the u.s. postal service is likely to lose $10 billion this fiscal year. up from $8 billion last year. the senate governmental affairs committee took up a proposal wednesday to help the agency avoid bankruptcy by tapping into its overpayments to the retirement system and reducing staff. the senate bill would also keep a six-day mail delivery schedule for another two years. a similar bill was approved by the house committee met last month. this is two>> morning, and welcs markup. we do not have six required for a formal court and to begin. but i thought perhaps we would be able to expedite the proceedings if we began with opening statements on the main, although not only item on the agenda today.

it has been a real honor to serve on this committee and the homeland security i would say some of the most productive work i have had the privilege to do has happened in this committee. because i think of a couple of things. one, it has a very strong and real bipartisanship. the second, the committee has not shrunk from confronting real

problems and presenting to our colleagues in the full senate, solutions that are bipartisan and are therefore, more often than not, have gone on to be adopted by both houses. notable among the list has a look back of the past decade, after 9/11, this committee, the attacks on 9/11, this committee originated the legislation that led to the creation of the department of homeland security. we also raised the bill that was adopted and created the 9/11 commission, which did an extraordinary independent non- partisan investigation of the attack on us, and presented a comprehensive reform legislation to make sure that nothing like that would ever happen again.

then this committee adopted that legislation, which constituted, i believe, the most significant reforms in our national security apparatus since the end of the world war. a lot of other things. we of the bill on cyber security that is working its way through confronting another big challenge in the committee. i am very proud and grateful for haswork anthis committee done. i am very proud to work with senator collins as closely as productively as we have. today this committee confronts another big problem facing our committee. i am very proud of the subcommittee that oversees the postal service, senator brown, the ranking member.

that is a bipartisan solution, we believe, to the crisis that the postal service is facing today. in some sense it is not small, it is not a small problem, but it is a kind of committee version of the macro problem we are wrestling with now, which is regarding the entire federal government and the increasing debt we are accumulating that will shackle and diminish our future as a country unless we deal with it. that is being called out in the super committee. the postal service is really an extraordinary american institution. begun really at the beginning of the country in the 18th century. yet it is not our relic.

it is a great national asset. there is well over a trillion dollars of our national economy that is dependent on the u.s. postal service. the sad reality is that it has gone into what i fear will be a death spiral, unless we do something together to rescue it. this year the budget of the u.s. postal service will be $65 billion approximately. the expected losses this year will be about $10 billion. it is not going to continue operating and that way and be the postal service that this country has depended on, including the promise of universal service. $10 billion deficit. why has this happened? there are a lot of reasons.

a lot of them may be internal about the management of the organization, and the postmaster has asked for authority to make the operation more efficient. but the world has changed, and particularly with the advent of the internet and electronic mail, the volume of mail the post office has asked to carry and deliver has diminished greatly. obviously in recent years the post office has been affected by a the economic recession that we have been in, and in some sense, are still fighting our way out of. the status quo is not going to work. there for senator collins, senator krueger, senator brown and i work together very hard

across party lines without regard to party lines to see if we do not come up with a solution to this problem that would change the postal service so that it could survive the 21st century and go on and help the way to the 22nd century. i think we have a substantial proposal to make to you today that authorizes changes in the postal service, that really will cut costs by reducing the work force, by reforming some of the benefit plans of employees of the postal service, and by consolidating services that the post office offers the american people and american business. we explicitly did not do what people are asking us to do, which is to allow an increase in the price that the postal

service charges, so called exigent increase. there were some that were urging that we've legislatively override the commission's denial of the post office request for an increase of that kind. basically our judgment was that if you at -- and the last thing you want to do with the business in trouble is to raise prices, because you will end up having bus business than you had before. so we did think this proposal we have made will enable the postal service to save billions of dollars. by one estimate equitable return critical estimate i have seen without any change it will be spending $85 billion per year. if this bill is enacted and the

powers which could the postmaster to work cooperative way with his employers and others, this estimate says the postal service will spend 65 billion per year, which obviously is a $20 billion saving, and i think enough to allow it to go on into the future. i know there are parts of the proposal that are controversial, frankly from both perspectives. we think we are presenting a bipartisan solution that can be presented and passed through the congress. it is not perfect. there are a lot of amendments that can help to make it better, some of which we think will not. we will oppose them.

we look forward to a good debate. if possible, i would like to consider the proposal today. i know your staff has asked to see if we can reconvene at 2:30 pyridin. we will go back and forth from democrat to republican and back with amendments in the order of seniority until we are finished. with that, it is my pleasure to call on senator collins. >> let me begin by thanking all of our members. every single member of the committee has expressed an interest in the postal service's financial crisis. many of you have put together

suggestions, offered amendments, and i think it is a tribute to this committee that all of our members have been so engaged on this very important issue, but i do want to salute the leadership of senator lieberman, and senator brown who have worked very hard, the four of us have spent countless hours and coming up with a bipartisan agreement that will put the postal service back on sound financial footing. this bipartisan bill gives the postal service the authority it needs to restructure, modernize, survive, and ride, and i want to point out, and -- an unassailable fact, and that is the postal service literally

will not survive without fundamental legislative reforms. the postmaster general has been very clear on this. he has told us a year from now the postal service will be unable to meet its payroll. in fiscal year 2009, the losses were 2.8 billion. in fiscal year 2008, at 2.8 billion. as you can see, we are going in the wrong direction, and if nothing changes, the protective losses for this fiscal year are $10 billion -- projected losses

for this fiscal year are $10 billion. that means this would result in the postal service being unable to meet its payroll. jobs are at stake. i think many people when they think of the postal service think of their local post office. they have great affection towards their local post office. if they are in business, they may be aware of the postal processing facility, but the fact is the postal service is the linchpin of the 1.1 trillion dollar mailing in male- related industry that employs approximately 8.7 million americans. the list goes on and on. in our bill we are asking -- no,

we are directing the postal service to make painful choices to reduce its cost, and not simply/services and raise prices, which would only add to the death spiral. at the solution to the financial crisis is not easy -- the solution to the financial crisis is not easy, but it must involve tackling significant expenses in ways that do not drive away customers and further depress volume. the postal service mission is to provide the american public with affordable universal service, but as operating costs have increased in volume and revenue have plummeted, we need to allow the postal service more flexibility in give it more tools to remain solvent. no one, least of all the

sponsors of this bill, none of us is happy with every provision in this bill. it is a compromise, and that is the nature of a compromise, but nevertheless, it is not a voice of difficult issues. it tackles the very tough issues in a responsible way. let me just comment on some of those issues. 80% of the postal service's cost our work force-related. that means you cannot solve the postal service's problems without giving the tools that are necessary to confront some of the work force problems. those are difficult ones, because all of us have the deepest of respect for our

postal employees, but the fact is, the work force is too large for the volume that remains. our plan gives the postal service -- the postmaster general, the authority to offer a compassionate early retirement incentive to encourage tens of thousands of eligible employees to retire. the postmaster general estimate is that 100,000 workers would take advantage of this program. it would be financed in part by eight returns of a $7 billion over payment made by the postal service to one of the federal retirement programs. this is a refund that everyone who has looked at this issue agrees is warranted.

we had gao do the final call on this, and they have substantiated there is in fact an overpayment to the first program. we have not included a provision that was than earlier drafts to refund up $55 billion from the csrs retirement program, because gao determined that was not in fact an overpayment. there is lots of disagreement on that, but we dropped out. we're only refunded the $7 billion overpayment that all parties from the independent actuaries, administration, inspector general have been verified as being a true overpayment. this buyout program will help to right size the work force, which again is striding 80% of the

postal service cost. the bill also includes -- overdue reforms to the federal workers' compensation programs. these reforms will save hundreds of millions of dollars, and help put more individuals back on the path to work. unfortunately the corte program has become an alternative retirement program for too many workers. the postal service, which is responsible for 60% of the claims in the federal employee'' compensation program, now has 2000 employees aged 70 and older receiving workmen's comp. two of them are now age 99. those individuals are never coming back to work.

and it does not make sense for them to be on a worker's compensation program, which is intended to be a safety net program temporarily for workers who were injured and then returning to work. that is why the obama administration has proposed sweeping changes in the workmen's compensation program. and our bill reflect the changes advocated by the obama administration, gao in numerous reports by the ig of the department of labor, which administers the program. on other issues we have included a two-year prohibition on moving to a five-day delivery. our belief that it is important for the postal service to

squeeze out all of the costs in thisystem before to windoing dramatic reduction from six-day to five-day delivery. this reduction can come about only if gao certify as the savings have been made and of ratifies the savings and they're still not adequate to return the postal service to solvency. i think this is so important. one company told me 18% of workers receive their prescription drugs in the mail on saturday. there are news subscriptions that rely on the delivery for saturday. if they lose the business, it will turn to alternative forms of delivery, costing them

further declines in the volume. again, we are taking a realistic way you -- you. we're saying if the cost reductions are not sufficient, than the postal service would reduce the number of days of delivery. -- again, we're taking a realistic view. this should be the last resort, not the first option. i have -- i am sure all of you have heard from constituents of are very upset about a closure of a post office in their community. we will have more discussion on that later. i know when number of constituents have been working -- members have been working hard on amendment in that area. there are many other provisions in this bill. it is a comprehensive approach,

and i believe it will accomplish the goal of putting the postal service back on a sound financial footing. again, the changes are going to be painful. the decisions are difficult, and i thank my colleagues for bringing us to this point. >> with the committee's permission come up the rest of

we have to find ways to grow the economy. the postal service has to find ways to grow their business. examples is partnering with ups, fed ex to deliver for them for packages that are delivered around the country. and this legislation will allow the postal service to do what ups and fedex to, deliver wine

and beer. we of law that to collect local services for state and government. there are a lot of ideas that the postal service needs to consider. there are close to the postal strategy and delivery system. when we do those things, we cannot just get in the way. there is an ad campaign for home depot that says you can do it, we can help. the last thing i want to say is we have tried on working with this legislation with our staff, and all of you have tried to abide by the golden rule. how would we want to be treated if we were the customer? how would we want to be treated as residential customers. how would we want to be treated if we work with the postal system. can this bill be approved? sure, it can.

as we move through the market, the idea is to make sure at the end of the day and ended the year we have not kick the can down the road, we have given the tools to fix the problem, solve a problem and restore the confidence that the american people have in our ability to govern. >> thank you. censenator brown added the use to this. i think you for being part of this. >> i will be brief, but failure is not an option. i wanted to make sure we can make the post office viable and give them the respect they deserve and come up with opportunities not only to retire and reduce the work force, but continued to be employed. if we do nothing, it is going to

close and a very short amount of time. all the ancillary jobs that go along with it, i went in with an open mind. i am new to the issue, and like senator crupper and collins, and now you. that being said, i was impressed by the compromise, give-and- take. senator carper came in really hard on one issue, and susan gave a little bit and vice versa. yet that was important thought was appropriate. i am looking forward to the amendment. >> i would like to offer a substitute for consideration at this time and use it as the base text as we debate the bill today. this is offered on behalf of the fpiour of us. i believe it has been distributed to the members and

staff. by way of announcement, the deputy postmaster general is good enough to be here. we asked him to be here specifically so that at some point there may be fact questions that come up that he will be able to answer that perhaps even our extraordinarily smart and hard-working staff might not here yet i want everyone to know if you have questions as this goes on. as i indicated earlier, we will go side to side, beginning on the basis of seniority. if you have more than one amendment, you can pick which one you want to bring up first. we will begin with senator levin. there you go. every now and then i think you are rookie -- >> [inaudible] >> senator brown.

all in favor -- that is adopted. senator levin, do you want to begin? >> i would like to begin with an amendment. i think it is amendment no. 3 that has to do with the transparency of contracts between the postal service and people with whom they deal. the right number is 3? >> that is correct. >> i am very much supportive of the provisions, and let me extend my thanks to all of you who brought this to where we

are. one of the provisions in the bill has to do with transparency to make sure we know what the postal service is doing. i was interested in what their contracts were with the folks they deliver mail for, and that they transport mail for. that is fedex, ups, and i thought i would take a look at the contracts, and i was told i cannot look of the contracts. only one person in contrast -- congress is allowed to look at the contracts. if they are redacted and it reads the only person who can get it is the chairman of the house subcommittee with

oversight responsibility. >> there is a story here. we do not know which. >> that is what i want to find out. i have never seen a provision like this. it is offensive to the senate and congressional oversight and the taxpayers of the united states. i just want to see what the deal is. in many places as i understand it, we deliver the last mile for them just fine. i am all in favor of that, provided it is a fair deal. responsibility, and a transport most of the mail that goes by air now. it is not by the traditional airline, which is what i assumed from boyhood is still being done, but it is being done by fedex and ups, and that is fine. it is probably a very, i just

want to see the contract. what i did was have notified folks that i was born to issue a subpoena, and i checked with my wonderful ranking senator to know -- to let him know we're going to issue a subpoena to get a hold of the contract. at that point i was told ok, you can see the contract. >> with this amendment does is to provide that. to go second by senator brown. further discussion. senator levin is a very persistent, hard-working member of the senate. he follows matters down trails that sometimes lead to surprising places, and this one did. [laughter]

is there further discussion? i think you for pursuing this to come to a place where we can change this amendment. all in favor of the 11th amendment, salevin amendment, s. ayes have it. >> i would like to say a couple of comments, and then defer my amendment. you all have worked really hard on this, and there is some good things in it, but i remember five years ago. and i remember what we said then. this fixes it. that is what we said. we were going to fix it. the one thing we did not do in

that bill was give the post office the flexibility to run as a business. we're making the same mistake again. we're telling them what they can and cannot do. there is a lot of positives in this bill. hopefully it will get better as we move through the amendment process, but i will predict to you the bill as it is written now will not get the post office. we will be back fixing this again. we do not have the luxury of not fixing it this time. i have co-sponsored senator mccain's bill, not because of this the best solution, but i think it is a better one than what has been negotiated. i wanted to say i do not lack of appreciation for what you come up with as a compromise, but if you want to get the post office out of business community to let them know what they have to do. what they have to do is go to five days of delivery quickly.

