you can find in water treatment or candy. there's a jelling agent also use -- gelling agent also used in toothpaste. this is all public record, all public record. pennsylvania, the department of environmental protection, which is the agency that oversees this drilling activity, markse these -- this -- requires that these list of ingredients are made available publicly on the drilling sites that are available. you know, standard, like any industry that uses materials -- i would trust in our congressional offices we have a m.s.d. manual, meerls safety data sheet because whether it's whiteout or some other cleaning fluid or win decks, you have -- windex, you have to have an

m.s.d. through requirements of oversight agencies such as the department of environmental protection, the ingredients th that this is such a secret and people don't know what's going down into the wells. not all this water comes out. that is important to recognize. just a percentage of the water that does come out, 8,000, 9,000 feet down and the water that does come back in oak these operations, much of it is recycled. mr. reed: on the chart we have here this evening, what we're talking about is that hydraulic fluid pumped into the horizontal area, that water is hitting that

area and coming back up the well bore. but if the gentleman could continue. what happens to the water that remains down there? mr. thompson: it stays with the geology down there. it is a mile below the aquifer and encased in layers of limestone. that is our geology. we have these -- this marcellus shale, but really encased in what could be hundreds of yards thick of limestone on top and certainly on the bottom. and the water stays down. what happens with the water that comes up and especially when it passes through that area, 500, 700 feet where the aquifer is, frankly where our fresh water comes from. and that is the casing that is on your poster that is incredibly important to where

it's encased through that area that the wells are encased with both steel and concrete, multiple layers. the safeguards are tremendous so you can't get cross contamination. mr. reed: my understanding of the process is we are dealing with a two-step process, if you would, in developing the well site. you have the surface up here. you have the initial where there's a drilling operation that goes through the -- i forget the technical name, but the upper end of the well that we are tapping into and that's going through the aquifer and we have highlighted a cross section and highlighted that area because it is a legitimate concern in my opinion and i know the regulatory agencies have identified this as a legitimate concern. and this is a critical portion of the well development that we need to spend a little bit more

time on. because as we punch through the aquifer, what we are talking about are steel casings that are pushed down the well site after they are drilled, pushed down the well bore and going through that aquifer. and once you get to that point that has been identified as the breakoff point or i forget the term that's been used in the industry, but they pump it up with a cement, with a material that provides a barrier between the casing, the aquifer and the other formations and fills in the area between the casings and the aquifer and the other area, probably that first 1,000 feet of well development. is my understanding correct? >> i think the gentleman is very accurate and it's multiple piping with cement in between each one. there is a lot of redundancy

built in because it is important not to get the cross contamination. mr. reed: that needs to be stressed, the redundancy of how the feet, where we have that breakoff point is and that multiple protection to make sure the aquifer is protected. and the second stage of the process is where they continue to drill down deeper to reach the actual formation, which again is 6,000 to 8,000 feet below because it is not a fluid level throughout the northeast as many of us know from our geology in high school days. and that's the amazing part of the technology, as that formation goes up and down, 5,000, 6,000, 9,000 feet, the technology can trace into that formation. and i hit those marks where the engineers have identified where this gas is located. what they do in the second phase

is continue to drill down to the formation. and as they turn the drill bit to do that horizontal drilling technique that actually goes through that shale rock, and it is rock. i literally held it the other day, it feels like granite, but the gas is trapped win that rock and reaches out 1,000 feet from the well site up on the surface. and that's a point i would like to stress right now, that one of the things that i saw as a benefit, because i have seen vertical wells and horizontal wells. vertical wells are taking a shot at the sweet spot and if they miss and the general rule is one out of three of those are not successful when we are dealing with a higher level formation, they would then have to move the well site and disturb the surface, the area that they

would have to clear in order to put the rig and the development facilities on the surface. what they are doing with this horizontal drilling technique, they have six different well sites from the one platform, is that understanding correct? >> that is my understanding and my observations where one site where this drilling activity goes on and takes up to perhaps 90 days to drill and to frack one of these wells, you can put multiple, at least up to six on one site. in terms of not disturbing -- minimizing disturbing the surface area, it's a great technology for the max mall -- maximum protection for a clean energy and water source. mr. reed: you have a real sense of the difference of having the multiple vertical locations that

would talk about clearing trees and building roads to get access to those areas, you would take six of those vertical sites and put them in one location where they could tap into this reserve from one location rather than six locations. that's a great point to put that information out to people, because i think a lot of people think this is just a one-hole operation but it's a multi-hole operation. this is not cheap. these are millions of dollars of investments in order to tap into this resource and that has to be recognized and respected. and i yield back to my colleague. mr. thompson: as we are talking about the environmental record, that is a concern that folks have raised. as you have noted or my other colleagues have indicated, hydraulic fracturing was used 60 years ago in oklahoma. and fracking has been common

practice and successfully used in over one million wells across the united states. it has not once contaminated any drinking water supply. in pennsylvania, there are 11 state laws that govern oil and gas development. in pennsylvania, drilling companies have to disclose the names of all the chemicals to be stored and used in a drilling site in the pollution prevention and contingency plan that must be submitted to the state department of environmental protection as a part of the permit application process. in addition, the regulations used in pennsylvania and at the state level, oil and gas production is subject to eight federal laws. more specifically, there are five federal laws that regulate hydraulic fracturing. this includes the clean water act and various stages of the process, the safe drinking water act, emergency planning and community right to know act which mandates that operators

maintain material safety data sheets in every well site in america where minimal amount of chemicals are present which is maintained by the state. the plan contain the safety data sheets for all chemicals and a copy be kept on each well site. that comes back to the question of what is going into this frack fluid. frankly, most companies exceed the requirements in their operations. so i think it's very important people understand that -- it's not to say they are like any other industry. some folks who don't follow standards, i'm proud to say in pennsylvania, when they fine those folks, they not only have to correct their problems but continue to do this, they are put out of business. we are blessed with not just this resource from god, but

blessed with the technology to do it right and that should be a standard we subscribe to. there are some here in washington who want to regulate this. i don't have confidence in washington. i have confidence in pennsylvania's department of environmental protection. they have been doing a great job and they continue to look at their standards, their regulations and i think they do a great job of making sure that we are protecting our environment and producing a great resource, which is adding jobs, growing the economy and frankly providing us a very affordable energy resource. mr. reed: i would echo my colleague's comments about the state agencies being the appropriate agencies to oversee this development. in new york state, we are under a moratorium at the local level that has stopped any development of marcellus shale until our local department of environmental conservation shoes

its environmental impact statement to come up with regulations. and to be frank upfront, we have learned from your district and in my other colleague's district in the state of pennsylvania as to how to deal with these issues. and i think the d.c. has done a good job in taking a time out and studying the issues. it has been three years and i'm ready to move forward to come up with regulations to unleash the game-changing opportunity for our nation and for our areas. and i do also agree with my colleague that leaving it up to washington to come up with a one-size-fits-all solution is not the appropriate policy. let our state agencies, the ones who live and breathe in our community, the people who work in those agencies that know our state best, let them come up with the regulations that are

reasonable to protect our environment and at the same time recognize the potential and opportunity that is locate nd our marcellus shale location and i think that is best served in order to allow the state agencies to do that. so with my colleague continuing, you know, one thing i did want to stress as we are going through this chart, i have heard concerns about fluid that remains down in the well site -- these are millions of gallons of water that is pumped down the hole to create the pressures and to access this natural gas formation, there has been concern raised to me and i would be interested to know what my colleague's thoughts are on that, that slick water or that brine as it sits in the formation, the potential risk of going back up through essentially a mile of limestone,

of different formations. have you heard the same concern? mr. thompson: i appreciate the gentleman yielding. i have heard the same concerns, but when you look at the geology anywhere this drilling is done and you have the layers of marcellus, and i think -- you only fracture maybe 18 inches perhaps from that horizontal pipeline. so you're not -- you haven't gotten into the marcellus shale and that is encased with hundreds of feet thick at a minimum of limestone. and the geology -- it's very, very dm you never say never, but it's impossible in order to get what will be called migration to get that fluid outside. mr. reed: the chart identifies

what we are talking about here. we are talking about the aquifer within 1,000 feet of surface. the water table is 500 feet, 200 feet. people putting their wells into those ack which fierces. and this -- aquifers. we have a ton of material, literally material that is protecting this formation and that area down there from our aquifer. and i think that concern is a legitimate concern, but because of the oversight and the ability of our local agencies to do their jobs, in my opinion, i think they can handle it appropriately and mother nature will protect that aquifer from the development of this. . mr. thompson: the type the cement, both the steel that's used and even as importantly the cement casing that's utilized to make sure that it's

of a high quality and to make sure that it's put in a way and tested so that there are no air pockets, there are no quick pathways for somehow for migration to occur through the casing. that is all done in a very high quality way with a lot of quality controls. and so -- and that's where the oversight is important. in pennsylvania, again, i come back and put a lot of trust in the department of environmental protection. you know, there's a lot of the -- there's a lot of folks that would be opposed to this and i want to -- i don't like to really promote anything, especially this, but there was a film sear sees called "gas lands," it wasn't a series but -- let me share with you some thoughts by john hanger. he used to be head of an environmental group and he became the secretary of the department of environmental protection in pennsylvania and

secretary hanger did a great job. he was concerned about the environment. he had an environmental record that was tough. he said that "gas land" is fundamental loedis honest and a false presentation for dramatic effect, end quote quote. he called the producers of that a prop gandist because -- propagandist. there was pictures of fire spews faucet that have been repeatedly found as a result of naturally occurring methane migration. you know, people that drill their shallow wells for water and unfortunately where they tend to drill they only sometimes drill them in the methane pockets. i saw a picture yesterday of a gentleman, a farmer from colorado and it was a pretty cool picture because it showed a large flame in the middle of a river but it was from a

naturally occurring methane pocket. had nothing to do with mining. had nothing to do with drilling. but it was naturally occurring. has nothing to do with fracking. the colorado oil and water conservation commission reviewed the specific location of the film numerous times and remarked, quote, dissolved methane in well water appeared to be bimbings io -- biojenics and there are no way related to the well water. there have been no confirmed cases of threatened, say, animal health, in pennsylvania but a lot of this occurs on our farms. the marcellus gas has saved more dairy farms in my district than probably anything else in the past couple years. when dairy farmers were losing an average of $100 per average per cow per month based on the fact that the government prices

milk and it's such a flawed system, that this really has been a blessing for our farmers. i have a few farmers going around new john deeres or whatever their choice of tractors are for the first time in their lives, actually, so it's been a good thing so we don't lose our farms. we're losing our agriculture at an alarming rate on a daily basis across this country but in pennsylvania there's been a blessing to help keep that land in production. you know, a little bit of a disturbance. small site for drilling. but once the rigs all go away and you have just that well-head that you look at in the insert on a poster board there you can farm around that. mr. reed: yeah, the next time that my colleague will yield, the next time we have this conversation and i hope we have this conversation many more times as we go forth and bring forth science and data on these

issues, the operation when it originally comes in and the development of the well site does require some industrial-type activity. i do recognize that and i think my colleague would recognize that. again, i believe you say 90 days is the estimated period of time for that development to occur and then i've seen wells that have been developed, put into production and that have -- i hear my -- i hear the speaker giving us the sign that our time is up. but i do thank my colleague for joining us tonight and i thank the opportunity to be here tonight. and with that, mr. speaker, i do yield back our time. the speaker pro tempore: the gentleman yields back. under the speaker's announced policy of january 5, 2011, the chair recognizes the gentleman from kentucky, mr. yarmuth, for 30 minutes, you are recognized. mr. yarmuth: mau, mr. speaker. it's a great -- thank you, mr. speaker. it's a great honor to come to the floor of the house of representatives this afternoon to join some of my colleagues on the democratic side of the

budget committee to talk about choices. you know, government is all about choosing. it's setting priorities. it's choosing what we're going to spend the people's money for, how much we're going to ask the people to pay to the government and how we're going to spend those dollars. it's all about choosing. it's also about values. and this week this issue of choices is playing itself out in two arenas in government. one, in the continuing resolution battle that took place on this floor this afternoon, the idea that we have to figure out how to fund the rest of the government for the rest of this fiscal year ending september 30, and whether or not we are willing to allow the government to shut down tomorrow night because of the choices we either make or refuse to make. and it's also playing itself out now in the development of the budget for the following fiscal year 2012.

