your reform proposal would raise revenue compared to the current policy. you did not do it by raising taxes. a lot of people get those things confused. why did you choose that route of raising revenue through reform rather than imposing new taxes? >> i felt like based on my experience in the business world and i felt it just made sense to get the spending out of the tax code and we could use that money more efficiently and effectively by lowering rates and reducing the deficit. >> thank you. dr. rivlin compaq in your plan, you had the government's share of our gdp around 21%, i believe. is that correct?

>> yes. >> and that is basically $1 out of every $5 of our economy would come to washington d.c. that is more than highest levels of revenue we have seen in the history of the nation. i think there has only been one time were the government's take has gotten anywhere close to that level, and that was during the internet bubble. >> we examine the other people's research on this. i don't read the record as having much evidence at all of a connection between the exact proportion of the federal government's revenue and

economic growth. the reason ours went up was, as i stated earlier in the hearing, we didn't see how in this very new situation of a much older population and the tsunami of the baby boom, we did not see how we could fulfill our obligations to those people and performed other services of governor without having the government in that range. has been there before. this is not taking on new government responsibilities. it is just saying we've got a lot more older people and we've got to take care of them, and that is going to maine slightly higher government spending than we had in the days when the population was a lot younger. >> senator, let me just say in

my past life i have used percentages like that. i have learned that on many of them, there is no reality attached to the number. nobody can tell you that 19% is better than 19.5% or 20.6%. you have the rest of the policies right, things in our kind of economy, the problem we have in this country has been expressed over and over again today. that is the population is growing older. the population has less workers per retiree, and so you have -- when we look at that 18.5 which was used as an the historically significant number, we did not have the system graphics. we did not have this kind of

problem. we saw that by trying our best to use the tax code to generate some extra revenue in the manner we have suggested here. at the same time, we have taken on the responsibility of some of the programs that are going to sink us if we sit by and say we have to have 18.5% and that is all on the revenue side, and what are we going to do about the exploding cost of the programs? i think we have solved it in a pretty reasonable manner. if you want to just say let this one go out there, we will fix it some day, we cannot fix medicare it -- medicare in the last 21 months. there is no positive evidence that any of these numbers are absolutely right. they are right, they are in the range, and we will survive with 21%, i am sure.

>> you also had two new tax structures in your proposal, one was what you described as the debt reduction sales tax, or most people would consider to be the value-added tax. the other was the tax on sugar to drinks, beverages. did you do an analysis about the cost of those two new tax structures in the implementation -- on our economy and what that might mean? >> you are right that we did have the debt reduction sales tax -- we did not call it vat, but it was analogous to that. the senator and i and members of the group all believed that it would be sensible for the united states to move part of its tax burden of the income tax and onto a broad base consumption tax. but this is not the moment to do

that. we realize that, and eventually took it out, though we still believe in it. wheat revamp our income tax proposals to make it part of the lost revenue. the sugar drinks, that is not going to change the economy, whether at the margins it discourages people from drinking too much soda. adon't know, but we had reason for doing it. >> we did not look at the economic significance of it. i understand sometimes you are just outvoted and you have to do things that are not necessarily the greatest. >> i get that park. [laughter] >> thank you very much, i yield back. >> the gentleman yield back. senator kerrey for

massachusetts. >> first of all, i want to thank each of you for your extraordinary service in this effort, which is important, and over the years. we are appreciative to this contribution to the dialogue and i hope it will be a contribution to more than a dialogue but to results when submitted. i just want to spend a few moments on the context that brings us here. administrator bowles, you open up with a comment that caught my attention, two comments. he said this is the most predictable economic crisis in history that we are looking at coming at us. even as you paid in the minimum figure of four trillion, which is what you think we ought to do, but then you said you are worried we are going to fail. i want you to speak to that for a moment.

>> you all have done a great job of stopping the leaks coming out of your committee for an extended period of time. but over recent days, i have been able to put together some of the proposals that you all are considering. i have also listened to some of the back-and-forth that has been in the press, and i have heard people talk about simply settling for $1.20 trillion worth of deficit reduction, maybe 1.5. doing it across the board, which is never the smart way to make any kind of -- to control any of your budgets in any way, shape, form, or fashion. i have even heard talk that if you end up doing 600 out of

defense and 600 out of non- defense, that the day after the sequestered takes place, you will have people in the house and senate be working to get around the sequestered. i think that would be disastrous. i think people would look at this country and say, you guys cannot govern. i think people would look at it and say you know what, they are really not going to stand up to their long-term fiscal problems and this is not going to be a powerful country in the future, and they would think that we were on our way to becoming a second-rate power. i think it would be a disaster. >> i want to build on that a little bit. we all know the figure we should hit in order to stabilize the debt, which is the mission -- ought to be the mission of the congress, four dollars trillion. what is the impact in the

marketplace? what would the impact be on discounting our debt, a write- down if we hit 1.2 or 1.5. are we going to be back here almost immediately with the same issue sitting on the table? >> you could lose 1.2 to to 1.5 by an increase in interest rates back to the normal rate, but you would not be accomplishing very much if you did that. plus, the effect it would have on how people would look at this country would really be devastating. i can tell you when we went through this whole debt default fiasco before august, i can tell you globally, countries lost a lot of respect for america and they lost confidence in us that we would really stand up and address our long-term problems. >> pete, i am sorry that al had

to leave, we had the great pleasure of working together on a number of issues. i trust your judgment, and while we are not wearing partisan hats here, hopefully, you are republican, and i would like you to share with us your perception as a longtime legislator, when, in your memory, has a committee in congress ever had the right to put together a proposal that would be voted on by expedited procedure at both houses of congress with 51 vote majority without amendment? >> the answer is never. i will tell you, when we passed effectively in the senate a bill that created the budget committee, it was the

impoundment and budget act, as you recall. it was to be authorized the authority of the president to impound and at the same time to create a budget committee. senator robert byrd, the expert extraordinary on the senate, spent weeks on end trying to figure out a way that you could assure the passage of bills that pertains to the budget and not destroy the filibuster rule. in the end, he quietly abn and the budget act, if you go look at it, if you read it, and do what i did, i decided that it meant that i could take a reconciliation bill to the core of the senate and it could not be filibustered. i competed with robert byrd because his own riding said he had found a way without changing rules of the senate to get around filibuster and give authority to a committee. so we gave the budget committee

and the senate the authority to act without a filibuster, but nothing as powerful as this committee. >> what would be the implication -- director rivlin, you have headed up the cbo and the omb as well. what would be the implications in your mind of the united states of america not meeting with every -- everybody understands is the financial challenge facing us, stabilizing the debt and beginning a long term fiscal path. how would the world view this, given the fragility of europe right now and their efforts on greece, italy, spain, etc.? >> i think it could be devastating. i agree with erskine, it would be even stronger. we could face along period of stagnant growth, another

recession which would be worse than the one we are slowly climbing out of. it is very hard to predict when this might happen or what the courts might be, but certainly in the last few months, we have seen dramatically in europe that sovereign debts of a quite solid seeming countries can go down very fast, and that could happen to us, and we could just lose the confidence of our trading partners and ourselves. i think the problem is, if we are seen by our own citizens as not being able to face up to problems and solve them, we are in deep trouble. >> importantly, i think it has been put on the table here clearly today, and i am trying to reiterate this -- it is

possible to put revenue on the table to tune of a trillion dollars plus with tax reform, is it not? you don't have to raise tax rates. in fact, you can do the tax reform with specific instructions to the tax committees to hold the rates down, lower the rates, get a lower range on the base, correct? >> right. >> we actually went out of our way to get some experts together, the best experts in this town and ask them that that section 404 give that kind of authority that you just alluded to that committees perform the following and reported back, and that bill would carry with it in the senate the same prerogatives that the original bill carried when it was created. >> you and i met and talked about your concept with respect to health reform, and i appreciate the contribution of it, and i have been trying to work through how we might be

able to do some of those things. those initiatives about how you guarantee the coordination of the lowest health care plan and still get coverage in certain areas. i don't want to get stuck on that for the moment. i want to deal with the bigger issue here. i assume all of you would agree that you can do structural reforms in medicare and entitlements that is not necessarily just the premium support approach, is that accurate? >> certainly, there are several approaches. for instance, the age thing that senator portman asked about, that is structural reform, isn't it? >> i actually would not think of raising the age and structural reform. >> give us some thoughts about structural reform that you think would conceivably alter it,

whether dual eligible, part a, part b. or their other components? or how about this, that he began to move the entire system of a fee-for-service were possible where it works, if you move into a value based payments system. >> yes, and that is roughly what we are proposing. >> senator kerry, i have a lot of opinions about health care. i think the current system doesn't make any sense to pay twice as much as any other developed country for health care and have our results ranks somewhere between 25th and 50th. we have 50 million people roughly who don't have health care insurance. i just ran the public health care system in north carolina reports to the president of the university. those people get health care, but they get it at the emergency room at 5to seven times the cost

of going to the doctor's office. it just gets shifted in the form of higher taxes. we have to have real structural reform in health care. i believe all people ought to have health care, but i don't think anybody should get on the government's or the taxpayers checkbook for a cadillac plan. i don't think anybody ought to get first dollar coverage. we ought to make sure that people have skin in the game. if you are going to have everybody have coverage, then you have to have her body have a medical home. then you have to make sure that educational institutions like mine are producing more primary- care doctors and war nurse practitioners and more physicians assistants and not so many specialists. i think if you want everybody to have prescription drugs, and i don't know why in the world you

would not have medicare negotiate with the drug companies for prescription drugs that the taxpayers are going to pay for, and i don't know why anyone who is getting drugs from the taxpayers ought not to have generic drugs. if you don't think that hospitals and doctors practice -- we have to have some kind of real tort reform. we have to go to paying for quality, not quantity. at the end of the day, nobody likes this, but without talking about death panels and the kind of crazy stuff, you are going to have to do something about it. those things have to be done if you are going to address health care. >> the co-chair recognizes the gentleman from pennsylvania. >> i want to add my voice in thanks to the folks who have come here today for the work you

have done. that may touch on a couple of the issues and develop a few a little bit further if i could. we all know as a given that the federal revenue is ultimately a function of our economy, but i think it is worth noting, and i think you will all agree that the growth of federal revenue is related to the growth of the economy, but in fact, federal revenue will grow faster as long as the economy is growing, than the growth of the economy. since dr. rivlin is the professional economist on the panel, i wonder if you just confirm that as a general rule, if we have strong economic growth, we will have even faster federal revenue growth. >> that used to be true, senator, before we indexed the tax system. it is much less true now. if you have strong growth, federal revenue will go up a little faster than the economy, not much.

>> so we could have a discussion about how much that is, but even now there is some additional growth, faster than gdp growth. one of the things that came out from our discussion with cto about this is that one-tenth of 1% of additional gdp growth on average, over 10 years, they estimate results in about $300 billion of additional revenue to the government. this is not perfectly linear, and i understand that, but very roughly, if that were to be roughly true, less than half of 1% of greater average economic growth would result in about 1.2 trillion dollars. i am not suggesting that is an alternative, but i think it underscores how important that whatever we do attempt to increase it -- to create a internment to maximize growth. the most constructive thing we can do to mechanize it --

maximize economic growth is major reform of both the corporate and individual tax code. i don't think there is any dispute about that, but i wanted to drill down a little bit. for instance, there are many approaches one could take. for sake of argument, if we were to reduce the value of all the deductions that are currently available to individuals and we had an equivalent reduction in rates for the sake of argument, everybody agrees that would be very pro-growth, is that right? i am understanding from both mr. bowles and senator simpson was that when you folks looked at this exercise are reducing deductions and credits and write-offs, lowering rates, you did it with roughly a 10 to one ratio. for every dollar that was dedicated to lowering rates, there was a dollar dedicated to the deficit.

