does their need to be reforms? what would those reforms be? would you be in favor of a line item veto? >> interesting that you ask. i am planning to introduce a plan called expedited decision. the president recommended certain reforms. we are going to introduce that bill. i have had conversations with paul ryan to see if we can find some common ground in this area. you want to make sure the congress has an opportunity to make sure they preview the cuts the president proposes to build that have already been signed. i believe that is a way to get to some of these budget issues. >> a quick foreign policy question. given what we are seeing in the

middle east and north africa, do you think we are headed for a situation where the united states is going to be pulled into some kind of military intervention? we heard about a no-flight zone in libya. are we headed -- no-fly zone in libya. >> i do not think we are headed toward a situation where we will have troops on the ground in libya. there is an array of military options. people are looking at a fly zone in of a nos- libya. there was a no-fly zone in iraq before troops got there. it is something that needs to be look at when you have this

continuing situation where gaddafi appears to be willing to kill thousands and thousands and thousands of people to keep himself in power. i would not recommend the united states do this in any unilateral fashion. to the extent that the international community and nato believe it is necessary, that is something that should be on the plate and considered. i would want to look at all of the facts. i would not rule it out right now. what i would rule out is putting american troops on the ground. but how worried are you -- >> how worried are you about rising fuel prices? >> we are seeing gas prices continue to go up. at some point, that has a depressing impact on the economy. yes, we are wary. that is one of the issues with respect to trying to provide

leadership, to provide some stability in the middle east. what we saw in egypt has been a great expression of people's desire for greater freedom, our democracy. the president handled that well. what we are seeing presents a great opportunity. it also has a set of dangers. how you manage through this is going to be tough. the president and the united states needs to -- united states need to exert leadership. >> a political question. the redistricting process is underway. the democrats are in control of the justice department for the first time since the kennedy administration. how does that play out for the democrats' hopes to regain the

house next year. >> we have redistricting going on in states around the country. that is a wild card as we go into the next election. how will that shake out? the democrats need 26 seats to regain majority in the house of representatives. a lot of people who thought that the election was about jobs and putting people back to work have been unpleasantly surprised that our republican colleagues have not been focused on jobs and economic. they have been focused on the peeling health care reform. we will have to see how -- pope r is onepeal -- on repealing health care reform. we will have to see how it all shakes out. >> thank you for being with us.

enjoy your sunday. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> today, my copy promoting his -- mike huckabee promote his new book and talks about the gop presidential field taking shape. watch him on "road to the white house." >> i think our system of government is breaking down. the system of checks and balances are not operating properly. >> winslow wheeler has written two just published essays. >> congress has the power to go to war, the power of the purse, and the public to investigate.

it first two powers to go to war and of the purse are meaningless if congress does not use the power to the best it is not doing that. prexy threst of the interview tonight on c-span's "q & a." >> we will take you live to the national governor's association meeting. today, we will begin with a panel talking about how states can afford medicaid. we will hear from douglas holds the can -- douglas holz eakin. while we wait, let's take a look at congressional redistricting. host: joining us from new york,

the senior counsel at the brennan center. appreciate your time. guest: thank you so much for having me. host: our focus is redistricting. and let me put on the table a snapshot of what we're looking at in terms of the latest census information and what it means for states. first, those expected to gain seats in the u.s. house of representatives include arizona, which will gain one seat, florida will gain one, georgia gaining an additional seat in the house. nevada gaining one seat, south carolina gaining one seat, texas gaining four seats, utah and washington state each gaining one seat respectively. california will stay the same. and those states expected to lose seats in 2012 include the following. illinois, iowa, louisiana, massachusetts, michigan, minnesota, new jersey, new york, ohio, an pennsylvania. all of those losing one seat except ohio which is expected to lose two congressional seats. again, as a result of the census information and

redistricting. so walk us through the process. what happens next? guest: sure. well, it's important to remember that everyone in america lives in districts. we live in congressional direction, we live in state legislative districts. some people live in actually smaller districts. for example, districts for city coinl or districts for school board or county commishers. after the census gives the apportionment counts to the president and the president then gives those numbers to the house and the number of congressional seats that each state is going to get gets established, the census then turns the data to the states and the states view that data to do their own congressional and legislative redistricting. host: and each state doing it somewhat differently. iowa for example has its own commission taking the politics out of the process. other states become far more political. correct? guest: will, what's correct, sir, is that every state has its own redistricting process. and in some states, the process

is different depending upon what districts we're talking about. are we talking about state assembly or senate districts or are we talking about congressional districts? and it is in fact if case that most states have the state legislatures drawing their own lines. but some states use the assistance of commissions. iowa uses what i would call an advisory commission, which means that someone other than the legislature prepares the map but the legislature ultimately has to vote on them. some states use what we call a backup commission, which means that whoever is drawing the lines aren't able to meet the relevant deadlines. this other commission comes into help. some states use what we call politician commissions. and a politician commission is a small body of people that can actually draw the map and implement the map but may include state legislatures that may or may not be ultimately running in the districts that they draw. and then some states use what we call citizens commissions, where the people on the

commission are not running for office, there are certain rules trying to establish a little bit of a gap between the direct interest in running. and in those instances a lot of people call those independent commissions. host: the brennan center has put together a report which you're a contributor for. one of the questions, how should the lines be drawn? guest: well, districting is about values. there are certain criteria used. there's federal criteria which include that of making sure that the districts are relatively equal in population. and making sure that we are adhering to the voting rights act. and then on top of that, the states impose their own sorts of criteria or values. but because redistricting is

about trade-off, every time one person decides to or the district drawers decide to elevate a certain value, another value has to change. and because it's all interrelate, you can't draw one district and n a vacuum because it affects the entire state, you can have substantive changes that's resulting from something where you decided to start. and it's for that reason that the brennan center believes that the redistricting process must be transparent. the public must know what are the guiding principles, what are the limitations on drawing district lines and being able to activity engage and participate in that process. host: act a quarter of the country viewed as solid democratic liberal state delegations including new york and massachusetts, oregon, and nume. and some of the more conservative republican districts include texas and oklahoma, kansas, nebraska. but almost half of the country viewed as centrist state delegations. like pennsylvania, ohio, florida, arkansas, south dakota, california, and nevada.

so the politician ofment state legislature, what does that tell you about the process? guest: i think there's a lot of thing that is go into the process, including the politics of the state legislature. but often it depends on who is drawing the lines. if it's done by an independent commission, then the composition of the government in that particular state is less important. if there's specific rules regarding how one draws the lines, what the state criteria are, how that state criteria interacts with federal criteria, that also has an impact. what is really important in the redistricting process is to remember that there are a lot of things at play. and there's no one factor which is going to have a dispositive impact. but because there are a lot of thingses at play, the process needs to be transparent and people need to be aware. host: myrna perez is joining us from new york. last friday here on the

"washington journal," charlie cook who writes for the washington journal talked about the politics of redistricting and what we could see in the year ahead. >> republicans scored so many huge gains in the governorships that they're going to be in a stronger position in redistricting than any time in modern times. so you've got some offsetting factors here. and then just one additional data point, that could or could not, may or may not be important. is this will be the first time that a democratic president or justice department will be in place during a redistricting since president kennedy was in office. and whether that becomes relevant or not we'll see but my hunch is that you're not going likely to see a turnover of more than 10 seats one way or the other, which obviously, if democrats picked up ten seats there's still 15 short of a majority. host: how would you respond to charlie cook's sentiment? guest: the outcomes of what's going to happen remain to be

seen. there have been a number of changes and reforms and there's a different process now. we have to remember that there is greater technology that is available to the public to participate. i mean, right now people can get electric notices of upcoming hearings of redistricting. people can join with other people via facebook, other social networking sites to talk about redistricting and what's the important value and people can draw their own map. and i think all of these many different things, and the ability for the public to participate in the process are going to produce an outcome that may surprise some or it may not. one of the thing that is really we as a country need to decide is how much of the redistricting process are we comfortable with having happen in back rooms or in hallways versus how much do we want in open sunlight with the public there understanding exactly what is going on. and the ability for political mischief is going to depend on

a number of factors. one, how transparent the process is and how accountable to the public are the line drawers going to be. where the population shifts are. what the relevant laws are, for example, if the voting rights act applies or what the particular law state may have to say about how much partisan interests can play in the redistributing process. so there are a lot of factors going on. and i know that it's really popular to try and make predictions. but what i'm interested in doing is making sure that this redistricting process is one in which the public feels like they have the tools to engage, the opportunities to engage, and the opportunities to understand what redistricting means, why it matters, and how they can become a play a bigger part of it. host: you can get more information by logging on to brennan center.org. what is the mission statement of the organization? guest: we are a nonpartisan, nonprofit law and public policy

institute affiliated with n.y.u. and named after justice william brennan. we focus on issues related to democracy and justice. and we have a redistricting program that does a number of things providing technical assistance, legislative drafting assistance. and a lot of publicication, public education on the redistricting process. host: including this citizens guide to redistricting. this is what it looks like. tom joining us from texas. good morning. caller: good morning. regardless of the redistricting, it only manifests the problems that already existed that got us in our situation the way we are now. and you would have to go back to the where the beginning of that problem started as far as the unemployment, the jobs, and up to the current redistricting. where states either lose or gain dricts.

