requests from the department of the treasury. they include the irs, the community development financial institutions fund, and we will look at this agencies separately. the treasury progress we will talk about today are programs whic deliver a generous return on investment to taxpayers. a few examples -- beforeny coalition planes were in the sky over libya, treasury's offic had frozen $32 billion in libyan assets. that is $32 billion that muammar gaddafi cannot use. the financial crimes enforcement network tracks the financial trail when a criminal tries to steal your identity.

for organized crime, narcotics traffickers,treasury's management service insurers social security payments their way east to see nearest. as many of you look forward to, tax refunds make their way to taxpayers a. treasury employs a professional contract of staff can analyze conditions to monitor risk building up in the financial system and promote stainable economic growth. general forspecial tarp provides transparency. last year alone the i.g. saved $555 milon in taxpayer dollars that would be lost in fraud.

to continue these activities in 2012, treasury request spending authority of 1.3 $9 billion. their est is a decrease of $18 million. compared to put the fiscal year 2010, fiscal year cr level we are operated on. i am glad to see a restraint budget proposal. i have concerns about some of the proposed cuts. treasury proposes to scale back law enforcement access to data on suspicious financial transactio. -- to's a proposal that thi nue funding of law enforcement. for too ng consumers have struggle to navigate the financial products front with hidden fees, 8 and switch terms,

and other features that experts have difficulty understanding. it will operate with a mission to empower consumers with information they need to make financial decisions for themselves and their families. since the day i introduced the bill to create this bureau, wall street has tried to undermine it. with the help of some in the house, wall street is attempting to limit spending by this agency to barely half of what it needs to get started. it is not a surprise that wall street is balking at cfpb arting up. fully informed consumers will make markets more competitive. we will work to make sure this agency has what it nee to start working for consumers. i look forward to discussing this with the secretary, and i now turn to my ranking member for his opening remarks. >> thank you veryuch.

today marks my first day to act in this role as ranking member, i appreciate the opportunity to serve on this committee, providing oversight over all discretionary spending. i look forward to working with you, mr. chairman, as we look forward to this budget and we reach the right agreement to spending levels. mr. secretary, you have many challenges in your responsibilities, and the include in my view invigorating bank lending to businesses, stabilizing the housing market, and encouraging economic growth. most importantly, you must promote this growth at a time in which the long-term financial security of the united states is one that is burned by unprecedented debt. our country faces enormous fiscal challenges which left unchecked will have a disastrous impact on the future of our

nation. for too long members of both parties have ignored this current fiscal crisis and allow our country to live well beyond its means. americans are looking f leadership in washington. oftentimes the debate about government spending is seen as a philosophical and academics and political discussion about a partisan issue, but out of control borrowing and spending has true consequences on everyday lives of americans. we're facing a turning point in our country's history. i know you a fully aware of the crisis we are facing and i hope we are able to work together to right the ship. in my remaining few moments, i want to address another problem hampering our economic recovery. the uncertainty coming out of washington regarding bank regulations and regulators. you and i had a conversation about this when i was a member of the house, and unfortunately

i do not think have -- think things have changed. this sort of relationship banking played no role in the fiscal crisis with his experience, and i feel strongly once record this trend we will see a recovery to call. i hear from kansas bankers this serious reasons for their inability to lend to members in their community is the increasing cost of unnecessary regulations. i hear from bankers like a record this morning who in his experience has never experienced such an unprecedented examination process like what has been ongoing recently. i hope you will work with me to find solutions to this circumstance. i am requesting your thoughts as the senator mentioned on the cfpb. i plan to introduce legislation

today that will reform the structure and replace the single director structure with a five- person commission. my concerns with the structure, this legislation is the first at the make sure congress as necessary oversight of such a powerful agency. the department of treasury place an important role in managing the finances and then something to reiterate our economy. i stand ready to work with you to address the challenges and look forward to working with you and senator turban on this subcommittee to find common sense solutions. i think it sherman and welcome secretary geithner. >> mr. secretary, you have the floor. >> thank you. we are here to talk about the treasury budget, which may not seem cenal.

i want to spend a few minutes highlighting what is at stake. treasury plays a key role in arranging important programs to help strengthen economic growth. it plays a central role in designing a powerful set of taxes to encourage businesses' investments, making it easier for families to afford llege. we played a role in devising a better means for establishing infrastructure across the country in setting up programs to help facilitate small business lending and credit growth. the new market tax credit, it plays a very important role to encourage china to appreciate their currency more rapidly, but the help establish a more level playing field for american companies. we play a central role in repairing the housing market,

and working to --beyond these question about growth, we played a critical role in helping reform our national financial system. we chair the council established by congress for financial stability. we help to work to wind down the better consumer protection, all as part of a broad strategy working with countries are on the world to make sure u.s. firms face a level playing field as we strengthen these basic constraints on risk-takingnd leverage. treasury plays a role as the chairman said to help protect national security threat administering financing, sanctions programs, but as the chairman said, in libya. trsury is responsible for raising the resources required to fund the obligations congress has established for the

government. every dollar we spend the irs generates $5 for tax revenue. every dollar we cut, the irs will increase the risk of americans to pay their taxes. we carry out these responsibilities with a tight, the efficient use of taxpayer resources. it is a remarkable achievement that in a $14 trillion economy, enormous economic challenges here and around the world, the entire treasury staff is about the size of the tax department of one of america pasqua single -- america's single corporations. we have identified in our last request more than $1 billion in

savings. consolidating functions and helping bring the payment system into the modern area, by shifting to electronic processing, and with very careful management of the emergency program established by congress we have helped save hundreds of billions of dollars of taxpayer resources should be careful management o those investments. our overall investments in the system alone are likely to generate a substantial profit to the american taxpayer, estimated today in the range of $20 billion. the president and the congressional leadership meeting this morning on the budget for this year, we're six months into the air now. house republicans outlined this morning a strategy for how to reduce our deficits over the long term. a group of senators are working hard to reach agreement on a comprehensive set of reforms that put us on the path to live within our means as a country. i want to conclude by emphasizing how important it is

never reach a bipartisan agreement on how to restore fiscal stability by reducing spending where we can, but investing in the types of reforms like education that are essential to our economic future and by enabling us to meet our commitments to our seniors and those less fortunate americans. the economy is healing. judge krishan is accelerating. businesses are investing we have a long way to go to kill the damage caused by this crisis, and we face enormous challenges, including from countries around the world. all must have a responsibility to demonstrate that we can solve these problems and not just talk about that. i look forward to working with you after she purrs support for the exceptionally talented professional staff of the treasury to carry out this enormously, carry the set of -- and enormously complicated set of responsibilities. >> what could be more important

than to the you where we are among where it is we are going. welcome, secretary died there. we learned last week that the nation bus jobless rate hit a two-year low. another sign the economy is continuing at a steady recovery, and if i may add a personal note here, the company i ran before i came here is the company releases the labor statistics that we see, a company called adp. yesterday, i will take another moment, a personal privilege, we said goodbye to my to the founder of adp, a humble man who worked very hard.

