sessions. they spoke for half an hour. >> afternoon, everybody. i am here with senator sessions, the ranking republican on the senate budget committee. the president sent his budget to capitol hill earlier this morning. let me just say this. we know we have a fiscal crisis in this country. we know we have a debt crisis. we know it is threatening our way of life and our economy. we know we need to do every -- we need to do something about it. the sooner we tackle these problems, the better off

everybody is. our problem is we are running out of road. what did we get to date? we got a punt. the president punted on the budget, the deficit, and the debt. that is an abdication of leadership. americans expect the president to lead. they expect the president to take on the country's biggest challenges. arguably, the biggest domestic challenges in the history of this country is the crushing burden of debt that is coming our way. many people thought that the president would moderate after this past election. this is not a moderate budget. this is not a triangulation. this is a budget that leads to the left. it would be better doing nothing than it would pass this budget, for the sake of our economy, our future, and jobs. we all have to remember that

today's big deficits means tomorrow's big tax increases and interest-rate increases. this costs our jobs. this hurts our economy. this tells entrepreneurs that the more we borrow today, the higher the taxes will be tomorrow, the higher their interest rates will be. this is going to hurt us in our ability to get out of this recession and create the kind of jobs we need to create to not only help our fiscal situation, but to help the economies -- hope that americans back to work. i will quickly go through what this is. you can see that we have a timeframe of debt. the president's budget, as you can see here, until such that the debt doubles by theim