the postmaster general and president say that. the other thing you have to recognize is people will adjust to five-day delivery. there will not be medicines they will miss that will come in on saturday, because they will come in on friday. all of that will adjust. the question is, do we want to wait five years and allow them to continue losing money until we finally get to the point where we say you can run this as a business that me teets this as the products and services you have, to recognize and compensate and keep the commitment they have to all the people. this is a slow death. we have an opportunity to really fix things and give them the power to do what they need to do, and i think we're not going far enough, and that is my were read. i know my view is a minority,

and i understand that, but i will predict to you, i will probably not be here when we're doing it again, but you will be doing it again. the real thing is we ought to fix it. that means there is a lot of unpleasantness for us to not allow the post office to close the facilities that they and their management capability think they need to close. no matter where they are in no matter how much he we take as a matter of thatbecause of that. we are saying we would not rather have the political heat and then fail. there are two real components. one is to have to go up to five- day delivery and do it quickly. to, give them the capability to control costs. -- two, give them the capability to control costs.

with that, i defer to senator mccain for his first amendment. >> i just want to very quickly respond to one. that my friend and colleague made. since he was critical of the 2006 act. in 2005, the gao put the postal service on the high-risk list. as a result of the bill that became law that we offered in 2006, the gao took the postal service off of the high-risk list, and indeed, if you look at the revenue figures in the years immediately following, the postal service did do better as a result of the reforms, and for the first time we started

tackling the huge unfunded liabilities of the postal service, which cut never been tackled before are we back in a worsening situation now? absolutely. there are a lot of reasons for that, but the fact is that gao thought our loss was sufficient to remove the postal service from the high-risk list. put it back on -- >> my point was not to be critical, but it did not fix the problem because we did not go far enough, and you were doing exactly the same thing again. if you want the postal service to survive, give them the ability to make the decisions they need to make to survive. one of them is to let them go to a five-day delivery, and let them have the flexibility to open and close facilities that they know me to be opened or

closed. -- that they no need to be opened or closed. if we want them to be a business and compete in the market, give them the tools to do that in the management authority to make the changes they need to do. that does not mean they do not have to have a great relationship with their labor contracts. it does not mean they can skim on -- but what we're doing is not giving them the ability to make critical decisions to survive. >> i cannot resist to say two things. one is, i think the postal reform of 2006 was actually a substantial accomplishment, but something else happened, which is that email took off, and the postal service has seen the volume of mail drop 22% in the past three years.

most of that is the movement of all sorts of activity to e-mail. some of it is the result of the valued economy. i think the postal reform would have achieved more if it was not for the change in environment. also, i think we're giving the postmaster a lot more authority in this building than the earlier reform act, and i think he will use it. senator mccain, you have an amendment. >> i have to say to senator lieberman, there was a lot of us in 2006 that predicted e-mail and other means of communications would be dramatically on the rise. it did not surprise some of us, and that really brings up the whole problem here. the problem is that we're seeing an industry that was incredibly important for americans to be able to communicate with one another for

a couple of centuries that now is being overtaken by technology, the same way the horse and buggy business was taken over by the automobile. the same way the bridal business went out of business, because we're seeing technology in means of communications that now no longer require us to use the postal service. the only way the postal service is going to survive is to adjust to the times and be able to make the decisions that every other industry in america had to make as we go to this new technology information technology that has changed in america. that has given rise to new industries such as google, facebook, and all of the other things. it has brought us to the major factors in the arab spring.

to somehow placed into law prohibitions for this industry to make the necessary moves in order to survive and even thrive because there is certainly a role for the postal service and the 21st century, but not old role. when you say they cannot go to five days a week, when you say they cannot close facilities that absolutely need closing, what you were doing is preventing them to keep up with the 21st century. and i appreciate the 2006 reforms that were made, but the predictions at the time, and i will be glad to get you the congressional record, were that we would never have to address this issue again. well, here we are pyridi. i am trying to help the postal service. i am try to help them make the decisions that every major industry in america is making today -- today to adjust to the

new information age. when you put in the law but they cannot make those decisions, is there anybody that believes the would not save money by going to a five-day work week? can't they decide whether they think that is best for the future of the postal service, or do we in our wisdom dictate to them you have to keep delivering mail on saturday? well, it is $3 billion. what is $3 billion? probably not much in the way we do business today, but to most americans it is a fairly sizable sum, and they believe the savings of $3 billion would be important in giving the postal service back on its feet. only thing, by the way, at the congressional mandate in 1984 is the only thing that has prevented the postal service from moving to 5-failday mail delivery and provide universal service. the postal service, as i say,

has to be able to adopt to changing times. to make my point, the average household 10 years ago received a five pieces of mail per day. it now gets four pieces per day, and by 2020 they will get three pieces of mail per day. total mail volume is down from 46 billion pieces since the peak in 2000. in 2006 first-clear -- first- class class will be 50% off the peak in 2020. mail volume is declining because of the permanent shift to e commerce. but the postal service recognize that and make the necessary adjustments. -- let the postal service recognize that and make the necessary adjustments. that is what the president of the united states wants to do. as usual, i am on the side of

the president of the united states. [laughter] u.s. ps estimates it will save $3 billion every year. so at the gao, an organization that we use with an incredibly regularity in frequency and has more credibility than any other organization in washington today says on march 2011 report, moving to five-day mail delivery would improve it u.s. pp.s. printed a condition by better align the delivery of -- options would better the plant operations. the postal service plan has a number of steps designed to deliver service to the extent possible. key post offices open on saturday. deliver mail on saturday and

deliver express mail seven days per week. i go to town hall meetings all the time, and not one town hall meeting have i been at where the top priority has been to keep saturday mail delivery. it has been about the fact that we continue to tax and spend and borrow, and we are on the hook. the tax payers are on the hook for the postal service, as we all know, in a variety of ways. i hope my colleagues would vote to at least give the postal service the flexibility to do what is necessary to get back on the path of fiscal stability. in very difficult circumstances in a rapid changing technology. i just got one of these new

phones. call cindy. >> i know cindy, and i think she would like to get a note from you. a handwritten note. [laughter] >> good saved. -- save. thank youu, pal. could i ask for consideration of amendment no. 5, which is five- day mail delivery. >> yes, indeed. let me respond briefly. just to clarify, this would authorize -- >> is it possible for me to speak out of order? we're doing it marked up on the transportation bill and about to go to a vote. to g>> i want to go back and red my friends what i said earlier.

like auto industry, 20 employees in 20 plants, they were in a very similar situation. what they need to do is right- sized enterprise. there are various ways to do that. while we share the goals, the way we get there is different. i understand from the legislation it would allow for labor contracts. it is thought something we want to do but need to do. it also sets up a process for closing post offices. we have been strong supporters of the years in the house and senate, but we do not need a brat-like structure to figure out how to close post offices. -- brack-like structure to figure out how to close post offices. we do not need that process to

allow the postal service to say they do not need to pay 506-60 for a post office master. that is what the congressman's legislation would do. here is what we need to do. we need to come up with savings, roughly 20 billion per year. that is what we need to do. under our legislation it says if we have not gone there, you can go from six-day to five-day service. i think that is a pretty smart approach. as i said earlier, a kids labor and management opportunity to see if they can do with the uaw and auto industry did, which is to negotiate a different wage and benefit structure to maintain the business and start to grow it.

with all due respect, i appreciate the arguments that my colleagues have made. i think when you see what we've done in the legislation, it is a huge thing, but i think when you get your head around it and understand better the kind of flexibility but we do in terms of letting the postal service do what they need to do, you will feel better about what is before us. >> thank you. come back soon. just very briefly, i will oppose senator mccain's amendment, no. 5. i reached a conclusion personally before we began the negotiations that we should go to the five-day delivery right away. i was convinced by my colleagues that there are disadvantages that 5 day delivery, and therefore it the better part of wisdom. the way i read the provision in the bill is we are going to five-day delivery after two

years. unless the postal service can reach the level of savings without it that is their goal. i am partisan way doubtful that it can do that without going to a five-day delivery. to me, this is easing into something we're probably going to do something in the end, and i think it is a reasonable compromise. is there further discussion on this one? >> let me just say, is there any argument we could save 3 billion per year? is there in the argument that the president of the united states believes that is the right way to go? is there any argument that the postal service believes that is the right way to go? so let's kick the can down the road for a couple of years. >> there is some fact about the cost. the postal regulatory commission did an in-depth review of this issue and challenged the postal

service's $3 billion estimate. they found the savings were much less than the postal service had anticipated, and they also found doing away with six-day delivery would have a disproportionate impact on rural americans who do not have access to broadband services. so in fact there is a counter analysis from the regulator, postal regulatory commission. they also warned it would cause a decrease in volume for the postal service as advertisers, newspapers, and other companies sought other means of delivering their notices on saturday. to go further debate, senator johnston. >> -- -- >> further debate, senr

johnson. >> i think the principles that are guiding my boat throughout the process is to recognize that fact, and what we need is we need to make sure we have excellent management of the post office. people that know how to compete with the private sector, and we need to give those managers ultimate flexibility. if we try to micromanage from congress, i do not think that will work. as i read the amendment, it says it allows the postal service to choose. i think that is exactly the kind of flexibility we need to give those managers, in recognizing the fact that we're down from over 200 billion pieces of mail per year down to 167. we forced them to design a service that could handle 300 billion pieces of mail. we have to give them the flexibility to right size their

organization so they can compete with the private sector, and all i see here does not demand they do it. i realize that is their intention, but we should give them flexibility that would allow them to compete. >> mr. chairman, thank you. i have a question. this is a broad question. maybe this evolves throughout the discussion today, but i do not have a clear understanding of the role of the postal service. the arguments that senator johnson and colbern make up heappeal to me in the private sector. if i was talking about general motors and ford, it is my -- not my role to make a decision about the management or ability to compete, with their five days of the production line is better than five days. that is where the private sector decides, and government not be involved. the question to me is conveyed

to me as a new member of this committee was never dealt with postal issues, is there something different about the postal service? is this not a function of the government to deliver the mail? is this not some role for congress to play in determining what the basic standards of the service should be, or is this just a private-sector issue that we turn it over to the postal service and let them decide? . .

>> maybe somebody wants to change this but we have given this by law and derived from the constitution a very unique responsibility which is universal service. that is a big responsibility. it has been deemed over our history to be very important. we will deliver the mail to you, the postal service will deliver the mail to you anywhere you are in the country whether or not it is profitable or it makes sense. if you have a certain sense of all uncertainty about it, it is justified because it is certainly not a private

corporation. does not totally a public function but it is more public and private. like the rest of our government now, we are trying to get it back into fiscal balance because otherwise it will go under. >> thank you for that conversation. so, we allow them to go to five- day delivery and they go -- and that does not work and ago to three-day delivery -- is there a basic standard by which we expect the postal service to provide mail service to the american people or is it simply whatever the market will bear? i am trying to figure out what that role is for the congress? >> i think we all are. for myself, i think it is an important principle that the postal service will provide mail to anyone in this country wherever they live. we are trying to do it in the most cost-effective way we possibly can. >> if i can respond to this senator's query.

-- >> the reason why the post office is in difficulty today is because of competition from the private sector. that is why they are experiencing these massive deficits. they want to continue to be able to serve. they know there has to be savings and efficiencies and acted because of the over whelming deficits that they are running. by the way, less and less real mail is being too liberal and more and more junk mail is being delivered. more and more people are using these devices rather than sitting down and writing a letter.

the postal service itself has said that they can be more efficient, they can get on a path toward less and less cost to the taxpayers of america is a good way five-day delivery. sure there are people who believe it is the obligation of the united states government to bail out the horse and buggy industry when the automobile was invented. we are in a period of changing technology. if you believe the federal government's responsibility is to stick with methods of communication and information for the postal service -- rather than adjust to the new information age, that is fine. i don't believe that. i don't think the taxpayer should be on the hook for $1.7 billion and $3.7 billion annually because we will stick with six-day postal delivery.