the problem started when the gap bill and the nafta were both signed over into the wto on december 8, 1995, under the clinton administration by bill clinton. the problem of that was it also went back retro to the year of 1992, and subsequently i said then to everybody which i belong to a very large union who was at that time consolidating with even another still larger union, and in the process i warned them it's going to take about ten years if they turned everything around after once getting into it. so now i'm going to tell you that every year on top of that, since the year 2010, we're

going to add another year. but that additional year every year thereafter 2010 will create an actual year and a half of detriment to the unemployment, the gross national product, as well as the treasury. . .

guest: it is for that reason that citizens must be involved in the redistricting process. we are so affected by all of the legislation enacted by representatives we sent from the district's we live in. host: let me put one example that was found on page 11 of the brenman report. this is illinois in 2002. in 2002, barack obama challenge to bobby rush, losing in the primary but getting 30% of the vote. as a result of redistricting, his residence was redistricted out so it would restrict him

from a rematch in 2000 to explain this. guest: one of the critiques is that they can use the process to target political enemies or potential political enemies. and that is, again, one of the really important reasons why the redistricting criteria needs to be very clear, why the public needs to understand what rules affect the redistricting process. the person drawing the lines need to adhere to the federal and state rules and the public needs to be provided some justification when there is actually a redistricting map on the table to be given an explanation. why does that particular district have a car out of one block? if there -- is the reason it given the legitimate? the public has to be given the ability to hold the line drawers responsible for the decisions they are making in the process.

host: bill, democrats line, from chicago. good morning . caller: i would like to say on that last caller, interesting that they see what happened with the world trade organization. you can see whether congressional people, senators and congressmen, did and how they voted if they would simply look online. what i would like to know is that when everything is redistricted, when does it take effect, and how long does it take effect? host: thanks for the call. guest: ok, that is a great question. redistricting -- some people live in small political unions at that do not need to have redistricting. for example, some city councils are elected at large. if you live in an area that does redistricting it will happen every 10 years and it is connected to the census.

after the census gives the data to the state, the data will be converted using the federal and state rules, and the input of the line drawers, into the district maps we live in. what becomes important timing- wise is what is happening in that process. states have different deadlines for doing their legislative redistricting. most states will do their redistricting between 2011 and 2012. some have deadlines in 2013. some states, the process is going to be prolonged because of legal challenges to various lines. then it is important to remember that some states have no laws prohibiting redistricting from occurring more than every 10 years. host: our next call is scott, independent line. caller: how is the 2030 report

issued in september, 2008, margaret beckett, for the stock and the reporturrh, from the world bank, with fragile state securing development plays into the redistricting, considering that they said that everything under the 40th parallel will be considered second world because of the climate by the year 2013. host: you lost me on the first part. what is your source? caller: the 2030 report, issued out of washington. margaret beckett presented on bbc tv. basically, the ocean and floors are sinking, causing the magma push. that is why volcano activity is up 300%. host: i am not sure it is

relevant to this conversation, myrna perez? guest: the only thing i would say is that redistricting needs to occur in america because population shifts, and families grow, people die and move. we want to make sure that there are roughly the same number of people and all of the districts that we draw. and it is true that the property and geography and other things like that affect the shapes of districts. the really important thing to remember when doing all of this is that there are federal and state rules limiting and guiding those in drawing district lines, and the public needs to be involved in the process. host: is the politicization of the justice department going to intimidate those legislatures involved in the process? guest: i think the department of justice has a large role to play because of the voting rights

act. section 5 is the pre-clearance division, which is a very limited and a tailored protection requiring a certain communities or certain states and certain jurisdictions which have had a history of racial discrimination in voting to get approval in advance before making any changes to their district lines in order to be able to afford a fight that the redistricting plan that is being to beed -- anin order able to fortified that the redistricting plan that is proposed does not make a protected community worse off. host: looking at states gaining and losing seats. california will stay the same based on census information, as we listen to joseph on our alignment from republicans. -- on our line of republicans. good morning. caller: i'm 70 years old.

i have understood census and i understood redistricting. and i understand that census and redistricting is a done by government and government representatives. i think her program is ludicrous. what she is trying to do is to get environmentalist's, unionists, to get people who feel that, well, the past election should have been lost instead of one and, therefore, we will have influence. please, please, please let the world stay free. thank you. guest: i'm not sure what response is warranted. i think the redistricting process is better when it is out in the open and when the public has an opportunity to participate. people of diverse viewpoints will provide it differing opinions, and it is important to those that are drawing of district lines to be able to

process and understand and hear from diverse viewpoints. there is federal and state laws that are superimposed upon the public perception and public desires. there is no one district plan that is going to make everyone happy, because there are going to be elections and some people win elections and some people lose the election and there is nothing that can be done about that. what can be done is to make sure that everybody affected by the redistricting process skills the process is fair, and they were given the opportunity to be heard and to be able to explain what the needs of their communities are, and what sort of representation that is required in order for their communities to be able to make their needs met. host: you can log on to brennan center.org. five points. number one, letting politicians

choose their voters. eliminating income tends, or eliminating challengers as we spoke about with barack obama in 2000 and 2002. attacking partisans, diluting minority votes, splitting communities, and the possibility of destroying civility. do you want to respond to that? guest: all of those are very important to remember. one of the things we like to say about the citizens' guide is that we consider it a user's manual. people should own, the public should alone in the redistricting process. and we hope that the citizens' guide -- the public should own and the redistricting process. we hope that the citizens' guide will give them a sense so that they can effectively participate in the process. and, in those instances in which the process in their state is not particularly open or it does not offer a lot of avenues for to the patient, we hope the

information in that guide provides people with the confidence to demand the ability to participate. and encourage people to talk to their neighbors to be able to understand more about what their community is, who their community is, where the community is, and what they're representational needs are. host: leonard is joining us from cleveland. good morning with myrna perez of the brennan center. caller: good morning. ohio, and we will have the possibility of losing the two. and the duty and care of our electric voters and things, that politicians, should be looking at that, but with us losing two is because people have moved away from ohio because of job loss, moved to another state for

their job and they have to sell their homes and things. will ohio be represented? we have many presidential -- here in cleveland. they feel we are a vibrant city and they need our vote. when we lose that extra vote, what will happen for us, the people? guest: i'm seeing a consistent theme. we are having a number of people thatanin about issues are important to them and their neighbors and their country. it is precisely because people care about what happens to them and because redistricting is such an important part in our representation that the public needs to be able to participate in and take advantage of those opportunities to participate. there is no question that the interests of the people calling in is that they want to have more of a say in their

government and they are concerned about what is going to happen if they do not have an adequate say. and that is precisely why the brenman center does the public do.uationducation we to demystify some of the technical jargon and terms and, hopefully, because of that, people will feel like it is easier for them to engage. with respect to the states that are going to lose congressional seats, those are instances in which it is perhaps more critical because there is going to be more at stake for people when those, when there are fewer representatives to go all around. we hope, especially in states that are losing congressional seats, but that they become more involved in the redistricting process and make sure that the drawers know which communities -- the line drawers know where they need representation.

host: jeff sent these tweet. "should racial and ethnic minority political power exceed their share of registered voters?" is that in issue? guest: it is in fact true that racial and ethnic city has a role in the process. as a country, through the 14th and 15th amendment and the voting rights act, we have made a commitment that no one is going to be discriminated in this country in the political process on the basis of race or ethnicity. and, as a result of those commitments, there are certain protections in place in certain circumstances under a certain set of facts with certain remedies. and it is important for people to realize that not only do these commitments exist, but they are not without limits.