we did it for nothing to help us along except for our intelligence and muscle, and i am not sure i provided much of the telligence carr. right now we have to help americans get back to work. that is why i see president make's budget -- we cannot those investments unless we start paying attention to the revenue side in the government cost ledger. i was a ceo and i know they cannot run a company or a country without revenues, no matter how much you cut expenses. that is why i voted last year it and the bush tax cuts. windfalls for the wealthy did not create jobs color reduce the deficits, or help us invest in our future. i urged president obama to keep the commitment in his budget to let the bush tax cuts for the

wealthy expire at the end of 2012. the wealtest among us do not pay their fair share. he president's budget also includes a landmark moisture reforms root this will protect our economy from the meltdown that we suffered through in 2008, and that is why i am the deep concern that the tea party republicans plan for funding for reform is in place. it is the republican team party of huggins -- if that tea party republicans --all so need to strengthen investment in our nation's in thresher by repairing crumbling roads and bridges and building projects by -- like high-speed rail. it will make easier for people to get where they need to go,

improve the environment, and support job creation. resident obama has proposed creating an investment and researcher, investing park in products that will get america moving, and i look forward to your commentary, mr. secretary. i am also eager to hear from the secretary about he can make taxes fairer, keep wall street in check, and accelerate our economic recovery, and i thank you. >> thank you. mr. secretary, before we get a policy and budget questions, i have to address the issue of crisis management. we have been lurching from short-term cr to short-term cr, i would like as you if you would tell me what impact this has had on the management of your agency and operations. secondly, we are now starting

have very active discussions amongst senators about what to do what if the government shuts down after friday. w many staff will still be around. whether anybody will answer the phones. whether it will be a skilled staff. i would like to know what your preparation has been at treasy and what services by be affected from your department when it comes to that. the final question is larger than the first two. that is around a corner is another crisis which he spoke to yesterday, and that is the extension of the debt ceiling. some senators have said we do not care. we will not vote for an extension of the de ceiling. please tell us what the impact of failing to extend the debt ceiling would be on the american economy. three very simple questions. >> the office of management and budget has been coordinating the work of the executive branch in preparing for shut down. the director set up a detailed

guidance for how they would manage through what critical services that would have to retain, would be from a bit under the law to retain, and which they could no longer function with. i want to emphasize the fact that competence is very important economic recoveries. there are a lot of things happening in the world today th are -- that carries some risk to the global economy and financial system. it is very important that we in washington demonstrate that we will be doing things to help reinforce confidence, support recover, and part of that requires making sure the government can carry its crital functions, and those functions would be impaired. i would be happy to briefers that in more detail on exactly what would happen to the critical functions we are responsible for. they are very material. you're right to highlight the fact -- to say it again, if we

force the government to live week by week now, more than six months into the fiscal year, you will risk underming the recovery now under way, and i think our first obligation of the american people, given the trauma caused by this crisis and the depth of the damage we still face, is to make sure doing everything we can to make sure we are reinforcing business confidence, helping get more americans back to work, repair the damage caused by the shutdown. we -you are right to say that in the next several weeks congress will run out of room. it will be forced to raise the basic that limit. what will happen if it does not? as i said in my letters and has all my predecessors have said, the consequence of that would be catastrophic to the united states. the fault would precipitate a crisis worse than the one we nt through.

it would make that crisisook modest in comparison. it would force us to cut payments tmilitary -- the critical payments to our seniors, and it would be a reckless irresponsible act. i find it inconceivable that congress would not act to increase the lim, and i welcome the fact that all the leaders of both parties in both houses have reaffirmed the importance of making sure that this country of the united states of america will meet its obligations. that requires cgress to act in a timely manner to increase the limit. if we take no additional actions, we face that we have run out of room on may 16. there are a series of measures my predecessors have used in the past that would give congress more time, but those measures did not by us as much time in the past because our debts and deficits are so large that. they will buy us an additional few weeks if congress does not act. even resorting to those

measures does create risk to ding uncertainty. we will do everything we can make sure we meet our obligations and encourage congress to act in a timely manner. >> mr. saturday, united states dollar is viewed as the most critical -- credible glob currency, and if we default and did not extend our that's silly, what impact of that out on the reputation of the dollar and our economy? >> it be catastrophic. you would call into question the willingness of the government of the united states to meet its obligations. he wl shake the basic foundations of the entire global financial system. i am totally confident congress will act to avoid that. to think about it in a direct sense, the borrowing cost permanently for a americans. every business for a long period of time would raise a much

higher cost of borrowing. every family, it would raise a much higher cost of borrowing. unemployment would rise. hundreds of thousands of businesses would fail. it would be a deeply irresponsible act, again, inconceivable. >> they give. mr. secretary, i experts shaver exhortations about the necessity of raising the debt ceiling. i would welcome you and the administration in making the same kind of raising the same kind of concern in describing the scenario if we do not get our debt under control. their consequences -- there are consequences, the standard of living, inflation, and i would encourage the administratioto join with congress, republicans and democrats, to find a path ward a long-term, sustainable production and our national debt. there are bad consequences.

he described one scenario. there is another that will come if we did not respond, responsibility, to the ever- increasing debt. one thing we can do is to get a tax code in place that is sparer, treats individual taxpayers and a way that makes sense in a global economy, and again i would be interested in hearing what the treasury department is doing with regard to the so-called grand plan for tax reform or major modifications in our tax code. i am learning from senator ddurbin to ask my questions at the beginning. i eat indicated iny statement that i introduce legislation today in regard to the consumer prince -- financial protection bureau, and i would like your view as to the preparation process, more funding, that the federal reserve is funding that

today. i would like to seereater oversight by congress in regard to the appropriation process. a five-person commission or board as compared to an headman this -- as compared to an individual. >> thank you for raising your courses. you are right that it is critically important that congress comes together and locked in a setup will take-your reforms that will put us on a path to livin within our means as a country. if we do not do that, you will put at risk our future economic correct. we cannot be putting out indefinitely. you have before you not just a process under way by a group of bipartisan senators, but looking at a comprehensive plan, a physical commission, which is a comprehensive, balanced

asonable starting point for discussion. this is not beyond the capacity of our country to sell. if you look at the united states today, investors are confident we will solve this problem. we have to justify the confidence. you are right to emphasize that. he asked about tax reform. it is inevitable that congress comes together with the administration to reform the u.s. tax code, not just for individuals, but for corporations. you have a very compelling model for doing that in the commission's proposal. a lot of merits, which is to broaden the base and use some of the savings to lower rates and no work future deficits. we are designing a corporate tax reform that is comprehensive that will lower the tax corporate rate substantially,

and before that by reducing or eliminating a set of special preferences for individual industries and activities. think that is necessary to improve incentives for investment, and we hope that we will be able to work with congress on doing that. perhaps at of the comprehensive reform of the individual code, which is likely to come in the next few years. that is important because we want to do everything we can make it more likely that american companies -- build their next plant in the united states. >> mr. secretary, in addition the debt commission, is there a pl in the works on corporate tax? >> yes. we are -- we have a working on a comprehensive proposal to help get the process and congress moving, and we have consulted with your colleagues on the tax-writing committees on how to

design that, and i am optimistic we will be able to start that process with a very strong pro- investment, kerr-current proposal. it will be revenue neutral, but i think we can do that. he raised important questions about the cfpb. i cannot answer your last question, but it is important we nominate and conform a director because the full authority congress gave this bureau did not come into place until we have a confirmed director. we would like to do that. we are consulting with congress, we want to nominate somebody to be confirmed, and that is why it is taking us some time. it has been a challenge for us to find -- to confirm and number of positions for important financial responsibilities. you raid -- u propose, you said you are right to propose legislation. i understand the motivation, i

believe as you would suspect that congress has been having considered a range of alternative models came up with a good model that combines very strong authority and independence with a set of checks and balances, this was the most car full of those are the this is of this bureau are subject to review and approval by the council of financial writers that congress established. that tats stronger set of checks and balances than exist for many other financial regulators, independent or not, and congress got that balance righ if you look at wt happened in our country in this crisis, you sell appalling, unforgivable failures and consumer protection. it is important we stick to that, and i think congress, if they keep it up for a long time, they can come up with a good

balance. >> if i could follow up. can you think of any downside of not having a director confirmed by the operational state in july? >> absolutely. what happens at the transfer date, the date where the authorities that exist among existing federal agencies is transferred to this new bureau, that responsibility is shared among seven different agency, and we will consolidate that. there are other authorities that only take effect when there is a confirmed director. the consequence of that the lake, and one example of that is one of the biggest problems we have is we helped banks to a set of standards. no similar standards are existing without protection. what happened over time is at a lot of that basic business and simmer finance moved outside the banking system to institutions that are not supervid adequately.

