components when you get them together laughing signatures for bombers and groups, passing them on to our partners in the department of defense and intelligence. host: you talked about the number of agencies. looking at the employment numbers in the agency, total employees with women as a part a part of the work force, a little over 15,000. national security agents, 5000. cyber-security agents, about 1000 agents. i am focusing national security versus criminal and how that has changed. guest: there are separate parts that all come under what the fbi refers to as the national

security program. those numbers can go back and forth, depending on the task at the time. looking at the number of agents, id is more of the -- armistead open. yesterday in the program it did not indicate the number of agents involved from the other impacted groups. those people come under the budget at the laboratory, primarily based on what they do cause involved with appeared- terrorism -- is involved with counter-terrorism. host: $7.6 billion $7.7 billion, counter-terrorism /counterintelligence. criminal enterprises and federal

crimes $2.6 billion. criminal-justice services, $491 million. explain those numbers a little bit. are those all the same thing? guest: within the fbi itself, the background of the national security program the counterintelligence division, the weapons of mass destruction director, and the terrorist cleaning center, all considered as a part of the national security program. those efforts are at cross- purposes, to some extent. host: how does the training differ? guest: all agents go through a program in quantico, va. that is 21 weeks. thereafter they undergo in service training that has to do with what they are doing at any given time. they also do virtual courses

that they are required to do any given time. they are referred to lovingly as baby agents. they are assigned to a more senior agent where they have to do a certain number of steps for the experience. as you move on in the fbi typically get to the point where you will be a specialist in something. you would be going back to quantico doing virtual training on all of those things. the department of state is an absolutely wonderful program for learning about the culture, the history, and the way that things are done in foreign countries. of course, the training from the united states for an military academy offers many different things the golan. the fbi is doing this

leadership development institute, bringing leaders together to train them. host: i wanted to ask you, what do you think would surprise viewers listening to this conversation about the fbi role in counter-terrorism? guest: one thing that people do not realize is that since 9/11, there has been a considerable increase in the budget of the fbi. on 9/11 we basically had 10,300 agents. look at that, look at what happened to the fbi in general 24,000 employees at that time. but, the biggest changes have been in analysts. they are an intelligence-driven organization. to reach that, we increase the analytical component by hiring more analysts.

analysts have gone up 300%. those people, among other things are your language specialists and computer engineers. given the organization's whenever they hire you, or whoever, it comes for -- it comes with computer and so forth. the fbi is the same way. on 9/11, that was 0.75 of the salary. it is now 250%. the fbi has gone to great lengths to make every agent more robust in what they can do. host: does the agency have a hard time filling these roles? guest:, the hardest is exotic languages. they are very difficult.

there are a lot of languages and dialects particularly in the strife areas of africa. i found one in a coffee shop. host: and recruited him? guest: yes. [laughter] host: guest:, david, you have been waiting patiently. go ahead. caller: can you hear me? host: yes. caller: i have two questions. you mentioned the weather underground earlier in your conversation. i am interested to know, we have subversive groups in the united states going into other countries. such as code tank. the weather underground is becoming active again by deed and dawn. countries like israel. the groups that are not

sponsored, do you check those out in counter-terrorism? guest: for the answer to that is fairly simple. if they represent a threat -- remember the fbi is an intelligence-led threat-driven organization. but those, in two parts. the person with an intent, but no capability, produces a reduced threat. if they meet the definition of terrorism, the fbi would be very much interested. host: independent line. caller: good morning. you mentioned your tenure with the fbi, 1972, when they had terrorism within the united states government. did you did not mention the

black liberation army. you did not ever mention [unintelligible] program of the fbi at the time that infiltrated the organization based on terrorism destroying these organizations through the end of the acts of the united states government. color abuse is one of the died lines of the fbi? -- what the guidelines of the fbi? guest: correct. caller: then why are there so many shootings of black persons in our communities that cannot be justified and no one from the federal government has been prosecuted? none of these police officers from the u.s. attorney's office? guest: prosecutions have been done.

one is to protect the national security of the united states. the biggest dog in the ring is counter-intelligence. the next is to preserve civil liberties. when we look at the civil liberties, it is important to look at how we are doing that. that is done very aggressively in every field office. host: democratic caller. detroit, michigan. you are next. caller: good morning. what i would like to ask up in detroit, michigan, in our newspaper they have pictures of terrorists and that we should be on the lookout for. they came into our office. we all called the fbi and said that they have to watch the planes.

also, they were caught at 4:00 in the morning. 3:00 or 4:00. they were let go. host: what is your -- caller: what they said is that we have to watch planes. is that just to subdue us, so that they would check into was anyways? guest: i do not know what that would be about. the fbi does not watch airplanes unless there is a target for criminal action. they are interested in people. i do not know what they said to you, but i can assure you that every single terrorism we in this country is covered. if, in fact, they stop some people at a power plant the

question is -- is there sufficient cause to take those people into custody? the fbi cannot arrest people just on their elk. there has to be probable cause. host: in the 1970's or 1980's, a tip on a possible terrorist, how long did it take for that information to get checked out as opposed to today? guest: today there are, among other things, and hence partnerships going on between law enforcement organizations including increased information capabilities. it is much easier to get information out of the government. there is something out there called the national data exchange that is hosted by the fbi in west virginia and it takes incident-based information, sending it out to law enforcement officers,

reading this information to see what is interesting. host: real time? guest: very fast. host: like fingerprints? guest: that modus operandi can be picked up and traced to others. law enforcement officers doing this there was a similar case in iowa or new york city. there was a point of contact leading forward to get a better handle on it. host: joe, good morning. caller: if i do not know if this problem is as large as it sometimes is characterized, but i have read about people being added to the terrorist watch list for reasons of confrontation. can you speak briefly about that? how easy is it for an employee

outside law enforcement to get their name on a terrorist watch list? how do you get off of the terrorist watch list? guest: are you on that? [laughter] i was at one time. people are placed on the list based on the need from the center determining whether or not they posed a threat to the united states. pat is how it is done. once your army has a watch list at that point there are procedures that you can go through. not with the fbi but the department of homeland security. perhaps they could talk to you about that. host: we have covered the watch list before. we have covered segments on

that. you, yourself? did you go to the fbi? guest: i spoke to everyone that i could. indirectly, i had a role in starting it and all of a sudden i was on it because of a common name reference. david williams is about as common as you can get. it really is a pain in the neck. i can commiserate with people who feel they are on it unjustly. i had to continually explain why was and what was going on. every year the screening and listing gets much more sophisticated. and it does get better. host: you said that this was an idea of yours pelops -- idea of yours? guest: i became a part of the

terrorist threat matrix. host: did the fbi get information from that list? guest: the fbi can get information from that list. host: it is considered a counter-terrorism tool? guest: yes. it is run by the fbi though other agencies are involved. the watch list is just a part of that. trudy, it is the responsibility of dhs. host: stephen connecticut. caller: that is a crazy story. host: do you know of any more? guest: no. [laughter] caller: the fbi has been pretty inclusive lately. sometimes i am concerned that the focus is too much on counter-terrorism. pulling the wool over the federal government, are we

spending too much time on that? guest: are we spending too much time on terrorism? i think not. there is a continuing series of reviews done at the fbi to since it -- consider the veracity of threats against the united states. al qaeda is still interested in doing massive damage to the united states. they proclaim that they are interested in procuring a weapon of mass destruction pop to attack the united states. i do not expect that that will change, since the demise of osama bin laden. that is a very real thing. offshoots of that, particularly in the arabian peninsula copper is a prickly, a growing threat. to the other groups with no direct affiliation, inspired by that mentality, they are a real and continuing threat.

the fbi has kept them as highest priority. host: new york, the morning. you are on the air. caller: mr. williams, how're you doing? guest: fine. host: -- caller: great. a long time ago before the anthrax letter was sent, a man came to me and he mentioned it passionately. and he asked, would you think of it as political to do so? i was very tired that day and i did not care to answer. after the next paragraph he mentioned anthrax. he was so happy about that, with washington. i did not think about it then, but if there was a factor that

they could get caught what do you call it, $2.5 million? i realize that they would need to play it, otherwise. he had a white car. all of their docks were in a row. he wrote the note, like the unabomber. he probably use the ruler. host: do you have a question? caller: we are one payment away from losing your house. i sent it to my wife. guest: the entire award that the fbi gives out does that work? guest: the rewards program is very effective.

it has been very effective in many cases. some of the international terrorists we have not had great luck with. nobody called in to tell us that osama bin laden was in a particular place in pakistan, but at the lower level we do find them to be very successful. host: a question from one of our regular watchers on twitter -- guest: they are used when it comes to counter-terrorism. human intelligence is extremely important. it is one of the pillars of the intelligence base of the fbi. i would say that they are vetted much more closely than when i came into the fbi. there were a series of steps that i will not go into

specifically but those agents as a source of information easily they had to be gone through to determine the fidelity of the individual. host: what is the risk to the informant outside of the alleged terrorist cell in this country? guest: the risk is high. higher. it does not just apply to counter-terrorism. i would say that the risk to an undercover agent or an informant in drug cartels is extraordinarily high. it is legal, to be discovered. host: what happens to these informants once their work is done? guest: generally we tried to recruit sources of information coming up. within sources of information we have witnesses that we use.

once they are used, there cover has been blown. generally, we like -- running sources of information over a period of time. host: john, democratic caller. caller: people like me are concerned about the tactics of the fbi in infiltrating anti-war activists, anti-drilling organizations, though there is no evidence that these people are a threat. they are sometimes the opposite of terrorists. without probable cause they seem to be completely suppressed. to my knowledge hardly any information on these people have turned up to this day? host: do you know where you have gotten this information?

caller: i am positive that has to do with the patriot act. in my opinion the patriot act is a confiscation of the american rights. opinion i have lost all faith in the fbi. many americans have. host: i apologize your call keeps breaking up. the fbi, counter-terrorism, and the patriot that guest: it does not change the fbi's jurisdiction. we do not go into anyone's home without a warrant. a search warrant will get you in, so will a court order, based on probable cause. in the national security are been a you have to have foreign

intelligence surveillance court with probable cause to move forward and gain entry. the fbi is not breaking into homes, willy-nilly, and it is not seizing anything willy- nilly. caller: in my opinion, let me say this, i live in washington, d.c. when he was in the thing 1968 through 1972. the fbi infiltrated all of the peace movements, the school that i went to, i would not trust the fbi if they told me of water was wet. i will tell you why. if they were serious about protecting this country, they would cover the southern border. 30 million people are walking across and no one has detected anything? 30 million people walking across that border? who else is coming in?

host: someone writes in -- guest: people distrust the government in times when things are tough. a major terrorist attack, people tend to lose confidence in all aspects of government. since fbi's on the forefront that is what happened. i would say to those people, talk to the fbi, we are out in the community at all times. you can talk to them and find out exactly what they are doing. certainly the director is on c- span and other networks, constantly telling -- talking about what we are doing. water is wet. host: you think there needs to be more communication from the fbi? more of an effort to be more

transparent? as much as they can be? guest: i think that it is a very transparent right now. there are some things we just cannot talk about, like the number of informants. certain things are protected. what the fbi is doing, as far as their mission, i think that we are very transparent on that. there website will give you a lot of information. host: republican line, indiana. caller: my question is about four could. how did that guy get through? to shoot all of those people? how was he vetted? explain more about how you, you know, check backgrounds. i had a question about all of that.

host: the fbi does background checks? guest: we do, but not on the army. the army does his own stuff. major hissa n was a psychologist with authorization to be where he was. the notion that he had apparently suspicious behavior that presages the actions that he took, were a matter for the army. the fbi was alerted to him. he was deemed to not be a threat by the army. host: charles democratic line. caller: how many ex employees are on retirement from the f-b i -- from the fbi? you have been retired since 2001. are you double dipping? them by paying you twice? what do you do?

guest: i make nothing right now. i am retired retired. greta is not giving me any money -- any money either. [laughter] i can understand your concern. i have not drawn a federal dollars since 2001. host: pensacola, florida. caller: how much is there a problem around interagency lack of cooperation as far as intelligence? this has troubled me since 9/11. accordingi have understood that there was a lot of that going on. i was wondering if you could address that. is that still a problem? does that happen much nowadays? guest: probably one of the best questions this morning. one of the tenants of our

mission is to carry for information sharing with law- enforcement communities and counter-terrorism communities. the various tribunals that met after 9/11 exposed areas where that was not what was happening. part of that was that information technology did not allow that to happen. in the days and years leading up to 9/11, there was less communication. it has increased substantially since 9/11. lots of cross pollination between the cia fbi and other intelligence organizations. we have inaugurated the national joint terrorism task force to bring together the key elements of the government. key to that was the creation of the national counter-terrorism center bringing those elements

together, where the real time sharing is going on and most employees look at themselves as members of one team, rather than individual entities. host: does the fbi have a presence there? guest: a huge presence. caller: it is run by? guest: the national intelligence director. that was a good question. host: mark, democrat, florida. caller: here is another good question. ladies and gentlemen, i have worked with senior fbi agents in argentine as a young marine. 53 former policeman doing maintenance on nuclear power plants cannot be too bad of a guy.