yesterday in the budget committee we considered the budget proposal offered by chairman ryan and the republicans that offered some very stark choices for the american people. they're similar to the choices that we've been debating now week after week after week for the last couple of months about how we're going to fund the government for the rest of the year. and from the democratic perspective, at least i know from my perspective, the reason i have not been willing to support the republican versions of the continuing resolutions that have come to this floor is that they make choices which don't seem very fair to me. they don't seem to represent the values that this country has always embraced. the values of fairness and justice and the idea that we're all in this great journey together and that we're trying to create a country that works for everybody and not just for

a very few. today the republicans brought to the floor a continuing resolution to fund the government for one more week. this is what the choices they made as to what we should cut in order to avoid shutting the government down. they want to do eliminate $143 million for school lunch assistance programs. $187 million for education for disadvantaged programs. school improvement funds. education, innovative improvement programs. adult education. cuts the w.i.c. program. nutrition for low-income families, women and their children. the office of national drug control policy. $495 million from fema's first responder program. awful these things they wanted to cut -- all of these things they wanted to cut, and yet when you ask them whether they want to help -- have other people, the wealthiest people,

the big corporations, the people that have done very well in this country over the last couple decades, if you ask them, well, why don't we make them share some of the burden of balancing this budget, they say, oh, no, we can't do that. we can't do that. let me just illustrate with this chart one of the choices that they made in the 2012 budget proposal. they chose to include refuse to eliminate $800 billion in tax cuts for the wealthiest 2% of americans and instead cut $771 billion from medicaid over the next 10 years. this was a choice. do we want to make sure that our senior citizens have access to nursing homes, that our disabled population has access to assisted living facilities and home care? our young, low income, poor

families, we want to make sure they have health care or do we want to make sure the wealthiest 2% of americans continue to have their cake and eat it too? their choice, their choice in the budget and in the continuing resolution is to let those wealthiest americans have their cake and eat it too and let the most vulnerable segments of society pay the price of helping to balance the budget. i just want to -- i'm a big fan of political cartoons and today's cartoon in "the washington post" i think said it all because one of the other proposals they made in their 2012 budget proposal, republicans, was not just to maintain the tax breaks for the wealthiest americans but to increase them. they want to cut the maximum tax rate from 35%, which was the rate that was put to by the bush administration, they want to cut it even further to 25%.

in other words, a 10% additional tax cut for the wealthiest americans. as a matter of fact, i offered an amendment in the hearing to rescind the bush tax cut for only those people making over $1 million a year. only those people making over $1 million a year. they voted it down unanimously. but here's the cartoon in "the washington post." it says -- has a -- i won't name him but a republican member of the budget committee that says more tax cuts for the wealthy. and the guy says, stop, i can't eat another bite. the republican says, sorry, everybody has to share the pain. this is kind one of the choices that we have. it's stark. it's stark. again, tax cuts for the wealthiest americans or health care, nutrition, education for the other 90% of the american people that have not done so

well. so as we move through this process of choosing both how we're going to fund the government until september 30 and how we're going to fund it into the future, the american people need to know whoose side the republican majority's on and whose side the democrats are on. with that i'd like to yield to my colleague, a member of the budget committee, mr. tonko. mr. tonko: thank you, representative yarmuth, and thanks for elk leading the next 30 minutes of discussion here which are critical to the lives of the american public and the american families, working families across our nation. you know, it's an honor to serve with you on our budget committee as we spent countless hours yesterday dealing with a saga of a budget for 2012. you know, just as we're trying to avoid a shutdown of america's government this very hour, they're also pushing through in a rather rushed

format a 2012 fiscal plan that takes the pain and suffering of the 2011 plan and expands it exponentially. they grow it drastically. the pain for 2012. and as you indicated these are choices that we have before us. i believe firmly that our budgets, whatever level, federal, state, local, are a reflection of our values, our principles, our priorities. and that's where we're at now, whether we're trying to avoid a shutdown for the 2011 fiscal year which is looming over us or whether we're putting together the 2012 fiscal plan, it's about priorities, values and principles that we hold near and dear. so, you know, it's also a statement on economic -- an economic agenda. i have before me here this chart that speaks about the 1.8 million jobs that have been added since last year, since

2010. 1.8 million private sector jobs. you can see the precipitous drop that came in the red ink of the close of the bush recession. then in 2009 we began to recover. we stopped the bleeding of the recession and it's been a slow but steady and upward and forward climb as we have introduced new jobs into the private sector arena that allows us to now work away at that 8.2 million jobs that were lost during the bush recession. why we would want to stop that progress is beyond me, but the cuts that will be made here in the 2011 scenario that we're attempting to -- by which we're attempting to avoid a shutdown and the 2012 budget which there are cuts to indeed science and technology. i had served as c.e.o. of our state energy and research

authority and i saw firsthand what science and tech means in terms of job growth and expanding the opportunity. and so these cuts that are part of the 2011 plan and the 2012 budget that we're dealing with in double-dose fashion will mean tremendous pain for our middle-class families. we need to commit to a jobs agenda. the people told democrats and republicans alike in campaign season, it's about jobs, jobs, jobs and the economy. it's not about growing another price tag, draining our economy with the cost of a shutdown. we need to avoid that shutdown. and one of the concerns yesterday when we were meeting in the 2012 budget format was my concern, your concern, our concern as democrats on that budget committee to avoid the end of medicare. this plan introduced by our republicans on the budget committee is called a road map, and i said it's a road to ruin for our middle class, for our working families. they want to end medicare. .

a system that has worked for 46 million americans. and shifts government to the senior citizen and asks them to dig deep into their pockets and to dig deeper. they are suggesting that the costs will double by 2022 and more than triple by 2030. are these our values? are these our principles? are these our priorities? i would say boldly, no, they are not. they are not. and senior citizens are already getting wind of this idea and they are supporting our efforts to stop the end to medicare, which is part of the form at that they have introduced, part of the legislation they have introduced for their budget for 2012. we failed in that attempt, you and i supported it. we all supported that push to end their desire to end

medicare. we failed with it. and that will be coming to a vote to the full house i think next week. these are the things that people need to be alerted to, these are the issues that are going to be tough for middle class america to assume for the poor, working poor, for the masses out there. and when we see the concentration of wealth and all the benefits and all the focus being in the upper class, we understand what their choices are. they are with big oil, big banks, special interests, millionaires and billionaires and oil companies setting on record profits. we are there with the middle class families, making certain we create jobs, retain jobs and keep this pattern of activity going. thank you for bringing us together for what i think is urgent, urgent dialogue that needs to reach every household in america. mr. yarmuth: i appreciate the

comments from the gentleman from new york and thanks for standing up for all americans as we try to recover from the greatest economic crisis we have had since the great depression 80 years ago. and i forgot to mention, the proposal to raise taxes, people making over $1 million back to the clinton-era tax levels. and what's interesting about those tax levels, when the highest rate was 39.6%. during that time, 20.8 million jobs created in the united states in the private sector. then came the bush tax cuts, took the max -- maximum level, 633,000 jobs lost. the mythology has grown out there when you lower taxes, it

stimulates economic activity. the reality is quite different. 39.6%, 20.8 million jobs created. what about annual growth rates? when the high rate was 39.6%, 3.9% real g.d.p. growth. reality is, lower tax rates do not necessarily equate with better growth. or more jobs. what they do equate with is a continuing separation of the very wealthiest americans from everybody else. over the last 30 years, the percentage of all the income earned in the country by the top 1% has gone from 9% to 33%. 9% to 33%.

33% of the american people -- 33% of all the income earned in this country goes to the top 1%. they make more and own more than the bottom 90% of the people in this country. all we're saying is, we know everybody is going to have to share in this sacrifice to try and get our fiscal house in order. but we're only asking the most vulnerable people to share, the people who have been doing the best in this country, we aren't asking them to have a little bit of an inconvenient. and someone who can speak so passionately about the wrong choice that the republicans are making, represents the great city of milwaukee, gwen moore. and i yield to her. ms. moore: thank you for putting

together this special order. i can tell you that it has been very distressing to watch the progress of this budget being put together for the american people. and part of the distress, i think, is because of the sort of sike logical war fare -- psycho logical warfare that is being created here. the way the budget is being presented is being presented as we have got to make draconian cuts in the budget and in order to heal our fledgeling economy and reform our entitlement programs in order to build and maintain them for the future. there has been a call for an

adult conversation about this, a call for the facts and for the truth and no accounting gimmicks in this discussion of reforming entitlement programs. democrats are admonished not to scare seniors with entitlement reform and to demagog the issue. and yet what we have seen from the republicans are these fire engine red, collarful charts, warning us of the burdenening the aging of the baby boomers unless we adopt the auseter path to pros tert which ends the entitlement to medicaid, caps those benefits, which turns medicare into a voucher, so-called premium support and which gives instructions to the

ways and means committee to privatize or to fix social security. now, experts have told us, even though the republican budget committee has told us that medicare and medicaid are driving the budget deficit and that they are the cause of this huge tremendous debt, experts across the spectrum have told us that the real problem with health care costs is the growth of health care in the private market. we have seen health care costs double in double digits -- increase by double digits every single year. we have seen private health insurance premiums increase, double within the last 20 years.

and so it doesn't matter whether you are a medicaid recipient, whether you are a double recipient, a medicare recipient who is also using medicaid because you are in a nursing home, it doesn't matter if you are a huge corporation, harley davidson or xerox corporation and doesn't matter if you are a small business operator or someone who is on the individual market looking for insurance. nobody, nobody can afford to fuel these profits for pharmaceutical companies. $20 million annual salaries for insurance executives and all of the other giveaways to wealthy insurance companies. medicare was overpaying

insurance companies by 14% until we enacted the affordable health care act. we can't afford part d, the prescription drug program, we simply cannot afford to have a program where medicare pays pharmaceutical companies, for a large group mike medicare recipients and negotiate the drug prices as they would with any group. i mean there are companies, large corporations, with a much smaller pool of employees that benefit from negotiating for the group. and the law that the republicans passed, the medicare part d, doesn't allow those negotiations. these are easy fixes. these are easy fixes that could reap us billions of dollars in savings. social security.

social security, there are some very low hanging fruit. if people would want to come to the table and negotiate in good faith to create a solvent situation for social security well beyond the baby boom years. we could raise payroll taxes beyond the cap that is now in place. but, of course, our republican colleagues have an aversion, as the gentleman has pointed out, for shared sacrifice. no one who earns money and has reaped the benefits of this great american economy should be asked to pay taxes. who should be made to pay taxes? those suffering, working class, middle-class folks. you have shared with us earlier your chart where they're proposing to lower the top tax rate by 10 points, down from 35%

down to 25%. and yet they claim that this is a budget-neutral act. well, come on now. you know, i don't have a degree from the wharton school of economics, but if it's budget neutral and we are still going to receive those revenues, that must mean that somebody else is going to pay the taxes. am i wrong on that? i would like to yield to the gentleman on that point. mr. yarmuth: you are absolutely right. we are going to be revenue neutral and cut taxes and other people are go to go have to pay more. and in this proposal, it will be the people who can afford it least. i want to welcome another colleague from the budget committee, alice son -- alison schwartz from pennsylvania. and now serves as a very

prominent member of the budget committee. i yield her time. ms. schwartz: i'm pleased to participate on this conversation and i want to make a fewments and maybe we can talk further about what the republicans proposed in their budget. and we sit on the budget committee. we went through 12 hours of what we call here in congress a markup, but it was a debate and real reflection on the contrast of what the republicans are offering to the american people and a way to tackle what are very serious financial problems to the country. we all agree that they're serious. we have to make sure that we take seriously the deficit and bring down the deficit over time and begin to pay down the national debt. we all agree on that, but the issue is here, how do we do it.

