he has not stood up to be republicans. that is going to change. the speaker can go out and make a stitch -- make a speech saying, it will be his way or the highway. i am as did the people -- the president will come back swinging. he has to tell the people is the youth delegates who want to touch social security -- gut social security. he has to show that they are extreme. i feel confident he is going to get reelected. >> you said earlier that your confidence -- caucus will hold firm on other epa regulations go with full board. have you been told that by the white house?

can you tell us what regulations are coming down the pike that the administration should hold firm on. ? >> when they were going to delay the ozone standard knowing the environmentalists will be disappointed in that action, they felt they should give them a stronger grounds to stop the republican who -- republicans who want to delay the regulations on toxic air pollutants to cause cancer -- that cause cancer. they are going to hold the line on that. when we meet next week -- the republicans have announced a number of anti-environmental vaults -- votes.

i expect the president to veto those anti-environmental laws. >> lisa jackson says the epa will meet a self-imposed deadline for fossil fuel burning plant. do you see this as the second in a line of regulations that the obama administration has punted on the above is this an election moved. is this something that demonstration will not tell the anyone about -- administration will not talk about until the deal is done? >> the supreme court says epa must regulate greenhouse gases if they make a finding that they are a threat to public health. they made that finding. even the bush initiative epa made that finding.

they have got to stop regulating. it was the black first choice that congress start to enact regulations dealing with green house gases. when i talk to republicans try to work schedule, our response was, is not believe in the science. how do you solve a pro -- solve a problem that you do not exist. they do not believe in science. every year, we will see more record heat waves some storms, it drops. -- and droughts. >> we are running out of time. one more quick follow-up. >> what about the president with his recent ozone decision? what grade would you give him on the environment? >> i am proud of his record.

i would like him to keep pushing for stronger regulations. >> do you want to give him a grade? >> i do not want to give him a grade. his time is not up. >> let me turn to our two reporters. you covered the industry and commerce committee closely. there is a bill that republicans want to bring to the floor. what is coming down the pike. what is next? >> we are expecting to see the train at, which would require a study of the impact of environmental regulations. also, maximum achievable control technology standards for utilities. all of these bills are shuttered

similarly and in similar ways. they called for the governor to -- government to rescind regulations that, in some cases, have not been imposed yet. 18 months can be taken to finalize regulations. it would also effect the amount of time businesses would have to comply to these new regulations. these may get through the house, but they will not pass the senate. >> is it even likely that they would be brought to the senate floor under democratic leadership? >> that is the $1 million question, whether senator reid what about these pieces of regulation to make it to the floor. the senate can try to get some of these regulations to the

floor. rand paul has a resolution that he introduced, the disapproval regulation -- disapproval resolution. it can be brought to the floor under expedited procedure. we could get at vote on that. >> we heard the congressman not one to give a great to be present on his environmental record. -- grade on his environmental record. what do you think the tension will be going forward between the democrats and the president? >> and much more difficult part is the compromise is the president has cut. his stimulus bill, democrats feel, was not enough. it was allowed for the republicans to target its as not enough .

he said for months that he would not accept the plan that did not include new revenue. our polling is showing a lot of his liberal base is disenchanted with of the compromises he has made going back to health care and the public option. >> you heard henry waxman talking about the super committee saying he does not think the democrats on the committee would vote for any compromise that does not include tax revenues, but cuts entitlements spending. >> that is the washington-speak part of this that is difficult. we are talking about revenues and what the republicans are willing to be going with a plan backed support something that is not -- backed -- that supports

something that is not net neutral. there are ways of doing that. there is some room for compromise. even though the congressman made the points he made, i think this is some room once you close the loopholes. if republicans can allow it to -- can allow it to be scored in a way that would be a net positive. >> thank you for being done "newsmakers." -- on "newsmakers." >> you can see newsmakers again at 6:00 p.m. here on c-span. >> you hear the boom and you see the flash. you hear him cry out in pain. the second thing is, if i have

lost anything special, shoot me. >> a 30 minute documentary a about rob jones. the film follows rob's journey in coping with the loss of his legs and his rehabilitation. >> next, the c-span series, the contenders. figures who ran for president and lots, but changed political history. this we james blaine,. james blaine. and now, the life of james blaine is profiled in the c-span series, "the contenders."

>> we are a lot from the home of james blaine. we are inside the blaine house. this house is filled with blain

e memorabilia. >> welcome to maine and welcome to the people's house. mr. blaine is here every day and we see this. every evening. we say good night to him. >> many people have lived in this house over the years. when have you come to learn about the man by living in this house? >> he was not only a strong supporter and founder of the republican party in man, but a national leader. he started maine on its course to where we are now. he was influential in state government, federal government. the man was a powerhouse, a big- time power house on a national scale. i am proud to be honored to be able to stay here in the house

for the next four years. >> you have the best view of america. it is right across the street from the capitol building. we are pleased to be here tonight to learn more about james blaine. for many people, he has faded into the pages of history. we will learn more about the man who brought the republican party to your state. >> welcome to the state of maine and to the people's house. >> we will be learning more about james blaine's america. we will be moving into the reception room here at the governor's manchin. two guests are waiting for me. while we are getting set up, i was so you a clip from a show

where the guest is talking about james blaine. >> it was blaine who prevented ulysses grant from making a comeback and winning a third term. >> despite making secretary of state. >> he was secretary of state under three presidents. he was in congress and he was speaker of the house. >> he changed some of the rules in the house. i am not sure exactly what rules they are. they are always changing rules to their advantage. a capable man but corrupt.

>> this was after the civil war when congress was more potent than it had been. the reaction against the strong executive said in. to be a power in the congress in the 1870's and 1880 meant a lot more than it would today. >> the you have anything to say about mr. blaine? >> i think he would be regarded as the best president between lincoln and fdr. he was uncertain. he had intellectual heft. he had a lot of talent. people are consumed. they lost after the presidency. it is a distorting malignancy that they'd suffer from. if they survive it and they win

the office -- blaine is someone like clay. in office, he would have distinguished himself. >> we are in the reception room at the blaine house. ear is the director at -- earl is the director of the historical association in maine. let me have you set the stage for us about the mid-1880 is in america. what was the country like at that time -- mid 1880s in america. but was the country like that that time? >> there is going to be a

democratic president that is elected that year. that was unthinkable just a short time before. the republicans were winners of the war and they had controlled the governor -- government for a long time. >> the state of maine is your expertise state taking -- talk to me about north america and south america -- the northern and southern states and the differences in their economies. >> one of the goals of reconstruction was to get the economy up and running again. that was on the way to success by the middle of the 1880s. >> blaine was a powerhouse by 1884. he was known nationally and internationally b.

the state of maine had not been long.e union for a long perio >> by the post civil war time, maine had initially suffered a bit of the said that during the civil war. is and 70,000 men to the war. can thousand have been lost. our population did not grow. by the 84 election, maine was can that on its feet. maine was always a piece was based place with resource based industries. we had lumber, textiles, shoes. blaine was a beneficiary of this riposte -- robust economy

of the time. >> he ran against grover cleveland who won. the republican party to nominate him -- this was his third try for the white house -- what was the key to his success in securing the nomination in 1884 it? >> he was recognized as a leading a gear in the republican party. there is the question. one of his many nicknames was mr. republican. it was certainly a leading figure. >> he also had some great enemies that were trying to deny him the nomination. >> there was a group of moderates. they weren't the intelligentsia

from boston -- they were the intelligentsia from boston who believed blaine was corrupt. he did have strong enemies even within his own party. >> this was a close election. will you tell me about these results. >> or cleveland won by 30 or 40 electoral votes. -- grover cleveland won by 30 or 40 electoral votes. >> theodore roosevelt was about to make his presence known. was he a factor in the outcome? >what is interesting was that te

election was highly personal. >> we do not think 19th century politics were personal. they were personal starting with andrew jackson. it was a fight about blaine as a corrupt politician. perhaps cleveland had a child out of wedlock. they are slinging mud at each other. >> i school students -- high school students study two slogans that came out of this campaign. one of them was rum, -- where did this come from?

>> rum, romanism and rebellion. that phrase was carried quickly by the telegraph and newspapers all over the country. it is one of the phrases that contributed to blaine's loss. >> many people actually thought he had said it. but it is just he did not denounce it. >> was there and anti-catholic mood in the country? >> there is still. the irish were immigrating in large numbers. and the prohibition and the temperance movement was rubbing up against that as well. >> the second phrase is ma,

y pa?here is min gone to the white house, ha, ha, ha. >> that was alluding to the fact that cleveland had a child out of wedlock. it was not denied. >> a lesson for modern politicians. i also have a book here. this is a book that blaine w rote that helped set the stage for his campaign. was well received.

>> he began to write it in 1881, shortly before he was secretary of state with the first time. it was published in 1884. the second volume did not appear until 1886 create it was a highly part -- a highly popular two volume book. it was a personal account of his experiences in washington, the time of the civil war until the 18 eighties. -- the 1880s. >> in 1862, he is speaker of the house of representatives and he is also running for congress or the first time. it is in 1862 that he buys this house or thought thousand

dollars. he and his wife moved in with their family. this house had been built by a retired sea captain. this becomes his political center for the rest of his life. >> he had lots of meetings here. >> in 1859, he becomes the chair of the republican party in the bank. it is a post he hold until he become secretary of state in 1881. in that time, this house is election time for the republican party in the brain and the springboard for his national campaign. >> the state capitol is right outside our windows. >> it was a strategic decision to acquire this house. >> we are going to invite you in

in in little bits. . in our contenders' series, we are looking at 14 men who ran who ran fornceders president and lost. james blaine was known internationally, but has fallen behind in the history books. we will talk about why he f failed in his bid for the white house. we welcome your questions or your comments about the gilded age in america and beat republican party and its influence on american life. we are going to be talking about some of his other campaigns. i wanted to go back to 1876.

this is the first time he ran for the white house. >> there was a speech that was a defense of blaine against we the charge of corruption regarding a rural road. he seems to have been the kind of person who had great admirers and tremendous enemies and the charges. he admires body was a great hero. >> it was a label that stuck.

in the cartoon is a day, the knight was a wonderful image. he was often shown in elizabethan costume or as a knight in shining armor. it was the perfect image korea. >> we are looking at one of the political cartoons you brought along. how important were political cartoons for that h.? >> this was a time when editorial publications abounded in america. they were widespread and easily produce. in the case of the political journals, you had a judge and in the pages of those magazines, it

shows blaine in his elizabethan costume. around him are letters making him to become president of the united states. it is definitely a pro-campaign cartoon. >> colorful names for factions of the party included the half- breeds and the stalwarts. >> the stalwarts supported those were for blaine. >> there was a questionable stock deal involving one of the

railroads. >> the nomination went to? >> garfield. blaine -- sorry, in 1876, it went to hayes. >> word the stalwarts still active -- were the stalwarts still active in the party? >> blaine wanted the nomination. it came after many ballots. he threw his vote to garfield. >>

>> garfield was struck by an assassin's bullet. blaine was actually with him in the train station. >> yes, he was. >> do you know the story? >> they were walking arm in arm. they were very good friends. i read somewhere that garfield never quite trusted his good friend, james g. blaine. they were very good friends. they were on their way to give some speeches. >> we will spend a little bit more time before we get some calls about these characters. we have heard about the suggestions of corruption. if he were to walk into this room today, what would he look like, what did he sound like? what are some of the things that you know from your studies of the man? >> he was considered very handsome, very well-dressed, extremely well spoken. beginning in the late 1850's, he started out his career here

in augusta as a newspaper editor. as a political bug. by the late 1850's, he had very much emerged in the coming political party. he had lots of experience in stump speaking. that really gave him a lot of practice towards being able to articulate his ideas as he emerged as a national figure. charismatic, magnetism was another word attached to him. >> my understanding is that he had a terrific memory for people's names so he was the kind of politician who could make you feel like he knew who you are and what your concerns were and so on. that made him a very powerful figure. >> there is a story told when he is in the 1884 campaign, he is on a train and he recognized a man who he had met as a wounded soldier in a military

hospital 20 years before. that was the kind of memory he had for faces. >> what a gift for a politician, to be able to memorize names and recall them. he was able to capitalize on them. >> he was a great politician. [laughter] >> not just in that, in his mastery of political tactics. >> mastery of tactics, mastery of leading his party. there is this sense of when he was in congress during those years that he wrote about, which were critical year for the nation, he had a way to smooth over the differences between the sections. and as congress was coming back together, also to include the south. >> some of the references that i read about him -- more mercurial, a hypochondriac, prone to depression. >> he was constantly complaining about his health.