it is a question of what you believe the role of government is in our society. if you think it is to maintain six-day delivery no matter what, no matter whether the continued decline in milk river goes on or whether it is necessary or not in the view of the postal service and most observers, fine. that is how you will both. >> we are at the fundamentals here and it is an important discussion but i want to urge my colleagues -- we have about 40 amendment so i would like to move through this one. would you like a roll call votes to? the clerk will call the roll. . >> senator levin, senator carper, senator pryor, senator landrieu, senator mccaskill,

senator tester, senator collins, senator coburn, senator brown, senator mccain, senator johnson, center portman, senator paul, senator moran, senator lieberman, mr. chairman, on the both of those present, the yeas and5 and the nays are 12 the amendment are not -- is not agreed to. >> thank you very much. i want to offer amendments number 1 -- to strike title 3

involving government-wide government worker compensation. pica reform. let me tell you why i am offering this. fica reform should not be done in postal reform. most employees affected by this are not postal employees. the savings expected from these changes would have very little effect on the postal service deficit. fica has not been reformed in close to 40 years. we need to take a closer look at comprehensive reforms to make sure we get it right and we could include adequate measures to reduce waste. there are complex issues related to the abrupt -- appropriate benefit level that deserve more

analysis before we cut benefits. at a hearing i held in july, a witness raised several -- concerns about reducing benefits f reducingica benefits especially at retirement age for a disabled employees may not be able to save for a reduction because they miss out on wage growth, social security, and that the thrift savings plan at the request of a bipartisan group of members on the house education and work force committee, which has jurisdiction, fica in the house, gao is reviewing pre and post-retirement age benefits to determine fair benefit an ounce. gao is also working on two requests from senator collins including a review of best practices in state workers'

compensation programs which could inform changes to the federal program. if we act prematurely, we may set benefit levels too low, seriously harming disabled employees or even to high. we must be extremely cautious not to make arbitrary cuts to benefits that could harm employees disabled by injuries sustaining service to their country. this is important in discussing cuts for elderly disabled employees. if we pass this section as part of postal reform, it also will create jurisdictional problems in the house where oversight and government reform is the jurisdiction of the postal service while education work force was jurisdiction over the

fica program. it also benefit from the input of house education and work force committee staff who have been focusing on this issue. these are reasons why i am asking we strike it. mr. chairman, i offer the amendment number 1. >> thanks, senator a caucus. we worked hard on this -- senator akaka. the administration through the department of labor thought the proposal we made was moving in so much the right direction to remove unnecessary costs without compromising reasonable expectations of employees for workmen's compensation. this particular provision of this legislation relates to all

federal employees, not just to employees of the postal service. this is numerically justified. this is one of the ways in which the postal service, though it is cause i-independent, nonetheless is interconnected to the postal service because we are part of -- the postal service is part of the federal workers' compensation program -- it happens to be the largest participant in the federal government workers' compensation program responsible for about 40% of the caseload. as i know senator collins will note for the record, we feel that the program needs tightening. it is more generous than we can afford. i think we have done it in a way that does not fall below the

standard of most workers compensation programs in america including most states. it still will save some money. centre collins, thank you for your leadership on this one. >> thank you, mr. chairman. i want to point out that the reason this is a government-wide reform is that the direct request of the obama administration -- the postal service makes up the largest number of workers' compensation claims in the system but it is a government-wide system. the obama administration argued that they did not want to treat postal workers differently from other federal employees. that is the rationale for why it applies across the board. we have needed workers compensation reform for many

years and the federal system. that has been documented by countless ig reports. there is day gao investigation going on right now. the department told ig has said that each time you take a fraudulent case off the rolls, it saves between $300,000.500000 dollars. the reforms we are making our fair and modest reforms. i mentioned the number of people who are over age 70 that are in the system including two that are 99 years old. that creates real inequities between postal and other federal workers who worked their whole lives and then retire and get a lesser benefit than someone who stays on workers' compensation

past retirement and is able to get a higher benefit that is tax-free. that is why the vast majority of states do not allow this. i would note to my colleague and friend from hawaii that the percentage of 66 2/3 that we are proposing in bill lot is identical -- in deval, is identical to the benefit in hawaii. and in 39 other states. these are not draconian changes. nine of the substantive changes are identical to what was proposed by the obama administration. since i know there was a letter that was circulated this morning as an example of a person whom senator akaka was concerned

about that would be treated unfairly, under the provisions of our bill, the prison guard case that you circulated, this person would be grandfathered and would seek no reduction to benefits whatsoever. we have worked very hard to come up with a fair approach. this involves substantial money. the postal service which strongly supports these changes pays out more than $1 billion each year for workers' compensation claims. we need better programs to rehabilitate people and to get them back to work those provisions are included in this bill as well. that should be our goal, to help people be out for the shortest possible time and to help them get the recovery and rehabilitation that they need so

that they can return to work. that is what our bill does. i think it is important that we enact it. i oppose the amendment. >> thank you. is there further debate? a question from senator levin. >> what would the say -- what with the savings be on $1 billion per year? >> the estimate would be in the 100 of thousands of dollars. across the board. i'm sorry, hundreds of millions. no wonder you look shocked. one of the reasons for that is the finding in 2002 by the dod ig, that each person you can return, the long-term savings are between $300,000 and $500,000.

>> who is grandfathered? >> we would grandfather totally people who are currently on the rolls who are totally disabled and have what is called a permanent total disability. so there would be no change. >> if your staff knows, what percentage of people currently on the rolls fit to that grandfather? >> about 1/4 of the people on the rolls. i'll also want you to know that president obama's proposal, much of which we have inc., the omb estimate is that it saves $500 million over 10 years. >> that is $1 billion each year said that would be about $50 million per year so maybe about 5% reduction in costs, does that

sound right? you said $500 million over 10 years. >> that was the obama administration's estimate across the board savings. >> we believe that this proposal will save more than that although it has not been financially estimated yet. in that regard, we are giving something to the super committee as it works to try to strike a balance. >> keep in mind that the postal employees are disproportionately represented in that poll. that is why there are more savings that will accrue to the postal service. >> further debate? hearing none, would you like to respond? >> on the case of reductions at a retirement age, i find that 38

states do not have any reduction at retirement age. there are complex issues related to the appropriate benefit levels that should be analyzed before we act. while there was discussion on workers' compensation during the debate on postal reform in 2006, since that time, this committee has not considered a single bill on workmen's compensation reform nor have there been any hearings on workers' n. an ogm hearingog was held this july were i was the only member who participated. there are different -- there are three different gao reports

pending that would inform changes through fica. there was one requested by senator collins and another request by a bipartisan group of congressmen from the work force committee which has jurisdiction over fica in the house. they are looking at a benefit levels that this bill would address. i am eager, mr. chairman, to work with you and with the committee to work on reform but we cannot hold the survival of the postal service hostage on workers' compensation changes. if we act prematurely, and we said benefit levels either too low, harming disabled employees,

or too high and i feel strongly that we must be extremely cautious not to make arbitrary cuts to benefits that could harm employees or the disabled due to injuries sustained in the service to their country and the reason why, mr. chairman, that i offer this amendment. >> thank you. centre collins? >> three quick points -- the inspector general of the department of labor has reviewed this program every single year since 2002. and has said that these reforms, reforming the system, is needed. second, the reason that states don't have a retirement problem for what to do when the person reaches retirement age is the

vast majority of states limit the number of weeks that you can receive workers' compensation. it is very rare for someone to reach retirement age. there is a weekly limit which we do not have and the federal system and are not propose a. finally, the treatment for people over retirement age, for new people coming onto the system when they reach retirement age in this bill, is identical to the proposal of president obama. this is not just a republican idea. it is the president's proposal. >> mr. obama is getting a lot of bipartisan support this morning. it is really very heartening. [laughter] >> let me add that the department of labor has admitted

that the changes to benefit amounts in their proposal are somewhat arbitrary. round numbers based on rough calculations are hardly the basis to determine what elderly disabled people have to live on in the rest of their lives. as i have mentioned, gao has a bipartisan request pending to determine fair benefit amount. this request was made in response to the administration's proposal because it is not clear that their proposal contains responsible changes to benefits. we simply do not have the information we need to decide on fair benefit levels. that is why i think what we are doing is premature and i offer this amendment, mr. chairman.

>> would you like a roll call vote? >> yes. >> the clerk will call the roll on amendment number 1. senator levin, senator akaka, senator carper, senator pryor, senator landrieu, senator er, skill, senator tests, senator:, senator coburn, senator brown, senator mccain, senator johnston, senator gore, senator paul, centre moran, senator lieberman.

mr. chairman, on the both of those press t comehe yeas are 5 and the nays are 8. on this of those ,the yeas are 5 and the nays are 11 and the amendment is not agreed to. of those here, let me indicate that next we will go to senator johnson and then senator mccaskill, then senator paul, that senatetester, all of whom have amendments pending. >> thank you, mr. chairman. i would like to offer johnson amendment number 1. like my colleague from kansas, i am new to this process. as i studied the issue, there is an eye-popping chart the that

the gao studied laying out the postal service. when you total up to 2020, it ends up being a lot of money. if we experience those kind of deficits, the taxpayers will be on the hook for this. that governs my votes in this process. my amendment recognizes the concern about the $6.9 billion, what is referred to as an overpayment. i think the overpayment is primarily the result of a read- calculation based on actuarial assumptions. when you look at an overpayment to a pension fund, i like the fact that there is a cushion especially when you look at a going concern like the u.s. postal service that does not look like a going concern. you want to make sure that those retirement systems are properly

funded and have a little bit of surplus, a $6.9 billion, that is not a bad thing. i hate to see that we are trying to spend that surplus. my amendment would remove such 102 which allows the postal service to offer up to one year of credited service for individuals and the civil service retirement system and up to two years for individuals in the federal employees retirement system as an incentive to encourage retirement. i understand the rationale to use retirement as a way to reduce the work force but we are spending a retirement surplus which would be a great offer. i think we passed out a sheet grill we went to the office of personnel management to see what kind of payouts would be in this essential result and the ranges eye-popping. it could be as low as a $6,000 benefit or as high as a $280,000 benefit.

think in a time when we're running $1.30 trillion per year debses and the post of is looking at potential 10-year deficit that we should offer something that is unprecedented. the office of personnel management has said this is an unprecedented pay out to individuals and it could unfortunately act as an incentive in the future areas where we can handle this the same way. i think it would be a bad precedent and that's what i offer my amendment. >> thank you senator johnson. i appreciate the amendment. one of the major responsibilities at that the postal service has is to reduce the level of as we've said

before, 80% of the costs are personnel. that is much higher than fedex or ups. this is a different kind of institution and has a requirement of universal service. it needs more personnel. in fact, the network has to deliver to the so-called last mile is one of its greatest assets. it is so great that fedex and ups uses the service of the post office for the delivery of that last mile. considering all that, we think the postmaster feel strongly about this and the unions have cooperated with some significant reduction. we need more. there have been some suggestions that we should legislate to override existing contracts,

collective bargaining agreements, to allow involuntary departures from the postal service. we thought that was not a fair thing to do. we are working with the postmaster general to create a system of incentives, basically a bonus to retire of not more than $25,000 and at the request of the postmaster, i believe, to add enough flexibility of service credits to reach what he hopes will be 100,000 employees who are eligible for retirement who will retire as a result of this practice. the savings will be quite enormous. as you say, the overpayment should not be spent. this program to cut the postal

service an additional 100,000 employees will probably consume about 1/3, maybe less, of the money of the refund for the pension system. there were a still be2/3 of that in there. we decided the better part of wisdom and most cost-effective over the long run was to accept a situation that would give the postmaster the option of offering service credits to encourage people to retire. the savings will be much greater, much, much greater than what they cost. i appreciate your points. they are thoughtful. respectfully, i will not vote for the amendment. >> as the chairman and the other negotiators know, this was an issue of concern to me when it

was first brought to us by the postal service. it was a far more generous proposal that was originally proposed to us. that's why we kept it at one year. and two years at the first program. keep in mind that the post office -- postmaster general will determine what is offered within the confines of a set amount of money. the postmaster general has told us that he believes it will be approximately $1.70 billion that would be used for the buyout program to reduce the total work force by almost 20%. he is talking about 110,000

employees. i felt giving him this limited flexibility makes sense. we've got essentially a cap on the program as a whole. crs ran the numbers and had a different result that you have come up with. i know you take a worst-case scenario but one that could happen. i hope we -- before we go to the floor that we can try to reconcile why crs comes up with a difference thanopm does. the postmaster general told us his goal is to have the service credit in most cases not exceed the values that you would get

from giving a monetary payout which is capped at $25,000 but he believes it would be less in most cases. >> is that something we can work towards? the $25,000 is the total pay off? i think you are referring to the cash payout verses the service pay at which can be much higher, right? >> let me just jump in. are you saying that the bonus payments a lucrative service, neither of those should be on the table? you have to decide whether -- employees have to decide whether they get the cash payment or the service payment. it is clear that you cannot take both. the value of either one cannot exceed $25,000. >> that is not the information i

have. we will research that. >> i think we should continue to work on this as we go to the floor. there right, we limited service credit to one year of credit. and two years if you were under thefds system. there was a general understanding that this was an either/or a net financial effect would be the same. we would be limited within the $25,000. if not, we should be open about that. we should make a judgment that it is worth it or it is not.

i leave it to you whether you want to go forward with a bow. >> if you are willing to work with me, that is fine. >> sure. if for some reason we don't reach an agreement, you are free to introduce your amendment to the floor. senator bagitsch. >> i have two amendments and i will determine if i'm going to offer them based on some comments. i don't know who can answer this. the microphone is on.

how's that? on amendment two which is issue of comparable compensation, i guess i won a little discussion from whomever on how women are shared deals with some of the wage issues, and i want to look a compensation, who are they comparing to. the issue for me and i can only speak as a former mayor of negotiating contracts and someone on the other side for 9.5 years who wrote the labor law. i have been on both sides. this is what can happen with a large organization like this. administrators take steadies' that are developed on a massive scale which have a small amount of small businesses which they tried to compare it to something

of this magnitude which is problematic for the state industries of non-like industries and compare them. what is the thought process behind of how they can provide for compensation? when i was in management, we made sure we prepared -- we compared lie to like./ we did not include small businesses. i don't know what's yet to that. -- i don't know who wants to answer that. did i make a ♪ i point? >> no0/ [laughter] >> with respect to comparability of pay, you may have an

arbitrator, up from labor and management, and they may say that with -- we think the pace should be adequate to pay for a fire, police, first responders, maybe for pope to the construction industry. folks on the management side can agree that maybe we think should be more on the retail side. there may be an argument as to whether workers comparable. at the end of the day, the arbitrated sides, i presume there will be some kind of case history there may be something else in a case history which

builds up over time. i am told it works. i want to build the record here. i would like to go to number one. i won't offer number two because i want to make sure we are clear that the process you laid out and how will develop or time. we had to be very careful when you're in the process that management does not pick. this is my struggle with this one -- it is very broad the way it is written in the current bill.

let me read you something and maybe will get a response from both in the municipal law that we drafted -- you can do prescriptive and list all the things that an arbitrator or fact finders o of look atr you live abroad and hope the recognizes other things. this is how we did it in the city and have long term success. the fact finder shall have the power to determine all relevant facts but not limited to work load activity, economic feasibility, cost of living, the party as bargaining history and relevant market comparisons to the private sector and the impact on personal and workplace morale. to the drafters of this, do you see that as a piece of how you see this broader discussion of how an arbitrator reviews the items that are part of the process of determining the outcome of wages and benefits?