what's on the table for discussion. and we offered up a number of suggestions and ways we might take some of the money -- and you have talked about this already -- the tax breaks for the wealthiest 2% of americans, the tax subsidies for the five largest oil and gas companies. we are talking about literally hundreds of billions of dollars here that instead they have chosen to protect those subsidies and those tax breaks and instead to make real cuts in what believe are priorities for us. budgets are all about choices and priorities. i want to talk about not just the spending cuts and where else we might be able to take spending cuts. we are interested on everything being on the table and looking at the department of defense, for example, which some republicans agreed with us on, but one of the changes they are making and we referred to this as the ryan budget but this is

the republican budget. this is no longer his ideas. but it is the republican budget that was passed last night and will be on the floor potentially next week, there are dramatic changes for our seniors in this country, dramatic changes. we have said to our seniors and our future seniors, when you get to be 65, there is going to be security for you in terms of payment for your health care. they have changed that for future seniors. they will no longer be guaranteed benefits for future seniors. . they will be given a voucher. they have said it will be support for the premium, not the whole thing. and that they will then -- i think paul mentioned it yesterday, shopping in the

insurance marketplace for the best insurance they can get. and when i think about that, maybe that sounds ok. you know, you can go shopping. you have a voucher in your pocket. it sounds like a coupon. you can go to the store and you can get an 80% cost of pay. however, this is health insurance. and what we already know is that the insurance industry is not inclined before the affordable care act to cover insurance for sick people. we need to pass a law that says you can't discriminate sick children. you have to let them buy health insurance and cover that illness. they certainly don't want to cover sick adults. well, when i go to talk to a group of seniors and i say to them, i can be at a senior center or any place we visit as members of congress, ok, a group of 50, 100 people and say, any of you take

medication? do you take prescription medication? of course. three, four. these are a healthy group of seniors. they look healthy to me. they're out and about listening to a member of congress. i say, how are you going to go out and buy insurance that can be affordable to you? what we know and what seniors tell us is that they know that if they go to a voucher program and no longer guaranteed that they will no longer have guaranteed benefits, that their voucher will become less helpful over time as expenses go up, that there will be no controls how their taxpayer dollars will be used so they -- if i may to say that seniors know that privatizing medicare, and that's what this is, it's privatizing medicare, will limit their benefits, will be obstacles to care and uncertain reimbursements. co-payments for primary care or special care could be quite

significant. there could be exclusions to certain services that they need. there could be discrimination based on income and age and illness. and there's more uncertainty if they face serious illness going forward. so i just wanted to show two charts and maybe we want to talk about as we go forward. one of them is to just follow-up on what i said about choices that here we are faced with a choice that the republicans have made which is to give tax breaks for wealthiest americans. it's going to cost about $800 billion. and instead they are going to dismantle, this in the case of medicaid, which is really about seniors and nursing homes, frail elderly in nursing home costing about $771 million. that's the choices they made. we can talk more about how we bent the cost curve, as we use the language on medicare, we've already taken some serious ak. let me turn it over to my colleague, happy to have a further conversation about what this budget, what this

republican budget means to seniors across this country. >> thank you. i'd like to yield time to mr. tonko who has another illustration he want to give us. mr. tonko: thank you. mr. yarmuth: two minutes left on our side. mr. tonko: i'll do this quickly because i know time is ticking away. we all mentioned the concern about medicare and how they're going to privatize it. well, here it is. the end of medicare. this is the buyer beware chart. this shows the republican proposal in 2022 dollars. and the coucher isn't going to cover much. 32% they're suggesting. 32%. so that leaves a $12,500 price tag to be assumed by, you guessed it, the seniors. dig into your pockets. under the current medicare model it leaves you with a $6,150 price tag. so it's going to more than double the commitment from the senior citizens.

this is the buyer beware chart. you know, the happy shopping spree isn't so happy and, representative yarmuth, i just wanted to show this. buyer beware. this is an attack on middle-class america. this is an attack on the system that has worked well for so many decades and certainly it's a priority that's not ours. it's theirs. we're for the working families of this country and we'll continue to do that. mr. yarmuth: again, a perfect illustration of the choices that we face as a country as we move forward over the next decade. we know we have fiscal problems. we know we have very difficult choices. the republicans have chosen to put the cost into balancing the budget on seniors, on low-income families, on working families and to completely spare oil companies, millionaires and billionaires, hedge fund managers and anyone else who has made the most of

america and has done the best and needs the help. just in the few seconds remaining, i'd like to ask representative moore if she has any closing comments. ms. moore: i just have some closing comments. i think that budgeting isn't just about numbers and figures. it's about values. and i think the republicans have made it very, very clear, that they want limited government. they particularly don't want government enritching the lives of -- enriching the lives of individuals. but you would think that they would want to protect some things that aren't individual things like clean air, clean water, food safety protection, and they're eviscerating all of these programs as well. research for cancers, the creation of green energy jobs, the community development block grant programs. the speaker pro tempore: the

gentleman's time has expired from kentucky. mr. yarmuth: i thank my colleagues from the budget committee for joining me and thanks to the american people for paying attention to this very important process we're in now. we yield back. the speaker pro tempore: thank you for yielding back. under the speaker's announced policy of january 5, 2011, the chair recognizes the gentleman from new mexico, mr. pearce, for 30 minutes. mr. pearce: thank you, mr. speaker. the -- it is a pleasure to address the house tonight and talk about the issues that are burning across the country. before i get into the economic discussion and my colleagues across the aisle, my good friends, have brought up many things that are worthy of discussing. before i get into that i'd like to talk a bit about our constitution. i think that if we as a republic are not aware of the importance of the constitution then we tend to diminish it, we tend to walk away from it, tend

to not give it the credibility that it deserves and that is highly risky for every one of us, but especially with those people with very little or no status. the constitution is basically the agreement, the contract between our government and the people. the constitution is the only thing that limits the power of government. it is the instrument by which we people have our rights guaranteed to us and any time we begin to say the constitution is not valid then we put at risk our own freedoms. and one of the -- one of the ideas of the constitution was that it was replacing something previous to it the articles of confederation what our founding fathers very originally came up with. very soon they realized they had deep flaws. interstate commerce, going from one state to the next, did not

like it was inside the same country at all. instead, the commerce was stopped at one state line, taxed as it went through that state, stopped at the next state line and product became so expensive they could not move to market because of the taxation, the accumulated taxation from one state to the next. the founding fathers recognized that to be a problem almost immediately. they convened the constitutional convention and one of the prime articles that they were talking about in that constitution was the commerce clause. they felt it was necessary to address that in order for the country to be prosperous, for it to move forward. james madison later wrote in his federalist paper number 56 that the water to be the objects of federal legislation, he's addressing that question of where are we to go with legislation, and he said those which of most importance which seem to require local knowledge are commerce, taxation and the militia. so he was visualizing a very

limited role for government, a very strict role for the constitution and one of the elements of that constitution was to be the commerce between states. so in our constitution in article 1, section 5, clause 3, it's in the constitution is delineating the powers of the government and one of those was to regulate this clause 3 states that the congress shall have the power to regulate commerce with foreign nations and among the several states and with the indian tribes. and so that's the limit of the commerce clause. and early on our founding fathers had actually had a very limited definition of that. but that commerce clause definition has been expanded over time so that one of the -- if you will research, if you'll google commerce/u.s. law abuse you'll begin to see the ways

that our government has begun to extend its reach over our lives by redefining what the commerce clause was actually about. now, one of the cases that has been mentioned is that some criminal somewhere was within a couple hundred feet of a school with a gun and that's something that should not be tolerated, shouldn't be allowed. but the government's attacking of that used the commerce laws to go to say that the presence of that guy on or near a school with a gun in his pocket affected the education of the young people so that it would end the life of the young students, would affect the commerce of the united states. so we're trying to get a guy that can't carry a gun on school property, we're going through this tore tuesdayous explanation that -- torturous explanation that somewhere down the line it could affect

commerce. we could not allow for someone to have a gun on a school grounds but to use that sort of convoluted reasoning is one of the threats that we all have because if the government can go through convoluted reasoning on one thing it can go through convoluted reasoning on anything. as we reverend the constitution as we talked to people back in this -- in our states, we began to realize that we in congress have been extending the powers of different clauses, we're using them that were not designated originally and basically doing a rewrite of the constitution. my office, i submitted a bill, h.r. 346, the health care choice act of 2011, in that we visual used that it would be good for -- visualized that it would be good for people to shop for insurance across state lines. new mexico has significantly higher priced insurance than texas. i live in hobbs, new mexico, that's three miles from the

texas border. it seemed practical that we would allow people to go to the state line and buy insurance across that state line. and it is currently prohibited. so i put a bill in that said simply we can go across state lines. on the surface that seems to be good and noble. it seems to fit the parameters of competition. competition is always good for consumers. but in the closer looking, we said we're doing the same extension with our bill that we were complaining about and others saying that the federal government can declare that a state's right to regulate its own insurance is improper. and so it's my full intent not to pursue our bill because i believe it's myself after looking that it does not fit the constitutional requirement that we have. so that is one issue that i wanted to speak about today. the next is i'd like to talk about the bill we passed off of the floor today. that defunds our troops.

in the face of a government shutdown. i served in vietnam in 1971, 1972 and 1973. i was there at the choice of my government. was not a volunteer. drew a very low draft number. ended up going through flight training. was flying combat missions in vietnam at a time when our nation began to choke off the funds to the troops in combat. i can remember that the missions here in the u.s. were being choked and starved for fuel so that training could not be accomplished in the full -- in the full curriculum that was established before us. instead, we were having to divert money to fund troops overseas because there wasn't enough money going there. i have a real problem with us using our soldiers as pawns in this particular case. so i think -- i voted against the last -- the last continuing resolution. i was one of 54 republicans that voted no. but in this case this

continuing resolution said let's take the troops off the table, let's have this discussion about where we're going to fund and what we're going to fund but let's not leave soldiers in combat while we're discussing how much we're going to fund or not fund the government. that to me is the only thing that we should be doing. of all the people that we should not hold as political pawns, the troops who are facing very difficult circumstances in afghanistan, iraq and now libya should not be asked to put their lives at risk and face declining amounts of fuel, declining amounts of ammunition, body armor or whatever. and so the suggestion today, even though i voted against the last continuing resolution, i gladly voted for this one because i do think that our negotiations here should not include them, our troops, our soldiers in combat, young men and women who are there doing the same thing that i did in

1971, 1972 and 1973 and it's my belief that the comments from the other side, from the senate, from senator reid, who is the leader of the senate, that they're going to somehow dismiss this bill, that they're not going to consider it, and from the white house that he wouldn't sign it if it got to my desk, is reflective they have not been in harm's way themselves facing declining funding. if we don't want the troops there then get them out, but don't hold them hostage to this funding battle that we're having here on capitol hill. so i voted for the continuing resolution today that would remove the troops, remove our soldiers from this discussion. . i'm saddened to hear that they won't sign it and the senate doesn't care, if the government shuts down, those young and -- men and women, we

are going to leave them there without being able to pay their pay check and that's the wrong thing for us to do. one of the things that i heard from our friends across the aisle just now was that there are many corrections for the problems that face us. and i keep this chart handy to show the depth of the problems we face. this is basically the economic situation facing our country. we spend $3.5 trillion in the revenues to the government, that is the accumulated taxes that each one of us pay or $2.2 trillion. your household could not function like that, but there are greater war stories. each year we overspend, we are spending in excess of $1.3 trillion. each year that we do that, i just draw this where you show the deficit running over and runs into the debt barrel.