10-one, 11-one, that was about the ratio. do you recommend that we take an approach like that on the individual side where we would do that kind of simplification, lowering rates and have a ratio comparable to that? >> i think you will run into some of the problems that senator baucus brought up. that is why we presented two options. you go with the zero plan and get rid of all the tax expenditures, then you do create enough resources that you can use only 8% of the resources and still generate a trillion dollars worth of additional revenue that could go to reduce the deficit. however, if you are going to go back and not get rid of all these tax expenditures but keep some of them, like some of the democrats will want to keep the earned income tax credit, the child tax credit, some of you may want to keep -- go to a

credit for mortgage -- to help people with their mortgage debt. some might want to go to a credit for charitable contributions. anything you keep gives you a smaller pie to work with. you will still come up with a trillion dollars of deficit reduction but that one to 10 ratio will not work anymore. >> does everybody on the panel agreed that if any package were to include net tax revenue, it ought to come in the context of reform that actually lowers marginal rates? >> yes. >> let me move over to health care for just a second. i am glad that there was a consensus. i think it was unanimous, that's our health care project healthcare is driving the debt crisis that we have. has been our -- my view that in fact our medicare plan essentially drives the entire

health care sector, and while there is obviously a significant private sector component, to a large degree, it is the reaction to an ax in the context of what medicare does, so medicare is the real driver of the entire health care picture. you agree with that? >> yes. there are instances in which medicare has actually done significant reform and the private sector has followed. >> i agree with part of it. i am not sure you said only, but medicare is one of the drivers of our deficit problem. it is not the only driver. >> i meant to say the primary driver. senator kerrey talked about structural reform. in my view, meaningful structural reform means getting away from -- because we use this

terminology and assume that everyone knows it, i will take a crack at what is described as fee-for-service. we have a committee in washington that specifies the price it will pay for every conceivable medical procedure, the circumstances under which it will pay, the people were permitted to performance, in which venue they are allowed to performance, and it is a completely government control mechanism, which also does not account for when the outcome is successful or not and whether the procedure needs to be repeated. is that a fair characterization of fee-for-service? >> i think what i said earlier in answer to senator kerrey was that i think we are going to have to move from paying for quantity to paying for quality. i think you are saying something very similar. >> i am. at the heart of this, this necessarily creates all kinds

of inefficiencies, miss allocations, and the solution has to be to get away from this. by last question for everybody, are all of you confident -- in- line >> before you proceed, i did want to make an observation. we recognize that medicare has very significant problems of the type you are alluding to. that is why we are here suggesting that it be changed. at the same time, we have explained why we said that we don't move so quickly with getting rid of one and establishing the other that we lose both. >> one of the things that concerns me is that as long as we leave a significant fee-for- service component in place, i worry whether the reforms are capable of defeating the mechanism and the misallocation and the perverse effects of that fee-for-service.

do you think it is possible that the plan that would -- to devise a plan that would transition away from fee-for- service that is designed to ensure that the most vulnerable people have the coverage that they need? >> for the time being and for the foreseeable future, it seems to me that you cannot do that. you have to go with some transition. that was the question where the -- whether you can get it done. i am not an expert on medicare. what i am saying practically, i don't think he could be done now under this circumstance. >> i am not suggesting that so much, but i appreciate the response. dr. rivlin? >> well, i agree with the senator. i think the idea, we believe that actually on a well-designed

exchange between comprehensive health plans, particularly capitated plans, they would win out in a fair competition. there are parts of the country, especially rural parts of the country, where it probably is not feasible right now to do that, and that is why we think there ought to be a transition, and that it is much less scary for seniors to say if you like what you've got, you can stay with it, but you are going to be offered something which is likely better. >> i would say you look at some of the policies in the affordable health care act, the have some good examples in their of experiments going on today to do just what you are talking about. >> thank you all very much. >> the gentleman yield back. the chair recognizes the

gentleman from maryland. >> thank you, mr. chairman. i want to join my colleagues in thanking all of you for your terrific service to our country in many different capacities. mr. bowles, thank you for recognizing that actions of the kind already taken to date, including passage of the budget control act, which is already achieve significant savings of close to a trillion dollars in discretionary funds, which is not far from the target that all of you set in your work. the major difference being it actually had a higher part of that coming from defense cuts, is that not the case? >> we actually divided hours between security and on security. >> half of that is $600 billion. i think the figures will show that your proposal to of more than has been taken to date from the defense side of the equation.

many of us view your approach here is balanced approach is, balanced remarks. i want to put the discretionary pieces side, because we have a -- we have come close to achieving your target. in simpson-bowles, as you mentioned, you had about $500 billion gross cuts in medicare and medicaid. you actually took some savings out of that. net it was around four hundred billion dollars. on the revenue, i just want people to understand, because what you have an older plants was in genuine joint tax committee storable revenue. your baseline assumes as part of your deficit projections that we would have about $800 billion, which is equivalent to about the amount of money that would be generated in allowing the rates for the folks at the very top to

lapse, correct? >> that is correct. >> on top of that, you had proposals for tax reform to generate another $1.20 trillion. >> that is exactly right. >> again, on the budget committee, what we call the current policy baseline, compared to cbo, that is about $2.10 trillion tax cut compared to current law. excuse me, revenue increase compared to current law tax break. looking at your testimony, dr. rivlin, you comment about the same place, about $2.2 billion. let me just ask one other question with respect to tax reform. i take it from looking at both to reports that you would want tax reform to be done in a way that maintains at least the current productivity of the tax code, is that correct?

>> yes. >> hours a slightly more progressive. -- ours is slightly more progressive. >> you both in written testimony suggested we might want to do a two-step process. a down payment and then something else. it specifically say as part of that downpayment you would include about four hundred $50 billion of what you call tax expenditure savings. i assume there for that you see that as something you could do for deficit reduction purposes, not necessarily at the same time as tax reform, and if i look at the one she picked out, you think they could be what we call rifle shots, is that right? >> right, but it should be consistent with our notion that you have a tax reform idea, you move some of it forward. >> on net, your tax reform ideas would generate $2.20 trillion.

let me talk about jobs and the economy, because the congressional budget office has said that about all little over one-third of our current deficit today is a result of the fact that we have a very weak economy. we are not operating at full potential. i think all of us agree we need to get the economy moving again. dr. rivlin, you pointed out, and senator domenici had about $180 billion of payroll tax relief. i think he said the other day you would go bigger than the president does the job plan. do you believe that something like that is necessary at this time? >> yes, i think we are in danger of slipping into stagnation and we should do something about it. >> mr. bowles, would you agree that it would be a bad idea this coming year to have every working american see an increase

in their payroll tax relative to last year? >> on the payroll tax that was in the president's proposal, i think it was about $240 billion, and it is hard for me as a fiscal conservative to say that i could see support a continuation of a payroll tax deduction for another year for employees. it is very hard for me to understand how an approximately $600 deduction for the employer on a temporary basis is going to be enough to get them to hire a full-time, permanent, $30,000 a year employee. i don't think i would support the payroll tax deduction for the employer. i could see supporting it for the employee if we could pay for it.

>> thank you. >> i would not argue his suggestion as i see it, it is still alive. what he is talking about is certainly better than nothing. >> thank you, senator domenici. on health care, doppler project dr. rivlin, you testified many times that you thought the affordable care act introduced a number of important innovations. i agree with you that we need to do more in terms of modernizing the medicare system to focus more on the value of care and quality of care -- quality of care versus the quality of care. i do have a question with respect to your version of the most recent premium support plan. that is, if you are confident in the market forces driving down

the prices, and if your argument is that medicare is driving those market forces, then why would you need a fail-safe mechanism? why would you need to say if you don't achieve the goal we want in savings, you have to have gdp plus one, and if it is not keeping track with the market, isn't that just a cost transfer to medicare beneficiaries? >> i think we are not absolutely certain how the markets will work. we have seen even in the limited market that is medicare a bandage that in some places they work well and come in under the fee-for-service, and in other places they do not. we think this is a much more robust plan and medicare advantage. the reason you want the fail- safe is so the congress will

absolutely know what they are going to spend going forward on medicare. it is not going to grow faster than this. it is a defined contribution. we think that is very useful, and ask for the cost shifting, there might be some cost shifting, but then you could arrange it so that this cannot cost shifting on to lower income people, it is means tested as we were saying before. it is cost shifting onto people who can better afford it. >> again, if we are confident that the market forces were going to work the way intended, then i don't think there would be a need for a backup. i do know that members of congress, folks on the federal employees health benefit plan, for example, never planned bid,

and there is a defined support mechanism that is set in law. i am not sure why it would be proposing something different for medicare beneficiaries to let me close by saying we asked cbo to take a look at some of these ideas, including one -- said competition among the managed care plans, and another one where we threw in the rate for premium support. it was along the lines of marketplaces. just having competition among the managed care plans, it was about $9 billion between 214 and 2021. adding in this other mechanism achieved up to a total of about $25 billion. it is critics clear from these numbers, we are going to need to do other things. this is not a panacea, at least according to cbo, for dealing

with the medicare challenge. we need to look at a lot of these other innovative ideas that are out there, including some of the things that have been talked about today. thank you, mr. chairman. >> the gentleman yields back. time for member questions has concluded. senator simpson did mention, mr. bowles, that you had something you might want to present without objection. i would serve only yield you a couple of minutes if you have something else to present to the committee. >> i can do this very quickly. i tried to think if i were sitting in your shoes or i was the go-between, as i was in what became the simpson-bowles plan, if it was possible for you all to get to the $3.90 trillion deficit reduction, given where your positions are today. i think it is. i think you can get this done.

i would just groote -- goes through the arithmetic briefly. you have to flesh out the policies, but if you look at where i understand the two sides now stand, and this is just from listening, which is what you have to do if you are the guy in the middle. the proposals for discretionary spending, these are all above the $900 billion and the 400 that was in the continuing resolution. this is in addition to the $1.30 trillion worth of spending cuts that have already been done. you all are between 200 50 and $400 million of cuts on discretionary. so i assumed we could reach a compromise of an additional $300 billion on discretionary spending cut. on health care, you are somewhere between 500 and $750

billion of additional health care cuts. i assumed that we could get to 600, and i got there by increases in the eligibility age for medicare that i discussed with senator kerrey when he was talking to me. that would take you to $600 billion and it would come not on the provider side, which would balance that out. on other mandatary cuts, somewhere between 2005400. i settled on 300 there, and we had enough cuts to get you to 300 on the other mandatory. interest will fall out of approximately 400 billion. you agreed on cpi of approximately $200 billion. the total is $1.8 billion. that left me a little short. that gets me to revenue.

