they were all out there doing experiments and folks like benjamin franklin and thomas jefferson, they were constantly curious about the world around them. and trying to figure out how can we help shape that environment it is in our dna. we know that innovation has helped each generation passed on that american promise. no matter who you are aware you come from, you can make it if you try. there's nothing more important than keeping that generation alive. there's no prior see i have that is higher than the president'. i cannot think of a better way to spend a morning them with the young people who are here doing their part and creating some

unbelievable stuff. and what he did keep up your work. it will make a long-term thing. it does not belong just gone the back pages of a newspaper. we have got to lift the this up. we have got to emphasize how important this is and recognize these incredible young people who are doing things that i cannot even imagine thinking about.

this is what will make a difference in this country over the long haul. this is what we should be focusing on in our public debates. it did not let your robots wander off any more. thank you, everybody. i appreciate it. [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> this conference meeting its next on c-span. colorado and minnesota hold presidential caucuses today and the polls and missouri have just closed after a day of primary voting. we will have live results and

candidates speeches tonight as they come in. it romney is in december. oryx santorum is in missouri. -- rick santorum is in missouri. newt gingrich has not spent much time in the states. we will have live coverage tonight here on c-span. republicans and democrats disagree on how to pay for the extension of the unemployment benefits that expire at the end of february. members approved a short-term extension back in december because they could not come to an agreement. the conference is trying to figure out how to pay for the $160 billion package. >> good morning. last week we had a good discussion on the policy merits of extending the payroll tax to the end of the year, extending

and reforming the unemployment program and other medicare it standards. i heard broad consensus that those three policies are at the heart of this committee. i also heard members suggest that some of the items could not be fully concluded until we have a better idea of what the pay fors are. it was offset in the deal in december. they were also fully paid for in house bill. my matt shows that extending these policies through the end of the year would cost between $150 billion and one under $60 billion. there'll be -- $160 billion. there'll be differences but i will start with three policies that have enjoyed bipartisan support in the past. the first will be one-year pay freeze for members of congress and federal employees that could

save $26 billion. second, at the present proposal to reduce medicare subsidies to wealthier seniors would save roughly $31 billion. recovering overpaid and of subsidies in the health care law could save $13 billion. -- over payment of subsidies in the health care law could save $13 billion. i will turn to senator baucus to continue our round robin discussion. thank you for the technical

support. >> thank you for making real progress here. the american people are clearly counting on this. i am hopeful that this discussion here will help frame possessions of various senators so we can sit down and get to work. getting to work means reaching an agreement. we do not have time. we have less time than we think we have. i think we have to wrap this up. or at least close to wrapping this up in a matter of days.

i am getting these basic clothes and where we compromise. there is an open discussion. it is also helpful for both sides to learn what can and cannot be accomplished to help us reach that compromise. we do not have time. we have very little time. i urge us to begin talking about the offsets that are going to be necessary to one degree or another in this bill. are we leaving office? >> yes. >> my understanding is that you are going ahead. >> we are on the first item of the agenda, and the extension of pay freeze.

let me talk about our federal workforce and how much i oppose the freeze included in this conference report. let me first point out that are a war of force has already made substantial sacrifices to bring it into better balance. we have had a two-year of crosstalk aircraft which equates to about $60 billion that. if the increase is approved for the coming fiscal year, it will be another $18 billion of deficit reduction. our work force is putting it on the table. we're asking our federal workers to do more services for the public with less people. the number of federal workers has been declined. the amount of responsibility they are being asked to shoulder has increased.

i want to address this comparable pay study that has been quoted substantially by members of congress. i take issue with how the results are being interpreted. when you look at the study, and point out that our lower wage workers, those at a high school graduation level or less, when you look at their salaries, you find that they receive comparable benefits that are higher than the private sector. we provide health benefits, etc. i hope we will not have a race to the bottom. when you look at the lower wage workers, they are much less likely to have health benefits and retirement benefits. i would hope we're not trying to race to the bottom when it comes to our lower wage workers. when you look at the report as

it deals with those who have professional degrees that are working for the pleasure of government, and we have quite a few, we have those that are working at nih as workers and fda to keep our food supplies safe. you find that their salaries are less than the private sector. it makes it difficult for us to recruit and retain those that are trying to answer some of our most vocal challenges whether it is cures for cancer are keep america competitive in developing the best technologies for the future for dealing with our food supply and keeping us safe. the list goes on and on.

aqua this is not reflect our two-year pay freeze. it has made the federal work force less competitive. i think this is very telling. federal pay is a tribute to all -- and treated to the job. this is true to a lot extent. when you but at our federal work force, and you find that 25% of our work force are veterans. the private sector is about 8%. whos take a look at those

are working for the federal government and not treat them unfairly. i know you but only the pay freeze. the house bill came over to us with other offsets for the federal workforce including sid against -- significant changes. it should have a major negative impact on our work force. i want to talk about fairness. i want to talk about how fair it would be to tell federal workers that we are doing this payroll tax holiday. we will get more money. you can lose more than that through this pay freeze over time. that is basically what we're telling our federal work force. in the middle income families will not get the benefits of the payroll tax holiday. that makes no sense from the view of fairness. the relief we are providing is

temporary. it will last through the end of 2012. the pay freeze is permanent damage. where is fairness? we have a challenge with the federal budget. i understand that. the issue before this committee is whether we will extend tax relief to middle income families and whether we will deal with protections of unemployment and make sure our seniors have access to their doctors. that is the focus of this. it tells me we are not serious a coming together. i do not know how any of us can go back to our districts and

tell our border security patrol people or our researchers that we are going to freeze the salaries. the hedge fund operators on wall street and those who have made it seem amount of money -- obscene amount of money will keep their rates where they are right now, which are lower than yours. we will then put another freeze on your salary when they get the benefits. where aris the fairness? i just urge us as quickly as possible to put this a bad issue aside. it should not be in our proposal. i think it is an affront to the fairness in our society and making sure all of us contribute ou.

