money is the root of all evil. and it just seems like now of the judges have decided that they do not have to report where a lot of their money is coming from. it just seems like we keep coming down this dark hole to where we do not even know what our representatives and senators are up to it anymore. i am just wondering if this so- called transparency thing that we're supposed to going through -- and by of the way, i think that king is doing a helluva job and he needs to be able to do this. do you have a comment on that? guest: i have not heard any indication of that he plans to hear from any lobbyist -- lobbyists to see whether they have become radicalized. i have not seen any evidence of that. more, and what you will see from hese lobbyists -- more,

commonly what you will see from these obvious is that they will push toward the center, not to say that these are centrist policies, but at least in terms of public posturing to soften some of the policies on human rights or any number of other problematic issues. and get the country, sometimes successfully, often times unsuccessfully, to adopt positions that will be a little bit more palatable to policymakers. host: eric lichtblau, thank you for your time this morning. thank you for your calls and "washington journal" starts every day at 7:00 a.m. will be back tomorrow for other events on the hill and the white house. we appreciate your time this morning. let's take you over to capitol

hill where the senate budget committee is about to meet. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] they're going to hear from the cochairs on national fiscal responsibility. we will see mr bowls and mr. sims and in just a second. they're also on the hill to launch what they are: the moment of truth project. -- what they call the moment of truth project. . .

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> i want to welcome everyone

to the senate budget committee meeting today and i want to welcome our two distinguished witnesses today. both chairs of the president's national fiscal committee. i want to begin by thanking them for the outstanding job they did. we never would have accomplished as much. they made a significant personal sacrifice to lead this commission. and we owe them a deep gratitude. i believe when the history of

this period are written, their names will ring out in getting our country back on track. i also want to thank the moment of truth pushing for a bipartisan solution to the death threats that we confront. there is now a growing consensus on the need to act. i believe we need to sees -- seize this opportunity and act this year. that's why i've been part of this. if we can reach some kind of bipartisan agreement in the senate, we hope it will provide more momentum to move toward a broad agreement this year. here's what the chairman of the joint chiefs said about the

threat. make no mistake we are at a critical juncture. we are borrowing about 40 cents of err dollar that we spend. spending of this share of the national income is the highest it's been in 60 years. the revenue is the lowest it's been in 60 years. no wonder we have record deficits. we look at the gross debt as it reaching 100%. two of our nation's leading economists studied the impact of debt on economies. they looked over a 200-year span at 44 countries. and this is their conclusion.

we examined the experience of 44 countries spanning up to two centuries of data on central government debt, inflation and growth. our main finding has been 90% above gross debt of g.d.p. they are associated with notably lower growth outcomes. if anyone wonders what this is about, this is about our future. this is about opportunity, jobs, the economic strength of the nation. this is not just numbers on a page. this is not just about a chart showing depth and debtt. this is about the economic future of america. and the conclusion of the ryan

-- ryan hard finding is your future economic properties are compromised. they are reduced. and they are reduced substantially. that's why this matters. i believe the only way we're going to solve this is by enacting a comprehensive debt reduction plan. we need a plan in the size and scope of what was presented by the fiscal commission. it would reduce the debt by 4 trillion over the next decade and put us on a course to get the debt stabilizes -- so we can be in the -- i believe a plan like the commission plan must include spending cuts and title changes that lower's

rates and the commission plan provided for such a balanced approach. its savings include mandatory spending and reff knew. they are used only to extend program's solvency. not for definite reduction. if this is one message i'd like to get out there as clearly as i can, the savings in social security were redirected to social security. not for definite reduction. this chart highlights the key elements of the tax reform including the plan. it 4ri78 natesar scales back tax expenditure. tax expenditures are as big as

all of domestic discretionary spending. and it makes the tax code more progressive. it promotes economic growth and improves america's global competitors. if we're going to reform the tax code, one thing we've got to have in mind is the competitiveness of the united states. we are no longer so dominant that we don't have to worry about our -- the effect of our tax code. normally it's included an i will lustous showing of how they can lower rates and produce more revenue. instead of her counterrate would be taxed as ordinary income.

the child tax credit and earned income tax credit would be retained to help working families. and the alternative minimum tax would be repealed. the commission's plan also increases revenue to 20% of g.d.p. by 2022 and other -- over time balances the budget. that's the kind of tax reform we'll need to adopt. that along with the spending reductions and reforms are. you can see the course we are on will take us to the depth of g.d.p. publicly held debt, 33% of g.d.p. if we continue on the course. the ryan road map takes us to a

place i don't think we want to go. because that's over 90% publicly held definitely the plan by the commission takes us to a publicly held debt of about 16% of g.d.p. s that, to me, a responsible target. to get down to 60% of g.d.p. on the gross debt would allow us to handle any future shocks that we might. -- that we might experience as a nation. so that's why we went a little further. with that i'm going to turn to my excellent colleague, senator sessions for any opening statements he wants to make.

then we'll go with -- >> thank you chairman. for those wise remarks. and i challenge to us all. mr. sirp son and mr. -- thank you for appearing before the court. it's affirmed the growing consensus that our nation is on an unsustainable path of surging debt. we live in a universe. the las of finance are as immoveable as the laws of gravity. nothing comes from nothing. government debt has the same kind of consequences the -- debt's always brought destruction. and it always will. folks mock the ice age folks

and they been say we didn't mean that much debt. now our financial master's is gone and it's all congress' fault. we do have to clean it up. but be careful. don't go too quick or too far. do it just right. for sure don't do anything that might affect my program or my interests. it's the other programs that are wasteful. not mine. your commission rose above that. for the most part it was not without compromise. your recommendations, i think -- when the chairman of the federal reserve, alan greenspan called the wall street journal

a few weeks ago and said our nation has a little better than a 50/50 chance to avoid a debt crisis, certainly we would have taken the hint. and moody's said indeed we could downgrade our debt in less than two years if we don't take action. so much of the world is in a serious financial if it fit. if you read the comments on wall street, the real fear there the is anger. the words to combine concerns for our nation's future and sell short shst. >> some are producing contradictory ideas for action.

and it's causing some confusing. you've helped us cut through that confusing in my view. so the house proposes reductions meanwhile, the president declares against plain fact that his budget calls for us to live within our means and to begin paying down our debt. what world are they living in? are we now through the looking glass, a post modern world where words have lost all meaning? i don't think so. american people get it. we can do this. this is not impossible leadership that the time is most proshese and when confusing on -- should call up to return to the tried and true. first please tell us.

-- first principles. we are a vigous -- vigorous, healthy people. the people know, if not the intelligenceya, the people in washington, that the right road will be difficult for a while. but it will lead to prosperity and service and give us freedom from the current government. the current road just leads to debt and decline. start telling the truth. and the truth is, this budget we have been presented does not let us to live within our means but doubles the gross debt of the entire state from 10 trillion to $26 trillion by the end of the decade. and it includes no new war or military conflict. this cannot stand. this will not stand. for the time and earth you

havive -- your nation is once again grateful for your service. thank you. >> thank you. thank you so much, senator session. we will now turn to alan simpson ander skin bolts, two people of real courage and character. and i would say to other members, senator fighter -- the leaders of this are textbook. it could not have been bitter. and five democrats, five republicans and one independent implet that's about as bipartisan as it can be. and so welcome to the budget committee. thank you for your leadership. and i don't know who wants to go first. senator simpson.

welcome. thank you, very much. old friend and senator conrad and snart sessions, thank you for your remarks. thank you for again explaining through those wonderful charts that we've been watching for many months. you've been very helpful, and you're very informative. and it's a great honor and privilege to be here, and to be in this chamber in these offices, at this capitol, and not be always-inspired by the --er skin and i have left our witness protection program. we make some appearances as today. people are waiting for us to go back into squest irwhen we leave.

let me just say this. it's a treat to look around this room and see friends of both parties that i've thoroughly enjoyed when i was here. and over there is mike. he replaced me, and people said thank god. that he did that. it was a self-less effort. and he is a dear friend and he and diane are friends and that cat over here, he was a -- now look at him. swauf. [laughter] i just say portman. ron. bill. i have worked with all of them. but on with the business. i know that is five minutes or something like that.

this forum is the most frustrating and irritating and cumbersome and sometimes sloppy work performed. as an old cowboy said it ain't pretty. rbir another said if you are hired on the be a cowboy and you draw a bucking bronco you can't complain. and erskine and i drew that bronco. i absolutely enjoy working with him. and we have thoroughly enjoyed our time together. and work is what we do. work is what we do together. folks say to us, why are you doing this? we have 14 reasons, he has eight grandchildren and i have six. it can't be simplefied anymore than that. that's where this is. it's about my grandchildren and yours.

it's not about us. it all started for me when i got this chief call from joe biden in january. he said, al, i got a real deal for you. i said thank you let me get ann on the phone with me so we can laugh at this. joe and i worked together on many, many things when we were here together. and so i said well, who is the co-chair? he sadar skin -- he said erskin , then it took three months to

establish trust. just plain trust. trust used to be the coin of the realm here. the coin of trust is severely tarnished in this. i've worked with so many on the other side of the aisle. kennedy and levin who is still here. and we trusted each other. i hope that can come back. and once we got through the initial hammering which is who is the biggest spending president in the world? george w. bush. never vetoed a single spending bill but then they said your guy's outdone them three-to-one. and we said we'll just do a two-man report. so off we went, and as they came around, a remarkable group

of five democrats, five republicans. one independent. mike fare was on it, and of course the chairman. but 60% of the commission did this it. that's kind of the big number around this place. fiths well with the filibuster and that magic number. when we go around the country, we just evidence -- if any of you have numbers to probe, this is the man. i do the color and he does the numbers. and it works so far. we still do things together if we can. i have one more minute and i yield to myself one -- whatever we do there. we -- what we tell people in america is simple. when they say why don't you go back and fix what people are

doing at their kitchen table? >> they know if you spend more than you earn, you lose your butt and if you spent a buck and borrow 40 cents of it, you must be tuned. so they've sh -- forget the charts. for get the g.d.p. the rest of it. that's where we are. the tipping point. i don't know wheres that. erskin and i take questions on that. but give senator der bin the medal of honor. he stepped in here and at the end of the voting his son called him and said thanks, pop. because that's what this is about. so anyway, the tipping point, i don't know where it is, but at some point it comes when those people who hold our paper say we thought these guys had --

don't swallow this that we're balancing the budget on the backs of poor old social security people. it's a fake, phony, wrong, untrue. we are doing it so it will have its own solvens as i. and the chart showed it. and let me just say about socialal scumplete don't throw anything. there are people out here i get that. i have a lot of emails that are choice. i hope they will never get in the public venue. but social security they sent it at the beginning of the greatest ponsy of all time. now the life expectancy is 77. there are 16 people paying into this system when i was at the university of wyoming then one taking out now there are three

in and one taking out. how long do you think that kind of thing can sustain? and the money had not been stolen by you greedy people. it's all choice stuff. highly, got lots of prints and frills on the side, paper. they were not going to leave that kind of cash. nor did president rose felt. anyway, if you have to go through the anguish. remember in this place, it was my experience sad lyrics you're going to have to using facts because you're going to have to fight off emotion, fear, racism. two quotes and i'll turn over to the numbers guy. sis ral. here's a crazy guy. it says 55 b.c. the budget should be balanced.