they are not without bonds. there are facts that need to be proven, standards that need to be met, remedies that are proper it, but when they are properly, we need to make good on the promises we as a nation have made that people will not be denied equal opportunity to elect their candidate of choice based on their race. host: becky in rhode island. good morning, becky. caller: good morning. i have to say this. democracy is a much-abused term. we hear it used as a smokescreen for so many agendas. and it's completely disregards what democracy is based on. -- it completely disregards what democracy is based on. partisan packing is an important thing to watch out for. it went on to show that minorities were not denied their

right oto have their points of view put across. i have seen it in my state that that excuse can be used for partisan packing. in my state, we have a district that looks like an octopus. i am not kidding. we have another that is shaped like a banana. >> we are leaving this program to take you live to the national governor winter meeting here in washington, d.c.. the first panel is on how states can pay for medicaid. >> joining us on the phone, are you there? >> yes, go ahead. >> let's go ahead and show the opening statement. >> good morning. thank you for allowing me to take a couple of minutes to kick off the meeting on the health

and human services committee. i apologize that i am not there in person. thank you, john, for helping us out by chairing the meeting. i will be joining you in a few minutes on the telephone. i wanted to set the table on what we can do today in washington. i appreciate you all giving me the opportunity to spend a few minutes with you to talk about the future of the health and human services committee. while there are many issues that need to discuss in the coming months and years, none of them are more important than medicaid. in just a couple of minutes we will be taking up some relatively non-controversial position papers that we have made some slight adjustments on. i know that each of your staff have copies of it. shortly after that i wanted to start with a panel of three distinguished individuals that are not there to advocate specific positions were, rather

than initiate discussions. today's panel is there to help inspire us into talking about medicaid, the impact that has on the future of our states, and one of the options that we need to pursue with the federal government. that is what it is all about. one of the outcomes that i would like to see is a fruitful discussion with panelists and governors from all parts of this great country. finding out what we are doing and what we might be able to do in the future. ultimately the reason i thought that it was best to wait until the next meeting was that there is a series of things or even just one thing we might be interested in pursuing, it is something that we can reach a consensus on and ask our friends to join us as we pursue that option. like many of you, i feel that

medicaid is a tremendous part of the budget of the said that we face. for the next two years in our state we have a $3.6 billion deficit. $1.8 billion is directly attributable to medicaid. an unsustainable option. about we want to continue to provide the basic safety net, we need to have the flexibility and tools to do that the best way we can for citizens in wisconsin. i know that i talked to you individually on the phone before this meeting, and this is a common concern amongst governors. my hope again is that today we will have a good, open discussion about what is happening with medicaid and what might potentially happen in the future. conference calls in the months to come, more on what came out of today's meeting. i am looking forward to hearing

your on the phone. >> thank you, governor. we have got a full agenda here. we will be spending most of our time on the sustainability of the medicaid program. we have the consideration of six policies, which will find under f in your binder. this is about demanding and reaffirming policies. given the unprecedented turnover in this last election, with an incoming class of 29, the largest in u.s. history, i would like to reaffirm these policies until our summer meeting in july, giving us enough time to reevaluate and rewrite for proper consideration. i would entertain a motion to adopt those blocks.

>> the last three of vamps and the affordable care act, i would say that the position of this committee is the acknowledgement that federal law should be consistent with it. >> all right. but out objection, we will be approve those policies under the stipulation that this extend only until the next full meeting. i would like to take a couple of minutes -- >> [inaudible] >> are there any opposed? ayes [inaudible] sounds unanimous to me. i would like to point out that i do not think this has to just do with medicaid. medicaid is the tip of a much larger iceberg when it has to do

with the challenge facing this country in terms of health care. i think that this crisis is one of the most serious domestic challenges we face as a nation and how we address that will be one of the defining issues of our time. stemming the rising cost of health care has to do with the impact on families, individuals and businesses. the opportunity costs on the one sector alone, as well as implications it has on the stability of our federal government. as all of you know, the rising cost of health care is a huge amount on the budget. in many states the cost of medicaid is exceeding the primary costs. as the cost of health care continues to increase and other things do have a huge impact on the health of our citizens and society, as well as the economy.

i know that there is a lot of disagreement around this table on the merits of a healthy americans act. we cannot wait until 2014 to take action that the state level. we will hit the wall before that. i would like to make it clear that i support that legislation, but it seems to me that the argument in court is not the right question. the right question, what is really important, is that the major provisions of this act, the high-risk pool, a small risk subsidies, the expansion of subsidies, they'll deal with coverage in have had very little impact on mitigating the rapid increase in the cost of medical care. perhaps the most sobering fact is that they have become the

major driver in national that. we know that national debt is about $14.30 trillion in congress is going to have to bump that up in april. last month the first of 78 million baby boomers came on the medicaid program. the system is approaching $7 trillion. for a nation acclimated to big numbers -- the financial bailout, stimulus package, the auto industry, it is easy to lose track of what $1 trillion is. let me give you an exercise that you can do when you go back to your room. 1 billion seconds ago was 1972. one trillion seconds ago was 3000 bc. we have got a 14 trillion dollars national debt and on the current course we will financed at through china and other

nations willing to purchase securities, threatening the security of the nation and leaving a shadow of debt for children and grandchildren. my point is that given the huge federal structural deficits and apparent on ability to deal with that, states will have to take the lead in the radical restructuring of how we deliver medicare to the system reforms that will be essential not only for improving the health of the nation but also the fiscal stability under federal government. today we are very fortunate to have with us a thoughtful expert on this topic. douglas hall taken -- holtz- eakin and dr. len nichols. the me read you a bit from the bio of mr. holtz-eakin.

currently the president and commissioner of the financial crisis inquiry commission. 2001 to 2002 he was the chief economist of the president's council of economic advisers. through 2005 from 2003 he was the executive director of the congressional budget office. please. >> thank you, governor. thank you all for being here today. i will be brief in my opening remarks and i do look forward to the conversation. i will make only three major points. the first is the obvious answer to the question. medicaid cannot possibly go forward as early as figured. according to latest projections, states are over 9% in outlays for medicaid.

you cannot imagine surviving that when each state manages to find something already. with medicaid giving substantial reforms from top to bottom. the second major point that i would like to make is that you will not be able to turn to the federal government to solve this problem. i think that the governor's opening remarks were on. regarding the federal fiscal outlook. but i do think it is worse than that. one way to think about apple, right now we are borrowing $58,000 for second, more than the median income of the average family. burning up the income of one family every second. this is a trajectory that threatens our economic prosperity and national security. at its heart is a large and extreme spending of the affordable care at. instead of asking for money,

governors are in the position of asking for more flexibility in the short term and longer term so that you can manage your populations more effectively in each of your states. that will require going back to the affordable care act. i do not want to start a big discussion about, but the notion that we can put 16 million more americans into a broken program , a programmer to few individuals get to see providers given current levels of reimbursement is a mistake for the population and the government. you are in a unique position that has to come from the governors of this country to reopen the part of the discussion that provides you

with the budgetary certainty to really undertake the needs of this population. i guess the final thing that i would mention, there are a series of very concrete steps that you can take in the short term to deal with eligibility, your benefit packages, service delivery and financing. which helps deal with the question and medicaid. we actually took the liberty of writing down what we thought you should do in a short paper. it will be in -- on the web site. if it is there, your staff can grab it. what i do poll for that is that as you go forward, those above the medicaid line, recent research suggests 50% of the americans below the federal

poverty level will turn in and out of the exchange, bouncing back into the exchange system and out. i think that one thing that should be on all governors radar screens as they go forward and think about going forward is the eligibility and administrative process so that you are not wasting dollars and we are losing people in these systems as they are currently configured. this is going to be a big issue. especially in delivering both affectively. it is one of the many challenges that we face. thank you, especially, for taking on these challenges. the medicaid program has to change. so do the medicaid beneficiaries. >> thank you. let me turn to mr. nichols.

dr. nichols is a professor of the policy director for health policy research in netflix. his continuing work that he began to the new america foundation has helped to found and the direct ceo's for health reform during the clinton administration and he is the chair of the economics department at wellesley. >> thank you, governor. thank you for the opportunity to be here today and share some thoughts. always a pleasure. we both look forward to your interaction more than ours. >> is medicaid sustainable? >> i agree with doug. the answer is no. but it should be ended is our job to make it so.

as you know, it is the lifeline to our most vulnerable fellow americans. it says a lot about us as a people and we will deserve to be judged harshly if we do not enable this program. therefore, the task before each of you as chief executive of your state is clear. fix medicaid, not abolish opportunities to sustained. but since the great depression have your state budgets in so strained. your budget requirements forced to to cut spending in a weak economy, ignoring your other priorities. since the federal health reform law limits production, the main tool the to have left in the short term is provider payment rates. i probably do not have to tell you that it pays to little now. more people could actually use -- lose access then if a smaller number of people were targeted.

both enrollment cuts and payments are a bad option. but i do think steps allowing states to use every tool at your disposal, with more press of purchasing and provider payments, the least painful combination for federal policy makers should be trusting chief executives and legislators to make the hard choices that no one wants to make. different, i think continuing the enhancement of the recovery act, where many of us have been arguing that policy should be permanently counter- cyclical to soften the blow of all recessions. it would have required the administration or congress to reacquire the courage needed to

explain it to the american people. i am not going to hold my breath. instead, the current congress seems intent on cutting spending in the face of a very large, 8% gap between potential and actual gdp. the argument here seems to be how much and which ones to cut. perhaps the argument for staying counter-cyclical would be heard more clearly if the arguments for this, states and economies, presented as part of a bipartisan budget package that also credibly addresses long- term fiscal challenges. perhaps our national leaders will rise to a level that will permit some of this discussion soon. we can pray for that, but right now i will get back to medicaid. blogging documented for spending

growth driven largely by two things. enrollment growth is what makes it unsustainable as currently configured. simply put, it cannot because it is buying access in the same system. unless we rein in systemwide costs, medicaid costs, and the share that must be taxed to pay for that, reining in long-term cost was one of the many reasons that the health care bill was passed. suggesting that we should be devoting post-sputnik like energy, i agree with that sentiment. our future well-being depends on our success in taming health care costs by in a humane way.