>> let me ask you what you were reading from. >> what i read was what we did in our labor law. the big debate is always what is included in was not included. we want to be somewhat prescriptive but not so hamstrung that they have to look at only these issues. the way i read the bill is is that it is kind of brought so the arbitrator can select. i am asking for the drafters of the legislature -- are these the kind of things you envision, not limited to, that the arbitrator will utilize in their determination of wages and benefits. if that is the thought process behind the language, want to make sure that is on the record. if it is not, is problematic because these of the kind of things -- i had to negotiate during my time nine different

union contracts when i was on the assembly, we do with a 10- year spread. the guiding force about how arbitration goes, we did not have economizing mayor, does that question make -- i want to know the genesis behind the language. >> let me take a swipe at that one. if we go back 41 years when your predecessor was involved in the postal service, one reason the bus service was created was because the wage benefit of people increased. wages were lousy, the benefits were lousy, if you did not work,

people call in sick, that is not a good situation. we decided to move from the old system to a postal service which is designed to professionalize in ways and benefit. we cannot go back. prior the way it was in 1970. it says we expect whoever the arbitrator is to have a $15 billion line of credit used up by the postal service. the arbitrator needs to consider the financial condition of the postal service. >> but not limited to a -- >> that's only one. we're also talking about accountability.

both sides have the opportunity to to offer the arbitrators their best arguments. the third thing we do is there is title 39 which is pretty broad and lays out how the postal service will operate in all kinds of different ways. it basically says that not only the condition of -- a financial condition of the postal service but the rates and wages. that is on the table. the third thing is title 39, as broad as it is, is open as well. that is a lot. this is not a narrow constraint. >> if i can briefly respond -- the language in our proposal -- we went over a fair amount. my understanding of it or my

ander -- or my intention is that it broadens the authority of the arbitrator to consider widerarray of factors that are relevant to the arbitration. we cite three as examples. the financial division of the post -- postal service, accountability, and everything in title 39 of the u.s. code which relates to the u.s. postal service. it is different from your amendment. i understand now were you are getting at. it says they can go beyond relevant factors. the wording of our proposal is in rendering a decision, the arbitration board shall consider such relevant factors

as -- and mentioned the three. it is not limited to those three. the difference between bile language and a substitute before your committee and the amendment is the word relevant. >> let me give you a scenario -- let's assume they are at a point where they are financially and a hard position, worse than today. a contract goes through, negotiations, neither side can agree and i go to arbitration. they say they reserve these pay adjustments of words and yes, the post office may not have the

full resources. does your language say that takes precedence over the other component which is the compensation and? in other words, what can happen like today, if an arbitrator looked at, they would say that is the plant -- primary question on compensation of the employees. you now have significant conflicts. if it is driven by this, i can tell you what can happen. i have seen it. people drive this number however they want in order to win over here. i want to make sure there is some equity in recognizing forces in the management to manage. they cannot just put it on the pile of the hour -- on the shoulders of the employees. >> i am following up. my understanding is that those three items that we say are

relevant factors are not exclusive. -- >> not limiting. >> exactly. the postmaster has said to us, and his understanding, the arbitrators are already considering the fiscal tradition of the postal service in arbitration but that is it is a good thing to status. i certainly don't intend that to be more important than the other two examples. that is a personal expression. >> the original bill that i had introduced only had financial status of the postal service. to address concerns that you and

some of the postal employees unions raised, we made clear that comparability was also a standard. that is important because there were arbitrator decisions on both sides of that issue. now that it is in law, is clear3. ... this is far broader and represents considerable compromise. it clarifies conflicting findings in previous arbitration. i think it accomplishes some of

the goals that you have outlined. >> mr. chairman, i think i see what i begish is driving at. i think we can put into this line will you, mr. jarratt just said. you said you said it is not limited to these relevant factors. any relevant factor could be considered and that could be easily inserted. you said the group should consider any relevant factor including the story. i think that what you said and that would address the senator possible point. i am not quite sure in terms of making this statement as ever about saying that what i am because it will reflect. >> please, read it again.

>> i'm sorry. >> this is technical stuff. in rendering a decision -- this is the way the current wording of the bill is -- the arbitration board shall consider such relevant factors as -- what i think the chairman the center shall be include those three. ofwe're back to the debate including that we had during the the part of a mine security. >> >> it is reminiscent. are there any other relevant factors that the chair and said the of the story. if so, they should be considered subject t.

>> we put the word relevant end so i presume in normal arbitrator would not go far afield. >> the other way to cure it was it mr. centre begish put the word relevant end his paperwork so that you could not risk the relevance of the bill/ >> your not strike our language that adding yours? >> yes, i wanted as much clarifications possibly this year is what -- to allow ambrose matt -- postmaster general, here is what i would said. the house said it is the only relevant issue.

>> i would be happy to give time to the folks who drafted this. i want to make sure we are creating a record year which is important but -- >> could i ask you a question? would that be adequate for you? >> i agree with what you said that years are 3 and 39 covers a lot of areas which does not bother me. i want to keep this show moving. >> i think senator collins might like -- >> you one more time? >> we're coming back this afternoon, maybe we can work it out by then. if not we will see where we are. that was an important discussion and i think it

clarified intention and that will be important. senator pryor, i can't go to you right now. not sorry to go to you senator paul. >> this is a man in number one in this would provide for flexibility of mailbox usage which would grant the individual owns the house and the mailbox what you would think would goal of the ownership of private property, the decision on how to use your mail box. i would recommend we support this memo. it is a man in number one that would allow you to use your mailbox as you see fit. if you bought and paid for it, you can do with it what you wish. >> say a little bit more about

what your intention is here what are you up to? >> i think it goes back to the magna carta. [laughter] >> tried it jump quickly to present day. [laughter] >> i think it was article 57 of the magna carta that said three men would not be deprived of their property without just and due process and that is what i am asking for here. i think the mls has been an anomaly -- i think the issue is did is an anomaly. >> am i correct in saying that one result of the passage of this amendment would be that alternative delivery services could use the telex? >> yes, back in the 1970's,

people thought that would destroy the post office because you would get first class mail which is great but it does not seem first like force permitted -- like force -- like first class mail is not probable any longer. i don't know that really changes anything. it would solidify and codify the ideas that private property is private property any individual has the right to exercise the decisions of how you used by final property. >> the problem is, you look to the point of view of private property. the effect of this amendment would be to further hurt, maybe cripple, the finances of a bus dulles.

private operations which try to supplant the postal service could basically cherry pick the most lucrative routes and services and deprive the postal service which is bound by this constitutional legal statutory requirement of universal delivery no matter where you live and make it harder for the post office -- the postal service to survive financially. probably, it will lead to an increase in rates paid by citizens to male who oppose dulles. >> i think there was still below is in place under first-class mail. i want on the record you are opposing article 57 of the magna carta- ask [laughter]

disturbing the melos part of the constitution but did not say anything in the constitution that your mail box did not belong to you. i think it-- so it does go agaie grain and a history of the development and usage of private property. that is why i brought it forward. to have some discussion and let people divide the house and decide where you stand. >> is there further discussion? >> mr. chairman, i agree with your concerns. i think what would happen particularly in urban areas is the alternative carriers would cream skim, do all the less expensive routes, and the rural areas would be left to the postal service which would inevitably cause an increase in

rates. so i do not think this is a good idea. i hope we will oppose the amendment. >> that was probably true in the 1970's and the 1980's. when people thought they could make money with this. i do not think people can make money on it anymore. it is probably impossible to make money at 47 cents. even the we have a prescription on the mailbox, -- even though we have a prescription on the mailbox,i get fedex delivered to my door, just thrown on the doorstep whether i am therefore not. it is an envelope. it is not the same size as a first-class envelope and it costs more. i did not think they will compete at 47 cents. i think they might compete at 3- or 4-delivery. this is more about the philosophy of private property then i think is of changing anything because i do not think anyone wants to get into first class mail. i do not think it is profitable. >> would you like a roll call?

>> yes, please. >> the clerk will call the roll. i was going to say that the question on this vote is whether you want to stand by our own constitution or some foreign document, the magna carta. [laughter] >> which by the way discriminates against women. i was listening very carefully. [laughter] >> with apologies. >> some might argue that the constitution derived from the magna carta. >> the amendment raises the risks, the financial risks, at a very perilous time for the post office. i thank you. >> senator levin. >> no. >> senator akaka. >> no. senator carper.

senator pryor. senator landrieu. >> no. >> no instruction. >> senator mccaskill. >> i am going to say no instruction. mitty will pass until we get clarity about the proxy's. -- maybe we will pass and we get clarity about the proxy'ies. >> senator tester? proxy is a no vote. ok. >> senator begich. >> no. >> senator collins. >> no. >> senator coburn. >> aye by proxy.

>> senator brown. >> no. >> senator mccain. >> no by proxy. >> senator paul. >> aye. >> aye. >> senator lieberman. >> no. >> mr. chairman, on the both of those present -- vote of those present -- >> can i go back -- >> senator landrieu is yes by proxy. >> senator mccaskill. >> senator mccaskill is no by proxy. >> senator brown has just appeared. rather than his voting by proxy. >> senator brown, ok. mr. chairman, the yays are two, the nays are seven. on this vote, the yays are six, the nays are 10, and the amendment is not agreed to.

>> thank you. senator pryor. >> thank you, mr. chairman. i think the senator wanted to be noted that she based her vote on the napoleonic code. [laughter] listen, this amendment -- i do not think we have passed the amendment yet so maybe this will be the first 1. we passed one? there we go. maybe mine will be non- controversial. i would like to ask senator mccaskill to be added as a co- dos senator mccaskill and senator landrieu be added as cosponsors -- i would like ask that senator mccaskill and senator landrieu be added as cosponsors. my amendment is very

straightforward. >> number one? -- amendment numbered two. whenever the post to regulatory commission makes recommendations through their advisory process, that the postal service would have to respond in writing and say how they are implementing the recommendations or if they are not why they are not implementing those recommendations. i think this has been an issue over the years that the prc will make recommendations but oftentimes the postal service and ignores them. this is more transparency and more accountability. i do not think we need a roll- call vote. >> did you call this a straightforward amendment? >> i did. >> i agree and support the amendment. >> further discussion? >> it would also be appropriate for the prc to be giving some answers to the postal service at times as well. i do not have time to go through the history of that. what is true for the postal

service which is i think accurately set forth needs to be true for the postal rate commission in terms of responding things they do not implement when the postal service makes decisions. i will make that as a comment and support your amendment. >> further discussion? all in favor? those opposed? the amendment is adopted. senator moran. >> mr. chairman, thank you very much. -- i have just one amendment, and it deals with world post office's. -- rural post offices. their reality is, some have outlived their viability, but others have not. i have yet to see the criteria

by which the postal service reaches a conclusion as to which which ones remain viable and which ones do not. the postal service announced the potential closing of 3700 post offices, 134 of them for example in the state of kansas. it is a significant member, though not inordinate to other members of the senate. we have attended -- staff of mine have attended 90 of those closing meetings. i cannot think of an instance in which any member of the community goes to the community meeting and comes away believing that the postal service has a plan in place for why their post office was chosen or that there is anything that a member of the community can do about it. it seems to me we have the postal service going through the motions of conducting these meetings, explaining that their post office is on the list for

whatever reasons that the individual representing the postal service explains, and when folks suggest what we do to see that our post office is not closed, almost without exception there is no answer other than to call your congressman and senator. the amendment that i would propose and i would indicate that it is co-sponsored by several, it creates a set of criteria by which the postal -- that the postal service must used in conjunction -- must use in conjunction with the postal rate commission, and it sets out the criteria that the postal service should consider for the basic services. perhaps a goes to the question -- perhaps it goes to the question tha that i was raising earlier. is there not some standard that we would expect the post office to provide service to americans across the country? perhaps number of days. in this case, communities,

rural versus urban, suburban. what standard would we expect to have some minimal or basic level of service? this requires the postal service to develop those national retail service standards and to take into account really four things -- geography, the proximity of the postal service to customers and what maximum amount of time a customer should be expected to travel. population factors. density, at age, demographics. requirements to serve rural areas such as alaska or hawaii that may have unique needs in regards to transportation. and to make certain that the postal service looks at available retail services in the area that were served by the post office. again, the nature of the community. many people, many constituents of mine will attend these

meetings and will come away wondering why my town was chosen and not one down the road. this sets criteria for which we have some level of ability to determine why us and not somebody else, but more importantly it creates the opportunity for the community to appeal that decision based upon the criteria to the postal rate commission. in addition to that, this economic requires the postal service to look at other options such as shortening the length of hours for the local post office. for example, having a post master there for fewer hours during the workday. the opportunity for the concept of co locating with a local school or restaurant or groceries store in order to save cost. and finally, this amendment -- that is the nature of the

amendment. i would indicate the effective date of this amendment is upon enactment, and the language of the legislation if adopted would say that it applies to the post offices currently under consideration. they would become subject to the criteria that we have now created. so, in my view, it is a pretty straightforward, creating a transparent process to determine which levels of service are to be expected, the criteria for determining whether a post office in the community meet those standards, give the community a chance that they disagree with the conclusion, and have the postal rate commission, and more independent agency, determine whether or not the postal service has followed that procedure. >> thank you, senator, for all of your work on this amendment. senator brown.