that treated appalling vulnerability for individuals, but created a huge and fairness for banks. one of the most important things congress did, establish a level playing field between banks and nonbanks. if we delay, we start funding or delay for paris to the agency, then you put bks into a disadvantage again. they will face the possibility of their business competed away. that would be an unfortunate consequence. >> mr. secretary, might a consequence of a shutdown result in an inflationary reaction? >> that is an excellent question, and i do not think i would frame that as a most

significant risk. the most significant risk is you leave the entities that are doing vital things, not just supporting americans in combat, not just making payments to seniors, provide benefit checks to americans who depend on it for their living, you put those things at risk, risk is for a long period of time, you create uncertainty, and that could slow recovery. i would think not about a risk that we accelerate inflation so much as we take a little bit of a moment them out of the recovery and slow the pace of getting more americans back to rk. >> house republicans claim that cutting programs like head start, medical research, are going to solve that problem. they refused to look at the revenue side of things. i mention that earlier. how important is it to let the bush tax cuts for the wealthy expire at the end of next year

to help to eliminate the budget deficit? >> it is criticall important. if congress extendshose tax cuts, that go to 2% of the most fortunate americans of the country, we have to borrow $1 trillion over 10 years. we cannot afford to do that. it is not a responsible act of government, asking my successors to go out and bought $1 trillion the finance tax cuts for the richest 2% of americans. we cannot afford it. there is no credible case for doing it. you cannot restore fiscal sustainability, you cannot restore a modicum of balance for a fiscal position and preserve our capacity for economic growth and critical to our commitments for seniors if you sustain those taxuts that we cannot afford. >> the administration house

budget calls for an increase funding implementing the wall street reform law. the house republicans faid in their attempts to block that they propose cutting the funding for that agency. what effect might these proposals have on wall street reforms, and our ability to prevent another financial crisis? >> the cuts are designed to starve those agencies of the ability, tonight a and -- denied them the ability to establish protections for consumers, and they will not pass because we think it would be irresponsible to pass them, but if they did pass, they would deprive us of the ability to fix the enormous

cost of the american people. think it is important congress equip these -- the executive branch with the resources and the people we need to enforce those basic sensible rules of the game. >> mr. secretary, mr. davis that the sanctions against the foreign medical -- minister of libya, a man who has been linked to numerous terrorist attacks, including pan am 103. in your consultation with secretary clinton regarding lifting the sanctions, the you discuss what other lovers might be available to be sure that he is the cow -- what other levers might be available to be sure that he is held accountable for these crimes?

what with the estimate be of the revenues needed to help us stabilize things that continued -- coinued to do improvements to our economy? >> the central question we face is how to get the deficit down to a level where we put our national debt as a share of the economy on a climbing path. you have to start to reduce it. that requires we get our deficits down to a level below 3% of gdp. that is a level at which our revenues and our commitments apart from interest are in balance. do that, we proposed in our budget, the commission proposal a more ambitious way to do that, that provides it package, a

balanced package of tax reforms and reductions in spending and a commitment that would achieve that measure of balance. without putting at risk future economic growth. without causing matial damage to the economy. those are things we can afford to make, changes we can accept. th those eggs at this -- both those examples -- the challenge is not to reduce the seven deficit. the challenge is to do it without hurting future economic growth, is fair to the american people, and that requires you to do it in a balanceday, and it is within our capacity to do as a nation. this is something we should make sure we can let americans know

because they are uncertain about this. this is something we can do at acceptable cost with time for people to adjust. >> well said, mr. secretary. >> you requested a 4% increase, and a couple of counts stood out. there was a request for $3.4 billion in international programs, a 50% increase, and food security accounts, a 1027% request, and that increase, 336% increase. >> the international peace, the treasury piece of what is called the foreign assistance budget is 5% of the total foreign assistance budget. the peace we are responsible for as funding institutions like the world bank, the

international financial institutions. in those institutions we get enormous leverage. the specific request you referred to include a variety of commitments that the government made in the past under republican and democratic administrations, a set of new commitments where we think there is the highest return to our basic national interest. an example. food security, what we propose to do is help feeding a milk -- a multilateral fund support improvements in industrial countries because of the challenges of poverty in this country. we are the most productive farmers in the world and that case. across west i would be helpful to out -- i would be happy to talk. our resources in that 5%

leverage multiple dollars both by bringing other people to the table and borrowing, so that total resources is more than 1.5 times than the budget. as we figure out how to reduce spending, we will have to reduce spending, we want to make sure we preserve things where we have uck.biggest bang for the bough >> unworried we have appropriated money that is going directly to the islamic republic of iran, meaning the treasury part manages a relationship with the ifc. ibrd has an unexpected balanced it iran. we of an $58 million -- we own

$58 million in a bank that is iran. we 0185% of that. a total of $85 million direct of the u.s. taxpayer, and i understand these payments are made directly to the finance ministry of the islamic republic of iran? >> oppose lending to iran. we have opposed them in a long time. last loans approved were approved in 2005. >> you have not that these checks yet, but you are about to prov? 2005, that was last time the world bank approved a loan. we opposed it then, and we have worked hard to dramatically tighten the financial sanctions on iran. >> he did not have substantial success. i have written you a classified

letter, and i hope you read it before you testify again on the subject. i hope you read that very carefully. >> i know that you care a lot about these issues. we'd do, and i would be happy to talk about these. the financial sanctions per graham's that my colleagues helped us design have resulted in a dramatic incredibly powerful tightening of the basic economic sanctions on the government of iran. it is very important we do that. >> before you testified again and make a statement like that, i would absolutely urge you to review the record. >> we are happy to work with you, d this job is a requires a relentless focus, because we titans of the year, what happens is overtime, the central shift gradually, people get around it, so it requis a relentless

focus. >> in march, the u.s. government raise a net of $120 billion, and it's that a net of $1.05 trillion. he spent $8 for every $1 you race. he covered by our roaring $786 billion and reducing your cash balance to an ending balance of $118 billion. is that your estimate of how your march went? >> i will have to check those numbers ver. >> erskine bowles said yesterday that we are facing the most predictable economic challenge in our history. you agree? >> it is important we do it. we have lots of the challenges. our challenge is to do that in a

way that does not hurt the recovery, heard the economy. >> my last question. if you with the chinese, with the land this -- lend us another 1 trillion dollars? >> of course. the world still views the american political system as up to that challenge of delivering reforms of making our economy stronger. if you look at what we pay to borrow today, there is confident around the world in the capacity of this system coming together to solve these problems because we have always done it the past. we have to earn that confidence every day. that is why these efforts are everyday, and it is important, as finds a way to come together and locked in a comprehensive restraints that reduce those deficits. it is within our capacity to do and we have to make sure we

justify that confidence you see in the markets every day now. >> take you, mr. secretary. -- thank you, mr. secretary. >> you witnessed and participated in discussions that led to an effort to save financial stitutions from ruin, and by most standards the fact that the money has been repaid that our government, the tarp money with interest, in most instances, is an indication of recovery. the purpose of wall street reform weston make certain we never had to walk that road again. we had to make sure that we put in place oversight and regulation so the excesses that led to the recession were not repeated. since passage of that of the session there has been a steady effort by wall street the on to that wall street reform.

we have seen it in many aspects. i am not want to raise the issue, but i am battling an issue of interchange fees. when it comes to financial responsibility efforts, there is an effort to slow down that implementation or stop it. as you step back and look at the banking industry from the darkest days, beginning in this recession until today, i see profit reports which suggests they are doing quite well. is there any indication that you can point to of weakness and our financial institutions that has been brought on by too much government regulation and oversight? >> let me say a few things. the u.s. financial system is in a dramatical stronger position toy than it was in the years running up to that crisis. there is much more capital and the system. the weakest parts have been

washed away. what we have left is much stronger. the challenges we face in the system are community banks across the country are still exposed and facing a lot of challenges still, and that is hurting the small business customers. the housing finance market is still deeply damaged. just at the beginning of repairing thachallenge. we have a lot of challenges to those still. i believe these reforms are essentials to the basic health of the american private sector, are essentials to credibility of the american financial system globally. absolutely essential to the ability of this financial system to take the savings and channel and the people that have an idea, to want to build a growing company, and we have to make sure we meet the basic challenges of the legislation in designing sensible rules.