medicaid must be a part of the solution, but it cannot solve the problem loan. in the short run it is driven by the economy, the main source of the budget shortfalls. over the decade growth has been largely driven by federal policy. states have all been implicitly agreed every year. personally, i believe that it is resentment over budget constraints and being forced into health care for lower income populations. that is what has pushed medicaid to the brink of being politically unsustainable. surprising fax are that combined state and local taxes for personal and per-capita income are no higher today than they

were 35 years ago. most economists believed states to retain the fiscal capacity to sustain the slight rise in shares. i suspect that many state leaders are more susceptible to the trend. when my daughter is in church, [laughter] if you look on page 7 of your paper, -- sorry, paid six. state medicaid spending as a percentage of your state general fund overtime.

those are all the states in the committee. i know that you spend other money besides general funds. you have to. but that is what would take. it is going up inexorably. you have to supplement general funds. here you have been forced to supplement general funding. i think that this metric captures the squeeze the to wall field. the simple fact is that medicaid costs reduce fiscal freedom every single year. it is natural for you to lead with discretion. there are three feasible sources. the short run is counter- cyclical with an extension. no. 2, just what the governor said. reduction in health care cost growth through the development

and expansion of realignment. by no means finished. i think you will have to talk about a long run shift to greater federal accountability for children. this surplus will happen to some degree, but more movement may be wise in my view as you get to a bit -- very big lift. however, relief from the federal government cannot happen at this time with a view providing leadership. the federal, state, the partnership in trust, we have got to get our fiscal house in order. we should start working this afternoon on a truly bipartisan way to do that. i believe that there is widespread agreement that one key to getting this done is getting health care costs under control. the comprehensive health reform

is necessary. we will be doing this one way or the other. but the belief is that it comes from the federal government, which must be allowed to adjust spending now. >> [inaudible] >> even as you call on the president to it -- to lead us more effectively, in essence you could say that you have his back. if he meets you halfway. in short you can apply the lessons of a founding fathers on competition. i wrote an op-ed in "christian* monitor" -- self-promotion -- you can keep your eye on the prize and give back, rebuilding trust to make adjustments along

the way. you can do all of this and in so doing, show the national leaders. we cannot achieve fiscal sanity by simply cutting government spending on the most vulnerable loans. these are our grandmothers that just want to age with dignity. what the a chance to grow up and live the american dream, our children. making sure that federal tax structures work for all americans. >> thank you both for your thoughtful comments. at this time i would like to open the floor to questions. i would like to offer the first to governor walker. are you still with us? >> yes, thank you. thank you to both glenn and dog. i appreciate your comments. they were very helpful.

dr. nichols, you mentioned two things. he talked about systemwide cost growth and enrollment growth, which is right on the money. first, and system growth and know that many governors have experienced this, but i have spoken to our health care providers where they're interested in the radical home concept. where they could focus more on being reimbursed for outcomes, not just procedures. while there are a lot of things to go on with that, medicaid reimbursement is obviously a key factor. the other part, on the involvement growth, clearly the economy has some impact and i do think that many of us assume that as the economy improves we are likely to see increased enrollment growth. one of the things we are concerned on is the vote between

those that will receive the federal subsidies on the health care mandate as well as those going into medicaid. our estimates are that 46% of those people currently already have private coverage. i think it goes to the heart of your comments about governor is getting more flexibility. otherwise we are stuck with shortened provider payment rates with many adverse effects. i would be interested to hear your comments on both of those. >> first of all, governor, great question. as you noted, you have got some really stellar examples of their. what they're talking about with you is exactly right. moving from a system where we pay to a system where we received value. the best way to think about that is the grand bargain to where

you can actually cover costs and essentially having providers incentivize delivered value to manage patients far better than they are today. i think that many of us believe that if we do that right, you can actually lower the cost over time. looking at the people that run the system like you have in other places around the country, they will tell you that one- third of what we are spending now is not adding value. it is hard to go to the point, but the people in those consistencies are the structure that holds them back. we cannot write down the left this afternoon, but we can write down good ideas. on the game point of enrollment, i would definitely concur. i got to be somewhat involved

in the commonwealth of virginia liberation going forward. one of the first issues to hit us between the eyes was -- what about this population that is counting back and forth? i would encourage you to look at managed-care plans that are set up, seeing that behind the door, there is also an impact along the way. clearly, over time you will want to make sure. >> we did actually agree on a few things. let's keep it loose. [laughter] you cannot emphasize how important it is going to be in the long-term care problem, which is a big part of the study. by necessity i would like to see greater use of managed plans in

the medicare and long-term care services. these vehicles will have to be involved overtime in the cost program. the sad reality is that it is going to fall to governors to lead the way on that and try different experiments in your state. no question. the only thing that i want to get on the record as fundamentally disagree with is the notion that somehow we need to just talk about spending more money right now. that is wrong. this nation has been growing for nearly two years. it is growing poorly. we need to fundamentally emphasize growth strategies that raise the long-term rate of growth for the americans out of work. these of the burdens placed on the economy at the state and federal level.

the obligation is to be to our children a better standard of living. federal spending is number one. i could not possibly endorse anything that said spend more now. time to go in the other direction. >> in florida we have got medicaid holding 3% of the budget. what do you think about block grants? but you think of the chances of getting block grants democrats -- what do you think of the chances of getting block grants? >> one of the fundamental problems that we face in this area is programs brought upon by medicare and medicaid, where you might have the finest quality medical science that you want add little to no cost, and it is expensive. then we go to providers and state -- stop that.

cutting reimbursement rates and tell them not to cover particular services. constituents come back and say -- you promised. until you put a budget on it and until we get serious, this is the budget for this activity. the block grant is a great way to provide the federal taxpayer with no budgetary exposures. lord knows that we need one. allowing states to know the deal. in exchange you should not get a little flexibility. you should get big flexibility to cover your population on the exchange. however this works out. that would be a good signal to everyone involved, solving many of our problems. >> i assume that the block grant philosophy would require states to meet a certain public forced

metric. let's you do not satisfy your populations metrics for social care access, you will not be able to [unintelligible] >> is there a director? >> certainly the way you pay should be changed. >> absolutely. >> i think that the block grant idea has a lot of merit. it is seductive in many ways, but risky for states. go forth, do good. i would certainly endorse the concept of giving you a lot more flexibility than right now.

this population is going to bounce back and forth. block grant is not a bad concept. but it is second best. far best is performance across the board. i would start with local level transparency and build my way up. be wary of what you wish for. ->> first of all, looking at the chart there is an interesting observation and a real compliment to the state of wisconsin. between 1990 and 2000, the governor released focused on welfare reform. my analysis was upset it would move people want real jobs from

the medicaid rolls. i think it is more effective to stabilize reform. i have been gone for clothiers and now back. almost double. i had to come back with $540 million because of the one time stimulus mcveigh -- stimulus money that was used. higher education provided zero growth. i believe that the federal government with maintenance and effort has really tied our hands and not given us the flexibility to do what we do. i would like to be able to set my own eligibility requirements. i think that people need to have scanned in the game.

my experience of medical school with trained professionals, we did assessments of everyone. everyone contributed towards their health care. and we then rewarded people that did things to reduce their risk factors. unless we get a system where people take ownership of their own health and are actively involved in that decision, i do not care if they are on medicaid or what, if they have that in the general population there is not going to be a way to solve this problem. i would like to give flexibility and the opportunity to succeed or fail based on our own policy.

[unintelligible] >> if i could read to put points on block grant issues for states, it means the risk for constituents. the main level of the man's increasing, one option is cutting services and i think we need to be cognizant of that. there has been a lot of talk about flexibility. recently said recent -- recently the secretary expressed interest in working with states to give

that flexibility. i know that we had a conversation earlier about what exist within the current law. that is one way from my perspective that the administration has shown participation in having a conversation. finally, the incentive system. i would like to see some real examples. a couple of weeks ago they introduced a way of doing away with fee-for-service. in my view that will be critically important. so that they're not just talking about 30,000 feet.

i do look forward to hearing more on that. >> i would like to thank the participants and speakers today for convening. our medicaid budgets has grown over the last 10 years. even with the downturn. we are doing precisely what was the intended strategy. right now medicaid is the only flexibility that we have. but how do we get that away from fee-for-service? the number one concern that i hear from small businesses is that when they get that payment

increase, they cannot add a few jobs. if they do not start retiring, they do not get to retire. it seems to me that everything around affordable care is a different question as opposed to having to get control of health- care costs in the economy, trying to move things away from fee-for-service, for example. as well as suggestions on how people pay for the services we need. i cannot tell you how would warms my heart, but not

necessarily being the same model in your mind's but what a powerful thing to come up around that strategy. >> thank you. i think the deeper and more fundamental question -- is medicaid of a wild and rapidly raising cost in the system? as governor patrick pointed out, we all agree, those are dollars that they cannot invest in your business or used to hire people.