he ultimately died at 62 in 1893. in the last few months of his life, he was truly ill. >> he was also relentlessly ambitious and i know that i read somewhere that said that there was no one who yearned or hungered for the presidency more than james g. blaine. >> throughout his years, the charges of corruption from his days of promoting the railroad, lobby for congress stuck with him. we have another one of these political cartoons. the tattooed james g. blaine. this refers to the charges against him. will you tell us about this episode? >> this is from the election in 1884. this is a tremendously powerful image in that election in that it is recognized as one of the factors that helped to defeat blaine.

blaine is shown as a roman senator in the senate and his toga is being lifted from his body. underneath are tattooed his various political sins. the senators are looking aghast at his political misdeeds being revealed. in the midst of that crowd is his running mate and also a young teddy roosevelt. >> and the letters that were his defense. was it a successful defense? does history record whether or not he was corrupt? >> the mulligan letters were the accusation as opposed to being his defense and he tried very hard to make them seem as though they had no value. i read something about him slamming them down on the desk and daring people to read them -- once he had stolen them from whoever had them. he went to the hotel and then

he disappeared with them and he never returned them. he tried to use them as a way to protect himself. i don't think that there's any clarity that he was not guilty. i think it is pretty clear that he was. some called him jay gould's handyman or busboy or something to that effect, that he was so tight with the railroad industry. it was unlikely that he was innocent. >> they continue to dog him. in the 1884 campaign, someone published what was believed to be a version of the mulligan letters in a pamphlet. he never quite resolved that. >> we will involve some of our viewers in the discussion. our first caller is from atlanta. roger, you are on the air. caller: hello, how are you tonight? >> great, thank you. caller: i just finished reading the biography of speaker reed.

for two people who are powerful in the republican party, they seem in the same place. they seem really distant. is that true? is that just a feature of the biography? >> no, i think you are correct. you are mentioning thomas reed who was born in portland, maine in 1839, just a little bit younger than blaine. he spent his entire public life as a congressman. he rose to be speaker, like blaine was also speaker. reed served in the late 1880's and into the 1890's. the corruption was never a question in relation to reed. reed was a totally honest and forthright individual.

in addition to that, reed is described as a towering figure in the history of the development of the congress. he is considered to be one of the three or four of the most influential speakers of the house in the history of the house. his rules, his reform of the house. the recognition that the majority rule had to be counted and had to be taken into account. >> our next caller is watching us in san francisco. caller: i think you are right on the major issues here. it seems to me that the country was going through a major transition from the old money having formalized their ethical values and then their transition with the railroads into big industrial corporations and raising money for corporations. very different sets of values.

the question is, how could someone who was busy making all of the deals and representing wall street maintain any kind of reputation in this situation? >> one answer to that would be that there was a great recognition of his sheer power. because he was so powerful and to do so much for the party and for the other goals, people could set aside his apparent relationship with the railroads and the industry. >> next is a call from portland, new york. hi, sharon. caller: i would like to thank c- span for bringing this wonderful series. did mr. blaine making money before he went into politics or did he have money to begin with? did he come from a family that had money to begin with? >> he is from a modest background.

he was born in pennsylvania. he started out as a teacher. then he married harriet stanwood. there was some question about the validity of the marriage, so they were remarried again in 1851. by 1853, they're getting word from her relatives that there was a business opportunity for him to come back. they relocated to augusta in 1854. he was involved in a daily paper. he was also involved in the "portland advertiser." and that is the oldest continuous daily newspaper. >> we're looking at his desk from the time period.

the newspapers at the time, he was a newspaperman and very involved in politics. was that common? >> i think it was one of the primary ways that politicians got the word out about their policies. certainly there was no television. people were interested. there was no radio, no newspapers and public speaking was a way that politicians operated. >> newspapers were very partisan in those days, and self admittedly so. individual group would start a newspaper and not only to report the daily news of their community, but also to support a political view or a particular political party. >> was his interest in their -- how did the newspapers and the republican party intersect? >> in 1884, when he becomes the editor of the "quinnepec

journal," he is involved in the founding of the "national journal." the newspaper is very much alive with the rise of the party in maine. >> let's take a telephone call from washington, d.c. >> i find this very fascinating. how would america be different or how would our country be different if mr. blaine had become president? and then also, why do we not care about him in the history books? could you elaborate on that? >> how would it be different? >> i am not sure the country would be terribly different.

i think perhaps mckinley becomes a very pro-business president in 1896. and a republican. and blaine would have brought about that earlier in 1884. >> some scholars have said that blaine, because of his personal magnetism, would had been a great leader for the country and would have rejected the kind of image of confidence and of power that really had been lacking in recent presidents in that period. in the modern men, the most important figure between lincoln and teddy roosevelt. >> chicago is up next. dave, you are up next.

>> there was a comment about referring to him as 20 years on the make. [applause] >> well, there is that. >> the railroad connection had some validity in the day. the small town in west virginia, blaine, west virginia, a railroad town. he endures in the railroad that way. did he not lose new york because he did not repudiate the statement of the reverend that people would not support the democrats?

thank you for taking my call. >> thank you for watching me. 20 years on the make? that is a great title. >> a great cartoonist, harper's weekly was his forum. every week he created another challenging political cartoon. he down right dislikes blaine and excoriated him in his cartoons. >> in one campaign, he went out to dinner in new york, incredibly all a bunch of millionaires, all the top millionaires in the york, despite the fact that new york and the country is in a great depression and suffering greatly. he seemed to be completely blind to the inappropriateness. >> that was the very day that he also was witness to the speech.

so the morning he did the speech, and in the evening he did delmonico's restaurant. the most fabulous restaurant in new york. that was immediately reported to the press. >> the belshazzar feast. >> we are in his study. the period of time of reconstruction, where was he on the issues? >> my sense is that he was largely a moderate, which would help to make him and the nation. he was in the congress at one of the more difficult times of its history. but he was also an early advocate of suffrage. that would not have been considered a moderate position.

my sense is that that was more opportunistic than anything else. he was among those who believed that black suffrage was important, not because it was important for blacks, but because they would vote republican and vote for him. >> talking about his enemies, talk about roscoe conkling. >> a congressman from new york. >> i know that there was the struggle between the two of them which led to an historic fight on the floor of the house of representatives. we have a clue about it from the senate historian. >> the two leading republican politicians were roscoe conkling and james g. blaine.

they were both dynamic and articulate. they were magnetic personalities. that attracted a lot of people to them. they could give a speech to a convention and knock the convention out of its mind, they were so terrific. any kind of oratory, they were legislative geniuses, and they hated each other with an absolute passion. no two political figures have ever hated each other as much as these two. partly because they are about the same age, the same ambition, they knew that one or the other of them would stand in the way of the other getting to the white house. and their rivalry started back when they were in the house of representatives in the 1860's. roscoe conkling was a vain man,

very handsome, dressed to the nines. he strutted about in a way that made other members uncomfortable. and he never particularly had a good word for anyone. james g. blaine was not afraid to take on anybody. they debated in 1866 and he launched into one of the most savage attacks on another member of congress. under the rules today, you really cannot attack another member that way. it was full of sarcasm and allusions to the hyperion curl that roscoe had and to the turkey gobbler strut. it was terrific. it gave tremendous amounts of ammunition to the political cartoonist.

from then on, they always made poor old roscoe into a turkey. >> the senate historian don richey. what you're seeing here in the blaine house in augusta, maine. the house is still very much in use. as we look at the characterization there, you think politicians are colorful today, but turkey gobbler strut! how do these stories get passed along to us? >> the press was very lively in those days. the way in which the information was translated to other newspapers around the country was through the telegraph. stories could be written and then they would be telegraphed

to other papers. and then copied in some cases to other papers. >> it was entertainment. much of it was not just about the politicians, but the entertainment value that it had. great writing and clever phrasing. >> just like a sports team. helen, from new jersey. >> this is a wonderful series. i hope my class is paying attention because there will be tests. [laughter] i have a question about the blaine amendments. he tried to amend the constitution. was there other motivations that went along with it? >> more than 20 states have blaine amendments even though it was not successful on the national level.

>> it is 37. >> he proposed an amendment that would prevent religious institutions from using federal funding. >> if it is still in place today. >> the separation of church and state. >> did it ever have a supreme court challenge? we discuss separation of church and state so often in this country. >> i do not know that it has. >> maybe because there are attempts not from the supreme court side but from individuals who are constantly trying to challenge the separation. >> what motivated him and putting it forward? >> it was 1875 and he may well have already had his eye on the 1876 election and opportunists to quit picking an issue. and i'm not beyond thinking that

it was an anti-catholic sentiment. the catholic schools would be most likely to use federal funding. >> he was a congregationalist. >> did he have a catholic parent? >> yes, his mother. but he says -- he attended the south parish church here in augusta. their beautiful tiffany memorial windows that he and other members and other families in that church bought. >> we have a caller from d.c. you are on the air. >> good evening, susan. >> i can hear you. >> thank you for hosting this series. i have been watching c-span for many years and all the programs have been so great. i wanted to thank you. my question goes to the chinese exclusion act.

most of new england republicans were against the chinese exclusion act. they tended to be more liberal. they were not on board with that. but blaine was supporting it with the southern democrats. why was he not so liberal in terms of civil rights at that time? like other new england republicans? thank you. >> again, it is similar to elizabeth's answer on another issue. this is a man who always had his eye on the presidency and in order to win the presidency, he needed to do it from a nationwide perspective. he recognized in the west and especially in california, chinese immigration was a major issue.

he wanted those votes. >> i'm taking away that this is a man that wanted that presidency desperately. he was not illogically driven so much as having his finger to the political wind? >> that is one way to interpret his political career. when i think about the black suffrage policy and at the same time, the chinese exclusion act, i find it hard to put together. if he was racially progressive, why would he not be racially progress on the other side? that makes me think he was very ambitious and whatever would win elections. >> was blaine so obsessed that he considered himself a failure for not having attained it? >> that is an interesting question. >> i do not think we get that sense.

he went through the process three times. 1874, 1880, 1884. he was also -- it was dangled in front of him in 1888 and 1892, even though he was very ill. i think he felt that his great accomplishment was the second term as secretary of state, and there he was able to play out of a lot of his ideas not only on the national scene but on the international scene as well. i do not think he viewed his career as a failure. >> you're watching our series "the contenders." we will take a short break and tell you more about the series. >> "the contenders" and our look at the life of james g. blaine continues in a moment. we feature profiles of key

figures who ran for president and lost but changed political history nevertheless. for more information on our series, go to our website at c- span.org. there you'll find a schedule of the series, biographies of all the candidates, historians' appraisals, and portions of their speeches when available. that is all at c- span.org/thecontenders. we now return to maine and our discussion of the life of james g. blaine. >> you're looking at our live picture of the james g. blaine house, the state capital. it is now the official residence of maine's governor and has been since 1920. we are inside the governor's mansion, a guest of the governor and his family, to learn more about a longtime owner, james g. blaine, unsuccessful presidential aspirant, three

times won the nomination, failed to win the presidency, and yet made a mark on this country that we are learning more about tonight. earl shettleworth is maine's state historian and the direction of the historical preservation center. elizabeth leonard, a specialist in civil war america. we're getting great questions tonight. the numbers are on the screen. we welcome your involvement in this. tell me about maine in this time period. we talked about his coming here as a young man. how difficult would it have been for him to establish himself? >> i think he had a very good connection with his wife's family. they were prominent family here

in augusta. that connection for him to become the editor of the "journal" was made by families and friends who wanted his wife back here and also wanted to make that opportunity available to him as well. he came at a perfect time in the 1850's, the decade before the civil war, maine at the zenith of prosperity. there is a recession in the late 1850's, but generally speaking, maine is really cresting in its economic and political fortunes at that time. >> last week we were at the home of henry clay. were there connections between henry clay and james g. blaine? >> there were in the sense that he had grown up in a house where clay was absolutely idolized. when he was a young man, he spent some time in kentucky and working as a teacher and made the point of seeing clay whenever he could when he was in kentucky.

he was a very devout fan. >> one account that at the age of 17, he attended one of clay's major speeches in 1947 and took copious notes. >> our next caller in our discussion from indianapolis, edward. >> hi, how are you? >> great, thanks. your question? >> what was the role of james g. blaine as secretary of state under william benjamin harrison? some're going to spend time on that later on. >> garfield, arthur, and then harrison. harrison was the long period. garfield was less than nine months. with harrison, it was a wonderful position because he had really reached the zenith of his career.

he was viewed as powerful if not more powerful than the president himself. he had this free rein to be able to develop ideas that he had been working on for years in terms of international relations. -- his particular interest during the 89 to 92. was central and south america. he developed, including the idea of the pan-american union and so on. >> i want to get more involved on that later run. there are a few pieces connected that abraham lincoln. he was obviously a supporter of abraham lincoln. did he know him, that we know of?