there has to be a balance. we have to preserve competition, some measure of the pheasants, dynamism, innovation, but we have to do a dramatically better job to protecting investors and consumers from the kind of abuses we felt. our biggest challenge now is to make sure those designs are done well, allowed to take effect. a minister by people who have the resources and the authority to carry out the responsibilities, and we aret the early stage of the process of implementation. >> yesterday i went to an opening of a housing projects, " on the west side of chicago. it was theame location where doctor martin luther king state when he lived in chicago. they we proud of the fact that they had five requests 45 units. as i went to this ribbon cutting, i drove to the

neighborhood, and virtually every third home was boarded up with plywood, indicating it was in foreclosure and not currently occupy. it strik me that this is still an unresolved issue, and you had alluded to it, about the value of real tate in america and our housing crisis. can we expect a solid recovery of this economy unless or until we mark to market and understand what the true value of real estate is, with so many americans facing the prospect of being under water in their own personal debt on their homes? are we tallying the inevitable of facing a resolution of this pricing? >> i do not think so. we you are right to remind everybody that the housing market is still in crisis. it is not still in california, florida, arizona, but it is in

cities across the country, and there are still millions of more americans in risk of losing their homes. there are two important tngs that we have to do in the near term to reduce that problem and help repair. we have to get the economy stronger. the only way and the most powerful way to make sure that you bring the market back to a reasonable get more americans back to work to make sure incomes are growing. overwhelmingly they will dominate the outcome. it is also important to contue to make sure that we use all the tools that we have to make sure that servicers and banks are giving people a chance to stay in their homes if they can afford to do that. the programs reach millions of americans, but there are millions more at risk. we want to do everything to make sure that. if peoe can stay in their homes, that is a chance, and

doing those things are important. but the most important thing is to make sure everything weo is motivated by the challenge of getting the economy strger and more americans back to work. that is the best thing to do for those communities still caught up in the trauma. it will take several more years under the best of circumstances to heal that. >> i will say briefly is that several years ago, i address the bankruptcy ce as a way to have some reckoning in this process. mangas would know what they were about to foreclose -- banks would know if they were about to foreclose, that ultimately there would be a bankruptcy judge who would have power to take the terms of the mortgage and keep people in their homes. it was thought by the financial institution, it was not enthusiastically supported by the administration, and it failed. and here we are today in a situation where i cannot

reconcile in my mind how way baseball is a foreclosing on a home, boarding up, letting the weeds grow in the front yard, and the vandals come in and went out -- ripped out the copper plumbing said that it becomes a bird out hollow building and has to be torn down is in the best interest of the banks, let alone the country in the neighborhood. that is what is happening over and over again. i have lived through this in my home town of in illinois, and it looks like after the bombing for all the vacant land there. i've seen it happen in chicago and i see no end in sight. i know we have tried but i do not think -- i understand what you're saying, the overall economy as part of it, but i do not think we address the responsibility of the financial institutions in this situation. didn't you brought up something very important and i've been saying for a long time that the servicers have been a really terrible job of helping fix and repair and he'll and help people through a mass that they help

contribute to. anthey're not putting up resources in this effor they're not doing a good enough job of helping homeowners navigate through a very complicated process. they have to do a better job. we're a involved in a series of efforts to try to bring more force to a more rapid resolution of those problems. >> in closing, we have given them a lot of carrots. it is time to find a stake. >> let me follow up on a topic that you started down. when senator dorgan describe that neighborhood with the boarded up houses, it brings me back to the value of community banking in which i might -- human nature tells me there is a different reaction if you are the banker lending to the house down the seet, down the road, you have a lot of caring compassion for your community a new drive by that house every day. you will have a response of figuring out how to get this

house backing to some owners hand. it gives me the opportunity to reiterate what i said in my opening statement. and the reason that the real estate aspect of this is so prevalent in my mind, i've had numerous bankers, half a dozen, telling me that with new regulations they are no longer making home loans. i think this is a terrible, sad circumstance in our country when your home town banker says it is no longer worth the regulatory costs of fingerprinting my employees to make a loan to someone who lives in our town. kansas and much of illinois, we have a large rural communities in which our bankers and other community very well. the idea that you can i go to your home town banker and get a home loan is trouble son. also a conversation with th regional banker telling me for the first time in their banks history, instead of the bank calling a community banks saying

we are interested in buying your nk. it is not a community bankers calling the regional banks and, i cannot afford this anymore. the regulatory costs have to be spread among such a large group of borrowers, that we are seeing in my view the demise of something that is very important to the life of a community. that is the local financial institution. and that occurs as a result of market forces, that is one thing to me. but that occurs because we had an overregulated, lack of common-sense regulatory scheme, we ought to be able to fix that problem. >> i agree with you. but the associate myself with your central point. one of the great strengths of this financial system is that we have not some of the largest -- not just of the largest, most innovative global companies, but we have 8000 small community banks that provide a level of diversity, responsiveness, customer service, care that is a

huge asset for the country. we want to make everything that we can to preserve that. i do not believe that that is at risk in any meaningful sense. the financial reform the congress passed, when the -- it went the extra mile to make sure that that was not contributing to the problem. that they are not subject to a greater burden. they are protected from additional regulations which are really designed to get at the largest, most risky institutions and risky practices. most of what you're seeing happening in community banks today is the result of the fact that a number of them, not all of them, got to expose to commercial real estate risk. when ec bank examiners -- when you see bank examiners who got a little caught by excesss in the country, they are over correcting them. and the burden you here in banks across the country is the

concern that examiners now are becoming too aggressive and making it harder for them too things that are economically sensible loan to a possible customers. that is important to counterbalance and resist. the chairman of the fed and the fdic and bank supervisors are aware of this problem, and they have been working to try to mitigated. they are independent of the treasury. i cannot control what they do in this context. but i know that they are concerned about it. i hear what you hear, too. community banks still saying that we're getting too much heat from examiners and we want to increase lending. we want to make sure that we can counteract that. congress did pass a very well designed set of programs to help banks, community banks get access to capital and help support lending and get more recess -- resources to small business credit programs across the country, which we are doing. we think that is a good sensible response. i agree with your concern and i

am personally completely committe to make surthat we preserve that great strength of diversity of a banking system that has thousands and thousands of small community banks operating on main street, trying to do a better job for their customers. >> i am never quite certain as to how much of the problem is additional regulation, how much of it as additional enforcement, and in part just the uncertainty of the enforcement. what is coming next? there is a reluctance to lend money and i have had this conversation with you previously and with chairman bernanke and sheila bair. we have been down the line. everyone is sympathetic. and yet the problem continues. i would say that i am not necessarily here advocating for my bankers. i am here advocating for what i think is important to the economy in putting people to work. banks that can make loans in communities across our country and kansas, access to credit is a determining factor as to whether or not you will grow and expand your business. and we have reluctance on the

part of bankers because the regulatory burden or uncertainty or enforcement that is making a very difficult for these things to occur. i do not know whether you have someone in the otc, firewall as part of the treasury, but you do not have direct control, but it would be great to have someone who is alternately sit down with community bankers and their customers -- ultimately sit down with community bankers and their customers. like the procuracy and paperwork. -- like bureaucracy and paperwork. if we could have a specific example of the rules and regulations or the enforcement action that can make no sense, we can address those individually as compared to the big pat -- the big picture of fighting the bureaucrat. you've heard suggestions of who i could get in a room with bankers and their customers to see if there are individual items of regulation or the regulators that are not following the protoco of the

exam process, so that we can get some certainty back into this process. >> i'll have to work with you on and and your right to call attention to it. i would point out that if you look at the broad measures of what businesses report in terms of credit terms and availability, and to look at the very broad measures of access to credit to businesses, types of credit, lending terms that they face, it is party to improve. not as soon as we would like or quickly as we would like, but much faster than credit to consumers or someone who wants to borrow to finance a house is improving. that is encouraging but we want to reinforce it and we have a long way to do. >> mr. secretary, one additional question personally if i could kick you for foam -- a few moments after this hearing. >> senator lautenberg. >> mr. secretary, it is estimated by the treasury that federal revenues lost due to

illegal tobacco trafficking may reach as high as $4.5 billion and european -- annually. congress provided more money for enforcement efforts. however, the president's budget next year would eliminate these. without filling these jobs, how would treasury have the resources it needs to carry out effective to back to taxing? >> i know is important to you and i am aware of your concern. i like to work with you to see if we can address it. the me tell you what is guiding our judgment. we're finding across the board that we're having to do more with less. we have limited enforcement resources and returned to devote them where we have the highest return in terms of revenues. that is forced as a cutback in some areas. this is an example. i know why you're concerned about it, because it makes it easier for the revenue base of