are federal workers have already had a two-year pay freeze. -- our federal workers have already had a two-year pay freeze. >> thank you. >> i am going to ask you to discuss this. i do not think we should only ask those who had a higher percentage of federal employees to carry the entire loan. this is an issue that affects all of us and all of the country. there are federal employees working everywhere. i think what he has said is not

at all parochial. what chris van hollen is going to say is not at all parochial. is this something that is national. -- it is something that is national. i want to point out that the three issues we are discussing today basically hit middle income tax payers. there are a few exceptions. i suppose there are some federal employees that would not be classified as middle income. there are very few. for the bulk, and they are very much middle income taxpayers and middle-class families. when we talk about health care and pension benefits for the federal employees, and the benefits have helped them become an important part of this

country. all three of these items on the agenda today have would essentially hit middle income tax payers. the freeze, at the health care coverage provision, and the medicare payments. i want to pick up before i turn it over to chris. >> we may be moving to the republicans if you do not finish soon. no two bites of the apple. >> why don't you finish and then we will go? >> i was not sure about to bite of the apple. -- bites of the apple. >> and now you know. >> let me speak about the urgency of this.

i want to pick up with what max baucus and others said. we must reach an agreement. we must reach agreement for 10 months. i think that means we need to resist a finger-pointing and really work hard together. the urgency demands it. >> thank you. >> i will let the next part of the apple be postponed. >> the of bachuthe light is on s not work. i want to say a couple of things. this provision is with in the skull of the conference. we included it in the house bill. we had a separate vote on this

item under extension. it passed nearly three-one. i want to compliment my colleagues for voting for it last week. 99% of federal employees that were eligible last year for a step increase, they have the table, and they know where they are, nearly 100% who were eligible for a step increase in fact got it. it averaged $1,300 per person. our rules is if you have more spending, you have to have the offsets. this was part of the agreement. this is a pretty sizable offset that we on the house side are looking at. i would say that the median

household income this year was $52,000. maybe as we look for an agreement, even though many of us with supports a total pay freeze on federal employees, maybe you look at the workers that are earning more than $52,000. maybe that should be included as an offset for this new spending. across the country are looking for congress to sacrifice. literally the first week last year we had an amendment on the house floor that that congress spending below what it was the year before. we did it again this year as part of our budget. federal workers know that they are being asked to sacrifice here. in return, we are trying to make sure that the deficit does not

go up. we took concrete steps on discretionary spending to make sure that it did not. i yield back. >> senator baucus. >> anybody? do you want to add some more? >> very briefly, those with professional degrees you work for the federal government are the ones that are in the greatest risk of us losing their talent. we're talking about the researches at nih and scientists to commit more money in the private sector. i would resist -- who can make more money in the private sector. i would resist. we fully expect there would be a vehicle through the appropriations process.

i do not think we should confuse the issue of our federal work force with embers of congress. let's not put them in the same category. >> if there is no further speakers? >> he would like to take a bite of the apple. >> we are trying to have one speaker per side. we will keep doing additional rounds. if there is a senate republican he would like to speak out of that is who is up next. >> the goal is to help people speak their piece. i would like to yield to senator casey and a senator kyl. >> just a couple of items. you can parse this a couple of ways. the statistics are what they are. federal employees on average

make a whole lot more than people in the private sector. taxpayers that pay our salaries would like to see some shared sacrifice. what happened to that concept that we heard so much about aboushared sacrifice? people on social security did not received it in two years. they understood the reason. arizona public employees have not received an increase in five years. the reality is a washington -- the people that work here are very well paid. we have very good benefits. the people that pay their salaries are the ones that are going to be making a lot of different sacrifices. i think it is fair to ask employees to make a sacrifice as well. at the end of another year, that there will have been a two-year pay freeze. we have not had a two year pay freeze yet. the commission said we should

have a three year pay freeze. we talked about how wonderful the recommendations are. except when it comes to this. there are a lot of reasons why it would be perfectly appropriate to ask them to make a sacrifice. i understand why those who represent more of the federal employees would be making the argument that they are. i probably would be making them as part of the effort as well. all of us have to view ourselves as represented as a whole. it has to be fair that we extend for a relatively short amount of time the high level of payment with no increase for federal employees. >> mr. levin? >> i will turn this to chris.