>> i do not know that he knew him personally. >> he went to congress in 1862. so he would have served in washington from 1863, and lincoln was assassinated on april 14, 1865. there is a very poignant reminder of this connection with lincoln here at the house. there is a little card, literally seven days before lincoln is assassinated, blaine went to lincoln to get permission to visit richmond, virginia, which had just fallen, the capital of the confederacy. we know that he would have had other opportunities to meet and talk with lincoln. so anso know that he was stil admirer of lincoln. -- of lincoln that when he built the addition to the house in 1872 for the study, he wanted to use the very same wallpaper in his study that lincoln had used in his cabinet room. >> we are showing that wallpaper to people as we speak on the screen. it is a replica? and the permission slip to travel to richmond. which would have been necessary

at the time. waterville, maine, glad to have a maine person involved in this discussion. alexander, you on the air. >> what other tactics did he use against cleveland other than a child out of -- van claiming he had a child out of wedlock? >> as far as i know, that was his primary personal attack against him. there were the local attacks as -- there would have been political attacks against him as a democrat and a representative of the party that fomented the rebellion. >> how much of a scandal would it have been to have a child of wedlock? >> quite scandalous. >> i would think so, too. >> just to answer that question, there were nuts and bolts issues to the campaign of 1884. one of the strong issues that republicans and democrats differed on in the post-civil war period was the tariffs. how much to tax goods coming and going. and that tariff was a major

factor. >> the curfew was getting to be -- and i believe currency was also getting to be a major factor. d> the civil war hav proliferated the use of paper currency. the whole issue of greenback currency was very much in the 1870's and 1880's. >> and into the 19th -- 1890's. >> that gives weight to the free silver issue. >> houston is up next. our caller's name is james. hello, james. you are on the air. >> he mentioned the civil war government. -- the civil war governor. the first republican governor was actually my good great -- great, great grandfather, hamilton. additionally, the rift with roscoe conkling might have cost him new york and possibly the presidency. some of his polling of the lion's tail came back to haunt

him, i think. him. yourank you for contribution. hannibal hamlin. >> he was born in oxford county. he was quite a bit older than blaine. he was a highly skilled lawyer. he had served as governor of maine briefly and then became a senator. then in 1850, he is chosen as a -- 1860, he is chosen as lincoln's running mate for vice-president and served as the vice-president of the united states from 1861-1865. after the war, he goes back into political life again as a senator. he would have been very much a part of blaine's world in the republican party in maine. hannibal hamlin was a very powerful figure in the world and -- in that period and he would have interacted constantly with blaine.

>> and he was someone that stood against chinese exclusion. he was a republican who stood against a plain -- against blaine on that issue. >> you hear people bring up the question of, it is time for a new party. -- the tea party system, this is the two-party system is failing us and the like. we saw the evolution of a political party. take a minute or so and explain about the demise of the whigs and the rise of the republicans. >> the demise of the whigs is very much associated with henry clay. when henry clay died, he was so closely linked to the whig party that it really collapsed. but it was not just about henry clay, but the slavery issue and the anti-immigrant issue. and a number of other issues that led to the development of this political chaos which gave way to the republican party but also the split in the democratic party over the course of the 1850's. >> we would love to introduce you to books. our guests, she has just -- our

guest, elizabeth leonard, has just seen the copy of her book. it is her first book on joseph holt. joseph holt. take a minute and tells about his character. >> he was lincoln's judge advocate general. a very important figure in lincoln's administration. he was the chief of military justice. after lincoln was assassinated, he was the prosecutor of the lincoln assassin. anyone who was seen the film, "the conspirator," has seen a representation of joseph holt which is more that i could say -- than i could say before that film came out. >> it is going to be available. [clock chiming] it is funny because it is not the top of the hour. the clocks are ringing. you will hear a number of them at the top of the hour as we get into the second half of our program.

a phone call from michael in tampa. >> i think your show is wonderful and i appreciate the historical commentary as well as the interviewers. commentary.wers' can we put forward some personal commentary relative to his experience and time as compared to today political landscape? -- to today's political landscape? >> what do you mean? >> i think he represents something that is dominant in the american populace today, and that is not being representative. i think blaine was very inspiring to hear about. i was curious of some personal input from all three of you relative to that landscape of then versus today. >> we will ask both of our guests to talk about that. >> i am not quite sure what he is looking for. you are asking if i think he is a politician who would be

recognizable today, i would think that he might be kind of recognizable in his ability to know the political system, to manipulate the political system. to be a real career politician. he is a certain type. >> could he have competed in today's -- could a person with his characteristics have been successful in today's political world? >> with his charges of corruption? [laughter] >> what would be different about that? >> good question. i think he had a lot of personal skills that probably would stand him in good stead today. clearly, to be an effective leader, you would need to have a charismatic personality and be able to get your message across. -- across well. these are things he did very successfully, and he really

understood the behind the scenes working of the political scene from the 1850's right into the 1890's. >> we talked about the media being supportive of the parties of the day. oncas someone who had persistent charges against him, were there investigations by the media at the time? >> definitely, they were looking into it, but even so, today we investigate people's corruption all the time and they still proceed with their careers. >> this is josh. >> good evening, great show. i wonder if your guest could -- comment on mr.lcould blaine's foreign-policy as secretary of state, what his opinions were. did he go abroad? i am specifically interested in south and central america. i was born in cuba and toward the end of the 20th century, the cuban revolution was just

starting. i was wondering if mr. blaine ever went to countries outside of the united states, and what his opinions were on colonialism by spain or other countries, and if he had any feelings about those types of issues? it is a great show, and i will hang up and listen. thank you. >> this question is so timely because it is time for us to spend some time learning about his years as secretary of state. we said earlier that he served three presidents. some historians suggest that we look at his legacy in the area of international affairs. can you speak to his influence and answer the question about whether or not he left the country? >> i'll take the first one first is that is ok? >> yes. >> i don't believe that he went to central or south america.

europe, yes. he traveled several times to europe in the time between the time he ran for president and the time that he became secretary of state in the mid- 1880's. he spent quite a bit of time in europe. some of that time was with a close friend of his, andrew carnegie, in scotland. in terms of his significance as secretary of state and the development of the policies, as we have mentioned before, they were primarily focused on central and south america. this was a very progressive thing to be doing in american foreign policy. those areas have largely been -- have largely been -- had largely been ignored since the days of the monroe doctrine. he was very concerned that britain was having an unusually strong influence on some of the countries, particularly argentina, and many of those countries were fighting among each other. he felt that in order to have a strong and safe america, you also need to have strong and

safe neighbors to the south. >> we have another of the political cartoons. it is titled "the old scout." what is it about? >> this is a pro-blaine campaign piece that shows blaine as an old western scout on a horse with an old, tattered hat. >> look at all the peoples of the world looking at him. >> exactly. this was him as secretary of state. this dates from around 1890. he is actually leading the people of central and south america into a new world. he is giving them leadership, and in many ways this is reflecting his pioneering work in creating what became the pan-american union, the opportunity for people to meet diplomatically in both hemispheres. >> where would he have gotten these ideas from? >> i think it goes back to the monroe doctrine. he was trying to revitalize that older image of hemispheric

unity and hemispheric dissent. -- defense. something i find interesting is this notion that he did feel that the monroe doctrine extended as far west as hawaii. he had his eyes on hawaii. even though he was talking about hemisphere integrity, he also had an imperialistic strain to him. wouldn't you say? >> certainly the whole hawaii episode was at the end of his life. he does not even live long enough to see hawaii and next -- annexed. he sets it in place by sending his old friend, john l. stevens from augusta who is involved with him back in the 1850's. he sent him as a special diplomatic emissary to hawaii to basically foment revolution. >> you mentioned that he really had an american-centric view even as he was branching out.

>> he would have been supportive of the notion of consolidation of capital. the growth of american wealth and expansion around the world. >> the interesting thing, we had a caller much earlier on who asked about thomas reed and there was a strong difference between blaine and his world view and thomas b. reed, who actually resigned from the house after the spanish war because he was so concerned about the imperialistic direction he perceived america going in. there were differing views in america in the late 19th century about the direction of the nation as a world power. >> he was serving under president benjamin harrison. how strong a president was he? >> i think he was generally perceived as a weak president, and that blaine was a shadow president. this was reflected in a lot of the popular literature and cartoons.

>> i read a similar thing about when he was secretary of state for garfield, that the author was defending garfield as being powerful in that relationship. he was defending it against a long tradition of people saying that it was really blaine running the show. >> this is david. >> hi, david. you are on. >> i was wanting to know did he have any influence? was there any fingerprint he put on wisconsin's socialist party that would become the progressive political party up until 1900 or 1910? all the way into the 1930's. there is a lot of policies that we still live by. workers' compensation and workers' rights. did they have anything to do with employing anybody in wisconsin?

-- did he have anything to do with influencing anything or anybody in wisconsin? >> not that i am aware of. >> think we are talking about the next generation of politics. we are talking about the teddy roosevelt as the progressive era from the early 1900's. i think you are talking about, the reforms that extended to other states as well as ours are post 1900. >> i would think he would be very pro-capital. -- pro-capitalist. we are talking about workers' rights and so on, he was with the millionaires. he was not committing the -- meeting with the laborers to see. >> could you give us a brief history of the house that you are in, about how the state of maine was able to acquire that from the donation? -- blaine donation? also, the death in washington d.c. and his subsequent burial 20 years later back in augusta?

>> i'm going to ask you not to ask about the death because we -- talk about the death now because we will show a little bit of the gravesite. but tell us about the house. >> the house was built by a retired sea captain in 1833. our state house right across the street had just been finished in 1830. -- 1832. this was a strategic location for home. -- a home. the house was acquired in 1862. -- acquired by blaine and his wife in 1862. he died in 1863. -- 1893, she in 1892. the house was really inherited by their surviving children. but then in the 1910's, the house went to his grandson, walker blaine beale. walker was tragically lost in

the last month of world war i in 1918 in france. the house went back to the daughter again. she in turn gave it to the state of maine in 1919 as our governor's mansion. it was restored and remodeled so it could be used as the home of maine's governors. they are the 21st family to live here since 1920. >> let me introduce you to another gentleman we would like to bring into the discussion. let me show you as we start here a biography he has written. his book is "continental liar." -- "continental liar from the state of maine." a campaign slogan used against him, of course. he is joining us from inside the governor's mansion. how did you get interested in blaine to read a biography --ut -- to write to biographe

a biography about him? >> basically, i had been involved in the house since 1966. i was assistant to the governor. i knew all about the blaine house. later on, another governor asked me to be the co-chair of a group called friends of the blaine house. i was spending a lot of time here. there was a little bit about him here. there really was not much. there was no up-to-date biography of him. the previous biographies were about 70 years old. there have been two of them written in the 1930's. i thought it was high time that this fascinating character who came within a whisper of being -- whisker of being the president of the united states should have a biography. -- another biography. that is hard got involved. -- how i got involved. >> what are some of the other words you would use to describe blaine? >> could you repeat that? >> what are other words you

would use such as fascinating to describe him? >> one they used a lot was magnetic. they called him the magnetic man because he had a magnetic personality. apparently when he would walk into a room, he just filled that room. everybody flocked to him. he was a natural in that regard. >> and you have been listening to our conversation. do you have a favorite story we had not told tonight? >> i did not hear everything that you said. i was wanting to start by talking about the first time he was secretary of state. i do not know how much you got into his relationship with gafield. >> that is okay. tell us a little about it, please. >> garfield was like a prohibition of his. protege of his.