the accumulated debt is $15 trillion and if we could devote our revenues to pay off the debt in the debt barrel, it would take seven years to do that. beyond the debt barrel, we have debt running over and you see that green sludge that is running over and that is debt that we really owe, but we are afraid to admit to the american people. that's social security, medicare and medicaid. those three programs have an accumulated cost facing success of $202 trillion but don't include that in our debt calculations. if you look on any government web site and ask about the debt, it will acknowledge the $12 trillion but not the $202 trillion. if this was your family and you made $50,000 a year and you are believing if i could devote the

full $50,000 a year and not pay off the debt, you would have to re-organize what you are doing. that is the discussion we are having. should we or should we not take on significant reform of the government and shouldn't we have a forensic audit of our government to consider what things we should do and shouldn't do. we owe 100 years of total tax revenues to pay off one piece what we promised tells us we are in a nonsustainable capacity. the chart in the upper right hand of the poster here is the alarming piece. we all remember when ronald reagan was president. he came up with the idea a only one worldwide who described it. i remember at his funeral in the taped presentation by margaret thatcher said, ronny said he could collapse the soviet union's economy by escalating

their expenditures for defense weapons and get the cost of government so high that they could never pay it and would collapse. so they started to spend more than they brought in. the accumulated debt began to weigh down and they actually collapsed. the opponents of what we're doing, the opponents of reform say that it's us, as republicans, making up the charges. this chart says our economy is simply going to quit in 2038 exactly like the soviet union did. it's going to crash for the same purpose that we're spending far more than we are bringing in. we have an accumulated debt. we have an accumulated unrecognized or undiscussed debt that is 2 -- $202 trillion and our economy will cease to function. this is coming from the office of management and budget web site. this is the white house.

they are the ones saying that what we're doing is not sustainable. now friends on the other side of the aisle said we could do something to cure social security. that means we should pass along a tax increase to those people making above $106,000. it is interesting to hear that when our friends on the other side of the aisle had the house in their control, they had the senate in their control with a majority that would not allow filibuster. and they had the white house and they did not once bring up or pass a tax increase for social security. i find it amazing that it's so simple now that they're not in charge for them to talk about it, and yet when they were in charge, they couldn't talk about it. the reason we're facing the problems that we are today with this continuing resolution is that our friends across the aisle did not last year pass a budget and did not pass the

appropriating bills. and so they simply passed a continuing resolution and could not get that passed through the end of this year. it was within their power to not have this discussion at all on continuing resolution. all they had to do was fund the government through september 30, and everything would have been fine. we would have no course to change anything. it's because they passed the bill that would only fund the government through march through the early part of march, that we're in this situation. so i'm curious while they say the solutions are so easy, that they're so necessary that they didn't find it necessary to do it before december 31. as they are talking about the need to increase taxes, at the other side of their mouths, they stopped the tax increase that was going to be automatic for american citizens. so my feeling is that i'm

hearing discussions which are not sincere, which they had within their ability to change, but did not. the idea that we are making draconian cuts in our request, the republican request for this continuing resolution, you hear that word often. that they are draconian cuts. i always let people decide for themselves. the cuts we are talking about, we spend $3.5 trillion. the republicans have suggested cuts at a maximum of $61 billion. so what would that decrease $3.5 trillion to? i think it's important to assess that to decide if the cuts are draconian. our cuts, $61 billion, takes $3.5 trillion down to $3.44. and i always ask is that

draconian and i never heard one person in any town hall say that's draconian. they are alarmed that that's all that either party is willing or able to do about the accumulated debt, about a deficit that is $1.3 trillion, about the inflation that is now rushing our way and they're saying it is enough. stop it. do something about it. do a forensic audit of the entire government and defund those things that don't make sense, the things that are no longer effective, things that are duplicative. we have duplicative agencies across the spectrum of government. sometimes more than 100 agencies do the same thing. that's 100 different overheads doing the same thing. now if our government was a business, it would be broke. and the truth is that our government is broke and is going to be broke worse, and in fact,

we are all seeing the effects on our personal lives. you hear many times that those oil companies are driving up the price of gasoline to $4 now. it's the evil oil companies. i believe that it is exactly opposite. in order to fund the $1.3 trillion deficit that we don't have the revenues to produce, we find that our federal reserve is printing money. it is in the printing of money that you devalue the money that is in your pockets at the current moment. if we can create monopoly money, then it did he appreciates the value of what you have in your pocket. if only oil were going up in price, you could maybe make the argument that it's the evil oil companies, maybe you could say it's the instability in the middle east, maybe you could say whatever. when we see the price of

vegetables skyrocketing, when we see the price of gold skyrocketing, and the price of silver has gone up 30% in the last month, 30%, and you would have to say well, is there a greater demand for silver? is there some manufacturing program that is now using silver that didn't before, that is, did demand drive the price up? you say no. silver isn't being used today that it wasn't used a month ago. you have to acknowledge that the problem is not that companies are driving prices up, but instead, the value of the dollar is decreasing. that's because we have printed almost $2.6 trillion in money last year and created it out of thin air and did he appreciates the value -- deappreciates the value of money that you have and we see gas, food, oil,

skyrocketing, because money in your pocket is worth less. that is going to continue as long as we do this. another problem with the country's economy, when it spends more than it can bring in and when the accumulated debt is so high, our bankers begin to worry, the same as your bankers would worry if you were living this way personally. they would call you in and speak with you. our bankers for the united states government have been primarily china, japan and u.s. companies buying our treasury bills. that's the process by which we loan money to the u.s. government. but because of this accumulated position, the chinese have begun to say, wait, we aren't going to buy so much of your treasuries anymore. so they have begun to sell treasury bills rather than buy

them. the japanese have their own problems and they aren't willing to buy much debt from us. and this year, the largest single private buyer of u.s. treasury bills said no more. the risk is too debate, we will never get paid back. the system is not going to work. so this year, this year, right now, our federal reserve, which is an arm of the government which receives its money from the government is, in fact, lending money back to the government. so we're giving money to the federal reserve and turning around and loaning it us to with the other hand. you are creating value where there is no value and i think i might call your note. we're in the process of finding that the note is due. we see that the country has a course in front of it that simply discontinues our economy, that simply we fail the same way that the soviet union economy

failed. and we are having discussions on the floor of the house about cutting this from $3.5 trillion to $3.44 trillion. this $1.4 trillion and we are saying those cuts are draconian and we aren't even approaching the cuts that need to be made. in these programs alone, medicare and medicaid, we are told annually that the fraud, not the waste, but the fraud is about 20%. and yet we can't find it within ourselves here to address that problem. we are afraid of what the ads might look like on tv if we begin to take this on. i watched "60 minutes" and the fraud was discussed by a guy from florida, miami. he had been arrested for fraud. he was selling $400,000 worth of medical things to medicare patients every month. he didn't actually have any

inventory. he was just billing the government and they were paying him $400,000 a month. he had a store front and said those guys from medicare drive by to see if i have a store. i didn't have inventory and never opened and he said i made it into a little game. he said i charged the same woman every month for prosthetics to see -- i don't know if she needed any, one or none. he said i did it month after month. he said yeah, you are going to put me in jail. at $400,000 a month, i can stay there for a while. i still have my mailing list and going to rent my list to someone else while i'm in jail so i will make money in jail. the fraud continues. that's 20%. that approaches $90 billion for one program and $60 billion for the other and we are talking

about cutting a total of 61 up here. americans are fed up. they are afraid of the future and afraid of what they see being unleashed here and frightend we are printing so much money to make the scheme work and they are saying enough is enough. . i do not think we should do things which harm the most neediest in society but there are many programs where we can make the cuts and we should. the outcome if we don't is extreme. the outcome if we don't is the loss of the economic status of this nation, the soviet union broke into small pieces, small countries. you're seeing states right now nervous and anxious about the future of the federal government

, they're beginning to say, we're going to take that function on ourself. we're not going to trust that the federal government can fix this. they themselves are in terrible shape. the biggest shame of all in this is that in a time when we're struggling to balance our budget, to just make ends meet for our nation, the government is conducting the greatest war on our jobs. the government is raising taxes high enough to push companies out of this country. president obama said in his state of the union message that we must address the fact that we're overtaxing corporations. he said we're one of the two highest in the nation and since then japan has decreased so we're left alone in that. we are overregulated, we're regulating companies out of existence. every time we kill a job through

regulation, i would point to the timber industry which has been killed by regulation, i would point to the jobs offshore where that rig had its problems this year off the coast of louisiana. i think that b.p. should be accountable and they are paying the bill for what happened. but we should not have killed those jobs because every job we kill lowers the $2.2 trillion tanned puts people on welfare, unemployment and the $3.5 trillion increases. we cannot cut enough spending to get $3.5 trillion to $2.2 trillion. we instead must go and recreate the jobs that our government has systemically killed and rebuild our economy, we build the manufacturing base so that when we put people to work they begin to pay taxes and we begin to not have their cost in government. in that case, we're growing the economic base, we're growing the revenues of the government, simultaneously we're cutting the cost of the government. the only thing that makes sense

for us in rescuing our economy is for us to grow the job base and at a time when we are alarmed at what we're seeing economically, then we find the government most hostile to new jobs. just recently, within the last week, we've been in discussions with the fish and wildlife service who out of the blue decided to list a lizard as endangered in our state. they cannot declare that it has different d.n.a. from the lizards that are not being put on the list, in other words it's just a variety of a lizard, not all lizards. and they can't show a d.n.a. difference. so over some small minute difference they're going to possibly shut down all of the oil and gas wells in southern new mexico. that means more people on welfare, more people on unemployment, it means fewer people paying taxes. up in the northwest part of the

state, the e.p.a. recently put out a ruling that would cause three of the five generators in one generating station to shut down, so at a time when we're facing rising utility costs, we're facing blackouts, we're going to put three generators offline. since they're doing that they're going to require less coal and now then 200 coal miners who live on the navajo indian reservation making $60,000 a year are going to no longer be working and paying taxes, they're going to be drawing unemployment and be on medicaid and be on welfare, food stamps. one would say that our government will not and cannot kill industries and yet they kill the entire timber industry, new mexico used to have 20,000 jobs in timber and today it has none. because it was spotted out, a regulation that could have been differently but instead was used to stop all the logging in every forest in new mexico.

we believe that's wrong. we believe that we can keep the species from being -- going extinct and create the logging jobs again. so we've submitted a bill that would do that. i would draw our attention also to the fact that 27,000 farmers in the san joaquin valley in california were put out of work because of a two-inch minnow that coup have been kept alive in holding ponds and put over in the river but an extreme decision said that it's either the jobs or the minnow and they chose the minnow. we're putting our economic system at risk by systemly killing -- systemically killing industries and jobs in this country and that's the reason why you have the frustration that's expressing itself in tea parties across the nation, taking to the streets and saying, our government is too strong, it's too powerful, it's time for us to live within the restraints of the constitution. so as i wrap up my time here tonight, we again talk about the need for the constitution to

limit the government, to limit the government's ability to come in and affect your streams and your life -- freedoms and your life. this country has been in the past the destination for anyone who wanted freedom to build their dreams here. they could come and do it. we're beginning to choke off the ability for even our own citizens to find their dreams and make them come true here. we're doing it one business, one industry at a time through taxation, through regulation, but more we're doing it through the unstable currency that we're creating through the printing of money. it is time for us to get our fiscal house in order, it is time for us to recognize that the future of that risk, according to the o.m.b. and the c.b.o. both, if we don't act now then we will not have an economic future any stronger than the soviet union. so it's my hope that we will begin to act as americans today, not as republicans or democrats,

to look at the challenges that we face, to take them on and to address them in ways that the american people say, yes, that is an appropriate action, that is a correct action. it's my sincere belief that our best days are ahead of us because i believe the american people are going to insist that we take care of the economic mess that we, that we in congress have created over the last 70 years and 80 years. we began to make promises that we can't keep with money that we don't have. we must correct it and i would yield back the balance of my time. the speaker pro tempore: thank you. the gentleman yields back the balance of his time. under the speaker's announced policy of january 5, 2011, the chair recognizes the gentleman from illinois, mr. jackson, for 30 minutes. mr. jackson: thank you, mr. speaker. mr. speaker, last week i came to the floor of the house to talk about the history of law and human rights and i suggested that that history is a work in progress. i believe that the law is going is somewhere from the earliest