states. it is a born in this context and i would be happy to work with you on this. a of a lot in the last two years. we have en forced and efforts under way which have some deterrent value. -- enforcement efforts under way which have some deterrent value. how be happy to work with you. to do we need the people to get the job done. >> we do, absolutely. we have use those resources to hire higher-up's agents to help in this effort. >> and that imposes an extra burden on those who have audits. >> it does, and there are people who want to cut those resources to. we want to make sure the with the resources you give us, we allocate them to where they have the highest possible return. and i know why it is important to you. >> the administration has recommended in infrastructure bank of funding and national

transportation projects of significance. when budget dollars are stress so thin, how would they focus federal dollars to maximize our country's economic competitiveness? >> as you know, we face a huge long-term infrastructure deficit of this enormous burden, which hurts the competitiveness of but american businesses by raising the cost of doing business of bringing their products to the market. when you think about the lg- term challenges, we have to finance responsibly much higher levels of infrastructure funding. we think it should be part of the solution. it cannot be the entire solution. what it does is give us the chance to get a better use of taxpayer rources to borrow from the market and bring private capital alongside what the government is directly, so we get more power, more

emanation behind these projects. there is a lot -- more ammunition behind these projects. will like to work with you to figure how we can get something done. one of the most importance we can do is have get more americans back to work. employing the people most affected by the crisis, like in construction, and for long-term competitiveness is to invest substantially more in construction projects with a high return over time. we cannot do that adequately to the traditional mechanism congress hassed to fund for example the transportation budget. >> will we hear some of what my the considered -- might be considered so that we can get on with it? >> we have a series of detailed proposals to get more support in congress. there are a bunch of new ideas on the hill that we want to work with you on. this is something that we should be able to do. it is not a partisan issue. it traditionally had a lot of

bipartisan support, and it is a good efficient use of taxpayer resources. >> well, some companies are pushing for a tax holiday if they repatriate income currently invested overseas. these companies believe that it will boost the u.s. economy and create jobs. i am skeptical about it. some have suggested that the tax hoday made sense and the larger context of corporate tax reform. how do you feel about that kind of proposal or a margin that is something the that we would not consider outside the context of corporate tax reform for the reasons that you have said. on the basis of that hal it has been experience in the pt, -- of how it has been experienced in the past, it has not produced an increase in investment, job creation, and it is expensive. we will not support at time the

context -- outside the contest, but there may be a way to be responsive to the broader interests of gettingore resources backed. but not outside the context of reform. >> it is believed that by keeping these companies from inging back the income that they have earned, they would not only lose revenues but we are also increasing competition for jobs within our own country. >> that is a very good idea to have comprehensive reform. it would broaden the be and include the incentives for people to bring back those resources. that is what our reforms would try to do. you will see in the proposal that we would find a way to be responsive to the broader interests. all want to do is improve incentives for people investing resources in the united states.

>> companies on the other side propose to cut the new financial protection -- consumer protection budget to $80 billion. -- $80 million. if the house republicans get their way, how's thatoing to affect the ability to start up and the fillets mission of protecting consumers? >> the purpose of those cuts are to start this entity of the resources it needs to get going. the will put it risked -- e example but i won't tell you another one. the most important priorities of this bureau from day one are to mplify and improve disclosure from people who wanted a loan to buy a house or to borrow against their credit card. providing more simple disclosure to people so they understand how

to borrow responsibly, can shop for a better deal, is an overwhelmingly sensible jet ever -- objective. you could lead banks with an unlevel playing field, but they're competing against non-. finance companies without constrained who might btrying to take advantage of their customers in that context. those are two examples. >> thank you mr. secretary. >> in my opening statement, i mentioned the financial crimes enforcement network which i do not know if many people follow it. it collects red flags on suspicious financial transactions for banks and other financial enties. hundreds of federal, state, and local law-enforcement agencies

access tt data to track the financial paper trail of criminal financial activity including terrorist financing and drug trafficking. many places like chicago and new york city, local law enforcement entities, have direct access to this data. in illinois, 75 users ran over 25 searches -- 25 searches -- 25,000 searches. all the searches would have to funnel through just to staffers at the state level. treasury would save $1.3 million for the proposed cuts in this agency, and it seems to me that it has a significant role being played in dealing with the use of our financial network by wrongdoers, criminals, drug traffickers, would-be terrorists. this seems to me to be penny wise andound foolish. can you comment? >> thank you for raising that. i understand your concerns and

will work with you to mitigate that effect. i appreciate much what you said in your opening statement that it provides as a whole. we're always looki for ways to make sure that we are directing them to things that can have the maximum positive impacin reducing the ability to take advantage of our financial stem in this case. this is just one example. you're concerned about the effect it would have on local law enforcement officials, paicularly in the major cities. i am optimistic we can find a way to address those concerns. we're proposing direct access for them to the resources, but they understand your concerns ani think we can work with yo to mitigate those. >> senator moran. >> i think mr. kirk and his conversation with you was about the world bank. i did want to make certain that you understand the importance

of enforcement, strict and strong, of the iran sanctions. i s and did you tell us that you're taking your job very seriously. -- i assume that you tell us you are taking a job very seriously. >> i would. we have a program and the law that congress pass it as much more power and it has a dramatic effect to make sure that our other countries are joining us can tighten the constraints. but as senator kirk reminded us, this is an ongoing challenge and it requires a relentless focus to try to make sure your catch every opportunity for evasion and stay on it. we have some incredibly talented peopleith a great record in this area and will work every day to make sure we can do a better job. coress gave as much more powerful tools. >> there is no need for additional statutoryuthority here? >> i did not do so. the big challenges you know is to get other countries to come

with us. we do not do material business, really, now. but much of the rest of the world does. by we're tightening the net getting other countries to come with us. but we have some more work to do on that front. >> thank you for your help. >> thank you, mr. secretary. the record of this hearing remains open. members may submit statements or questions for the secretary to consider. this hearing stands adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] [unintelligible]

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and going all the way, and stopping for the night. i would say the fatigue level is different and it takes different approaches, it is my recommendation. >> general ham, just a couple of questions for you. a few weeks ago i had the privilege of being at your command. i just got back from visiting several countries in africa. on every briefing you would find

a host of error is -- arrows drawn from operations going on, someone -- some from the state department, and the question that puzzled me is who is managing all the arrows. hill is the one authority making sure that we are not overlapping and that those missions are all coordinating in the right fashion? can you shed light on that for me as we see the overlap between state and dod and all the various operations that we have going on in africa? who is ultimately managing that to make sure the job is done right? >> there is not an overarching commander reckon that. this is our inner agency process at work. each of us who participates in that has the responsibility. at africa command, certainly is

secretary carson and state, but folks at usaid and other agencies, what we have to do is make sure that we had a forum through which the most senior folks cantilever bridges collaborate and have a synchronized -- the most senior folks can collaborate and have a synchronized approach. i am not sure that that is quite as tightly wound as a perhaps ought to be. it is something i would like to take a look at as i began my tenure. >> as you take a look at that, give us that information back, and some quick questions. one of the other concerns i had was in talking to the various players over there, one of the things we consistently heard from the state department was

defense does not do anything unless we ok it. they gave us some concern. the role the state to bargain as and the role but the department of defense had -- the role the state has and the role that the department of defense has. can you tell me how you are collaborating? >> it is far better when state and defense agree ahead in any particular matter. >> that is good. >> sometimes that is not the case, but we have a mechanism through are in your agency process, through the national security staff, for the various departments to bring forward matters where perhaps there are some disagreements on the way ahead. i am confident that as i am able to get started in this command and build up the relationships with secretary carson and others in the inner agencies, that

those times will be few and far between but we will have very strong disagreements, but where we do, i do not feel any reservation whatsoever about saying, i am sorry, i cannot agree you brown this, we have to take it into the bitter agency delivered to a process to have this agreement adjudicated. we know how to do that. we do it all the time in our government and i am comfortable with that process. >> what authority is granted to the command activities that they are posted great party think it is a vision? >> in general they are. the chief of missions is the senior american representative, the representative of the president in those countries. our efforts are nested with the chief of missions. there may be some unique circumstances where there would military effort that might

require authority other than the chief of mission. those are probably best addressed not in an open session. >> i think we about all of our questions. thank you so much for your service to our country and for your patience today. thank you for sharing your expertise with us. this hearing is adjourned. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] [inaudible]

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[inaudible] >> yesterday house budget committee republicans unveiled their 2012 plan. we will hear from paul ryan next on c-span. then we will get reaction from

democratic congressman chris van hollen, the ranking member on the budget committee. on washington journal, we continue our conversation on the 2012 budget. we will talk to the budget policy reporter for the "hill" newspaper. >> you are watching c-span, bringing you politics and public affairs. every morning it is "washington journal," our live call-in program about the news of the day, connecting you with elected officials, policymakers, and journalists. weekdays, watch live coverage of the u.s. house, and on weeknights, congressional hearings and policy forums. also supreme court oral arguments. on the weekends, you can see our signature interview programs. on saturdays, "the communicators," and on sundays, "newsmakers," "q&a," and prime minister's questions from the british house of commons. you can also watch our programming any time at c-span.org, and it is all searchable at our c-span video library. c-span -- washington your way, a public service created by america's cable companies.