i just want to say there are federal employees everywhere. the house proposal that passed on a partisan basis, only a handful of democrats, i am talking about the proposal that came over from the house and federal employees, a $63 billion. there are two proposals. we all have federal employees everywhere. >> thank you. i think we all benefit from the federal employees that are doing research at nih into lifesaving cures and treatments. we all benefit from the folks in the intelligence committee to track down osama bin laden. this is not an issue of whether or not we represent a small number of federal employees. we all benefit. i think the american people benefit. let me start with the vote that

mr. upton reference. the reason it had such a big boavote is because you couple tt with a freeze on all federal employees salaries. it is a question of the pay freeze for congressional salaries. we can all support that. if they want to entertain a motion, we can do the right now. let's not mix of the two. the reason you have that vote is because they were afraid they'd be accused of trying to protect their own pay if they voted against that provision. let me briefly get to the threshold questions as to offset. i do not want to go into great detail. we have this before. we do have this new standard being applied to payroll tax cuts. the majority in the house change

the rules to say when it comes to tax cuts for folks at the top we do not have to pay for them. week and put another trillion dollars on the national -- we can put another trillion dollars on the national credit cove car. we did not have to have a penny. now when it comes to tax relief for 160 million americans, we have a different standard. it seems when we are considering offsets, we will insist on offsets and to look at some of the offset that have been suggested by our democratic colleagues originally in senate with the surcharge and other proposals to close tax loopholes. i say that by the way to mention that federal employees are prepared to sacrifice. federal employees recognize that they have to be part of the solution here. federal plays have seen a two year pay freeze.

it is about $60 billion. social security recipients are now getting their call list. the president has proposed a half percent which still represents $18 billion that would be dedicated toward deficit reduction. that comes to $60 billion that they would help contribute to deficit reduction as they shed. the question is not whether federal employees will be part of the solution but whether they should be singled out as the piggy bank for all these other issues. if you look at other and legislation, they seem to be the main target. i am talking but using it as the transportation bill. they may be an easy target for a

lot of people. i think it is counterproductive to move in that direction. i want to talk about a couple of different studies. there have been a lot of studies. this comes up in the context of the joint committee. it comes up in the context of other reduction efforts. what we really need to do is take a comprehensive look at this issue. if you look at the federal salary council, if you look at statistics of labor to si data, they are underpaid by 26%. what is the different? the difference is the methodology you use. with the bureau of labor statistics, but they look at the responsibilities of a particular job of day employee and try to compare it to federal jobs with similar responsibilities. for example, you have somebody who has been a pediatrician but then goes to work at nih.

he is supervising 30 or 40 researchers in the area trying to find treatments for cancer. when the folks at the council look at that comment they say not just a solo practitioner pediatrician, but they see somebody who also has responsibility for managing 30 people. it seems to me that is a reasonable distinction to be made. it is somebody who is managing people in the private sector. take a simple prison cook. you could sesay they should receive the same amount of money as a cook anywhere. prison cooks also have to be trained to take care of of violence in the prison or an outbreak. that is why you have these big disparities in a different studies that have been done.

the council said on average when you compare actual job responsibilities, federal employees are 26% underpaid. now you have the cbo study that looks simply at democratic characteristics. if women are underpaid and the work force, that would translate through into that same analysis. that is a different approach. what the cbo approach also shows is that they agree that you have people who are underpaid. withery study shows that highly skilled workers you have people that are underpaid in the federal work force. according to the cbo analysis, it was around 18% underpaid. some of the folks there trying to recruit in some of the most

sensitive positions are underpaid. these are people i would think we would want to make sure that they were able to continue to have in the federal government. to take a support is the wrong way. even if we were going to try to segment out groups here, that would be a mistake in the sense that this is an area that requires a more comprehensive view. people have proposed taking a steady and looking at the discrepancies. they are really getting to the bottom of this wretched and taking an across the board wax. they are able to go after federal employees. i would urge my colleagues to step back, ask yourself the question why there are these big discrepancies between these huge

steadies, and take a comprehensive look at this issue before we do what i think could be long-term damage not so much in the federal workforce. if we do not make these decisions in a smart way, ultimately the taxpayer will be hurt. they are not going to be able to have the set of skills that are necessary to make sure that federal employees can do the job that needs to be done. >> thank you. >> dr. price? >> thank you. the taxpayers that are being hurt are all the american taxpayers. there is a lack of responsibility when it comes to spending. nobody is criticizing the federal workers. did they do great work. i want to commend the senator from maryland for standing up and representing their

constituents. it is a commendable thing. folks at home are looking at us and say what is going on? we believe that these policies are appropriate. an extension of the temporary payroll tax is inappropriate policy. however, we do not believe that we ought to do it without paying for it. we do not believe it ought to be paid for with money we did not have. american people say find the money. we know there is money there. the numbers are clear. they have been reviewed by a

number of folks. the management steady in october of 2011, the average federal government salary was $75,614. that is commendable. the average salary out there in the real world is $52,000. the average federal worker makes about 45% more than the average individual out there in the private sector. a half million federal employees make under half a million dollars. that increase 36% over those that make over $100,000 since the recession began. it is incomprehensible that the u.s. department of transportation, which when the recession began had one individual whose salary was over $170,000. now, 18 months later, 1690

individuals are making over $170,000. they all may be appropriately compensated. however, when the american people look at this and they know the tightening of the bill they have had to undergo an the conversations they have had, when they look at each other and say i do not know how we will be able to send our son to college or pay for our car payments so that we can get to that second job or i do not know how we will be able to do that. when they look to us are around this table -- to us are brown this table, it is incomprehensible that we cannot figure how to pay for this out of another pot. is clearly room for improvement. what has happened in the past? we will go a distant past. 1933, franklin roosevelt did not ask for a pay freeze.