the treasury should be refilled. public debt should be reduced. and -- here's what abe lincolnen said as a young man, at what point does the approach of danger, is it to be expected? as a nation of free men, we must live through all time or die by suicide. finally, i don't know where this little baby came up, so i don't want any copyright infringe meant on it. barter is the number of dance is the money of slaves. go look at alexander hamilton, his statue, what it says on

there. everything that this country has ment had to do with getting rid of its debt. and boy, here's your handful. so god bless you. >> thank you senator simpson. erskin bolts. >> good to have you here. >> thank you, sir. i spent a long time trying to get here. >> twice. [laughter] >> i sometimes thank god for unanswered prayers. i want to thank senator conrad. and he's not here. but senator greg. without their leadership, none of us would be here today to talk about this. so i thank you for having the courage. you and the group that stood up some years ago and said, we're not going forward unless we have some commission to deal with this. it simply wouldn't have happened without you. senator sessions, thank you for meeting with us this morning, and thank you for your kind words.

i also want to thank senators crapo, durbin and others for having the -- to do this. and trying to turn a 67-page plan into plain english to legislative language and bring together bipartisan group to make this happen. i'm not going to youzhny notes today. i'm just going to talk to you. i think we sface the biggest economic crisis in history. this one is easy to see.

the physical path we are on today is simply not sustainable. this debt and these deficits that we are incurring on an annual basis are like a cancer. and they are truly going to destroy this country from within unless we have the common sense to do something about it. i was with former senator kerry. bob kerry about a year ago exactly. and he sadar -- he said erskine, 70% of the revenues of this nation the today are being consumed by our mandatory spending and the interest on the debt. that means that every single dollar that we spend a day on

these two wars on our military, on national security, on homeland security. on education, is borrowed. and half of that is borrowed from foreign countries. s that a formula for failure. and if we -- that is a formula for failure. if we don't pay attention, we'll be spending a trillion dollars a year by 2020. think about that. that's a trill dollars that won't educate our children or won't build a highway or won't bring broadband infrastructure to rural south carolina. that's a trillion dollars that won't create the next big thing in this country. it is basically going to create the next new thing somewhere

over there from the people we're borrowing money from. it's crazy. and this is not a problem we can grow our way out of. you could have double digit growth over the next two decades and not solve this problem. soen don't think we can grow our way out of, and it's not a problem we can tax our way out of. raising taxes doesn't do a darn thing to slow the rate of health care. if you want to try to stholve with just taxes, you'll have to trays highest marginal rate to around 70%. the corporate rate to 80%. to capital gangs and the zive depend >> we can't simply tax our way out or cut our way out of this problem.

when i see people go on the sunday shows and they say, oh, we're going to cut our way out of this problem. but we're not going to touch medicare and we're not going to deal with medicaid. and we're not going to mess with social security, and for sure we have to stay safe and secure and we have to pay the interest on the debt. if we exclude all those things -- [laughter] >> you know, you've got to cut everything else by 60%-75%. that's not going to happen. that's not a realistic world. so what al and i tried to do was to present a realistic plan. a balled plan. a plan that will turn out to be a bipartisan plan. and it's based on six basic principals. -- it's based on six basic principles. first of all. we didn't want to do anything

that would draupt very fragile economy. and the economy is in a recovery. this growth is real today. but boy we can lose it and lose it quickly. so when we looked at cutting spending, as senator crako knows. most of our spending comes in 2013. that's when we get back to 2008 levels in reel terms to precise sis level. which i think we can do. i suspect the creans will be getting back to wait to 202. we simply were afraid to do that, because we didn't want -- we have real cuts in 2012. second principle. we didn't want to do anything

that would harm the truly disadvantaged. and that's why if you look at the cuts we made in mandatory spending, we didn't touch things like food stamps or unemployment or s.s.i. we let that -- left that off the table for income supplement plans. and when you look at medicare, we did a couple things that made our job more difficult. we increased the minimum payment up to 125% of poverty to protect the truly disadvantaged and gave that bump up to -- and in our plan we paid for that. but we wanted to do the right thing. and when we raised the rate for retirement age, we did put in a hardship position to prevent those people who have so we

tried to protect the truly disadvantaged. third, we do wanted to keep this country safe around secure. now, i'm not personally one that believes we can afford to be the world's policemen. but i'll put it in more basic terms. i don't think this country can afford to spend more on national defense than the next 14 largest countries combined. and have enough noun invest in education, infrastructure, and high-value research which we've got to do in order to be competitive in a knowledge-based global economy that we all compete in today. fourthly, i do think we have to make these investments in education, infrastructure and high-value added refment it doesn't mean we have sfoned

money willy nily. i just finished five years as the president of the university of north carolina. it's a -- i saw where some of your research dollars go. today we have 375,000 research products that you all were funding. on 3,000 separate university campuses. now all of that -- and it ends up dying, but it's good research. some of it is not high-value research. we have, in a time of limited resources, we have to spend our money more wisely. fifth, for god's sakes, let's tresm tax code. the tax code is ar cake. it was created when america dominated the world.

we live in a global economy today. you saw it every day when you were at u.s. the. it is the fact what we proposed was broadening the base, simple phiing the code, eliminating or greatly reducing these tax expenditures. bring down rates, and using some money to truce deficit. we went to what's called a zero-based plan. and if you eliminate all these $1.1 trillion worth of tax expend chures. i call them ear marks. you-all have been so bold to get rid of the -- but we have $1.is trillion we're spending in the tax code. it's just spending by another name. but if you eliminated those, you could actually take rates

from 8% and 14% up to 210,000 so . you can go to a territorial system that will bring those trillions of dollars back to the country that are captured overseas and bring them back over here. lastly, we do have to cut spending. and we have to cut spending wherever we find it. we can't just deal with domestic discretionary spending. you know, the democrats, as near as i can tell from reading a paper, are talking about the cut. and the republicans are talking about billions in cuts. i can account my budget 1.6% tonight. by tomorrow morning.

i took $625 million out of a $300 billion budget at university of north carolina. 1.6% is nothing. the problem is that you all are focused on taking 1.6% out of a 12% of a budget. so some of the cuts are having a disproportionately -- we can take $430 billion out of health care spending. we take $215 billion out of other mandatory spending. and we get social security solve n't for 35 years. our plan reduces the deficit by

$14 trillion, and takes the debt-to-income rashe g.d.p. ratio to 60% by 2003. it cuts the deficit in half. by 2015 to 2.6% g.d.p. the president asked us to get to 3% g.d.p. it takes us to 2.6% g.d.p. i came here today to ask you to -- i know these cuts are politically difficult. thank you, mr. chairman. thank you for allowing me to

come. >> thank you. i sympathy you've made the case -- i think you've made the case about as clearly and persuasively as it can be made, and i want to thank you for the leadership you've provided. let me ask you this. what happens if this doesn't get done? in other words, erskine, i didn't give all the things when i introduced him but head of the o.m.b. head of the small business association. has been the administrator for the college system, in the state of north carolina. pretty good set of bonefieds. and every place he has served, he's produced results. let me ask it again, what happens in your judgment, to the united states fetishes we

fighter -- if we >> what you said about me reminds me about when my you thinkal sam died in north carolina and the editor called ask about him, and i occupant went on and on about the things he had done and he said you do know we charge $5 a word for every word you put in the paper. she said in that case just put sam died. >>i thought you were going to say the one about look in the casket and make sure it was your old man. >> i have eight grandchildren under 5 years old.

i'll have one more in a week. and my life is wonderful, and it is wild. but this problem is going to happen long before my grandchildren grow up. this problem is going to happen like the chairman said or like moody's said. this is a problem we're going to have to face up to maybe in two years. maybe a little less or maybe a little more. but if our bankers over there in asia begin to believe that we're not going to be solid on our debt, that we're not going to be able to meet our obligations, just stop and think for a minute what happens if they just stop buying our debt. what happens to interest rates? what happens to the u.s. economy?

the markets will absolutely devastate us if we don't step up to this problem. the problem is real. the solutions are painful. and we have to act. >> alan, you want to add to that? >> i would just say, and i know it's repettive, if you can understand here what the people of america, as we travel around. and we do stuff. we go to the business counselors and the conservative group in dallas. and the economic club of new york. and wherever we go, people get it. and then we tell them that if they just draw, pick, go to the internet and go www.fiscalcommission.gov. it's 67 pages. if we leave that out they'll

never read it. they say oh, they worked for a year and it must be as high ags this bofpblgts and it isn't. and it wasn't written for all that. it uses terms like going broke and shared sacrifice. let me tell you what was stunning for us. there's never been any sacrifice required from the american people. if someone says you can't use that word, well, the american people are using that word. it's called shared sacrifice. and it's a puzzling thing. they don't -- and it's the right and the left. they are not involved in social issues deeply. they just -- now this has risen to number one. jobs. very important.

and this number one or number two is the debt. they understand debt. because in their own home they have been wiped out by debt. the first thing anyone did during this crash that had any brains at all was to gather their loved ones around and said we got to get out of debt. that's first. and you know my wife ann and lucy has saved you many times. she said pay it off, al. you guys here on credit cards. great. we paid cash. so i said ok. it's a deal. i guess -- i think it will come before two years. i think that when the people that hold this paper look around, and all you have done is cut waste, fraud, and abuse, foreign aide, pelosi's aircraft and all that, they will know you didn't get anywhere. you got the 5% or 6%.