civilizations with their eye for an eye systems of justice through today when countries like ours lead the way toward more freedom and more human rights for all. we began this congress with the reading here on the floor of a redacted version of the constitution, not the constitution with amendments. but that redacted version leaves out the historical struggle to create today's constitution, a more thoughtful and a more inclusive document. mr. speaker, america is one big corporation. the constitution is the bylaws. we the people, the board of directers, have the right to change our bylaws in the constitution and redirect the american corporation towards our priorities. the american constitution is a benchmark in that living history. we've amended it from time to time to make sure we're closer to achieving a more perfect union for all americans. i believe we should continue that progress and amend the constitution in several ways. including giving all americans

the right to a high quality education, high quality health care and a clean environment. i think we need to guarantee equal rights for women. if in fact the congress had adopted the equal rights amendment for women many decades ago, to date 51% of all jobs and 51% of all households that are headed by a woman where there is no man would provide greater stability for the work that they already do. but tonight, mr. speaker, i want to put my beliefs about why the constitution should be amended and to further historical context. this week's "time" magazine makes my point in ways that i cannot muster tonight on the house floor. it has a picture of our 16th president, abraham lincoln, crying and it says, why we're still fighting the civil war. and no american who is watching this debate on the floor of the congress between democrats and republicans should be operating under any illusion that we are

simply not on a battlefield, we're simply in the halls of the congress. but we are waging one hell of a fight to build a more perfect union versus building more perfect states' rights. i wrote about these issues extensively, mr. speaker, in 2001, very extensively in my book, "a more perfect union: advancing new american rights." in fact, my book's launch party was scheduled for the big borders world trade center on september 11, 2001. and fortunately we had a scheduling conflict and couldn't make it. so i want to talk tonight, mr. speaker, about the central conflict of american history. the debate's over the role of the federal government between those that who believe in states' rights above all and those of white house have a more national perspective and belief in creating a more perfect union. i think that's a more appropriate analogy for

definding -- defining how the congress is divided, not democrats and republicans, for some democrats will vote for the continuing resolution offered by the republicans, supporting more and more cuts. it's really hard to tell where people stand. but in washington either we are building a more perfect union for all of the american people or we're building a more perfect states' rights. so, mr. speaker, i want to share a few quotes that i think helped frame the debate. governor morris, a pennsylvania delegate to the philadelphia convention said, i cannot conceive of a government in which there can exist two extremes. two supremes. in 1787 governor morris was concerned that a dual system of state and federal control might not work very well. in his book, peter appleobama writes, quote, think of a place that's bitterly anti-government and fiercely individualalistic where race is a subtext to daily life and god and guns runs through public discourse like an electric current. think of a place where influential scholars market

theories of white supremacy, where the word liberal is a negative epithet, where hang them high law and order justice centered on the death penalty and throw away the key sentencing are all but politically unstoppable. think of a place obsessed with states' rights as if it were the 1850's all over again and the civil war had never been fought. such character systems -- characteristics have always scriced -- described the south, he writes. somehow they now describe the nation. and finally, mr. speaker, it's important to note a headline from june 24, 1999, from the washington post that red, quote, in three cases high court shifts power to the states. of course in over a decade since then we've seen case after case at the supreme court, bill after bill in this house, that have furthered that trend. this afternoon i want to talk about the center of conservatism. the center of the constitution.

the legal basis by which republicans and some democrats stake out their antifederal government agenda. mr. speaker, there are two central issues that have dominated this country from its beginning. the first is the relationship between the federal government and the states, that question has been with us since the writing of our constitution in philadelphia in 1787, through the supreme court's first major decision in 1793, chisholm vs. georgia, during the antebellum period of 1800's through the 1860's, through the civil war and post bell umfirst and second reconstruction periods and it remains active and very much a part of our discourse today. the second issue that has plagued the u.s. is race. it is a central dilemma in our nation's history and it's haunted us since 1619. when the first african slaves arrived on our shores before the declaration of independence, before the constitution, before the bill of rights through to

the current period of second reconstruction. throughout history the question of how to properly balance the national and state governments have confronted america. are we 50 nation states that voluntarily participate in a national federation but can ignore or withdraw from the federation at any time? like when 11 states succeeded from the union? or when 22 states filed a lawsuit against health care reform bill that passed congress this year and the president signed it. . are we one nation that is indivisible with liberty and justice for all. these were perplexing questions for our founders and three-quarters of a century and still trouble us today. it was the civil war that converted us from a federation of states to a union. the current common belief is that we are the latter. in practice, too often, we try

to operate like the former. clearly the ideology and legacy of state rights lingers and continues to disrupts and interferes with our ability to build a more perfect union. for some, not building a more perfect union appears to be the goal, downsizing the role of government or devolution of ideology that newt gingrich brought on in a forceful way following the 1994 republican conquest of the house. it is a goal of achieving it. not building a more perfect union is clearly the goal of the 112th congress. under the guise of the budget, spending cuts, today's republican majority with the help of some democrats is trying to push through bills that would drastically shrink and change the size and scope of the federal government. we are on the verge of a government shutdown and many

republicans have cheered about the possibility of a government shutdown with loud applause. mr. speaker, i believe that it will be impossible to build a more perfect union until the ideology of states' rights are defeated as well as in the marts and minds of the american people. it is part of the belief system of too many american citizens. by issues full employment, health care, housing, public education and justice, it guarantees economic injustice for workers and consumers and ensures inadequate health care, sheltered learning and justice for all americans. soon, millions will wake up with a shut downed federal government. their faith in their elected representatives to solve the issues of their lives will be shaken and america's confidence

in the freedom system will be diminished. the 50 states acting in loose cooperation or volunteer association simply cannot and will not adequately address policies administratively or financially these basic national needs. only if if these questions are addressed in a democratic, centralized and coordinated way can we even hope to build a better nation. there is no simple answer to this balance of power issue. the question of the relationship of the states of the federal government is an ongoing one. times and circumstances change. and if the government is to be relevant, responsive and accountable to the american peoples' real needs, the relationship roles and balance of power between the federal and state governments must adapt and adjust. the balance of power is not something new and cannot be settled by the opinion of any one generation wrote woodrow

wilson in 1911. he continued, changes in the social condition of society and issues needing to be addressed by government and in the prevailing political values require each generation to treat federal-state relationships as a new question subject to full and searching reprisal. it should not be used as an excuse to pursue an anti-government philosophy of states' rights. the principle must remain true to build a more perfect union, not more perfect states' rights. the idea of state rights in the american colon niss preceded the constitution and the united states and ressed on the idea of state sovreignty and that power and authority resided in the states individually. states' rights became the means

by which state governments defended slavery and perpetrated that institution with its political and social arrangements. there is a difference between sovereign state rights and the states' rights ideology. some matters do belong in the purview of the state. states' rights, however, come from a very different spirit and appeal, one that has historically defended injustice within the states. during the colonial period, citizens strongly identified and were loyal to their individual colonies or states. early frictions prevented them from working together to fight against the french and others. their hatred of british domination joined them in the continental congress in 1776 to fight. even then, the hostilities among the states continued, postponing

the adoption of the articles of confederation until 1781. internal mistrust and external colonial made most suspicious. indeed, when they true up the articles of confederation in 1776 and ratified them in 1781, they made central authority so weak as to be unworkable for the idea of union. the founding fathers, women people of color were not included, tried to correct this flaw in philadelphia in 1787. mixed feelings and politics surrounding centralized or federal and decentralized state power led them to create a constitution with divided powers both within legislative, executive and judicial branches and without between federal and state governments that were deliberately ambiguous.

it was a central issue of debate during the constitutional ratification process as well. the new congress, quickly proposed 10 amendments that secured these rights including the 10th amendment, which delegated to the states those powers not authorized or prohibited by the federal government. the 10th amendment, powers not delegated to the united states by the constitution nor prohibited by it to the states are reserved to the states respectively or to the people. this has come to mean that if the constitution specifically speaks to a right, than it is federally protected. but if the constitution is silent on a particular issue like slavery, it was reserved to the states respectively. only adding an amendment to the constitution of the united states overcame the limitations of the 10th amendment to guarantee freedom to the slaves.

however, if slavery, mr. speaker, at this time was a state right, then state rights can never be human rights in the american political context. therefore, if succeeding generation of americans believe in human rights, they must fight to overcome the limitations of this old amendment and the very slave system that it protected in order to provide progress. if you believe in gay marriage, you must overcome the limitation of 10th amendment and not state by state, but fighting for your human rights in the context of the constitution. if you believe in education for all since the constitution of the united states is silent on the question of education, you must overcome the limitation of the 10th amendment to guarantee a high quality education for all americans. if you believe in health care for all americans, you must

overcome the limitations of the 10th amendment, this old slave amendment and guarantee the right to health care for all americans in the constitution, because the issues of slavery taught us if slavery is a state right and virginia all around to texas, then state rights can never be human rights. the questions, mr. speaker, were many and it should logically follow exactly what this congress is doing. if the constitution is silent on health care, cut it. if it's silent on medicare, medicaid, liheap, unemployment, housing, n.i.h. funding, cut it. the republican majority has placed it on the chopping block because they argue it is outside the scope of federal jurisdiction. mr. speaker, what we have learned from this process and what we bring to the table is

that human rights must be advanced by this congress in order to broaden the definition of what it means to be an american. mr. speaker, tonight i'm joined by the distinguished the gentleman from louisiana. i welcome my colleague from new orleans, whose state is in financial condition, has experienced financial disasters and can't rely on his state legislature to solve these problems. he needsal strong federal government to find some of the profound gaps that exist in his congressional district just as i need a strong federal government to close gaps that exist in my congressional district. but it is virtually impossible, mr. speaker, to close those gaps unless this congress recognizes that we have an obligation to the american people to those who

have been left behind. while slavery was clearly the cause of the civil war, the nonslavery rationale for the war and argument that won broad support in the south and almost won international recognition was madison's and jefferson's interpretation of states' rights. that's why the tea party says the federal government should be out of business and turn it over to the states, with some practical examples of the limitations what we are confronting, i'm produced to introduce to some and i'm glad he is joining me, distinguished the gentleman from from louisiana, mr. richmond. mr. richmond: thank you for yielding and allowing me to participate in this conversation and thank you, mr. speaker, for allowing us this opportunity to talk. congressman jackson, you well know and it starts back in the second congressional district of louisiana when we start talking

about the true and historical fight of states' rights versus the common good or what we can call a more perfect union, because had you left it to states' rights and the will of governors and the legislatures of those southern states, then rubey bridges wouldn't have had federal marshals to escort her to school so she could have a the same education as everyone else. when we talk about states' rights and the federal government and the fact that we are talking about a more perfect union, we are talking about a constitution, we are talking about a court system that should guarantee every child the same opportunity, whether it's louisiana, whether you're in lake providence, louisiana, whether you are in boston, massachusetts. you should have the same access and same rights. what we are talking about is a

federal government that insists and ensures that everyone is treated equally under the law. now, the interesting thing when you talk about and you allude to states' rights, congressman jackson, people talk about states' rights when it's convenient. and i come from a state in which they're talking about states' rights right now. it should be there right to offer health care as they see fit. it should be our job to cut all of the things that are essential. however, i remember those days after katrina when we were not saying states' rights. we were saying where is the coast guard? we were saying our levees have collapsed and need the corps of engineers' help to rebuild them. and took this congress and your vote to put $14 billion into the corps of engineers' budget so

they can build the proper infrastructure around the city to protect the citizens there. why did they do it? it was the right thing to do. so you can't have it both ways when you talk about states' rights and talk about the role of the federal government and now when times are difficult, we go back to the states' rights argument so that we can cut those things that the least of us need. mr. jackson: would the gentleman yield. how can the federal government or how can the states address unemployment individually? how can 50 states, one state at a time address education? how can 50 states one state at a time address health care without some centralizing unifying coordination from the federal government? mr. richmond: they can't do it. and when you take health care as a whole. when you start talking about the united states of america and

health care for all, the united states for america and education for all, united states of america and employment for all, you're talking about things that affect interstate commerce now. now you are talking about things that fute affect the future and well-being of the whole which directly puts it back in the powers of the federal government because it affects the federal government, so you can't isolate it. that's what some would attempt to do now and i don't think it is possible to do now. history dictates that you can't do it. what you will end up with is a system of unequal treatment to people based on arbitrary factors, where they live and what they look like and all of those things. congressman jackson, i would just say that i think you are right on the mark when you are talking about the role that the federal government should play. and you raised just a couple of