>> in response to the self- programmed new guy, thank you -- self-proclaimed a new guy, first of all, thank you for your thoughtful amendment -- in response to the self-proclaimed new guy, thank you for your thoughtful amendment. we have wrestled with this many an hour. i think this has affected every single congressman in their states. i think you have more than most. it is certainly something that i agree with. i think the bipartisan members of the commission agreed. i would ask that it be taken up. do you need a roll call? >> i would ask for 1. >> i want to thank you for the work on this. i think it is a good amendment and i am going to support it. the postal service has a lot of post offices. more probably then it can afford -- than it can afford now. one of the numbers i have seen which startles me is that it

has more retail outlets than starbucks, wal-mart, and macdonald combined. -- mcdonald's combined. so, we have to close some post offices. i have been through this a few times in connecticut. again, this is when this is not a typical business. there was one case in a small town years and years ago when the postal service tried to close the post office and on sheer numbers, they were right. but that little post office was not only important to small businesses and the people in town, but there was also a sense that it had become a community center. we cannot afford that really now. it is very difficult to close post offices but it is necessary to do that now. senator mccain said something

earlier which is that this bill will stop the closing of post offices by the postal service. id will not, and it does not do -- it will not and it does not do that. including with your amendment, it creates what i would call some thoughtful and reasonable due process before the postal service can close post offices, including everything you have listed. i think it is not bad. requiring the postal service to consider instead of closing a post office reducing the number of operating hours or procuring a contract for retail services and community served by the post office or by providing services to rural carriers. i think this is a very balanced amendment. it does not stop the postmaster from doing what he thinks is necessary to keep the post office going but a creates some

-- it creates some reasonable due process before post offices are closed. i support the amendment. thank you for your work on a. -- it. further debate? senator levin. >> i want to commend the senator for his work on this amendment. and for what he is trying to do. i just have one question. that is a reference to the appeal to the postal rate -- regulatory commission. where is that? >> i am sorry. senator paul was visiting with me about the magna cart up. -- carta. >> i do not want you to miss the commendation because i think it is an important piece of work. i think you are right on track. two questions. where is the question to the appeal to the prc? what page of line is that on? -- or line is that on?

>> answer forthcoming. >> i believe it has to do with the service standard. >> any time a service standard is violated, there is an appeal to the postal rate commission. it is broader than just -- >> it already exists in law? >> correct. >> secondly, in the post office -- any post office that is proposed for closing after these standards are adopted could make an appeal to the prc on the basis that the>> the other question is the -- >> that is true. it is effective upon passage, upon enactment. it includes those post offices that are currently being

considered today. >> it is not limited to them. >> it is not. >> the other question is -- the words "market-dominant product" on page 3 -- i am not sure what that means. are the eight market- competitive products? with that not be -- are as a market-competitive products? >> that is a term within the arcane post the world. -- postal world. the products are defined in different categories. products that the postal service are the only provider of, like first-class mail, is one category. packages with a competing with fedex or ups is another category. those are terms that actually mean something. >> this maintains then the

universality of the service. >> right. >> is that what the term is intended to be? -- mesaan? what about service standards for other things like a market- dominant? >> i wonder if this one if we want to pull in an expert witness. it is a fair question. may be the deputy postmaster or somebody from his team. do you want to come forward? would you like senator levin to repeat the question? >> i've got it. the postal service would have to put out standards on the market dominant products. -- this just goes back to that requirement. market-dominant products are

products where there is no other competitor. >> like first class mail. >> on the competitive side, competing with people mostly on the packages side. >> further discussion? senator. i got to work with him a little bit on this and enjoyed -- i just want to thank senator ra moran. thank you for the leadership you have taken. thank you for the leadership he this is an important issue. we know that the postal service has to stem the bleeding. we know they have more post offices then they need. we also know there are ways they can provide good service to the folks in these communities. we can have somebody there to sell stamps several times a day. we can have folks -- if you have a letter carrier, be there when they come to your house and buy their stance.

-- buy their stamps. that is not very convenient for everybody. maybe the convenience or the drug store down the road. i visited a drug store in the chicago area. walgreen's has a post office there. this is a new generation pharmacy. i think there are a lot of alternatives. the goal is how do we continue to provide good postal service to people across the country and doing it in a cost- effective way? i think we have struck a good balance.

>> mr. chairman, thank you. you and my colleagues have been very cooperative with me. i have had wonderful conversations with both senator collins and senator carper as well as my colleagues who have been co-sponsors of this amendment. could i ask someone to confirm my understanding that they are not going to rush out and closed post office is why this legislation is. ? that they will allow the legislation to take effect? >> you are not here under subpoena bank [laughter] do you want to answer? >> [inaudible] >> senator, we did particularly raise that issue with the postmaster general when we were negotiating the language that you brought forward. >> thank you. finally, just to conclude and shorten the day, i will withdraw my request for roll-

call. i did want to point out one more fact. as we try to find savings within the postal service, according to the postal rate commission, you could close 10,000 of the smallest post offices in our country and effectuate savings equal to 0.7% of the revenue of the post office. while it's important to find every nickel and dime, there really is a much bigger picture here that we need to make sure that we do not lose sight of. again, as a member of the senate that represents a pretty rural state, we want to make certain that rural america is not the target for savings exclusively. we want to share our burden and responsibilities with others. 0.7% closing 10,000 post offices. this amendment, in my view, is a reasonable opportunity for us to demonstrate the need across

america. i thank senator levin for raising the technical issues in his questions. >> an amendment this up in -- and the men in this important -- i think it is important that there be a message for a strong role call to the postal service that we do not want them to be closing post offices during this thing. >> do you want to look at my list first? [laughter] >> mr. chairman, i will not ask for a roll-call vote. >> i think it is bipartisan. >> i will not ask for 1. i have no preference as a junior member -- >> i would ask for a roll call. >> senator levin.

>> aye. >> senator akaka. >> aye. >> senator carper. >> no. just kidding. [laughter] aye. >> senator mccaskill. >> aye by proxy. >> senator tester? >> aye by proxy. >> senator begich. >> aye. >> senator coburn. >> no by proxy. >> senator mccain. >> no by proxy. paulenator - >> no instruction. >> aye by proxy. >> i tried to warn everybody. [laughter] >> senator paul. >> no instruction. >> senator lieberman. >> aye. >> senator moran

>> aye. >> mr. chairman, the yays are 9, the nays are 0. on this vote, the yays are 12, the nays are 4, and the amendment is agreed to. >> lunch break was mentioned earlier. do we want to try to move an amendment or two? do you have any other amendments? >> i have no other amendments. >> i just am thinking about who is here. senator levin i believe has bee passed. we will go to senator akaka for another amendment at this time. which were number would you like to call up? >> i would like to offer akaka number five. it is an amendment on medicare.

i would like to come back to workers' compensation another time but not now. so i would like to turn to health care. my amendment strikes the provisions requiring postal retirees to enroll in medicare parts a and b if they are eligible and replacing their current health benefit plan with not a not-yet-negotiate plan. -- negotiated plan. i understandthe postal service estimates it will save $15 billion from these -- i understand the postal service estimates it will create $15 billion from these provisions, but as far as i know, they have not provided anything as so far as a particular claim.

opm as much more extensive health benefits experience. opm does not believe it will save the postal service money. rather, opm believes it will impose costs on the health benefits plan, resulting in higher premiums for every one including the postal service. additionally, this appears to shift costs from the medicare program which is serious financial challenges already. for this reason, finance committee staff have informed my staff of this amendment. the provisions in this bill could create jurisdictional problems because these changes are financially jurisdictional. i think it will impose costs on retirees. we are requiring retirees to pay more than $1,100 a year in medicare part b premiums with no guarantee how much of that

will be offset by savings from a new plan. therefore, mr. chairman, i encourage my colleagues to support this amendment to strike the provisions requiring postal retirees and to enroll in medicare parts a and b. if they are eligible. thank you. >> thank you, senator akaka. respectfully, i am going to oppose this amendment. this is one of those cases where the legislation does give the postmaster the authority to take steps regarding the health care costs of the postal service. not only most private employers, but most public entities that i know of including state governments for

instance have taken to reduce the increase in the cost of health care for their employees. the sections that senator akaka would strike direct the postal service to require medicare- eligible retirees to enroll in medicare parts a and b and direct the postmaster to work with opm to develop plans that offer comparable benefits within the federal program for postal retirees and their dependents. this is an amendment about how we can argue how much it will save. it will save a significant amount for the postal service which is critically needed now. it will alter the health care benefit package of the postal employees and retirees.

but we think it still maintains a level of coverage for health care that compares quite favorably to people in the public and in the private sector. we also have a provision in here that says if the expected savings are not realized, the new program would end. we discussed that with the postmaster, and he is confident that they would achieve the savings. he is willing to be put under that requirement. so for those reasons, this is an important part of the legislation. what the legislation saves would be dramatically undercut if this amendment was adopted. >> i just want to emphasize your last point. of the postal service estimates that this provision -- the

postal service estimates this provision would reduce its cost by $15 billion. as senator akaka pointed out, opm is uncertain whether or not that is the case. that is why we included language in the amendment that would allow opm and the postal service to scrap the program if they agreed that it would not save the postal service money. so there is a safeguard, if you will, that has been built into the language. >> senator begich. >> mr. chairman, has there been a response from folks on medicare about what this would do to their costs? >> my assumption is if one saves, the other pays. >> one point i would make on that is a postal employees are

paying into medicare now. in some ways, they are paying twice. they are paying into medicare when they are active employees, and then if they do not enroll in medicare part b or d, they are not getting the best benefit of all of those payroll deductions over the years made both by employees and the postal service, and they are instead of getting the federal employees health benefit plan. in a way, they are paying twice. >> but i guess my question is if you require them to take the benefit, they are not taking it now. is actually a bonus for

medicare. it is like free cash flow for medicare. >> but that is not fair. >> have medicare folks responded in any way about any impact it would have? >> i do not believe the committee has had any response from the cms. it would raise costs for medicare. we are saying that this large entity, this clause i-public business, the postal service, ought to have the right to take the same kinds of actions that every private business and most of the states as far as i know and other municipal levies are doing for their employees. in this case, i think our priority has to rescue the postal service even though it may add some cost to medicare. >> thank you.

>> senator akaka. >> let me add that the office of personnel management has stated that its health care actuaries do not believe the postal service will receive money on this. opm runs one of the largest health plans in the country. 8 million participants at about $40 billion in total annual cost it. i have not seen the postal service's analysis for how they believe this program will save money for them, but i trust opm's cost estimate more than i do the postal service. >> ok. further discussion? senator akaka, would you like a roll call? >> yes. >> the clerk will call the roll. >> senator levin. >> aye by proxy.

>> senator akaka. >> aye. >> senator carper. >> [inaudible] >> senator mccaskill >> aye by proxy. >> senator begich. >> yes. >> senator collins. >> no. >> senator coburn. >> aye by proxy. [laughter] >> senator brown. >> senator mccain. aye by proxy. >> senator paul. >> aye by proxy. >> senator moran.

>> no. >> senator lieberman. >> no. is it possible that there is a little mischief going on? >> mr. chairman, on the vote of those present, the yays are 4, the nays are 5. on this vote, the amendment is agreed to. >> ok. thank you, senator akaka. congratulations. let's see. no one else here on the republican side has an additional amendment. you are retiring undefeated. if it is ok, after the senator, we will break for lunch. >> thank you, mr. chairman.

i want to thank the committee for passing the amendment. senator mccain talked about the fact that when he has public meetings people talk about the post office. if you are in a small town and you have a public meeting, i guarantee you it will be the first issue that comes up. with the 10-mile issues that the senator brought up, it is an issue that people have talked to me about. post office closures are really going to close a lot of communities. i want to express my appreciation to senator moran for offering the amendment. the amendment i want to take up now has to do with executive

compensation. i want to thank the senators for joining me in offering this amendment. it restricts the pay of the postmaster general has the same for a member of congress. $104,000 a year. -- $174,000 a year. the 2006 reform bill allow the postal board of governors to set salary as the same rate as the vice-president and allowed the postmaster as many as a dozen senior executives to receive bonuses up to 20% of their base pay. the postmaster general could earn $276,840 per year. this will take it back to 174,000. to let you know, that could save about $200,000, you could keep open post offices in various towns -- five could be saved for this.

it is a common-sense amendment. as we look to everybody to make sacrifices, i think it is entirely appropriate that the administrators of the postal service also make the sacrifices. i would urge my colleagues to support 8. -- support it. thank you very much. >> thank you. is there further debate? >> earlier in our debate, we were talking about making sure that we allowed the postal service to do what it needs to do, to really get out of the way. one of the underlying things that was said is we should let them proceed with closing mail processing centers or post offices or go from six to five- day a week services. >> our role should really be to step out of the way.

this amendment runs in contravention to the. -- to that. the postal service is the second largest business and america. -- in america. the second-largest business in america. they have over a half-million employees, 33,000 retail outlets, over 500 mail processing centers. day service every home, every -- they service every home, at every business in america six days a week. there is a reason why ups and fedex pay their ceo's of $1 million or more per year. the reason why they do it is they want to be able to attract the best talent they confined to run this big operations. the postal service makes those big operations look small in comparison. we need excellent people. we need some of the best talent

leading the organization to be able to be successful in the 21st century. to say to people that are working hard to turn the postal service around, for your efforts, we are going to lower your pay by $100,000 or $50,000, i don't know how that retains the best talent to lead the postal service and one of the most challenging times in its history. i do not see it. my grandmother used to say to me, "penny wise and pound foolish." this is penny wise and pound foolish. we are talking about replacing or losing executives that can help the postal service save billions of dollars by providing the leadership that is needed. they can implement a law that we are providing. i would urge us to defeat this

amendment. i was prepared to offer -- i just think we should defeat this amendment. defeat it out right. >> could respond, mr. chairman? >> if the goal here is to make the usps and the ups or fedex, -- into ups or fedex, we need to take the u.s. off of the front of the postal service, privatize it, get done with it, change the constitution to be sure we do not have any obligation. if any of us sitting here around the table because of the money we make, what they are not -- we are not sitting here for the right reason. the postal service is public service, unless you want to take the u.s. off the front of the postal service. to say that we cannot find people -- good people to run the post service because of salary, maybe that is the reason we need to pass this amendment. it also has some indications on our ability. if we cannot find anyone to get the postal service out of the woods, how the hell are we going to get the deficit under

control? we get paid that same salary. this is the most money i have ever made in my life. $174,000. it does not compared to $800,000. that is what he could make. $174,000 is a lot of dough. if you cannot hire anyone for $174,000, -- if our employees my contention is that you will not hire anyone good for $800,000. if our employees have to sacrifice, and there is no reason on god's green earth that administrators should not have to suffer too. that is the wrong message, if you defeat this amendment. i encourage your acceptance of this amendment. >> mr. chairman, could i suggest since your plan is to come back at 2:30 that maybe we could try to work on this amendment? i am sympathetic to the arguments that both of you are making in that this is a huge enterprise, but on the other hand, i am troubled that

bonuses are being given at a time when the postal service is losing billions of dollars a year. i also wonder if maybe we could cut down the number of people to be paid at the level of the vice president. this is one of the largest enterprises in the united states. so i find i have sympathy with both of your points, and i wonder if we could try to work since we are going to break to see if we could come to a meeting of the mine's. -- minds. >> i would like to see us all line to the extent that we are paying money above the cabinet secretary level money above that there should be tied to results. it should be tied to better performance, a better financial performance. i am not averse to doing that.