and they will say you didn't do it. then when the debt extension limit comes up 85 guys will say i'm never voting for that under any circumstances. then you'll hear the cracking of knuckles. and you might even have to shut the government. some will say, well, that's why i came here. that the point there will be a sound of bone against flesh. but at that point, too, i can't imagine shutting the government. our party tried that once. it was about the biggest disaster i've ever seen. so i'm just saying at some -point, at the end of the year if they just thought we were playing with fluff, 57, 6%, 7% of this whole, they are going to say i want money for my paper. if there's anything money guys love, it's money. and the money guys, once they

start losing money, panic. and let me tell you, they will. and it won't matter. to me it won't be a year. >> you see, i don't see how we cannot face up to it. you showed a chart, senator conrad from admiral mullen. admiral mullen said it's our greatest national security problem. think about it. if you believe in investing in infrastructure and education and high-value research to be competitive in today's global marketplace, if you don't want those people creating the next new thing over there but over here, there's not going to be any money for it. and if you're a small business guy like me? and they will be starved for capital if this budget

continues to grow as it is today. >> thank you. my time is expired. we're going to go to five-minute rounds. making an exception for senator sessions. but five-minute rounds because of the number of people we have. senator sessions? >> the remark you've just made are very sobering. it goes beyond the a dental i can or theoretical to a warning of an immediate and dangerous let the -- threat that's before us. the language you used in your opening statement, i noticed was pretty stark. and mr. bowles, we believe physical we do not take decisive action, our country faces the most predictible crisis in history. and i can't dispute that. the more i read about it. the more i believe in it. and believe that's true and i believe we need to take action.

let me ask you to just share with us your thoughts about the president's budget if you've had a chance to see it, and if you think that's sufficiently decisive to alter the trajectory we're on. >> the president's budget, i think all the domestic discretionary spending does a pretty good job. if you look at it over the eight-year period. it has some gaps in it. they talk about investing in transportation. but they don't tell you how they are going to pay for it.

we said you've even got the cut transportation spending back to the level of income coming in, or if you're going to spend to the level you are today. then we proposed a 15-cent gas tax to pay for it. your choice. on the total cuts and total deficit reduction in the president's plan is somewhere between $1 billion and $2 billion. it's hard to tell. we proposed $4 billion worth of cuts. so it was much less than what we proposed. >> trillion. >> trillion. and i think that's the minimum amount that many should be done. if you look at health care, we cut health care spending by $430 be. his budget cuts are about $310 billion. but only about $50 billion are specifics. the others are 2 $250 billion

not saying where they are coming from. on other mandatory spending, we had about a $215 billion cut or is -- 11.2% cut over that time period. he's got about $60 billion for waste, fraud and abuse and we couldn't find anybody to support more than $20 billion so i don't know where theo $40 billion is going to come from. on social security, we have a real plan at least to a 75-year solvency. and they talk about us doing something for 7 -- solvency and making sure we up the minimum payment and protect the basic

payment, and we get it solved in the long run, and of course our plan does exactly that. and on revenue. on revenue, they,, too, eliminate some tax expenditures. but they sfend money that they create by eliminating those tax expenditures. we take thotion tax expenditures, and the vast majority of it, we use to reduce rates and lower the deficit. so the overall effect of the president's plan, think i -- i think falls short of what the country needs do right now. i think the president has done a lot of good things. i think appointing this commission was bold step. in the state of the union, he showed us a little leg of some of the things he would cut. i think in the budget he went

further. my hope is he will show strong support , and it's going to take support from both houses and both parties and the president. >> well, the way we calculated it. not $4 trillion reduction as you proposed. but one, basically, at the present -- we think that's incorrect scoring, and the budget will be scored at not having to reduce the budget at all. so with regard to discretionary s. >> we've calculated this out over reducing the baseline over 10 years, plus the interest

saved, assuming some steady growth or no growth, or however you calculate it. but taking that baseline down to 60 would result in a saving of about $850 trillion. you proposed $1.7 trillion. but you shared with me the significant reductions you had to take at the university of north carolina. 30% or some figure such as that. the 61 billion would result in 1.6% of the overall budget and only on the discretionary it's only about 6%. so i don't think that's hash or extreme. especially in light of the fact that the administration has achieved a 23 -- so i believe you're on the right track.

i believe you're sharing with us the fundamental truth of the financial condition we're in. i do believe that the american people will benefit from social security, medicare. i want to see the wasteful washington spending under control too. that it shouldn't be off the table. it should be on the table and rulings in real trillions in savings if we work at it, and you combine that with the entitlement reforms that could take place. we'd do pretty well, i believe in offering the trajectory. >> thank you, mr. chairman. >> would you correctly say that you can't do serious deficit reduction just by cutting? and you can't do serious deficit reduction just by taxing. what i want to do is make sure that as part of this debate, we see that to really drive

deficit down, you've got to do some serious growing. and to me, that's what the tax reform debate is all about. in the two years after the 1986 tax reform bill was passed, we created 6.3 million non-farm jobs. twice as many as were created between 2001 and 2008. so we're clear. and you-all have done an excellent job. isn't your heart of texas reform is it will help us create more good paying jobs and it's key -- >> our plan was -- i believe if we take such steps and we get rid of some of the inefficiencies in the tax code and bring down rates and reduce

the corporate rate, and get rid of this -- get to a territorial system, then i think we have a chance to really create a lot of jobs in this country. >> let me ask the two of you a technical question, and i'm very appreciative of all the work you've done. you-all propose an important budget enforcement mechanism. something i talked about with the chairman and colleagues in the past. but you didn't include a -- when you go back and look at the history of 1986, practically as soon as the ink was dry, as soon as democrats and ronald reagan came to this historic kind of compromise, what you saw is the lobbiests went back to work and kept packing in break after break

after break, and pretty soon, it added up to 15,000 new breaks added to the tax code from 1986 to 2005. . .

>> i knew ronald reagan well. this man does a beautiful job. i said ronald reagan raised taxes 11 times in his eight years. he said, i didn't like that at all. i said, why do you think he did it? disappointed." he did it to make the country run. people were talking about that tax. i cannot understand how distorted things can get, as if we were putting a tax on top of the present tax code. that was the word. the bible said they are talking about a tax on top of this atrocity. you have to scrub everything off the board. it was difficult to deal with the tax by a vote of 84-15. there will never be a vat tax in

the history of the world. there was talk about a vat tax. at some point, we found only 2% of the american people, the wealthiest in america are using these 180 tax expenditures. that is who is using them. the little guy does not know what thteey are. bombs will fall. oil depletion loans. and land reclamation. i am from wyoming. we would be the largest coal- producing states in the world. this took a bite out of our ankles. these things are like the zombies that rise from the graves. this city is lined with people

who make big money to get a pait back. this time they will not be bringing home the bacon. the pig is dead. >> make sure we have tax enforcement from backsliding. >> absolutely. otherwise, we will end up back where we are today. the top taxpayers pay a marginal rate of 60%. warren buffett says he pays a lower rate than a secretary does. that is what happens to people who benefit from these tax expenditures of people in the upper tax income brackets. >> it was 37 years ago that senator simpson told me i needed to put my money where my mouth was and get into politics. i ran for mayor as a result of that. i wound up here. he has been a tremendous mentor

to me over the years. i appreciate both he and mr. bowles were willing to take up this task. it needed to be done. i was one of the co-sponsors of the conrad-gregg bill. i was disappointed when that did not pass. i was elated when the president decided to do it anyway and thought that was a good step. i was disappointed when the president missed the opportunity in the state of the union speech to say what you said today, to inform the people of how desperate the situation is so we could take some positive action. i was disappointed when the budget proposal came out. the biggest thing was to take the tax expenditures to use them

for new programs. the american people have figured it out with your help. they are getting a clearer and clearer every day. we have to get congress to catch up. there is a question in there somewhere. you broke your recommendations into six areas. i know that your task was to have a single vote on all of that. given the fact that congress has trouble doing comprehensive legislation well, what it makes sense for us to break into six areas separately? do you think we should do that in one big piece of legislation? >> i can tell you that based on our experience, before i do the, i want to address one of the things you said.

the wicked shown how desperate the situation is. it is only desperate if we do not act. if we do act, the future of this country is so bright i cannot believe it. if we have the courage to stand up and do something that is a real today on all six of those areas, then the future could not be brighter. we originally started out thinking that one of the easiest things to do since it was part of the president's request was social security. you can kind of figure out how to get it from 75-year solvency and make it safe over the next 75 years. we thought that was morally important. second, we thought we could do some of the discretionary stuff and thought we could make some progress. as we went on through this process, we found that the

bipartisan group really did coalesce around doing something that was comprehensive. we get more support rather than less support when we were bolder and did something more comprehensive rather than trying to break into individual pieces. >> i think we also felt that -- it is tough to keep anything together here. if we could just stabilize the situation, just stabilize things so that they know that it is not just on automatic pilot, that alone would be worth everything. you would not challenge that, which you? of course you would not. you would try. let me just say this. if you cannot get social security solvent for 75 years, and this congress cannot do that, you can forget everything.

you will never get to medicare, medicaid, and defense. you'll have felt we see as the easiest thing to do, which is to restore solvency of social security for 75 years. we're not stealing from the old people. we're not throwing bedpans of hospitals. that is not what we're doing. people are involved in massive fakery, at worst. i have many words, just as salty as bernie can be. i hope becomes back and ask some questions. i want to answer his questions about social security. if you cannot solve that, you're gone. forget the rest of it. it just won't work. >> i did appreciate your comments in the report to have

transition rules. i think that will make it possible to get it done. i am anxious to work on all the ideas you the put forward. >> if we only do social security, we have not come close to solving the problems. you can direct of all domestic discretionary spending and still have a $1 trillion deficit. i think you have to look at revenue and spending in order to solve the problem we face. >> i think we all have to do it all done. we have to do it one at a time so we can get the trust of the american people. they don't think we're going to do anything. >> your skills -- i saw how you worked with ted kennedy. you did about 40 pieces of legislation. nobody realized that. you always work with the other side. your guest will be heavily alled upon -- your guifts

will be heavily called upon. >> senator enzi has been a key ally. sotho has senator nelson -- so too has senator nelson. we needed 60 votes. i was called to the vice president's residents to negotiate the executive order commission bill. senator nelson volunteered to go with me and i accepted. i want to say that we would not have gotten the executive work commission without bill nelson's hanging in there and being tough. and also i will forever be grateful for his assistance in negotiating the executive order commission. that was a pretty tough negotiation, as well.