he put it in place a pay cut for federal workers. folks could argue that it is not dissimilar to where we are now. the bulls since the commission has been mentioned. today mentioned a three-year pay freeze. this is not something out of the ordinary. it has been touted by folks on both sides. im we need to recognize that others outside of the microphones has said it is a reasonable thing to do to have a pay freeze. remember the pay freeze is not include the step increase. it is the cost of living adjustment. it is what our seniors have done in this country for the last two years. they have not had an increase in social security. we all want to pay for these

policies. we all want these policies to occur. we need to pay for its with money that we have, not money that we do not have. >> sister -- senator reid. >> thank you. i think the point that he made deserves to be reinforced. if you look at the pace scales of federal workers, lower paid workers tend to make more than lower-paid workers in the private sector. i think that is a reflection of what has been happening over the years. wages have not increased. benefits have not increase. as a result, the differentials go back to the issues that a lot of people are talking about. it is a growing inequality in this country. from my standpoint, cooks and

federal correctional facilities not only have to be prepared to cook but also to do other things, they are probably being in fairly paid. when you get to the other side of the equation where high skilled federal workers, we see much less. there are many examples of this. whokly, we're asking people are receiving high levels of pay relative to federal workers to share their pace of the people they regulate, compare the facilities and computer system and the institutional support they have with the people they're trying to regulate. there's no comparison. we want to attract good people into the federal government's to have intellectual capacity and skills to essentially regulate

effectively and fairly this is not sending the right signal. again, when this argument is tied up with congressional bids, there's no one that does not understand that we lead by example. when you look at the federal work force, you have to recognize that they are highly confident. everyone will say when they go back to michigan and look at the people who are federal workers, and they're doing a great job. they're doing more than they should. they go around to different facilities. they're very talented. frankly, like everyone, they certainly want to be paid. there is a dedication and they are committing beyond a paycheck. i have seen that was civilians.

they have a public duty. when we are not focusing on trying to pay for these necessary tax cuts for middle income working americans, you're also looking at the other side. we're singling it out. we are not doing what is effective on what is appropriate. >> senator baucus, i do not know if there's a senate republican who like to respond now. >> apparently not. go ahead. i could say a word otherwise. go ahead. >> thank you very much. i want to look at this may be from a different perspective, the question of pay fors and

how we will reach a compromise. we have to ask ourselves a couple of basic questions. how do we get a compromise here that will result in a payroll tax cut? how do we do that in a way that is reasonable and fair? how do we do it in the time with which we had? i think we have to start from the basics. the goal is to get a payroll tax cut, which i think we all share, in place. we know the folks that will benefit the most our folks in the middle who had a tough time. here is what i believe. this is based upon legislation that i introduced. the first bill i introduced at the end of last year had a surcharge on income above 1 million and 1.25%. we got 50 votes. we tried it again a couple of weeks later.

between the first vote in the second, i dropped to 1.9%. it is evident from that from that legislation that i think the payroll tax cut or at least part of it should be paid for by enacting a surcharge on income above $1 million. the operative word being "above" a million. they can help share the burden, not just the burden of paying, but the burden of continuing the recovery by helping directly 160 million american workers. i said i jotted down the surcharge proposal to 1.9%. that would raise $145 billion. that is more than enough to

cover not only the extension of the payroll tax cut that we heard resolved, but more than that. that was an attempt at compromise. that was rejected. we still have about 50 votes on that. here is the reason why i think a lot of americans believe this makes sense. this is a reasonable way to help us at this time. there is a direct connection between our reasonable surcharge and direct help for 160 million workers. it is not as if we are saying a surcharge would go into some broad general fund that no one knows where it is going. so, i think the directness is what people are supportive of this. secondly, i think a compromise is essential. both sides have to figure out how to compromise, to come to some conclusion about the principal issue that we face, which is making sure the payroll tax cut is in place.

we need to come together. we need to compromise. in terms of the legislation, i would like a 2.5% surcharge to drop to 1.9%. 1 not in -- why not in the interest of trying to solve this, why not have a surcharge for incomes above $1 million? i am told by my staff -- we can check this again -- that would result in $76.3 billion. and put that on the table for your consideration. >> thank you. >> before i go to mr. levin, just want to say the proposal you put forward has billed the senate several times. it did pass the house with

bipartisan support. that is why that is something that has to be considered. mr. levin? i know we are running out of time. i know there are several speakers on the house side that would like to speak. >> on terms of average, the average income of the hedge fund taxpayer is probably 10 times to 20 times that of a federal employee. so, if we want to talk about fairness, let's speak were broadly. the average. i am sure that is true. >> alright. they pay their salary. >> thank you, mr. levin. >> what? >> i think there is a difference -- why don't we let my colleague make his remarks. >> thank you, mr. chairman. to me, too rapid a look into what we are supposed to do, does

this proposal advance our mission? as far as i can tell, our best tactic is to keep the economy moving forward, rewarding it the hard work of the people who need to make this country be -- even though it has been very tough, helping our middle-class families moving forward, and certainly finding a common- sense solution. and i know we just said the proposal left before us, to tax middle-class workers, up has been proposed before and it had bipartisan support. there are two answers to that. if you cloak the proposal with the faces of the members of congress taking the hit, certainly a lot of people will vote for.