on revenue, i took the number that the speaker of the house had actually agreed to and i was able to generate $800 billion through revenue from the speakers recommendation. if you did that without dynamic -- i am alone on the reagan plan, trust and verify, as we talked about earlier. you will use it to reduce rates or reduce the deficit. but if we add the $800 billion, that is slightly more progressive after you have done it than before. then i think you have something you might be able to work with the democrats on. that would give you an additional total of $2.60 trillion added to the $1.3 billion you have already done.

i think that would create a lot of excitement that people in the country and i think it would go a long way toward building of confidence that we really could stand up to our problems. >> thank you, mr. bowles. you certainly created some excitement. i would say don't necessarily believe everything you read and hear about the proceedings of this committee. i do want to thank every single member of the panel on behalf of the joint select committee for deficit reduction, not just for your presence here today away from your businesses and families, but more important, everything have lent to the body of work to try to address a very real crisis that we face. i do thank you for that. your testimony was certainly sobering and helpful, not the least of which is timely.

i want to remind all members to have three business days to submit questions for the record and i would ask our witnesses to respond promptly to the questions. member should submit their questions by the close of business on thursday, november 3, with no other business before the committee, without objection, the joint committee stands adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> sent majority leader harry reid said today that republicans

are being led like puppets by lobbyists grover norquist, who heads up an nt tax organization. we will hear from him next, followed by senate minority leader mitch mcconnell. in house debate on the u.s. motto "in god we trust." >> on tomorrow's "washington journal," an update on the work of the joint deficit-reduction committee. we will talk to a senior economic advisor for the herman cain presidential campaign. later a discussion on the fourth anniversary of ms. magazine. "washington journal," live each morning at 7:00 a.m. eastern here on c-span. prime minister david cameron will take questions on the european debt situation. live coverage from london begins at 80 am eastern on c-span2.

>> now, senate majority leader harry reid talks to reporters about the senate's agenda and jobs legislation. follow senator reid's remarks, we will hear from senate republican leaders. this is 20 minutes. >> i should do it this way more often. look how many are here. by the time i did here, most of you are gone. an interesting thing has taken place here in our country. virtually everyone outside of the senate chambers believes we should be creating jobs, and they all believe we should be creating jobs by having a small tax on people who make more than a million dollars a year.

76% of the american people feel that way. the majority of the republicans feel that way. independent still that way. everyone feels that way except republicans in the senate. the bill that we will soon be working on on the floor today, we will start talking about it, will create hundreds of thousands of jobs. every state is like nevada. nevada has a situation that is more intense than others. the construction industry has been whacked at least in half. this would create almost 4000 jobs in the bottom in the construction industry. roads, railways, airports, and other places. so it is really difficult to understand what their reasoning

is. trying to protect people that make more than a million dollars a year, people who have had their percentage of the american economy grow by almost 300% in the last 25 or 30 years. and my republican friends are being led like puppets by grover norquist. they are giving speeches that we should compromise on our deficit, but never did a compromise on grover norquist. he is their leader. so i repeat, everyone outside the senate chamber believes that we should create jobs in the way we are doing it. talking about north, alan

simpson testified before the joint committee today. he said to his republican colleagues earlier today about grover norquist, "the only thing he can do is try to defeat you in re-election. that means mortgaging your country, you should be in congress." alan simpson. we really want to get our jobs bill done. the super committee is working hard to get their work done, but it is impossible to do with grover norquist leading the charge for the republicans. >> sir, you said earlier in the year that social security does not contribute to the deficit, and so in the deficit reduction area, entitlements are fair game but not social security. do you support the plan -- the proposal that the democrats advanced? >> any questions you have about what has gone on in that super

committee, talk to the 12 members there. i am not negotiating this deal, they are doing it. my expectation, what i thought would have been really good for the world and the country, would be to do the grand bargain, the big deal that started with boehner and the president some time ago, months and months ago. i friend, john boehner, once this grand bargain without any sacrifice to the people that have most of that money in this country. [unintelligible] >> >> listen, this is something i read to my caucus today, what happens with sequestration. 800,000 kids and their families would be taken out of head start.

800,000 children and families, no head start, and a long list of other very brutal cuts. i would hope we can get something done there. if we cannot get it done, we cannot get it done. >> are you going to bring up the withholding bill? >> it is mike understanding that the republicans want to vote on this. that is fine with us. however, to give you a little background on this, this provision, the withholding provision came about in george bush's administration. it came about because contractors were cheating and not paying the appropriate taxes and stiffing subcontractors. so the president and his people, with our assistance, decided there should be something done about that, and we did. the problem is that in the process, we were causing a lot of people reef that had not done anything wrong. the bill that comes from the

house, i think we should amended to make sure that those people who are not the length and in their taxes get the benefit of what we are trying to do. those that are not, don't. >> you mentioned the housing crisis in your state. no doubt the worst in the nation by this report. it was reported that a number of executives at fannie and freddie got a million-dollar bonuses. >> of gag reflex in front of all of you would be improper. that is how i feel about it. [unintelligible] think frustrated is the right word. i am terribly disappointed that the republican caucus has

ignored the wishes of the american people. i am not making these numbers up. 76% of the people support what we are trying to do. that includes republicans. i am not frustrated, i am terribly disappointed. one last question. >> [unintelligible] >> i have spoken to the republican leader. he wants to bring that forward. i am not going to stand in his way. thanks, everybody.

>> we thought we would give you the other side of the story here. the thing we ought to be concentrating on in the senate is passing legislation that enjoys bipartisan support. the house has passed 15 bills and send them over to the senate, almost all of which have broad bipartisan support. we are looking for ways to cooperate with the administration in passing legislation that we think will help us deal with this economic crisis in which we are mired.

the other side approach seems to be to try to craft measures they know cannot pass, most of which have had bipartisan opposition. and then complain about not being able to pass legislation. first, i would remind everyone here that the first two years of this administration, they got everything they wanted. the biggest items obviously were the stimulus, the health care bill, and the financial regulation bill. all of those were in place by law here in the united states, and unemployment is 9.1%. the american people last november said they wanted to stop that and try to go in a different direction, and we are certainly open for business to do those things we agree with the democrats on. the free trade agreements were good example of that.

we were looking forward to that signing ceremony on a bipartisan basis, but alas, the signing was held and a room without any cameras. we have the 3% withholding at the house passed overwhelmingly that the president says he would sign, and i would hope that the senate majority would be willing to take that up and pass it and send it down to the president for signature in the near future. instead, we are going to have another partial stimulus bill later this week. we will be offering our alternative to that, but i fear that nothing will happen on either one of those measures. in fact, we could beat passing the 3% withholding president said he would sign, and be looking on things on which there is bipartisan agreement. there are actually quite a few things where there is bipartisan agreement. we have to focus on those in the remaining months.

>> americans are struggling with the economy. it is time to call it what it is, the obama economy. it is not fair to blame the president for problems he inherited, we agree with that. but it is fair to hold him responsible for making it worse since he came into office. unemployment is up, debt is up, home prices are down. there has been an increase in individual insurance premiums and the misery index, the combination of unemployment and inflation is the highest it has been since 1983. that is why we call on the democratic leadership of the senate to bring up the forgotten 15, the 15 bills that the house of representatives passed and sent to us that would help us go step by step to make it easier and cheaper to create private sector jobs. that is the right way to deal with what is now properly

described as the obama economy. >> the president, as he travels around the country on his bus tour, he taught blogs to talk about economic insecurity. economic growth is what is going to create jobs. they had the run of the place around here for two years and they put in place all kinds of new policies, all of which we are seeing the effects from. it is pretty clear they do not work. the president is now asking the country to raise taxes on the people who create jobs to pay for policies which have already been proven to be a failure. it seems like the opposite remedy from what the country needs right now. i believe there are things we can do together, and the president is out there talking about -- there are a number of things we could work together on that would be good for the job creators of this country and

would lead to greater economic growth, but this president and his allies here in the congress seen fixed on this idea that doubling down on what has already been tried and proven to fail is a wise strategy. we disagree with that and we have a whole agenda of things we would like to do here in the senate. we we will by to be able to take those up over here. they seem to be intent on the political strategy. >> government regulations make it harder and more expensive for them to create jobs. five different departments of this administration said it is not the regulations. just to remind them of a recent poll, when you ask small

business owners of what their biggest concern is, of the biggest concern our regulations coming out of washington. in this last month, there have been 265 new final regulations at a cost to the american job creatures and people. this is approximately one new regulation every three hours. i want to talk a little bit about fannie mae and freddie mac. they have bailed alcoa them to the tune of $170 billion. now we learned that the executives have received bonuses and a total of $12 million. i'm calling on him to cancel those.

they bailed them out. >> what are your expectations? is failure an option? >> i would not have been a part of crafting a process the reduced the number for success in the senate to 51 and eliminated the possibility of amendment the fashion i get an outcome. my view is divided government is the best time to do it. it is challenging to get people to get there. the of all written stories about the debates. i can confirm.

we do have differences about the approach. social security went into the red for the first time this year. they are all going to have to be adjusted at some point are they will not be there. why not now? we have divided government. that means you can sell it to the american people. that is necessary. we can also use it and the next election. i have high expectations are would not have them party in creating it. i will not speculate. i will not speculate about what they may do. it was created to succeed, not

fail. >> we were talking about what to do with regarding to infrastructure. we will probably offer and the infrastructure alternative to this week's version of the stimulus package. pretty bipartisan. it is pretty popular. at some, we will come together. do of to a two-year extension. i cannot give you a precise answer pincushion we have a crumbling infrastructure. spending is not color on both sides. we will talk about this.

>> we did not get cap and trade. we did not get immigration. >> is this something they did not get? >> there's an overwhelming bipartisan position. there a lot of democrats that did not want it. bill and thing they forgot to do is raise taxes. this is the whole economy. they reshaped government policy when they came to office in dramatic way. the move this to western european company.

they have an opportunity to answer the questions. thank you. thank you. >> the house passed a resolution today that reaffirms "in god we trust." the measure passed. here is some of the debate on the house floor. >> this was unique in that the writers recognize that the rights that we had to not come from some committee. resolution or even from the king, but rather came from god himself. in 1814 during the war of 1812

frances scott key noticed through the battle fires that were going on a unique thing and began to pen what would become our national anthem when he wrote "the star spangled banner" and mentioned "in god we trust" was the motto of our great nation. the 39th congress of the united states in 1865 during the civil war which threatened to tear this nation apart, authorized "in god we trust" to be placed on certain coins including the dollar, the half dollar and the quarter dollar. the 43rd congress in 1873 authorized "in god we trust" to be placed on coins as the secretary of commerce would so desire and secretary of the treasury. in the 60th congress in 1908 congress mab dated that "in god we trust" be placed on all gold and silver coins. in the 82nd congress of the united states in 1951, the

senate chamber had "in god we trust" placed over the entrance door in the senate chamber. in 1955 president eisenhower approved legislation requiring the motto to appear on all coins and currency. in the 84th congress in 1956, congress officially adopted "in god we trust" as the national motto of the united states. and in that congress, the senate said it was important for the spiritual and psychological value of the country to have a clear and well-defined national motto. in the 87th congress, this body authorized "in god we trust" to be placed right behind where you're standing, where it so stands today. in the 107th congress, we reaffirmed the pledge of allegiance and once again our national motto. and in the 109th congress, the senate reafimpled the -- reaffirmed the national motto. in the 110th congress in 2007, congress said that the dollar

coins that we had to put "in god we trust" on the edge of the coin back to where it belonged in the front or back of the coin. in the 111th congress in 2009, this body authorized "in god we trust" to be in the capitol visitor center and be mandated that it be placed in here. mr. speaker, what brings us to today? there are a number of public officials who forget what the national motto is whether intentionally or unintentionally. there are those who become confused whether or not it can still be placed on our buildings, whether it can be placed in our school classrooms. almost a year ago, the president, in making a speech across the world, said that our national motto was e pluribus unum. a part of this very structure that we are standing in here now, they did not have the national motto wherein they inscribed in the stones that our motto was "in god we

trust." we have the cause of those omissions, many people confused today when we changed it, what happened to it, can they still display it in rooms? so we believe that today is fitting that we come together as a congress and reaffirm that great national motto do what the senate did a few years ago and our national motto is "in god we trust" and encourage them to proudly display that motto. mr. speaker, i hope and urge adoption of this measure and i reserve the balance of my time. the speaker pro tempore: the gentleman from new york is recognized. mr. nadler: mr. speaker, i yield myself such time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. nadler: mr. speaker, although the american people are concerned about restoring our economy and creating jobs, today we are returning to irrelevant issues that do nothing to promote economic growth to put americans back to work. we've seen this before.