senator nelson. >> thank you, mr. chairman. the problem is that if we try to do these things one at a time, we will not get it done. you have to take that comprehensive approach. i do not know how bad it has to get before we can get everybody to the point of being all willing to pull up and hit you -- and hitched up their belts to do a comprehensive approach. you mention the six things, six major components. one of them was health-care cost containment. you know, why should medicare be paying the premium price for drugs instead of the discounts that the u.s. government gets in

the drugs for medicaid? we know why. why is there will to payments that are not being paid for the extraction of oil from the gulf of mexico? that is a tax expenditure. we know why. so if you try to take individually items on, you're not going to be able to get -- you're going to get beat because the powerful interests are there that can always beat you on an individual basis. so now i want to ask a question. you all have put social security as part of this overall

reform. and i agree that it passed today. but you are quick to point out that nothing in the way of social security savings here goes to help the deficit. so other than this symbolic value of tackling social security for the long term, which is in notable goal and which by the way it was one of the finest achievements of u.s. government back in 1983 when social security went down to about six months before going into cardiac arrest, everybody came together in a bipartisan way and two old irish men, reagan and o'neill, got it done. my question is, other than social security, why does that have to be so much a part of it since it is not actually helping the deficit, which is

what we're trying to get to right here? other than the symbolic value. >> it is more than symbolic. we had no choice. if you look at the mandate, the second part of the man it required us to look at the long term entitlements and the effects they had on the country. in addition, we felt that we had a moral obligation to face up to social security. we're not making this up. social security -- all the interest earned on the trust fund and the funds lent to the general fund or a exhausted before 2037 because of what we did at the end of last year. benefits will have to be cut by 22%. that is under current law.

that is not something we made up. in addition, it is a fact that -- i will leave it at that. we have made promises as a country that we cannot meet. we try to do was to restore the solvency of social security for 75 years while protecting the most disadvantaged and giving them a higher benefit so they could have some kind quality of life. >> we have seen -- sometimes for budgetary purposes, they will use trillions, $3.5 trillion as not counting against the budget and sometimes they will counts it. when you have a figure of $2.5

trillion and people are saying you stole it and all the tr drama that goes with it, if you do nothing and the howling and shrieking by the interest groups -- do not think we did not know we would be savaged by what we are proposing. i had a hearing on the aarp. they are still looking for me. you cannot play games with it unless you want to go to these on the other side who say you're going to touch my social security. got your relatives in 2037 and get 22% less and downhill the rest of the way. there is no way to avoid that. it pays only payable benefits.

it will not pay scheduled benefits. if everybody can wake up and figure that the thing they get from the social security when you're 65, it will not be there because you did nothing. >> senator gramm. >> i do appreciate what you've done for the country. we will take parts of what you did and will add that and we will do something. if we are politicians who are not wise, it will all get beat. i think america wants us to do something. can you mention -- can you imagine a budget that does not have intolerance -- have entitlements? >> no. >> can you imagine saving social

security from massive cuts or any entitlement program without adjusting the age for eligibility? is there any sensible way to do it without adjusting the age? >> you can do without adjusting the age mathematically. so yes. we thought you should not adjust the age. you are not eligible for social security at 65 today. eligible at 66. it goes to 67 in 2027. >> can you imagine any scenario of saving social security or medicare or getting our debt situation in better steny without adjusting the age of eligibility? >> it is impossible. the average age of 77 will go to 80. 63 was the date of life

expectancy and 65 was our retirement. now you can retire -- used to be able to retire on security and live free or four years. now you can retire and of 20. we have 16 paying in and out only two people are paying in. i tell people, read the report on social security. it was done by democrats and republicans for years. >> can you imagine a scenario of saving social security from bankruptcy or major cuts without some forms of means testing of benefits? >> again, mathematically, you can do witit. >> we like patting ourselves on the back. how great we all are. nobody in this room including both of you are doing anything

near like going to afghanistan. let's put this in perspective. all we're asking people to do is to do things that makes sense. the sooner you do it, the better we are. testinglk about means and sacrifice. if you took the idea that said if you make $50,000 or less in income including social security, you should have your benefits adjusted. what would that mean for people who make over $50,000 to feed you would have to have your benefits reduced somewhat. >> you probably have to slow the rate of growth to have the benefits reduced. >> when i was 21, my sister was 13. social security survivor benefits came to my sister. it made the world of difference. i make $107,000 a year. what would it mean for somebody

in my income level in actual -- the difference between what is promised and in what would be paid? do you have any idea how much it would affect my benefits if we did it means test for people in my income level? >> i don't know. >> $100 a month profit to $1 a month? could you give me that number -- $100 a month? $200 a month? >> the rate of growth would be at a slower rate request paying people what you can actually afford. >> it grows at the rate of inflation rather that a higher rate. >> you have progress of price indexing. >> i am 79. i see people with their signs and all sorts of activity. i say, wait a minute.

i put $5 in it when i was 15 and i worked at a bakery. i was in the army. you did put it in when you were in the army. not now. i never put in over 807 $4 a year and neither did anyone else in the united states -- i never $4 $874 a year. such a you will get it all back. they get everything back plus 6% interest in three and a half years. >> this effort to bring about fiscal sanity. >> yes, . >> i thank the senator. >> thank you. let me thank both of you for

your workout. i think you have the correct formula. each element will be controversial. let me deal with the limit of time with the revenue. i know you have had some discussion in regards to consumption taxes. i want to carry it and make a point here. we get around the tax reform about every 25 years. it is important that we get this right. we should have a goal that revenue is equal to about -- that is a revenue goal that could be achieved through the reforms in the income tax that you have outlined, or it could be by using some consumption taxes as well as using our income tax. the revenues would be the same. i mention that because we passed

-- since we passed the last reform, the chairman points out that there is now 140 provisions in the tax code that have been added and need to be reviewed for extensions on a regular basis. my concern is if we were to pass the recommendations of the commission, it is unlikely that would stand for very long before congress would once again for reasons of political expedience the use the tax code rather than the revenue code in order to carry out the policy. i think we are safer if we use less income tax revenue and we have more consumption revenues to equal the dollars we want to bring in. the realities of competitiveness and the fact that during the best times, this nation did not save enough. our policies -- we worked in the house to try to encourage more savings for americans.

our tax code has not been helpful in rewarding savings. we know that the income-tax is not bordet's adjusted. the consumption taxes or the border deaths adjusted in international trade. that puts american manufacturers and producers at a disadvantage. the argument i hear is progressivity. we can make the tax protest and we have ways of making it. i want to make sure that the end of the day, we bring in revenues in a more progressive way that we currently bring in revenues of this nation. knowing that you really did your best to put forward the policy objectives of this nation and we are certainly realistic to know that your proposals are going to be politically controversial wherever you went, could you

share with me why we shouldn't be considering as a matter of policy less reliance on income and more consumption, knowing the history of congress and changing the tax code? >> i will be glad to do that. let me tell you what it is not in our plan. it is pretty simple. a week before we started, the u.s. senate voted 85-14 and it does not look like the odds are looking to great we would have a consumption tax. secondly -- >> a lot of laws were intended to put in similar resolutions on social security. i dare say which of gaunt 85 votes. each one of those recommendations -- it was terribly responsible for the senate to take up that resolution. >> i am telling you what we did

not do it. there was no opposition on the commission to a vat tax or consumption tax in theory. most people believed that it is much better to tax consumption if you can do it on a progressive basis then it is to tax wages or investments or savings. you have to make it progressive. there wasn't a lot of opposition in theory on either side of the aisle. where there was concern was that we would end up with two engines of revenue. an income tax that would be escalated and with a consumption tax and you would have two engines out there fueling revenue and feeling the tax rate. that is why there wasn't support in our commission. it wasn't the theory that it is better to tax consumption. >> i feel better getting that

explanation. i conclude that we want the best policy objectives. future congresses are going to act regardless of what we do on these recommendations. i think we are safer having a tax code that is less likely to be changed in the future for social reasons then we currently do on the income tax. >> take a look at the diminish sheet-revlon -- dominici-rivlin report. there was just -- it fell like ramming our heads into the wall. let me just say -- >> i argued strenuously for vat tax or consumption tax in whenever form to be part of the package. i did so in part based on the

recommendations the commission received. we broadened the best experts in the country. their recommendation to us was to go to a hybrid system, part income tax and pork consumption tax. not layer one on top of the other in the sense of any additional revenues, but displacing part of the income tax system so that we could lower rates, especially corporate rates, to help america be more competitive. to adoptthe proposal f a hybrid system with part of it being consumption tax and to take 100 million americans off of income tax rolls completely. 100 million people no longer would have to file income-tax returns at all. you would achieve the same amount of revenue that is in the commission plan but you do with a hybrid system. we understand the politics of

it. i did want to take this moment to explain the position that at least i took. >> thank you. i want to thank both of you for your service on behalf of the people i represent in ohio. most commission reports end up collecting dust on a shelf somewhere. there is an opportunity for this to be a similar report, to change the direction of our country. it depends on what congress does. you have given us the opportunity to make these necessary changes. alan simpson mentioned i worked for him at one point. he inspired me to take a shot at elected office, which means you'll be blamed for some additional now, senator. >> both of us now. that witness protection program will have to be even better. >> erskine, thank you for your

service. ben cardin and i did some work on increasing savings and helping on retirement. i do not think i would have been -- i recall your willingness to step out of the partisan ship into solutions. that is what you've done in this report. i have three quick questions for you. we have discussed two briefly. tax reform quickly. do you think from all the testimony you have heard that the proposals that you have will not just have the impact that the -- but also will make our economy more competitive? >> yes. without question. >> that is an intangible not represented in the numbers you

are provided which will help to grow the economy. we will hear later today on social security than they are not getting a dime to the deficit and is in good financial condition. do you agree with that? >> is $45 billion cash negative today and is expected to stay cash negative for the foreseeable future. >> what people sometimes forget is that when somebody my age goes to collect on their social security, i want money, cash. i go to present that obligation to the social security trust fund, and it does not have cash. what has is the government iou 's which are as good as gold.

the government has to go out and borrow the money, so it increases the national debt. , half of the doing money i am getting is coming from some foreign country to pay my social security. >> that is a good way to put it. i'm glad you address the issue in the report. it is getting to war debt. what is the economic impact of all this? people who study this have said if we reduced discretionary spending, it will result in job loss. it is called a dickensian model. it equals less economic activity and job losses. these are the same folks who said the $800 billion stimulus package would add interest on the dabt because we had to

borrow money for it. folks that unemployment would be 8% last year and 7% last year -- this year. that has not happened. there would be a great loss of jobs. you looked at this carefully. you talked about the potential financial crisis and small business is being starved for capital if we don't do something. what do you think the impact would be of reducing spending along the lines you have recommended? >> i'm not an economist and don't want to pretend that i am. i am a pretty decent business guy. i can tell you from my career as a business person and from heading the small business administration that small business cannot grow without money. if we do not tackle this fiscal

mess that we have today, then small businesses will be crowded out of the marketplace and there will be fewer jobs, not more jobs. if you're concerned about jobs, we have to tackle this fiscal problem head on. >> and we do realize throughout the fragile nature of an emerging economic which seems to be happening except the jobs do not meet expectations, but people when you're through with this will say this was a failed commission because you were involved deeply with the slick commission on immigration -- policy and we did two major pieces of legislation, legal immigration and illegal immigration. that bill brought to pour nine people out of the dark to obtain legal status in america. i was on the last study group. that was not a failure.