reallped him get to a reathroua tough patch in congress when garfield was accused of corruption and taking something he could not have taken. he got in on that. they were very close friends. in 1881 when blaine was running for the second time, he did not have the votes to get the nomination himself. he turned his votes over to garfield. that is how garfield who was a very dark horse when the convention started happened to end up as the republicanthe sort of quid pro quo was when the number one job of the cabinet was to be secretary of state. it was understood between them that he would become secretary of state. >> let's take another telephone call. we have less than 20 minutes left in our 90 minutes on james g. blaine.

ohio, this is chris. >> hi. i was curious about blaine's relation with radical republicans before and during and after the civil war. it might be particularly interesting since he was chair of the senate foreign relations committee. >> thank you very much. is that something you can take? >> i can take a shot, particularly at thaddeus stevens. blaine made a name for himself by taking on the dow the thaddeus stevens, who everybody was afraid of. i do not know exactly what his relationship with sumner was, but he was not a radical republican. he was a moderate in that regard.

he still wanted to build the republican party in the south. that is why he was so strongly for suffrage for the free slaves. and for that part every construction. he was not for tremendous punishment for the south that some of the radicals were. >> we are talking about the life and times of james g. blaine, unsuccessful nominee for president in the '84 election. hoover cleveland was the successful -- grover cleveland was the successful candidate. we believe he had an influence on american history and are learning more about that tonight. woodland hills, california, you are on the air. hello, eric. >> hello, how are you? continuing on about james

blaine's personality, i was wondering, he is certainly a larger-than-life character. do you see him embodied in any current politician? >> let me give them a little time to think about it. >> i do not think so. he was considered a very congenial person. he came from away, as we say here in maine. he came up here as a young man. immediately he was accepted by people here. he was so good with people. he was sort of a combination of various people that we have now. i do not see anybody that has his intellectual depth. he was a very bright guy. he was very well read. i just read about him going to parties in washington and being described as being surrounded by people because he was reading the poetry. -- by women there because he

was reading them poetry. >> have either of you read about comparisons to today? >> i thought about bill clinton. >> in some ways, that kind of great personal style, larger than life -- very commanding -- my understanding of bill clinton is when he walks into a room, he takes center stage without trying. >> and a great orator, too. >> and very bright. clearly a very intellectual figure. the other person i thought of was lyndon johnson in terms of him being a party man and knowing everybody and being able to gather people together to do what he wanted. >> and to work the system. >> but a little corruption here and there. >> we are live inside the governor's mansion. we have 15 more minutes. falls church, virginia.

sean, you are on. >> good evening. i was wondering. was there are residents on dupont circle? -- a residence on dupont circle? is there any connection between mr. blaine and the southern railroad? >> we will take it in here. >> what was that? >> we will take in this -- his residence in washington, d.c.? >> in 1881, when blaine became secretary of state, he decided to build a large mansion on dupont circle. that house is still standing today. it was a house that he only kept for a few years. in the post-1884 election, he and his wife traveled a lot. it was at that same time after giving up the washington residence that they built another big gilded age victorian summer cottage here in maine. then when he became secretary of state for the last time, he

actually acquired the secretary of state's house near the white house. near lafayette square. that is the house he died in in 1893. >> he had sold the dupont circle house. >> he was there for a very short time. he had one of his daughters who was married there. died there. his wife hated the place. it is absolutely mammoth. it is still standing on massachusetts avenue. >> interested in james blaine and like to see that period of history. about 12 minutes left. hi, stanley. >> are there any books that they might recommend for reading in regards to mr. blaine? >> i would suggest the book you

are holding right there. if you want to know about the time period or the state in addition to this, some other books you can recommend? >> i would agree. neil's book is the most recent and up-to-date and comprehensive of blaine. you have to go back to the 1930's to have two biographies for him. neil is also an author of other books. he has done an overview of the state of maine. >> he is getting a lot of valentines in this room. >> good. [laughter] keep it up. >> we are talking about houses. in this book, you described the scene when blaine learns he is successful in obtaining the republican nomination in 1884 and he goes to the front door of this house to greet his supporters.

will you tell us about that time? >> when the news first came, the people were gathered down on water street which is right down by the river. around the post office, his biggest crony was the post office down there. -- postmaster down there. they were putting up signs about how blaine was doing. they put up that he had gotten the nomination. also, the blaines have a telephone. they were probably one of the first in the nation to have a telephone. the phone rang. his daughter picked up at dawn that she won. -- up and learned that he had won. she ran out into the front lawn where blaine was lying in a hammock. she said, you have won, father. you have won. that was how he learned the news. everybody marched up the hill from water street to greet their hero.

a huge crowd gathered. then it started to rain. you heard a voice yelled out from the crowd -- we have been waiting 11 years for this rain. blaine said they were all getting soaked. he gave his speech then. everybody started pouring in here from all over the country. they had a train come from california which had the california delegates to the chicago convention. people started coming from all over the state of maine. all over the united states. john eventually called him black jack logan spent a few days with blaine. >> i want to thank you for adding to our rich knowledge of james g. blaine.

one more thing before we say goodbye to you, "continental liar from the state of maine" -- it is available wherever you buy books. our guests are part of our program as we learn more about this colorful and intellectual man from the 19th centur, known not only around the united states but around the world. north carolina, douglas watching us there. you're on the air. >> i would like to ask you, what is blaine's relationship to joshua chamberlain? he was a republican. what was their relationship? >> as you mentioned, joshua chamberlain served four terms after the civil war. chamberlain was a very independent individual. he was not comfortable with blaine's brand of politics.

i think there was ample evidence they did not get along that well. there were not close compatriots in the party. chamberlain did not go for their politics after the governorship. he became president of the college. later on, he became collector of the port of portland. >> we had a callar that mention the towns that were named for james. we did a little bit of research. we found a number of cities and towns -- rather counties and towns named for james blaine -- mostly after the time around his death. can you talk a little bit more about honoring people -- especially james g. blaine in the communities around the country? >> one thing i heard what i've learned about that -- i thought about the fact that several of them are out west. i thought about his whole push for the western part in the

1880 hoping to build that with the chinese exclusion. i thought maybe he really did win some favors out west. i do not know if there is any connection. it is interesting that this republican figure from maine, well-known, there was some clear support. >> san francisco, up next -- jim. >> thank you. most of blaine's history was during reconstruction. do you know to what degree he negotiated with southern whites? >> i am sure that he would have said that he stood firmly against the reassertion of power by southern whites. he was a moderate. he was in line with those who believed the nation should move forward.

the radicals were really holding it back. the radicals were in favor of punishing the white southerners -- the rebels as best they could. i do not think it would have been in any way good politics for him to step up for white southerners. i do not think he was really strong going to take the position that they should be punished. >> in that regard, can i ask you -- what would have been the spots in the bill that would exclude citizenship? >> when he was throwing his hat in the ring he sponsored a bill that said that all of the remaining confederates, former confederates who had not been given amnesty should be given amnesty except jefferson davis which is interesting. >> how were those politics resounding with the nation?

>> it provoked a great fight in congress. people felt this idea that you should hold jefferson davis accountable was great. others thought that plan was doing what they called waving the bloody shirt again. and here the nation was moving away from the war, and reconciliation seemed to be moving forward and why was he provoking this kind of dispute again? >> we have about five minutes left. independence, iowa, this is joe. >> and joshua chamberlain, ulysses grant, william mckinley, blaine had no military record in the civil war. his running mate had won and was the first president of the grand army of the republic -- the great republican organizations throughout the states. did it cover the fact that blaine had not served?

>> there is no question that was a political balance on the ticket. logan was very well-known. the veterans' vote was a very powerful force in the post civil war period in america. blaine, because he was very much involved in a emerging political career -- when the civil war broke out, he was speaker of the house in maine. he was about to run for congress. he did what many men did at the time. he actually bought a substitute. it cost about $300 to have someone else go instead. cleveland had done the same thing. it was a very interesting situation that prior to the 1884 campaign, you always had someone in office and in the presidency -- grant and hayes and garfield, who had been civil war officers.

blaine and cleveland were not. >> whoever had won, it would have been a break with that generation. >> we have a viewer who asks about his death. will you tell the story about his death? >> as it has been mentioned, he was a man who was prone to illness all his life. i think both real and imagined. there was always mention that he might have been more of a hypochondriac in reality. but at the same token, by 1892 he was exhausted both physically and mentally. in fact, the campaign of 1892 was looming. there was some talk of him being nominated for president. he really was not up to it. he gave only one speech during the campaign.

it was on behalf of the reelection of harrison. early in 1893, he died at his home in washington. >> where is he buried? >> buried in augusta. originally buried in washington. as was his wife. the state of maine bought his remains back to augusta. they reside in a beautiful blaine memorial here in augusta. >> how long did his wife live after him, do you know? >> until 1903, she lived another 10 years. >> we have a local caller. augusta, maine, this is jonathan. >> what was the relationship between mr. blaine and the native population of the state? we know there were natives in the civil war that had

regiments in the south. >> i am going to stop you there. our time is short. >> i am not sure i have a quick answer for that. >> is that right? any place to go for that? is there material available? >> we definitely look to neil's book to start with. also the state library. >> i would like to close. we have just a minute left. i'd like to ask you the question. what was the legacy -- what is the importance to america today of james g. blaine having been a politician here? >> the biggest influx of secretary of state was very important. it was a great legacy. and his desire to build some contained of cohesion between the north america and south american and central american states. >> i think there is that. i think also if you look back across his long term career in public life is that he is one of the key builders of the republican party in the 19th century.

he's there at the beginning in 1854, and he is still there almost 40 years later, as probably the most powerful and most identifiable figure. >> our state legislature is all republican. >> we are out of time. i want to thank a number of people as we close here, first of all the host family for hosting us here at the governor's mansion. also the director of the blaine house here, and the staff has been fabulous. we really did take over the place, and they have been wonderful. the main historic preservation committee, thanks for your help and historic research, and to our wonderful cable affiliate here, time warner cable, for all of their help and support in bringing c-span to this committee. we'll close the program the

same week we open it. we will give you look at the campaign memorabilia, and listening to a group called the independent silver band, as they sing the 1884 blaine-logan victory song. thanks for being with us. ♪ hurrah, hurrah, heir radio ♪ [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> william jennings bryant, one of the best-known speakers of his time and the first politician to campaign from the backs of railroad cars and automobiles, he ran for president three times and lost, but he changed political history. he's one of the 14 men featured in c-span's new weekly series, "the contenders," live from

fairview, the bryan home in lincoln, nebraska, friday at 8:00 eastern. learn more about the series and our upcoming programs at c-span.org/thecontenders. >> next, a joint deficit reduction committee hearing with congressional budget office director on cutting taxes and increasing spending. the joint deficit reduction committee is tasked with finding at least $1.2 trillion in deficit reductions by november 23. this is about two hours. >> the doctor was a senior fellow in the program at brookings institution, he served as co-editor of the brookings papers on economic

activity, and the director of the hamilton project, an initiative to promote broadly shared economic growth. he has served as an assistant profe at harvard university, a principal analyst at the congressional budget office, a senior economist at the white house council of economic advisors, a deputy -- assistant secretary for economic policy at the treasury department, and an assistant director of the division of research and statistics at the federal reserve board. in those positions, the doctor has gained a wide range of expertise on budget policy, social security, med cafere, national healthcare reform, financial markets, macro economic analysis, and forecasting, and many other topics. so i'm very glad that he has agreed to join our committee here today. doctor, thank you so much for taking the time and for helping us get through this, and we would look forward to your testimony. >> thank you, senator murray. all the members of the committee, i appreciate the

invitation to talk with you today about the economic and budget outlook and about c.b.o.'s analysis of the fiscal policy choices facing this committee and the congress. the federal government is confronting significant and fundamental budgetary challenges. if current policies are continued in coming years, the aging of the population and rising costs for healthcare will push up federal spending as a share of g.d.p. well above the amount of revenue that the federal government has collected in the past. as a result, putting the federal budget on a sustainable path will require significant changes in spending policies, significant changes in tax policies, or both. addressing a formidable challenge is complicated by the current weakness of the economy and the large numbers of unemployed workers, empty houses, and underused factories and offices. changes that might be made to federal spending and taxes