in the 107th congress we passed a bill to reaffirm the phrase "one nation under god" in the pledge of allegiance and reaffirm our national motto. we re-enacted into law word for one making "in god we trust" our national motto just to be sure. now, no one threatened it. no one said it was not the national motto. this resolution today, which has no force of law, simply restates the national motto once again. why have my republican friends returned to an irrelevant agenda? irrelevant because it does nothing. it restates existing law that no one is questioning. why are we debating nonbinding resolutions about the national motto? the american people are demanding action on the president's jobs legislation. they are demanding that we deal with the budget fairly and effectively. they are demanding fairness for the middle class and for the 99% of meashes who don't write million-dollar checks and hire

expensive lobbyists and make huge campaign contributions. and yet here we are back to irrelevant debates, when people run out of ideas, when they have nothing to offer a middle class that is hurting and has run out of patience. what happened to republican pledges that we weren't going to do these kinds of symbolic resolutions any more? symbolic because after all it changes nothing. the national motto remains the national motto as much today and tomorrow as yesterday. what happened to republican pledges that we were going to focus on the business of legislating? that was earlier this year. make no mistake about it, some have taken a decided divisive tone when talking about the national motto. some same political adversaries are somehow less godly or less patriotic and views the motto to drive home that point or try to drive home that point. i think that kind of

divisiveness defies national unirit which in times like these is important. rather than trying to one up each other, we should be working together to try to solve our very real problems. mr. speaker, let's get back to the work we were sent here to do. let's stop playing the kind of social issue games that do nothing to move the nation forward. the national motto is not in danger. no one here is suggesting that we get rid of it. it appears on our money. it appears in this chamber, above your head. it appears in the capitol visitor center. all over the place. we don't need to go looking for imagined problems to fix. we got enough real ones to worry about. this resolution is a waste of time, a waste of effort, and, again, remember that this country is a country for all people. whether they are religious or not, whether they believe in god or not, whether they believe in one god or not.

the first amendment said we should not make a law prohibiting the free exercise of religion. this is not an establishment of religion but restating this when no one has threatened it, when no one has questioned it, is an exercise to tell people who may not believe in god you don't really count. you're not really americans. the establishment clause is there to protect religion from government and government from religion and to separate the two. this resolution is saying we don't want to separate the two. if someone were threatening the national motto then maybe it would be necessary. as is this is simply an exercise in saying we're more religious than the other people, we're more godly than the other people and by the way, let's divert people's attention from other issues like unemployment.

we shouldn't go looking for imagined problems to fix when we have enough real ones to worry about. i reserve the balance of my time. the speaker pro tempore: the gentleman from virginia is recognized. mr. forbes: with all due respect, i'd like to respond to my good friend saying this is irrelevant, nothing to offer the middle class who is hurting when he says this is just a symbolic gesture. mr. speaker, there are those who believe that the declaration of independence is just a symbolic document, just words. there are those who believe that that flag behind you is just a symbol and the pledge of allegiance we make to it just words and there are those who believe "in god we trust" right up there is just words. so many presidents of this united states realize, there are far more than words. they are the very fabric that has built and sustained the greatest nation the world has ever known. and i challenge my good friends who would dare say that that

declaration was just a symbol, that pledge of allegiance just a symbol, in god we trust just a symbol, to dare say to president lincoln when he brought in in god we trust and he talked about that and he embraced it during the greatest conflict this country has ever known, the civil war, he was just wasting his time, it was irrelevant, he wasn't doing anything to that nation who was hurting. or to say to wilson during world war i when this nation was at a very difficult time that it was just irrelevant, it was just words, it did nothing at all, or to say to president roosevelt during world war ii when we didn't know we had the freedoms that in god we trust gives us the opportunity to have and that flag gives us the opportunity we have would embrace this nation, that in god we trust and lead this nation, just words. or john kennedy or dwight eisenhower or ronald reagan or francis scott key, just words.

and, mr. speaker, i would just say to my good friend i understand there are a few believe that in god we trust is just words. but i would say today it is far more than words. it is worth defending just as that pledge of allegiance is worth defending and that declaration of independence is worth defending and i am grateful we will have an opportunity to do just that today and the challenges he say done exist with court suits and public officials who are saying that it's not in god we trust as our national motto but something else, it's worth us standing today and taking 40 minutes to do what so many presidents, so many congresses have done support that to say they are different than the rest of the world and those words will continue to stand behind where you stand and, mr. speaker, i continue to reserve my time. the speaker pro tempore: the gentleman from new york. . the speaker pro tempore: the gentleman from new york. mr. nadler: nobody said that the national motto in god we trust

is just words. nobody said any such thing. this resolution is just words. it's on our currency, on our walls, it's there. it's our national motto. nothing will change. it was our national motto yesterday, today and tomorrow. this resolution is simply words designed to distract attention from our real problems. there is no challenge to our national motto. there is no challenge to the foundations of this country. there is a challenge to our economy. and that we ought to be paying attention to. so, all the nice words that my friend from virginia talked about how important belief in god is, i agree. this resolution is a waste of time and a diversion and i reserve. the speaker pro tempore: the gentleman from virginia.

mr. forbes: i yield four minutes to the chairman of the judiciary committee whose leadership helped bring this resolution to the floor. the speaker pro tempore: the gentleman is recognized. mr. smith: i thank mr. forbes for yielding me time and introducing this resolution. there are few things that congress could do that could be more important than passing this resolution. it ry affirms in god we trust as the official motto and provides congress the opportunity to renew its support with a principle that was ven rated by the founders of our country. in our declaration of independence, the founders declared, quote, we the representatives of the united states of america, appealing to the supreme judge of the world, do with a firm reliance on the protection of divine providence pledge to each others our lives, our fortunes and sacred honor.

president washington declared, let us raise a standard to which the wise and the honest can repair. this event is in the hand of god. james madon, the father of the constitution, declared a day of thanksgiving and acknowledgements of almighty god. madison said that no people ought to feel greater obligations to sell bait the goodness of the great exposure of events and of the destiny of nations than the people of the united states. thomas jefferson, the author of the declaration of independence wrote, god, who gave us life, gave us liberty. and can the liberties of a nation be thought secure when we have removed their only firm basis, a conviction in the minds of the people that these liberties are the gift of god. more recently, america's presidents have reafffirmed these same principles. president roosevelt said in

teaching this democratic faith to american child, we need the aid of those great ethical religious teesks which are the heritage of our modern civilization, for not upon strength nor upon power, but upon the spirit of god shall our democracy be founded. president kennedy said, the world is very different now and yet the same revolutionary beliefs are still at issue around the globe, the belief that the rights of man come not from the general rossity of the state, but from the hand of god. during the civil war, abraham lincoln counseled americans to have a firm reliance on god who has never yet foresaken this favored land and recognized it is god's pleasure to give us to see the light. and ronald reagan told the american people, we are a nation under god and i believe god

intended for us to be free. thanks to the leadership of the the gentleman from virginia, mr. forbes, now, it is our turn to show that we still believe and recognize these same eternal truths. we can do that by approving a resolution that will allow today's congress, as representatives of the american people, to reaffirm to the public and the world our nation's national motto, in god we trust. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from new york. mr. nadler: i reserve. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from virginia. mr. forbes: i yield one minute to the gentleman from california. the speaker pro tempore: the gentleman from california is recognized. mr. lungren: in contrast to the suggestion that we don't need to have this' affirmation, we had a

lawsuit by an individual in my district about the words under god in the pledge of allegiance. that same individual is suing on this question, in god we trust. i had to fight strongly to get the words in place in the c.b.c. where it is now. and i think we have admitted one, the leader of the civil rights revolution, martin luther king, made it clear in his letter from the birmingham jail, that, in fact, we act out of the requirements by the god in whom we trust. that makes us a nation that respects the liberties, the individual worth of every single member of our society. if he had not, in fact, looked to our historic belief in god as a basis for those principles, that all americans abide by,

that is that we are equal in the eyes of god, and therefore, equal in the eyes of our government, he would not have been successful. this is an important message we need to reaffirm. it is under attack and we are not wasting time. how could we waste time in making sure that in god we trust is, in fact, enshrined in our laws and as our national motto? the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from new york. mr. nadler: i would point out that the lawsuit that the gentleman from california referred lost at the supreme court which adds to the point that of course, in god we trust our national motto is not under attack or under threat nor is under god in the pledge of allegiance under attack and this is an unnecessary resolution. mr. lungren: the gentleman who

brought that case to the supreme court has a case pending on the issue in god we trust and there is a federal action out of the district court in wisconsin right now attempting to get us to take out the words in god we trust in the c.v.c. mr. nadler: reclaiming my time. cases making these challenges occur all the time. they lose 100% of the time. and there's no reason to expect that that will change. so, again, in god we trust was our national motto yesterday, today. whether this resolution passes or not, it will be our national motto tomorrow. and we are wasting time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from virginia. mr. forbes: i yield to mr. miller from florida. the speaker pro tempore: the gentleman is recognized. mr. miller: i thank mr. forbes in bringing this he legislation

to the floor. and there are attacks on our national motto in god we trust. we know it has been attempted to be taken out of the c.v.c. this country for many, many years, since its inception has relied on a faith in god. there are attacks every day. there are attacks on chaplains in our military services that are being told in some instances that they cannot perform religious duties in reference to their faith. we have the flag-folding ceremony that is under attack now on veterans' cemeteries where people are now being told they aren't allowed to do the flag-folding ceremony during the death of a person that has served time in the military. you know, i think the unfortunate thing is as we stand here today, this is important.