sharing the best practices. this is a time when governors need to manage and use performance measurements and management to put people together to bend down cost curves. in our state to regulate

hospitals. our rates have not gone up. just like you have seen in other states. we believe that there is flexibility here. we believe that with the ability to use this technology to mapping where our thoughts are, or the costs are, where there are now -- anomalies, using an open transparency, we have the tools to bring down the costs of health care. as well as flexibility in the affordable care act. getting these unsustainable costs off the backs of businesses in our state. >> it is important to be honest about the affordable care at

being a step in the wrong direction. there has been no non-partisan entity to look at it. in fact it will probably go in the wrong direction. i do not think the two should be looking for the flexibility that you would like in the context of that. bankruptcy, flexibility is like waivers. doctors, hospitals, insurance patients with fragmented service care.

one that lack of flexibility will put us in trouble. >> the average annual bonus increase of 4% to 5% over the next 10 years with an average rate of 8.3%, 83% over enrollment. not only imperative, but there is an opportunity with these costs. it seems simplistic to say that that is the fault of the act. with the population aging, they will get older and need more

expensive medical procedures. focusing on the context of how are we, as a society, going to provide for all of our citizens. how do we holistic play it the businesses? that is a much larger issue. -- get business -- holisticly get those businesses? that is the much larger issue. >> i would actually say that there are tools available. they point the way towards precisely what we are talking about. let me tell you a secret. if all that we do is public sector reform, we will fail. which is your point. this has got to be multi-payer. what is going on right now, how

do you get real multi-payer conversations to complement, if you will, and improved? i am totally in favor, but not of starting over unless it is with the same commitment. i hope that we start there when we start over. >> i was pleased to hear about the ability to get flexibility, as it is contrary to our experience. in 2009 be tried not to get a waiver, but a state plan amendment. it was approved in february of last year. we submitted a contract subject to that and it took until this february for them to act on the contract. saying that this was a plan for

coordinated care. cms said ok, you can have a contract, but she cannot do the things to save the money. sabin's were essentially taken out of the cut -- savings were essentially taken out one year later. the idea that the federal government knows better than we do want pre-existing conditions, i deserve no credit. 3600 people in our risk groups, about 160% of what standard premiums would pay. they will not let us use that risk pool to meet the requirements of the new act. so, they set up their own risk pool. they cut the premiums to get more people in that and is still only has 58 people. it might grow later, but the idea that the federal government has to create their own, or

forced us to create a new risk school, that is not the kind of flexibility we are looking for. i am glad for the state that get it, but it is not my experience. >> my experience is similar to the governor's. we cannot get a response or did anything done. we will not get control health- care costs until we change how we deal with providers. we need to not restrict competition. two, we have to allow individuals to purchase wherever they want. four, give people the same tax breaks as employers when they purchase their insurance at 25.

you have got to allow people to be rewarded for doing the right things. my state is different from every other state. if you give me a block grant, i will cover the right people and spend the money better. if not, i do not get reelected. >> let me expand on something that was said. the affordable care act does not contain the elements for significant cost, and expiring -- expanding is good. we wind up paying for the scope of managing hypertension. i think that the challenge and opportunity for states is to figure out how to change the way that those dollars are spent.

unless we wake up medicare and medicaid, we will not solve this problem. whoever the candidates are, if it is not on the table we will be in trouble. if you are admitted to hospital with congestive heart failure, there is no incentive for any care to make sure that person does not come back in. 80% of the costs in the system come from treating chronic illnesses. suppose that you had a 90-year- old woman somewhere in washington, d.c., without an air conditioning apartment. there was a heat wave and the temperature but up to 100 degrees. that is enough stress for full- blown congestive heart failure. in the current system you would not even know about her until she shows up. medicare pays for the ambulance

but we cannot purchaser a $200 air-conditioner, which is all she needs to stay at home. the difference is $48,800. but what we really need to do is get the flexibility to use those resources as they come in. not just to expand coverage, but to change the incentive in the community-based chronic conditions. >> may i build on your example? the work that it takes to manage the front end of that example is not reimbursed today. it has to get precisely that kind of flexibility.

they have so the most detailed percentages on the cost of care. that is the other issue, how do you create the incentive i feel that there is a tremendous amount of incentive. my last point, i am trying to do very different incentives, this has got to go beyond the public care and a scene that that is what we should be working on to come together. >> the first need is getting health care system broadly more competitive. it seems to be 20% of the economy and if we continue to

allow the change dramatically, as an economic policy. there are many ways by which to judge the affordable care act. if you think about the example the to gave, there are no longer twisting insurance into a pretzel. they are willing to pay for the things now that keep them healthy in the future. there is no financial incentive to do it. changing the private-sector payments system. i think that that is something that really needs to come back into play.

>> you talk about the private and public health machines. this last year they averaged 15.1 million people were 62.9 people enrolled. what can the states do to reduce that turned? >> the research that i am online with was done in february of 2011. it is informative. if you have eligibility rules, people are going to bounce between eligibility and medicare. it is the nature of their income bouncing up and down to change eligibility. they disappear and sign up again

and disappeared. you want to take your medicare money and stay in private insurance -- private insurance. i do not understand that fire wall. it makes no sense. >> the accord will care has a requirement that the states come up with a window for -- the affordable care act has a requirement that the states come up with a window for eligibility. a human being comes in one time. you cannot stop the economics of people getting and losing jobs. you can maintain a proper care and keep it -- keep it as cheap as possible. you can save a lot of money if you can make that change seem less for people. >> if you want to have a

preventive system, every state has a department of public health. in all this discussion about health care, it gets messed a lot of time. the increase in the american life expectancy comes from public health changes. whether it is using seat belts, cleaner air, said her -- safer food. when we talk about health care, we have to look at our public health departments and how they interact with big populations of people. in our state, we have 50 million people. the public health department educates the public on everything that has been said about being healthy. if you do not have a director of public health that can engage the public in this mission, we will come up short.

in the next century, we want people to live it a moderate than they live now. that is what better outcomes are, especially healthy outcomes. i think all love us need to keep an eye on public health as well as all the things we have talked about today. >> there are factors that impact people's lives. 40% of them are lifestyle and the haiti. 10% are genetics. -- 40% of them are lifetime -- lifestyle an. 10% are genetics. if you work spending to% on an outcome that =-- 10% on an

outcome that provided no value, would you do that? we need to endorse community- based delivery models and allow people with chronic conditions to be in the health-care system. this debate is not about health care, but health. it makes a difference. at the end of the dead, people do not want health care. -- at the end of the day, people do not want health care. there is no intrinsic value outside a outcomes instead -- other than the economic model. we need flexibility to get our arms around this problem. >> one of the issues we are dealing with is we have 12% unemployment.

whether we are talking about private insurance or the cost of medicaid for taxpayers, if we do not solve this, we are going to continue to lose jobs. we are competing with companies with headquarters here that are moving out of the country. health care costs are less expensive. if we do not solve this issue, we will never get our unemployment where we need it. >> governor walker, do you have a question? >> i have been listening. i have been watching and listening on c-span all at the same time. [laughter] i have one comment. is perfect after governor

scott's comments. secretary sebelius commented on questions i had about the affordable care at. she says the affordable care act is based on the belief that the states understand their health care system better than anyone else. i believe that is true. what we are a democrat or republican governors, we know our states better than anyone at the federal level. i would echo what rick scott has been saying. we would love to have a block make so that we could allocations the way we see fit. i have a comment on the procedure here. one of the things we are willing to do? i followed up with the number of governors.

after the discussion, i am willing to follow up with each of the governors on this panel individually collect a list of specific flexibility and try to figure out if there is any sort of consensus on that. the question is, what is our next step? what do we ask the pharaoh government for? for us right -- what do we ask the federal government for? there are provider pay rate changes. many of us would like to have the stability, if not a block grant, then some flexibility. >> i want to stress something that i think gets lost in this debate a lot. number one, if you look at this in the point of view of jobs and

growth, the way the federal budget is set up, these large federal spending programs -- many of them are legacies of our past. they questioned the ability of government to spend on anything else, including things that our core functions of government, national defense, education, infrastructure. that is the future. i have these questions on the future in a fundamental way. to get it under control means dialing the clock back a week. we can say there was a bipartisan consensus about the delivery system in the way there was not about the coverage expansion. that shows the importance and

the willingness of both sides. we would all be well served. >> the important thing a lot with flexibility is that there are examples where we are moving toward paying for wellness. they are doing things with their frequent-flier who come to the hospitals with diabetes. -- frequent flyers will come to the hospital with liabilities -- diabetes. they are bringing down because of health care, that small percentage that is driving the cost. they have a financial incentive because they are able to share in the profits from reducing those costs.