the bush and administration was asked for more knowing that he would be turned down. taking over the security position for towers 1 and two can you tell me who the other clients were? guest: i could not. caller: i will tell you. the enron corp., is like those missing 18 minutes of tape. i am dubious. i think that the earlier message about the power of multi- national organizations with respect to your perception of patriotism i do not trust what happened on 9/11 physically or politically. host: any reaction to that? guest: i was in the marine corps

and i would have to say that i do not share his cynicism with what is happening in the government. in terms of maintaining secrecy on anything, the idea of grand conspiracies' in washington, d.c. it does not exist. a computer -- conspiracy in this town is almost impossible. host: this question -- guest: that runs on the iii. it is as accurate as the information fed into it. the fbi has been criticized of trying to arrest the wrong people. without being able to prove that these are really felons. a lot of that is the final disposition that is not being submitted by law enforcement agencies in a timely manner. the fbi only reports that

information if they get into it. host: last phone call, california independent guest: good morning. caller: i do not think that the american people understand the efforts and meticulous detail that having gone through to protect the people in this country. you have seen quite a few changes between 1972 and now about people getting scared in different ways. i have spoken to you guys. you understand that times are changing. i wanted to say thank you >> "washington journal" has been

asking a are you willing to pay more in taxes. so far 367 voted yes 254 voted no. pakistan's former foreign secretary is in washington, d.c. today. we will have live coverage from the johns hopkins school of advanced international studies at 5:30 p.m. eastern. earlier today defense secretary leon panetta said that bigger defense cuts would have devastating effects on the nation's security. he said in a conversation with hillary clinton that the pentagon is prepared to make $350 billion in cuts over the next 10 years but warned of dangers if bigger requirements are required. you will hear all of that conversation tonight, o'clock

p.m. on c-span -- 8:00 p.m. on east digit c-span. there is a proposed freeze on transportation projects. the committee held a hearing with the mayor of los angeles and representatives from unions and businesses. the current transportation bill expires at the end of september. this hearing is two hours and 20 minutes. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> the committee will come to order. this is a big day for us. before i begin my statement, i want to thank a host of organizations that have been transportation advocacy organizations. i know this is not complete, but

i feel this belongs to you as well as all of us. the national conference of mayors, the american public transportation association, the american council of engineering companies the transportation builders the gravel and stone association, a host of the -- a host of organizations american traffic safety services association. the associated general contractors. the american trucking association. the association of metropolitan planning organizations. the american concrete pavement association. the portland cement association. the national auto dealers. the national asphalt pavement association. the american iron and steel

institute. the u.s. chamber of commerce. the national association of development organizations. the national association of truck stop organizers. and, many more. i had to do that. this day has been hard to reach and it is because of your advocacy working with all of us, that we have gotten to this point. i will begin my statement. i want to say thank you to my friend and colleague for insuring that our differences on many other issues never got in the way of working toward a bipartisan transportation bill. we see life differently in many areas, but where we can come together, we do, and this is one area we believe is absolutely necessary for our states and the united states to be strong and competitive. we share a deep commitment to

our infrastructure. one of the most impassioned moments i have seen on this committee is one the senator talk about what happened when there was a piece of infrastructure that started to fall apart in oklahoma, and the consequences of that. all of the senators on this committee had been instrumental in getting this bill into action. senator max baucus and senator bidder were extraordinarily helpful. we have many, many meetings for more than a year. i want to thank the committee staff who have been working so diligently. same thank you does not mean the bill was done. it is an unusual situation where we have had to work so hard. i want to say thank you to rose, and david, and james the bipartisan staff. i think i have spoken to them

for nights on end. i want to thank the staff of all of our colleagues were working so closely on this bill, and i welcome everyone to this important, critical moment on our nation's infrastructure. the current bill expires on september 30, and if we do not act, we will see a cut of 1/3 actually 36% and we will see all law that says 620,000 jobs, 500,000 on the highway side. it is clear that we have to act. if we do not step up to the plate, we will see these jobs lost and our infrastructure continue to crumble. this hearing is a milestone. this bill moving ahead for progress in the 21st century will maintain current funding levels protect existing jobs,

helped spur economic recovery. now, we made a lot of reforms in this bill. it is remarkable how many reforms we have made. we have taken an array of programs consolidated them, making this bill much more streamlined than any other bill we have seen before. we keep funding at current levels. that is crucial. we also have a new section called "america fast forward." that was after a name that bipartisan leaders in los angeles came up with to describe one part of this bill. then there was paid to that. -- the mayor will speak to that. i thank him and his bipartisan team for that. according to the federal highway administration every federal dollar made available has mobilized up to $30 in transportation investments, and i am pleased to say that

although chairman micah's bill is different from this bill, he does step up to the plate. he stepped up with us and he had a $1 billion. i'm very pleased about that. let me say again, we have many differences on this committee when it comes to the environment. that is no secret, and we are very open about it, sometimes have a sense of humor about it, although sometimes neither side is laughing much. but on this, we believe this is a basic function of the national government to address our infrastructure needs because if you cannot move people and goods, you are just not going to grow, we will not have the jobs, we will not be the great power that we are and want to continue to be.

in closing the coalition that i mentioned at the beginning was really represented and a magnificent way earlier in the year when we heard from tom donohue, and richard trumka, who practically held hands during their testimony. they were so close together on the way we need to take immediate action to reauthorize this nation's transportation system. i look forward to this hearing all or mark-up -- our mark-up. pray that all of the other things fall into place. again, my deepest thanks terry >> thank you, madam chairman. -- thanks. >> thank you madam chairman. i want to put an editorial in

the record. i think it is very good. let me start by commending chairman boxer. as she said, we have had a lot of differences in the past, but on this area we do not really have differences. her leadership, dedication, and willingness to work together has made this possible. i said the same thing for senator max baucus, and the rest of the committee. i know the senator sessions has had real concerns about what is happening in the state the alabama, and i think we put together a really. highway bill, one that we did not anticipate we could've done even two or three months ago. it is very appropriate we have my favorite secretary of transportation, gary risley, back with us. i've often said he is the best in the nation. one of the reasons for that is he has been there as long as i have. we figured that you came at the

same time i came to the state legislature. i think it was the same year. we will not tell them how long ago that was, but we go back a long ways. you can not find too many members said at the close relationship that we have. there is not a week that goes by that we do not talk about this problem that we are facing. we acknowledge of the proposal we have has a $12 billion shortfall. i know that the finance committee is working on that. it is something we are not going to be able -- yes, we are going to come out with a bill, but it will not reach where we need to have it to get it passed until such time that we fill that hole. we can do that, but right now it would be virtually impossible to pass, as we're able to do that. we are facing that. we know it is going to happen. we are fortunate to have the chair of the finance committee on this committee senator max baucus, and we were very, very

closely with him. i support the efforts that have been working behind the scenes with him and republicans. i've been talking to republicans on the finance committee about what we should be doing as we address the spending problems, and i have to say there are a lot of things in this bill that are compromises between barbara and myself, the chairman and myself, and there is a lot more in the way of project delivery that i would get preferred, a lot more of the livability stuff that she preferred, but most of all we want to build. this includes policy reforms to consolidate the number of programs from 87, down to 30. is a major change. -- it is a major change. also putting it off is not an option. we had been putting that off and we were talking about it

when we had dinner last night about the lady in my state of oklahoma who drove under a bridge. a chunk of concrete this size fell off, hit her kill her, and she is the mother of two children. this is not just something that should enjoy a high priority. his life-threatening, and something we have to do. i did not think putting it off as an option, or selling for lower figures that would be a 34% cuts, and i was a secretary talk about the specifics in our state of oklahoma, as to what this would mean, what it would cost. would be very, very expensive. i want to get one thing across to my colleagues. i have been ranked, more often than not the most conservative member of the united states senate but there are a two

areas where i am a big spender when one is national defense and the other is the infrastructure. this is where ed has to happen. if we do not do it here, it will not happen any other way. i have been on this since i have been in the senate. i think we know what we have to do, and i think we are prepared now to get something done, so we are looking forward to it, and i agree with you madam chairman. this is a very, very significant day. >> thank you i will call on senator max baucus, but i want to say something i said to him and senator inhofe privately. in the gang of six proposal, one of the things they do it is fully funded highway trust fund for 10 years out based on current levels of spending, and the reason it is performed --

important to mention it is because i think it does show that among democrats and republicans it is a strong priority. >> and, confession is good for the so. if i did not know wenzel barbara told me on the floor yesterday. >> -- 's barbara told me on the floor yesterday. >> senator max baucus. >> thank you madam chairman. thank you for schedule and this hearing. i want to read something and i want everyone to guess who said it, and when it was said. i will begin. "america today lacks a coordinated transportation system that permits travelers and goods to move immediately and efficiently from one means of transportation to another using the best characteristics of each. the result is waste. waste of human and economic

resources, and each of the taxpayers' dollars. modern transportation can be the record, -- rapid conduit of economic growth, or a bottle neck. it could bring jobs, loved ones, and recreation closer to every family or it could bring instead a sudden and purposeless death. it can improve every man's standard of living or multiplied the costs of all the bias. it could be a convenience, or it could frustrate the peace and the way. the choice is ours to make. that was president lyndon johnson, march 2 1966, calling for the establishment of the medicis department of transportation. what he said more than 45 years ago is as relevant today as it was then -- the choice is ours to make, we need to plan for america's future that is why

through your late -- able leadership, madam chairman, the senate will proceed with a two- year bipartisan bill. two years is not clear -- ideal for a transportation bill. i now chairman barbara boxer held out for a six-year deal for as long as possible, but the issue is funding. the congressional budget office says the highway trust fund needs $12 billion to maintain funding and still have a proven balance at the end of two years. i want to stay -- say publicly that i am working hard to find that money. we're having constructive conversations. nothing is certain around here, but i feel fairly confident with some of the ideas that i am working on that we will, on a bipartisan basis find that $12 million. there is also a sequence of things. senators want to see congress

resolved a debt limit before we commit to anything and find that $12 billion. i am optimistic we will find the money and avoid the severe cuts the house proposes. i am optimistic about the bill we are discussing today. this is one of our most important national programs. i emphasize the word national. we need more of that around here. as with defense space agriculture and security, we are all in this together. chairman bachmann -- boxer ranking member inhofe, and i have lost it focused. i want to note the contributions of previous ranking members of the committee. some people will not like it. they will say it does not do enough of this, or it does too much of that, but that, of course, is the nature of compromise, and we based compromises and a national

interest. the american people need a 21st century national network. our bill focuses on natural pursuits, such as asset management freight and planning. we seek to clarify needs and to foster strong investments for the future. states need funding uncertainty to pull the national net worth an american means jobs. unemployment nationally is a 9%. inductance digit construction sector, it is 16%. the urban and rural states must all pull together for a shared national benefit. we are in this together. it reminds me of what benjamin franklin would have sent -- either we hang together or most assertively and we will hang away from each other. we should contemplate what we want this program to be for the

21st century, and we need to think about how we are going to pay for it. we should use our time wisely. as president eisenhower said, the choice is ours to make. >> thank you. i thought it was eisenhower. you surprise me on that. we all would have felt the exam. it is fascinating to think about how long ago that was said, and how much oil grown since then, and now what worst problems we now face. to let pericenter sessions. >> i will offer my statement for the record, and would like to congratulate you and senator inhofe for putting together the framework that answers the questions our state highway director race when he testified here. you have made some progress in a lot of different ways.

i know how significant financial situations are and if we can maintain the funding level that you have recommended i think it would be something i can support. i say that very seriously because a lot of programs will not be able to maintain the level we would like them to be maintained that. i remain disappointed that the stimulus bill only produced about 4% of the money to roads and bridges. we missed an opportunity to jump-start the infrastructure needs. we will wrestle with this. secretary lahood testified at the budget committee and said we needed more revenue but it was not a gas tax sell high to set a little bit and talked about

the not-gas tax. you have a not-gas tax revenue enhancement, somehow, i guess offsetting expenditures. >> the leading contender is a non-gas tax. [applause] [laughter] >> the non- gas tax tax? >> the non- gas tax measure. >> it is really my pleasure to introduce don james, will be testifying today. he is chairman and ceo of balkan materials company, based in birmingham. they are the biggest producer of materials that go into highways and roadways. he joined after a long and successful career. i am sure it is still a great

law firm. is a bachelor's degree and an m.b.a. from the university of law -- of alabama. served in the army. he is one of alabama's most respected and important leaders. he is past chairman of the national stone sand, and gravel association, a director of boy scouts, and the u.s. chamber of commerce the medical health care system, the medical development partnership the university of alabama health services foundation, a trustee of birmingham southern college a ferias liberal arts college one of the highest ranked academically in the state and children's hospital, which is a fabulous hospital in birmingham. so mr. james is a fine system,

and knowledgeable person who is deeply involved in these issues, and from my experience in talking with him, you can be sure that the comments he offers would be wise and beneficial. >> i know you have to go in and out. i just want to thank you for your comments. your support for this bipartisan bill goes a long way for me. i am very grateful to you. >> thank you. >> senator sanders. >> thank you madame chair. i find myself in agreement with what has already been said. what i can say is i was the mayor for eight years, and one of the things you learn about infrastructure is if you do not invest in it or maintain it, it does not get any better. one of the stupid alliance that we -- elements that we do about delaying infrastructure and the costing us more. that does not make sense. i had hoped that we would be discussing a six-year bill.

i know that was your desire as well that said i hope this committee and the senate can comes together to pass meaningful legislation that will address how a significant transportation and infrastructure needs. the need is apparent to everyone in this country but in the process we can create millions of good-paying jobs. is not only in infrastructure issue, but a job creating moment, and one that we should take advantage of. even with this meaningful investment been made as a result of the recovery act our transportation system clearly is in worse and worse shape every year. we have heard in previous hearings that civil engineers have created america's -- graded america's rose with a "d."

they say we must spend $2.2 trillio dollarsnn. we are trying to move forward but i think we can all left knowledge that it is simply not enough. madame chair, let me just simply conclude that not only is this important for infrastructure, not only is it important for job creation but it is also a important in terms of our position in the global economy. today, the united states invest just 2.4% of gdp and in the structure. here and vests twice that amount. china invests almost four times all right, roughly 9%. i will conclude with a short story. a good friend of mine returned

from china, leaving a state of the art airport in china having written on stated the art rale, getting cell phone service all over the so-called third world country. she came back to an overcrowded airport in new york city, had to wait for hours, and when they returned, they were wondering which is the third world country? the rest of the world is moving forward aggressively in public transportation. we are not. this is an enormously important bill for a number of reasons and out ford to working with you to make that happen. >> mr. sanders -- look forward to working with you to make that happen. >> mr. standardssanders, i appreciate that. i do know how you feel, and i want to note that you have been nothing but helpful, and your staff as well.

senator, i'm so glad you're here. please have the floor. >> thank you, madam chairman. i will not be here long, but i start by looking at what our mission is, and if our mission is to move our economy forward and create jobs, that we can do it very rapidly very effectively, if we look to be in for shorter side of things. i saw it and mightin my own state, that the governor made a decision not to accept plea dollars of assistance in dot and the port authority in new jersey, because of concerns that there might be overruns in building this tunnel so critical for us to continue to get cars off the

road this, by the estimates that were available, would have created jobs immediately. lastly, to create a better ave for those who want to work in the city of new york, and vice versa, those who want to live in new jersey, and move things along more efficiently. it was mind-boggling, to say the least, to hear that decision by the governor was being made. i look back at history, and it may be a surprise, but i am old enough to remember wpa and some of the other things. i even remember when the george washington bridge was being built. they said it would last, but

there is. in any event washington bridge between the largest crossing facility between new york and new jersey -- george washington bridge was built during the great depression. the interstate highway, built over a 40-year span, even when the country was in recession. the fact is that if we short transportation now, we will be selling the country short in the future. that is not why we are here. we do need to make smart investments. simply building more highways will not solve our transportation problem. we need a national strategic transportation policy that establishes clear, measurable goals for the future. while we should not, in my view be adding more lanes on our

highways we ought to be repairing the infrastructure that we now have in place and keeping dangerously large and heavy trucks and the wear and tear of our bridges and highways. after all 21st century economy cannot be built on collapsing bridges and crumbling infrastructure. so we ought to be making substantial investments, and that is high-speed rail. we are now planning to build a gateway tunnel which will allow us to run more trains, faster trains, through the vital northeast corridor, create tens of thousands of construction jobs, and permanent jobs. we ought to be putting more cargo on trains and ships and that will help get more trucks off the road and help us save fuel burst productivity and -- boost productivity. we ought to make transportation

safer by investing in systems that reduce things like drunk driving, more use of transportation networks, including bicycles, if necessary, and other things to encourage people not to jump in their cars. if we don't prioritize smart transportation investments it today, we will fall behind tomorrow. and i remind everybody that there were 100 million new americans in the 30-year period and it is predicted that it next 100 million will come at a much faster rate. we have an infrastructure that isn't built for that kind of use, and we ought to wake up to the needs of not only tomorrow,

but for the days well after tomorrow. thank you, madame chairman, for holding this investment -- this hearing. it is important, i hope we will not be the only ones listening to ourselves. >> i can assure you we are not. i am optimistic hearing what senator inhofe has said and senator sessions, senator baucus. i feel good about the way we are going. senator boozman, keep up that spirit sir. >> thank you very much. i will keep up that spirit -- >> well, good. >> i want to thank you and senator in off and senator baucus. i would like to thank all of you

for your leadership. i would also like to thank our witnesses for appearing today and sharing their thoughts on the two-year bill. while we still have work ahead of us as far as funding is concerned, i do believe this bill is an extremely important step in the right direction. we cannot afford to let current projects go on finished, and that is of very real concern without proper funding. in the state of arkansas we have a number of unfinished projects that are important to the state, but more importantly of national significance, that would greatly help the flow of commerce throughout the country. without a proper investment in our nation's infrastructure, thousands of the jobs are directly or indirectly on the line. the ability of our people to travel hangs in the balance. i am pleased that the committee recognizes the problem such as this and have worked hard to put forth a proposal that will hopefully address much of are

needed infrastructure investments. again, i am excited to discuss the details of this highway funding proposal. without the dedication of the members here today, this would not be possible. with that, i yield back. >> i thank you so much for that. we will get right to our panel. we will start with the hon. antonio villaraigosa, mayor of the city of los angeles. i think everybody knows that right now you are the head of -- what you call it -- president of the conference of mayors. mayor villaraigosa has done wonders in los angeles and continues to. this is an area that has all the congest gin and needs a leader like this. we are so proud. you have worked with all of us. i just want to praise you for working across the aisle on this. i-got in at 4:00 this morning and you are leaving at 1:00 today -- i know you got in at