could have a substantial impact on the pace of economic recovery during the next few years, as well as on the nation's output and people's income over the longer term. i will talk briefly about the outlook for the economy and the budget and then turn to some key considerations in making fiscal policy. the financial crisis and recession have cast a long shadow on the u.s. economy. although output began to expand two years ago, the pace of recovery has been slow, and the economy remains in a severe slump. c.b.o. published its most recent economic forecast in august. that forecast was initially completed in early july and updated only to incorporate the effects of the budget control act. in our view, incoming data and other developments since early july suggest that the economic recovery will continue, but at a weaker pace than we had anticipated. with output growing at only a

modest rate, c.b.a. expects employment to expand very slowly, leaving unemployment rate as depicted by the dots in the figure close to 9% through the end of next year. i should say all these figures are taken from the written testimony and nearly in the in order in which they appear in the testimony. as a result, we think that a large portion of the economic and human costs of this downturn remain ahead of us. the difference between output and our estimate of the potential level of output shown by the gap between the lines in the figure has accumulated so far to $2.5 trillion. by the time output rises back to its potential, which will probably be several years from now, we expect that cumulative shortfall to be about twice as large as it is i had to, or $5 trillion. not only are the costs associated with this shortfall in output immense, they're also

born unevenly, falling disproportionately on people who lose their jobs, are displaced from heir homes, or own businesses that fail. i want to emphasize the economic outlook is highly uncertain. many developments could cause economic outcomes to differ substantially in one direction or the other from those we currently anticipate. if the recovery continues as expected and if tax and spending policies unfold as specified in current law, deficits will drop marked am as a share of g.d.p. over the next few years. under c.b.o.'s baseline projections, shown by the dark blue portion of the bars in the figure, deficits fall to about 6% of g.d.p. in 2012, about 3% in 2013, and smaller amounts for the rest of the decade. in that scenario, deficits over the decade total about $3.5 trillion. but as a number of you have said, those baseline projections understate the

budgetary challenges, because changes in policy that will take effect under current law will produce a federal tax system and spending for some federal programs that differ sharply from the policies that many people have become accustomed to. specifically, c.b.o.'s baseline projections include the following policy specified in current law. first, certain provisions of the 2010 tax act, including extensions of lower rates and expanded credits and deductions, enacted in 2001, 2003, 2009 all expire at the end of next year. second, the two-year provision is designed to limit the reach of the alternative minimum tax, the extensions of emergency unemployment compensation, and the one-year reduction in the payroll tax all expire at the end of this year. third, sharp reductions in medicare's payment rates for physician services take effect at the end of this year. fourth, funding for discretionary spending declines over time in real terms in

accordance with the cap established under the budget control act. and fifth, additional deficit reduction of more than a trillion dollars will be implemented as required under the act. changing provisions of current law, so as to maintain major policies that are in effect now, would produce markedly different budget outcomes. for example, and shown by the full bars in the figure, if most of the provisions are the 2010 tax act were extended, if indexed for inflation and if medicare's payment rates for physician services were held constant, then deficits over the coming decade would total $8.5 trillion rather than the $3.5 trillion in the current law baseline. by 2021, help by the 3ub would reach 82% of g.d.p., higher in any year since 1948. yesterday, c.b.o. released analysis of the enforcement policies of the budget control

act. as shown in the slide, we estimate that if no legislation originating from this committee is enacted, the following would occur over the next decade. reductions in the caps on discretionary appropriations for defense would cut out waste by about $450 billion. reductions in the caps on discretionary appropriations for nondefense purposes would cut out waste by about $300 billion. and reductions in mandatory spending would yield net savings of about $140 billion. the total reduction deficits would be about $1.1 trillion. the estimated reductions in mandatory spending are comparatively small because of the law except a significant portion of such spending from the enforcement procedures. as a result, about 70% of the total savings would come from lower discretionary spending. cuts in defense and nondefense spending of that magnitude would probably lead to reductions in the number of military and civilian employees and in the scale and scope of

federal programs. beyond the coming decade, as you know, the fiscal outlook worsens as the aging of the population and rising costs for healthcare put significant and increasing pressure on the budget under current law. when c.b.o. issued its most recent outlook in june, outlook was projected to reach 84% of g.d.p. in 2035 under current law and about 190% of g.d.p. under policies that more closely resemble current policies. although new long-term projections would differ because we would incorporate the latest 10-year projections, the amount of federal borrowing that would be necessary under current policies would be clearly unsustainable. in sum, the federal budget is quickly heading into territory that is unfamiliar to the united states and to most other developed countries as well. as this committee considers its charge to recommend policies that would reduce future budget

deficits, its key choices fall into three broad categories listed in the slide -- how much deficit reduction should be accomplished, how quickly should deficit reduction be implemented, what form should deficit reduction take. let me take up these questions briefly in turn. first, regarding the amount of deficit reduction, there is no commonly agreed upon level of federal debt that is sustainable or optimal. under c.b.o.'s current law baseline, debts held by the public is projected to fall from 67% of g.d.p. this year to 61% in 2021. however, stabilizing the debt at that level would still leave it larger than in any year between 1953 and 2009. lawmakers might determine that debt should be reduced to amounts lower than those shown in c.b.o.'s baseline and closer to those we've experienced in the past. that would reduce the burden of debt on the economy, relieve

some of the long-term pressures on the budget, diminish the risk of a fiscal crisis, and enhance the government's flexibility to respond to unanticipated developments. of course, it would also require larger amounts of deficit reduction. furthermore, lawmakers might decide that some of the current policies scheduled to expire under current law should be continued. in that case, achieving a particular level of debt could require much larger amounts of deficit reduction from other policies. for example, if most of the provisions in the 2010 tax act were extended, the a.m.t. was indexed for inflation and medicare's payment rates for physicians were held constant, then reducing debt in 2021 to the 61% of g.d.p. projected under current law would require other changes in policies to reduce deficits over the next 10 years by a total of $6.2 trillion rather than the $1.2 trillion needed from this committee to avoid automatic

budget cuts. in 2021 alone, the gap between federal revenues and spending of those policies were continued and no other budgetary changes were made, as shown by the right pair of bars in the figure, it's projected to be 4.7% of g.d.p. putting debt on a downward trajectory relative to g.d.p. in that year would require a much smaller deficit. reaching that objective, declining debt relative to g.d.p. from that starting point would require a reduction in the deficit of about 2.5% of g.d.p., or $600 billion in that year alone. your second set of choices involving the timing of budget, which involve some tradeoff. on one hand, cutting spending or increasing taxes slowly would lead to a greater accumulation of government debt and might raise doubts about whether the longer term deficit reductions would ultimately take effect. on the other hand, implementing

spending cuts or tax increases abruptly would give families, businesses, and state and local governments a little time to plan and adjust. in addition, and particularly important given the current state of the economy, immediate spending cuts or tax increases would represent an added drag on the weak economic expansion. however, credible steps to narrow budget deficits over the longer term would support output and employment in the next few years by holding down interest rates and reducing uncertainty, thereby enhancing confidence by businesses and consumers. therefore, the near-term economic effects of deficit reduction would depend on the balance between changes in spending and taxes that take effect quickly and those that take effect slowly. as shown in this next slide, credible policy changes that would substantially reduce deficits later in the coming decade and beyond would without immediate spending cuts or tax

increases would both support the economic expansion in the next few years and strengthen the economy over the longer term. moreover, there is no inherent contradiction between using fiscal policy to support the economy today while the unemployment rate is high and many factories and officers are underused and imposing fiscal restraint several years from now when output and employment will probably be close to their potential. if policy makers want to achieve both a short-term economic boost and longer-term fiscal sustainability, the combination of policies that would be most effective, according to our analysis, would be changes in taxes and spending that would widen the deficit today, but narrow it later in the decade. such an approach would work best if future policy changes were sufficiently specific, enacted into law, and widely supported so that observers believed that the future restraint would truly take effect. the third set of choices

involve the composition of deficit reduction. federal spending and revenues affect the total amount and types of output that are produced, the distribution of that output among various segments of society, and people's well-being in a variety of ways. in considering the challenge of putting fiscal policy on a sustainable path, many observers have wondered whether it is possible to return to previous policies regarding federal spending and revenues. unfortunately, the past combination of policies cannot be repeated when it comes to the federal budget. the aging of the population and rising costs for healthcare have changed the back drop for budget decisions in a fundamental way. under current law, spending on social security, medicare, and other major healthcare programs, the darkest line in the figure, is projected to reach about 12% of g.d.p. in 2021 compared with an average of about 7% during the past 40 years. it's an increase worth 5% of

g.d.p. most of that spending goes to benefits for people over age 65, with smaller shares for blind and disabled people and for nonelderly, able-bodied people. in stark contrast under current law, all spending apart from social security and the major healthcare programs and interest payments on the debt is projected to decline noticeably as a share of the economy. that broad collection of programs includes defense, the largest single piece, the supplemental nutrition assistance program, formerly known as food stamps, unemployment compensation, veterans benefits, federal civilian and military retirement benefits, transportation, health research, education and training and other programs. that whole collection of programs has incurred spending averaging 11.5% of g.d.p. during the past 40 years. with expected improvement in the economy and new caps on discretionary spending, it

falls in our projection by 2021 to less than 8% of g.d.p., the lowest share in more than 40 years. under current law in our baseline projections, putting those pieces together, including interest payments, between 1971 and 2010 as shown by the left par pair of bars in the figure, federal spending averaged about 21% of g.d.p. but under current law for 2021, as shown by the right pair of bars, c.b.o. projects it to grow to about 23% of g.d.p. alternatively, if the laws governing social security and the major healthcare programs were unchanged and all other programs were operated in line with their average relationship to the size of the economy during the past 40 years, federal spending would be much higher in 2021, around 28% of g.d.p. that amount exceeds the 40-year average for revenues as a share of g.d.p. by about 10 percentage points.

in conclusion, given the aging of the population and rising costs for healthcare, attaining the sustainable federal budget will require the united states to deviate from the policies of the past 40e years in at least one of the following ways. raise federal revenues significantly above their average share of g.d.p., make major changes in the sorts of benefits provided for americans when they become older, or substantially reduce the role of the rest of the federal government relative to the size of the economy. my colleagues and i stand ready to provide information to help you make these important decisions. thank you. >> thank you. as we begin the work that has been no wind under the budget control act, i think it is helpful to have a clear understanding on the scope of

the problem, and you lay that out. i think we agree that the task is enormous. we have to come together around a balanced approach that addresses our fiscal situation and also focuses on making sure that we remain competitive and look toward long-term growth. helen to start by asking you to expand on what you were just talking about entellus what we should consider in weighing the trade-off between helping our economy in the short term to create growth and not create significant harm in the long term. >> in our judgment -- and this is consistent with the assessment of general opinion -- there are unused resources in the economy, unemployed workers, and used homes, and so forth -- the economy finds it difficult to

find further support because the funds are already close to zero. under those conditions, cuts in spending and increases in taxes will tend to slow the economic recovery. they will tend to reduce the level of employment. at the same time, this is consistent with the consensus of professional opinion. over time, as our economy moves back toward potential output and those unused resources become used again, under those sorts of economic conditions, cuts in spending and increases in taxes are good for the economy, bolster output and income. they seem like a paradox, but not really, just reflecting the view that the objective of fiscal policy on the economy depend on economic conditions and on the abilities of monetary policy. that is why, in our judgment, we

have presented to provide the biggest boost of economic activity now and over the medium-run and long-run, the combination of fiscal policies that would be more effective which would be cut taxes or increase spending in the near term. but in the longer term, moving in the opposite direction and cut spending or raise taxes. >> as you know, several bipartisan groups have released reports in the last nine months with recommendations for reining in our deficit and stemming the rise of federal debt. all of them came with a balanced approach. i'm concerned that congress has not yet included revenues or entitlements and focused only so far on discretionary spending cuts and caps when we need to be looking at balance approaches.

many in made clear the the what entitlements off the table and others want revenues off the table. unfortunate, that means there is a very small amount of discretionary and mandatory spending that members so far have been willing to focus on. would you agree that budget caps can help somewhat in the long run and what we really need is a comprehensive approach and mandatory programs? >> as a matter of arithmetic, there are a lot of different tasks to producing budget deficits. it is not the role of the cbo to make recommendations among those alternative paths. i think the crucial point, though, is that the more the large pieces of the puzzle 1 ticks off the table, the greater the changes will need to be in the remaining pieces. you can see this very clearly in

the picture. this picture shows revenue being about 1% of gdp in 2021. >> it is hard to say. >> this is figure 14 in the written testimony if you have that in front of you. the left hand set of bars show the averages over the last 40 years. the far left bar is revenues. they have averaged about 80% of gdp. the right hand bar shows the major pieces of spending. chunk is so sol security.