that is 10 hospitals. we gave them the ability to do what we need to do, which is to get better care results and to bring down the costs. i cannot want to go back. i understand your point. i do not want to go back. the states that do it best and embrace these reforms are going to be more competitive places for businesses. they will have better care results. >> i would pick up on that. i would recite a similar example. it makes a larger point. we are only going to make our health-care system better if we find the best examples from around the country, highlight with or without the federal government. there is a company that offers

their largest customers 0 park = price inflation if you bring the same number of patients as last year. they cannot get that deal from the federal government. private sectort incentives. only the private sector understands incentives. the government has realigned banks. this is not impossible. -- the government has realigned things. >> we had a meeting of governors in florida. we came to an agreement with democrat dicks and republicans.

we want to put together our thoughts and work it out with the federal government. that is important. governor should not be focused on one wall and disagree or agree with that law. we have a basic idea of better health. that is the outcome we want. there are things the states are doing and it is doing -- entities are doing in the states and we can share them together. we should not get distracted by this one lot. there is a common agenda of governors who are making health care work. wrap this up. there is no reason for us to hang out just to hang out. as governor patrick said, we cannot solve this problem by dealing with medicaid itself.

it is closely related to medicare and private health care itself. we need to deal with it in a way that is comprehensive and moves us will work. we can come together around a set of parameters that would allow us to do some brought demonstration projects that can inform the national debate. it has to happen sooner rather than later. i want to thank our distinguished guests. thank you, governor walker. [applause]

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>> inside the hotel here in washington, governors discussed

the sustainability of medicaid. one governor not in attendance is governor scott walker of wisconsin. he called in the a video conferences and delivered a statement. -- via a video conferencing and delivered a statement. madison state police say the crowd at the state capitol was the biggest. outside the hotel here in washington, union protesters were demonstrating and holding a sign of support for the workers in wisconsin and against governor scott walker's changes there. we got a look at another governor, vermont's governor, who addressed the crowd. [crowd chanting]

>> somebody here who has a better voice than i do. >> solidarity forever. the union makes us strong. [applause]

[random conversations]

[crowd cheering] >> thank you. [applause] i just want to say this. you all are the backbone of america. it is not be hard working middle-class that got us into this mess. it is the ones on wall street who bailed out the big banks who were too big to fail and want to take it out of your hehide. this is america. i think that america wants reasonableness. what america wants is thought

when this to make america a bad thoughtfulness. in vermont, we know we get more with maple syrup and we do with benigno. -- with vinegar. you know that a vermont cheese is better than wisconsin cheese, write? -- right? not all governors are born nisei. we rely on you, on -- governor as are not borne the same. same.ne th the i just want to say keep on keeping it on for america. [applause]

>> thank you for coming by. >> we will be bringing you more live coverage of the national governors' association meeting coming up at 3:00 eastern time. brewer governor jan jan will chair the panel on cyber security. you can watch all of the panels online act c-span.org. -- at c-span.org. >> today on "road to the white house," mike huckabee promote his book and talks about the republican candidate for

president. >> i think our system of government is breaking down. i think the system of checks and balances are not operating properly. >> winslow wheeler has a written two just published essays. >> congress has the power to go to war, the power of the purse, and the power to investigate. the first two powers to go to war and of the purse are many less are many less -- meaning less if congress does not exercise the power to investigate. >> when congress returns next week, members will have until march 4 to avoid a government

shutdown. last week, the top republican and democratic staff of the house budget committee debated the probability of a shutdown. this event was held at the woodrow wilson center in washington. it was held by the national politico and a university. politico will be the moderator. live coverage getting under way. >> there are speakers. we're going to talk today about the federal budget such as it is. first for those who aren't familiar with us, the national press foundation is an independent nonprofit. we're based here in washington, d.c. we are not affiliated with the national press club. we don't take money from the u.s. government. our goal is to help reporters

understand complex issues and do their jobs better. i want to thank our partners in this series of briefings which are capitol hill issues briefings. first the center on congress at indiana university, which has been a tremendous partner. and politico which has been very helpful in getting these organized. i also want to thank the wilson center, our beautiful venue here today in downtown d.c., which has been very who is pitable. i particularly want to thank our speakers who will be introduced in a minute. i know a couple probably haven't slept much over the past few days so we're particularly grateful that they are here. to introduce them, i'm going to hand off to the congressional editor for politico, martin caddy. >> thanks, linda. a great panel today. i'm glad everyone turned out here. this might be one of the more exciting times to talk about federal spending and the federal

budget. we initially scheduled this when the president's budget was going to come out and we were going to talk about the fiscal 2012 budget submission but we're not quite past the fiscal 2011 budget problem. and we are one week away from the government running out of money if we don't cut a deal. so that is going to take up a chunk of our time here. we can talk about fiscal 2012 as well as other things. starting on my left is tom cohn, the minority chief of state for the house budget committee. i'm not going to read the entire bio. he has worked for congress almost 30 years in the minority, majority back in the minority and if you listen to steve israel, they'll be back in the majority in two years, right? and in the middle here is miami guinness on the committee of the budget which sounds like something everybody wants to have for the moment but is not. that's part of the new america foundation. you can also read her bio in here. then on the right here is austin

smythe who works for -- who is the staff director for the house budget committee which is run by paul ryan, who is not only a really happy guy because he got to give the state of the union response but because the green bay packers won the super bowl. we'll see how long he remains happy as they get into the fiscal 2012 budget negotiations. so like i said we're not going to quite go into 2012 yet because we're not done with 2011. this is a dominant topic in washington. a lot of people think it's 1995 all over again. anyone who was here during the last shutdown as i was, as these folks were know there is an up side. a lot less traffic and metros more empty but huge political downside for some. there was a lot of fallout that we're still talking about and now we're talking about it again. i want to talk about the prospects for a deal before we get to next friday. i realize you guys aren't on the appropriations committee. you work for the budget committee. but still this is topic number one in washington. i want to talk about the

process. starting with tom. what do you think is the chance for some sort of middle ground to be struck between the house and senate and the president? >> first of all, thank you for inviting me. thank you for hosting this program, which i think is very important, very timely and we're very grateful to the wilson center and the foundation. in terms of the chances of a deal, i'm an optimist by nature and hopeful that there will be a deal cut before the end of the cr. i think the reality is it's too critically important for the government to continue operate because there are people who depend on its critical services. i'm a little less optimistic for the following reason. if the key players were senate dxs, house democrats, mitch mcconnell, john boehner i would say the chances of a deal are very good but there's an unknown factor. there are about 90 new house republicans, many of whom were elected on the tea party

platform. and it's not clear i think to anybody the degree to which speaker boehner can control what those particularly freshmen republicans want. that's the unknown factor. for example we saw a couple of weeks ago when a bill came to the floor, the cr, original number -- before it came to the floor, the number that chairman ryan put forth, the cut had to be significantly increased, significantly increased in order for these freshmen republicans to vote for it. so that's why i add the caveats i'm an optimist by nature and the stakes are too great for government shutdown and i don't think anybody wins here. >> maya, you want to weigh in as we work down the line on the prospects for a deal or shoulddown by next friday? >> if you had asked me a couple of weeks ago i would safe nobody wants to go through the shutdown experience again and we're not headed that way. but i suppose with each passing day we're starting to see this is not as tom said and let me

just say i feel lucky to be sitting between tom and austin. you guys are getting a chance to talk to two of the four smartest budget people because there's great staff on the house budget committees. you'll learn a lot from these two, no question. with each day that goes on, we're seeing that this is just a multifaceted negotiation and it's sort of like saying republicans or democrats or white house and acting like they speak with one voice is clearly not the situation at all. and i think that maybe this is why i'm starting to feel like it's more likely we will see a shutdown. maybe this is something that just has to play out. and i want to focus on the whole effort in the house on spending cuts. you know. when you run a group called responsible for federal budget first it becomes a laugh line in most conversations these days but it's something is that everybody knows we want to be working on. one of the things i'm very

encouraged by is that the discussion is now so solely focused on the budget and fiscal responsibility. i will say coming out of an economic downturn we had two challenges to deal with and that's how to get the economic recovery to be secure and stick and deal with the fiscal challenges we face. used to be primarily long term but now are much more immediate and we have to deal with quickly. the ideal model i would have put forth was put in place this year a multiyear plan that would fix the overall budget, a multiyear plan that would get the budget to somewhere with debt levels that are sustainable by, say, the end of the decade. and i probably wouldn't have done anything this year. i would have let the economy continue to recover and perhaps done more on the stimulus fund if we could find one not politically motivated. whenever you do something politics muddies up the bills. i would say this is probably a bit early for the kinds of cuts we're looking at. that said i'm encouraged we're talking about cuts because for

so long we talked about slowing the growth or maybe freezing and the reality is we are going to have to focus on cuts in the budget. the discussion is there a little bit premature from an economic standpoint i believe but useful to shifting the discussion. however, it is on the wrong piece of the budget, right? we're all focusing on domestic discretionary which is part of the budget that at least gets annual reviews unlike entitlements basically on automatic pilot and not getting reviews and same with tax exp d expenditur expenditures. my hope is that when we go through whatever this have exercise is -- and i do think we will experience a short-term shutdown if i were betting -- that the result will be, okay, we went through all that. it was pretty painful and didn't fix the problem. we didn't come anywhere close to fixing the problem and this quickly shifts the discussion to where it needs to be which is larger structural reforms on entitlements, tax expenditures,