50-some of those seven not recommendations have been adopted. these are not feckless things. this is a stink bomb in the garden party. >> thank you, mr. chair. i wanted to ask some questions about panera i don't think anybody has touched on -- about an area i don't think anybody has touched on. the steady elimination of the deductibility for businesses. you've waited out that the deductibility was in the seventh percentile. it should stay steady for four years and the face doubt. the first concern i have -- and will be faced nphased out. the first concern i have, we're

going to have employees take up a lot higher co-pays and a higher share of their -- it sounds a lot like an immediate regressive tax on working americans. i wonder if you could touch on that for a moment. >> i don't think that is the case. --t i think you'll see is every business in the world whether it is a small or large business has raise the deductible and the co-pay, reduced the benefits in order to offset the increase of costs. that is a fact of life we have had to live with during the last -- at least as long as i have been in the business world. i did not know any business that has wanted to do it but has been forced to do it.

if we do nothing and take the hasids theory, i think you'll see that continue into the future. -- if we do nothing and take the hostages. health care is the biggest fiscal problem we face. if you look at medicare and medicaid, it is about 6% of gdp today and it was go to 10% before you know it. and that does not count the money it takes to do the doc fix or the money to fix the class act. we think we're going to have to stand up to that. we have proposed some pretty aggressive proposals as it relates to medicare, medicaid, to the tax deductibility, as you mentioned it, that we felt was responsible to meet the fiscal challenges that the nation

challenge -- that the nation faces. we have made promises that we cannot deliver on. >> i am not sure you made me feel any better about this. what i have described this kind of the reaction of a normal business if you increase the cost of providing that particular benefit to their workers, they are likely to decrease it by a decrease in the co-pays and the shares appear above the employees. in the context of health care reform, there was a promise of workers in -- of companies to provide health care. if you set up a situation where employers say, without the tax deductibility of these benefits, we're going to shut that down. we will provide benefits to our employers in other ways.

that results in a huge cost shift increasing the size of the deficit. it sure looks like something that is going to increase public deficits and public debt into the future rather than reducing them. >> this is a monster. we cannot wrap our arms around it. that is where health care is. think about your own family or the family down the street where there is air flight, hospice, and maybe you could run up to a bill for $400,000. that is cody, wyoming. there is a way to do this. you cut providers and you reduce physicians' fees. you increased copays for patients. you get one set of books in the

hospital instead of two and you do tort reform. we have recommended all those things. how is that tough? leave it like it is and it will eat a whole through everything you love in the discretionary budget. >> there is a number of concepts include the house passed a bill to get rid of the exemption from antitrust the health care and currently employs. there is discussion of a public option in oregon, and workers' comp. my colleague from ryland said one adopted it, it had the same -- my colleague from rhode island -- the same rhythm we haven't veterans and would save $60 billion over 10 years. there are many approaches other than a short-term transfer onto

working americans of health care costs. >> thank you. >> thank you, mr. chairman. welcome back. you did a terrific service with your work. i did not agree with every piece of it, it was the body of work was exceptional. and i think you gave -- if we want to follow-up, a pathway to start to get this fiscal situation under control. you were attacked by both the right and left, i assume you're trying to find a spot in the metal that might be able to attract a level of support that would be necessary to enact something around here. i do want to ask a couple of questions. it has been talked about already. it may get you to collaborate already. if we were to adopt -- the president's budget this year it did not address, many of us thought it should have, some of

these issues of entitlement reform. if we were to adopt the budget, how does that address the long- term structural issues and problems that you have identified in your work? and you seem to be -- some of the recommendations the were included seem to be absent from the president's proposals. >> i can answer that pretty straightforwardly. first of all, i don't think anybody on our commission agreed with every part of the commission report. i sure did not. i know the chairman did not. we all kind of held our noses and swallowed some of the things in the commission report for the good of the country. andpresident's budget began does a good job of dealing with domestic discretionary spending cuts, but it does not step up to

the extent i believe it should. defense cuts are necessary. more cuts are needed. more cuts in health care or reforming social security so it is solvent for the next 75 years. >> i think is much like the republican response, which both of them are like budget efforts. >> this has been mentioned. the u.s. could face bond market crisis if politicians cannot act soon to cut the debt. the probability is a 50%. do you agree with that assessment? >> i don't know what the present is. let me tell you how crazy our situation is today. we have a treaty where we are supposed -- if china were to

attack taiwan, we are supposed to support taiwan's. belah promised we would have to borrow the money from china to do it -- the only problem is that we would have to borrow the money from china to do it. we can decide will put our head in the sand or step and do something about it. bankers want to make sure they will get paid back. we are borrowing half of our money from foreign countries. >> how do we translate that -- we talk about it in the abstract. how do we translate that american people personalize it so that they and their personal lives understand what the implications and impacts of our not acting are. in many cases, their response to the attacks about programs that are caught.

once you focus on the specific, it is hard to get the kind of support when you're talking in the general terms about the need to reduce spending and debt. what does this mean to the average american felt if we don't take steps to fix this mess? >> on this level, we used to talk in say, how are the people handling this at the kitchen table profit of will tell you. they don't need any charts, nothing. they just say, if you spend more than you earn, you lose your butt. that is what they know. that is what they are with us. when we traveled this country, they understand this because that is all you have to say. you are barred for 40 cents for every dollar you spend. they know if they did that in their own home, they were out in the bow-wows.

they get it. >> my time has expired. >> thank you. senator white hohouse. >> healthcare consumes about 80% of america's gdp right now. the closest country is about 12% -- health-care consumes about gdp right now.s we don't to better outcomes for ait. the rate of increase is accelerating. it strikes me that we have a problem on our hands with health care. it is not just an entitlement program. it is a health care system problem. the cost increases are clobbering the private sector just as strenuously as they are clobbering the public programs.

so i don't think we can fix the health care system just by trying to cut benefits in the health care programs the government supports. there is an underlying cause problems in our health-care system. i think it has lot to do with our rube goldberg design of the health-care system. except it is worse. every party has a motive. so i think the risk of a lot of work being done to correct and reform the system as it goes. the areas that are obvious of a quality improvement movement that is out there. we spent $2.5 billion a year treaty which should be avoidable hospital-acquired infections. if we can figure which prevention methods actually save money we could invest in those

and that would save cost overall. a robust information technology platform can make a huge difference and generate new private industries. we can start paying doctors better for results instead of just a mess in as many procedures as possible. the overhead can be driven down a lot. a great deal of overhead goes into total on productive warfare between insurers and doctors over getting paid. staffers a fight with each other over getting paid. it doesn't provide a nickel's worth of health care and value. stock all that up and there's quite a lot going on. there are some big outfits that have confidence in it. kaiser, intermountain, mayo are seeing real cost reductions and quality improvements. if elected the council on economic advisors report, they

have calculated the savings available from this is about $700 billion a year. others put it at $800 billion a year. do we know the exact number? no. but it looks like is it really big number. if you agree with this, i would urge you as you are discussing this issue to focus on this question of delivery system reform and the win-win that is possible for improved experienced of care all lowering costs. it has one big flaw and that is that the cbo and omb cannot predicte it. it is a process of learning and experimentation. we know there is good stuff to be done. with enough confidence in our ability to get there. we cannot predict the dollars.

my fear is that this incredibly significant opportunity gets shoved off the table because i can put thish, ah, dollar figure on it and you need to put a dollar figure on it. so my appeal is to not give up because it is not costable. it is probably the best think we can do for most severe long-term budget problems, which is the health care piece of the system. i don't see as much as i would like to in that report. even if you put it in as the footnote. it has a huge potential. we should focus on the potential. it worries me that we're not getting that. one of the best people in the world is under constant attack because he did not come here and

get confirmed properly. well, fine. we have a chance for a big win win on these numbers. the more you ignore on it, the more things -- it seems like an ok idea. i urge you to consider that is to go forward. i'm sorry to speechify. it is so frequently overlooked. i hope if you agree you give a more airtime. >> i do agree. it.ave done nit i headed the university of north carolina's public health care system. what you're saying is exactly right.

it is not in our report. >> we have a bipartisan group of john chafee and dave prior and we worked for months, and the problem was we never -- nobody ever understood it. you go to the floor and you do and a minute and is something good. somebody sticks it on and nobody understands the impact. i agree with what you're saying. i think those figures are correct. $800 billion. there are people who use terms hoping you feel inferior enough not to ask any questions. >> thank you. i like to thank both of you for putting forth a serious

proposal. i think is essential we mobilize american public so we understand how urgent the problem is. we heard the term debt crisis all the time. can you describe what a debt crisis will feel like? help it will affect a family? not just in theory. what is echoing to do to family? >> their interest and cost will rise rapidly. the quality of education that they can provide their schools is going to erode. there university systems are going to -- the research will evaporate and the likelihood of that creativity creating the next new thing here rather than someplace overseas is less likely that there'll be a new job even if they are trained for

that new job down the road. training funds may not be there. there roads and bridges and highways will be less. there will be fewer cops on the street. it will affect them in every way possible. >> and the guy that gets hurt the worst will be the little guy that everybody always talks about. that is who is going to get hammered. >> you touched on one question i wanted to ask about how we redeem the social security bonds. we talk about the social security system is softened until 2037. how is the $2.5 trillion -- how was it accounted for? >> we did a couple of things. on the revenue side, we raised the minimum payment that somebody would be taxed upon.

today it is capped at 106,000 in dollars$106,800. you would pay that tax on the differential of $22,000. we reduced the rate of growth and benefits being paid to people at the higher levels. we have changed the rates and we change the age eligibility age and we also changed the rate of inflation to what is called a chain cpi. >> you did account for the fact that $2.5 trillion needs to be raised. >> passed today -- has to be. >> in the budget, we have never hit 20% of gdp in terms of

revenue. we came close in three times. i kind of a subscribe to matter what the tax rates are, we'll give off 18. % of gdp in terms of revenue. how do you overcome that? i want to look at the facts and figures. >> i looked at the forecast and saw that revenue was forecast in 2020 to be about 90% of gdp -- 19% of gdp. i had to figure out how we were going to close the gap. i wanted to close the vast majority of it on the spending side. we had to get to a balanced budget to get to the revenue side. we have balanced the budget always as -- and a level below

21% of gdp. i thought that was the national level we could get to. i thought it was probably one of the lowest levels we could get spending down to the >> we have never raised on average more than -- never raced 21%. >> that was the maximum level is what our report says. >> i did not subscribe that it has to be comprehensive reform. i think the american people want single-issue bills. they want to understand what we're trying to do. did you make any attempt to prioritize this? the pirates tied to the other recommendations if we do this in a piecemeal fashion -- did you make any other recommendations if we do this in a piecemeal fashion? >> we did not prioritize the

others. we looked at it as a comprehensive basis. i believe you have to do all of it, much as one little bit of it if you're going to deal with this deficit in a responsible manner. >> thank you. >> thank you, senator. >> i want to thank you for your service to the country and in the senate and in previous administrations and to take on this thankless task. . .