if you remove the faces of the members of congress and leave it what it really is, the bulk of the money coming out of the hides of almost 3 million american workers, most of the middle class, i think most americans would say no. this is not how we want the payroll tax cut to move forward, to essentially get 160 million americans who work the chance to get the payroll tax cut, but doing it by asking close to 3 million american workers to pay for a. they will be getting a payroll tax cuts on their paycheck in one instance at the same time close to 3 million american workers would see a cut in their pay and benefits to cover the 2% payroll tax cut they would be received -- it would be receiving. i do not think this is how most americans would want us to do business. i think it would not be fair to create the tax cut for 160

million americans by asking 3 million americans to take the hit for the. -- to take the hit for them. we have until the end of this month, the 20 of us, to come up with a solution. to my thinking, what senator casey's has proposed as a great deal of resonance, and i think it has a great deal of resonance with the american public. every two years, to contribute a little bit more. we think that would be a good way to do it.

i am asking them to take a surcharge of less than 1% on income if they make more than $1 million. we could not only take care of this, but probably some of the other things we wanted to in this package and those three big priorities we have, dealing with reimbursing are doctors and medicare so 40 million and get their services under medicare and helping americans who are out of work through no fault of the rahm. i hope that the solution that we come up with, that common sense to move us forward -- i hope this does not mean we are beginning a race to the bottom of solutions for americans. we need to lift up anyone in this country who is willing to work. let's elevate and help folks. we want to thank them. i urge moving beyond to something that is common sense and that we all can agree on bipartisan. >> before i invite one or house member to close, with nearly 13 million americans out of work, you have the cbo issuing a letter or week or so alone -- a week or so ago, saying on average the federal workers are paid more than their private counterparts.

it seems to me a cola freeze, still allowing federal workers to get step increases, is a reasonable approach. >> thank you, mr. chairman. yesterday, i was in paterson, new york. the business has been in the business up for 30 years locally in the valley and they export machines that create components for manufacturing throughout the world. they are a great success story. i actually had occasion to find out about the burdens we place on our private enterprise, hard- working private enterprise sector throughout departmental policy, tax policy, fiscal,

financial policy. the number-one problem the owner mentioned to me was to settle the deficit. this was the number one problem. he was trying to earn for his employees, for all those who rely on him, based on his inherent worth in the marketplace. he has to prove himself. his workers have to prove themselves every day. right now, it is a situation analogous to a business who is far exceeded by its cost, and they have to ask for sacrifices, unfortunately from our employees.

unlike the private sector, unlike the enterprise sector, the federal government coerces its operating resources out of the american public, and you cannot use -- will argue with one white. you cannot justify that role employees are paid a much higher rate on average that hardware and -- that federal employees are paid at a much higher rate on average than the average american employee he. and by the same token say that the private sector is something we can tap into. if government is the engine of growth, then we would not have the unemployment we do today. we would not have 63.7% of the work force participating at this point. we would not have nearly 40 million americans either out of work or underemployed.

nobody can argue that. by taking active dollars that would be put into the actual engine of growth and prosperity that pays for everything the federal government does, private enterprise, we would be further towards what we need to grow. right now the people who pay our federal salaries are at nearly $60,000 in the whole. -- in the hole. and that is why we are asking our employees to make a sacrifice. thank you, mr. chairman. >> thank you very much. the the next item on our agenda is -- >> yes, i would like to make just one point here.

we're talking here about discretionary spending. the budget control deficit pact, the debt control act in august cut discretionary spending $2 trillion. that is have been and half the sequester. $2 trillion. i supported a freeze on national pay. the proposal we're talking about here is the extension of the freeze that was in the act, and i do not know if it is wise and frankly -- i do not know if it is wise frankly and dig deep into non-defense discretionary. there are a lot of other places to find revenue. just to remind us -- we have already cut $2 trillion in discretionary spending. which should not go so deep -- we should not go so deep that we are hurting people.

the government can raise revenues elsewhere. >> i think the reason that this additional year is important is the president's commission on fiscal responsibility, the some symbols commission -- the sense and bowls commission -- simpson-bowles commission reconciled federal pay. i think that is why it is important to consider this. let's move onto the next item on our agenda, the president's proposal to reduce the medicare subsidy for seniors. the policy would ask the -- >> chairman, i thought we were going to -- >> i thought we were going to parts b and c. >> i had the wrong agenda.