a package that would fix the budget and don't spend years focusing on -- it feels a little like earmarks to me like all the discussion is on this small slice of the budget. i hope we don't spend too much time getting caught up with that and illuminate where the big problems are and productive for that reason if not the level of cuts we seem to look alt now. >> austin, hearing from your ends about the prospects for deal. a lot of back forth but what do you see? one thing i want to point out the stew staff directors are speaking for themselves and not the boss or the committee per se. >> let me start by echoing tom and maya's comments. first tom's comments. we're in an extraordinary situation in terms of i think there are 85 new republican members in the house. one third of the caucus are freshmen. we went through an extraordinary election. so we're sort of in an extraordinary period in terms of the membership of the house, extraordinary change, extraordinary composition. i think we have to go back a

long time before you find a period when the house had as many new members. i think it's even back to the '50s or maybe prior to that. so that's sort of one extraordinary challenge. we have a lot of new people in the house. the second challenge in my mind is that we didn't have a budget last year and we didn't get any of the appropriation bills enacted. you combine with the fact that we got a lot of new members in the congress with the fact that none of the appropriation bills have been enacted, we're trying to get organized, our members are trying to learn the process and the first thing put in front of them is a bill that deals with every aspect of the operations of the government, not the entitlement programs. but the discretionary programs. i think the third big challenge is we're in an extraordinary fiscal situation. i think tom and maya would agree. maya touched on it. deficits of $1.5 trillion this year. $1.6 trillion according to omb.

the debt just went through $14 trillion. i think the debt held by the public is around $9 trillion. i think anybody who looks at our budget situation, whether it's the congressional budget office, the gao, federal reserve, om bhdz, treasury all speak to the fak bare -- so we have an enormous challenge. to echo maya's point i find it remarkable the past two years the discussion was where can we increase spending and seen a remarkable change in the debate and not just from republicans. now it's focused on how do we reduce spending? that is encouraging i guess i would say in this environment. but i don't want to say there isn't still an extraordinary challenge in getting the cr done. i think the real issue before the house is not the long-term cr but a short-term cr probably

because i doubt the two bodies can work out a long-term cr. the house passed a long-term cr but i doubt the two bodies can work that out. so the discussions will probably migrate to how do we do a short-term cr. i think the speaker has been very clear that he's not interested in shutting down the government. he doesn't want to shut down the government. what he wants to do, though, is not just continue funding at the current levels, which while most of the focus was on stimulus and so forth, the base level of what we call discretionary spending subject to appropriations if you look to nondefense accounts it rose by 24% just over two years. they had double-digit growth over two years. and maya is right. discretionary spending is a small piece of the pie. i'm going to say two words that you'll only hear in washington. it's only a trillion dollars. but it is a small piece of the pie. it's about -- that's about 40%

of the budget when you look at it. but it's certainly a place we ought to start. it's certainly an area where congress can get a start and make progress and i think we've got to address the budget both in discretionary programs, in the mandatory programs. my boss has a great deal of interest in that, paul ryan, but he also believes we ought to do 60s we can in the discretionary accounts. we can't overlook a trillion dollars and can't overlook the growth and real opportunity to achieve savings in this part of the budget. >> tom wanted to weigh in on this. >> first of all -- and i should have said personally i have such enormous respect for both maya and austin professionally and must add also that they're very good friends. so it's really a delight to be on the same program with them. maya said something before that really struck me that i thought was important about the cr. it seems that what we really need in terms of the budget is sormt of a two-step process here. the first step is the short term. in the short term our recovery

is very fragile. we still have unemployment of 9% and the worst thing we could do is jeopardize that fragile recovery which is probably more fragile with the spike in oil prices. and that's why deep cuts now in the cr are really risking the recovery. and that is the view -- that's not just my view or the view of many democrats but it's the view of goldman sachs, which came out with a report yesterday saying that these cuts could lead to as much as a 2% drop in economic growth. the commissions -- the fiscal commission sls which austin and i work the simpson/bowles commission said you do need a long term plan but shouldn't start in terms of the spending cuts or tax increases at least until 2012 and so there has to be a short term issue and short term resolution and long term. and i think it's very, very dangerous to blur the two. >> maya, you want to talk about

that because the goldman sachs report is something the democrats jumped on this week. this is the big political point. $60 billion in cuts that the house republicans passed for 2011 will actually dent the economy and hurt gdp. is that a legitimate political and policy point to be made? >> partially. sort of the answer to all of this which is -- this has been a two-pronged challenge, economic recovery and fiscal challenges and tales needed a two-pronged solution which is some kind of stimulus. i'm not going to say what the right stimulus is because it's an economic question and unfortunately because it's been politicized with each round of stimulus and we had stimulus under the previous president as well. they lose the credibility so when you have put together the next stimulus package if they didn't buy the last was done for purely economic reasons it's harder to do the next one. i do think there should have been more but i think it should have been tied all along to a medium-term fiscal consolidation

plan. what we've seen in the past is congress keeps passing these bills, stimulus bills or the tax deal which i was not a fan of whereby the december tax deal where they cut taxes tremendously or increase spending tremendously and then they're like, whew, that was tough. we came to a brptd deipartisan cut taxes by $850 billion. our work is done. that's the easy part. for me it's always troubling you don't link that with the budget deal so you need to pals short-term boosts to the economy. i would say along with the medium-term fiscal plans or at least the way to get yourself on that trajectory. severing them and focusing congress does better tax cuts and spending increases makes the next part even more challenging. so the reason you want to put them together -- i think the case for why the recovery is weak or strong -- and certainly you can see that when your fiscal and economic situation is

skating on thin ice like we are now cracks can come really easily. so you look at what's going on around the worlds. you look at the spike in oil prices. each one of those things you take greater notice of in terms of how it will affect the fiscal policy than before because we are much more vulnerable. but if you put in place the plan, up something -- at least we've seen in other countries called the announcement effect which means just by saying and committing credibly to a plan that will get your fiscal path back to a sustainable course you can reassure the economy in the medium run. keep interest rates lower. help buy breathing room before you have to make the changes that i agree shouldn't have started until 2012. there are a um can have warnings on that. i think there will start being a lot of focus on the unemployment rate is high. we can't make the fiscal pivot to make the changes. here's the bad news. the unemployment rate is probably going to stay high for a reasonably long amount of time because a lot of what we've gone through in the economy in the

past couple of years is the result of many, many years of overleverage, overspending at the household level as well as the government level. it's not going to disappear in a short amount of time. and i do think we need to look at the economy to figure out when to pivot and focus on fiscal issues but you can't just look at the unemployment rate because the sad truth that's not going to come down as quickly as we like and not much we can do to control it. the economic recovery will not take hold until a fiscal plan is in place. we know there is $2 trillion on business balance sheets there that's not being invested because there's not a secure environment. we know people don't know how to plan for the future because they know changes will have to happen to medicare and social security and taxes and don't know what they are. until we add that security of saying this is what the fiscal path is going to look like, this is the changes we'll put in place, i don't think any economic recovery takes hold for a very long or very secure amount of time. so it's always been a two-part approach i think and in the

political world tales hard for politicians to give you have two sides. it's more of a nuance story than the political story has been and hopefully we can find a economical response to be as nuanced. >> you talk about the negotiations. house republicans are cutting $60 billion and the democrats first was zero. we see today in the news that they're starting to say we'll cut a little bit but there's a missing party and that's the white house. it's remarkable that the white house seems to be on the sidelines. haven't weighed in with specifics where they think things should go. this is signature for the white house. wait until the last minute and like to come in and be the closer when they think a deal is close just like on the tax cuts. but what do you have guys think about where the white house is or is not on this? seems like they're not weighing in with a lot of specifics. maybe behind the scenes but certainly not publicly. tom, what do you think? have you heard much from the white house or they're waiting on the sidelines until closer to

a deal. >> far be it from me to speak for the white house. i think they have concerns about the cr and the spending cuts, the $60 billion. and some of the specifics in particular. some of the cuts are just somewhat mindsless. for example eliminating a program to help homeless veterans, cutting border security at a time when that's so critically important. homeland security, cutting head start. those are all not only really bad policy but they are cuts that the hurt the economy. for example, a construction revolving fund for state water. that's deeply cut as well at a time when the construction industry has 20% unemployment rate. so i think all of these cuts are really misguided and hurt jobs and hurt the economy. clearly what the white house is committed to is -- and democrats in congress -- is to grow jobs and grow the economy. that has to be the number one priority. that's what the american people care about and what we need to focus on.