this is not a waste of time. it's important that we stand here and we renew our national motto in god we trust. ronald reagan said, in fact, that if we ever forget that we are one nation under god, that we will then be one nation gone under. i'm proud to stand with my good friend with mr. forbes, to reaffirm that our national motto is in god we trust, yesterday, today and tomorrow. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from new york. mr. nadler: reserves. mr. forbes: i yield two minutes to the gentleman from texas, mr. poe. the speaker pro tempore: the gentleman is recognized. mr. poe: i thank the gentleman for introducing this resolution. in god we trust is an important part of american history and this resolution is necessary to ensure that it remain a part of

our history. today, some individuals argued that the constitution says america cannot have any mention of god in a public atmosphere. these folks argue that americans must be censored when they talk in public about god and even religion. i disagree with that contention and the supreme court agrees with that contention and using the writings of our founding fathers as a guide, i believe they would disagree with that contention. what makes us unique is the way we started as a nation. we had this concept in the declaration of independence that we are worth something as individuals and that we are worth something as individuals, not because governments gives us rights or men gives us rights but the declaration of independence says we are all endoweded by our creator with certain unalienable rights. in god we trusted then and in god we must continue to trust now. the truth is that our

constitution says that we are guaranteed freedom of religion, not freedom from religion and having the word god in our national motto does not establish an official religion for the country, but simply recognizes the role that faith and religion have played in our history. i believe as many other americans do that america is a special place, chosen place and even an exceptional place and america is more than just another country on the globe as some say. we serve as a and one reason is because of god we trust. unless the lord watches over the city, the watch men watch in vain. we should reaffirm it. and that's just the way it is. the speaker pro tempore: the gentleman from new york. mr. nadler: reserve. the speaker pro tempore: the gentleman from virginia. mr. forbes: i yield one minute

to the gentleman from mississippi, mr. harper. the speaker pro tempore: the gentleman is recognized for one minute. mr. harper: in god we trust, for over five decades america has celebrated this phrase as our national motto. this pronouncement is part of or national anthem and engraved in both chambers of congress. but the united states foundation in god far outdates that the country has recognized. our country's first national document the declaration of independence spoke to inalienable rights given to us by our creators. there is collective reliance on god as they drafted the united states constitution. when congress included biblical references and when the

constitution was framed at the constitution in philadelphia, franklin reminded the delegates that god governance and if a sparrow cannot fall to the ground without his notice, is it probable the that an empire can rise without his aid. i ask my colleagues to support this and i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from new york. mr. nadler: reserve. the speaker pro tempore: the gentleman from virginia. mr. forbes: i yield 1 1/2 minutes to the gentleman from georgia, mr. broun. the speaker pro tempore: the gentleman is recognized for 1 1/2 minutes. mr. broun: franklin wrote a speech urging the assembly to begin their morning session with daily prayer. franklin wrote, quote, i have lived a long time and longer i live the more convincing proof that i see that god governance in the affairs of men. without god's aid we shall

succeed in this political building no build better than the builders of babel and our projects will be confounded and we ourselves shall be a by word down to future age. just as franklin suggested, we must continue to affirm that god has a place in blessing our government in guiding our lawmakers and he has the ability to lead our nation back to a path of righteousness and prosperity. in god we trust has great meaning in our nation. and we must encourage its display in all public buildings and government institutions. so i urge my colleagues to pass house resolution 13. i yield back. . the speaker pro tempore: the gentleman from new york. mr. nadler: reserve. the speaker pro tempore: the

gentleman from virginia. mr. forbes: i yield one minute to the gentleman from oklahoma, mr. lankford. the speaker pro tempore: the gentleman from oklahoma is recognized for one minute. mr. lankford: i ask unanimous consent to revise and extend my remarks. the speaker pro tempore: without objection. mr. lankford: i would remind us in a time in 1861 when our nation stood at the press pus of the civil war and the oratories stood in a bloodshed. the director of the u.s. mint was to create a new inscription to u.s. coins. he said no nation could be strong except in the strength of god. the director of the mint responded back with a variation of the phrase that he pulled out from the star spangled banner, so our motto is in god we trust. since it was a similar hymn and indicative of the american people, it was later put on a two cent coin at the end of the

civil war. it's not some isolated incident of the american dream. francis scott key, whether it was world war i or ii or the cold war fighting communism trying to set the united states apart from other nations around the world is unique, our founding fathers and our founding documents are based around this statement. we are given our rights from god including life, liberty and pursuit of happiness. we believe it is in god we trust. the speaker pro tempore: the gentleman yields back. the gentleman from new york. mr. nadler: reserves. the speaker pro tempore: the gentleman reserves. the gentleman from virginia. mr. forbes: mr. speaker, i'd like to yield one minute to the gentleman from arizona, mr. franks. the speaker pro tempore: the gentleman from arizona is recognized for one minute. mr. franks: i thank the gentleman. i thank the gentleman for bringing this forward. i know that down through the ages there has been this great question that has occurred to mankind, and it is a similar

noll one. is god god or is man god? in god we trust or in man do we trust? i'd submit to you that the answer to that question, mr. chairman, is one of profound significance. indeed, christopher columbus' search for god was to search around the world and found this place called indeed. col nists wanted to worship god and wanted a way to worship god. the founding fathers did so in the name of god. their trust in god has had a profound impact on those that live in this day. i submit to you if we answer the question the other way, mr. chairman, if man is god then anate yist state is the brutal as the thesis that it rests upon and there is no reason for us to gather in this place. we should just let anarchy to

prevail because we are just worm food. indeed we have the time to reaffirm that god is god and in god we trust. thank you, mr. chairman. the speaker pro tempore: the gentleman yields back. the gentleman from new york. mr. nadler: reserve. the speaker pro tempore: the gentleman reserves. the gentleman from virginia. mr. forbes: mr. speaker, i'd like to yield one minute to the gentleman from alabama, mr. aderholt. the speaker pro tempore: the gentleman from alabama is recognized for one minute. mr. aderholt: thank you, mr. speaker. and i rise today in support of this resolution, reaffirming in god we trust as our official motto of the united states of america. the motto is more than just a slogan. it defines the sentiments, i believe, of the founding fathers. while there never intended to be an official state religion they fully endorsed the idea of god. in the opening of the house and senate of prayer, to the private prayers of the founders, the fathers did put their faith in god. i believe they knew in their

hearts that god had a special place for the united states of america and this new nation. and while they knew that a christian and godly nation could never be achieved by any legislation that congress could pass, they knew it was the people of the nation who would individually receive god in their hearts for this for frule a godly nation. so today, mr. speaker, i urge my colleagues to support this resolution that's before us, reaffirming our motto, in god we trust. i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the gentleman from new york. mr. nadler: reserve. the speaker pro tempore: the gentleman reserves. the gentleman from virginia. mr. forbes: i'd like to ask the gentleman from new york if he has additional speakers. if not i am prepared to close after he finishes his remarks. mr. nadler: i have no additional speakers but i will speak. he gets to close. i'll speak then. the speaker pro tempore: the gentleman from new york is recognized. mr. nadler: thank you, mr. speaker.

i've listened to this discussion. there's no question that most people in this chamber, maybe everybody in this chamber, agrees with the phrase, with the motto, "in god we trust." i certainly do. there's no question it's the motto of this country. we've adopted. it's no question that it's not threatened. no one's seeking to change it except for every so often there is a court case that gets thrown out and that's not new. there's no necessity for this resolution except really the only reason for this resolution, frankly, is to declare how good we are, that we're going to reaffirm what needs no reaffirmation. and to divert attention from the issues that we really ought to be dealing with. so let me say again, "in god we trust" is the motto of the united states. it was yesterday. it is today. it will tomorrow whether we pass this resolution or not.

we do have to be sensitive to the fact that not everyone in this country believes in god and they are just as much americans as those of us who do believe in god. and i see no reason for passing this resolution to reaffirm what is already the case and what we affirmed before. so it's a waste of time. and i am not saying that "in god we trust" is a waste of time or that the national mott ore is words or symbol but this resolution is words which does nothing, is intended to do nothing other than to get up and say we're godly, we're -- we're good people and it's true, we are, i hope, most of us are, but we don't have to declare it. and we don't have to make people who may not agree with it feel that they are not as american as we are and we don't

have to spend the time in this house when we're not spending it on things that are important in terms of something that we can actually change, that we can actually do something about like creating jobs and affecting the economy. we can't change it. it's the national motto. it changes nothing. if this resolution says we are abolishing the national motto, you say, you can debate it one way or another. it diverts attention. it wastes our time. it is unworthy for that reason. i yield back. the speaker pro tempore: the gentleman yields back. the gentleman from florida -- from virginia is recognized. mr. forbes: mr. speaker, the gentleman from new york says that we are simply declaring how good we are. that we are wasting our time. that we have other things that are important. mr. speaker, i rise today and i realize that there are some who

don't see the difference between what we're doing and reaffirming "in god we trust" as our national motto from naming a post office or commending some athletic team that's won the last sports contest, but i happen to believe that when thomas jefferson stated in the declaration of independence that our rights came from god, he didn't think that it was irrelevant or not important. i happen to believe that when francis scott key penned that -- >> on tomorrow s "washington journal" we will

talk to the senior adviser for the hermann cain campaign. abigail pogrebin joins us. from the british house of commons, and david cameron will take questions and the european debt situation. let coverage begins at 8:00 a.m. eastern on c-span2. next, a preview of the 2012 congressional elections. charlie cook moderates the discussion. this is 40 minutes. >> of like to talk about the partnership we have. to bring our readers and to curious folks nationwide.

every week congress is in session, we partner on the congressional call to survey opinions and attitudes of americans from far away. the poll has provided insight to the nation's priorities and the reaction to the current legislative agenda. it has been a rewarding partnership. we appreciate the effort to 90 to work with the united technologies. joining guess is the vice president of defense. his a 20 a year veteran and works on a wide range of domestic and international government and industry groups. please welcome him.