. and how do we stay on top of a sense of when that's going to happen? because my sense is it may happen very suddenly and without a great deal of warning. first, second, we talked earlier about the need for a long-term mechanism to restrict not just growth in spending, but to also prevent the

re-emergence of a lot of tax expenditures, doing all the hard work of fixing the tax code, some mechanism that would prevent it from being undone. any suggestions in that field would be welcome. and then last, something about the health reform ideas, you've got a significant amount of cuts here, more than $430 billion that haven't been touched on with the two previous stpwhors touched on the health portion of it. if you would. >> let me just address the tipping point. that was your colleague, our colleague i think it was a colleague, senator durbin, kept asking, where is the tipping point? and we kept saying, we don't know. but some say two years, some say three, i happen to say it all depends on how far the congress goes in getting to the meat of reducing a $14

trillion, which will be $300 billion, $14,300,000,000,000 and a deficit of $1.4 trillion, it depends on that, the people who hold our paper aren't going to be patient and they're going to say, you didn't have the guts to do anything, you romanced the stone again, you didn't do what you're supposed to do and we want some money for our paper and it is my experience that big guys take care of themselves and they will take care of themselves. that's how we got in this huge slosh of a recession. the fat cats took care of themselves. and the little guy will get stone. that's all i know. and that's what i keep talking about. doesn't make any sense to anybody when you talk about getting the paper for the money but that's what it is, the bond holders are not just gentle people. >> what kind of mechanism might we put in place to put tax expenditures from ballooning

once again? >> we did a couple of things. we put a fail safe in there on the tax side that said if congress doesn't act by 2012 then you have an automatic across the board reduction in tax expenditures. and i think that would get to you move. we also had another fail safe in there that if the deficit to g.d.p. was greater than what's called primary balance, which is 3%, that the president had to submit a proposal to get it to 3%. this was by 2015. that was his date, he picked, so that's why we went with that. or if the debt became unstabilized after that, it would begin to grow again, then the president would have to act. on health care cuts, we have in our plan, we didn't just willy-nilly say that there ought to be cuts in health care, we have every single cut

absolutely spelled out and paid for. i did cut the fund to go to hospital for medical education, but again i thought it was one of the areas we could, we took away some of the trickery and gaming that goes on in medicaid, one of the things you can see that some of the states do is they will raise the cost of a thacks that they have on providers and then the providers will then be allowed by the state to raise their fees and so it's kind of a wash for the provider but, oh, by the way, when the providers can raise their fees then the feds have to match the taxpayers 2-1 and it's costing us over that same time period about $44 billion. we cut out that kind of gaming. >> i see i'm over my time. i just want to close by thanking again for your very hard work and i'm hopeful with the leadership of the chairman and ranking minority member that this committee will step up to the task.

thank you. >> senator sanders. >> thank you very much, mr. chairman. and thank you, senator simpson, and mr. bolt, for being with us. five minutes is not a whole lot of time. i want to make a few points and then maybe ask a few questions. i think one of the problems that we have when we just focus on deficit reduction, as significant an issue as it is, we lose the broad context of what's happening in this country which is not just deficit reduction. the other reality that's happening in this country is that for many years the middle class han been collapsing -- has been collapsing, poverty has been increasing, we now have by far the most unequal distribution of wealth and income of any major country so while the middle class slifpks and poverty increases, the wealthiest people for many years have become much wealthier. so that you now have a situation, if you can believe it, where the top 400 families in america own more wealth than half of the families in america.

where you have the top 1% earning more income than the bottom 50%. so when you talk about moving toward deficit reduction, which we all appreciate is an important issue, the question is, well, on whom should that burden fall? should we really, as our republican friends have recently suggested, throw 200,000 children off of head start? should we cut back on the social security administration? should we cut back on pell grants with middle class families, finding it harder and harder to be able to afford college? how do you deal with that? to my mind the first question that i would ask and i'm going to have to request very brief answers because i want to get to social security and to health care as well, at a time when we have such a grotesquely unequal distribution of income and wealth, where over a recent 25-year period 80% of all income in this country went to the top 1%, why in your proposal did you suggest that 3/4 of the movement toward

deficit reduction come from spending cuts, only 25% from resksnue why didn't you ask the wealthiest people in this country to start paying -- and i know you did some of it, but a much more significant way their fair share of taxes? >> first of all, i think we have a significant spending problem in this country. secondly, i think we did exactly what you said. in every single case we tried to protect for truly disadvantaged. if you look at all of our cuts that are in the other mandatory canned goir which is about -- category, which is about 20% of other mandatory category, we didn't touch a single one of those. >> i would respectfully disagree with that. >> it is a fact we didn't touch food stamps, we didn't touch unemployment, we didn't touch s.s.i., we left them all like that. if you look at -- >> but answer my question. answer my question. if you are earning -- >> i am answering your question. i'll continue to. >> we don't have a lot of time. how 400 people --

>> it takes some more time, that's because the tax expenditures actually go to those people. those are the people who benefit from this. the top 400 people pay an average tax of about 16%. why do they do that? because they have all these tax expenditures. we got rid of the tax expenditures. that's why the rate of increase in tax for the top 1% or the top .1% is about 155 times what it is for somebody at the bottom. that's the right thing to do. >> but, mr. chairman, at the end of the day, in your movement toward deficit reduction, 3/4 of your plan talks about cutting spending. i just ticked off -- how do you feel about throwing 200,000 kids off of head start? that's a cut in spending. good idea? >> i don't think we recommended that, sir. >> i know. but this is the result. when you talk about cuts in spending, pell grants and stuff. let me go on. we don't have a whole lot of time. >> what about your president offering to cut liheap? >> terrible idea. >> i didn't do that. >> and it was a terrible idea. no question about it. but here's -- let me go to

social security. social scuferte, to my mind, has been an enormous -- enormously successful program for the last 75 years, taken a whole lot of elderly people out of poverty, people with disabilities, widows and orphans, paid out every nickel owed to every eligible american. now i found it interesting, you just made a point, which i think is right, you said when we don't -- with social security, we didn't do it from a deficit reduction perspective. we did it to try to strengthen social security. president obama during his campaign also had an idea. his idea was to raise the taxable income level at $250,000. remember that? people earning more than $250,000, that cap would be removed. i thought that was a pretty sensible idea. what do you think about it? >> i'm on the record, i have said many, many times that i didn't think that people in my income bracket needed a tax cut. >> i was part of a group of dave prior and jack danforth

that met years ago with paul simon and agreed to take that lid completely off. that's me. >> is that your view today? >> you can do anything you want. >> is that -- do you recommend to the congress -- >> i don't know. you're the guy -- >> i believe -- i agree with president obama, that at $250,000 or more, that cap be removed. do you agree with that proposal from the president? >> any comments? you guys just did a long report. >> i already said i didn't believe that the top 2% of taxpayers needed a tax cut. >> i asked a fairly simple question. >> and i -- >> do you agree with president obama that above $250,000 we should remove the cap? yes, no? >> should remove what cap? >> taxable income. for social security. >> actually, the cap -- >> right now it's at $106,000. >> we actually did raise -- >> i know you did. but the president went a lot further than you did. >> i believe what we recommended, we took it to 90%,

know, which is what it originally was which means when in 19 -- in 2020, instead of going $168,000 it goes to $109,000. >> but the president said we should start very shortly at -- by removing the cap for people over $250,000. i'm not hearing your opinion on that. >> i'm happy to give you my opinion. my opinion is what we recommended. >> so you don't agree with the president? >> i don't. >> that's fine. in terms of health care. >> i don't think you'd ever agree with us either, so it doesn't make much difference. >> in terms of health care, at the end of the day the united states spends almost twice as much per capita on health care as any other nation. we are the only nation in the industrialized world that allows private insurance companies to play a significant role in health care. other countries have national health care programs without private insurance companies. would you suggest that one way to get -- to lower the cost of health care -- >> senator, in fairness to

colleagues, you've now gone over -- well over. so i think we got to end it there. in fairness in to colleagues. when there's a flow of a conversation, i permit both sides to go a minute over but now we're two minutes. i don't think it's fair. let me go to a point that senator johnson raised because i think it is a critically important point and we discussed this in the commission. if we just use the historical average for revenues, no time in the last 40 years would we have balanced the budget. not one time. so i don't think that's going to work. if we look at the five times the budget's been in surplus, what has been the revenue? and there you can see every time we have actually balanced the budget revenue has been

nearly 20% of g.d.p. 1969, 19.7. 1998, 19.9. 1999, 19.8%. 2000, 20.6%. 2001, 19.5%. and we have a different circumstance we're dealing with and the different circumstance we're dealing with is the baby boom generation. which is going to double the number of people that are eligible for these programs. so, when we looked at that and we're at 25% of g.d.p. on spending now, we decided, and i wish senator sanders was still here, that we had to do more on the spending cut side of the ledger, substantially more, but that we also had to do something on the revenue side if we're going to bell this cat in some kind of fair way. because we are borrowing 40 cents of every dollar we spend.

if we did that all on the spending side we'd have to cut every single thing, the federal government spends 40% across the board. social security, 40%. medicare, 40%. defense, 40%. i don't think that's reasonable. there has to be some revenue in this equation. now, some will say, well, revenue is going to return to the norm. right now revenue is about 15% of g.d.p. the lowest it's been in 60 years. in fact, very close to being the lowest it's been in 80 years. now, as the economy recovers, we will get back to close to the average. because, you know, we know that in economics there's a return to the mean. we see it in the markets all the time. a return to the mean. we can expect that here, too. but the reality is a return to the mean isn't going to balance this budget. it's not going to balance this

budget. and so we concluded, we got to have some revenue, although much more of it has to be done on the spending side of the equation. i want to just end my questioning without a question. to again say thank you. i know that could you have been out there with anne in wyoming and for those that don't know, alen married up. his wife is spectacular and of course she's tough on him, too. she doesn't cut him a wide swath. and, you know, you took on a tough assignment and we appreciate it. and erskine, there are very few people i've got more confidence in to deal with something like this than i have confidence in you. and, boy, you proved it in spades, the two of you working together on this commission.