>> alright. they would pay it a little bit more to their part b and d premium . we will of 45 minutes to debate on this issue. we will begin with the senate. >> ok, basically, mr. chairman -- we see medicare beneficiary premiums by $45 billion -- reducing medicare benefits your premiums but for two billion dollars i believe is not good. we pay doctors more. we're taking it out of the hides of beneficiaries, which does not seem to make much sense to make. if we want to cut docs by the same amount, that is fairness. that is balanced. i do not know whether the american people think it is fair

to pay more to doctors and to get out of the hides of seniors. i just do not think that is what you want to do. i will have more to say at another time, but let me just say i think it is totally unfair. there are other places you can find more fair and balanced of says dennis. we should not be -- more fair and balanced offsets it then as. we should not be penalizing seniors while increasing dr. pay and making that adjustment

here. anybody else want to speak? >> senate republicans? >> thank you, mr. chairman. i will just speak briefly. my colleague wishes -- there are other ways to do it. the only other ways we hear our tax increases. i thought we all agreed that high income beneficiaries that are eligible for medical programs paid for by the taxpayers could afford to make some sacrifices here in receiving a little less in the way of benefits or paying a little bit more for what they received. we have all heard about warren buffet. i do not think taxpayers need to subsidize their annual -- his annual exam. this is what it is all about keeping these high-income people do not need to receive the same medicare benefits as others. this is not a new idea. this is something the president proposed. this is something the white house proposed when we first began our discussions. back in the biden group. we all agreed to a. i do not know why all of a sudden now people want to put a

they do not need these medicare benefits. i think we're all in agreement on that. is just a question of how low you wanted to get. for millionaires and billionaires, you do not need to give them free medical care. this is what the president proposed. here is what he said. he pitched this whole thing. "to improve the stability of the medicare program by reducing the cost of subsidy from those beneficiaries who can most afford them." the 20% increase for the eligible medicare part d subsidies, which we provide, and the part b subsidies.

is seems only fair that we ask some of the people at the height and to pay a little more. as chairman baucus has said many times, we need to look at the entitlement side. well, this is the entitlement side. i think it is a no-brainer to say we believe that a hard- working taxpayers should not be subsidizing the cost of very wealthy, retired americans when those people cannot afford these medical benefits on their own. >> i would like to just add on there. there's a big difference between the so-called millionaire's surcharge and what is proposed here. millionaires are making $11

million. [laughter] these people do not make above $1 million. some may. most do not. most do not. the current practice is ramped up. those incomes, $100,000 -- their medicare premium is 50%. date paid half. -- they pay half. if your income is $160,000, it is 55%. that is a pretty good hit, frankly, for someone making that income. and the proposal is to raise that significantly more, in effect the premium that folks will have to pay.

that is why the house does not want medicare to the new sure it -- beneficiaries to pay for the payroll tax cap. that is health offsets for payroll. we generally decide in this body to help pay for the sgr's. we do not want these offsets to pay for non-health person's. >> i would just say -- before i go to mr. levin -- listening to the floor, but if discretionary spending is off the table, then we have mandatory spending. this is mandatory spending.

we need to keep in mind. we are talking about retiree in come -- income. right now at $80,000, that will only hit 5% of the seniors with incomes. while we are throwing around the salary levels, it is important to keep in mind the retiree income levels. there are a significant amount of assets behind that. mr. levin? >> mr. chairman, i think it is useful we're having this discussion. i think all of us wants to exchange views and not essentially say there is not any give on anything. so, let's have a good discussion about what this is really all about. all due respect, this is not

about millionaires and billionaires. maybe some people who are millionaires are not having income over $1 million in a teeny tiny percentage of cases. medicareking about beneficiaries who have income much, much, much less than $1 million per year. much less than $200,000. i think we should understand what the potential impact is. people in the height middle income brackets -- in the high- middle income brackets will have paid more in many cases than though i -- how will have paid more in many cases than those in the low income brackets.

that is the way the system works. they work in most cases. so, essentially what the house bill does is over time, because there is not an inflation factor, is going to increase the impact on middle income seniors. and they may be higher middle income seniors, but they are not the very wealthy, wealthy seniors. so, the president proposes this as part of the a multi trillion dollar approached. what is being a pro -- what is being proposed here is part of

the effort to extend these three major, major programs for the rest of this year. and what is being proposed here is a change that will ripple through for many, many, many years and have an increasing impact on taxpayers come up who i think in the vast majority of cases -- on taxpayers, who think in the vast majority of cases, consider themselves middle income and in the clear majority of cases are middle income. so, let's have a discussion of what this is all about. is this mandatory? i do not think we should be impacting discretionary. when we impact with the

mandatory, as senator baucus said he could do it in the right way, and i think the question is is this the right way when you look at all the factors for all these people under medicare? they are not millionaires in most cases. they surely aren't billionaires' in most cases. these are not going to be people who have income of $100,000 a year, when the position is we cannot touch the taxation of people whose income is over $1 million a year. they are multi-multi- millionaires. >> clearly, with the deficits the country as racking up again this year -- more than $1 trillion -- we do not have the money to extend more provisions

without savings to pay for a. we also know medicare does not have the money. it will be insolvent in 12 years without action by congress. today, we start some of the reforms, and frankly all the republicans and every democrat around this table has voted for them. this is the president's proposal. when he pounds the desk and says "i am sending you a bill," this is exactly what he is doing. he includes this in at this year. he has pitched this policy to senator kyl. like the other two provisions today, it is a bipartisan provision that members of the other house support.