-- 18% have averaged gdp. in the past, where you see medicare and exchanges in the future for insurance exchanges, there is defense spending were it has averaged 11% of gdp. interest payments are about two and a quarter of gdp. that is just under 3% current under current law, revenues would rise about 21% of gdp. social security and the major health care programs would be a little over 12% of gdp. and 5 percent -- that is 5% of

gdp more than the last 40 years. that is the essence of the point that the aging of the population and rising costs for health care have changed the backdrop for the decisions that you and your colleagues make. if those policies continues -- if those programs continue to operate like in the past, there will be much more expensive than they have been in the past. there will be more people collecting benefits and each person will be collecting more in benefits. that is the crucial driver of the future budget trajectory relative to what we have seen in the past. the other categories even much smaller than 2021 under current law and our projections than it has been historically. that is a combination of improvement in the economy, which we think will reduce the number people on food stamps and unemployment insurance and so on, but also discretionary spending caps that produced both defense spending and non-defense

discretionary spending. >> i am sorry. i am at a time. how to turn it over to my co- chair. >> thank you. we will continue on this line of questioning. is it possible to pull up your figure 12 from your testimony, if somebody could help with that? figure 12, page 39 of your testimony -- i believe it is entitled "figure 12." >> i aniston this chart of historic and projected growth on social security/medicare/other major health care programs. you would not have this chart

plotted in gdp, would you? >> it is expressed in percentage of gdp. >> historic average post-world war ii is what? roughly 3% annual economic growth? >> that is about correct. but i do not know for sure. >> on figure 14, social security and major health care programs have averaged 42% of gdp. -- averaged 7.2% of gdp. for 2012, is 14%. that is rapid and explosive. >> yes. >> social security has grown at

an average of 5.8%, medicare at 9.1%, medicaid at 8.1% in the last decade. again, we now have a revised gdp i looked appeared -- gdp outlook. is it fair to say that they are potentially growing two times to three times the human growth of the economy? >> our projections are for them to outpace economic growth of course, the exact amount is uncertain. but the gap in the growth rates we have seen historically has been very large, as you said. >> in the senator's comments, he talked about the current law baseline. although an important exercise,

under current law this one, medicare physicians will get a 30% ticket next year. is that correct? >> yes. >> recently testified that cbo does not have a model to really impact -- to show the impact of such a cut on health care delivery. is that correct? is cbo developing a model or is that beyond the scope of what you do? >> it is a long-term plan. we have obviously raised concern that the slower growth in payments to medicare relative to the private sector could re stricken the access to care. -- could restrict the access to care. but we do not have a model that would enable us to make any more specific predictions along those

lines. >> what i'm trying to get at this, clearly, quoting the president who would do not always agree with, he said "the last major driver of our long- term liability is medicare and medicaid and our health care spending take it you would agree with that assessment as well. i also wanted it to the qualitative aspects as well in our current system. you said that cbo's developing a model. and the cms actuaries have said that, under the current base line, "medicare beneficiaries would face severe problems with access to care." that is august 2010. the medicare trustees 2011 talk

about the growing insolvency. "beneficiary access to health care services would be rapidly curtailed." the decision is not whether or not we would ration care. it is whether or not we would ration with our eyes open. looking at not just programs that are driving the insolvency of our country, but, in many respects, is also shortchanging the beneficiaries as well. would you agree that as well or would you wait until you have your model? >> the extent of the pressure on providers of care to medicaid beneficiaries may depend a lot on the time horizon. and the actuaries make projections for 75 years into

the future, they have shown pictures that i have seen in testimony about the relative payment rate to providers many decades into the future. there are search of train -- the sorts of changes that are for the future may be much less severe than those affects for the remainder of the 75-year period. beyond that, we do not have a way to quantify for you the extent of the impact to the beneficiaries. >> the trusties and cms, in an attempt to lead by example, do so. i see my time is up. thank you. >> thank you very much for your testimony. you focus quite a bit of your time on for what is coming up.

if we are not careful, it could be pretty bad. we're doing right now with a $14 trillion national debt and a fairly massive deficits today. we have been charged with come up -- with coming up with savings of at least $1.50 trillion. the first church is of the -- the first chart is of the cbo finding surplus since january 2001. i would like to point out what by yourbeing projected office in 2001. i think my colleagues have copies of the church with them. it is very difficult to make up

-- copies of the chart with them. it is difficult to make out the lines. the very top line, the total surplus -- >> can you tell us what pace that is on. >> it should be a separate package. >> a handout. >> that is right. >> this is a table the cbo published in their website, but is not included in the testimony today. >> it is difficult to read the numbers oon the table. projected in 2001 to 2011, we have surpluses of $5 trillion 61you go to the bottom of the charts and you see the deficit under the year 2002 column.

by the year 2002, there was a deficit of $158 billion. while the projections in 2001 were for record surpluses totaling over 10 years, by the second year, 2002, we were already beginning to run deficits, not surpluses. so we knew well in advance of the year to any 11 -- of the 2011 that the government would be running deficits that could possibly harm our economy. i have another chart that uses the data from the cbo that we just discussed and tried to put it any easier form to analyze. pew center tried to

segment out were the changes. all the dollars that were spent, all the revenue through the tax code that was lost, where did it go? obviously, the piece of the pile on the right, technical and economic, that is shortfall and nation output. all of the things that have caused us to have less output than we have expected/projected, the recession and so forth, probably constitutes the biggest portion of that. after that, the second biggest slice of the pie that drove our deficits are the tax cuts in 2001-2002, the bush tax cuts. you put together our defense costs, which are here the bottom, operations in iraq and afghanistan.

and you have 15 percent of the pie due to defense spending and so on. interestingly enough, the money we pay just on interest wheel on the national debt is one of the largest items as well. so nothing comes of making those paiyments. i bring this up so that we can look at where we should target our solutions. we can look at where we have been in these large deficits. the final chart that wanted to raise also has the congressional spending cost of the pie. that the tax expenditures for the spending we do through the tax code, but through the allocations will make every year through these budgeting processes, the allocation process. the largest item shows the

change in spending from 20 -- from 2001 to 2010. the greatest percentage of that ad spending in the tenures was in the department of defense -- in the 10 years was in the department of defense, largely because of the war in afghanistan and iraq, but most of the spending done from 2001 to 2010 has come in spending done in the department of defense. you can compare that to the veterans department. the share of the new spending over that time that would to veterans was about 5%. education, further down the list, the new spending beyond what was expected in 2001 was 1%. it is important to gauge that. as much as i hope we get into some of this and talk about where we have to go, i think it is important to know where we're coming from. i think you for being here

and gauge those responses into the future. >> rather than make a speech that will probably have the effect of dividing us if i responded to my colleague, i want to focus on areas where we might find agreement, going back to my opening statement. i will begin with a quotation from the president in march of last year. "it is estimated that improper payments cost taxpayers almost $100 billion last year alone. if we created a department of improper payments, it would be one of the biggest departments in our government." this committee can discuss the issue of proper payments, but i think we will need the help the cbo to do for ththat. medicare/medicaid and unemployment insurance ranked one, too, and three in total improper payments. their figures were slightly below those that i quoted

earlier. but the bottom line is that, if you had $100 billion, as the president says, in over payments each year over a decade, that is $1 trillion or more when you compound it. it is an area we need to address. it does not involve cuts and benefits and fundamental reform programs, which i think we should do, but we will need help in scoring how to approach this. my first question is do you agree whether it is with these specific numbers are not, the president's contention that there is a significant amount of inappropriate payments for some of these programs i have mentioned? >> i agree with that. there is a difference between improper payments and fraud. fraud is a much narrower category involving certain legal issues. some improper payments are simply people puttindoinfillingt

applications improperly. the second point to make is that it is not just that improper yes or fraud is out there, but the levers that government has. these programs are not trying to encourage improper payments or fraud. there is an active effort by the justice armand and the department of homeland programs to crack down on it. uc -- you see reports on this. one thing that the committee worked on is what levers are available to bring some of the money out of the system. >> exactly so. that is where we need your eyes. the comments about fraud is absolutely correct. i think fraud is not the subject

of overpayments. would we benefit in a cost- benefit analysis in order to read that out? we should deal with that. another would do with whether or not hiring additional people to check before the check goes out rather than on it after we find a problem would be beneficial. the prompt payment requirements represent some of the challenge. is it true that cbo -- well, as cbo done an analysis of these numbers? >> i do not have numbers comparable to the ones you quoted to use. but we do spend a fair amount of time working with members of congress, working with the people at cms and so on in thinking about the ways policies can be changed to reduce the levels of those payments.

provisions have been included to cover those efforts to describe. we concluded the effects of that, the savings that we thought would accrue in terms of payments. >> will you help us identify the potential policy that could result in significant savings if it were implemented? >> we certainly will. i would also caution that there's no evidence that suggests that this sort of effort can represent a large share of the $1.20 trillion or $1.50 trillion or the larger numbers some of you have discussed in savings for the committee. >> if the gao report is right and what the president said is right, that there is over $100 billion in one year alone, even

if we get 25% of that, it is a significant amount of money. it is something that, on a bipartisan basis, we can agree on because it does not require fundamental reform in the programs. i also want to raise asset sales. there are a lot of different reports. in 2009, the government held over 10,000 by unused buildings, spending $34 million just to maintain them. the president's budget assumed savings by selling them. i know you have scored the president's proposal. but that was a proposal that relied on incentives to sell property. if we simply mandated the sale of property, i think we would need your advice on how to structure that so that we would get the best return for the sales that we would want to accomplish. would you work with us on that potential area?

that is revenue rather than savings, but it all helps. >> of course. we have given testimony on this topic. there is no evidence that the amount of savings that could be -- warwickshire revenues -- that could refund the government -- or extra revenues -- that could refund the government. the base closure realignment effort has not yielded significant amounts of money for the government in terms of selling the property. it said many in terms of operating some of these facilities. but not much has been sold. thousands of government properties are not being used. many of them, by number, are shacks in the middle of nowhere that do not have market value and the properties that have the most value, such as property in law settles, the people who live around it are fighting very --

in los angeles, the people who live around it are fighting very hard. the people who are there are using it or potentially could be using it or want the area to stay that way are fighting very hard. we are ready to work with you on policies in that direction. >> i think we should explore this much more vigorously than we have in the past. on the version i have, page 5, you're talking about the timing of debt reduction. according to analysis, you say

that you support spending expansion. can you give us some examples about how we can achieve both goals? namely jobs and deficit- reduction. that is one of the key questions. had we do this? you mentioned that deficit reduction has to be credible in the longer term. it has to work. but we have to find a balance. could youcould you give us somes of that? >> we analyzed a set of alternative proposals for spurring job growth. we look at increased transfer

payments. looked at the different types of taxes. we looked at other types of government spending increases. i do not want to be appearing to steer the committee in any direction. the choices not only affect the economy. the also involved choices about what you want the government to do, what sorts of activities it should be engaged in, the role of the government relative to the private sector. there are assets of tauruses far beyond our technical role. -- there are sets of choices far beyond our technical world. i think cuts in spending will spur employment in the near term. by themselves, they will reduce

incomes later on because of the extra debt accumulated. we also want to improve the medium and longer-term outlook. we need to have deficit reduction that offsets the extra cost in the near term and reduces the deficit relative to the unsustainable current policy. >> i think i have your charts and tables on output and employment. i applaud you for it. you have highs and lows that year rate. you give us a sense of it. unemployment is very high in terms of the economic effect and helping people without jobs and also with respect to the economy

and gdp. i appreciate that. we will try to find ways to address that. use a leading it to 61% of d p under current law. -- you say we can get to 61% of gdp under current law. there will be changes. you list some of those in your statement, mainly the 2010 tax cuts, the index for inflation, medicare payment rates, and so forth. if we were to assume those revisions will be extended, the

figure i have is about $6.2 trillion. >> it amounts to about $5 trillion over the coming decade. the choice has a larger impact potentially than the stated deficit reduction target for this committee. >> lets say we would do $6.2 trillion. what would the composition of the reduction be if we reduced its proportionate to the causes

for the additional $5 trillion. most of the extra $5 trillion under your scenario comes from a reduction in taxes. to offset that, one would have to raise revenue through another channel. i am talking about the history of debt and how we got here. you are extending back into the future looking at what will get us to that place. the fundamental question for you is not how we got here, but where you want the country to go. what role do you and your colleagues want the government to play in the economy and society? if you want benefit programs like those of the past, more tax revenue is needed than under current rates.