4:00 this morning and you are leaving at 1:00 today. if you need to leave, we understand. we are thrilled you are here, mayor. >> actually, i have to walk on about 50 years from around the country to my city at 5:30, so i may take you up on that. madame chairman, ranking member inhofe all the members i dare say that those of us listening and watching and working with you marvel at the bipartisanship, the ability to work together. if we could just do that on many of the other issues facing the nation, i think america would move forward even during this -- these tough times. i know i speak for my fellow mayors around the country both democrats and republicans, when i say that this is a critical moment in our nation.

hearing senator sanders a few minutes ago speak to the $2.20 trillion in need just to get us into a possible great -- just to get us to a passable grade it boggles the mind, the challenge before us. we are standing at a generational crossroads, and i believe we need to think very carefully about how we choose the path ahead. across the country, from portland, oregon at the portland, maine, one thing is clear -- americans need jobs now. with all the debate around the deficit and debt, when people walk up to me on the streets of los angeles -- in fact, when they walk up to mayors across the country, they don't ask us about the butdebt. i am not suggesting those are not important issues, but invariably they say "mayor, can

you get me a job? i want to work." we have a solution for them, you all have a solution for them, and that is to pass a transportation bill now, the bill like the one outlined by it chair boxer and ranking member inhofe when not only invest in our crumbling roads tunnels water treatment and power facilities, it would create half a million jobs just right now. i want to applaud your leadership in developing the outline for map 21, the forward- looking proposal that would help create a world class infrastructure this country needs. people out -- obviously, i come from los angeles, and for some of you on the other side of the country, sometimes it seems like the other side of the world. but what people don't realize is how we move 44% of the

seaboard goods that enter the united states. every single congressional district generates jobs because of the trade activity that occurs at our port. our airport is the number one destination airport in the united states. we know firsthand that worldwide competition is demanding more of us than ever. i am very pleased to see it this committee's framework would include a national freight program. we also continue to grapple with growing congested. you may have seen on the news last week carmageddon. a day without a car in los angeles is a day we do not enjoy very often. we were able to enjoy the other day. what i try to explain to everyone, we were not just demolishing a bridge. we are connecting a system of hov lanes from orange county all

the way to the center and a valley with the goal of reducing moving traffic and producing congestion -- reducing congestion 1 minute, i'll as a result of the hov lanes. creating 800 jobs just as the will of that a laundry we continue to grapple with congestion and the impact on ability and jobs. as a native angelino, congestion can be a job killer. when congested and other constraints joke movement o -- when congestion and other concerns joke movement, , it is pulled stakes and move. if you took a new york, l.a. and

chicago, our output is roughly the equivalent of france. if you took the 10 largest cities in the united states of america, they would be the third largest nation in the world in roughly $5 trillion economy, after the $5.90 trillion economy of china and a $14.90 trillion economy of the united states. the key to those economies is investing in infrastructure, investing in the movement of people and goods. the current extension of the surface transportation bill expires on september 30. the clock is ticking, and we are at a critical fork. we can put people back to work and invest in infrastructure that our cities desperately need. or we can lose ground against competitors in the way that senator sanders just said. put simply, we cannot afford any cuts to infrastructure spending. at the very least, we must maintain current levels.

according to the reduction -- according to the dot, reduction in transportation funding would result in the loss of thousands of transportation jobs. i stand with you, and i know the mayors across the country have come out unanimously in support of his upper -- of this effort, a two-year bill wwhich would invest $109 billion. as a senator sanders says, when china is investing four times the rate of what the united states is, and what he did not say is, they are also putting most of the bill for europe. europe is a tad of us, that china is 4.5 times ahead of lesus -- what he did not say, we are not even competing with the rest of the developing world. latin america is investing more in infrastructure that we are.

we have said we cannot keep building bridges in baghdad and kandahar and not baltimore and kansas city. the american people need and deserve a world-class infrastructure, which is why we are pleased that the bipartisan america fast for proposal has been included in the house and senate bills. i, too, want to acknowledge chair mica for his support. it was a great thing to see senator boxer senator inhofe, congress member mica, tom donahue, richard trumka, all supporting the idea that we need to invest in infrastructure and the jobs that come with a. according to the l.a. county economic develop corp., your committee's proposal to increase budget authority to $1 billion has the power to create just with that alone of 500,000 jobs. why? there is a 30-one of leverage with that money.

at a time of high deficits and debt, this is the right time to make those kinds of investments. i hope that the senate and house will also look at but some point at a transportation bond program that would help us expand that effort as well. there are now 113 at bipartisan mayors who have gotten behind this effort. i want to thank all of you for your work. i look forward to working with you to pass this. i hope that this support, on a bipartisan basis, will bleed through on the many other issues facing the nation today. america's cities deserve no less. thank you very much. >> thank you, mayor, and we know you have to rush off to the airport. have a safe, a good flight. our next witness is mr. terrence o'sullivan, president of the

laborers' international union of north america. welcome, sir. >> thank you. i would like to thank you chairman boxer, a ranking member inhofe and all members of the committee for the opportunity to testify today. our perspective on critical infrastructure investment is crowded as an organization of the half million men and women who predominately do the work of building america. our roads, bridges, transit systems and other fundamental pieces of the backbone of our nation's economy. like all americans, we are concerned about falling behind in the world. we are concerned that china, for example, will invest almost 9% of its gdp almost $680 billion, in infrastructure this year, while we are struggling to catch bottles. -- to patch potholes. there are millions of men and

women who are ready, willing and trained to rebuild america's crumbling transportation systems, but through no fault of their own, are jobless. through nearly two years of delay in passing a robust highway bill, it is not a recipe for economic growth and competitiveness. it is a recipe for disaster. this is one reason we are gratified and thankful to testify today. in contrast, the outline of your highway bill with the outline put forth by the u.s. house of representatives. we join with partners in the environmental community, like the blue-screen alliance, and with the business community including the u.s. chamber of commerce, in pointing out that the house proposal locks in failure for six years. in fact, it gives up on america. likewise we joined others in praising your political courage and focus in maintaining a foundation for the future which is illustrated by a bipartisan

proposal. i want to emphasize that you have the necessary economic impact, investments must be made through the existing core programs and highway trust fund. there must be a commitment that any shortfalls do not result in less investment and is currently made. liuna welcomes proposal to leverage more private investment and believes that properly structured, innovative financing mechanisms, such as the infrastructure bank, could provide a valuable supplement. but we believe that some of these proposals are years away from creating a significant number of jobs. like many others, we also believe that there must be greater transparency. we have all heard about the bridge to nowhere, but we must remember that there are plenty of bridges to somewhere that are deficient or obsolete. in fact, four years after the i- 35 bridge collapse in minneapolis, 25% of our bridges are still structurally deficient or functionally obsolete.

in stark contrast to this committee's proposal, the house outlined would result in massive job losses, as many as 490,000 lost jobs related just too high work in the first year alone. it would result in a dramatic acceleration of the decline of our nation's transportation infrastructure. one could argue that those who crafted the house proposal have found the will to justify billions of dollars in tax breaks and loopholes or corporations and the wealthy while cutting investment that all americans and our economy depends on. this may be the summer of the blockbuster "harry potter" movie, but a magic wand will not prevent what for some americans and our nation will be the real deathly hallows. like many americans, we are frustrated by the inability of some in washington, d.c. to put

one and one together and matched those who desperately need work with our critical infrastructure needs. just last night, i held a conference call with the thousands of farmerof our member activists about mobilizing for a highway bill that built america. we will make sure that their voices dreams and our ships are heard loud and clear. liuna's perspective is that this is a no-brainer. we can put people back to work, spur economic growth -- we can i get the nation that as big things even in trying times. we can fulfill our obligation to make sure what we do these our nation better off in the -- way that we thought it that the way that we found it. chairman boxer, ranking member inhofe members of the committee, we can build america's that america works.

thank you for the privilege of addressing you today. >> thank you. i just hope the phone call you had with all those workers will continue, because we need that people to communicate with those on the finance committee on both sides of the aisle and this committee that you really need us to do this, because a lot of you said it took courage for us to come together. we need to have you in the background with a loud voice. thank you for that. our next speaker, donald james chairman and chief executive officer of the vulcan materials. you had a fabulous introduction from senator sessions. we welcome you. >> thank you, chairman boxer ranking member inhofe. as the senator sessions said in his gracious introduction, book a material is the lead as producer of construction -- vulcan materials is the largest producer of construction aggregates in the united states. we are here to address the critical situation highway

programs specifically with respect to the next two years, fy12 and 13. at the outset, let me say that it is our view that highway transit programs were not created by congress for the purpose of providing jobs. although they do in fact do a really great job of providing jobs, the real purpose of the program is bigger and much more important than that. it is to provide the nation with transportation infrastructure that is essential to the efficient functioning of the u.s. economy. transportation infrastructure is a basic and fundamental could. every man, woman and child in this country is a direct beneficiary of the federal investment in infrastructure, as is every business in this country. providing that transportation infrastructure properly maintaining and sustaining it is a core federal responsibility. the lifeblood of the u.s. economy flows through our

transportation system. in funding it congress provides a critical public benefit that extends decades be on the construction project. nation's economic competitiveness, our economy's growth and the creation of jobs year after year are directly correlated to the health and quality of our infrastructure. for example our nation's roads and bridges move close to $40 billion worth of goods every day but could move significantly more were it not for traffic congestion, which costs our nation $87 billion annually. the construction sector of our economy that implements its core responsibility will be severely tested in a fy12 and 13. the downturn in the economy has placed historic economic stress on the businesses that build and maintain our transportation system. commercial and residential construction in the u.s. have dropped 75% to historic lows.

short and medium term prospects for improvement remain bleak. aggregate of volumes at fault vulcan are down 50%. transportation infrastructure construction is the one somewhat stable construction sector in the u.s. economy today. the annual federal funding for infrastructure has been a vitally important, while at the same time enhancing economic efficiency nationwide. congress wisely chose to maintain the fy10 bas 4li -- baseline for fy11 programs while reducing spending in other areas. companies did not have to lay off more employees as a result of these cuts. instead, they've been able to provide the public and economic benefits of the construction

industry produces. throughout the recession, we have through necessity had to reduce our work force and take additional measures for the current economy. you face similar challenges in reducing the size of government. when we reduced our company size and the number of our employees we had an obligation to do it in a way to preserve our company and to position it for future growth. the cuts and layoffs were painful, but strategic, designed to ultimately make us stronger and better. if we had ignored this core responsibility and cut arbitrarily across the board we would have damaged our ability to grow, to rehire our employees, to survive and flourish again as a leading u.s. company. in roughly 10 weeks, the current authorization will expire. it is critical to determine now what size federal program is required to maintain it the nation's transportation infrastructure in order to grow the economy.

we strongly support the funding on a bipartisan level at the current base line to continue congress' long commitment to the score responsibility. our nation is at a critical crossroads economically. i ask you to consider the great importance of prioritizing is spending cuts in a way that preserves the nation's potential for economic growth. your bipartisan decision on the baseline determines whether we can begin to climb out of this recession and rebuild our work forces or experience for the decline and lose more employees during fy12 and 13. our nation's ability to grow economically, to continue to create additional taxpayers will be subverted if we do not maintain the baseline. we have all heard that the job loss, if we do nothing more than funded construction at the current gas tax receipts, we will lose hundreds of thousands of jobs all across this country.

as bad as this is, the true calamity will occur in the ongoing national economic impairment which there are few if any existing and accept it metrics. our ability to produce export u.s. products efficiently is directly tied to the quality of our highway infrastructure. adds an adequate funding, we will experience a corrosive consequence of competitive losses as we have all heard today from other witnesses and members of this committee. the infrastructure investments of china india, the european union, brazil, canada are making in their infrastructure. it would be prudent to avoid these consequences of loss and combat -- loss of competitiveness before they occur. this would allow the transportation infrastructure that allowed us to become the greatest economy in the world and preserve that for future generations.

thank you very much. >> thank you for your eloquent statement. we are happy to welcome back susan martinovich on behalf of the american association of state highway and transportation officials. i want to thank your organization for being behind this bipartisan approach. >> the morning, madame chairman -- >> make sure you turn on your microphone. >> good morning. thank you for the opportunity to share our views on transportation reauthorization and the summary you recently released. on behalf of aashto, i would like to express gratitude to you, senator in hhofe baucus and vitter. we recognize that in this time of economic stress, producing a bipartisan bill requires tremendous compromise on both sides and we applaud your

efforts. your proposal merits our strong support to trade if it succeeds, over 500,000 jobs will be saved and projects a vital to america's competitiveness will be made possible. let me make three brief points on your proposal. first, the fiscal year 2012 budget resolution approved by the house in the past spring would lead to an almost 35% cut in federal highway transit funding, and this has been mentioned that it would have a devastating effect on many state transportation programs. in nevada, this would result to $122 million cut in funding next year, with a major impact. one of those impacts being our project neon, scheduled to begin construction in 2013. this is all $1.7 billion construction project on interstate 15 in downtown las vegas. i-15 is a major corridor for east-west goods movements are the country and $122 million

cut to our program would delay that. but it is not about the start date. that is important, but it is also about people. there are developers, businesses, there are individual homeowners whose lives are on hold and in limbo, waiting to see if we have the funding to acquire the property or even start the project. we understand that to maintain the current funding levels, the revenue gap of approximately $6 billion per year is likely needed to be filled. we urge the senate finance committee, working with your committee, to find offset and the revenues to fill the gap. we recognize that the current highway trust fund revenue limitations, but advised that it is absolutely essential to maintain current funding levels. we need it is not only to sustain hundreds and thousands of jobs, and to keep essential transportation projects moving, but what has also been said, is for the economy of this country.