i know senator casey is sincere in looking at higher taxes. but that approach has failed five times in the senate, just this session. 6 if you count unanimous rejection of the president's budget. with the clock ticking, i do not know how fruitful that is. why don't we focus on the policy republicans and democrats and the president have supported, and make sure that seniors who are retired and are making $160,000 or more pay a little more of their medicare premium. is what we have done in part d already. it is clearly working well. we're looking at bipartisan proposals that can actually keep us from borrowing more money from lenders in foreign

countries this year. this is one of those common sense provisions we ought to pass. at the end of the day, it seems today we're hearing no for the sake of hearing no. we have all voted yes on these proposals. so, why don't we agreed and accept them as bipartisan proposals and get on to the other bipartisan issues we have? i yield back. >> senator -- >> thank you, mr. chairman. first of all, let me concur with senator baucus. to me, it is a logical to say we are going to add medicare beneficiaries, -- we're going to ask medicare beneficiaries, most of whom do not work, to pay for the payroll tax for working families. i concur with senator baucus

of's observation -- senator baucus's observation that we should not be looking at this kind of offset for cost. i think the point that mr. levin raises is worth repeating. the intent is permanent until we reach 25%. one of out of every four seniors would be required. it would be as much as 25% of seniors that would be subject to this surtax. let me point out the financing mechanism for medicare allows for people who make more to pay more for the same benefits. we ask those who are more well- off to contribute more currently. i think we need to emphasize

that. as i am sure everyone here is aware, the payroll taxes people pay for social security is capped at $106,000. but the amount that is contributed by the fight the taxes -- fica taxes for medicare is not capped. if a person makes $100,000, they are paying into the medicare trust fund, whereas someone who is making the maximum on the social security withholding, $106,000, is paying little less than $1,600 into the medicare trust fund. so, we already have a progressive way for those who are more well-off paying for their benefits when they retire. secondly, we changed the law on medicare part b in 2007.

that has already been pointed out by chairman baucus. we have an increase starting at 35% and going up to 80%. that is already in law. and lastly, in the affordable care act, we put in an additional surtax going to 2013. i must tell you, in response to senator kyl, there is a big difference between someone who is earning taxable income over $1 million and someone who is retired to has an $80,000 income. there is a big difference here. i think we would acknowledge that difference. the last point i would make is this. medicare part b is a voluntary.

the more we put these types of payment structures in place, the more people who are well off will choose not to enter the medicare system, the part b system. it is their chores. but if they start to have to be paying close to 100% of the cost, why would they opt into the system? i think this is a slippery slope to changing a program where all seniors are eligible to participate to means tested and basically becomes a safety net program rather than a social insurance program. i think that is a dangerous path for us to be down. we have taken responsible steps here to make sure those who are well-off contribute more. i think this would take it too far in that direction. i would urge us to modify or

reject this. >> i would just say that every democrat on this panel voted to freeze the income threshold for a decade. president obama is suggesting to continue that for a bit longer until the top 25% of seniors are income threshold tested. we are suggesting this as something every democrat has voted for, the president forward did it to the super committee, and we are trying to find a way to pay for the policies we are doing. and this, to me, is a bipartisan suggestion from the president that we are trying to get -- >> mr. chairman. >> our colleagues to accept. >> you were the one that raised the 5%. >> currently $80,000. >> if this program goes forward, it would be well over 25% of

seniors subject to this thing. i think that was misleading to say 5%, because it will be a much larger number. ultimately, it will affect a significant number of our seniors. >> current law is 5%. the president for it to the super committee suggesting that the income threshold, and in the health care law that were frozen for 10 years. >> i am trying to understand the house proposal. as i understand it, it freezes -- it reduces the 85,000 threshold to $80,000. secondly, it freezes the increase which is normal on bracket. and it is my understanding that will lead us to a point under what congressman levin mentioned that it will be as a beacon percentage of our seniors will fall within these brackets. that is the only point i was raising. it is not just 5%. it will be a much larger percentage. that is the proposal we had

coming from the house. >> which is the president's proposal. >> the president also proposes a surtax on high income. are we going to consider? >> the senate rejected that. had the senate included that, that would be in the scope of congress, but the senate rejected it. >> if we are going to get into the scope of conference issues. >> we are. >> i hear what you are saying. listen to my republican colleagues talk about how we have to come together. democrats and republicans have to come together. if we are serious, we have to compromise as we should. and we want to make sure we are fiscally irresponsible and we have proposals we believe can get a majority of democrats and republicans together on offsets. the sooner we can get to those discussions, the better off we are. to go through this list of issues that you are isolating, i

am not sure is helpful to reaching an agreement on a set of offsets. but let's not -- if you're going that it is the fact not them of the house bill, it will be a tough climb. >> you are asking us to consider something that has failed the senate repeatedly. >> as you know, it received 50 votes in the senate. we understand it was in the context of a proposal that did not have the republicans engaged in getting it accomplished. we now know that both democrats and republicans want to make sure we extend the payroll tax holiday by the in of this month. so we have the focus of both democrats and republicans on getting the job done for the american people and for middle- class families. i think we are all going to have to compromise. i expect there will be things in

this conference report that i would prefer not to be in there, but that is what compromise is about. i think the republicans also have to understand there will be things in here that you may not particularly want to see in conference. we can argue each of these points. i think there are serious policy problems with his purple. >> i understand. >> that is the preservation of medicare as a social insurance program. >> we have stepped all over senate republican's time here. if the senate republicans wish to make a comment, or i will go forward round robin. mr. levin? >> i think that was a very useful energy. no, seriously. i do not think we need to tie ourselves into knots. how much time?