months ago that it's the federal government's role to dictate how we treat the unemployed. now, we very well can't leave that up to states' rights, because a lot of times --. . mr. jackson: there ought to be some national interest in making sure that 13 million americans have a job, that they're working, that they're paying taxes, that they can help reduce the deficit and the debt. i hear from neither side anyone come to this floor saying that we're putting forward an agenda to wipe out unemployment. i thank the gentleman for yielding. mr. richmond: congressman jackson, my question to you was going to be, have you seen a state react yet? have you seen a state step up with their own jobs plan? or have you seen a state address the inequality in the treatment of the unemployed so far? mr. jackson: i have not seen it in any coordinated way and as if

to suggest that somehow illinois, just because of an invisible border between illinois and indiana, that indiana's economy doesn't affect the illinois economy or the wisconsin economy doesn't affect the illinois economy or the iowa economy, another border state, doesn't affect the illinois economy, what i have seen is i've seen governors now embattled offering incentives to corporations not to leave their states and cross state lines because we are not growing the economy evenly in all states together. the absence of federal coordination creates a disaster amongst the states and we become less of a union as states begin to offer incentives in a rush to the bottom, to undermine workers, to undermine the quality of life for americans by changing laws within states to undermine the quality of benefits that workers receive who even work within states. this is part of the ongoing revolution that's been led over the last five or 10 years by the

right wing, both in the democratic party and in the republican party, against the idea of the central government. my question to you, how can we be a government of, for and by the people and then be so upset at it when it's our government? it is us. mr. richmond: well, it depends. and what we see in this climate right now you is see the anger out there of a generation of people and a large population of people who are upset at the way government is working. not particularly one thing that they can point to which is now the great conversation which is the debt and the deficit. and one way which is the way that's being pursued today is to just cut. let's cut everything that's unpopular, let's cut those things that go to the common good, those things that promote unity, those things that will help people lift themselves up, those things that will create opportunity for people. we always said in this country that education was the best way to lift yourself out of poverty.

well, what we're doing here in this congress right now, we're cutting pell grants. we're cutting early childhood education and you can't do those things and then leave it up to the states because you so adequately addressed a few minutes ago that it's a competition between the states. i had the privilege to go with my governor before over to germany to visit, to offer them incentives so they would come to louisiana as opposed to going to alabama. well, we need a referee when things like that are going on. we need somebody who can coordinate and say, some competition between the states are good, but it's our role to make sure that all americans are treated fairly and everybody has the opportunity to succeed. mr. jackson: i thank the gentleman for yielding. i think the lesson particularly from african-american history which i think is appropriate, we don't talk about it up here enough, i'm not ashamed or afraid to come and talk about it, when african-americans were fighting for slavery -- fighting against slavery and fighting

from 1619 to 1865, a passage of the 13th amendment, the legal argument that was used to justify, to justify why slavery needed to continue was the 10th amendment. states' rights. virginia said, you don't have a right, federal government, to come here and tell us what to do. georgia, you don't have a right, federal government, to come here and free splaves. you don't have a right, federal government, to come into alabama and tell us what to do. you don't have a right, north carolina, united states, to come to north carolina and tell us what to do. and here we are in 2011 with an element of the congress of the united states and a tea party outside of the congress of the united states telling us, federal government, you don't have a right to come into our state and give somebody health care. you don't have a right to come into our state and end the foreclosure crisis. you don't have a right to come into our state and provide a higher quality of life for all americans. oh, yeah, but do you have a right to give some people a tax break with, you do have a right

to help these corporations, you do have a right to bail out wall street, but you don't have a rial right to bail out the individual. and so i think, mr. richmond, that we have a unique perspective around the 10th amendment that we need to bring to this debate. i'm hoping the african-american, the black caucus, joins us in that conversation, but let me ask you, mr. richmond, in louisiana, if offered an opportunity by this government to receive more resources to fix schools, to fix levees, to build infrastructure, would your state send the money back? mr. richmond: absolutely not. my state not only would they take it, if there's a new report out by conservative group that shows that louisiana receives more aid than every other state except one and for the first time our state budget has more federal dollars in it than state dollars. so i want to be clear about what you hear about states' rights. and this is not just in louisiana. right now 27 states have more federal money in their budgets than they do their own state dollars.

so they're not turning down state assistance when it comes to providing those things. and i just want to tell you that it's so convenient and the 10th amendment couldn't address everything. and the constitution could not address everything at the time and we can't pretend that it did. what we have the responsibility to do as people in this congress is to make sure that we apply commonsense to what the -- common sense to what the founders were doing. you will see no mention of the internet in the constitution. that's our role to now deal with it. so now that we talk about a complex program to give every american the basic right to health care, you are not going to see that in the constitution. but what you see in the constitution and what the overriding theme is a more perfect union and this government has the responsibility to do that. so when we start talking about energy assistance to our seniors who can't afford it, you would

not see those things in the constitution, but when you apply common sense which is what we were elected to do then you apply common sense to a living, breathing document, it would follow that we have not only the right but we have the responsibility and the obligation to do those things for the states. mr. jackson: mr. richmond, i understand that our time is just about to expire but our men and women who are fighting in afghanistan and iraq, they're fighting to defend that flag, they're fighting to build a more perfect union. it's shameful that members of this congress aren't fighting for that flag, aren't fighting for a more perfect union, aren't fighting to expand opportunities for our men and women when they return from afghanistan and iraq. nothing more tragic in this current hour, mr. speaker, than the idea that our men and women could come home to unemployment, to come home without health care, to come home to homes that are in foreclosure. mr. speaker, the 112th congress needs to do something about that. i thank the gentleman from louisiana for participating in this colloquy and in this special order and, mr. speaker,

we yield back the balance of our time. the speaker pro tempore: thank you. the gentleman yields back. does the gentleman have a motion? mr. jackson: mr. speaker, i move now that the house do adjourn for the evening. the speaker pro tempore: the sque on the motion to adjourn. those in favor say aye. those opposed, no. the ayes have. it the motion is adopted. accordingly the house stands adjourned until 10:00 a.m. tomorrow for morning

all of the house live your on c- span. this is the latest in the ongoing debate. c-span has been following all of this from the start. you can watch budget hearings, including the mark above the 2012 budget, budget briefings and read the latest proposals and analysis. you will find links to our facebook and twitter pages for more comment on the budget debate at c-span.org. >> as we mentioned, the house passed a one week spending extension. just before the debate started, republican and democratic leaders came to the floor to discuss the agenda. demerits of the republican plan were debated at verses what congressman hoyer call a clean bill, one that does not have the policy writer contained in the republicans' bill. this is about 10 minutes.

mr. cantor: i ask unanimous consent to speak out of order for one minute to inform members of a change in the upcoming legislative schedule. the speaker pro tempore: without objection, the gentleman is recognized. mr. cantor: i'd like to inform my colleagues that the house will meet at 10:00 a.m. for morning hour and 12:00 p.m. for legislative business tomorrow. as the members know, this is a change from the original calendar. due to ongoing negotiations, mr. speaker, surrounding continued appropriations for the remainder of fiscal year 2011, i believe it is both appropriate and necessary for the house to be in session tomorrow. i expect legislative business to include but may not be limited to h.j.res. 37 a resolution of disapproval regarding the f.c.c.'s recent internet and broadband industry regulation ruling. votes are possible at any time ter noon tomorrow. at this time, it is too early to tell whether the house will need to be in session this weekend.

in the case of lapse in appropriations, i fully expect the house to meet. mr. speaker, we will not leave town until we fulfilled our obligation to cut spending to begin getting our fiscal house in order -- mr. cantor: mr. speaker, we are -- the speaker pro tempore: the house will come to order. mr. cantor: mr. speaker, we are committed to getting our fiscal -- the spker pro tempore: the gentleman will suspend. the house will come to order. mr. cantor: mr. speaker, we are committed to getting our fiscal house in order and keep the government functioning. therefore members should keep

their schedules for this weekend as flexible as possible and i yield back. the speaker pro tempore: i thank the majority -- m hoyer: i thank the majority leader for yielding, i share his sue we ought to keep the government running fonot only the sake of our economy but for the sake of all those that rely on the federal government. my friend has made the observation in the past that shutting down the government and i believe the speaker made the same observation, was not a national policy for us to pursue. i ask the gentleman because i believe that the resolution that we will be considering will not either pass the senate nor be signed by the president. in light of that, and in light of the fact that the majority leader of the senate and the speaker have both indicated that negotiations are ongoing, woul the gentleman agree to a unanimous consent that we, as

we have done so often in the past, when the majority democrats were in control of the house and the senate, disagreed with president bush, that we would have a hold in place unanimous consent continuing resolution, not changing the status on either side of the negotiations, for seven days, which would give the parties the opportunity to come to an agreement? my understanding from the leader of the senate is that we have agreed to some $70 billion in cuts which is a substantial way toward what you wanted and a show that we share the view that we need to have fiscal restraint. so i ask my friend if i made a unanimous consent request that we continue the government

authority to stay running until next friday without changing the status quo so that neither party would be disadvantaged and that our government would in fact, as the gentleman observes is his objective, be able to stay in service to the american people. mr. cantor: mr. speaker, first of all i'd rpond to the gentleman to say there's no indication in any definite way that the senate would not take up and pass the piece of legislation that we would bring up today. as a response to the second part of his inquiry, regarding our going along with the unanimous consent, i would say to the gentleman, no, we don't accept the status quo.

mr. hoyer: will the gentleman yield. mr. cantor: mr. speaker, america is broke. that is why we are trying to address the need -- that is w we are trying to address the need to get our -- mr. speaker, the house is not in order. the speaker pro tempore: the gentleman is correct. the house is not in order. mr. cantor: that's why we're trying to address our fiscal crisis and to get the debt under control. mr. hoyer: mr. speaker, will the gentleman yield. mr. captor: i yield. mr. hoyer: the white house -- i want to inform the gentleman the white house has just issued an intent to veto the resolution you are offering. i tell my friend that if in fact the gentleman wants to keep the government running

while negotiations proceed, we have already agreed to a substantial billions of dollars in reductions in spending for 2011. we did so and we've agreed on that. as the gentleman knows, i have voted for both of the previous resolutions. i believe that beth of those could pass and in fact i was correct they did pass. i tell my friend, this resolution in my view will not -- that both of those could pass and i was correct and ty did pass. i tell my friend this resolution in my view will not pass. however, we are having discussions. we never shut down the government when we had the majority and president bush was in power and the reason -- and i tell my friend the reason we did not shut it down is because -- the speaker pro tempore: the

house will come to order, the gentleman will suspend. mr. hoyer: we agreed with the premise you have stated and the premise the speaker has stated that shutting down the government was not a process that was useful for our economy, for jobs, for our people, or for the services th are expected of us. what is useful is for us to rationally provide a cntext in which negotiations which quite obviously have not yet been completed are completed. now, you've heard me talk about the perfectionist caucus. you can't get it all your way, we can't get it all our way, but in fact, the american public overwhelmingly elected president obama for a four-year term. he's in office. mr. gingrich said that we were ignoring the 2010 election results. we observe that the 2008 election results were regularly

ignored by your side of the aisle the last two years. what i am saying to my friend, there is a rational way for us to proceed and very frankly, when we were in your shoes, we did so. when we couldn't reach agreement with president bush. the speaker pro tempore: the house will be come to order. mr. hoyer: the tea party on your side, as is so often the case -- mr. cantor: mr. speaker, mr. speaker -- reclaiming my time. mr. speaker, reclaiming my time. the speaker pro tempore: the gentleman reclaims his time. mr. cantor: mr. speaker, i would say let us look at why we are

mr. speake the house is not in order. the speaker pro tempore: the house will come to order. the gentleman will suspend. the house will come to order. mr. hoyer: we have lite doubt on our side of the aisle why we are where we are today. mr. cantor: reclaiming my time. the speaker pro tempore: the house will come to order. the gentleman from virginia is recognized. mr. cantor: i say, mr. speaker, we are trying to do the business of the american people. we do not want to shut the government down. we don't accept the status quo. we don't want to bankrupt this nation. we believe there's a fiscal crisis demanding urgent action,

>> the short-term measure on speaker government through friday. if funds the department of defense through the end of the fiscal year. speaker john boehner and majority leader harry reid are set to meet at the white house this evening. the communications director for senator harry reid said the meeting will now be 8:00 p.m. we will keep you posted. house and senate leadership continue their discussions to fund the government through the end of the year. see what your elected officials say at c-span.org/congress. >> the c-span network. it provides coverage of

congress, public affairs, nonfiction books. i our content any time through c-span's video library. -- bind our content anytime 3 c- content- find our anytime 2 c-span's video library. created by cable and provided as a public service. >> with the potential of a government shut down by the end of the week, it is said that the deadline will remain for paying taxes. the irs commissioner spoke wednesday at the press club.