second, states have a critical need for programs stability and certainty to plan, develop and construct transportation projects. without this, the states could have to avoid arrest by differing investments in major multi projects. -- multi-year projects. simply put, states will not advance the first stage of our project of the funding needed to complete the project is not available in subsequent years. deferred, construction companies will not make the material and vestments, there will be forced to further cut their work force, and this trickle down even more jobs and businesses that directly supports the construction industry. while states would prefer a six- year reauthorization bill, the two-year bill provides the opportunity to advance towards the long-term goal and it is a vast improvement over the uncertainty of the month-to- month extensions we have had over the past two years. third, the state dot's have been

advocating many of the policy reforms similar to those in your legislation. we recognize that many of the provision of the bill recognize -- represent compromises from all viewpoints and we thank you for that spirit of cooperation. it appears we are in agreement with some of the key policies are needed, consolidation and flexibility, the use of performance measures, expansion of innovative and finance, and for the streamlining to accelerate project delivery. there are two policy reforms we are -- of this especially supportive of, the enhancement and expansion of the loan guarantee program. however, i want to caution that innovative financing mechanisms, including infrastructure banks, are valuable financing supplements, but they cannot replace the need for funding of the base program. we are also supportive of provisions to reduce bureaucratic hurdles for projects with no significant environmental impacts and visions to accelerate projects approved within a specified deadline.

we hope your bill will also encourage increased cooperation with the regulatory agencies. i want to emphasize here that we strongly believe that constant or reduced funding levels, congress should be even more aggressive in removing regulatory burdens and providing states with greater flexibility to deliver projects. finally, i would like to reiterate what i said at the beginning, that we believe that a bipartisan measure which has been a cooperative between you madam chairman, and the senators baucus inhofe and vitter, merits our support it really is an investment that is immediate and has long-term benefits to this country. we respectfully urge you to continue this a bipartisan effort, and thank you very much. >> thank you. and now we call upon the hon. gary ridley, secretary of oklahoma department of transportation. senator inhofe has given you a

very warm introduction. we welcome you. >> madame chair, members of the committee, my name is gary ridley. i am secretary of transportation in oklahoma, and i'm here to testify on behalf of the oklahoma department of transportation. first, we want to thank you madame chair, along with a ranking member inhofe and other members of the committee, for your efforts to maintain funding levels and increase the efficiency. as we consider the deficiencies of our national transportation system in the next five bill, we recognize the challenges faced by congress are significant. transportation departments across the country are hopeful that congress can make every effort to at least fund the transportation at historic levels. however, we ought to be aware of the difficulties presented by the limitations -- we are acutely aware of the difficulties presented by the limitations of current revenues g. when considering a reduced

federal funding projection, none of the critical needed transportation projects currently being prepared for delivery in oklahoma tandycan be held harmless in the rebalancing of our fiscal constraint work plan. in addition, your renewed focus on transportation infrastructure and your consolidation of programs that made the commitment of the highway trust fund dollars to french activities is welcome. as eligibilities are retained, the commitment to retain resources in these activities should be left to states alone. even more so when our state and federal budgets are an extreme pressure and our performance is proposed to be measured by key outcomes like reducing fatalities, improving bridges and -- congested -- at reducing congestion the private-public partnerships, built america bonds, another methodologies that are proven effective in financing certain well-defined transportation systems -- however, should be mindful that

none of these financing activities provide new revenues are sustainable, long-term funding. it is important to ensure that the funding -- the financing option is the only solution to stem a further decline of our transportation system. the nation requires new and effective transportation revenue streams, but does not need you encouragement to incur additional debt. extreme care must be exercised in disparate programs to avoid over-projecting an over- extending resources. states should not be left to bear the burden of the financial system alone. we recognize that a consistent authorization with a reasonable funding commitments, a term that extends beyond the reach of the and this extension tax while the complete physical resolution of our national transportation funding process may not be at hand, the value of legislative provisions propose to facilitate a more effective project and

program delivery system should not be discounted. reducing environmental hurdles for projects that have no significant environmental impacts will be extremely beneficial. for example, in the last three years, we let the contract almost 200 routine projects -- all these projects required documents that typically took a 30-180 days to complete assuming that such projects would meet the criteria for expedited process an exemption, oklahoma would have had the opportunity in many cases to reduce the process costs and delivery times on each i like about. the introduction of these ideas is a giant step in the right direction. preparation efforts and time saved to deliver projects that meet defined criteria would not only translate as a cost and time saving to the agency, but will accelerate a direct user benefit to congress and the

traveling public. also, the state in frederick regulatory resources and lead agencies will have the opportunity to focus more of their internal resources on progress in other large scale proposed transportation improvements in a more timely and effective manner. however, even as some progress is evident, we have recently become aware that the epa and the corps of engineers are seeking to expand jurisdictional authority over new waters through issuance of clarification guidelines. such guidelines are really concerning, as more and more regulation creeks into the simple drainage ditches and minor tributaries that were long considered non-jurisdictional. in oklahoma, corps of engineers issued permits and mitigation members approval is becoming more difficult to obtain in a timely manner due to the resource strain on the existing broad jurisdictional assertion. this situation can only be exacerbated by expand it

traditional authority under the proposed guidelines. regulatory guidelines should not overstate the law, should be easily managable by the responsible agency with the resources anticipated to be available, and above all should be determined reasonable by state governments and by the private sector. it is critical that a balance is maintained that projects environment is not restricted delivery of critically needed safety and addition-related improvements or the economic growth and competitiveness and development of our nation. thank you, madame chair, ranking member inhofe, for the opportunity to testify. we are grateful to the -- efforts -- grateful for the efforts of the committee and congress to fund the transportation, meizell will carry us to a multi-year authorization. >> thank you so much, mr. ridley. our next witness is mr. deron

lovaas a transportation policy director of the national resources defense council. >> thank you, chairman boxer ranking member inhofe, members of the committee for -- investing for a -- invite me to testify today. imagine a world without transportation systems. rangers and farmers would be unable to get products to market. manufacturers of the vehicle's parts would be unable to ship it to the u.s. or a. overseas transportation -- or overseas. current policy undermines security and our economy. invest wisely by setting national mobility in access, at safety, economic impact and in a car rental quality objectives. public investment in infrastructure can yield a large productivity gains. investment in transportation to its $3.5 billion of gdp to handle investments in public

transit systems and high-speed rail would create 3.7 million jobs overall and more than 600 jobs in manufacturing over six. years these investments would generate $60 billion in net annual gross domestic product gp nearly $45 billion in annual worker income, a $14 billion in annual tax revenue. current fiscal constraints warrant collection and use of cost-benefit data during planning and project selection and design. we need to make sure to invest carefully dried governments should turn into a tool in the kit of successful companies. strategic planning, including the use of scenario building. one recent study pegged the cost differential between strategic and business as usual investment at 12% savings for sacramento, 24% for albuquerque, a whopping 51% from asheville. there are a big potential savings if we look seriously it in the future it by building some areas. to, we need to fix it first by

clear and more aggressive maintenance policy. 500 bridges in america fell between 1989 and 2003, and nearly 7000 bridges are in disrepair. as former white house economic adviser larry summers put it, you run a deficit when you borrow money and when you needed for maintenance that needs either way, you are imposing a cost on future generations. we need to break our oil that and national oil savings objectives for the transportation policy in similar object is for states and regions. transportation driving america's dependence on foreign oil. with nea -- transportation remain almost entirely dependent . this translates into a 9000- gallon-per-second ad. how do we reduce that dependence? raising the bar on fuel economy which we are making good

progress on, is the first step. second, providing consumers with more fuel prices by making cars pluggable. the third prong we need is greater mobility choice. consumers deserve more options for travel, including a virtual travel i occupancy toll lanes telecommuting, technology that transit slow, as well as convenient and save opportunities to walk and bike. we need a new tools and we are in agreement on some of those toys. -- tools. an increase in the gas tax over the long run, innovative financing. expansion of tools and all that public-private partnerships, such as infrastructure banks should award assistance on a competitive basis. a focus on maximizing returns and minimizing -- and fuel savings.

five, we need to approve project delivery by tackling real causes and not compromising environmental reviews. let's be clear, environmental reviews account for a small share of transportation project delays. lack of adequate financing is a bigger factor. congress should not legislate by anecdote, based on a horror stories, but evaluate project delays and tackle them with planning improvements adequate resources for worthy words. no. 6, when needed to move faster and cleaner and cheaper with a free program while reducing environmental harms. we can save oil and as well as reduce air pollution, water pollution, and noise to targeted provisions. specifically, we favor a competitive grant program to find innovative private space on energy and environmental performance criteria developed in coordination with environmental stakeholders. last but not least, we need to

protect natural resources by setting up standards for new and rebuilt it i was and roads. smart strategy such as green roads and highways are a cost effective way to reduce storm water runoff and improve clearwater requirements. thank you for the opportunity to speak with you today. we need to press forward with a wise investments any smarter and greener transportation program and i look forward to working with you on that. >> thank you so much. last but not least, we are very happy to welcome back mr. greg cohen, president and ceo of the american highway user alliance. >> madam chairman, ranking member inhofe members of the committee, i am honored to be here today for testimony. highway users is the only organized national non-profit coalition that represents the interest of the motoring public across all the highway muds.

we promote several state and local policies that improve safety and mobility, and our members include a aaa clubs trucking and bus companies motorcyclists and others that contribute user fees to the trust fund. these members and several other associations represent millions of highway users from coast to coast. we have worked closely with members of this committee, and your excellent professional staff, to advocate for a new vision of the federal highway program that is reformed, robust streamlined and reflects the core priorities that serve the national interest. we congratulate the committee on this week's policy of land which largely reflects the priorities that we share with you. our goal is not to please traditional transportation trade associations in washington, but to serve the interests of the public at large particularly those who pay the highway user fees. unfortunately, the unwieldy and complex authorization bills of the recent past generation lacking in direction and full

year marks, up with this committee at a public relations disadvantage before he even began working two years ago on this. that is why i am emphasizing how delighted to be odd that this is a new bill that sets a new course -- delighted we are that this is a new bill that sets a new course for reform. map 21 is being negotiated to receive the support from some of the most progressive and some of the most conservative members of the u.s. senate. bipartisan cooperation it is a tradition worth keeping. we strongly support passage of this bill and the house bill so that conference committee can be convened quickly and so that you can complete your work. the worst possible outcome would be if congress failed to make progress and we ended up with a long-term extension bill and fails to reform the program. it is much more valuable than simply being a jobs bill. mobility and a safety investments create broad economic growth, improve our quality of life, and give

america a bad of an edge in international trade. for example -- give american advantage in international trade. for example, the program is save $41 for every $1 spent. investing 1 to 7 $5 billion a year on highway projects would have a positive benefit to cost ratio. at the current funding levels, the performance-based in program would deliver hundreds of billions of dollars of economic benefits each year for only $40 billion in annual user costs. we support your efforts to prevent cuts to the funding of the highway program. due to the shortfall in the highway trust fund and the seemingly impossible task of raising highway user fees on fuel, we encourage all the committee members involved to consider supplementing highway programs from the general fund over the next few years. however, it is important to note that we have always supported how we use is paying their full share for the highway program. we agree with the committee that growing the program is a better

plan than the national infrastructure fund. we also encourage the senate consideration of senator wyden's bill, which would supplement funding for all states. we applaud this committee for taking a strong position on reducing bureaucracy and improving product delivery. we understand it that the committee's plan is to keep all substantive improvements in place but at the same tim -- according to dot a major highway project and take 19 years to complete, and every year that the project is delayed, the cost is doubled. we also support streamlined process that could consultation with a wide range of interested parties, and ensure that representatives of motorists private bus companies, truckers and other groups are at the table. however, with money in should supply, congress should avoid additional planning lairs or mandates that force corp.

cooperation ordination with new groups of the reviewers. planning is already extremely complex. i know. i have done a greit. in mandates experimental planning techniques, that creates additional hurdles for u.s. dot to review plans. these have to be avoided most of the core programs proposed by the committee are similar to those we have to propose in our briefs and previous testimony. in particular, we congratulate you and strongly support your core programs for safety, a free and the national highway system program. city is a top priority, and we encourage the committee to consider additional proposals such as the baucus safety bill and others we discussed in 2010. the national highway system

program will improve just 4% of the roads, but those are the most used and serve as our nation's economic arteries. this committee has an extraordinary opportunity to improve the economy, reduce congest in, save tens of thousands of lives by expediting the authorization of map 21 with the reform, streamlined ata robust highway transportation program. we would be happy to answer any questions. >> that he very much to all our panelists. mayor, i do have a question for you. don't go just yet. i felt, mr. cohen you really brought it home to me, that a lot of the reforms in this bill, probably all of them, and there are many, really came from the people out there who have been working on various commissions and committees and have worked with us on both sides of the aisle, and we really appreciate it. what we were able to do is look at all of these proposals and finally do something about this

program, which -- let's just say it was sprawling. it was too many little things. we managed to consolidate and save the things that we work hard together on. there were differences here. we gave and we took. it was hard, but i think at the end of the day, we managed to get this together. mayor, i want to make a point that i know you agree with. the basic highway trust fund, that is the bread and butter. it is what mr. james referred to, what mr. ridgely referred to, all of you have referred to it. most of you have referred to it. that is the bread and butter program we have talked about. that is why i appreciate all the new ideas that are coming forward. and by the way, support them a. whatever they are. but we cannot allow those ideas whether it is an infrastructure bank or anything else, to replace the basic funding

mechanism we have here. i know senator baucus has on his plate -- you now, as soon as we act, he is going to do everything in his power but you need to help them, support him, and i say this just as someone who is been around here on this committee since the day i came to the senate, so that he and his number is the -- senator carper is on that committee -- i do not know who else here is great but the bottom line is that they have to feel this is a priority. i already feel that because during the conference calls with you -- you must've been sick of me. i felt the support, but the support now has to continue with this committee, but also with the finance committee, because if they don't sense that america wants this, it is going to be very difficult. i want to make that case. i think you have seen bipartisan

support here. mayor, i want to thank you personally but also, your organization, now that you have had the conference of mayors because you are bipartisan mares and you have worked with us very clearly, and you have worked with us on the need to have a strong core bill, which is maintaining the levels that we have now. you have worked with us on six routes to schools -- safe routes to schools, and we kept it, and recreational trails, and we kept it. that has remained in the bill . with information on all senators, this is, to me, so exciting. when you came here with a bipartisan group, humid labor management, chamber of commerce everybody, and he said

that los angeles has passed a sales tax, and we have a list of programs -- i think 9 that the people said they want to do. it will take us 30 years and if you come to us up front and move these projects forward you know that we have a stated stream of income behind it. would you be willing to come out? i want to senator inhofe i said, here is an idea whose time has come to the cities and counties are stepping forward but it takes time to get the dollars in. through the existing program, and i give credit to my chief of staff and chief counsel for saying, you know, i think there is already a program here, but it meet the needs here, we were

ready to help already with one project. i wonder if you could explain to my colleagues now, because they support this robust -- so does chairman mica -- how it works and what it is enabling your city to do it, and other projects were found also -- and speak to other reforms. we will put those in the record. >> thank you, madame chair, and i want to thank you and the committee for the work you did on this issue. in the middle of the recession, with a 2/3 vote, we passed the half penny sales tax to double the size of the rail system, but also to invest in highway repairs, expansion of hov lanes, throughout the region. it became crystal clear when