>> earlier house republicans unveiled their 2012 budget plans. the budget committee chairman lays out the details of that 10- year proposal and takes questions. his remarks at the american enterprise institute are just under an hour. >> i am arthur brooks, chairman of the american enterprise industries. i am happy to introduce paul ryan. he has just presented the house republican budget to his colleagues on capitol hill. budgets are not just financial documents. they are moral documents. it speaks volumes about our priorities about how we govern ourselves, how we see our future, and the country that we choose to pass on to our children. in short, they tell a story about our character. paul ryan understands this, and

today he understands to talk not -- comes to us to talk not just about the what of the house republican budget but more importantly the whys of that budget. he joins us in believing that freedom, the heart of america, is painted on many campuses and the government's budget is one of them. congressman ryan has been here many times in the past year, and as always, it is an honor to host him as he presents his courageous work for the future of our nation. he will speak for about 20 minutes and then host his own questions and answers. please welcome paul ryan. [applause] >> arthur, thank you very much. you have done a great job of taking after a great job -- a great guy. i want to thank you and the aei for your warm welcome. budget debates that are

circling around washington today, around our state capitals, especially the one we have right now, they seem disconnected from reality. the new stories are full of phrases like continuing resolutions and baseline levels, and the numbers are in millions and billions. the scorecard is these days about political posturing and partisan edge. this debate is stale. the debate is distracting. the debate needs to change. today we are going to give americans the debate that they deserve. we face a monumental choice about the future of our country. for too long, policymakers from both political parties in washington have traveled the path of least resistance. easy promises and endless claims -- empty claims of progress. relentless spending and constant borrowing. this path has left us on the

brink of national bankruptcy and continuing down it will push our nation into a debt crisis characterized by uncontrollable interest rates, unsustainable taxes, and economic collapse. we would leave our children a very different nation than the one we inherited. highly centralized and highly bureaucratic, less self- governing and less free. the president whose budget punted on the drivers of our debt is not the first public official to direct us down that path. and the members of his own party who are defending his do- nothing approach while demagoguing our solutions, they're certainly not the first either. in recent years, both political parties have squandered the public trust. the american people had a -- ended two majority and they

reject in to promises from a government that cannot live within its means. they deserve the truth about the nation's fiscal and economic challenges. they deserve and demand on this -- honest leaders who are willing to stand for solutions. this new house majority which it is my privilege and pleasure to serve as the budget chairman has decided to do things differently. we have decided to offer americans the twist that they -- the choice that they deserve. the stakes are very high. they transcend what fraction a worker in madison continues to pay for his benefit packages and they transcend the billions we finally settled on as we try to repair this year's broken budget process. at stake is the security and stability of american families. at stake is a potential prosperity of american workers. at stake is america. it is that that posing an -- if the debt poses a existential threat to all that we hold dear, if we truly believe that our

current path leads to a crisis and the demise of america's exceptional promise, then let's dispense with all the triviality. let's confront the nation's most urgent fiscal and economic challenges. let's take the path to a brighter future. let's restore america's promise and ensure real security through real reform. the path to prosperity is the budget we are offering today. it represents our choice for america's future. it represents our commitment to the american people. we aim to restore the dynamism that is defining america over generations, unleashing the genius of america's workers, investors, and entrepreneurs, and strengthening the foundation of economic growth and job creation now and in the future. we reject the culture of complicity. we reward work and effort.

we reject the idea of unlimited and unrestrained government. instead, we call for government limited to its core constitutional functions and faithful to its noble mission to secure life, liberty, and happiness for all. now more than ever, it is vitally important that we act. the government's unfunded liabilities, the promises that they made to current workers about their health and retirement security for which it has no means to pay, are projected to grow by tens of trillions of dollars in the coming years. every year that congress fails to act, the u.s. government gets closer to breaking promises to current retirees while adding to the large and growing stack of empty promises to future generations. the structure of our biggest government programs is by no means the only reason the we find ourselves facing the crisis. the president and the last congress introduced current

agencies and they failed to deliver from their promise to create jobs. the biggest gap in the wrong direction of the last two years was the creation of two new open-ended health care retirements which would accelerate our path of bankruptcy. programs that make up this safety net for the poor are failing the citizens who rely on them and the taxpayers who fund them. and the tax code, it is riddled with inefficiencies, creating a very drag on the economic growth needed for a sustainable future. the president's proposal would celebrate a descent into a debt -- accelerate america's descent into a debt crisis. it doubles the debt held by the public at the end of his first term, and trebles it by the end of his first budget. it imposes new taxes, with spending never falling below 23% of our economy. it permanently enlarges the size and scope of our government. it offers no reform to help retirement programs and no

leadership. our budget is different. first of all, it cuts $6.2 trillion from the president's budget over just the next 10 years. it puts the nation on a path to actually pay off our debt. and it lowers the debt as a percentage of the economy now until we pay it off. our proposal brings spending on the federal government, the size of federal government, back to 20%, consistent with the post-war average and reduces the deficit by $4.4 trillion. our budget tackles the biggest fiscal challenges head on. it is a plan for job creation today, ensuring our children inherit an america that is more strong, more prosperous, and more free, as generations in the past ensured for us. the four major aspects of this budget reform agenda. first -- this budget reforms government to make possible

more efficient and responsible government. second, it builds on the welfare reform efforts in the 1990's and strengthens the social safety net. third, this budget helps fulfill the mission of health and retirement security for all americans. fourth, it reforms the tax cut to promote economic growth and job creation. by removing the anchor of debt that weighs down our economy and by advancing pro-growth tax reforms, this is a jobs budget. it's a signal to all that a brighter future is still possible to invest in america. how heamerica can still be the growth engine that it ought to be. and that is from the heritage center for debt analysis, projecting 1 million jobs next year alone. bringing the unemployment rate down to 4% by 2015, and results and additional private-sector jobs in the last year of the decade alone.

according to this analysis, it spurs economic growth with over $1.5 trillion in real gdp over the debt. -- over the decade. this is that it will raise wages by $1.1 trillion, additional family income each year. this is a path to prosperity. it began by reforming government. the role of the federal government is both vital and limited. when government takes on too many tasks, it does not do any of them very well. this budget restores limits to government in order to reduce deficits, saves money for taxpayers, and focuses federal departments and agencies on their critical missions. the first job of government is to secure the safety and liberty of its citizens. defense spending should be executed with greater efficiency and accountability, no two ways about that. but our men and women in uniform should never be thought of as mere line items in a budget spreadsheet. it follows the lead of secretary robert gates, getting savings from going after

inefficiencies at the pentagon but reinvesting $100 billion into key military capabilities before putting to rest toward deficit reduction. other government agencies have important roles to play as well. but the budgets for many of these agencies have grown far beyond what is justified by their properly limited missions. domestic government agencies enjoyed a 24% increase in their base spending since the president took office. nearly 85%, when you include the stimulus funds, and the massive budget increases of a last two years has served not to help these agencies meet existing missions more effectively but to create things that lie beyond -- new missions that lie beyond the scope of the federal government. whether an excess of epa overreach or the implementation of a disastrous health care law. this budget restores discipline to a government that badly needs it. it returns spending levels to