>> to donate to programs, you can see more information act www.press.org/library. our table includes debts of the speaker and working journalists . members of the public are attending as well. i would also like to welcome our

c-span and public radio audiences. our lunches are featured on our weekly podcasts available for free download on itunes. after our guests speeches concludes, we will have time for questions. i will ask each of you here to stand up briefly as your name is announced. the president of the wharton club of washington. the editorial director of kiplinger.-- sean, the washington bureau chief. i will skip over the podium for just a moment.

the chair of the speaker's committee. the press secretary for the natural resources defense council and the speaker who organized today's events. the tax policy team leader with bloomberg news. the senior personal finance correspondence with thomson reuters. the director of the eurasian business china program. you can now give your applause. [applause] as talk of what the the congress and the administration can reach an agreement on how to spend the taxpayer's money, our guests are in charge of collecting those dollars in the first place. in his third year of his term, he is the 47 irs commissioner

responsible for collecting $2.40 trillion in tax revenue. with a budget of $12 billion, he has snared in federal resources at his disposal as heat -- he has significant federal resources at his disposal. with belt-tightening and budget crunching already felt in many american households now headed to the capital, even the irs budget is facing cuts. one week ago, our guest speaker told the house ways and means committee that a cut to the irs budget would lead to a collection of $4 billion less in taxes and could lead to lower compliance in the long term. how a potential government shutdown will affect tax filing, tax returns and refund

checks remains to be seen. we will get into that. he tells congress there has never been a shutdown in the middle of the tax filing season before. this is a new challenge. the government accountability office says the irs process 17 million tax returns. the percentage of returns electronically filed is 89%, up from 86% last year. douglas came to the ira's from the financial industry regulatory authority. that is the -- came to the irs from the financial industry regulatory authority. earlier in his career, he was involved with several startup organizations. he holds a bachelor's degree from williams college, a

master's in public affairs from harvard, a georgetown law degree. as an aside, the commissioner was my guest at last year's white house correspondents' dinner. it was a pleasure to visit with him in a more congenial setting. it was a pleasure to see the reaction among celebrities when you introduce the irs commissioner to them. queen latifah literally scowled to him. celebrity chef rachel re said, i will cook for you any time -- rachel ray said, i will cook for you any time. please give him a warm welcome. [applause] >> i had forgotten about queen latifah.

thank you for inviting me back to the national press club. a few weeks back, i actually celebrated my anniversary of my third year as being the irs commissioner. milestones like that are a good time to reflect and think about what you have gotten done, what you accomplished, what you learned, and what lies ahead. i will tell you, it has certainly been an interesting journey so far. some things i expected, others that i did not expect. one of the most pleasant surprises -- yes, there are pleasant surprises when you are the irs commissioner. one of the surprises was that this large organization is so responsive, so agile and so nimble. the irs literally turned on a

dime multiple times during the worst recession in our generation. when we were called on to help millions of distressed americans get money, send out money, make it through some tough economic times, we sent out hundreds of billions of dollars on short notice to help jump-start the economy. we played a major part in the economy, which i and my team are quite proud of. we have accomplished a bunch of other things. we improved service to taxpayers. we have an updated technology on the web. we have cracked down on offshore tax abuse. we have launched a major initiative with the return preparer community to make sure we boost compliance and service to the american taxpayer.

i certainly learned a great deal. that is a process that is never going to stop in this position. i learned about the inner workings of the tax system and what we expect the taxpayers and what taxpayers expect of us. this actually strikes me as a good moment to open the aperture wide and reflect what the tax system could look like in the future. i want to take us out to the horizon of the system. let me quote the microsoft co- founder. he once observed, i tried to anticipate what is coming over the horizon, to hasten its arrival and to apply it to people's lives in meaningful ways. that is what i would like to do today, to look at the horizon and see how we can make a meaningful difference in our tax

system and in taxpayer lives and to begin a dialogue with our staff, with the practitioner community, and other people affected in parts of the tax system about how we can secure a lasting change. ever since i have been commissioner, one of my priorities and one of my coure leadership principles is about continuous improvement. i believe if institutions are standing still and accept the status quo are actually falling behind. the world around us is always moving forward and movie " a lot quicker than in the past. -- and moving forward a lot quicker than it has in the past. when you talk about the future and a vision of the future, it does not mean you have to be futuristic like a science fiction novel.

we can challenge ourselves individually and collectively to see how far we can go and how far we can push the system to make an impact on taxpayers. president kennedy once said -- i like this quote -- he said i am an idealist without illusions. what i want to posit today is that for the irs to move forward smoothly is what has been woven into the dna of the tax system since its inception in 1862. that is looking back as a core business model. a significant percentage of our business resources are devoted to helping taxpayers understand the law and providing taxpayer services. the compliance side of the irs'

operations is predicated on looking back. the taxpayer prepares her return, files it with us, we process it and issue a refund when the taxpayer is owed one or deposit the money if they have a balanced do with us. for most taxpayers, it ends there. sophisticated risk models help the irs staff identify returns that are most likely to show compliance problems. although i sometimes hear people talk about the audit lotteries, the process is far from random. the irs uses cumulative knowledge and data. that it gathers over many years to model and target activities that have the highest

probability of tax avoidance. once we identify a taxpayer where that probability might occur, we follow up with the taxpayer to better understand the issue, to request documentation and to determine whether it be returned is accurate. the look back, which i will also tell you is the model of most major tax systems in the world that have developed economies, has some flaws. the biggest deficiency is that it does not deal with taxpayer problems up front. an irs audit often occurs years after the be turned is piled. -- is filed. by law, we have three years to audit and individual tax return. we have more time if there is a 20 5% omission of income or fraud is involved -- if there is

a 25% omission of income or if fraud is involved. this after the fact compliant approach can create problems and it can create frustration for the taxpayer and for us at the irs. it can be a real dilemma for taxpayers who may no longer have the money that was refunded to them. but as it turned out, they were not entitled to that refund. there is also possible sticker shock. interest and penalties can accrue by the time it takes us to get to them. it may have been accruing for up to three years. taxpayers often ask, why didn't you notify me sooner? this hurts the image of the irs and contributes to the gotcha perception of the tax business.

it is much easier and cheaper to resolve problems up front and not let them faster. i spent time with my employees and my senior staff. when we identify a problem, human nature is to put it off. but we try to address it right away. festering problems to not become better over time. that is why consumers get a call from a credit card company. the minute you miss a payment, you get a call. nobody loves those calls, but at least you cannot get into debt over multiple years. i think taxpayers can rightly wonder with us, why can they receive the same kind the response from the irs and not get stuck down the road with interest and penalties? i spent a lot of time thinking about this and thinking about the concept that our tax system is run after the fact and could we move it up? we have been accelerating our program to flag issues up

front and to avoid the look back problem altogether. we have increased our compliance activities that happened up front before we finish processing a return. most of that increase in push has been around our unit that analyzes tax returns that claimed a substantial tax refund. our system sifts through millions of returns and billions of data points to attend by questionable returns and to flag those that could be fraudulent. increasingly, we are also consulting other databases spot inconsistencies on a return. we actually block billions of dollars of returns that could be going out the door fraudulently and verify the accuracy of those returns.

in some cases, the taxpayer simply forgot to attach the required documentation. in that instance, once sufficient information is given to us, we release the return and get the refund out to them. in other cases, the claims are fraudulent, part of an organized ring of tax cheats, sometimes run out of prisons. our success rate in finding and blocking these schemes is high and getting better as we improve our capabilities to stay ahead of schemes. as we think about the future and ways we can more aggressively moved to resolve issues up front at the time of filing, a number of complicated issues arise. many of them involve information returns. you probably know these

information returns by their form numbers. the most ubiquitous r&d w2 and e 099. the w2 and th this filing season, we will receive about 2 billion information returns. think about a typical taxpayer who works in an office or a store and owns his or her own home. he or she has a w2 and information returns from mortgage interest, distributions from a credit union or a bank or other securities. there may even be a k-1 thrown in. everybody in the audience knows

them. you use them as you are putting your tax return together. these information returns foster voluntary compliance since they are filed with the irs and people know that. it is often overlooked what a real time saber these can be for taxpayers. the standardized format think in information returns and the data people receipt and transcribe makes it possible for today's robust tax software industry to work. let me give you a peek behind the curtain at the irs to see what this looks like for the irs. in many cases, we received the information returned after a taxpayer files their return. we go through a lengthy process of collating and matching all of these documents that we get with taxpayer returns. this can be further complicated

if it is a joint return where we have to marry john and jane doe's separate information returns onto their one joint return. this has made tax pair returned more efficient in the past. i believe they are the source of the next generation of innovation. a potential new structure for tax administration, one that would opportunity and is a shift in the way we run the tax system. i believe taxpayers, third parties in the tax system, and the government would be better served if we try to move as many of our processes forward as we could and reduce the need for for thehat look backs an

agency. the irs would get all information returns from third parties before individual taxpayers filed their returns. the taxpayer or their professional tax return preparer could access that information from the irs via the web and down load it into their returns using commercial tax software. taxpayers would add to the information down loaded and they would file their returns with us. we would then take the information sent to us before that return ever came in and we would embedded that information -- embed that information into

our prescreening filters. it would immediately reject any return that did not match up with our records. we reject the return and ask you to fix it before we process it. we would have more accurate returns and deal with many more problems up front. we could shift resources and spend more money trying to get it right in the first instance and do less back and auditing. -- back end auditing. that vision is much easier executed -- much easier articulate it banned executed. -- than executed. let me talk a minute about what would have to change as a prerequisite to moving the tax system in this direction.

it would take a major reworking of our core technology system. i will tell you that we could not have even thought about this -- and i would not have articulated a vision like this a few years back before we were on a solid path to complete our core customer account database, which we called k-2. over the past few years, we have been working to get our individual taxpayer accounts into a modern database that processes into a daily rather than weekly cycle. the new data base will allow taxpayers to seek faster refunds and it will eliminate some of the structural technology problems that could lead to a timing problems with notices that are sent to taxpayers. even once we get this database done, we would have a lot of work to do in the taxpayer arena. we would need to load and be

ready to run matches with all of the w-2 data that we've received from the social security administration months sooner than we do not. we would also have to load all 1099 data into our system before the return is filed. we would be able to match in real time these 1099 documents with the return. this is much easier said than done given both the budget constraints that we face and the real production issues that we face during our peak filing season between january and april. performing enhancement to the systems to the u.s. government that process all of the tax receipts and process about $2.50 trillion to our system every year is a complex endeavor.