>> as you will see, we are at a n inflection point where this offers new dynamics. to provide thoughtful analysis ,we are proud to write the poll. opinion of congress and the line of communication between means street and pennsylvania avenue to promote a dialogue. key findings are featured on the pages of the national journal daily. today is tuesday.

this goes beyond page 10 of thoughtful analysis. in the next session low, he will further high-level some of the polls and what they might mean for the upcoming election. i want to welcome you. thank you. >> i know that charlie cook is a very familiar face to many pirie it he was once described as the bible of the political community. we are fortunate he writes for the national journal twice a week. joining him is the editor of national journal daily.

also joining us is a veteran of the 2006-2008 campaign and is editor and chief of the popular hot line. >> thank you very much. i am moderating more or less. thank you for coming. thank you. i worked there 40 years ago it is so exciting to come to work every day in the national journal under the leadership of ron who has revitalized the national journal and an exciting way. and with my two colleagues, it is an example of that where matt cooper is a veteran. he was a new republic.

he made his way as an editor of the "time" magazine. what a background. we have much homegrown talent. they learned the company from the inside out. they have incredible expertise. if his great to work there every day and to be on this panel with my colleagues. we decided to each topic for a it upnutes and then openin to questions. >> we have had three tumultuous election since 2006 and 2008 for democrats. while i am not anticipating the

kind we saw in 2006 and 2010, i think the volatility will not go away. certainly not the debt. it makes it worse. matt cooper will be talking about it. it shows the volatility that is out there. this is not normal. this may not work so much, especially on the congressional side. we should expect the unexpected. i do not want to step on any think that anyone else will say. democrats needed this to get a majority in the house.

that 25 is really hard. i think democrats are more likely to pick it up because you do not pick up 63 seats. the begin scheme -- you do not pick it up with out some. this is to be expected. buick a close to the 25 they need for a democratic majority. i get it. this is a rebound election. democrats picked up six seats in in 2006. they come into this film with six seats. -- into this one with 6 seats.

they are comparably endangered. it maybe they're picking up three on the low said. the most likely did a bell curve of outcomes. this is boring behavior. we're talking by human behavior. a lot can happen. i guess this came out today. caiained about to the xi phenomenon. -- if richard stein were a political analyst, i think should say there isn't not a year in -- she would say there is none here.

they almost win the nomination. you look at jimmy carter. there was more of a critical mass of infrastructure and strategist who had been there. it there was fund-raising potential. stock and there is a randomness. the me started hearing some of the rumblings. and you could tell. this'll be a pretty short lived.

i think probability is pretty high. you will see met romney as a republican nominee. if it is quick and clean, the realists this is a relative term -- and i realize this is a relative term. it is not technically over. does it allow romney to pick a running mate based on this? is he forced to do all sorts of contortions and try to pick a bizarre nominee tax early on he bizarre nominee?

it reinforces the top of the ticket. or is he forced to do things that are distracting but shore up weaknesses? that is the bottome line. who wants to go first? >> this is where you can have discussion. to tie in what you said, this has been a great survery. we are so delighted.

so many polls are like sno flakes. ho they hadou wo in a horse race. what we are finding is the complicated borders i have ever seen. anyone who thinks they understand this is being cocky. any number of issues, trade, jobs, you see a split elec torate in ways that are not predictable. we are deep in policy on things like cap and trade. we found support for the notion that too much is ha

mpering the economy. we saw people more wary of changing regulations. people may be conservative in theory but more liberal in different stages. one party is more pro-trade than the other. they were wary of more trade deals. most pro-trade were affluent democrats. the landscape is muddled.

it will be hard to call who can prevail in those ways. i do think in some ways it is has elected weak candidates. we saw some in 1980. some could not make it to a second term, because they were lucky to be ther ein the first place. this is tough. >> it is nice to have this down

the hall. the odds of republicans taking over is an average. move up to 47. they need 4 to take over. they have control for those three weeks. there are 4 seats that seem most likely to help rep ublicans. this may provide an unpleasant surprisde.

claire in missouri. both are going to have these. it will be top races. i don't know why people are pollliing these races. if george allen is up by one, it is the onyl result you will see. to thetention ot t partisan polls. they states will be competitive. wisconsin is part of the blue well. we saw a big republican swing in

2010. new mexico, a swing state. there is a chance for heather wilson to steal a democratic senate seat there. cain and allen, two titans known by 99% of the entire state. this will be a battle to see whether a democrat will appeal voters andacan whether they can turn out the have ledvotrers that them to such success. this is great that the cook

report has called hawaii a toss up state. you have two democrats in a state that divides the base. there are 5 republicans. the margin is quite stark.

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> your plan also addressed the concern of accelerating debt, the recovery, and phasing in some sort of deficit reduction. you were also worried about demand. can you talk with us about what you had in your proposal. >> we were also very concerned about inadequate demand. we called for a one-year both sides, employer and employee, payroll tax holiday. that was on the grounds that that was needed to stimulate

demand up front before we could safely phase into the deficit reduction that we were calling for. that was at a time when the economy was somewhat stronger. it seems to us even more incident -- more necessary now. >> do have something besides peril to stimulate the? -- did you have anything besides the payroll tax to stimulate the economy? >> no. we took that as a symbol of how concerned we were, a full year a payroll tax holiday for employer and employee which i think is $650 billion. that is a lot. you can do it a different way. but we put it into symbolize that we were really worried about inadequate demand. >> i might comment on that. frankly, i was very surprised in looking at the group of people that were on this debt reduction group.

when it came to this issue, they were as worried as any issue had seen because they were really fearful that the economy was not going to recover. quite frankly, we do not know what will make it recover, but we have a properly told you how we came about what we did and it is a lot of money. i guess some of us said that it might have been a much better thing to have been two years ago. this may be a better way than anything we did so let's suggested. >> i appreciate it. my time has expired. >> the chair now recognizes the senator from arizona. >> it is great to see you both again. thank you for the thousands of hours you put in on these subjects. it has been helpful to everyone. senator simpson, you never disappoint.

this is a serious subject, but a little levity can help. i appreciate that. you talk about eliminating so- called tax expenditures. i have one question for you. comment on taxes and then i have a question on entitlement reform. if we eliminated the so-called tax expenditures, the biggest four, which on the personal side are deductions for medical expenses, charitable contributions, work interest payments, and payments of state and local taxes, and you do not reduce marginal tax rates commensurately, the americans who itemize would have a higher tax burden. they would pay more in income taxes. >> in getting rid of $1 trillion suggested that $100 billion would go toward production of -- reduction o f the debt and the rest of it would come out and we would give the people of america what

they have been asking for. drop the bays, lower the rates, -- broaden the base, lower the rates, expand the code, and we will give people free rates. $70,000 to $200,000, you pay 14% could anything over that, you pay 18%. if you want to put something back, go ahead. the issue is that, if you want it, pay for it. then you can do to rates of 12% and 18% or whatever you want to do. on home interest deduction, give them a 12% non refundable tax credit. that will help the little guy. municipal bonds -- at some point, you just say, look, you were told to bring home the bacon. the lobbyists got what you wanted and now it is over. the fun and games is over pierr. >> so the $1.10 trillion, $1 trillion of that would go to

rate reduction. >> that is correct. >> and only $100 billion for debt reduction. >> that is correct. let me just say that, if you want to put something back -- and there are wonderful things, the income tax credit -- you can get the violin out -- [laughter] >> let me just make one observation. both the fiscal commission and the bipartisan policy center have suggested that one of the options is to tax capital gains and dividends as ordinary income tax rates. you would not want to do anything that would disrupt a fragile economic recovery. it is along the line of first do no harm. i observation is you could do great harm by effectively doubling the capital gains and dividends taxes because those represent areas of capital formation and investment in our

economy. let me make a quick observation. the government receives capital gains revenues when taxpayers sell appreciated assets. they're called realizations. congress tried taxing capital gains at the same rate as regular income back in 1986. the resulting capital gains revenues were dismal. in fact, they shrunk and remained depressed until congress lower the capital gains rate in 1997. it means a higher cost of capital, less activity in the capital markets, and less economic growth. the health care bill that was passed last year already increases capital gains by 8.3%. -- by another 3.8%. that means that the very lowest capital gains rate and your suggestion would be 26.8% and the highest would be 22.8%.

even the committee on joint taxation said that a rate that high would lose rather than raise revenue. other economists, one that testified before our finance committee said that letting it drift up to 20% will erase the theoretical revenue gain from increasing the tax rate and will lower both economic growth and wages. if the rate is pushed even higher, more revenue and gdp will be lost and wages will be even lower. i would just ask you, as we continue to visit about these things, to think about this. your views are important to the committee, but i think it could be counterproductive by lower economic growth, not really raising revenues, and it would make our deficit problem worse. let me turn to entitlements. i think you said something very important in response to these questions.

i want to make sure i have these things right. first of all, i think it would be useful for you to explain the benefits of a defined support or premium support such as you recommend it. but also, correct me if i am wrong, but i've understood you to describe the plan laid out in your submitted testimony which is a little different from the original in that there are at least two. first of all, do you actually set the federal contribution level first by the second lowest bid, which would include fee-for-service, but it would not go up more than gdp + 1% with premium support in the event that it did so? if that is not accurate, please tell me. >> senator, you have it exactly right. we have improved this plan over

our original one. it is now more like the bipartisan plan in the wrote thomas proposal in the late- 1990's. when complete of the way we did -- one of the complaints we got itut the way we did originally was that it did not reflect the actual cost of health care. when you do it by a bidding process, it does not reflect the actual cost. >> talk about how you select the second lowest bid. i think that is a very clever way to do this. >> that is arguable. there are different ways of doing it. but selecting the second lowest bid -- it was not the lowest of that might well be foolishly low for some for some reason.

but people who wanted to go to the even lower bid, the one that was not selected, could do so and get their money back. >> they would pocket the difference between the second bid -- >> reichert >> and it would be -- >> right. >> no dollars out of pocket. so they would take -- >> right. >> and it would be no dollars out of pocket. so they would take the second plan. but the federal premium support only be at the second lowest bid. >> that is right. >> so it gives you a way of making the competition real. we believe that would bring the costs down. >> i agree with that. let me go back to my first question. discuss the benefits of that premium support concept generally. i do not think it is necessarily well understood. and the final question is that that is not all you would recommend. this is really a question for

all of you. but you would recommend additional changes to the existing system that we have in order to potentially reduce expenditures, things like combining the part a and part b portions in certain circumstances. i do not know if you get into the copiague issue or not. -- into the co-pay issue or not. but what are those that are useful to do even if we do the premium support, but in any event, certainly if we do not to do it? >> also, the things that was mentioned, that the pilot programs and attempts to find better ways of delivering care and government support and private support for innovations and testing those things and putting them out in the public domain, that is all a very good thing to do.

we think it will pay off in the end. it is not incompatible with our defined support plan. once you have those innovations out there, the private sector will pick them up. >> hopefully reduce costs. up?igh tt if follow on medicare, the first thing that we did was to note the objection to a new system. and it was right up front that you were abolishing medicare. so this new plan starts with the premise and you can choose. and that put on us on a different path with our members

than before. it is very different than anything you in the house have considered here fourttofor. >> in our plan, we did try to address this is you. our belief was the current benefits structure encourages overuse. and there are currently a hodgepodge of different co-pays and deductibles and premiums. we wanted more cost sharing. we wanted people to have some skin in the game. we wanted to get rid of first dollar coverage for that reason. so we went to one deductible on $550.nd part b of we had a 20% payment up to $5,500. we also on medigap, we had no medigap available for the

for $100. and 5/50 fo0/50 0. >> we now recognize the congressman from california. >> thank you for this service to the country and for the work you have done to give us some templates we can use to resolve this issue not just for the contras but for our country. i enjoy it always hearing from the four of you because you have shown us that you can beat big, bold, and balanced and still try to move the country for. i thank you for that. as i said to alan and erskine on many issues, i thank you so much for attacking the cent -- sacred cows that too often did in the way. i served on that commission with you, as i said before, i thought

you put all the elements in place i would have put the mixture of those elements differently, but i complement you today as i did back then and i applaud you for what you did in putting together the template of what could be a solution for the country. i think i heard you all say this, but i want to make sure. while we are still suffering through these difficult times, and back when we were going through this with the commission and director rivlin, i know that you and senator demint as you were going to this, times were tough. they are still tough. i suspect it when we were going through the work of these two commissions thought that the economy was doing far better. is it still your premise that we should concentrate on getting the economy back on track, getting americans back to work, before we go too heavily into trying to find savings by making cuts and importance of investments that we have? i will open up to anyone to answer. director?