what it boils my blood is when i see big companies who pay a boatload of money, millions of dollars, to ceo's who run their companies down the drain. i am not interested in doing that. but we're not talking about paying millions of dollars to somebody to lead the postal service, despite the fact that it is a second-largest business in america. the idea of tying executive compensation to results -- i think maybe we can work something out and that thing we -- and i think that we should do that over lunch. >> that would be my same point. i want to see fair compensation. the part that bothers me is the bonus component. a lot of us signed a letter on bonuses -- on the fannie mae, freddie mac bonuses. of thing i would caution is that we set metrics other reasonable,

solid, good, not like what they did at any map -- as fannie mae and freddie mac. the net results was they got millions in bonuses. we want to attract a right -- attract the right people for public service. the bonus component bothered me. that is where you were going on what does this all mean. i would recommend the same thing. >> are you willing to hold over -- -- holdover until this afternoon? >> the problem is going to be that my schedule this afternoon is packed. might right hand person will work with your staffs to make this happen. >> fine. if you vote by proxy, you will have to sign off on any agreement that we make. i hope we can reach some kind of agreement. >> i understand what the senator is getting. i feel that the postmaster general -- i do not want to -- taking the bonus offer is one -- off is one thing.

it seems to me that he is running a very big operation. he is trying very hard to bring it back in the fiscal balance. it seems to me the wrong message to give to him is to cut his salary. depriving him of a bonus is another thing. we should come back and talk about that. i think we have had a very productive morning. we have dealt with some of the really big issues. i think we're going to be able to finish this afternoon. senator baucus -- senator akaka's amendment on the was put forward with thoughtfulness and sincerity. it passed with some surprising -- i am sorry. the medicare amendment. it passed with some surprising votes. it also opposes and then that not only four of us have recommended, but the obama administration has recommended. the bipartisan support was

short-lived. we hope we can regain it. it diminishes the savings by a very substantial amount. i hope we can come back and reconsider it said some point -- if at some point, if not here than on the floor. we have had a lot of debate. i wish you a good lunch. we'll reconvene at 2:30. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> author finally recognizes and comes to terms with his posttraumatic stress disorder, decades after vietnam.

>> i started telling this guy about my symptoms, jumping up in the middle of the night, running outside without knowing what was going on. a car would halt behind me and i would be out of my own car and just angry, just attacking. he said to me, have you ever been in war? that hit me so hard. i was in the middle of a room with 80 people. i started calling, snot coming out -- bolling -- bawling, snot coming out of my nose. when i finally got under some semblance of control, he said, you've got ptsd. have you ever heard of it? >> more on "q&a." >> on prime minister's questions, the prime minister discusses youth unemployment, the eurozone crisis, and border security. prime minister's questions sunday at 9:00 p.m. eastern and

pacific on c-span. on tuesday, senator orrin hatch emphasized his opposition to tax increases as a method to cut the nation's debt. he stressed the need for tax reform and control in health care spending. his remarks came during an event posted during -- hosted by a group called "ending spending n." this is one hour, 25 minutes.

we decided to gather these organizations that most would agree are not usually aligned. we wanted to see if we could not find some common ground with regards to the super committee. the facts are clear. [no audio] with the government borrowing 42 cents out of every dollar it spends, we must do something now. when the super committee began its work, we were, in truth, a bit dubious that will people in every could accomplish the lofty goal of cutting over $1 trillion

in spending. we were reminded of a scene from the great 1993 political movie starring kevin kline. perhaps some of you will remember the scene when the president, in an attempt to address the real first lady, works with his accountant friend to cut several hundred million dollars from the federal budget. the movie was optimistically naive about the budget crisis. the people sitting here before you today have done exactly what kevin kline's character did. they have made a list of potential cuts. they are here today to defend them publicly. so, while there are many in this town who talk about the super committee and suggest that it should go big, it is these people, sitting at this table, who have actually put pen to paper to show what the super

committee can do. one final note before i introduce our panelists, senator orrin hatch will be joining us in a little bit to make remarks on what he believes the super committee should do. we may need to enter the discussion when he arrives. we have announced each group to briefly present their recommendations, then we will begin our discussion. you have copies of the proposals. for those watching on tv, you can find these online at ending spending.com. our first panelist is the vice president for policy at americans for prosperity, the author of a new book, open what democracy denied." i am sure it is available -- " democracy denied." i am sure it is available online ticke.

michael has co-authored numerous reports on our fiscal challenges, including the important report on passing the balance. andrew is the vice president of government affairs at the national taxpayers union, where he lobbies and assist on educational and efforts. gary directs the u.s. public interest research groups federal affairs office in washington, d.c. in 2009, he was a founding member of americans for financial reform. steve ellis is the vice president of taxpayers for common sense, where he serves as a legislative liaison and media spokesperson. he formerly served as an officer in the united states coast guard. finally, david is a senior fellow for health and fiscal policy at third way and among several interesting stops on his career, he served on president clinton's health care task force in 1993. thank you very much. that, i will turn this over to

you. >> thank you, brian. i like to begin by thanking in congratulating you and your chairman. stephen and you're very involved as well in the fight against earmarks. it is remarkable to have all washington organization actually accomplish your goal as thoroughly as you did yours. i can only hope that the new name of your organization will have the success on this crucial effort to set -- to end excessive government spending here in washington. i was just on any budgetary outlook, the problem is a spending problem, not a revenue problem. we have historic revenue levels without any legislated increases in taxes. i think if we do include tax increases, revenue increases, coercive in nature, that force people to pay more, that will

cause themselves to fail. i don't think a product with tax increases will pass because it does not address the problem. if we are trying to cut spending, giving politicians more money to spend is at cross purposes with that goal. that is my practice to get into some of the specifics we would like to say. if you look at the report in your packet, we broke in the two sections. there is the specific dramatic cuts that we're recommending the super committee adopt immediately, and then where we recommend some big department closures. it will put an ideological marker down to remind people that there are very big elements in the federal government that we could probably do without. we are under no illusion that that type of movement will move in the current environment or the super committee. so we go into much more politically attainable cuts that we think can and should be

considered in the context of a separate committee. they are guided by three principles. those are laid out on page 3 of the document. first, washington should tighten its belt and make do with less. for too long, they have gone to taxpayers for more and more money to continue their overspending ways. the country has been in tough economic times. washington needs to tighten its belt. the focus needs to be on the spending side. second, government should not pick winners and losers. it is not beneficial to the economy or to individual americans for the government to have programs to intercede in the marketplace and it causes scandal in dislocation and inefficient allocation of resources. and finally, we want to empower individuals and states. we fundamentally believe that the best decision making comes from individuals. we want to maximize individual freedom and liberty. government governs best when it

is closest to the individual spirit we want to see programs return to states or localities to the greatest extent possible. i think it is critical to repeal the so-called patient protection and affordable care act. i do not think at this present time, it is not with the super committee mandate. the class act being the most recent to fall on the claim that it provided deficit reduction has largely evaporated. we will see that this is a major contributor to deficits going forward just as every major entitlement program has been. it is impossible to dig deeper by adding a new major entitlement program. second, consolidation of programs which comes directly out of the gao report earlier this year that we should be able to agree on. it will save $100 billion in eliminating duplicative

programs. i suspect everyone should be able to agree on this. this should be a starting point and i hope it is included. next is selling federal access. however draw a distinction between revenues that make government smaller and revenues that make government bigger. tax increases give government more money to spend. but the extent that we a short of historical averages in revenues because the recovery has not happened, we need to make government smaller. selling federal assets is a way to do that. there is no reason for those financial assets to remain on the balance sheet of the united states treasury prevent tarp assets alone, that would raise about $166 billion. we recommend red doors -- reforming and reducing the america -- the federal work force through attrition. all sorts of examples.

you cannot have the people pulling the wagon making significantly less and all the people riding in the wagon making more. we would like to see a significant reduction in the rate of growth in the defense budget. are left wing colleagues on the stage can probably agree with that. it's important that the super committee not fall into the trap that the trigger mechanism is a doomsday. defense spending increases every year under the sequester mechanism. we cannot meet our national security priorities without larger increases of -- so we need to rethink those priorities as a matter of economic reality. in a second area, the government picking winners and losers, we would like to see a wind down of fannie mae and freddie mac. there were the center of the housing crisis. republican members are moving far too slowly on this. the first thing is to reject the increase in loan limits.

we cannot subsidizing $700,000 homes are more common i do not know what we can do. this is a potential part of the government that is an on limited line of credit. it can run into the hundreds of billions of dollars. we think you have to take on agricultural subsidies. we should not have americans of all backgrounds subsidizing farmers. that is unnecessary and wasteful and misallocated resources. i'm amazed to the extent to which otherwise conservative members on everything else say they have to be for agricultural subsidies. one very conservative member told me that he is 9% conservative than 1% -- 99% conservative and 1% socialists when it comes to farm subsidies.

we need to dramatically cut them and we would urge the super committee to do so. energy subsidies and r&d, most of the subsidies of fossil fuels in the form of research and development, and renewables aren't refundable tax credits. we would eliminate all of those. the current scandal over solyndra and other cellular companies which can be tied to campaign contributors shows the considerable saving from that. we rescind the balances from the small business lending fund. and we would empower individuals and states -- and i think that block granting is a proven way to limit growth in some federal spending while increasing the freedom of states and get better policy outcomes, it is overwhelmingly successful when we did it for the depended children. it should be the model for all federal welfare programs, including medicaid. eventually i like to double

that taxing authority by capping those programs to generate significant savings while better serving those populations in this program. that is an overview. to sum up, if they cannot do it on the spending side, it would be better to have them fail and get the real savings of a sequester mechanism and had some disastrous deal that just raises taxpayers -- their raises taxes. that is our view. >> michael, i saw you nodding your head. so we are adjourn? please go ahead. >> i am michael linden, and not surprisingly, phil and i may disagree on a couple things. one hour to minor things. let me start with the big one, which you hear a lot, which is that we have a spending problem, not a revenue problem.

that is just false. it is true in the long run, in the very long run, and after the next 10 years, it is actually true that the major drivers of the federal deficit are an aging population which means higher costs is also security, medicare, and medicaid, and rising health costs generally for everybody, and the federal government is the major purchaser of health care with the medicare and medicaid programs. so there will be a big impact on those programs as well. definitely in the long run we have to do about those -- have to do something about those spending programs. i agree that we have to have some really serious conversations about how to get those things under control. but in the next 10 years, the major problem is revenue. look at the congressional budget office dateline -- baseline. the official projections of what will happen. letting the bush tax cuts expire in all sorts of things,

but deficit would be reduced 1% of gdp by the end of the decade. the reason no one thinks that is true or we have doubt about the deficits is because no one believes that is going to happen. the current policy projection, what happens with the deficit and debt if we continue doing what we have been doing, our massive deficits and massive debt. what is the big difference between the current projections and the current policy projections? it is not spending. do you want to jump in? the sdr is about -- yes, the sdr, a little bit, and that is a sustainable growth rate formula for medicare, but the major problem is revenue. if we just followed current law and congress did nothing, i am not saying that they are not going to, but if we just

followed that current law baseline, the medium-term deficit problem goes away. so it is absolutely a revenue problem as well as a spending problem. we are in extremely low taxing country, despite what he will say. they collect at its lowest amount of taxes as a share of our gdp among developed countries. the only one that collects less than us are mexico and career. we are at very low end. if we collected the same amount of revenue as canada does, not sweden, not france, canada, we would still in the bottom third and we would balance the budget. so we absolutely could do this all on revenue but we are now proposing we do that. there is an imbalance here. we have groups like american for prosperity same to do this all on spending. they're definitely influential among one political party. but we do not hear anyone say

let's do it all on revenue. no one is suggesting that. the center for american progress is not suggesting that. we think there is a balance and that revenue is definitely doable. catch rates rental lowest levels they have been that for years. the very wealthiest among us have increased their share of income dramatically over the past 30 years. at the same time, their rates have gone down. it seems like an easy place to go to get more revenue and i am sure that someone will say that will be economically disastrous, but i would point out of the last few years, we conducted a natural experiment. we raise taxes on the wealthy in 1993 and the economy boomed. we cut taxes especially on the wealthy in 2001 and 2003 and we saw what happened after that. it does not mean that raising taxes will cause an economic boom, but it gives the lie to the notion that raising taxes on the wealthy will be bad for

the economy. all that aside, let us get to what the center for american progress thinks that the super committee should do. it should absolutely hit its $1.5 trillion target. it should be careful about going bigger than that because of the frankly -- the major divisions between the political parties right now. imagine if you tried to implement the proposal that phil has laid out here, you would basically alienate an entire segment of the population to the degree that they work dramatically for the next few years to undo it. that does not help us. we need to take a positive step of ford for the last time we balance the budget in 1998, it took us several legislative attempts. some were successful, some less so. we do not he did do it all in one bite -- we do not need to do it all in one bite. you will never balance the budget with 9% unemployment.