if one wants to keep those rates, one has to make significant changes in spending programs for older americans. >> the question is where we want to go. do we want to have amt, sgr, increase taxes for middle income americans and upper income or not? these are questions we have to ask ourselves. they all have consequences. the consequences are a $5 trillion edition. is in addition to what the president will have us do with his jobs plan. >> >> i want to underscore what mr. kyl said about fraud and abuse. there's nothing more irritating

to us and our constituents. any assistance on that would be low hanging fruit to include as part of the package. let me ask about the timing of this event. we will devote prior to november 23. -- we will have a vote prior to november 23. what is the realistic date if we have to have our documentation submitted to you? a lot of members are frustrated trying to get a cbo score. what is really the date when you will want the material? >> it is a process.

we often see preliminary versions of ideas and offer preliminary feedback. if this committee intends to write letters please send -- to write legislation that would change entitlement programs in significant ways, the process usually takes weeks of drafting to make sure the letters of the law accomplish the policy objectives you are setting out to accomplish. it will take at least a few weeks. i have terrific colleagues who are talented and work unbelievably hard. we need to do our jobs right. that means not just pulling numbers out of the air. we have said in discussions with the staff of the committee that your decisions need to be made

mostly by the beginning of november if you want to have real legislation and cost estimates from cbo to go with that before thanksgiving. >> i want to talk about the cost of the affordable care act. we have increased taxes on some of the most innovative job creators. we have reduced medicaid spending significantly. the tax increases in medicare cuts were cut to create three new entitlement programs. they have yet to take effect. according to our projections based on your most recent race line, those entitlement programs to cost the nation nearly $2 trillion over the first 10 years from 2014 to 2023. have you estimated the full 10- year cost for each of these entitlement programs, medicaid,

health coverage subsidies for the 2014 to 20203 time when they are implemented? >> no, we have not. >> do you anticipate doing that at all? >> we produced estimates that were under concerts -- consideration when the law was considered. we provided rough estimates from that point in time. as the budget window moves out, we will end up with a 10-year budget window from 2014 to 2023. it is not obvious we will have an estimate of the effects of that legislation by itself. some pieces of that create new flows of money that did not exist before with insurance subsidies. that will become real flows of money. much of the legislation made

changes in existing programs. we will never know for sure what money is flowing differently because of that legislation. we will see flows through certain accounts. isolating the effects of the legislation will not be possible. prescription drugs is one part where we can look back at what it did. much of it created a new stream of money so we can see the difference. with most of legislation, one can never go back and tell what happened. the health care legislation will be like that at some point. >> is there a way to take the percentage of gdp and try to match it up with the years and look at it 10 years out?

>> we did do an estimate. we talked about some of the bigger pieces of the legislation and growth. that calculation is not possible on specific provisions. it is too broad a brush given the uncertainty involved. i hope we have made it clear that the legislation created significant new entitlements a raise federal outlays region that raised federal outlays. -- date created significant new entitlements that raised federal outlays.

that increases the uncertainties surrounding the estimates of the net effects. >> thank you. >> dr. elmendorf, we have received a notice that the poverty rate has increased to 15.1%. that is by almost a full percentage point. in september of 2010 in testimony before the senate budget committee, you said that regarding structural changes in the housing boom and recession,

there was a reduction of jobs in industries in geographical areas. the developments suggest the gains in employment rely on the creation of new jobs with different businesses, in different industries and locations and requiring workers with different skills. do you still feel that to be true? >> yes, we do. much of the unemployment we are seeing now is a cyclical response to the weakness in demand and business services. some of the extra unemployment is a structural problem. that involves the mismatches that we discussed. it relates to an insurance -- and employment insurance and other parts of the economy.

we think some unemployment relates to this structural mismatch that makes it harder for those people to go back to work. it is not so much going back as going on to something else. >> your view is there is not much that can be done in the short term to attack this? >> i would not say that. it is challenging. the cyclical part of unemployment can be addressed through aggregate economic policies. people who are unemployed for structural reasons, that is not

amenable to a broad macro economic policy. it might be responsive to more focused policies like training programs. the broad brush summary of training programs is that it is hard to make them work. it is not impossible. it is just a different sort of policy that needs to be considered to help those people find new jobs and help other people create jobs that those people would be able to do. >> i am just as concerned as my friend senator kyl is about fraud and abuse. i want to cull that out of the system as much as we can. with these numbers and what you have laid out, those in need are

increasing rapidly. if you look at the median household income, it declined at 2.3%. that means your respective of what may be happening to people who may not be deserving of assistance, there are increases occurring among the needy very rapidly. we have not done anything to absorb that challenge. >> you are certainly right about the number of people hurting. the federal budget automatically does some things for those people. food stamp participation is up.

a lot more money is flowing out that way. unemployment insurance will pay benefits to more people if more people are unemployed. some of the automatic features of entitlement programs end up helping those people. i do not want to suggest that has inoculated them against the overall problems they face. >> the burden of doing the smart cuts is greater. we need to look into all of these programs to see where the cuts ought to be made rather than just dealing with the numbers. thank you very much. i yield back. >> senator portman.

>> building on what congressman cliburn just said, had you gotten reaction to the study that shows when you are at 90% of gross debt you have an impact on gdp, jobs, and the kinds of issues that congressman cliburn -- clyburn talked about? >> the study was looking at a gross debt. those are larger numbers. we focus on debt held by the public. they divided the world into pockets of different levels of debt. that does not prove there is some particular to pinpoint at 90%.

the evidence shows above that level, the economy tends not to do well. we wrote about the risk of the physical -- fiscal crisis. we do not think it is possible to identify a particular to pinpoint. there is no doubt that as that rises from the risk of fiscal crises rise. the government loses the flexibility to respond to unexpected developments because of the looming debt. we're moving into territory that is unfamiliar to most countries in the last half century. >> there was a recent study from harvard showing the most effective deficit-reduction took place in countries to rely on austerity programs and spending cuts. nations relied on tax increases were less successful. have you looked at some of these countries that have gone through

the process we're going through now? what can we learn from them? maybe you know about the study. >> i know his work. there have been a number of studies looking at the international experience of countries that have faced fiscal crises and have undertaken austerity programs. the imf looked at a similar set of data and came to a different conclusion. their conclusion was that in countries that set out to do fiscal austerity, the results tended not to be good in the short term. the principal lesson of looking at countries like greece and others is that it is a terrible situation to in have been where one has to make drastic and abrupt changes in policy. if you look at greece, ireland,

or the experience in the u.k. that is made a pit, those economies are not doing well. those countries felt they had no alternative. they were at the point where people were not lending the government's money -- the governments money, so they had to make drastic changes. that is not a situation we would like to find ourselves in as the country. >> it appears that we're heading there. if you look in your chart with regards to base lines, we have about a $3 billion increase. i would add in the tax extenders and you are up to about $9.3 trillion.

$1.3 trillion is a relatively small part of the problem. it is about 17.5% of the $8 trillion. as we look at our work, we will need your help that looking at more realistic base lines. we're making difficult choices on things like alternative minimum taxes, the payroll tax, and so on. in terms of what drives that, your figure is very instructive. we talked about a major health care programs earlier. there was discussion about onsident obama's comments medicare and medicaid. i assume you agree with that. what should be the primary focus of this committee? >> it is not the place of meat or cbo to offer recommendations

on how to proceed. more expensiveee in the future is partly due to changes in policy over time but mostly due to the greatly increased number of older americans and higher costs for health care. it is possible to raise taxes or carve away at the rest of the government in a way that can support the programs for some time. there should be no illusion about the magnitude of the changes required in other policies to accommodate the. under current law, the rest of the government will be much smaller in 2021 than it has been historically. one would need to raise revenues

substantially. this is a 5% increase in gdp in 2021 relative to the four-year average. by% of gdp is a big number. -- 5% of gdp is a big number. that is why many people believe there should be changes in that part of the budget. >> the major driver is social security and health care programs. revenues go to 20.9%. my understanding is under current policy, revenues go above 18%. the $9.3 trillion includes a slight increase.

>> the number of americans over the age of 65 is going to rise by about 1/3 in the coming decade. there'll be 1/3 more beneficiaries of social security and medicare a decade from now than there are today. there will be higher costs per person. one can see why these programs are becoming much more expensive overtime. >> dr. elmendorf, i want to move things fairly quickly. you said the things that will be different are the number of older americans and the cost. those of the two things you said

are starkly different about the aspect of the budget today. >> and even more so in the future. >> is it accurate that we have balanced the budget since world war ii five times? each time we have balanced the budget, revenues have been somewhere between 19% and 21% of gdp. is that accurate? >> that sounds right. i am not sure exactly. >> assuming that is accurate, we are currently at 15.3% for this year on revenues to gdp. is it fair to say that there is an aspect about our budget today that is starkly different. that is the level of revenues rose of gdp. -- that is the level of revenues

to gdp. it is well below the historical average. given that reality and the the reality -- given that reality and the reality of other budget scenarios, there is one with no cuts. there's another one with nothing but tax increases. then there are two in between. the only way they could keep their revenues at the historical average and keep spending at a decent level was with cuts. that does not get you where you need to go in terms of the historical average and not

winding up with major cuts in benefits. you made the statement that we have to make a decision about what we want to do. most people have accepted that we do not want to have major reductions. we need to do a better job of making reforms fiscally sound. i have not heard anybody stand up and say there should be huge cuts in benefits. if that is true, are we forced into a situation where we live near the historical norm with respect to the revenue to gdp percentage? >> if one wants to leave spending on programs roughly in line with what would happen under current law, then won either needs to further car away

at all of the other functions of the government or one needs to raise revenues above the historical level of gdp by a significant amount. one could do combinations of those. there is no way to simultaneously let the major programs grow the way they would under current policies and operate the rest of the federal government in line with its role in the economy over the last 40 years and keep gp where it has been. the reason those things are inconsistent is because of the people who will be older and the benefits they will be collecting will be so much larger. >> i agree with the judgement you have made with respect to how we approach this. we are going to have some time

to discuss the health care peace. -- piece. how does the medicare cost growth compared to that in overall health care spending over the next decade? i think you found that medicare excess cost growth was lower than the historical average. >> excess cost growth does not necessarily mean excessive. it just means faster growth in benefits per person than in gdp per person. under current law, it is pretty close to zero for the coming decade. that would be a sharp change from the last 40 years. >> to what do we attribute that

significant reduction in the growth rate? >> there are important features in the law like cuts to physicians that will take effect at the end of the year. there are a number of other things inactive in last year's major health care legislation progress that has had a beneficial effect in restraining growth in medicare costs. >> that is right. >> i will reserve my time at this point. >> director elmendorf, last year you testified before the commission on fiscal responsibility and reform on a topic similar to what we're covering today. it seems as if you said we need to get control of the automatic spending increases built into

the government budget. is that a fair statement of your testimony then and now? >> we send those pieces are growing rapidly. to accommodate that as it stands would require large changes and other aspects of what the government spends or >>. >> those are significant drivers of our current situation. what programs are at the core of the projections for long-term government spending? which programs are responsible for the largest increases in government spending? >> page 39 is coming up on the screen. this picture shows growth over the next decade in major health care programs. >> do those include the health

care act, long-term care, and other medicaid increases? >> medicaid, the children's health insurance program, and subsidies to insurance exchanges, and related smaller spending. the long term care entitlement raises money for the government in the first decade of its life. i do not know if that has been acted out -- netted out here. i do not think it has been. we have the major health care programs followed by social security. that is because of the increase in the number of the fisheries because of expansions and sharp increases in costs for the beneficiaries of the programs. >> you also included a chart. everyone has a copy of this.