2008 levels and freezes it for five years. it does this not through indiscriminate cutting but by proposing the elimination of dozens of wasteful and duplicative programs, identified by nonpartisan watchdog groups and government auditors such as the general accountability office. it does not just call for the government to spend less. it calls for the government to focus on creating the conditions for prosperity instead of micromanaging the economy. washington should not be in the business of picking winners or losers in the marketplace. jobs are not created when politicians reward their connected cronies with favoritism. and jobs are created when we choose economic freedom. our budget targets corporate welfare and proposes programs like privatizing fannie mae and freddie mac, costing taxpayers hundreds of billions of dollars. it gets rid of a permanent wall street bailout authority and

rolls back expensive handouts for uncompetitive sources of energy. instead, it calls for free and open marketplaces for energy development and innovation. it proposes the role of -- approval of the -- the removal of the moratoriums on safe, responsible energy exploration here in the united states and in washington policies that drive of gas prices and unlocks some of america's vast energy resources to help lower costs and create jobs and reduce our dependence on foreign oil. if we want these reforms to last, then it is not just enough to change how much government spends. we must change how the government spends. this budget contains several budget process reforms, including real enforceable caps on spending.the government will spend only as much as it needs to fill its constitutionally prescribed rules. in this it follows the fiscal commission i took part in. the second part of our reform

agendas seeks to build on success of a bipartisan welfare reform of the 1990's. in wisconsin we paved the way for this. we support the safety net for americans who through no fault of their own have fallen on hard times. however the government programs that make up the safety net are coming apart at the seams. it should come as no surprise that a system designed in the 1960's is not equipped to deal with any pressures of the 21st hit -- unique pressures of the 21st century. bipartisan efforts in the late 1990's transformed cash welfare by limiting the duration of benefits and giving states more control of the money being spent. but cash welfare is only one of 77 means-tested federal government programs. others including medicaid, food stamps, and housing aid were left unmodernized and unreformed. this budget completes the work that was left undone with reform centered on individuals and led by governors at the

state level. medicaid suffers from the same flawed structure that welfare used to suffer from. the federal government provides an open ended match on what the states spent on medicaid, which creates perverse incentives. states are unable to save money by tailoring the program to meet unique needs of its citizens. instead they must obey the one- size-fits-all federal mandate. the only way they can save money at all is by cutting reimbursements to doctors and hospitals. this is why so many doctors refuse to see medicaid patients. the payment rates are so low, they are losing money every time a medicaid recipient walks into their office. this budget proposes ending the one-size-fits-all approach. it converts medicaid into a block grant and cuts the excessive federal strings, freeing states to design programs that work best for their residents, giving states more flexibility, which will allow them to create more

options to give access to better care. this budget process proposes similar reforms to the food stamp program. it ends the same incentive structure thatreward states for signing up higher numbers of recipients as opposed to rewarding results. the best welfare program is one that ends with the job and a stable life for the individual. this budget will strengthen and but of a streamline consolidating dozens of wasteful and duplicative programs into accountable, targeted career scholarships aimed at empowering american need to pursue their dreams. the third part of our reform will put the end to the empty and he going broke. people have organized their

lives around these programs. people have based their retirements around these programs. we need to honor that. but we also need to make sure that future generations of seniors actually have something they can count on. ally have somethi they can count on. i cant tell you how many people at my age bracket just do not think any of these things will be around for them. that's fixes so that they are. we start with saving medicare. the open ended blank check nature of medicare subsidy mechanisms is threatening the solvency of this critical program and it is creating inexcusable levels of waste in the system. everyone who is on medicare or knows someone on medice has stories about waste in the system. unnecessary tests, redundant treatments, the cost of time and money of mistaken billons comer misplaced records, and just outright fraud. this kind of waste -- let me be clear -- it is inevitable in a

top down, government-run system. and it translates into runaway health inflation. this budt repair is medicare cost broken structure and saves the program for current and future beneficiaries. the principle that government should reorient its policie without forcing people to reorganize their lives, the budget reform does not affect those nearing retirement in any way. instead, and people 54 years old and younger become eligible for medicare, they will be allowed to choose from a list of medicare-approved coverage options and pick a plan that best suits their needs. more individual choice, more competition. medicare would then provide a payment to subsidize its cost. this plan is a difficult to the system that members of congress and other federal employees enjoy today. it is similar to the drug benefit which worked very well. name another program that came in 40% below cost projections. because thisne has choice.

it will preserve better care among health plans by the millions of seniors to get to choose and by trimming billions in waste and fraud. on this plan, medicare will provide assistance while providing more assistance to lower income beneficiaries and the with greater health care risk. reform that empowers individuals with a strengthened safety net for the poor and the sick will guarantee that medicare can fulfill the promise of health security for america's seniors. it is also necessary to reform so security to prevent severe cuts in benefits in the future. this we run out of iou's, budget for his policy makers to come to the table and work to enact common-sense reforms. it does this by requiring the president to submit a plan for restoring bance to social security trust funds and requiring congressional leaders to put forward their best ideas

as well. this process is designed to yield a bipartisan solution quickly and this is one area while i still hold out hope that there is a bipartisan agreement out there to be achieved. we know the way for a year. the president's bipartisan fiscal commission provided an example of what needs to happen to make so social security solvent. it is growing more slowly and those more vulnerable to economic shock in retirement. they also proposed will forms that a call for increes in longevity, to gradually reflect the demographic changes that are straining social security financing. although budget is sell -- i support both of these ideas. the goal of our budget is clear. we must save social security for current retirees and shrink it for future generations. this budget achieves -- strives to achieve retirement security,

economic security, and fiscal sustainability. but none of this is possible, you can i get it done, on as we have economic growth. this brings me to tax reform, the fourth part of our agend this budget recognizes that the nation's fiscal health requires a vibrant, growing, private sector and the tax code that is simple, efficient, and fair. unfortunately our current system fails on all three accounts. this budget attacks complexity, and inefficiency, and on fairness in a code with fundamental reforms drawn from a broad consensus of economic experts and based upon the principle that government should never take the dollar from one of its citizens and us the dollar is needed for absolutely vital national purposes. it draws on the commonly held view that the key to pro-growth tax reform is to lower tax rates walt broadening the tax base. leing people keep more of the money that they have earned of gettinrid of the distortions

and the loopholes that deferred economic resources from the most efficient uses. it starts out by asking the right mix of tax increases and spending cuts to balance the budget, and asking what is the purpose of government. then raising only as much revenue as the government needs to fund the things it is supposed to be doing. in 1981, president ronald rean inherited a stagnant economy with a tax code that featured 16 brackets and a top rate of 70%. when he left office, the tesco had been supplied to three rates of the top rate of 28%. over time, brackets' became added. as with so many things, we need to get back to the reagan model. in this case, bayh implemented the policies of growth. this budget begins by lowering taxes, with the top individual

and corporate capped at 26%. it adopts a revenue-neutral approach by elinating loopholethat distort economic activity. this budget takes is a major problem that has distorted economic activity over the last two years. it refers are -- its reforms are designed to be permanent changes in law, not every boosters. america's families and businesses need and they deserve certainty and predictability when it comes to their taxes. they need to be able to plan for their economic future. let me close with this. america is drawing perilously close to a tipping point it has the potential to curtail free enterprise, transport it to transform our government, and weakened our national identity is in ways that may not be reversible. it represents too dangerous. -- two dangerous.