to be blunt, it is not a cheap and better. we are making investments in our technology now, our technology infrastructure like k-2, that should set the stage for us to think about these major shifts in the future. there was an under investment in irs technology for the past 20 years. it has left us in a deep hole. starting with the president's 2011 budget proposal, this trend has been reversed. given the current budget debate in congress, we are going to have to see if we get these resources we need to build the basic technology infrastructure to position us for the future. in order to execute the more real time tax system that i laid

out before, we would also need a push to get information returns like 1099 into the system earlier. this would require a change of behavior on the private sector's parts. our partners, where they are payroll processors or practitioners, would need to work with us to make sure the date they would work by and we would work by worked for the american people. dates like february 28, which is the due date 41099 returns, are built into our core operations and they are built into the business of the tax committee. if we want to move to add up front, real-time tax system, -- moved to a upfront, real time tax system, all our time line would have to be on the table. it is a potential win-win for

taxpayers and for the government. it streamlines the tax process for the past -- the vast majority of americans who played by the rules and want to get it right. it minimizes interaction with the irs, which taxpayers wants. as i described earlier, this would not only change the face of taxpayer services, but also compliant. and like the look back model, we would do a 180 turn. most compliance activities would be done up front. we would reject the return right away if a problem was detected. let me give you a simple illustration of a real world example that we face on a baking the bases at the irs. a taxpayer mistakenly interest to thousand dollars in dividends on his return. on the 1099 that we received, we

showed the dividend to be $3,500. because of this mismatch, we follow up with the taxpayer well after the taxpayer has filed to address this unrecorded income. under the structure i envision, it works differently. a taxpayer would begin the filing process with access to all of the information that has been reported to the irs. any discrepancies that the taxpayer seas between the information reported to the irs between theee information reported to the irs and what is reported can be dealt with. the taxpayer can get it right

the first time with no risk of getting a letter from us later about the mismatch and with no risk of interest and penalties on the delta. the better use of information and data has long been a priority of mine. the payoffs are huge. taxpayers avoid the hassle factor. back end audits are much more focused on issues that require real, what. we would see significant gains in service and compliance that have the potential to save billions of dollars across the public and private sectors in reduced administrative burden. some people ask the question, if we let taxpayers know what we know, would there be lower compliance and lower compliance rates? there are two answers to that

question. first, of course there will still need to be after the that audits and other types of after the fact compliance activities to make sure we maintain overall levels of voluntary compliance. i will tell you, we could do more work up front and do you work audits on the back end and we would still have a compliance boost with this scenario. i chaired an organization comprised of tax commissioners around the globe. many countries now actually make information they have available to taxpayers. not have recorded a drop in compliance. where do we go from here? at this early juncture, i do not see this as a plan or a blueprint with proposed

structures, time lines, and it of robles. what i am offering is a bishop for a journey that is -- proposed structures, time lines, and the liberals -- deliverable s. it will not happen overnight. it is not too soon to start a dialogue on the vision and engaged the business community on that dialogue. it is not too soon to start scoping out the technology work we would need to do to make his next big elite, a generational leap -- his next big leap, a generational leap. it means evolving to keep pace with change, constantly looking ahead to try to be more innovative and imaginative with

the resources at our disposal. i think we are now at the point where we can let our heads above and daily and weekly fray begin a dialogue about the shift in the tax structure. as our today engine goes online, we had a keen foundation for this. as our e-file rate goes up -- we crossed the 70% threshold. we have data coming in through the digital format. in modern technology, we can move much quicker than we could before. we can process more information than we could one generation ago. internal and external factors

make the time rights for big, broad, and long-term thinking about the way we do it this. that to be wrapped up by saying -- and long-term thinking about the way we do business. what i have described israel and doable. it is something we have discussed with stakeholders and our internal team. my goal is to keep pushing the agency to imagine the future and to make the tax system work better for the american people. let me leave you today with some final words that franklin delano shortlylt wrote before his passing in april 1945 for a speech he never delivered. he wrote, "the only

limitation or tomorrow is our doubt of today." thank you for listening. i look forward to taking some questions. [applause] >> thank you for that. i think we will probably get to be content of the speech before we get to the real-time news questions. at the front of everybody's mind today is the risk of an imminent government shut down. it could not stop the irs at a worse time. for many functions of the government, there is never a better time. many of the questions i have received is about that. couple of questions about the new lines of that. the question many people want to know is, i did they have already filed their returns or they are in the process of taking things up to the deadline.

maybe they need to make a tax payment and they are waiting for the tax refund. what can people expect in those circumstances right now as you can see it? >> it is a good time to step out of the daily fray of operations and envisioned the future. mark has brought us back down to the daily fray. the president has made it clear that his goal is not to have a shut down. a shutdown would not be good for the american people. budget negotiators are working hard to avoid a shutdown. april 8 is not a great day for the potential for that. we, like every agency in government, have been doing some contingency planning around this. the most important thing for me to communicate is that the

american people should file their taxes. the deadline is april 18. people should file and they are required to file by april 18. we will not have a full complement of operations. if the government were to shut down, the irs will be accepting tax returns. the due date will remain a great team. what i want to do is encourage people, what if there is a shut down or not, to file electronically. in the event of a shutdown, people should really file electronically because most of these returns are processed automatically and will not experience any delay is. tax payers who file paper returns will experienced some delays if we end up in a government shutdown.

the goal of everybody is not to have been shut down. these are all contingency plans. >> the processing continues, but there is a delay in the processing of refunds. >> electronic returns, people should expect to see no change in processing. it is an automated system. unless there is a flag, people should see regular refunds. >> they all have stories to write. i am their presidents. . will any chief counsel work remain on pending regulations and what regulations might be

the focus of continuing work? >> the most important thing for me to communicate to everyone here and everybody in the audience watching is, file your tax returns. [laughter] we are going to be accepting returns electronically. you are not going to see any delay. all of the new ones -- nuances of who is going to be doing what, i am not ready to get into. the most important thing for people to know is that we will be accepting tax returns and people should file. >> do you think in the longer- term it adversely affects the jobs you want to do on and going -- on an ongoing basis with compliance will be affected? >> i am quite hopeful that the

budget negotiators will work some out and we don't have a shut down. what i will tell you is that we are involved in the running of government part, not in the policy making part of government. we run a huge financial services operation that has one of its 40 million individual clients and has tens of millions of nonprofits and businesses that we interact with every day. we have a $12 billion budget. finding the government two weeks at a time is not a great way to operate. we need to actually plans for hiring, or attrition, for travel, for training, for systems. not knowing what kind of resources we have is not helpful. the president articulated this quickly -- articulate it is clearly. it would not be good for the american people to have this kind of shut down or this kind of disruption.

>> at the end of the day, are you agnostic to tax policy? is it all about enforcement and customer service, the customer being the taxpayer? we get a lot of questions about this kind of tax and that kind of tax. if the date came -- to use an example -- that there were a flat tax and it was your job to administer that, would you say, that is our top and that is what we have to do? >> congress writes the tax laws. our job is to take the laws on the books and to make sure they get administered in a fair way to the american people. i am focus on running their, balanced programs. americans filed returns, they get a refund directly deposited

into their account or they get a check. that is what they see us. we weigh in. the unique perspective we at the irs have is that we interact with the american people every day. we can see where parts of the tax law treats them up and where honest mistakes are made and where there are grey areas in the law. we end up in lights and controversies with corporate taxpayers. our fight is to administer the laws on the books. we are an apolitical agency. we try to stay out of the fray and make it as easy as possible for the american people to interact with whatever tax law is on the books. were a flat there tax.

would that not required less resources to process returns and in a budget cutting in our mature agency could theoretically be at risk toward the goal of greater compliance? >> the way i think of our budget -- i will tell you what resources we need to implement the task that has been given to us. congress gets to decide what resources we get. the consequence is that we do not get those resources. i would not advocate for a bigger budget. my job is to serve the american people and to be a public servant. we have a staff appropriate to the size of the task at hand. if the task is smaller, we would change that. you do not find me as a leader concerned in our budget got smaller. the one thing i focus quite a bit on -- we can have a pretty

strong voice -- is simplification. we see a lot of taxpayers who get caught up in the nuances of the tax law. they get caught up in the complexity of the tax law. behind the scenes, the and the senior staff spend time trying to help the administration seek places where you can simplify the code to make the experience that it would be american people. >> do you have a tendency to expect the tax code to be simplified given a 300 page publication that you were able to publish this year? >> one of my favorite is that the tax code is four times as long as the war and peace and only getting longer. we actually had somebody --

every year, i have some account of how many tax law changes there are. it is hard to count, depending on a huge change a comma or add a word. there have been 3500 changes to the tax code. i do not have a crystal ball. we have been going in the wrong direction with the application. the president, in his state of the union address, talked about this. the treasury secretary has been spending time on this. everybody would like to see a simpler tax code. it is complicated. there are lots of stakeholders. >> we did not have a round of applause when the accountants in the audience heard about all those changes. i would like to move on. maybe some other topics that have been in the news or related to the news. here is a question from the audience. are we going to witness a broad

inquiry of credit suisse. the ambassador said to the swiss that that was a possibility. >> i am prohibited by law to talk about any specific taxpayer. as commissioner of the iraq, it is a good idea for me to abide by the law -- as commissioner of the irs, it is a good idea for me to abide by the law. what i can say is that since i have shown up at the irs, i have made cracking down on offshore tax abuse a priority at the agency. when president obama came into the audience -- came into office, the president gave us more resources to pursue international tax evasion. the secretary has put this on

the agenda of being g-20 meeting and made it a focus to get more cooperation. we have come a long way. first, we had a major case against ubs. it is on the public record, so i can mention it. it brought in 4000 names that switzerland sent to us. it is the first time switzerland has broken bank secrecy and sent names of taxpayers to any government. as part of this initiative, we created a voluntary disclosure program. we told people they should come in voluntarily and pay their back taxes and pay a stiff penalty, but avoid going to jail. we thought about 2000 people would come forward. we had 80,000 in the door. we had another voluntary disclosure program coming. what i told people is, these

18,000 names have come in. we have got a few into their advisers into their banks and their accounts. we are using that data to pursue the next wave. this is a multi-year effort and it is not going to stop. we have of the banks and other promoters in our sights. there are active investigations. we want to make sure people keep coming in. the ultimate goal is to deter this behavior from happening and shift away so that people will not think about parking assets overseas and not paying taxes open them because the risk of getting caught is so great. >> there seems to be some concern about exposure to this problem around the world. it does not about a particular entity. it involves a particular nation. the question is, does the irs

had any cooperation with chinese authorities to get chinese- american assets in china that in the country. ? >> i am chairman of deferred tax administration, which is the main body that organizes all the tax commissioners. we have gotten a lot more cooperation and information exchange with other governments. with a small number of authorities, we have a washington office and a london office, which is the joint information tax shelter information center. we have co-locate its staff looking at schemes using treaties and documents. sometimes countries in up in some tax competition where they

get the money or we get the money. to make sure there is not double taxation, we have treaties for that. when it comes to citizens parking assets overseas and committing crimes, there is a commonality of interest. there has been a lot more information flow and i anticipate this will continue. >> i saw a release on your website about this the other day. i am not sure this question is on the mark. why hasn't the irs been more forthcoming regarding the delay of processing first-time home buyers credit prepayment forms? i understand some refunds could be delayed under certain circumstances. >> or people who do not serve our website as often as you do, mark, let me get some information so people know. gary a. two-year period, --

during a two-year. a lawod, congress passed eigh on a credit. it was passed during a time where the drag on the housing market was a major factor in contributing to the economic downturn. we put $27 billion of tax credits out to help people buy homes, which was a major factor in helping to stabilize the housing market. it has not come as far as everybody would like, but it has stopped falling off of a cliff. that is an important part of the

economic recovery. as created as it may have been for congress to come up with, we will make it a loan so it will not cost us money in the long run, it presented us with unique challenges. the way that we think is, you owe taxes and you pay to the government and we put it in the treasury and we go for rth. it is not a loan operation. after all of these 3500 tax changes are coming, we had this unique one that is set up like a loan operation. i would encourage congress in the future to not set up loan operations. it is not the way the irs is structured. when you set up something new, kinks in the system. some people got the loan or the

first-time homebuyer credit when they were single. we had a problem matching it in our system. we had a delay in some refunds. in the next week or so, all of the be funds are going out. >> it is a great website. i love the youtube channel also, by the way. we had a report of a significant date the breach involving a number of retailers, banks, and financial institutions. we do not know if any money was stolen yet. it seems like the federal government and the irs would be the holy grail for the hacker's destination. what can you do to assure people that you have everything in place to avoid that? >> it is a great question. >> it is a great question.