because i think the result, look, there are all kinds of things in here i disease like intensely. if i were going to do this i'd do this very differently. you know, dick durbin called me the night before the vote, he said, kent, what are you going to do? i said, i'm voting yes. he said, well, why? i said, the only thing worse than being for this is being against it. because, look, the country is in deep, deep trouble. i don't know what could be more clear. this thing is headed for the cliff. and we say, well, we don't know when we're going to hit the cliff, that's true. there is not a single person that can honestly tell you they know with certainty when we're going to hit the cliff. the one thing we know for sure is we are hurdling towards it. that's one thing we know with certainty. so, you know, i'd say to colleagues, please, whatever your ideology, whatever your philosophy, i tell you, i put mine on the back burner because i deeply believe we got to do

something like this and the only plan out there i see that's got bipartisan support is this one. as much as i dislike it and i do dislike it. i would do this very differently. but, hey, what matters to the country is getting a result. because failure is not an option. senator sessions. >> thank you. we appreciate your work and we'll continue to pursue bringing this government to a fiscal -- to fiscal sanity. i have no doubt that we need to start cutting this year. i don't think $61 billion out of $3,700,000,000,000,000. but i think they can be done and could be done wisely and will add up to over $800

billion if we were to execute it. i do not shut the door on entitlement reform because obviously they're unsustainable, they're on an unsound basis. when you've got that you just got to face up to it and it goes without saying i think the world financial markets and our own economy would respond if we put ourself on a sound course rather than an unsound course. you have given us good suggestions, many of them i think are within the relate am of achievability -- realm of achievability and let's not see if we can make some progress, mr. chairman. i look forward to working with you and thank you for your leadership. >> thank you. i thank all the colleagues who participated here today and special thanks to the witnesses, thanks for your contribution and, you know, you've done something very important. i hope the country's paying close attention and i especially hope my colleagues are. >> mr. chairman, let me just

say thank you for your consistency, you came here when i was here, you stuck right with your guns on the budget all the way through, i thank senator sessions and if we can just remember one thing, one thing, we're americans first, not republicans or democrats and if we can't get out that have rut we'll never get out of the rut. >> amen. thank you both. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> we started this process three years ago, the commissioned proposal. we decided after many, many hours of discussion with our colleagues, we have to do this as a comprehensive package. this breaking it off in pieces, this problem is so big, we're borrowing 40 cents of every dollar we spent. so you've got to have a comprehensive package. i don't believe, senator gregg did not believe, many of our colleagues don't believe that you can do this breaking it up into pieces. you just don't have time. you got to do a comprehensive approach. >> in bowles said cutting 1.6% is nothing. he seems to be dismissing of what's going on the floor as a

side show. are you in line when with what he's saying there will? >> on many occasions there's an incredible disconnect here. because they're only dealing with 12% of the budget. at a $3.7 trillion budget, they're dealing with 12% of it. so as a result when you just deal with that 12%, cuts that are true draconian, and it doesn't deal with the real problem. the debt is the threat and the debt is going to be $15 trillion at the end of this year. $60 billion doesn't cut you. and it doesn't touch it because they're not dealing with the vast majority of the budget. they're dealing with a portion of it. it make noes sense. >> you talked about having some sort of summit at the white house and wanting to get the administration involved. have you gotten anywhere with that? are they leading on this in any way?

>> i don't see how this ultimately gets done without some kind of a negotiation where the president or his representatives are at the table. which senator greg and i proposed in our original commission proposal. is that the 18 members, of two of them were from the administration, secretary of the treasury and the head of o.m.b. as you know, we didn't yield 60 votes for that proposition, we got 53. but at the end of the day that's why i just go back to the notion, at some point there's got to be a negotiation with everybody who's affected at the table and that includes the white house and the senate leadership, republicans and democrats. >> where does the -- [inaudible]. do you take the proposal to the white house eventually? >> i don't honestly know yet. we're working in good faith to try to come up with a proposal for our colleagues. i just don't know at this point. >> the white house isn't

involved in that at this point, right? >> no. >> so at some point -- but you'll know. they have to get involved. >> i think we have to demonstrate that there is a chance for bipartisan group to come together on a proposal that's big and bold and actually takes care of this problem. >> [inaudible] namely the tea party freshmen in the house. could they ever -- >> i remain optimistic and hopeful. because, you know, the consequences of failure are so really serious. >> budget committee chairman kent conrad answering reporters' questions on the debt commission report. "the new york times" reports today that separately senator warner and senator chambliss will continue working privately with four other senators two, from eef party, all of them former members of the bowles-simpson commission, to

write legislation based on the panel's recommendations. the house side of things on federal budget fiscal year 2011 budget, the house will be coming in later today but there's word today that kevin mccarthy, republican from california, saying that republicans are planning to move a second short-term funding measure to avert a potential government shutdown. the u.s. house is meeting today for general speeching at -- speeches at 2:00 p.m. eastern. legislative work starts at 4:00. members will consider bills designating dentists and veterinarians as emergency responders. tomorrow they hear from the australian prime minister. we'll have live coverage. then members begin debate on eliminating mortgage relief programs. transportation secretary ray lahood testifying on capitol hill today on the 2012 budget request for the transportation department. we'll have the live coverage of that senate committee hearing at 2:30 eastern on c-span 3. >> c-span's congressional chronicle, you can follow every word from the house and senate

floor online, track daily timelines, read transcripts and find a full video archive for every member. on this week's congressional schedule, a joint meeting of congress with australian prime minister julia gillard. see what others have said during their joint meetings. at c-span.org/congress. >> the top democrat on the house energy and commerce committee says he's willing to start from scratch on a climate change bill. california's henry waxman also says president obama should oppose any spending bills ending the environmental protection agency's authority to regulate greenhouse gas emissions. his comments are about an hour. quex good >> welcome. i'm the chairman of the senate for american progress action fund. i'm pleased that you could all join us for this morning's discussion with congressman henry waxman, representative waxman is of course one of the most determined and effective progressive advocates in

congress today. fective progresss in congress today.tive progresss we all know that he has his hands full defending against a barrage of attacks on great energy and public health programs. it is a special thanks to the congressman for taking time out of your schedule. thank you for being willing to come here and speak to us. i want to start by taking a moment to recognize your hard work on the american queen in ag and security act in the previous congress. the house passage was a success. it would have lowered production costs by spurring investment in clean energy technology while controlling costs. thanks to his leadership, it had broadbased support that it needed to win final approval in

the house of representatives. unfortunately, [unintelligible] from passing complementary legislation and given the hill, we'reoliticacapitol unlikely to see a similar package,. the bill pointed the country in the right direction. i have no doubt that the u.s. will move down the path of -- outlined by chairman waxman and congressman markey. the center for american progress and the fund d focused on shaping strong markets, investing in world- class infrastructure. they will createertainty for clean energy investors and businesses while building a foundation for robust future growth. these technologies will help the largest polluters reduce their

carbon dioxide pollution under rules to be set by the environmental protection agency. another area of our focus remains ending our independence -- our dependence on foreign oil. did we need another week of call? oil prices are at their highest level. before the spike that was caused by the turmoil in north africa and t middle east. imported oil already accounted for half of our trade deficit. you would think congress would act with haste to bring on technologies that would increase efficiency and switch our fuel mix to less volatile domestic supplies. what was theouse's response? tout investmts in oil and programs including public transit, high-speed rl, and programs to help factories retooled to make cleaner cars. that is insanity masquerading as

fiscal discipline. we are t without hope since it does not appear the administration will get much help from the current house majority. it will need to do more with current authorities including setting fuel economy standards for 2017 through 20/20 five model years that follow up on the initial improvements that were going into effect this ar that were settled in 2009. it needs to complete a first of all fuel efficiency standards for heavy-duty trucks. it can encourage congress to increase the availabity of incentives for people to buy super efficient cars and electricehicles and create incentives to move fleet vehicles to run on domestically produced natural gas. the administration can take some short-term steps to protect businesses and families, including making oil available

through a strategic petroleum reserve release and encouraging to come out of -- to crack down on speculators to keep oil prices dn. as we push for to meet the short-term rates, we would do well to remember our broader vision for cleaner energy and why we set out to do this work in the first place. moving our economy to a clean energy path requires us to modernize our infrastructure, to invest in high-tech research and revitalize our manufacturing center to build these technologies and export them to e rest of the world. it means building up the skills of our work force so american workers can succeed at the millions of new jobs a clean energy economy will create. our competitors are added. we need to be added as well. by building a new industries and building up technologies that other countries will want to use, we will make our economy stronger and far more

competitive. representative waxman has much more to say about this clean energy vision and the challenges and opportunities of making it a reality. it is my pleasure to recognize the congressman and get the conversation started. henry waxman represents the 30th district in california. he chaired that committee as well as the committee on oversight and government reform. throw his 35 years in service, the he has championed environmental and public health protections, introducing the first, bill in congress in 1992, serving as the author of the 1990 clean air act that stop acid rain and as i mentioned, offering the american clean energy and security act of 2009. he is a longtime advocate of issues from medicaid improvements to prevail and

long-term care. he was a tremendous leader in crafting the historic patient protecon act and affordable care iq. there is no better champion on capitol hill working to make the vision, the clean energy vision a reality. we are excited to have the congressman today. after he speaks, we will have a q&a. it is a tremendous honor to have a year. the podium is yos. [applause] thank you for that very kind introduction. i am delighted to be with you and your colleagues here the center for american progress. i want to salute the outstanding work that you do. this morning, i want to speak to you as bluntly as possible. during my career in congress protecting health and the environment has been my top

priority. during tse years, i have been in many battles. i fght president reagan's efforts to roll back the clean air act in the 1980's and went on to pass landmark 1990 clear -- clean air act revisions over the opposition of many industries until we were able to work out a bipartisan consensus. i battled efforts by vice- president dan quayle and his council on competitiveness. tom delay and the case tree project, and president george w. bush and vice president dick cheney's efforts to roll back the law on the environment. i have never been in a congress where there was such an overwhelming disconnect between science and public policy. the republicans in congress have become the party of science deniers and that is profoundly dangerous. exhibit a in the republican attack on science is the upton

inhof bill. that carbon emissions endanger health and welfare. when we had a hearing, senator in halimhof said climate changea hoax. the newly republican majority in the house has a lot of power to write in rewrite our nation's laws, but they do not have the power to rewrite the laws of nature. cancer and they cannot stop climate change by declaring it a hoax. findings andepa's stripping it of regulatory authority will not stop carbon pollution from building up andrew will not stop the

droughts and floods that are ravishing nations across the globe. it will not protect the air quality of our cities when summer temperatures soar to record levels and it will not stop the strange weather patterns that looked much of our nation into a deep freeze this winter. the republican rejection of science is also visible at to h.r. 1 the concurrent funding resoluti. it is a reckless assaults on our laws. it willtrip protections. they do this by cutting the funding is for the epa by almost one-third. epa and the states will have neither the authority nor the resources to carry out the clean air act, ensure safe drinking water, protect rivers and lakes or cleanup. that is not all.