almost days, weeks after the passage of that bill, people would walk up to me and say "mayor where is the subway you promised?" i had to explain to people that it was a half penny sales-tax and the money would generate over a 30-year period of time. as you said, working with you and your office, we began to look at innovative financing tools, because we knew that this was coming. the conversation over the deficit and debt was such that people in the congress did not just want to rely on programs that provide grants. what is right about this specific program is that there is a 30-1 leverage. in our case, and in the case of cities and counties across the country, and states, if you have a revenue pool from which

to invest in you can get a loan and pay it back. as you know, we have already done that with you five under $46 million loan for the crenshaw line. -- $546 million loan for the crenshaw line. we are now in the pipeline of a finalist for the $646 million loan for a subway. the reason why we are qualifying the way that we are is we are putting up our own money. what is encourages is that the responsibility, not just on the federal government -- not just be on the federal government. i associate might support for it ms martinovich who says that we do not want this to be in view of a federal -- communicate -- in lieu of a federal

commitment but this is a creative way to incentivize localities. if you ask someone in l.a., detroit, a small town, wherever it is, if they would rather support in local tax or bond or a state or federal one, they are almost unanimous in the support for a local wine, because they want to see their dollars come back to their neighborhood. that was the idea. in that is the idea behind that. in addition to that, instead of just 33% this could go for 50%. it would grosso do multiple projects here. you could get advanced notice. i forget the exact term, but the opportunity to give advanced credit going forward on multiple projects which could help us as well. i do want to say some -- one

last thing. to really make this work, getting a transportation bond program could really enhance all of this as well. it could also promote public- private partnerships, and the like. particularly, during these tough economic times. >> thank you, mayor. i want to say to my colleagues, when the department of transportation made that loan to los angeles -- $500 million right? the score was $20 million. it was barely anything. the stream of people voting for it, it is hardly any risk at all. that is why it is so wonderful. it does not replace the core

programs. but in these times when you hear mr. james talk about layoffs and worries and we know construction is down, this will give us a chance to do more than we can do with the base. the lasting is we reform to allow world areas -- rural areas to move with practically no interest rates. i think it is terrific. i give you 80 minutes. -- 8 minutes. >> we went through this in 2005. we had a successful effort then, but that was to wondered $86.4 million, i believe. -- $286.4 million. i think you were here at the time. that amount of money really just maintains what we have now.

what we are talking about here is not that we are saying to drop $12 billion over a time frame is going to fix some of the funding. it is not adequate. i remember so well when they had the $800 billion stimulus bill and they were down on the floor and i could not believe only 3.5% of that actually went to what we are talking about today. we had an amendment -- you talk about been bipartisan, the chairman and i had an amendment to take that. it was $29 billion and up to 79 million -- $79 billion. that still would only have been 10% of the hundred billion dollars. it is mind-boggling to me -- of

the $800 billion. it is mind-boggling to me that we did not want to do that. i will start with secretary ridley because we talked about this before. i think miss martin of ageovich would agree as to how this affects all the other states. we had to do the 34% cut from current levels, and that is what we are talking about. specifically what would that mean in oklahoma? >> thank you sir. it certainly, the impact would be devastating to our eight- year construction work plan. we put together a plan that is fiscally constrained, based on the monies that we receive at the state level as well as the anticipated revenues at the federal level under current

statutes and law. if you have a one-third reduction of the federal funds and those make up 60% of our eight-year construction work program, if you do the math, you are looking at somewhere around $800 million coming out of that work construction program. it would have to be reduced by $800 million. there are certainly some projects that you could probably looked to rescope and reduced the length of them, but within that program we have 650 bridges that we need to replace or rehabilitate. i cannot reduce the length of those, as you might expect. they are what they are. it would certainly put all projects within that eight-year program at risk of being reduced in size or scope, or being pushed either out of the eight year program, were being moved.

>> is there a specific program within our state of oklahoma that you could address that would make a difference to the project? we have some huge one in oklahoma city and tulsa and elsewhere. >> absolutely right, and we have the relocation of the i 40 crosstown bridge. we are getting close to being able to take traffic off of that critical bridge and put them on the main line, but with that, it requires us to reconnect the downtown area of oklahoma city back to interstate 2 wondered 45 and interstate by 35. -- interstate 230245, and interstate 35. there is a crime and -- common bypass that is a triggered $40

million project. -- $340 million project. one could imagine it could very well be a project that we would have to delay. it is the oldest section of interstate that we have in our system. in fact, it was in place before the interstate system was established. it was supplanted on top of an existing highway. high accident rate, high severity rate, high fatality rate in that area, and some of the worst on our interstate system. the completion of the project would not only cause additional costs, but certainly you would expect to have additional accidents, both personal injury and maybe even fatalities. of any delays that we would have you could expect that. >> i would like to ask maybe mr. james, or just about anyone, the alternative -- if we were to

deal with just more extensions as opposed to just a bridge, and even if the money workwere more, in addition to the reforms, what other problems do you see that would be there? in other words we spend the same amount of money but we do it with extensions. >> the biggest problem is not be able to plan. as a transportation official, i do not know when the money exactly would come, or even how much because of the unknown *time frames. i would be hesitant to put out any projects, not knowing if i were to be reimbursed on time, and then supplementing the contractors with our state money. it is a balancing act and planning act. if i cannot plan, how can our customers plan? how can the customers know and

set up their wheat sources -- up their resources? how can they know and be reactive? >> that is what we are trying to get bad, because we have a lot of things -- predictability is in here and how that translates from what we are are going to be able to get from a bill in terms of the state's activities and things. i guess what i am saying, we have a lot of really good reforms. some of them were easy. some of them we did not agree on in the beginning. but that, to me, it's almost as important as the amount of money to be able to predictably see. i want to thank you -- my time has expired but i want to tell you i appreciate your being here and bring to the table the fact that we have thousands and thousands of jobs out there. i often wonder, and maybe you have put thought into this, but

if we had been successful in changing that $29 billion in 279 mcvet -- in 27 $9 billion, how many more jobs with their be today? -- into $79 billion, how many more jobs would there be today? >> there would be an awful lot more jobs, less unemployment in the construction industry. and just a question about what would happen as far as the state department of transportation, from the labor perspective we already have a 15.6% unemployment rate in construction today, down from 20%, 1.3 million construction workers out of work. we have lost 30,000 members from the unions in the last few years. those were construction laborers that had eight or more years in the service industry.

-- in the industry. this is a sustained a depression in the construction industry, one that we have not witnessed in a long time. and we are seeing an exodus of skilled craftsmen both men and women, in order to rebuild. the skills trade in this country because of the prolonged depression in the construction industry is a problem. >> i so appreciate your asking this question. >> this is really unusual. we have everyone covered here in this committee. i express to you my appreciation for working on this input that we are getting. >> is extraordinary. i went about a year ago to a job retraining center in the central valley, and one of the programs was learning how to chef. i went on the room and at least

in that room about 25 to 30 working people, there were at least 10 you said they were construction people. -- who said they were construction people. they had just plain given up. your point is poignant and accurate. i thank you for it. senator mark lee. >> thank you for your testimony and thank you madam chair. i really want to make sure we understand fully the job implications. i have heard the estimates ranging from 700,000 to 500,000 jobs. can a couple of you feel they have a handle on these numbers help us understand what happens if we do not get this acquisition and we have this roughly 35% drop?

>> i can speak from my company -- for my company, my customers companies, and our suppliers companies. we are staffed at a level today that is in anticipation of maintaining the current level of funding. if, for some reason that declines further we unfortunately as well as our customers and suppliers, will have to make reductions to remain economically viable. that is our only option. this is not a theoretical job loss issue. this is real. these are human beings. these are members of mr. o'sullivan's union and others who we will not have work for if

this program is not maintained. >> the number i mentioned earlier with a 36% cut was about a 630,000 jobs lost to our agency alone. -- the job loss. to our agency alone about $1.4 billion. it is a sizable impact on the job market, but also on our ability to fund important projects. but mr. ridley? >> senator, a lot of -- >> mr. ridley? >> the senator, a lot of talk and discussion around the jobs situation in all our states. and that is certainly an area that we look at in the short term especially for creation or sustain jobs in the construction market. to me, the idea of investing in ourselves and investing in infrastructure establishes much

more than that, exponentially more. if we think about the investment that our nation put into the interstate system and where we are today with the economy and where we would be without it, i think rebuilding the system, our national system, if you will, to get it back to where we were or better than where we were 20 years ago, it will create an investment along those corridors like we have not seen in a long time. i think the economic vitality of this nation is totally dependent upon how well we do our job as far as infrastructure is concerned. >> certainly i agree that investing in our infrastructure is absolutely critical to our economy in terms of jobs creation and critical to our future economy in terms of transporting goods and people. we had a bipartisan delegation that went to china.

i have been there for 14 years. there is a massive structure built there -- infrastructure built there. i have never had a chance to set foot on a 200 miles per hour train here in the u.s. the amount of light rail transportation and reconstruction -- road construction for a decade and a half. i want to thank all of you for being your testimony today. -- for your testimony today. in my opinion, this is simply the minimal acceptable approach. in fact, we should be figuring out how we can spend -- someone

referred to building bridges in baghdad rather than here. there was a political way of putting it, but we need to figure out how we can invest far more in infrastructure here. thank you. >> thank you for holding this important hearing and for the hard work that you have put in to create such a broad spectrum of consensus on this point. it is reflected in today's panel. we are obviously facing a serious shortfall in transportation funding. in rhode island, one in five of our bridges are presently structurally deficient. it is the fourth highest ratio of any state. 60% of our roads are rated poor or mediocre condition. and 37% of our highways are congested. there is a lot of work that needs to be done. estimates are that to bring road

eileen's highway system to a state of good repair, we would have to double our current spending for 10 years. but against that backdrop, the house of representatives the republicans in the house of representatives, have proposed a budget cut in transportation levels by more than one-third. if we have a devastating impact on the economy -- it would have a devastating impact on the economy and jobs. road island has the fourth highest unemployment rate in the country and it would lead to more jobs cut in rhode island. it is totally unacceptable. i applaud the chairman, the ranking members baucus and bitter for their work to this point. in representing one of our strongest labor organizations, i want to ask you, and mr. james

who represents corporate interest in this area, have we done a good job in congress at distinguishing between spending and infrastructure spending? i think of a family that has a moderate income and they discover that they have a significant problem in the roof over the family home. you could ignore that. you could sit around the kitchen table and say, this family is spending too much. we are not going to spend it to fix our roof. that would be wasteful spending. the water would continue to pour into the roof. it would damage the house. you could see a circumstance in which the smartest decision for the family would be to go to the credit card, fix the roof, protect the assets, save money in the long haul. that is a very different family

decision than saying, let's take the old credit card and take the family to walt disney world for the week. some people in washington do not seem to be able to distinguish between those two kinds of spending. one is money out the door. the other leaves you with a national asset that you can go out and touch -- a bridge, a highway, a high-speed rail system an improved airport that runs on digital technology instead of cathode ray tubes when they are bringing the aircraft safely to our landing strips. i would love to have the thoughts of mr. o'sullivan and mr. james on spending for strength and -- spending for spending sake and spending to strengthen our economy and the wealth of our nation. >> senator white house --

senator whitehouse, thank you for the question. spending in the business world where we invest heavily in large equipment the answer to that question is obvious. when the united states spends money building infrastructure you have created an asset. it will last literally for decades. we are traveling on an interstate system that has been in existence, many parts of it for four or five decades. unfortunately, there is not a federal balance sheet like there is in the private sector where we can look at our investments over the last 10 or 20 or 30 years and say, here is a real asset. it is producing economic efficiency. it is producing revenue. it is a long-term value-

enhancing assets. -- asset. somehow, we do not see that. >> we have no budget in the federal government to work with to accomplish that. >> nice to see you. thank you for the question as well. we talk about accountability. i think we all believe that whatever money we are born to spend on infrastructure there has to be account -- going to spend on infrastructure there has to be accountability. it has an impact on our economy and our infrastructure and on putting people back to work and our ability to move goods and services across the country. i also think that what we need to do is a much better job of making sure the general public realizes -- we talk about statistics like 27% of our

bridges are structurally deficient or obsolete. but people keep driving a clot -- across without any real knowledge. we did a campaign where we took out billboards in a number of places across the country and showed the undercarriage of a bridge that was running away because you cannot always see it from the top down. it was a union-funded campaign to inform the general public about the sad state of our infrastructure, of our bridges in this country. in washington sometimes, i think we need to take the message of a crumbling infrastructure across this country so people realize the state of affairs, but that we do have a $2.2 trillion problem. we all need to agree that this is the starting point and we need to do even more. what we need to do is understand -- make sure that people understand the state of affairs

and the reason we need to invest in infrastructure because it affects their livelihood. we have more calls not from members, but from the general public saying, i cannot believe that bridge is not prepared. they could not see it driving over, but they took pictures of it -- but they could see it from above. we took pictures. >> highway 95 near providence goes by on a large bridge, a viaduct. you go around it to get to a parking garages in the mall. the planks are there for support because the bridge is falling through. they stop their chunks of the bridge that are falling through from landing on the cars that go by underneath. that is the state of that bridge in our capital city.

>> that is a visual that we need to be reminded of. and we talked about the tragedy that occurred where a piece of concrete fell on a young mother and now she is gone. this is our responsibility. when we get to our markup before we leave here, i think we should try to get a few photographs of this example, and others just to keep them in the forefront of our mine. -- of our minds. it is a stark reminder of what we are dealing with here, and that is a matter of life and death and safety and moving of goods and jobs. >> as a defense department and

budget member, had to remind them that they have to tighten their belts like everybody else. we're all in that mode. i think we need to do our dead level best to maintain the kind of spending this committee proposes. whether or not we can do that, i am not sure. we are in worse shape financially than most people realize. people are borrowing literally 40 cents out of every dollar. people are used to depending on the federal government to ask them to help when they are living beyond their budgets. we will just be a source of money. it is a very difficult thing. the one thing that i believe the bill attempts to end up that i think can be helpful is to reduce some of the -- attends to do and that i think can be helpful is to reduce some of the costs and delays.

delays due drive up costs -- delays do drive up costs, and regulations also can drive up costs. do you agree with that? >> yes sir, senator. you are right on target. and as we talked about, it is not always -- not only the cost of delays for putting people to work, it is not only the cost of delays for increased inflation but the real cost is for the road user who may have a structurally deficient bridges who may have to take a detour. for the school buses -- or a school bus has to go around because it cannot cross it because the average school bus is about 15 tons. or it may be the shippers that are trying to get through from

one side of the state to the other. but more importantly, it is the accident, the fatality accident personal injury accidents that happen on those roads and bridges, simply because we have been unable to fix the problem we know exists. >> and when people take time out of their day for meeting or carry-on -- carrying on these functions. our member many years ago -- i remember many years ago we had an induced a problem and we put it on -- an interstate problem and we put it on an accelerated time line. what was your assessment of how that came out? >> it came out beautifully. a good customer of ours repair the bridge. they work 24/7, seven days a week. they brought a lot of labor in

and got the bridge repaired. it was destroyed by a fire. it was back in the contractor earned a very nice premium for completing the project early. >> accelerated time frames did not always drive up costs. >> they may get dramatically more efficient. the contractor could mobilize, bring the workforce in, finished the project demobilize, as opposed to stop and start construction. >> they start 20 and they have money to complete 10 and it takes twice as long and

sometimes, that drives up costs. i do see a lot of roads that are partially constructed. >> i think it is the duration of a program that is really the key to efficient construction. >> that is a huge cave. we are all supportive of the two-year bill that this committee has reported out. ultimately, to get a efficiency and a highway program, there has to be a multi-year bill. >> thank you for sharing that.