they will never happen. the last time we balance the budget, we did it with the help of a significant economic growth. anything we can do now to get back to normal economic footing will help us reduce the budget deficit as well. as i mentioned, we think that entitlements are the major driver of a long-term budget deficit, which means we need to get a handle on those. but in the next 10 years, it is not quite is true. we do not need to leave them entirely alone, but fundamental changes, turning medicare into a voucher for example, that would be unfair and politically unwise. we should probably try of the savings on ways that do not shift the cost simply from the federal government on the families. the last thing i will mention is on the discretionary side. the budget control act already implemented $1 trillion in discretionary cuts.

that is just below what the simpson-bowles commission recommended. it is in line with what the domenici-rivlin commission recommended. there may mean more cuts that we could do, although interestingly, i will be the least excited about this on this panel. we of party cut $350 billion in we could do more. a lot more would be a little bit dicey. i did not want to go into the specifics of the proposal because you concerned look at that in your packet. but those of the broad contours of what the center for american progress think that we should do in the super committee. >> thank you very much, michael. next we have cantor moylan, and in an interesting experience that an shura and gary will talk about, your two groups wrote a joint plan.

i'll turn it over to you two and you can divide your time however you like and talk about how you develop your plan. >> allocate at all. i'm andrew moylan, vice president of government affairs for the national taxpayers union. we are grassroots taxpayer organization and i always kick these things off with a joke. our budget tells us what we cannot afford but it does not keep us from buying it. that has been the mantra of the federal government for par to long from our perspective. there two quick things i want to point out. and the president's recent budget estimate, the lowest single year deficit is $607 billion, a number higher of every annual deficit in our nation's first 220 years. it is roughly equal in the inflation-adjusted terms to the war spending of 1944. that is a problem from our perspective. a lot people attributed to the response to the recession.

the recent increases in spending. we have had deficits and 45 of the last 50 years, but even die-hard kenseyians should find problematic. this started years ago when we started working and transparency issues. the contours of this report start of last year when the president's fiscal commission was meeting. we join together to make about 30 recommendations for $600 billion worth of deficit reduction that we submitted to the fiscal commission. about 20 of those recommendations made it into the fiscal commission's final report, and the illustrious cuts that they put together. the purpose of this proposal was to find out what kinds of spending reductions can we get a group that is locally on the right and the other colloquially on the left to

agree upon. that is the challenge with a super committee, is it not? trying to figure out who can get someone from the other side to agree to the proposal they are putting together. we came together this year and put together a plan with over $1 trillion a specific spending reductions. you could look through the entire list and find a link to all the of permission. we're not reinventing the wheel but abrogating sources, like cbo options, numbers from gao, if other authoritative sources like that, that figure out where we could find spending reductions that would not dramatically undermined if what we like to see the federal government doing on a regular basis. a couple of results from that -- we outlined $215 billion worth of wasteful subsidies. that means agricultural subsidies, direct payments, $50 billion of direct payments for commodity crops that the market access program, which probably every group of here with support getting rid of, if

essentially corporate welfare, a program that helps underpin are insane system of sugar subsidies in this country, $370 billion. we also included $429 billion of specific reductions in low priority military programs. we believe in a strong national defense but we also believe that unfortunately there is a tremendous amount of waste in the defense budget. we outlined a couple of specifics -- $35 billion of excess spare parts orders. we are ordering as many as 50% to many spare parts for the armed services. one upgrade the status $15 billion and be offset by other capacities of that prevent us from losing any real operational abilities. we laid out $232 billion of improvements to government operations, eliminating unneeded programs like the essential air service, a system of subsidies for rural airports.

one of my favorites, the national drug intelligence center located in the heart of america's drug war in johnstown, pennsylvania. you can thank john murtha for that one. another of my favorite, the state's awareness program, were people involved in spaceflight put together all wards and spend $60 million for no apparent purpose. and finally, $132 billion worth of reforms to entitlements. mostly efficiency changes, not big, flashy, raising eligibility age is or anything like that. he can save more than $47 billion by reforming repayment rates in high-cost areas. even when you account for differences in costs and providing care in man hadn't as opposed to kansas, when your account for those differences, we have huge disparities in some cases in payment rates. or removing the ceiling for

collecting overpayments in the ssi program. we are reducing our ability to recover callbacks. and the reason that we got into this was to show that from our perspective, cutting wasteful spending is not an issue of ryder left but an issue of right or wrong. these aren't that -- right or left an issue of right or wrong. for most of these, we do not believe it is the federal government's role to be performing many of these things. it is incumbent upon us at anytime but especially right now to go attack of those things affirmatively to try to root out that waste. we think that this demonstrates that there is an ability to agree across ideological lines, over $1 trillion, $4 at $5 that the super committee needs to meet its at $1.22 trillion target. we think it is a significant

leg up, without getting into more contentious debates that we've heard about what revenue. our associate myself with all the commons that kill curtain had made, -- i would associate myself with all the comments that feel curtain -- phil kerpen had made. but that, i will turn it over to gary and he can talk about why it is that they ventured over to the dark side with us and put together this program and their motivations. >> gary. >> thank you. i am gary kalman, and i direct the office when u.s. public interest research group. we were very pleased to renew our partnership with the national taxpayers union appeared we of work with them with transparency issues -- the national taxpayers union. we have worked with them on transparency issues. we got into it because we think

that how the government spends its money is probably the most critical decision that legislators may, and i did a fine public priorities and make sure that we can afford those is something we obviously spent a lot of our time working on, are higher read program, food safety issues, etc.. we need to solve the deficit as a real problem. we felt that it was important to start having a voice in making our voice heard about the good cops and the dangerous cuts we think they're not helpful -- a good cuts and the dangers cuts we think are not helpful. we were happy to go after what we thought was some of the waste. the second thing which is important about the report, you hear a lot about folks today talking about we need to cut waste, fraud, and abuse, and the media has caught on

thinking that we should not talk generically but name names and actually site things that we should get rid of rather than waiting your hands. because somebody -- we can also waste, fraud, and abuse, and to some people they are thinking one thing, and others are thinking another. they all nod, but when they sit down to make the cuts, they do not happen. there are a few things that -- a few principles we came to the table with. i like to share those because we think they are good principles as legislators are making decisions about specific programs, targeting programs to cut. one is that we want to approach subsidies that provide incentives to companies that do more harm than good. people talk about agricultural subsidies like a big hand at the corporate interests. we would argue that some of these actually are destructive, large-scale agricultural production of a crop used for

biomass and accelerating problems with deforestation and raise food prices globally. there is actually harm being done by the subsidies we are offering to the public. so that's a problem. the sec it is opposing subsidies to ensure proper global industries to do things that they do not need to do. we'll include in this category some of the funding which supports the change the market extra cheese pizza, and they have the incentive and resources to develop their own products. the third is that we would support reforms to make government more efficient. there are any number of ways in which that contracting process can be made efficient. also things like calling the defense department to buy their

prescription drugs jointly in wit -- jointly with the veterans administration. a lot a savings to be found by reforming how things like that. and finally, when it ventured into areas like defense, we do not claim to know exactly the national security needs of the country. but we do oppose funding where there is authoritative consensus to do so, that is, if you have credible and reliable agreement across the political spectrum that something is wasteful. at the agency that is supposed to be receiving that dollars, if they are saying we do not need it, so with secretary gates recommendation, including the expeditionary fighting vehicle as an example. the secretary of the navel and the commandant of the marines both agree with that then- secretary of defense is proposal. those of the recommendations that we wanted to support.

a couple of quick things i would add. one is, as you might imagine, we are very nervous about across-the-board cuts that would replace valuable programs with wasteful spending -- equate viable programs with call wasteful spending. so we're going to cut pell grants as well as agricultural subsidies. we do not think that it makes sense. we need that actually cut the things that are wasteful. lastly, one things that are not in those words to talk about revenues, one thing we have not taken a closer look in advocating, which we do think there might be some common ground with some folks on both sides of the aisle, the notion of corporate tax loopholes. the issue has gotten a lot of attention to the issue of offshore profits made here in the united states, it could

raise as much as $100 billion a year. they're plenty of accounting gimmicks are shifting profits as a legal but it would not be right. we would encourage congress to take a look at that. there may be some efforts and ability to bring in some of the revenue loss of making correct public policy. >> thank you very much. and now we're joined by the senior senator for utah, senator hatch. would you please join us up here? it is an honor to have senator hatch year. as you can see, we're doing this in the viewing room. we wish the entire super committee were listening to the six chairman. now like to hear from you. he has been a leader in this fight against spending. we both agree that if the senate had passed the balanced budget amendment years ago, we would not be in the shade. we hope that you will present your ideas for what the super committee should do. senator. >> sorry to interrupt you, but am very honored to be with all

of you here today. i thought i would bring up from what i considered to be important aspects. i want to thank you all for coming today and what you're trying to do. this could not be more timely. in another two weeks, the joint select committee will hopefully report its come -- its recommendations to the full congress. now let nearly $15 trillion, almost there, admiral mike mullen, the former chairman of the joint chiefs is that, has called this the greatest threat to our national security. and i concur. spending more than we've taken is not only a clear and present threat to economic growth and the families of entrepreneurs and job creators. it is a necessary means for addressing this threat. i'm glad to see so many groups and concerned citizens you represent working to address our deficits and debt, but now one in the long term. -- both now and then the long term.

i like to extend special this thanks to ending spending. you might know them by their original name, taxpayers against earmarked for their only mistake was in choosing a name that would become obsolete. they are against air marks along with many of you. they managed secure and earmarked ban. this was a real achievement for the morning after their big victory, they have to start thinking about a name change. i think they settled on a good one. all we need to reduce spending significantly, i do not think we will be ending spending any time soon. brian, i think it's safe to print your new business cards. at the beginning of this year, it was not a foregone conclusion that we would have and make rational debate about the impact of our national debt. yet throughout the spring and summer, culminating in the debate to increase statutory debt limits, congress and the

president considered ways to address our debt. unfortunately, we have a way to go. you would think from the editorializing that spending had been cut to the bund, yet just recently the congressional budget office concluded that the federal government cost budget deficit for fiscal year 2011 was $1.3 trillion, almost the identical to the budget deficit in 2011, or 2010, excuse me. this was the third highest deficit as a share of gdp since 1945. at some point, these accumulated deficits will create a debt that is past the point of no return. if we keep going this way, and we are quickly appointing -- approaching that point. at the end of the fiscal year 2008, as the bush administration was winding down, that debt held by the public reached 40% of gdp.

currently, federal debt by the public = of modern record of 69% of gdp. cbo reports that current tax and spending loss takes that figure to 76% over the next 10 years. according to cbo, if we continue current tax policy, do not raise taxes, fix the amt, provide state tax relief, policy support by a clear americans -- by a clear in a dirty of americans, debt will reach 97% of gdp. even in these extreme but charges, they may be understating the fiscal consequences of our current spending policies. if our current historically low interest rates go up even slightly, we could see massive increases in federal debt even without any policy changes. as the crisis in the eurozone demonstrates, it is critical that we get our debt under control now.

waiting until late truman of crisis will further undermine the economy -- until late true moment of crisis will further undermine the economy appeared there needs to be bipartisan consensus to address the debt, and as we craft remedies to deal with this crisis, it is critical to get the diagnosis correct at that outset. to me, it seems clear that we must begin by recognizing that we have a spending problem. a revenue problem. our debt is large, it is growing larger, not primarily because of any tax cuts, but because of spending that is well above historic averages and is going higher. we have annual deficits and skyrocketing debt out because government taxes too little, but because our government spends too much. it would be a mistake to view this is an opportunity to raise taxes. passeriform that addresses tax

expenditures is long past due. -- tax reform that addresses tax expenditures is long past due. taxes are already high and the tax burden is heavily skewed toward the upper income brackets. " according to cbo, june 2011, from 1971 to 2010, taxes of -- have averaged 80% of gdp. if no changes in the law made, revenues will go up to 20.8% of gdp by 2021, and 23.2% by 2035. even if all the bush era tax rates were permanently extended, taxes would still be roughly equivalent to the recent historical average. additional progressivity would be a challenge. according to the tax foundation for calendar year 2008, the top 1% of our population in terms of income already paid 38% of

all federal income taxes. the top 5% paid 58.7% of all income taxes. meanwhile, the joint committee on taxation estimates that approximately 51% of all households, which includes filers and non-filers, had either a 0% or-tax liabilities for tax year 2009. that is 51% of all households. as someone committed to limited government and the belief that you're really on the frigate euro labor, i think they're raising taxes beyond historical levels goes against our defense constitutional values. as economic policy, i think it is counterproductive. first, it is not clear that the anticipated revenue from tax increases would actually emerge. this is how the non-partisan

joint committee on taxation put it. "we anticipate that taxpayers would respond to the increased marginal rate by utilizing tax planning and tax avoidance strategies that would decrease the amount of income subject to taxation." furthermore, 34% of income would be subject to the surtax for this is harmful to small businesses. the vast majority of which are organized as it to deuce. as the instrument of debt reduction, it misses the mark. an article from the tax policy center shows that our debt problem cannot realistically be sold under revenue side. in an article entitled desperately seeking revenue, the authors detail of what types of tax increases would be necessary absence pending changes. to reduce federal deficits to 2% of gdp for the 2015-2019 period, its authors concluded

that tax increase is consistent with the president's campaign pledge not to raise taxes on individuals making less than $200,000 for families making less than $250,000, would require the top 2% tax rates to go from to 87% and 91.1% of eliminating our deficit and bringing down the debt to a manageable level by looking primarily a revenues would require significant increases in taxes, not just on the so-called rich, but on the middle class and probably the working poor as well. actress solution to our debt crisis is going to require pro- root tax policy and serious spending reforms. -- actual solutions to our

deficit crisis is going to require pro-growth tax policy in serious spending reforms. tax reform is critical. our current tax code, i think everybody basically agrees, it is unfair and inefficient. 6 billion hours are spent each year complying with the tax code at the cost of $160 billion. attached for that is revenue neutral against the currents policy baseline with incurred fairness, simplicity, and economic growth. by reducing and eliminating tax expenditures, we could broaden the base and lower rates. we could also minimized the current preferences in the tax code for spending over saving and investment. under our proposal, the top individual and corporate rates would be 25%. as for the spending side cover recent levels of spending levels are unsustainable.