this shows a real gdp per capita under different economic conditions. under the alternative fiscal scenario, the wind stops between 2025 and 2030. you explain it stops because economic growth collapses. it cannot handle debt levels that high. is that an accurate statement of what you testified? >> that is right. we have updated this picture in our long-term projections this year. the amount of debt under the alternative scenario becomes so large that our models do not know what to do with it. i do not think the economy will get that far. people in the economy will be looking ahead and for seeing what is happening. more serious problems will come sooner than we show in the pictures. >> you said it becomes so high

that you do not know what to do that because private investment ceases to function. the economy ceases to function under that scenario. >> it ceases to function at some point. the freezing up of the consumer in anticipation of the problem. >> that analysis goes along with what others have said of the debt to gdp ratio when it exceeds 90%, i am talking about total debt to gdp ratio. it reduces economic growth by about 1% at that level. >> the models we're using are consistent with the consensus on this issue. >> am i correct in saying the ratio is over 90% at this time. >> yes. >> what impact do you think

these massive levels of debt have relative to gdp have on the economy and job creation? >> the levels of debt are a burden on the economy. they reduce our outputs and incomes relative to what we would enjoy if we had done less borrowing and more saving. >> it is committee has been tasked with finding dollars and 1.5 billion in reductions over 10 years. what will be the size of the economy? >> gdp today is about $15 trillion. we think it grows over the 10 years. if you have done that calculation, i would be happy to hear that number. >> we're talking about 1% of our economy in rough numbers. the impact of

those making decisions about spending that may have an impact on the economy. i want to put it in perspective. over the next 10 years, these reductions we're asked to find roughly represent about 1% of the economy. i am talking about very rough numbers. >> that sounds about right to me. the problem is large by the standards of the incremental fiscal policy decisions that congress normally makes. it should not be viewed as unsolvable. changes in policy can put us on a different path. >> in terms of outlays, this amount represents about 3% of our outlays. we need to put into perspective. i am not under-playing how difficult this might be. but in terms of impact in the economic trajectory of the united states economy, we are

not talking about significant percentages over the next 10 years. most families and businesses have had to do with less than 3%. they have had to do with less than that. my time is expired. i want to ask you one quick thing. we may come to agreement on inf talks within the 10-year budget window. we may have decisions outside of that window. would you be willing to work with us to find ways to measure the impact of policies outside the traditional budget window and if you would commit to helping us do that? >> absolutely. >> let me start by thanking you for your testimony.

this goes for republicans and democrats. we're all entitled to our own opinions but not our own facts. the last time our budget was balanced was back in the 2000's. revenues relative to gdp were 19.5% in 2001. the last time spending was 18% of gdp was about 1967. it has risen since then because we as a nation decided to make sure that older americans in their retirement had the health security that they needed. it is important to keep those facts in mind as we go forward. you posed the fundamental

question to this committee. let me ask you this. if we were to try and continue with current retirement and health programs in the future, we would need significant changes to revenue beyond current law in order to fund them and balance our budget. that is assuming we kept the rest of government constant. >> that is right. >> if we were to try to preserve those programs -- let me ask you this. if we were to continue current revenue policies without any changes, it would require deep cuts to those retirement insecurity programs to bring down the deficit.

>> if you also maintain the rest of the government in accordance with historical patterns. >> that is the fundamental question. we recognize we have to deal with the out-year issues. we have the democratic challenge. we have more people retiring. if we want to avoid huge cuts to medicare and social security, we also have to deal with the revenue part. we have to increase revenues beyond current policy to avoid deep cuts. it is important that we look at the revenue side of the equation. you have presented that to us in your testimony. it is time for this committee to get real and recognize that there are spending issues in the at years but there's also

revenue issue. under current law, the 10-year cumulative deficit is dollars and 3.4 trillion. >> i think it is $3.5 trillion. >> on page 19 of your testimony, you point out that if we continue current tax policy and payments under medicare, it will rise from $3.4 trillion to over $8.5 trillion. you mentioned those factors together. it is important to point out that of that over $5 trillion, the huge bulk of that has to do with continuing current tax policy. >> yes. >> you get just under $4 trillion revenue. if you add the debt service associated with that, you are talking about $4.5 trillion of the $5 trillion dealing with current revenue policies.

>> that is right. >> if this committee were to adjourn today and congress were to adjourn for the next 10 years, we would actually achieve greater deficit reduction than if we took the simpson-bowles advice and win big -- went big. we would get over $4 trillion if we fix the reimbursement peace -- piece. >> if you extend the expiring provisions, it would add to the deficit. that would be larger than the amount of savings. >> it would be more than the $4 trillion a lot of people talk about. i think it is important to look

at both sides of the equation. what we would be talking about is essentially going back to the same tax rates and policy in effect during the clinton administration. that was when 20 million jobs were created in the economy was booming. i am not suggesting we go back to that particular tax policy. but if you look at simpson- bowles compared to current law, it would provide about a $2 trillion tax cut compared to current law, as opposed to $4 trillion. another proposal is for $1 trillion tax cuts compared to current law. if we're really going to address the challenge, let's recognize that if we do not deal with the revenue part, you are talking about dramatic cuts to help and

retirement security for america's seniors. we have to take a balanced approach. that is why other bipartisan groups took a balanced approach. >> senator toomey. >> i want to touch on a couple of things that did not make it into the conversation so far. as recently as 2007, the current tax rate structure yield the revenue that was about 18.5% of gdp. >> i think that is right. the level is low because the economy is weak. >> the reason is lower than historical levels is because we have an economy that is still effectively in recession. we have high unemployment with a lack of growth. as recently as 2007, the deficit that year was less than 1.5% of gdp.

if we could get to the point where we consistently have deficits of 1.5% of gdp, our debt as a percentage of the economy would clearly be declining. we would have solved the problem to a great extent if not completely. it would be to the level of the deficit we had internet -- that we had in 2007. i do not think there is any dispute that excessive debt has negative implications. we all acknowledge that. there is the possibility we get to the point where there is a financial crisis and economic freezing up. is it true is impossible to know precisely when you get to that point? >> absolutely. >> it is just not knowable. >> that is right. >> is there a danger that the magnitude of the debt is already

impeding economic growth and having a chilling effect on investment, risk taking? >> the level of debt is probably weighing on economic activity. the question is how to proceed from here. >> given that it is probably already weighing on economic growth and with knowledge that continuing down this path leads into a full-blown crisis and we cannot know when, that suggests to me it is dangerous to delay making meaningful reforms. there is some concern that curbing the side of the deficit in the former and impedes economic growth, i would argue is already happening. if the future promised reductions in the budget were not credible or became less

credible, we could discover we're already in the territory where the financial crisis could be merged. is that a danger we would run in delaying this? >> there are disadvantages to delay. based on our analysis that is consistent with the consensus of professional opinion, immediate increases in taxes or cuts will slow economic recovery. that does not mean to imply there are not in number of factors that matter in different ways. we are not sure we have that right. but that is the consensus of professional opinion. >> there is an alternative point of view about that, especially with regard to the spending side. we may disagree on the debate somewhat. i am sure you would agree to let it comes to the impact on economic growth, not all government spending is equal. >> that is right. >> spending in your models would generate more.

similarly, not all tax cuts are comparable. crudely speaking and broadly speaking, spending and tax cuts may have the same impact on the deficit mathematically if you assume they have no other implications, they do in fact have other implications. >> in modeling, we try to capture that. we incorporate the marginal tax rates on spending and saving. >> you observed the lower marginal rates enhance the incentive to save and invest and that as a pro-growth impact on the economy. i would like to reflect on the possibility of a revenue- neutral tax reform that lowers marginal rates. would that enhance growth and therefore revenue to the government? >> yes, that is right.

the magnitude of that effect depends on the specifics of the policies that would be enacted. >> do you have a rule of thumb to share with us? for an incremental increase in the rate of growth on average, what kind of impact does that have on the deficit over an extended time? >> we offer rules of thumb for the in the back of our annual budget and economic outlook. the magnitude of that affect i will offer to you in one moment. >> a figure that comes to mind that you could confirm or refute is that 1/10 -- 0.1% of growth, roughly $3 billion in additional revenue? 1%?ll

>> it is not perfectly linear. we offer these rules of thumb for changes. we're not sure what else might happen. >> a small, sustained change in growth has a huge impact on the deficit or in reducing the deficit. >> that is right. >> thank you. >> we have gotten through our first round. i appreciate everybody keeping it concise. i will have to use the prerogative of my chair to make a small change. the house is going to be having votes at approximately 1:00. there are 12 of us. the time is very short. unless somebody throws something at me, i will limit each invested two minutes in the final round. i will ask everybody to keep it to that time frame. -- i will limit each of us to a two minutes in the final round. the long-term budget report included the analysis of lower-

than-expected economic growth on the federal budget. what does cbo estimates is the impact on deficit projections over the next 10 years if gdp growth continues to weaken beyond what is reflected in the current estimate? >> a weaker economy implies the worst budget outcome primarily because tax revenues fall. also, there is extra spending in the entitlement programs. we have not done quantitative estimates of budget outcomes for other scenarios beyond what is in the rules of thumb we offered in the volume in january. the rules of thumb are roth. a lot of things may not rise and fall with the rest of the economy. the rules are rough. there is no doubt a weaker economy is worse for the budget. a stronger economy is a lot

better for the budget. the challenge is how to move the economy. it is not easy to move a 15- dollar trillion economy. -- it is not easy to move a $15 trillion economy. >> i appreciate the information you have put out on that. the significant impact to sequestration needs to be understood. i will submit that for the record and reserve my time. i will turn it over to mr. hensarling. >> senator kerry brought up the revenues are at 14% of gdp. does your latest estimates show that revenues go back to their historic norm of 18% of gdp in 2014? >> they are a little over 15% today.

the improvement in the economy and other underlying factors will push it up to zero little over 18%. >> it also shows spending going from an historic average of roughly 20.5% up to 34% of gdp. is that correct? >> that sounds about right. >> with respect to revenues, one is episodic related to the lack of economic recovery. the other is structural. is that a fair assessment? >> both factors are at work right now. >> those who have advocated were brought up that historically when the budget has been balanced, taxes have gone beyond the historic norm of 18% of gdp to closer than over 20% of gdp. this is your alternative fiscal scenario. it shows that spending by 2035

goes up to 33.9%. the same alternative fiscal scenario shows taxes are already on a path to increase to 18.4% of gdp. following the analysis of those that advocate revenues have to come up to 20% of gdp, it would also suggest under a balanced approach that spending has to decrease 14 percentage points under the alternative fiscal scenario to reach the historic norm. >> i parse the meaning of the word "balance -- i would rather not parse the meaning of the word "balance." the underlying scenario would require a balance in spending. >> i think i am going to start

calling you "sergeant friday." your giving us your best interpretation of the facts. we appreciate that. you are not trying to give his opinion -- give us opinion or tell us if we should reduce benefits to seniors or make a change to our defense or security needs. you are simply telling us what the numbers show and leaving it to us to make a decision and come up with a good mix. i appreciate that. mother and father and grandmother are also appreciative that you are just talking about numbers and not what should happen to social security or anything else. on the long-term costs, you mentioned medicare and social security and medicaid. medicare and medicaid are in a different boat than social security in terms of the long- term costs.

>> that is right. the increases in spending for those programs are greater over time than for social security. >> social security by 2030 stars to stabilize. it stays pretty constant in terms of its cost to the federal government. >> after the baby boom generation has retired, the line roughly levels out. >> you are dealing with facts. you are not here to tell us how to make the fix to health care. medicare and medicaid are reimbursement systems. if we were to cut benefits for a senior, that does not mean that their health care costs will drop. that shifts the cost more to the pocket of the senior to pay for the care if medicare produces what it reimburses. >> it depends on the policy. there are some policies that shift costs. there may be some policies that

reduce overall costs. >> thank you, sergeant friday. i appreciate it. >> just one question in the interest of time. i know you agree that there are other points of view regarding your view that cuts now can delay the economic recovery. that is true of defense spending as much as other spending. >> there may be differences across types, but that is more subtle. >> with the fence, -- defense, in of high unemployment with returning veterans to begin with. your reduction in the end strength. you have people building ships and radios and so on. if it reduces employment in those industries and money spent in those areas, it could delay

economic recovery. >> that is right, senator. >> senator baucus. >> what changes in tax policy will stimulate the economy most? rank them somehow. >> the table from our january 2010 report shows we considered the effect of an set of alternative tax cuts. we have not updated this table since that point. it would be slightly different but not fundamentally different. reductions in payroll taxes that we studied were among the more powerful levers, followed by the powerful levers, followed by the expensing of investment costs