>> it is very expensive separate certain projects can be worthwhile. i think we will have to look at that as part of our projections. is that the best place to spend our dollars right now? preserve the amount of money the funding that we have. madam chairman, thank you. >> i want to pick up on a couple of things. if we build incentives into completion on time or ahead of time we also have the contractors to finish. when pete wilson was governor, he put back into play after a series of earthquakes.

it was remarkable how bad incentive worked. that is what we have tried very hard to do -- it was remarkable how that incentive to work. still giving them their full rights. if you feel like it is an environmental issue, bring it up. before i call on the senator you are still on track when you talk about the wasted time. the texas transportation institute always does a study about this very issue. their latest study was finished in 2010. americans waste 4.8 billion hours a year sitting in traffic due to come justin. this translates to almost 4 billion gallons of extra fuel consumed and 115 billion cost to

the nation. when you talk about -- i could not agree with you more. this is a question of priorities. if we allow the highway trust fund to expire, and now we see a 34% cut disaster, that is what would happen. it is so counterproductive. this is one of those investments that the dividends paid are very clear. it is true that we have to make reforms. we do not want to have a program going that is not sufficient. the reason i am so proud of the work we have done your together is we have taken all of the recommendations from a lot of the people sitting here, to have helped us to work together across party lines to come up with a bill that is going to

address those issues. at the end of the day, we have to determine as americans if investing in additional $6 billion a year for two years makes sense. i can honestly say that in the budget that we have, we will have to figure this out. i do not know if you were here when i pointed out that the gang of six they actually do mentioned only one spending priority. that is the highway trust fund. they instruct in that particular document to fund the highway trust fund at the current levels for 10 years. they say how much it would cost. i think the senator was very happy with that because it showed a bipartisan consensus. we all face cuts in our future.

in this particular are being a, if we were to allow the draconian cuts that appear to be on the horizon if we do not act it is terribly counterproductive. 620,000 jobs lost in 2012 alone. that is a true estimate. we have seen business and labor confirm it is just a crisis. i am -- i know how you are wrestling with this whole issue. we need to do this, but how we did -- how do we do it? there are certain areas that some of us think they should not grow. we may have different opinions on a host of them, but on this one, i think we should build on the bipartisanship that we have. we have to do this. if we do not do this, it is counterproductive. people are going to lose their

jobs. i am not being melodramatic, they will lose their lives. we will not be able to compete and the world. i look forward to working with you. i am going to do some tough cutting. we have no choice. we have to do it. we also need to be smart about how we do it. i think you have been very helpful to date. thank you for being here. >> i will do two opening statements. 17 questions. thank you for working so hard. i appreciate the witness is being here. some of you have been here a number of times. we are grateful for your

response to our questions. senator boxer was just mentioning how much time we waste sitting in traffic jams around this country. i think it is at a university in texas that figures this out each year. running up and down the east coast of our country is i-95. it runs through delaware and it cuts the northern part of our stake in half. i came to delaware right out of the navy in 1973. during the weekend a lot of people trying to get to the beach, holidays, we always had

backups on i-95. one of the things i had to do was to introduce a new technology to be able to expedite the movement of our vehicles through i-95. i always felt very badly saying to people travelling, not only do you have to sit there and wait for the privilege of coming through delaware, you have to pay for that privilege. we made some improvements, but more and more traffic comes through. about 140,000 vehicles a day from maryland and delaware. one of the things i saw to do in the senate was to garner support for a highway speed e-z

pass. really be able to move traffic. if we could just move most of those vehicles, we help ourselves in a variety of ways. we reduced the amount of time people waste. we reduced the amount of fuel that we waste. we reduced the amount of air pollution. we promote public safety. you have people darting from one lane to another. we finally get it. we used money from the stimulus package. it took a while and we had to work with the folks from maryland. we opened it up on the fourth of july weekend.

the governor ninth got to do an event. -- the governor and i got to do an event. we took some camera crews and opened up the sides and you could see the traffic coming from the north and to the south. on the fourth of july weekend no traffic jams. saturday, no traffic jams. sunday, no traffic jams. for the first time anybody could ever remember. we have the traffic jams. that is an investment that yields fruit and so many different ways. it cost about $30 million. that is a smart investment of public dollars. i think. for people to go up and down the east coast.

as we prepare to spend money transportation dollars in the next person of our transportation infrastructure bill, i hope that we will try to figure out how to use the money to be able to disburse the money in ways that meet objectives of our nation. that reduce our dependence on foreign oil. reduce pollution. reduce congestion. those are pretty good goals for us, and i hope that we keep them. the other thing i want to say the gang of six worked -- one of the things the president has called for while it is

important for us to reduce our budget deficits, if we do not we are damned. we cannot go on this. there are things that i did not like in the proposal, but there is a lot of good there. we need to satisfy our differences and deal with these issues. try to do more good than bad. one of the things that -- one of the things it is important is to do what the president suggests. if we are going to when the 21st century, we have to -- as we reduce spending, we have to continue to invest in three areas. work force, we will not be competitive without a world class work force. research and development but has the potential for being commercialized. we can make in this country and sell all over the world.

number 3 its infrastructure. if we do not have a modern infrastructure we will be a second-class nation sunday. hopefully not in our lifetime or our children's lifetime. but someday we will. as we go forward it is important for us to invest -- we need to find out what works, and to keep more of that. that goes back to the example that i used with the highway e-z pass. this is a question of >> it

deals with maximizing return on investment. with new transportation funds in short supply, we cannot find every transportation projects, we have to support the projects that give us the most bang for our bucks. the delaware valley regional planning commission uses a strategic planning process that compared alternative investment approaches and they were able to accommodate new growth while reducing pollution and transportation costs for our families. should more states use this common-sense approach? >> the short answer is yes. more states should use this tool. there are several regions are

doing so, both big and medium- sized, and finding that there are huge potential savings based on infrastructure that does not have to be built. corporations do it fortune 500 companies do it. there is no reason that the permit should not learn from them. it is important. in addition to encouraging more of that with the new law, under current law, there are requirements that plan speak fiscally constrained. that is a good question to ask of the federal highway administration, whether that is the case. we would like to see a lot more investment and this program. we're probably going to have to make some cuts as well. it makes sense to take a look at programs to see -- to make sure they're fiscally constraint. >> thank you so much. in delaware, we used to say, if things are worth having, they

are worth paying for. we could have barred money until the cows come home to put -- we could have borrowed money until the cows came home to put into our transportation projects. at the end of the day, we need to raise revenue. we need to raise revenue as well. it would be smart if we actually reduced our dependence on foreign oil. i would leave us with that. my time has expired. thank you so much, madame chair. >> thank you so much for your leadership in this committee. it is so important. the fact that you were also on finance is key to us. we have reached a milestone today and the bipartisan support for this bill. we must get that same sense of

bipartisanship and the finance committee because these are tough times but we know that if we fail to act we are inviting unemployment. we are inviting second-class economic leadership. it is now like we do not know. it is not what we are walking blindly into something. we know what the options are. what i would like to do enclosing today is to go through this panel. we have to start with different approaches. i do not think it is necessary to bemoan that fact, but it is necessary to recognize that fact. we have the house proposed bill which slashes spending between

34 and 36%. we have the budgets passed a bill -- budget passed a bill that does the same. we know we have a looming deadline, which does the same. we have three ways to go that would result in a cut of more than a third. all of you have spell that out regardless of your views, or whether you like the president or you do not, and this is nothing to do with any of that. i guess what i need to hear from you today in the most unequivocal way, if you can do this is to tell me whether you are willing to be part of a team that is going to move forward with this bipartisan bill. this is not going to be easy. it is necessary.

it is necessary for the economy it is necessary for the environment, it is necessary for competitiveness, it is necessary for safety. it is necessary to make sure that for a couple of years, the states know how to plan. we have heard from to incredible people here who deal with the uncertainty every day and i remember once before, when we were not going to act on the extension, i believe it was nevada. i think it was your state, susan. layoff notices are going out, we cannot proceed. we cannot go into this future. this is america. we do not do that. we know that we can work together. my question to you, and if you give me a guest on it, i will be very grateful. if you cannot, do not do it. this is an unprecedented job

that we have. we do not have time. we have to mark up this bill before we leave this summer. we have to persuade our friends -- i know he cares about this. we have to convince them to work with us. this is a long hurdle. we have to convince the administration to please wait in now. -- weigh in now. yes, we want an infrastructure bank, but it is not the core program. will you be part of a team of bipartisan -- a bipartisan team and work as hard as you can to accomplish this bipartisan bill? i will start with you. >> chairman, we will be there on quickly. we will be there with you. this issue is too important and we will be with you every step

of the way. >> wonderful. mr. james? " my testimony today was in full support of the bill that is being introduced by this committee. we certainly think it is important that surface transportation funding be -- remain a bipartisan effort, which it has been throughout its history. we certainly believe that maintaining the current level of funding for the next two years is the best approach to the highway program. >> will you help us? >> absolutely. >> excellent. we understand. if this bill takes a different turn and somebody here says, i do not like it anymore, i did it. that is not our intent. >> madam chair yes.

>>. wrigley is such a close friend of my colleague. >> certainly the states and cities such as los angeles cannot rely totally on the gas tax. they have to require -- the federal government needs to do the same thing. if you are going to take transportation infrastructure at a higher priority -- you need to find other revenue sources in order to ensure that it is funded. >> you are a yes. ok. >> we are part of the blue-grand alliance -- blue-green alliance. >> i am very pleased to hear that.

>> absolutely. we are 100% supportive of this bipartisan effort. we are glad to be part of the team. we will be there. >> tomorrow, everyone of you will be on a conference call with me and getting some other colleagues to join on that call so that we can keep this coalition together. i just want to say to each and every one of you, this job that i have, we would be nowhere without the people. we would be talking to each other. i honestly believed that this effort -- in this effort. i cannot thank the staff and us. this has been a team effort. there were moments where i thought we would never get here. we have gone to this point and so we now have to keep up the momentum.

your answers mean a lot to me and i know the senator feels the same way. we cannot move it through our respective conferences, as we know week -- unless we know we have a lot of your behind us. this is a milestone and a day that we will remember for a long time. i will talk to you all tomorrow. we stand adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> president obama is in iowa today. he is proposing to make it easier for businesses to get access to capital. he made an unscheduled stop to have breakfast at a small cafe. one of the other people having breakfast was a small plant manager.

>> president obama from this morning. right now, he is near the illinois border right now for a conference. he is speaking at the conference. you can watch that on line right now out -- at c-span.org. the white house says this is an official presidential tour. the president to return to washington midweek and begins his vacation at martha's vineyard on thursday. "washington journal taking a poll on the economy. are you willing to pay it more money in taxes?

if you go to facebook, you can register your vote. the current numbers -- that is it that, -- facebook.com/cspan. it is all available to you on television radio and on mine. and on social media sites. we are on the road with our c- span digital bus and local content of vehicles, bringing our resources to local communities and showing events from around the country. it is washington your way. created by cable, provided as a public service. >> pakistan's, former foreign secretary is in washington d.c. today.

he will be talking about u.s.- pakistan relations. the administration will start basing its aid to pakistan on whether the country meet the scorecard of u.s. objectives. that event is coming up at 5:30. we will have it live on c-span. coming up later today at 8:00 from earlier today, a conversation with hillary clinton. talking about international challenges facing the u.s. again, that is tonight at 8:00 eastern. a forum on the solvency of social security with former bush administration economist and a former obama administration economists. this year's report says the program is solvent until 2037. this month marks the anniversary of social security. this discussion is hosted by the six the -- 60 + association.

>> we're going to go ahead and start. welcome to the social security birthday tribute. 15 years ago, my organization began in this annual forum as a salute to seniors. to all of you seniors watching and listening on tv or radio, i believe you are going to benefit from the program. you baby boomers and the younger generations you are in for a treat. before i turn to the most distinguished panel we have ever assembled, allow me to make a couple of observations. i say this as i enter my 50th year here in washington. i came here in 1962 as a young reporter, working in this very building, the national press

club. social security was 76 years old on sunday. it was passed and signed into law by president roosevelt. the system experienced few growing pains. it was a it was a healthy and viable benefits for retirees. after leaving its teen years and aging, it began to show some wear and tear, but who among us does not at age 76? or in my case, 75. i believe almost everybody agrees that some social security form -- reform is needed. i emphasize "reform," not political one upmanship to create favor with citizen. social security has kept millions of our most vulnerable our party. my favorite singer, my mom

depended on her check, and her sister would have celebrated her 99th birthday august 14. her son, my cousin, former kentucky state senator ray white, turned 76 this week. they're surviving sister lives down in okeechobee florida. by the way our national spokesman, pat boone is still singing at concerts'. seniors are entitled to solutions, not political potshots. after all a system that started as a 2% tax on $3,000 in income has grown to 12.4% tax on as much as $106,800. from $50 annually -- that is only $5 a month -- yes, i did the calculation on a computer, but to be sure, i also did the

math with an old fashioned pencil as a former reporter, and believe it or not $5,000 in 1945 is as much as $13,000 annually. that is a whopping $1,100 and change per month. so why is it not a gold mine for seniors? two reasons -- actually, three. one, lower rates of birth mean fewer workers paid in. two, living longer. yes, we are into our 70's, 80's, 90's and beyond. as one observer put it, rather and delicately, i thought seniors no longer rather "conveniently die" at the actuarial age of 65. our former chairman, now nearly 90 living with his wife marjorie in evansville, indiana, a look of the states that he has been open a close statistically dead" for 25 years -- "statistically dead"

for 25 years. that puts a strain on the system. ida had in less than $25 before retirement but instead of conveniently died at age 65, this retired schoolteacher lives to 100 and for her investment of $25, she was paid nearly $23,000 from social security. that is a whopping 92,000% return on her investment. evidently a cleveland ohio, and then retired the day after the system became law. he paid in a nickel and got one check back for 17 cents. that was a 340% return on his investment. 3 and little discussed in congress is the social security cut fund, bursting with over