when the legislation hit the floor, republicans adopted the amendment after amendment saying no funds could be used because they could not change law but they could say no funds could be used to do a lot of important things like requiring cement kilns to clean up toxic mercury emissions which demonstrate our children think and learn. they barred the epa from considering the impact of air pollution from oil and gas drilling along the arctic coast. they defended efforts to protect water quality in the chesapeake bay and florida. they it asserted protections against the worst mining practices, they prevented regulation of toxic coal ash and set to block the funding to set air quality standards to protect against life-threatening pollution.

with a direct attack on federal efforts to understand that prevent climate change, they defended epa's efforts to reduce carbon emissions and prevented the u.s. from supporting the work of the intergovernmental panel on climate change, the leading body studying climate change. this prompted "the new york times" to write an editorial yesterday entitled, "on clement, who needs the facts?" it apparently no matter is what scientists think. all that seems to matter is what industries make. -- coke industries thing. i wanted to describe the disconnect between science and political belief that is so prevalent today. i want to share some thoughts about the forces behind this disconnect, and i want to talk about what we can do about it.

the growing gulf between evidence and facts on the one hand and political positions and beliefs on the other is not limited to environmental policy. there is a consensus among economists that federal spending, under the recovery act, saved millions of jobs and pulled our economy back from the brink of a depression. during the campaign in november, republicans ran on the platform that the economic stimulus undermined our economy and destroyed jobs. in the current debate over the cr, republicans claim that cutting federal spending will create jobs and grow the economy. the consensus among economists and market analysts is exactly the opposite. enacting the cuts republicans have proposed will cost hundreds of thousands of jobs.

one of the sharpest manifestations of the disconnect between reality and rhetoric is in the area of climate change. every year, the scientific evidence on climate change and grow stronger. last year, our national academy of sciences reported climate change is real and it is a serious threat. the academy found climate change is occurring, it is caused by a human activity and poses a significant risk for and is already affecting a broad range of human and natural systems. this is the same conclusion reached by the premier scientific organizations of all the world's major economies. the impact, the findings have come to about the impact are

beginning to be felt. last year was the hottest and wettest year on record. even bigger floods submerged much of pakistan and australia. other regions of the world the reaction of many on the republican side has spent to deny the science. this is politically convenient to because if you reject the science, the imperative to act vanishes. but it is incredibly irresponsibl half the republicans in the house and three-quarters of the republican senators believe that climate change is exaggerated or a hoax. those are staggering numbers. there is an overwhelming

scientific consensus that scientific -- that can enchains isel. most republicans in congress -- that climate change is real. i approached him about working together to produce a bill that would be bipartisan. he said, i do not believe in the science. why do i want to work with you to solve a problem that i do not think exists? this year, the chair of our environment subcommittee is representative -- he is also a science denier. he said that he does not believe in climate change because god said the earth would not be destroyed after the flood of note. -- noah. we were debating the energy bill in 2009, he agreed that

climate change was a serious problem. earlier this year, we told -- he told a reporter that he did not believe that humans have a role in causing climate change. and deny that climate change is a problem, how do you start a conversation about solutions? they say there is no problem so we don't need to reduce emissions. we don't need to set clean energy standards and we don't need to invest in new technologies. a common perception is that energy and environmental issues are more regional than partisan. for most of my career, that has been true. but this is no longer true today. the republican party is

increasingly the anti environment party and i believe it is one of the root causes of the rejection of science. during the debates over the 1990 clean air act, there were both democratic and republicans environmental champions. president george h. w. bush campaigned on strengthening the clean air act. republican rep jerry lewis from california was a close ally of mine on the provisions to reduce and control the vehicle emissions. rep ed madigan from illinois was a close ally on the provisions to reformulate gasoline because of the potential market for renewable fuel. our major obstacle was not partisan politics. it was u.s. industry.

car companies said they could not meet new standards. the chemical industry said they could not meet the new toxics standards. the provisions to eliminate would destroying cfc's shut down hospitals. the oil industry said they could not make cleaner-burning -- the acid rain provisions would cause electricity rates to skyrocket. ultimately, we were able to forge bipartisan regional coalitions and to enact a law in 1990 that was stronger than the leading environmental bill from the previous congresses. once laws were enacted industry found ways t meet the new standards at minimal cost. this guy did not fall like industry predicted. instead, it got a lot cleaner. the debate last congress over clean energy and climates

legislation was fundamentally different preyed on the democratic side, regional issues still matter. industry and republican members approached the issue in new but completely divergent ways. the new industry approach was a welcome change. they wanted a clear direction for the nation trade they told congress that they could achieve aggressive goa as long as the park -- policies are well structured. they could put a lot of people to work doing it. what was motivating support for business was the desire after years of debate for certainty about the way for words. the u.s. climate action group was formed by ceo's from

business and environmental organizations. they acknowledge that global warming must be addressed and they issued a call to action. each weighed a late -- each year we delay action increases the risk of unavoidable consequences that could necessitate steeper reductions in the future and potentially greater economic costs ansocial disruption. they recommended the prompt enactment of a national legislation in the united states to slow, stop, and reverse the growth of greenhouse gas emissions over the shortest period of time achievable. that was a remarkable change. it was not easy, but we ented into a process with indices stakeholders enforce a mprehensive energy and climate policy. as a relt, we had a remarkable coalition urging passage when

the american clean energy act came to the house floor. unlike our previous -- we had a bill that was endorsed by energy companies and utilities, including duke, exxon, shell. we had support across the manufacturing sector, including the general electric, to no motors, dow chemical, and rio tinto. and major agricultural interest was on board. including the national farmers union, the american corn growers, and the national association of wheat growers. in the senate, there was a republican reaction. despite the support for the legislation from iustry, which republicans used to pay attention to, republicans in both the house on the senate made a decision to turn the

energy bill into a partisan battleground. our legislation was modeled on a successful cap-and-trade approach used in the 1980's clean air act to control acid rain. this was an approach that president george h. w. bush and other republicans had championed as a market-based way to achieve environmental results. even though we were using a republican idea as our cornerstone, and had industry support, no republican in the senate would support the bill. as a matter of strategy, the republican efforts to demonize our bill may have made political sense. it set back our efforts to address climate change and achievement -- achieve energy independence by many years. protection of the environment is now a partisan battleground and

on the preeminent environmental threats of war time, climate change, we cannot even agree whether there is a problem. another force contributing to the emergence of science denial is growing power of some special interests. that is ao changing the nature of our politics. special interests have always been part of the political landscape. our campaign finance laws always placed limits on the extent of their influence. as a result of supreme court decisions, a company like coke industri could pour millions of dollars into electing legislators who agree with their agenda. an insightful article was writn last october in "the new york times" about the two-party and climate change. skepticism and outright denial

of global warming are among the articles of faith of the tea party movement. he quoted one key party leader who called climate change a flat out lied. another movement leader said, some people said i am extreme. but they said the thing about the judge burke society. the article described how fossil fuel industries provided backing for the tea party movement and encouraged them to adopt the anti signs of use. money seems to have a lot to say about these views. americans for prosperity, an organization closely linked to cope indtries, played a leading role in these efforts. here is some money, we are against government. we want freedom to do whatever we want. we do not want government regulation. we do not want those people telling us how to behave. we do not want them telling us

that science is on our side. it is a hoax. in this last election, there was the addition of new members with extreme views that reject the consensus of our top scientists. science denial, partisanship, and the rising power of special interest are deeply intertwined and they feed off each other. coke industries benefited immensely from the rollback of regulations. it? republican candidate to advocate this position. it comes groups that attacks science and organizes anti regulation demonstrations. republican strategists, attacking efforts to climate change so that leads to a growing acceptance of science denial. this is not -- this is one that

we need to face to figure out how to change. i nt to offer three suggestions for the path forward. we need to preserve the administration authorities. while congress has been debating what to do, president obama and his administration have been taking important steps administratively and pursuant to the recovery tax legislation. as a result of the administration's leadership, the vehicles will be cleaner and more fuel-efficient than ever. this has eased up projected need for oil and oil imports. even if w're able to take no more action, -- this new reality turns to the old debates.

as a result, we are seeing a plug in electric vehicles, there been domestically manufactured for the first time. advanced battery manufacturing. it has begun in the u.s. we have established a robust policy to encourage renewable energy projects and energy efficiency efforts. congress is not likely to enact a neenergy policy this year or next. whatever progress wl be made needs to come from the obama administration. we need to encourage the administration to take full advantage of their existing authority and make sure that they are not reverted to congress. that includes protecting the environmental protection agency. secondly, we need to educate the

public about what is happening in washington. it is a republican mantra that they are pursuing the will of the people. but that is not what they're doing. they are anti science, anti environmental agenda. it may be the will of the oil companies, but it is not what american families want. republican leadership in congress is overreaching. we need to take full advantage of that fact. an informed public is our best weapon for advancing clean energy and reasonable regulatory policies. we need to tell the america people that not only is climate change eye steak, -- at stake, but as well as clean and safe food, pharmaceuticals, all the places where they look the government to regulate needso be strengthened and not strict.

finally, we need to find a way to work together across party lines to address climate change and are dependent on foreign oil. you might think at this point that that is going to be impossible. neither democrats nor republicans can solve these problems by ourselves. we need to find a way to forge a consensus. that takes time. i know as i have worked on many bills over the years, it took time to develop legislation to confront hiv aids. it took a lot of time to get legislation to regulate the battle at the fda. it took time to do a lot of other things like the clean air act. i remember when we were looking at the tobacco industry. we had science so clear, but the

tobaccindustry still denying the science, some people to think perhaps that science was the all that settled. the cost of delay on tobacco policy were enormous. millions of people became hooked on tobacco and died. what alarms me about climate change is that we do notave decades to wait. we do not have decades to wait because our international competitors know that economic success depends on winning the race of environmental technologies. they have become the world's largest manufacturers of solar panels and wind turbines. europe is racing ahead of us in reducing carbon emissions and developing advances in solar energy and green buildings. if we did not act soon, we will

lose these markets and the act -- the jobs they create to china and othecountries. congress and themerican pple need to be educated about the science. but they also need to learn about the economic disadvantages to us as a nation if we do not seize the initiative. last congress -- companies like general electric and duke energy told us that billions of dollars in private cital had been frozen because the united states didot have a long-term plan for reducing carbon emissions. after the election, one of my colleagues said, we should never have been dealing with climate change. what people want that, our jobs.