>> it's a timing question. we believe that drastic cuts in spending right now would be damaging to the economy, as would tax increases right now. we need to let the recovery happened, and in stimulate it with proposals we have been talking about. but that does not mean putting off the deficit reduction. one of the best things we could do for the growth of the economy right now is for this committee to legislate long-run reduction in the deficit on the entitlement and tax side right now. we cannot wait until after 2013 or some other time to do that. the markets and the public have got to see that it is going to

happen, that we are serious, and that it is in law. then it doesn't have to take effect right away, but it has to be in law. >> so get it done. let it play itself out. you have time to make it take effect long term, as you see the economy begin to recover? >> but do not wait to legislate. >> it got it. mat asked a question regarding revenues? you all tackled the issue of revenues. for the most part, you did something i thought was very important. you try to also show the public that, while we would increase revenues, we would ultimately tried to reduce the rates and give people a fairer taxation system. so that, while we were still able to generate revenues, you are able to tell the public that they will have a system that works better for them. and so they could understand the

simplicity and fairness of it. in both plans, i believe, and we had a discussion on this, you equalize the taxation for capital gains and taxation's to ordinary income. in layman's terms, and asset, an investment in stocks or bonds would now be taxed at the same rate that it the income earned by hard working americans would be taxed at, so they would be treated equally. you found ways to reduce the rates overall for all income groups. and you went after what i know and the commission became known as the tax earmarked, those expenditures that i believe senator symms and you mentioned told all over $1 trillion. so you came up with a mix. -- senator simpson said totaled over $1 trillion. is it still your sense that that type of a mix could work for

this committee? open jit up to anyone. >> i would say absolutely. i would say to my friend, senator kyl, you looked at my record, i voted in favor of capital gains from like 36 years and the senate, but i did not have a chance to lower their rates like we are lowering them. at the same time we are looking at capital gains. in this case that is what happened. we lowered the rates. i heard from the best experts this country could put before me that the best way to affect growth in this country is to lower the rates on all people. that was the best instrument of growth. they did not say except for capital gains. they said it is the best instrument for growth. and we lowered at all substantially so we put back into the code the estimates of growth which is a blurring of the rates on middle america and all americans, which we do in ours and they did in theirs. theirs is a little stronger, as

al explained it, they came down lower so you could put back some things. i would tell you we also included in this, we put in the medical expenses, which is the largest tax expenditure. it is bigger than a homeowner interest rates. we phased that out over the long term. that is a difficult one, but we did in hours. that is part of the reason we got the rates we got. >> you called the tax expenditures back door spending for the tax code. >> it is, congressman. it's spending by another game. i was flabbergasted, i was appalled to see, having listened to all the talk about earmarks all these years, which are in the operation bill, there are $16 billion of annual earmarked per year. there are $1.10 trillion worth

of annual earmarks in the tax code. and it is just spending by another name. it is somebody social policy. and if he were to eliminate them, and use 92% of the proceeds to reduce rates, and only 8% of the proceeds to reduce the deficit, you could reduce the deficit by about $100 billion per year. so a total of for 10 years of $1 trillion. and you could take rates to 8%, up to $70,000, 14% up to $210,000, and a maximum rate of 23%. could take the corporate rate to 26% and pay for a territorial system so that $1 trillion is captured overseas and brought back to this country to create jobs over here. i believe that would create dynamic growth in this country and produce revenues are far

beyond what we have forecast. so i am very excited about simplifying the code. i think it makes a lot of difference. >> i would like to focus on a couple more areas of spending. i know that when we talk about spending, you also were willing to tackle this issue of the discretionary side of the budget, the kind of spending we typically talk about, but most people do not recognize 65% of all spending increases that occurred over the 10 years, the last 10 years, came out of the department of defense, mostly because of the war, but because of the growth and some of our military projects and contracts and so forth. i know you try to tackle that sum, and i appreciate the work you did there. with the a limited amount of time i have, i would like to touch on health care. i appreciate what you try to do on health care. that because one question. we can do any number of things that to try to reduce the cost of medicare and medicaid for the american public.

at the end of the day, if we do nothing to try to help lower the costs of health care overall, not just within the public sector with the medicare medicaid, we will simply have shifted the expense of health care in medicare-medicaid to those who use health care to medicare-medicate, our seniors and disabled. because the reality is that today the cost of health care under medicare is growing slower than the cost of health care in the private insurance market. we went through that in the commission.son if he were to get rid of medicare and put it into the private sector insurance market, they would end up being more because the costs of private insurance is growing at a faster clip than is medicare-medicaid. how do we corral the cost of health care, which includes medicare-medicaid, so we do not end up just shifting costs from

the people, the tax pa yers, o ur seniors who are now retired. if you could give that some thought, that would be instructive. the health reform of last year tried to do this, to help corral the cost in the private sector. if we do not do something about overall health care costs, simply telling seniors they will end up paying more in medicare does not help with our health care costs. thank you for your service to this country and your time. >> the time of the gentleman is expired. the co-chair recognizes the congressman from michigan. >> thank you, mr. chairman. i certainly want to agree with each of you that these deficits are unsustainable. i appreciate your candor, your service, your hard work. believe me, we know a little bit about your work because we have spent hundreds of hours over the last members of weeks, and you

underscore my respect for each of you is truly great americans. as you may know, my home state of michigan, we have had 34 consecutive months of double- digit unemployment. as i talked to people back home, as i was again this last weekend, people know we are in a rut. senator simpson, they know exactly what you are talking about. and they are relying on us to try and get our car of the ditch and back in first gear. i put a chart. i think you have a chart in front of you that scores the president's health care plan from 2014 to 2023. and that 10-year out a plan shows that - - outlay plan shows

the effects on the federal deficit will be $2 trillion in additional spending over the next 10 years. and each of you noted in your various proposals that the federal budget is unsustainable. and you identified healthcare as one of the most important items that this committee and the nation should be focusing on. so as you see from this chart, that the exchange subsidies are certainly the primary driver of this dramatic expansion of medicaid. cms certified that because of the president's proposal, nearly 25 million more americans will be on medicaid after 2014 because of that expansion, which means that more than one in four americans will be in effect a medicaid beneficiary. so, based on that and the statements you have made about the budget crisis, do you believe that we should revisit the expansion of the medicaid

program and the president's proposal? erskine? happy to answer any question that you ask. you will not smell any fear on us out here. >> go right ahead. >> we had great questions that if the affordable health care plan could slow the rate of health care. because we have those questions, we did believe that that it would solve a problem of providing more people health care, but we did not think it solved the problem of how to control the costs. therefore, we made the $500 billion of additional cuts to medicare and medicaid in order and hoping that that would slow the rate of growth. if it did not slow the rate of growth, then what we said is there had to be an overall cap on all federal health care spending. and we would have to look at some options like a premium

support plan, like the robust public option, like a singer le payor plan. >> we knew that whatever you call it, what ever you want to use the-or col. at obama-care or whatever you want to call it, -- the negatives or call it obama- care, it will not work. use common sense. you have this employee of people. you have one person in america that weighs more than the other two. you have guys that choose to do tobacco and booze and designer drugs and all of them will be taken care of. you have pre-existing conditions at in 3-year-olds. what happens in there 50 years of life? all you have to do is forget the charts and know that if you torture a statistical long enough they will eventually confess.

no this country cannot exist on any kind of situation where a guy who could buy this building gets $150,000 heart operation and is not even get a bill. that is not. that is where we are in america. there is no affluence testing. you have to raise co-pays. you have to have hospitals keep one set of books instead of two. >> alan, what did you do about medicaid? originally, it as i understand it, you were converting it into a block grant for the states. it is my understanding you dropped the proposal. >> we were never going to convert it into a block grant for the states. we thought that was too big of unproven.too what we did advocate is testing it in 10 states on the theory that one size did not fit all and governors can cover more people with less cost with

control of the funds. we said let's tested in 10 states. if it does prove to be something that lower the cost of health care and provide coverage to people, then we can afford it. but you should test it first. that is what you do in the business world and in most places. it is now being tested in rhode island. it is working very well. washington state is asking if they can test it. i do think it is one of the things that will prove over time. >> beyond those tests, did you ask for any other reforms on the medicaid side? >> yes, we did. >> and they were? >> as an example, having run the public hospital in north carolina for the last five years, you can see the gaming that goes on in the medicaid program. by the payments, since it is a shared cost program, that is approximately 50/50 between the states and federal government. the docs would up the amount they would charge in order to cover higher fees charged by the

state. they would both come out even, but the taxpayers would end up with a $50 billion bill for that. so we cut out that kind of gaming in the state medicaid programs. >> one of the proposals that you recognize on the medicaid side was this program called the per capita cap. for those in the audience, what actually -- each state would receive an allotment determined by the number of folks in the specific categories for medicaid based on the state population number for those numbers, and then that would be increased each year by gdp plus one, beginning of want to say in 2014-2015. you were part of that proposal. are you still supporting that

idea? >> we looked and a number of ways to reduce the rate of growth of costs in medicaid. one was splitting their responsibility between the federal government and the states that. medicaid is really two programs. accute care, which is largely for children and their mothers. and it's long-term care. pand on and one of the things we looked at was split the responsibility for those two between the federal government and the states. we thought that would help make it clear whose responsible for what, and not have the matching program that results in a certain amount of gaming. we also wanted to get rid of the kind of gaming that goes on in medicaid. and one thing we were very clear about was the dual eligible,

eligible for medicaid and medicare, there are some impediments getting into managed care and management of their multiple diseases. and we wanted to fix that. >> what did you do in terms of added state flexibility to allow states to have greater control over what services were eligible? >> that is a possibility. we did not come down very clearly. we offered a menu of options on what to do about medicaid. i think it is the hardest problem, much harder than medicare. and we thought we had a good plan for medicare. we offered a menu for medicaid. >> on medicare, both ways and means and energy and commerce have jurisdiction over this issue. and i know that as many of us have looked at this, we have felt it is the toughest entitlement to try and curb the cost curve down words.

we have heard a little bit about putting them together, the deductible, the co-pay. it is my understanding that both of your groups also increase the age for eligibility. is that right? >> we did not. we did not even do that for social security. but we certainly did not for medicare. >> we have it is one of the options in the 10-yerar window. >> when you looked at all the options to consider, what was a priority order that you came up with in terms of where you thought, what we should do to reform medicare? >> we did not prioritize on this side of the 10-year window. we said drastic steps would have to be taken. that would have to include looking to things like alice and paul's premium support plan and a robust public option and block granting, medicaid to the states.

has to look at things like a single payer plan. it has to look at things like raising the eligibility age for medicare. that is what we eat, those are the options we saw that would have to be considered if you cannot slow the rate of growth to gdp plus one. >> before yielding to the next panel member, senator simpson i have been informed that you have to depart in 20 minutes. >> mr. co-chairman, i could wait a couple of minutes after that. i have to catch a 5:30 flight to denver. >> we sincerely appreciate your participation today. you will be excused from the panel when ever you need. >> let me share with the chairs bowles has a ne remarkable thing to present you. it is very important to hear what i think is a solution for

you that only he in his brightness can propose. i think it will get you somewhere we think you want to get. erskine, if i leave, whatever time he would have allowed to me, i want to hear from my colleague who came to the senate when i did, max, and i will stick around until 25 or 20 of. >> mr. bowles now has your proxy. the co-chairman will yield to senator baucus. >> thank you, congressman. everyone wants to reform the tax code. i do not know anyone who does not. it's in the eyes of the beholder.