$2.50 trillion surplus being paid in four current and future seniors, but one of washington's dirty little secrets -- the fund is broke. the trust fund is the favored cash cow of -- surprise, surprise -- congress. i would say right here two former senators held a press conference a few years ago and said it private businesses did what we do in congress stealing from this trust fund, they would be locked up for embezzlement. that is probably correct. but for the system poses problems, there are solutions galore offered by all manner of experts. i guarantee you that the people we are privileged to have with us will offer a straightforward practical solutions. unfortunately, social security solutions often run into a political buzz saw on capitol

hill. nowadays it seems to be standard operating procedure in capitol hill. perhaps it will be commonplace that seniors will no longer be used as pawns on capitol hill. now, for our distinguished panel. jerry bernstein is a senior fellow at the center on budget and policy priorities from 2009 to 2011. dr. bernstein served as chief economist economic adviser to vice president joe biden. he was also executive director of the white house task force of the middle class and was a member of president obama's economic team. prior to joining the obama administration, he was a senior economist at the economic policy institute here in washington. during the administration of president clinton, he held the post of deputy chief economist at the u.s. department of labour. he's the author and co-author of

numerous books for popular and academic audiences, and he has been published extensively in various venues -- the "new york times," "washington post," and others. he hosts a popular economics blog. dr. bernstein holds a ph.d. from columbia university. i give you jerry bernstein. [applause] >> rousing applause. thank you very much. great to be here to talk about one of my favorite talks. jim, thanks for the nice introduction. i've always like to find myself in the company of double speaking one of my favorite economist around town. the story i like to tell is that when he was director of the congressional budget office, he annoyed everyone equally, and that is very important in this

town, so i give him a lot of credit. let me start with a set of principles. in fact, i think of my talk to you today in three brief parts -- principles, facts, and fixes. in doubles facts, and fixes. first, on the principles, this is -- these are the set of principles, it is that guide my thinking, and i hope yours as well on social security. retirement security has to be a goal of a civilized society in an advanced economy. in fact, this is the case in every advanced economy. two, a guaranteed pension is essential to meeting that goal. private plans that depend on stock market returns can surely complement a basic guarantee but they are simply not compatible with the goal of retiring security. 3, private employers are

providing cover fewer benefit plans. if you think about the three legs of retirement security -- pension, savings, social security to my thinking, despite -- i will argue with some of the points gin made in the introduction -- despite some of the arguments you often hear, i would argue the social security is one of the strongest legs, not because it does not need fixing, but because the other two have weakened significantly. here are a set of facts that guide my diagnosis for the problem and the prescriptions to help fix and maintain this bearable 76-year-old. average benefits, as jim pointed out, are not overly generous. right now, the average benefit is around $1,200 a month around $14,000 a year, but some

benefits are very important to people. i think this is commonly misunderstood. you cannot vp these kinds of facts. maybe the folks in this room, certainly on this panel know these facts, but the importance of benefits, even at their not so generous levels, cannot be overestimated. for more than half of elderly beneficiaries, social security provides the majority of their income. for one quarter it provides nearly all. about 90% of their income. as you get the spending down of your savings and the minister probability of working, as you get older and become the older elderly, dependence on social security increases with age. among those aged 80 or older social security provides the majority of family income for about 2/3 of the beneficiaries and nearly all of the income for

about 1/3. if you were to take social security out of the picture poverty rates among elderly would jump from 10% to 45%. it is a huge poverty reduction program. now, let me move on to some of the budgetary points. my first point is that these benefits are critically important. when i get to fixes i emphasize i am not one of these do not put everything on the table people. i am not saying benefits are outside of the target. i am just saying that when we think about achieving sustainability in social security, we need to be mindful of the importance of those benefits to the beneficiaries. let's talk about the budgetary challenge. when you hear folks talk about how entitlement spending is unsustainable, what you hear a lot these days -- make sure they are not including social security. it is absolutely true that

entitlement spending is absolutely expected, according to estimates of cbo to increase from about 10% of gdp today to about 16% in 25 years. but only 1% of that increase is social security. that is not nothing, but it certainly should be split out from the pressure on entitlement spending coming from the health care side. that is where the real pressure is. if you look at the projections over time, you will see that social security not only goes from about 4% of gdp to were around 6% by 2035, it kind of stays at the 6%, while the health care entitlements continue to grow based on but demographic pressures but more so cost pressures -- health care costs. so that said, along with this

entitlement pressure, you also hear we simply cannot afford to fix the social security shortfall. let me put it this way -- the 75-year shortfall according to the actuaries most reserve report amounts to about 20% of gdp, okay? according to the most recent actuarial report, a -- 20% of gdp. that is the long-term horizon. that is just about equal to the revenues that you would achieve from the expiration of the highest bush tax cuts. not all the bush tax cuts. just the high end. when people are you that we cannot afford social security, yet somehow we can afford those- tax cuts i think that is a hypocritical and destructive argument. how is it that every advanced economy in the world every other advanced economy in the world can afford this but we

cannot? what is so different about this? yes, we have demographic pressures, but if you look at the countries of europe, their demographic pressures are even more challenging than ours. yet, we are an international laggard. 30 out of 42 countries if you look at replacement rates of median income, across the oecd the organization that make such comparisons. the average for me income is above 60%. our social security replacement rate is about 40% by that metric. but is social security going broke? the trust fund exhausts. i think this has been a terrible misinformation campaign. some of the worst misinformation i have seen. it is absolutely the case that full benefits can be paid through 2036, at which point the trust fund is exhausted, which makes it sound like the benefits go to 0 but they do not.

payments still are coming into the system, and social security at that point would be able to pay 75% of scheduled benefits. this again is widely known perhaps to people in this room, but i guarantee you, most people think when they hear trust fund exhausted, that is all she wrote. but we should not let that happen. but i'm not saying that 75% is an acceptable outcome. i think we should take steps to close the shortfall, and those should be a combination of tax increases and benefit cuts because those are the only options. you can dress it up however you like, but at the end of the day, that is what you're talking about. as you might have gone from my part of the discussion on how important benefits are to social security recipients, what a large share they are to the average retiree, that i would rank benefit cuts has considerably less desirable to

revenue increases. there is a long menu. maybe, like, 30 different options, and i'm just going to name a few data most commonly discussed in the debate. the first that i think is essential is to gradually increase the maximum amount of earnings on which workers and their employers pay social security taxes. you heard jim mentioned that it is around $107,000 right now and covers once again 90% of earnings. i think it is around 83% or 84%. historically, it has covered 90% of earnings. because earnings and the quality has grown so quickly -- there's so much concentration of high levels of earnings at the top of the scale, the share above that threshold has increased to about 16%, instead of the

traditional 10%. so get up there, and you can close maybe 40 or 50 basis points of something like 82% payroll data. switch to the chain consumer price index. this is so commonly discussed i probably do not have to describe it to this audience, but it is basically a more accurate measure of pricing, so switching to that is on almost everyone's list including -- i believe the president brought that to the table. that is a benefit to us. let's be clear. sometimes newspaper reports get that wrong. it is a benefit because relative to promise payable benefits, but i think it is a good idea. now, you kind of get into some of the ones that are more tricky and controversial. trimming benefits to reflect rising life expectancy, raising retirement age, or longevity indexing, which i think is a mysterious way to say raising the retirement base, so people

do not know what you're talking about -- that is obviously -- too many people, that is a very compelling idea, and you heard jim was a very correct assessment of how we are all living longer and while that may be an accounting problem for social security, i actually think it is a pretty good thing. but be aware of one thing, and that is why i would put this quite low down on my list of fixes -- the life expectancy -- we only have these data for men. retiring at age 65 has risen six years in the top half of the income scale, but only one year in the bottom half. in other words, increased longevity has more and more become a function of income. man of lesser income are not living all that much longer than they did a generation ago. raising the eligibility age is actually not a slam dunk. when you hear the statements made about how we are all living

longer -- in fact, we are not all living longer. those in the top half living longer, and those in the bottom half of the income scale are only living a little bit longer. i am going to get out of the way because i want to hear what the has to say, but there are other ideas. i just wanted to add one idea on the table, a fix that i had not heard discussed in a. i bring it up are the because i think doug might like it, seriously interested in your response, but this comes carteret the budget plan. employer health care benefits -- the health care benefits that employees pay -- provide to their employees are untaxed. those benefits are untaxed. in the debt reduction plan, they came up with an idea that i think is interesting and has some appeal.

economists like doug and i -- i think i can say dug in you because we have complained about this from our various purchase for a while -- tend to worry about the extent to which employee exclusion distorts the system in lots of different ways, and it is a very large tax expenditure. if you could apply the payroll tax to the value of employer- sponsored health benefit insurance, maybe phase it in over 10 years -- that could really take some of the cost pressure off of social security. according to their analysis, it reduces almost half of the 75- year gap that the actuaries estimate. the idea would be that the growth of these fringe benefits -- because of the increase in health-care costs -- the growth of employer fringe benefits has put pressure on the health care system, and it has eroded the

social security tax base. remember, wages are taxed. non-wage benefits are not here this takes the payroll tax and applies it to some of those non- wage benefits in a gradual way. look -- a sure applause line among politicians is america is the greatest country in the world, and that is as it should be. patriotism runs strong in our veins and mine and yours as well, i'm sure, but what do we really mean by this? what is it that makes us such a great country? >> in my view -- in my view, it is no exaggeration to say that it is things like social security that provide security and respect to those who raised us and spend their lives helping to build our future. those are the ideas that i think would help to fix and maintain this program well into the future. thank you. [applause]

>> thank you very much. let me make a comment on the high income and low income seniors. clearly, low income seniors suffered more during this heat wave we are having. why? because of the high cost of electricity. they cannot afford to turn on their air conditioning, and that is a shame. more people die of heat waves than in freezing weather. an observation on the social security trust fund. please explain that to me. the trust fund -- i was coming across the bridge the other day coming into town and talking on my cell phone, and my driver a senior citizen said he was drawing social security now and did not understand what the hullabaloo was about about not getting social security checks during the debt ceiling debate. then, he surprised me further and said, after all, we have

got a social security trust funds sitting there that i have paid into all my life. i was pretty encouraged by that. he did not say anything else, but i asked him how much -- if he understood how much was in the trust fund. he said maybe $3 trillion. i said that there was not really anything in their. i know based upon the full faith and credit of our government, which is kind of scary in this downgrade, but the fact is he almost ran off the 14th street bridge. that is a sad commentary, but that is the trust fund. i call it a bust fund. there is no trust. there is no fun. now, we turn to a man with a distinguished record as an academic a policy adviser and a political strategist. currently, he is president of the american action forum. during 2001-2002 he was chief

economist for president george w. bush for the council of economic advisers. from 2003 to 2005, he directed the nonpartisan congressional budget office, which provides budgetary and policy analysis to congress. during 2007-2008, he was director of domestic economic policy for the john mccain presidential campaign. he has held positions in several washington--- washington-based think tanks. he has also been a visiting fellow at the american enterprise institute and the american heritage foundation. he received his ph.d. from princeton and began his career at columbia university in 1985. he does not look that old but i guess he is. he moved on to syracuse university from 1990 to 2001. at syracuse, he was trusty

professor of economics at the maxwell school. he was chairman of the department of economics. he serves on the boards of the tax foundation, national economists club, and the committee for a responsible federal budget. the floor is yours, sir. [applause] >> thank you, and happy birthday to social security. i hope i make it to 76. i also have three parts to my remarks. anyone who talks about the system at this point in time has to document the problems out there and spend time on that, and for purposes of framing the debate, i want to talk about what i think are the five crucial decisions one has to make in the about the future of social security. once you go through that list, you will know where you stand in terms of reforms, and i will close with some thoughts about the way i think united states

should go, but let me just start with the problems. the top problem we hear so much about is the financial condition of social security. there are many different numbers. there are a gazillion different metrics, and it is absolutely positively easy to get completely baffled by what is going on. the simplest way to think about it is that revenues in the system are about love and is in system are about as far as the eye can see. line two is the benefits that have become not used to be about 4.5%. we used to run with surpluses but the surpluses are gone, benefits are above the revenue coming in, and it will run to about 6.5% of gdp. the problem is that benefits are here and revenues here as far as the eye can see. you can add it up for 75 years or do buzz lightyear matt and add it up to infinity and beyond but the problem exists. it has to be addressed.

i will come back to it, but i think there are problems that get lost inside of that that are equally important. the first is that there are very different problems in the retirement part of the system, which is about 82% of spending, and the disability part of social security, which is about 17%, and often disability gets lost. i am not a disability insurance expert and will not begin to be one, but anyone talking about social security reform has to remember that this is not one thing and reforms has to be done in connection with one another and we have to get that right in doing reform. second thing to remember is that social security is a powerful government policy and has powerful incentives for the functioning of the economy. it affects how much we say, how much we were, how long we were, and we ought to think about economic incentives we are presenting people with when we do social security reform and not just count dollars in an dollars out for purposes of doing financial accounting.

it troubles me sometimes when we forget that this is such an important part of our economy. the third thing that i think garrett mentioned but i want to emphasize is that -- that jared mentioned is that most people who look at the system come to the conclusion is that the minimum benefit is too low. when you're doing reforms in the face of financial difficulties, the first step is to make them worse and over time is the minimum benefit and overtime figure out how to make the rest of it add up because there is a universal agreement that this part of the system has to be address. lastly i think the key problems are really problems of uncertainty in the political process. as jim said, we are not here to talk politics, but the fact that we do not fix social security, the fact that we have workers uncertain about the nature of the deal they will have with social security when they retire is a disservice to everyone. that uncertainty is bad

economics, that policy, and it ought to be resolved as quickly as possible. indeed, every year we delay fixing the system, we make things harder. we should address the fact that the failure to reform social security and put it on solid sustainable footing is bad policy in an of itself. so what do you need to do to fix it? step one is how much are you going to do on the tax side and how much on the benefits side? there are lots of ways to disguise this, but in the and you have to make a decision about where you come down on that. that is the most politically charged of the decisions that congress will ultimately have to make in reforming social security. step two, which is different but equally charged is whether you want to continue the practice of funding social security on a pay-as-you-go basis were current workers pay the benefits of current retirees or do you want to move to a want topre-funds what each

individual pays? if you make a decision about that you dictate a lot of your ability to handle the financial problems with social security. on the pay as to the bases, revenues coming in are not enough to cover benefits going out. if you decide to move to a pre- funded system, the problem has not gone away. you have to pay for current retirees and your own retirement, and you have to figure out how to solve that problem. their decision -- how progressive do you want the system to be? how much in the way of benefits and taxes do you want to assign to each part of income distribution and the system is currently progressive in its overall nature, but you could make it even more progressive. for example, not make it a universal program by not providing benefits to very high income individuals. that would make for a very intense political debate but that is the nature of the decision you have to make and where you come down with that. fourth is what kind of

incentives you want to have. probably no real political heat because it is hard to get the political groups excited about the things that jerry and i spent our younger years mastering. lastly how would you handle the transition from what we have now to any reform system? to what extent will you -- to what extent will you exempt those currently retired? how about those near retirement? the sort of standard operating procedure in social security for the past decade has been you exempt those near retirement, which has been defined as 55 or older. that, i think, is a very important decision when you make that because it absolutely increases the urgency of doing social security reform quicker and quicker. in the end, the fundamental problem is the demography. the retiring baby boom

generation. i am the trailing edge of the baby boom generation. i am 53 years old. if you grandfather anyone 55 or older, you have two years to get me, or you have grandfathered the baby boom, which has grandfathered the problem. this increases the urgency that we see action quickly. so where do i come down on solutions? i will agree with some that jarrett mentioned and offer some others. first of all, i agree with should always run government programs with accurate measures of inflation prices, wages whatever it may be. so i endorse the pricing index. i would favor benefits in a highly progressive way. you could change the formula to have a lower rate for high