according to a report by the congressional budget office released just yesterday, federal spending was 24.1% of gdp in 2011. that is slightly lower than the 25.2% recorded in 2009, and about the same share in 2010. but well above the 40-year average of 20.8%. the federal government spends about 25% of our entire year's output in the national economy but that is far too high. we need to come to grips with the fact that our debt crisis is in large part the health care spending crisis. it is significantly impacted by at demographic problem. when medicare was created in 1965, life expectancy was 70. today is 79. we need to address the eligibility age for medicare.

our problems are not only demographic, but some levels this structure and design of these health care programs must be reformed. creating choices for seniors and encouraging plan competition much like the federal employees benefit program would have a positive impact on access -- access for care for seniors and the cost of medicare for taxpayers. as for medicaid, which currently consumes 22% of state budgets, and will consume $4.2 trillion in federal spending over the next 10 years, congress could see -- should consider giving each state defined benefits to help with their vulnerable populations. as for the president's health care law, it must be repealed. there's no getting around the fact that it is expense and medicated new entitlements to premium subsidies are ticking time bombs for both federal and state budgets.

according to the house budget committee, the true cost of the hca, or the affordable air act, stands at $2.6 trillion over the next 10 years, if we're lucky, once fully implemented. it also reveals that the law will increase the deficit by $71 billion in continue to add to our nation's growing debt. in addition, there is little doubt that the healthcare law is hindering economic recovery and a robust economic growth necessary if we are to dig ourselves out of debt. the law imposes over $1 trillion in new taxes and penalties on individuals and employers for the director of the congressional budget office are testified before the house budget office -- budget committee this year that the real fault would result in a reduction of 800,000 new jobs in the future due to the increase in marginal tax rates.

in my view, there should be greater consensus on these tax and spending reforms. liberals and conservatives, republicans and democrats, have a shared interests and successfully bringing our debt to heal. cbo projects that the cost of simply paying the interest on all of this debt will rise to $792 billion, or 3.3% of gdp, in 2021. when you are nearing one trillion dollars in interest payments alone, the day is coming when the national government will not have the resources to accomplish even limited objectives. i am confident that the joint committee will succeed in taking another step toward restoring our nation's fiscal integrity. a long-term fix, however, it is going to require additional actions. we are going to need you to continue to keep the pressure on with respect to spending and pro-root tax policy.

needately, we're going to of send of balanced budget amendment to the american people for ratification. after 35 years in this body, i have to say i think that is what we simply have to do. it is possible to get our economy back on track. as a ranking member on the finance committee, i am working hard to put this nation back on the project sound fiscal footing. and with committed individuals like you working on these issues, i know that we can get there. let's just understand, this is still the greatest country in the world. i notice a lot of young people here for your future is really at stake here and we can no longer can continued at like there is an unlimited supply of money coming in the week and spend in unlimited ways. we have to get real on spending. that's why i love this organization and what it is trying to do. i want to commend all of you for

being part of it. god bless all of you and thanks so much. [applause] >> thank you very much, senator. senator, we really appreciate your time and thank you so much for joining us. we will continue with the panel. as we are a bipartisan panel, i noted that we invited several of the college from the other side of the outcome of the senator hatch was kind enough to join us today. our next presenter is steve ellis. i think your organization wins the award for best title for your recommendation. why don't you pick up with super cuts? >> i am steve ellis, vice president of taxpayers for common sense. we are a watchdog and we did come up with super cuts for the super committee. you can follow along in your package. if you want extra comments -- copies, i brought them along. for you watching on c-span, it is available at our website.

i am really glad to be here and share the table with these folks. what did you like the plans are not, at least everyone here has come out -- whether you like the planes or not, at least everyone here has come out with one. congratulations to you as well. for 16 years, we have highlighted wasteful spending, exposing, naming, and killing the bridge to nowhere or going after wasteful spending in the tax code like the duplicative ethanol tax credit, we have been doing this for a long time and building on our earlier work, which was a submission to the sense and bowls committee, the work that we have done, -- simpson bowles committee and, the work of we have done and other independent entities, but it is the government accountability office, the congressional budget office, or

others, put it all together here. that said, it is no means -- is by no means exhaustive. we continue to see overhauls in entitlement programs like social security and medicare, the savings that we supported are not reflected here. we support that change at cbi, incremental increase in the retirement age, -- the chain the cbi, incremental increases in their retirement age, the overall reduction in their rates and expanding the base. and we did not include things like setting dollars in reducing net interest free from our perspective, that will happen if we did the other cuts. so they put in $200 billion, we felt that would skew the numbers or serve to inflated. and lastly, we did not include

a gimmick that we're critical lot. net interest is the true savings, but a lot of people talked about counting the savings from reduced troop levels in afghanistan and iraq. say 89 years out. that is an accounting gimmick. -- eight or nine years out. that is an accounting gimmick. extending the baseline, saying that we would maintain lulls at 2010 or 200011, it is poppycock. it is a way to gain savings on the books without really helping our debt. now know what we did not do. what did we do? we have more than $1.1 trillion of cuts. we think that that is a lot. what we tried to do is capture a score will savings. rather than looking at things that would expire, like the ethanol tax credit, that is

scheduled to expire december 31. of course it was scheduled to expire last december 31, so it could extend, but considering the senate voted to eliminate it, we did not think to -- we did not include that in old $1.2 edge trillion. there is a section in the document called other common- sense cuts, recapture the other things we think the conduct into, whether something like this, or the super committee can do something, or in some cases it is authorization for projects, subject of future appropriations. we would like to strike those of the book of we will not count those toward our savings. -- off the books, but we will not count those toward our savings. we think that achieving budget savings is not and cannot be of popularity contest. we go after mandatory spending, discretionary spending in infrastructure and energy, and yes, national security.

we go after tax expenditures from small to big, like reforming the tax inch -- mortgage interest tax break. agriculture -- a lot of talk about that already on the panel. all not going to detail on that. there are certainly things like direct payment, payments to producers that emanated from the 1996 farm bill that was supposed be transition from a couple payments, paying people not to grow. like many things in congress, president reagan observed that there is no better example of eternal life on earth than a federal program. they did not go away. they add layers back in, many of the same countercyclical programs that go along with direct payment. they are indefensible. most people think that is the case. agriculture is interesting because the next thing we talk about is reform to crop insurance. we did i really subsidize crop insurance but revenue guarantees.

-- ken we do not release subsidize crop insurance but revenue guarantees. what we're saying is that the agricultural committees are trying to actually expand their subsidies in the super committee process. several other groups here the table with us have signed a letter and we have worked with the broad bipartisan coalition to look at trying to stop to agriculture committee from actually putting a five-year farm bill, hundreds of pages of legislation, on the super committee project. it is not only getting savings but it also is preventing future subsidies. they're concerned about some of the future revenue guarantees, up to 90% of revenue guarantee by the federal taxpayer, something that would be not seen is reasonable.

the market access program was mentioned earlier that we are in favor of getting rid of. in energy, we target old and new energy subsidies. we oppose new energy subsidies. and rolling back all subsidies and a letter of this year signed by about 30 groups. and going after mature industries, the oldest energy tax breaks on the books are nearly a century old, to help the oil industry gets started. i think that that has already happened. we should be looking at things like a percentage of allowance. these things that we should be targeting as individual tax expenditures. everyone talks about kneecapping the tax and how we have the $350 billion in savings that were mandated by the budget

control act. if you start peeling back the onion and looking a defense, we had a dramatic increase in the last decade. even if you exclude war funding, emergency war funding, we spent $1.5 trillion on service contractors over the last -- since 2001. since 2000. we worked with projects and government oversight to come up with broader reforms and summer reflected here. if you just reduced our service contractor's expense, you would save hundreds of billions of dollars. those have been increasing every year. it has not even been linear. it has been a magnification and increase. that third rail of defense spending -- as bryan indicated, i served in the coast guard. my father is a career navy, retired after 23 years in service. he went back to school and got

a master's and went to work for fortune 500 company. will we find is -- secretary gates talked about this -- there are many of working age retirees in the military. i obviously have great respect for my father in everyone who served. my classmates in the coast guard are eligible to retire this year, which is odd to me. i feel really on -- young. anyway, that try care premiums have not gone up since the 1980's. my father could have gotten health care through his fortune 500 company or pay a higher premium, because he was making a very good way to the time, and yet we allow this sort of bifurcation. these are not retirees and the working says. their retirees in the military sense. there are areas where we do is possible changes. i ran this by my dad and he was fine with that.

if he is fine with that, then i think a lot of our men and women in uniform in that category working on retirement, that they could look get an increase in their tri-care premiums. not taking away any ways -- taking away any once medicare premiums. we need to look at personnel. one of the things as secretary gates told now-secretary panetta when he took over, the health care budget for the defense department is larger than the entire cia budget. this is where we have to look at these areas. or it will consume all of our other military spending. operation and maintenance and procurement. we also look at withdrawing troops from europe. we still have a cold war posture in those areas. we could draw down those troops and removed things there. we look at space, weapon system, new nuclear weapons infrastructure.

running toward the end, tax expenditures. these are breaks and loopholes and special interest purveyances rigid provisions inserted into the code over the years. modifying the mortgage interest deduction, a perfect example of something that had a good intentions which was to make home ownership more affordable. it has not done that very few have canada and the u.k. with similar rates as the united states that do not have the subsidies. it increase the price of home so that your -- your savings are baked into the private -- price of the home. it is not so good for the average price olmert homeowner. -- it is not so good for the average homeowner. we do not want to stop the home market right at this time because there are issues that are eminently clear about sales.

looking at things like last and, first out accounting. you can assume that that barrel of oil that you have in the oil industry is the big beneficiary it is still the one in your inventory so when you are accounting, you take out the more expensive barrel of oil. it is something that by international accounting standards, it is not allowed. it would be a onetime savings but could have a significant impact phased in. and the last thing on taxes, a couple of years ago, we allow state and local sales tax to be deductible. this is something in the 1960 act -- 1986 act that we carry them. it is another tax expenditure that we let back in. other states where there is no income tax, this is something that was a new subsidy that came about, that is necessarily -- it is not necessary or

justified. is -- i liken it to a forest where we'd have the buildup in the forest. we need to reduce the rate and expand the base. lastly, i would mention infrastructure. we have talked about the trust fund, the highway trust fund. we knew that when we passed the highway bill, that we had -- we were not going to get enough revenue in the gas tax to pay for everything we promised to pay for. and yet we went ahead with that bill. it was clear in 2005, we wrote about it at the time, we would not have the revenue at the end. we did not. we bar at $34 billion from the general trichet we borrowed $34 billion from the general fund to pay for -- we borrowed $34 billion from the general fund to pay for.

just friday, a highway bill was released that did not explain how they would pay for it. that's $72 billion over the next 10 years if we do not fix that. in this case, we have to match revenues with expenditures. i will leave it at that. there is a lot more and i hope you take a look at what is been proposed. >> thank you very much, steve. certainly not last, david kendall from third way. want to say something that you wrote. your plan demonstrate significant savings can be achieved while allowing democrats and republicans to hold their basic promises and principals. that is a tall order, but please share it with us. >> thanks, brian. your super cuts.

i wish i could do that for my hair, too. i am very happy to be here. what i want to focus on is 12,000 criminals who will not go to jail. 50,000 new cases of food poisoning. 225,000 pounds of luggage unscreened for bombs. that is what would happen sequestration would take effect. it is something only washington, d.c., can come up with. if the super committee fails, other cuts will take place and it will affect parts of the budget that affect most americans. is the part of the budget that even the tea party folks would understand when they saw that there gunshots were going more slowly and the kinds of cuts that americans who do not see

benefits of government every day but would not get with the reports that are accurate. they would get with the reports that are half as accurate because we cannot afford to put another satellite up. those are the kinds of things that i would think would motivate most members of congress in washington, d.c., to get this done. so, what that want to do with describing our proposals is three things. describe our plan, why it might work, and why we think that would be a success. third way strongly supports going big, having a grand bargain between democrats who would go for some and out of their reforms, and republicans who would agree to increased revenues through tax reform.

but if we cannot get that done, and that is a tall order, we need to get thasomething done. we propose a failsafe just in case we need to break the glass and get something done to meet the minimum threshold for preventing that sequestration from taking effect. we proposed a plan that includes 1.64 trillion dollars and revenuers and increases and spending cuts. it is $2 in spending cuts for every dollar in revenue. we do not think it is just a revenue or spending problem. we think it is a combination. at the end of the day, we have to look at both things. we actually had our own little markup. we decided to see what we could do amongst our group to facilitate a discussion.

we found that when it was going hard on that defense group to cough ought more money, some folks on the energy team said we could cut more here. -give-and-take is something we can hopefully seat in the super committee when we get down to brass tacks. we proposed some revenue increases. for instance, we could and eliminate the deduction for second homes, mortgage interest deductions for second homes to promote home ownership in america. so, why might our plan work? primarily, it pulls from the plant that we have seen coming from the bulls since then, -- boweles-simpson. 70%