i think the white house very much understands that. >> what do you think, maya? is the white house waiting it out until they're close to a deal? not getting their hands dirty in all this numbers negotiations? >> they're not leading. there's no way that you can look at the budget that they put out and say they're leading us towards the deal. it was a disappointing budget i will say is the polite way to say it. it was a really disappointing budget. i think back today point that the budget wasn't passed last years and haven't seen them a lot of year and always seem the appropriations deadline and the president's budget is regularly declared dead on arrival. p the way the process works needs a makeover because it's startling how many dead lines are missed. this is a bipartisan problem. how -- we need to overhaul the whole process. the president's budget doesn't

carry much weight and not taken seriously and i wonder if the white house -- the white house didn't think this was a brilliant budget. they didn't put out something and say we should really follow this. and i think there's something wrong with the ability for the president to be able to put out a budget that even they don't take very seriously. there's something in the pro sesz that's problematic. i will say they're focusing on fiscal policy and that's a good thing and helping to turn the conversation fiscal policy but they too are focused on the domestic discretionary piece. they didn't do anything that would be considered real on entitlement reform. this is disappointing for me because they just had a commission. the bowles/simpson commission spent whatever it was, nine months. tom and austin helped their bosses work on it and came up with a remarkable plan whether you love it or hate it. it accomplished $4 trillion in savings which is so different than the kinds of solutions we've seen so far and exceeded

all expectations. it thereby gives anybody the cover that commissions give which is political cover. the president could have said this is a starting point. i don't like everything in the recommendation but it's serious and we need to use it as a starting point but instead he focused on domestic discretionary. troubling also in the budget when they talk about the savings in there, there's a whole lot of magic asterisks. we've returned to the period where the president's budget is not specific. it has these sort of fill in the blanks after a couple of years in the white house making spexs how they were done with gimmicks there are some doozies in there. the narrative from the white house i think is both right and wrong. the narrative they've given is we couldn't lead. we know -- this is something they would say to something like me. we know you would like us to put in the retirement age but just imagine if you did. i'm sorry. i'm not saying they said that but this is the kind of narrative they're giving.

that would make raising the retime age more toxic. we'd get so beaten up it wouldn't help the cause at all so we have to step back. that's probably true. if the white house put out a budget which i liked which is raise the retirement age, means test social security, cut domestic discretionary and defense, all the things -- reform the home mortgage interest reduction, it might have been a political loser. but the only time that somebody has put out an entitlement reform plan recently was austin's boss paul ryan. unfortunately one of the things that happened in the past election that got beaten up on. whether you liked it or didn't like it it had serious reform proposals and the white house was part of beating up on that. so i feel that they needed to take the past year to help change the discussion. the discussion has to be this. we might not like the proposal that somebody puts forward but we're going to put a different proposal instead of beating it up. we have to change from if somebody puts something hard on

the table -- tax increases or spending cuts -- they get clobbered by the other party and an evening of the playing field has to be you then put forth an alternative and then we can have the discussion we need to have. so while i understand their reasoning for having a timid budget i really feel that the white house needed to do more in the past year to change the framework of the discussion so we could switch it around from what you wouldn't do into what you would do which is where we really need to be in the discussion now. >> austin, did you want to weigh in or jump into the larger topic we keep hitting at which is entitlement reform which is something paul ryan has stepped in on. he's been criticized on all fronts for. it does seem like we're starting to get into a discussion phase on entitlement reform. i don't know where it's going. i'd like to hear everyone's opinion. but in the long run, entitlement reform is on the table for all the parties and everyone is sort of waiting for the next guy to step out and say the

controversial thing like raise the retirement age. it's all toxic and no one wants to hear about it and we're always in more of an electoral posture than next 30 years on entitlements. >> first back to the cr just to touch on that. if government spending and borrowing created jobs we should be at full employment. the government is at 25% of gdp this year. it's the highest level of spending since world war ii. the other issue is if $60 billion -- if it creates -- causes a recession, that seems remarkable to me. a remarkable statement to me in that if you look at $60 billion i can't do the math of what percentage of a $3.7 trillion budget, a $14 trillion economy, our view is there's tremendous uncertainty in the financial markets, among small businessmen, the people among investors and so forth and funding government projects isn't going to get the economy

going. what's going to get the economy going, what we need in this economy is sustainable economic growth. and the way to do that is to create more certainty in the tax code. we have tremendous uncertainty in the tax code. it's really complicated tax code and has a lot of distortions. we have to tackle our fiscal problem. the evidence of looking a at -- kevin hassett has done work and others looking at other countries to the extent they deal with fiscal situations particularly on the spending side they get economic growth. ben bernanke, the federal reserve chairman, came and testified before us and said if you can put the budget -- start addressing these problems you will get economic growth. that's where we want to go. we're not interested in shutting down the government but getting control of spending, putting in the conditions to sustain long term economic growth, get the private sector investing. >> bernanke focused on a multiyear thing. >> that's right. on the long term -- on the

entitlement issue, when you look at the numbers in the president's budget, there was a lot of -- i'm just looking at their numbers, their baselines -- baseline is a projection of current spending and then policy numbers. when you look at those numbers, not only do they not do anything often entitlement spending. when you look at their budget they increased entitlement spending. not big numbers. $300 million over ten years but that's what we've been doing for decades. tales not only they're not addressing entitlements, they're heading the wrong direction. it's something we want to focus on. my boss is very interested. as mike indicated, he put out his plan about a year ago. updated plan. he did an earlier one, first version in may of 2008. he believes that we have to address entitlement programs and we have to address them in a way where we get the structural problems of entitlement

programs. that's something he's very interested in pursuing. >> you want to talk a little about that? >> let me first say something about the president's budget because i'm hearing less than enthusiastic reaction. and i don't honestly think that's a fair analysis at all. the president's budget calls for a five-year freeze in nonsecurity spending, which is saves $400 billion. it calls for the elim nail you nation of the reduction of 200 programs. it reduce s. the deficit relative to baseline by $1 trillion and rexs primary balance by 2017 and at the same time calls for investments in key priorities, things like science, for example, and infrastructure. and my boss, congressman van hollen, refers to the president's budget as tough love. and it's easy to dismiss the cuts in there. but let me tell you many of those cuts are very painful and we're hearing from people complaining about them.

for example the cuts in cdbg, which is really an important program, funding service for many cities and towns across the country is cut significantly. so is liheap. there is a lot of pain in there. the -- in terms of entitlement reform it's interesting. we just went through a very critical process of entitlement reform -- and i think maya and austin would agree with this. what's driving the budget deficit and long term threat in the entitlement growth is health care. health care is absolutely the thing that's grabbing up all the money. last year we passed the affordable care act, the aca, the health care reform bill. accord issing to the nonpartisan congressional budget office it reduce s. the deficit in the first ten years by $230 billion and over 20 years by more than a trillion dollars. and there's a lot of pain in the health care reform bill. a lot of people think that the

cuts are too deep. but now that it's passed and enacted we need to give it a little time to work. there are a lot of pilot projects in there. there are a lot of efforts and different ways to go after the growth and it's a responsible way to do it. it expands health care coverage to more than 30 million americans that didn't have it and over the long term actually cuts government spending. so we should let it do its job. and there are -- that's as to health care reform. social security, which is the other entitlement that's growing that people like to talk about whereby the fact of the matter is social security is running a surplus. over the long term yeah social security has challenges and needs to be addressed over the long term but until 2037 it can continue to pay the benefits. social security is not now contributing to the deficit. in truth it's reducing the did he have sit. under no circumstances should we be doing anything to cut social security or balance the budget on the backs of social security beneficiaries. one of the first things that the

house majority did, the republicans when they took control is they repealed the health care reform bill. that adds more than a trillion dollars to the deficit over 20 years. so there are a lot of things that can go on. i would just say in general in terms of entitlement reform it's important to keep a little perspective on it. one last thing. a lot of the reform proposals for entitlements and chairman ryan has put forward a very thoughtful comprehensive plan and sincerely deserves a lot of credit for his courage and analysis and thoughtfulness. he's one of the few out there willing to put it on the line. after we passed the health care reform bill and cut $400 billion, a little more for medicare in the health care reform bill, democrats were sashasash savaged in the election. having seen what happened a few months ago in the election it makes some democrats a little curious as to the commitment by the other side to doing anything about health care reform in a really positive constructive

way. >> i'm glad to hear that social security is fine until 2037. it's great for the baby boomers. that happens to be the year i turn 65. so i'm -- people my age and younger are totally out of luck. but do you see like the two sides getting together in a serious conversation? kent conrad is out there. he's retiring, doesn't have to run for re-election so it'sees to say i'm leader of the deficit commission and he doesn't have to run. do you see a serious move of the deficit commission and this -- i guess sort of a party of six in the senate to talk about deficit reduction and entitlements? we keep getting hints in the media and politico and "wall street journal" that these guys are getting together and going to do something but then they don't get there. we're not sure where that goes and we've seen things get pretty close and it becomes -- >> with the deficit commission briefly

briefly. what they did was terrific. i think in a very difficult environment because you have to remember when the deficit commission was meeting, we were in a -- i think a very heated partisan debate in my opinion -- no, not even my opinion. the facts about expanding entitlement spending. the health care reform bill increased taxes and spending. that's the net effect of it in the end. so that debate is going on. very partisan debate. it's passed by no republican