you mentioned the $1.10 trillion in tax expenditures. i think it is important for everyone to know that only about 200 billion are itemized. the rest are other tax expenditures, which includes health insurance, retirement income provisions, earned income tax credit. so if the proposal is to repeal them all, in return for lower rates and deficit reduction, the people have to realize what that means. a lot of people have relied on those provisions, employees have. their income is not taxed. as well as their -- tax credit to make america strong and retirement provisions of people can save for the future. now the question that comes to my mind is how quickly do you recommend we tackle all that?

we have a november 23 deadline. i think what you suggested, i think it was mr. bowles, that this be delegated to another committee so that we do tax reform with some kind of a penatllty if the committees in the congress cannot act. i would like you to comment on that. i am also waiting for bowles, address revenue. when you gave your presentation, i might say we are big fans of all four of your. you worked so hard. when each of you were speaking, you could hear a pin drop. you have been so conscientious. people know that. but when you mentioned one of your four principles, one of them was a tax reform, but you did not say much about how to

raise revenue. my understanding is that the commission it suggested something in the neighborhood of -- i've forgotten what it was -- maybe $1 trillion in new revenue to be offset with spending cuts. is that true? it's my understanding that you would make permanent the middle income tax cuts but not the upper income. you in effect propose raising revenue on the current policy basis about $1 trillion. does that sound about right? >> you were on our commission, so i think you probably know exactly what we did what we did it was -- what we did was we extended the bush tax cuts for everyone except the top 2%.

and then we reformed the tax code by broadening the base and simplifying the code and by eliminating the tax expenditures in our zerio option plan. all the tax expenditures did disappear, and 92% of the money went to reduce rates come and8% went to reduce the deficit. none of it went to additional spending. >> so the answer to the question about $100 a billion for deficit reduction. >> approximately. >> how can that be enough revenue when there are such spending cuts recommended in your plan? i think you have a two to one ratio of revenue raised to spending cuts. >> i think it was even more than that, senator. depending on how you counted, we have about $1 trillion of additional revenue coming in and

we had about $3 billion worth of spending cuts. >> trillion. >> trillion. excuse me. when we were working towards that number, we were trying to get it to be no more than 1/3 revenue and 2/3 spending. >> do you recommend that we try to enact all those, cut all those tax expenditures and set rates? recommend that you delegated to the tax-writing committees and said up a framework. i do not think you can possibly rewrite the tax law between now and november 23. nor do i think you can rewrite the entitlement legislation and get it scored by november 23, but you can provide instructions to the appropriate committees. >> to raise much revenue?

>> about $1 trillion worth of revenue. >> which is included in the reform? >> yes. >> i wonder if he would deal to me for one minute? >> sure. >> could i just offer a suggestion? we felt ourselves extremely confronted by the problem of shortness of time for such a big job of reforming the tax code. some of us were here when bob chair.was the it took 2-3 years or more. what we did in our testimony and what we sent to you in a packet. section 404 of the l aaw that created you, which is a section that we think intentionally gave you an extreme amount of authority and more flexibility

than we have been talking about. that flexibility, we think permits you to set up a direction with specific things you asked the tax-writing committee to do and that they have to do it by a date certain, which would be three or four months from now. >> i appreciate that. >> it would go to the committees. it is not reconciliation. >> we want tax reform and the worst way, all of us. we are trying to figure out the best process to do it. second, i want to ask about defense spending. it is my understanding the commission recommended $800 billion in defense cuts. >> we recommended $1.70

trillion of discretionary cuts. there was about $2 trillion in discretionary authority. he proposed a $11.70 trillion in discretionary spending. we proposed to cut it to $9.70 trillion in the course of the way the budget authority plays out slower. it worked out about $1.70 trillion. that's to be split proportionally the between security and not security spending. we recommended a fire wall between security and non- security spending over a period of time. so that future congress it would not come back and loaded up all over. on the non-defense side. >> i think the commission recommended a cap on overseas contingency operations. >> yes, we did. >> isn't it true that the

appropriations committee transferred $9 billion to overseas contingent operation to escape the limitation? >> i do not know about that. >> that is going on. you would therefore suggest a cap. i think your cap is $50 million -- $50 billion? thank you. that is what i am getting at. >> may i say that what ever you do, and that will be so a proper, just do a plan. you do not have to worry about who is doing this for the time table and so on. because let me tell you why the rating agencies do not mess with germany or france or great britain. because each of those countries have a plan. all of these people are waiting for is a plan. you can decide how many teeth you want in the jar, but just do a plan.

and you will see dramatic effects around the world with the rating agency. >> i would agree with you very much. one question. concern that some have is this -- that with the election, that to upt iput it in rought terms, spiral,b e a death that insurance companies will package to the sales and policies to the most healthy people that will buy the new policies, leaving the less healthy in medicare. the more that happens, the more sicker people in medicare, then medicare costs go up, up,. up. some have raised this question. >> some have raised it, but we do not think it is true of our plan. we think we have avoided the possibility byt the rules we put

in. any plan on the exchange would have to accept anybody, and they would be compensated on a risk adjusted basis. they have more for people that are older and sicker. therefore, they have no incentive to not serve those people. >> again, i want to thank you all very much you have offered a tremendous contribution to this country. all of you. thank you. >> time for the journal has expired. the chair recognizes the jungle and from oi -- the gen tleman from ohion. . >> thank you to the four patriots that are sitting before us. try to avoid the testimony in the most predictable economic crisis our country has faced i appreciate the discussion today. we talked about a lot of the same issues that this group of

12 has been grappling with it -- revenues, of course, but also spending. i would like to focus if i could on some of the issues that we've talked about but with a different angle. if he would not mind putting up a bipartisan policy center chart, the one that senator domenici asked to be put up earlier. health care spending as a percentage of our gdp is set to double in the next 25 years. so just take my word for it. if you guys could put that chart up. erskine bowles says current benefits encourage over- utilization. he talked about some of the things that could be done, including higher co-pay, higher premiums. he talked about part a and part

b been combined. having a single deductible. he also said that in the simpson-bowles proposal that you all recommended reducing -- there is -- reducing health care spending over a 10-year period by $500 billion. i assume to senator simpson and mr. bowles that that refers to the gdp plus one, that that is what that would mean, the $500 billion, given the unsustainable growth. one is means testing. it seems to me this is one where republicans and democrats alike should be able to come together. i will give you some interesting statistics. a couple retiring today will pay $119,000 in lifetime medicare

taxes and receive $357,000 in medicare benefits, which goes to the advertisement that you talked about, al. so that is about three bucks and benefits for every dollar in taxes. if you multiply this by the 77 million retiring baby boomers, it is not hard to see what we have an unsustainable program. now, we can talk about this in terms of being sure that those at the lower end of the income scale are taken care of, but it is difficult to justify giving upper income seniors benefits that exceed what they paid into the system. can you comment on that? how'd you feel about means testing, particularly on the part b and part d premiums? >> you have to follow the nomenclature here. he never not -- you never want to use the word "mean" in

anything. you call it efficent -- affluence testing. that is what you should do. you'll have to start affluence testing some of these benefits. there is no possibility of people, and you know them in your own community, who use these systems and pay nothing. >> how about co-pays? >> co-pays have to go up. >> how many are for -- because the photographers love this. >> you as the republicans, nine bucks worth of spending and $1 worth of revenue. all of them shot up like robots. >> this works. >> bob kerrey and i talked about it. and danforth and bradley were all involved in it years ago. you have to start. it will be called on american, cruel, evil, raping a contract. i can hear the music and the violins from the back already. and it will not work anymore.

>> ok, let me go to a tougher one. >> can i chime in on that? we already do have in the part b premiums. and part d. and we are certainly in favor of increasing debt. >> first, can you talk about a little of some other ideas -- put you on the spot -- because one was raising the age. the eligibility age on medicare i am talking. >> we actually did not have that in our plan. as i have thought about it since that time, under the affordable healthcare act, we provide subsidies for people who have really chronic illnesses and for people that have limited incomes

so they can afford health care insurance in the private sector. and that did not exist before the affordable health care act. and that means that people's 65- 66-67 would still be able to get health care insurance. so as i think about it, i could support raising the eligibility age for medicare, since we have other coverage available through the affordable health care act. >> let's go to tax reform for a second, if i could. all of you are talking about broad in the basic. -- broadening the base. they could address this to simplifying the code, be able to do so by reducing marginal rates in getting rid of some of the underbrush. one thing we have not talked about is corporate reform. we of the second highest corporate tax rate among our trading partners. japan slightly higher.

and they are continuing to take theirs down. the average of all of the oecd countries is 26%. we are at 35%. yet state taxes at 6%. you are talking about 41%. we do not have a territorial system. we have a worldwide system that puts us at a disadvantage we are told by all of our companies. do you all support getting a corporate rate down to a competitive level? i would define that as 25% or 26% and territoriality? does everyone agree with that? >> almost. >> if you're pinning us odndowno a rate, we did take the rate down to 28 in our -- and actually, we didn't do territoriality. and the reason was interesting. simpson-bowles had strong representation from

multinational corporations. they spoke eloquently for territoriality. our business representation was small business. they were not enthusiastic about territoriality, so they left it up. >> we took the corporate rate to 26% and we went to a territorial system to pay for it. >> i support ours. we did not come down as far as them, but 28 is ours. the problem we have with the public on that is that it is discussed in isolation by the commentators. they say we are lowering taxes on the fat cat corporations, but when it is part of an overall plan -- >> i am talking about not lowering the planet. it would be revenue neutral. there would be no reduction in the taxation. you would get growth from that, which would add more revenue, not revenue from increasing taxes but revenue from growth and other feedback effects. >> i don't disagree.

i was just giving you an explanation i have heard. >> i appreciate it. with regard to balance, because that has come up here. the co-chair talked about balance. what is the right balance? i think, erskine, you talked about this earlier in terms of where you were headed and where you ended up. could you or senator simpson give us a sense of what you believe would be the right balance between revenues that is generated again to tax reform but new revenue, and on the one hand, on the other hand reductions in spending? what is the right balance? >> we thought it was no less than 2/3, and we work towards 3/4 coming from spending. if you look at the projections

for 2020, it had spending at 25%. revenue at 19%. we did not want to see revenue go above 21%. we wanted to see if we could drive spending down to where revenue was so we could balance the budget at some point in time. >> well, that's interesting because you are right. we are at the historical average of 18.4% on revenue. even under cbo, there is tax cuts that would continue. we would get back up to 80%. my time is expired. i want to thank you all for your help today. and the help you have given us to this point. all of you have made contributions to our efforts individually and as part of a group. we will need your help going for. >> your time has expired. the co-chair recognizes that carolina. forom south

>> let me add my voice about the panelists here today and thank them so much for their service. i want to start with a statement. i've asked that's been put up -- a chart to be put up here, looking at a bar graph that i suspect a lot of us have seen in the last weaker so, and we talked about -- week or so, we talked about when dr. elmendorf was before this committee. it shows a widening that is existing in our country today. and it covers the last 30 years. now, we have 31,043 counties in

the united states. of those 3,143 counties, 474 of them, 15% of those counties, have been more than 20% of their citizens have been living beneath the poverty level for the last 30 years. it is kind of interesting because i did not think about this through the weekend, because about several months ago, i joined with congresswoman