-- dangers. has the powero make decisions to strip from individuals and their elected representatives and given an unelected bureaucrats. this chart a new path, a new federal commitment of assuring this nation's workers, investors, and entreprenrs that we recognize the threat that uimited government poses to the american way of life. it affirms our cherished ideal of individual liberty, and equal opportunity, and self-reliance. these of the ideals cultivated in the exceptional american character. aei has been a champion under leadership.ks' just as this budget seeks to make them the guiding light of

american fiscal policy once again, freeing individuals by restoring to the size and scope of government should not be a partisan issue. in his state of the union address on january 4, 1935, president franklin delano roosevelt road and the nation of a threat to america's national character from permanent dependency on the government. and let me quote -- confirmed by the evidence before me show conclusively that continued dependence on relief induces a spiritual and moral disintegraon fundamentally destructive to the national fiber. to dole out relief in this way is to administer a narcotic, a subtle destroyer of theuman spirit. it is in violation of the tradition of america to give -- of america." this budget offers america of mobled government that is guided by the timeless principles of the american idea.

this budget provides policymakers with a blueprint to put our budget on the path to balance in our economy on the path to prosperity. this budget assures a america's seniors from those currently retired and future retirees, that their health and retirement security will be strengthened and preserved. this budget provides parents wi the hope that their children will inherit a strong, free, and prosperous america. it is a plan to give our children a debt-free nation said that they can realize their american dream. this is submitted for consideration of the u.s. congress and to the american people. this budget marks the new house majority of us answer to histories call. it is up to all of us to work together to keep america exceptional. thank you very much. [applause]

questions, anybody? >> thank youchairman ryan. we appreciateour remarks. of work for a school that focuses on world schools, particularly high poverty place. di't hear you mention the word education once. we're in the process as you know of reauthorize the secondary and the expectation is investing in competitive grants. where is the majority in the house going when it comes to reauthorization? where does that fit into your principles? >> you will have to ask about half he plans on we authorizing.

they are working with arne duncan on that. we are setting a cap on discretionary spending. it is up to the committee to prioritize it. he did not get down to the mike carona specifics. we said the cap. then congress passed to prioritize that. of this is an area where the government is more deeply involved. only 6 cents on the dollar comes from the federal government. it is the constitutional responsibility of the states. we have 49 different job training problems. none of them are measured.

we do not know that they are working to get people into work ancare rears. we are trying to do it consolidation. that is where we spend a lot of the time and education. that is more of a federal responsibility. >> reduce spoke about taxes. what can you tell us about what the ways and can means -- ways and means committee is likely to do? >> the tax reform was given to me by the member. we were closely together. what he is planning on doing is broadening the tax base, lowering the rate to a condensed

shropshire. it when you broaden the base, you have to get rid osome loopholes. we will figure out precisely how to do that. you'll see a broader tax base on that. the key thing is to not raise taxes on capital for investment. you get higher wages and more job creation. it is not inconsistent with the direction. they went to a little farther. they charge a higher rate than we do. they had1 trillion in there. we do not raise taxes and back. we get rid of the obama care taxes. they are not imposing a $1.50

trillion taxncrease that presidentbama is imposing. that is where we do our tax reform. the guy next to you. i do not remember your name. >> tom coburn has proposed raising -- removing a subsidy. would you be ok with removing it? >> i've always voted against it. it is 5 miles from my house. we do a lot of this. i do not think it is smart policy. the money did not go to the farmer any way. i've been it is the smart way to go. it asked me my opinion, that is a bit. >> congratulations on a lot of

hard work. during the worst part of the economic crisis, my company is one of the most important. they are invested deeply in research and development. we have to have the research. i am wondering what role you see for the continued federal investment. cracks in the particular credit? on the tax side, i hate to do it. they will decide the makeup of how broadhe tax base is. on the spending side, we are going after corporate welfare. we are going after applied resech in going after basic research. there is a basis. the applied research is the

government picking winners and losers. did they do not pick well. >> i will go over here. i apologize. >> are you counting on increased revenue from domestic oil and gas production? >> we basically open up the ocs and we do get bonuses. the royalties to not come in and out cited the tenure window. it takes time. we get bonuses up front. we assume royalties later on. that is not in our score. >> i do not know anything. >> a few people had their hands up. >> do you -- have you began your own plan to address such security reform?

is awaiting and other proposals that spikes we will have it -- or is it waiting on the other proposals? >> we will have it in the future. i do think there is a shot at some bipartisan agreement. we are trying to set the table for that. where tried to put in place a process that reqres harry reid to own up to the fact that we do have a problem. many of us will be submitting a plan. we are talking about getting behind somebody's plan. i do plan on working on that >> you did not put forward this? >> we went back and forth on this. we thought that if we put one out there it should be too tempting for the democrats to attack. this requires a submission of

plans to come with procedures to act on. we believe that this will give us t best chance. it is insolvent. we need to fix it. we do not want government help care. that is what obamacare does. map ways. that is a chance to come together. we are trying to advance it. >> on the medicare proposal, he had made -- you have made the

difference. while i get the mechanical difference, they are not be a voucher that people then purchased insurance with. it would go to the plans. though there there is a mechanical difference, at its is hard to see the this. >> they achieve the same kind of savings path. my road map does have doubters. i worked with the director in the clinton administration. i think she was chair of the fed. she and die with the chairs of the task force. we agreed on a structure. cbo called the premium support. it looks more le progress people are already familiar

with. it is a people do not inaccurately or incorrectly tried to tell us what we are doing. >> as long as this is not incle comprehensive reforms. kenny talk about how we still have a health care system with the current tax code -- can you talk about how you still have the health care system of the current tax code? >> we are planning on moving through ways later on.

we have not come together to finish that yet. that is why he had help care for the over 65 population appeared we have a lot of other things in here. we are going to be working on our legislation together. i believe it is one of the drivers of help inflation. you are subsidizing the wrong people. you have a hard time getting insurance. you have that benefit wherever you go regardless of how you care health inrance. i think that is the best way to reform health care and get the consumer in the marketplace. i their health care will be run by 30,000 bureaucrats in

washington with price control or three and a million americans acting as consumers demanding performance for our business. i have lasik surgery 11 years ago. otherwise i wouldn't. i paid about $4,000 for surgery in the year 2000. it is now about $1,600. it is a better procedure. it is something that has market procedure. what we've what to do is apply this free-market principles so people can act on those things.

>> is to save more than $1 trillion. the cbs said it will cost more than $2 billion. >> we retain the savings. during this combined with eliminating all the spending get to the number. do we do repeal the price control mechanism that they put in medicare that ends of rationing care. >> first of all, thank you for

prioritizing the budget. if we do not mind, military families are concerned about the government shutdown and the bill that was proposed. can you give us an update? >> i can speak to the house. the democrats are our adversary. we are worried about this because you do not want to be affected are the it spouses. the bill will bring to the floor guarantees that they keep getting paid while we cut spending. this will be our third that we will have passed.

the senate has not donone yet. it has been 44 days since we passed our purse. nothing has come to prevent a shutdown. they are looking at to is moving as the it is the senate democrats and not the republicans. >> are you confident that you have a consensus for t medicare one? they are in groups of eight or 10 people. the biggest driver of our debt is the medicare problem.

there are the kinds of things that are needed to fix it. they are on board. look, it all comes down to this. he can guarantee people of yardy organize their lives. they get what they have coming to them. do nothing and kick the can down the road. the need to start cutting seniors. it is brought if we reform. the question is when and how we reform it. verys spending goes up quickly. do we say these programs now by engaging?

do we just worry about politics? do we worry about the next election. we see a real problem where we do indiscriminate cuts to everyone. we do not want to have european austerity in this country. the compassionate things to is to fix this on our side rather than seeing more pain later. >> on the point just made, as you are speaking this morning,

he are retaining giveaways report -- before forcing seniors to clip coupons before seeing a doctor. but i did not even know whato say to that. >> do you think the gund as been prepared for republicans for this coming debate? >> steve israel is the head of the committee. is this a political weapon? of course it is. their scoring ese political points. here is the decision may have been made -- we have been making. we nell are at the series will do it.

we have these halos over our head. there is the crash of 2008. there are hundreds of banks going down. what if your congressmen and their preneedy were coming? what if your president saw it coming? they know it in enough time to prevent it from coming.

what would you think of him? i do not think of this spirited this is wrong. this is the most predictable economic crisis we have ever had in this country. we owe it to our men and women to fix it while it is fixable. shame on people who want to demagogued and politicize this. our country's better than that. they have this budget gimmicks and county checks. is not what is really needed to save this country.

>> thank you very much for speaking. i know you are here. they are going to have to get the programs they like. to many people think these cs will not hurt.

>> we are about to do a whole bunch. we are refming agricultural subsidies. he is taking the lead in doing reform. we have people in congress now you are doing that. we have no choice. >> use said -- he said that the president is not leaving on this.

what do you do in the next year and have? >> as they said, we are going to do a budget. let's put the democrats decide. it will use this as a political weapon. look at the path they are on. we are on a path where i debt goes from about 68% of gdp to 800% of gdp. i asked them to run the model. i asked them to run the model.