earners. you could do the proposal for a mixture of wage and price indexing. the initial benefits in retiring -- i am pretty much in different about how you do it, but i think that having a universal program that is less generous to the affluent is absolutely the essential way to go. i, at least, would raise the normal retirement age, but would retain the same early retirement age and worry a lot about the law in between stability program and retirement program. i think jared's observations about longevity are matched by what we know about the correlations between health and wealth. you want to make sure you have this well calibrated across income distribution. i would raise the minimum benefits as i said before. you have to do that. i, at least, would add on a private investment account with an additional table tax, and add-on account of using existing

payroll structure. we do not have adequate retirement savings either on the personal side or in the employer retirement system, and we need to find different ways to give people both access to the higher on average rate of return equities with the acknowledgment that there is risk there -- we have all seen that -- but also to just expand the base of the retirement in security. things not on that list, you will notice, are raising the payroll tax rate or raising the cap, and here is why. we in fact do face, in my view an incredibly threatening fiscal outlook. everyone of our social safety

net programs -- these programs are a disservice to their beneficiaries. we cannot rely on them to be there for the next generation of poor and elderly. they often do not serve their constituencies well. medicaid is no one's idea of a good health program. we will have to reform all of these in some deep and fundamental ways, and we simply cannot tax our way out of these problems. there is no projection i have ever seen that you could sensibly say this is a solution to tax our way out of it. it may be the case that we will have to raise taxes in the process of dealing with our problems. i think an important lesson was provided where they said if you want to talk about higher revenues, the route is through tax reform, not in jacking up existing tax structures, and i take that lesson seriously. that is why i avoid going there on social security payroll taxes. i am painfully aware that the

place we will most likely need to cover our spending programs could be in medicare and medicaid and health programs in general. i do not think you start out by solving social security. you reserve that for the place where it is most likely to raise its head. i would do this on the benefits side. there are many plans to the show you can add this stuff and make it work. in closing, let me talk about jared's of exposing the employer sponsored health insurance to tax. i hope there are no phd-trained economist who argue that it is a good idea to have an open-ended tax subsidy to any activity that is more generous to the rich than to the fore, and that is exactly what our current tax treatment is. it is in the eyes of most analysts that health policy. it is certainly bad tax policy, and one certainly ought to absolutely change that tax treatment and find different

ways if you want to subsidize health insurance to target the subsidy more effectively across the income distribution and make people more cost conscious at the margins. i think that is very important. this is not new and in the spirit of putting everything on the table, i think it should be on the list. my guess is when you finally collect $1 taxes, it will go up the federal door under a health care label -- label does that is where our biggest problems are but i want to again thank everyone for the chance to be here today. it is always a pleasure to listen to jerry -- jared and disagree with him, and i look forward to the discussion. [applause] >> i want to thank everyone and our panelists. i want to ask dr. bernstein to respond to that, and then we will entertain any questions you

may have from the audience. we have a microphone that will be passed around, so we want you to state your name and direct your question to one of the panelists, but first, dr. bernstein probably wants to respond. >> very briefly, i thought doug strange things well and set us up for a good q&a. there are two points he made, when i want to clarify and one i want to very strenuously disagree with with deep respect for my buddy. the first is he made a very important distinguishing comment about the difference between means testing benefits, means testing social security benefits as a way to make the system actually hold. that is one of the contributors. and changing the benefit formula. at the high end of the way we calculate these things so the people who had very high

earnings throughout the life would have lower social security benefits than they would under the current plan. those are two different approaches, and substantively and i think in terms of actually their effectiveness quite different as well. i very much would oppose means testing, and again, if we are going to go to the benefit -- if we're going to get some of our savings from cutting benefits, i thought the second part of that was a much better way to go. there's a lot of reasons for that. administrative complexities, that incentives, regarding -- that incentives regarding older people's tax rates at work, but mostly, the problem is, and it gets back to my point about how benefits, even though they are not all that generous, mean that much to even middle income seniors. a means test that is enough revenue to make a difference would have to go way down into the scale. you would have to start taking social security income away from middle-class

beneficiaries, and i do not think you want to do that. the thing i strongly disagree with -- i think doug said -- and you can correct me if i'm wrong -- he wants to get 100% of the revenues to fix social security from the benefits side. if that is your position, i think that is unfair and very much misguided in spirit of what i was talking about. >> would you care to respond? >> i agree on the first one theory the second, that is what i said. -- i agree on the first one. the second, that is what i said. i believe it is feasible to do it. if you look at lots of different options, it is not hard to put together lots of different reforms that meet that test. the second reason, it is the strategy we will have to face as a country on dealing with an overall deficit problem. i think there is a big difference between looking at social security in isolation

compared to thinking about the political economy of fixing social security and many other things, which we will have to fix. >> bring the microphone down here, please. >> if you could say your name, organization and question. >> i am the former chief of staff at the house aging committee. worked in the clinton white house and enjoy doing op-ed's on the subject. jared always very impressed with your work on tv. i am distressed when i come to a panel like this and think it will be very objective, and it is as much two to one as i have ever heard a panel ever be. a couple points i want to make -- the trust fund, questioning whether it exists, whether it is real money when they had the deal in 1983, they knew they were creating a system that

seniors would pay in, and it would go to saving social security right to what it is now, which is 2037, and then a week after that. there was no debate over that. that was the deal that was struck. to say there is no trust fund, when you go now on social security's website it is graphed year by year, and there have already been 11 years in the past starting in 1963 -- very few people know this -- where it was tapped to pay that particular year's deficiency. this is not a new thing that threw 2037, there would be some years that the trust fund has to absorber. i am distressed when people say -- it is like telling your bank "you can use my money for other things. we do not care. -- we do not care to get that argument does not hold. the other argument i want to make is it is not a matter of dollars and since. it is a matter of what kind of

country we are and what our priorities are. it is not just dollars in, dollars out. what is the cost to america if you downgrade these programs to what taxpayers will have to pay for the recovery of that half of senior citizens' views that are say from poverty -- safe from harm it. >> may i respond? >> one other point i need to raise. private accounts -- boy, what i not want a private account. when bill clinton was present the stock market was the equivalent of 14,000. now, it is 11,000. that is real food of seniors tables if you have privatization of any kind here that is why people like nancy pelosi and others have said first do no harm. going that route is an outrage to seniors. stealing so you can give tax breaks to oil companies and all of that. >> i asked to respond to your

question. >> thank you. >> i would like to see the panel respond. >> bob, before we go there, i would like to respond to your question. i used to interview senator pepper. i wrote for the "tampa tribune" then and wrote for radio in miami, florida. he helped so many seniors are party, including my mother, who worked until her 80's. she depended on her social security check, quite frankly. we could go on all day about privatization and the stock market going up down today. over a 44-year history of the market i challenge you to tell me it has not grown. >> [inaudible] >> ok, they will just take out a

segment, then. the fact is i would like to have douglas or jared respond. >> thank you. great points. i particularly want to get back to i disagree with jim as strongly as you do on his point that somehow those bonds are meaningless. essentially, you're saying we're going to default, and i think that is extremely destructive rhetoric. listen on the stock market, i totally agree with your points about privatization again because the problem with the stock market and private accounts is it introduces a timing dimension into social security that does not exist when you have a guaranteed benefit. if you retire in a down market, you are kind of screwed. what is interesting is that canada has -- invests part of the trust fund in equities.

the center of american progress, which i think has good, liberal street credit, is suggesting a plan to help us solve social security's financial problems, but i think 25% of its trust fund in equities. you maintain the guaranteed benefits just like in canada, but you tap some of the growth in equities. by the way if you think of the shortfall in terms of the payroll tax gap, that is about 2.2 right now, that will close about 40% of that gap. >> thank you. a couple of points -- first and foremost, on the trust fund, there is a longstanding dispute about just how much of a new when they passed the 1983 reforms. -- how much they knew. there were revisions that showed that the surpluses and deficits were not bought what they thought -- were not what they thought during the discussion. i will leave that to the historians.

there remains a dispute. second thing is on the terms of the trust fund, the sad fact is if you take it on out of the trust fund and walked to the treasury and say you want to redeem it, the treasury will be able to redeem it in one of three ways -- they will give you another bond that will not help you very much, or it will have to borrow some money or cut spending and raise taxes. >> that is four. the bond in itself does not carry the value. the power of the treasury and the power of congress ultimately -- >> i just want to be clear -- the line >> i never said that. -- >> i just want to be clear -- >> i never said that. >> my proposal was not privatizing social security. it was keeping the fund benefit and adding on additional savings -- very different -- and we do

know something about how these various accounts have performed. they do not have to be all equity. remember that. you can hold treasuries if you want. we did in fact in the united states in 2001 or 2002 -- i forget which -- allow the railroad retirement fund to invest in equities, and managers have done that. if you compare the performance from 2001 to now it includes some fairly choppy financial years -- let's leave it at that -- it far exceeds investments in treasuries, even with what went on in 2009. i would like to see this debated on on the merits, because we have retirement problems. the last is i would not disagree with you. this is about values. i certainly believe that there is a good case to be made on the value of benefits to the port

and the taxes to the rich, and i addressed one thing that has not been discussed in office that in this country everyone is quick to say they are unhappy that their taxes went up or the programs got cut but if we do not do some of those things, we are going to ask our children to do one or both in the midst of a damaged economy, and that, to me is fundamentally unfair. almost immoral. let's not forget those constituents who are yet unborn and very important. >> i am nervous. excuse me. my name is judy lear and i am the national chair of gray panthers. we, too, are celebrating the birthday with -- and i have a

press release here of social security, 76 years, and we are doing it with eight media watch campaign to know the facts about social security. and to fight truth decay, to make sure that some of the things you are saying, people understand that that is not true, such as the fact that the trust fund is going to go broke. it will not go broke. i want to advocate for raising the taxes, and right now -- >> address your question to one of the panelists, please. >> i want to know why right now at approximately $108,000 -- that is what the tax is. even if they raised it to $250,000, think of how much more money -- now you are

economists, and you would be able to tell us how much more. how much more could that be? and if you raised it all the way, have the 4.2% that it just dropped down to, how much more would go in to the system -- >> thank you. >> jared who will prove to be a better resourced than me, is looking up the number you want. i do not know the number. it is an old number. it is important to distinguish two different things. one is raising the maximum and continuing the tradition of having benefits awarded on the basis of all earnings. if you do that, you may in the near term raise tax revenue but since you will give out more benefits in the future, you do not solve a lot of these problems by doing that. the alternative is just raise

taxes. do not award additional benefits on those earnings which are now being taxed. that changes the character of social security, and many people are uncomfortable with the idea that they will break the link between the tax base and benefit base and thus, break a key feature of the system. as i said, i am not wild about raising taxes because one, we have lots of financial problems, and i do not think this one is going to be the one that drives us as much as some of the others. two, it really strikes me that we need a reform, not just a flat increase. that would be the place i would rather go. >> the increase -- to apply the payroll tax to a higher level of income strikes me as absolutely part of any reform plan. in fact, if you took it up to

90% you would close 40% of the outstanding gap over the 75 years, which, you know, ain't nothing. there's a menu, here. you add back cpi we were talking about, that gets you to a little bit under half of the gatt, and doug and i could come up with other options, but i want to focus on your point about -- which is in direct contrast to doug's view -- that we should not close any of the gap-through taxes. we should all do it through the benefit cut side. there's a great op-ed in today's "new york times" by warren buffett, which talks about how -- just how -- he calls it

coddling millionaires -- just how not only income is accumulated, but the taxes that those millionaires and billionaires are paying, and he talks about paying a 17% effective tax rate on his income which i calculated to be $40 million. that is taxable income. i am sure he has other things going on. he is talking about paying a 17% rate. he says everyone else in his office space 20% or 30%. the reason why you are now applying this payroll tax to such a considerably smaller share of the income scale is because of this concentration of earnings. it is very important to tap some of that, correct some of this imbalance, especially when distributed through a progressive program that is as efficient and effective as social security. >> just so all the cards are on

the table, americans hold to be true two things which are contradictory. they believe that rich people do not pay taxes. they can always ebay them. but we should get more money by taxing the rich. someone will have to figure out how to resolve this contradiction to the answer is, of course, to figure out how you want to tax the rich, which is to say have real tax reform that makes it impossible for financial manipulation to legally avoid taxes. which is a big chunk of what is going on. i would be all for that. that is the key how your tax rich people, not just tax them that matters. a lot of the discussion is misplaced. the second is about fairness. it already is fundamentally redistribute sorry. -- redistributory. i am always baffled by the

asymmetry in the discussion. it is about net impact of people with different lifetime earnings, and that should be the focus in my view. lastly, fairness is in the eye of the beholder. there will never be scientific adjudication of these disputes, but it strikes me that if you look broadly at a time of programs -- for many in social security, it has been true that they paid in far less than they took out. that has been the history of the program and will continue some but not as much in the future. certainly in medicare and medicaid with the largest tax most americans pay is the payroll tax and they pay in far less than they ever get back in benefits. what that means is that for those paying income tax, which is only 50% of americans, and were 5% of americans pay 60% of the income tax they are paying all those entitlement benefits. these people was payroll tax of

the biggest tax our net winners by the law is margin. the kids are paying for it and high-income americans pay for it and high income americans provide all that up -- all of the basic government that our founders envisioned. they pay the infrastructure, education, basic research, and it strikes me as odd when a tiny minority is providing all the government to say it is really unfair that they not provide more. >> payroll taxes are paid by everybody. >> that is right but they are giving out more than they pay in. absolutely. >> let me intervene a second and comment on the social security trust fund. i do not care what you tell me -- it is broke. the fact is -- it is like -- a journalist once said it is putting $50 of your pay check in on friday for your daughter's

education and on wednesday, you take it out and put in and i know you. you either have to cut benefits, raise taxes or -- scariest of all in today's economy -- barrault -- borrow the money. maybe we could borrow it from china or greece. but our time is up here and i want to thank everyone for coming, and especially, we want to thank our tv and radio audience. if you want more information about 60 +, visit our website. we now have over 7 million seniors that we relied on for keeping abreast of events that affect them. i would be remiss if i did not bank the staffers here today. mary mahoney matthew erica jeannie, as well as others we depend on.

and amy, who is out of town busily recruiting seniors. i see our time is up. we thank you most sincerely for years. our panel another round of applause. thank you. [applause] by the way, someone said it is two to one conservatives, it is now three to two because we got two questions from the liberal side. thank you. [laughter] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> the "wall street journal" reported yesterday that the obama administration will begin basing its aid to pakistan on

whether the country meets a scorecard of u.s. objectives to combat al qaeda and its allies fear the country's former foreign secretary is in washington today. he will be speaking at the johns hopkins school of advanced international studies. we will have that live here on c-span. congress returns three weeks from today. when they do there 12-member joint committee on deficit reduction will begin meeting to determine additional $1.50 trillion in cuts by thanksgiving. on this morning's "washington journal", discussion on how that may affect the federal work force. >> "washington journal" continues. host: john gage is the president of the american federation of government employees. we hava special line set aside for federal workers. we want to hear from you this morning. let me begin with what the so- call