>> 21 minutes remaining. >> how much time do we democrats -- >> we will continue to do rows. we have 21 minutes. we should be able to get to two more speakers. >> let's put into perspective what this conference is all about. this is not a conference to reduce the deficit. this is a conference to extend emergency measures. people are unemployed through no fault of their own because of a bad economy, a lot of which had to do with the policies of the previous administration, and now we have a situation where these unemployed people are going to lose their benefits. and if we do not extend their benefits, not only they but their families will go without the basic amount of money to survive. secondly, and this is an emergency. therefore, it ought to be treated as an emergency piece of legislation.

secondly, we have a middle-class tax cut that we all say we want to support to, and this middle- class tax cut is one that many of us think should not be paid for at all because the upper income tax cuts have never been paid for, and i am sure our republican colleagues will say, extend the bush tax cuts but do not pay for them. but if you're going to pay for them, we have got to make sure the economy is improving. so we need to find offsets where we are not putting the burden on the middle class again. we are -- or the burden on their economy recovery. i do not think we should put the burden on medicare beneficiaries or seniors, middle-class workers. when we say a surtax on millionaires, you might want to say over and over again it has not passed the senate, but that is not the test. the test is -- what is a fair way to offset these costs?

rather than deciding that some medicare beneficiaries are rich, and we are going to make them pay more, we are saying that those who are genuinely wealthy in our society should not pay more in their share of the taxes. who is rich and who is not? we have a means testing of the medicare premium. that was in the affordable care act. people who have higher income pay more for their medicare part b and part d premiums. the president proposed something. the president proposed something less drastic, but it was part of a large and long-term deficit reduction package. we are not looking for a long- term deficit reduction package. we are looking for something to pay for the short-term costs of the payroll tax. and, therefore, i do not think

we ought to impose this on the medicare system. i think senator -- was articulate. we know people will leave part b if they have to pay 90% of the costs because that is what the house republican proposal would impose. aid right now we have cost sharing for parts b and d. you get a social security benefit, and you live on that, this is a significant burden for those who have fixed incomes. it does not just simply affect the wealthy. in fact, let's decide who is wealthy. under the republican proposal in the house, when it goes fully into effect, 25% of seniors will all be paying more for their medicare premiums. and that means that people who

now make $40,000 a year would be affected. i do not think any of us would say that people who have $40,000 a year in income are wealthy, are higher income. >> will the gentleman yield? >> no. >> i think the brackets are frozen under the proposal. >> if you look at where people are today, the people who would be affected today when this is phased in would be those are in today's dollars making $40,000 a year. and i think the point that senator carden made, this distorts the medicare program. it takes away the social security, the social insurance part of it, because when higher income people decide to opt out rather than pay so much of their part b premium out of their own pockets, they will go elsewhere

and by private insurance. those are the healthier, wealthier people. you will leave medicare with a sticker, a lower income people. and that means the entire medicare system will increase in cost. i have heard a lot of sentiment about millionaires should not have to get a free ride. wealthy people should be required to pay more, yes. in their taxes. but we are looking at the amt debate, higher income was defined as a taxpayer with incomes above $250,000. i just think this is unfair. it distorts the medicare system. it will be a great burden. on a lot of seniors. they already pay more for their medicare part b premiums. and they already pay more into the system over their working years in a medicare tax that is

based on their income. >> thank you. ms. elmers. >> thank you. congressman waxman, you know we keep hearing about emergency, a emergency. what does that translate into for the american people? if this is an emergency, then the government should not have to pay for it and we should not have to pay for. unless, of course, you want to tax the hard-working small- business owners who are our job providers in this country. that is what i am hearing. >> i think you are incorrect in what you are hearing. >> i am not yielding my time. now, if this were an emergency, we would have passed this at the and he of the year, 2011. emergency, this would have been taken care of. that is why what you say is completely and totally incorrect. this is not an emergency. the american people are in hard shot. we need to come up with solutions.

we have to pay for. that is what they're asking for. they want accountability, of efficiency. and they are tired of continuing on. senator carden, we keep hearing about fairness from you. fiat fairness. the purveyor of fairness. how is it fair to continue to ask our seniors, and i apologize because i am going to digress for a moment, how is it fair that we have asked our seniors to have a cola freeze for two years and yet will continue to pay our federal workers without that? how was that fair to our seniors? >> there is a freeze. do you want me to respond? >> the point being, that already existed. and now you are basically saying there are federal employees who make more than those in the private sector -- should not be touched. moving on to this proposal, when we are talking about individuals with medicare part b w2who are of higher income, $400,000, they

will pay a little over $300 a month for their premium. this is the president's proposal. the three provisions we have put forward today for the $70 billion are all bipartisan, have already been hard partisan. why is it today in this conference committee that all of a sudden it is not? these are things that republicans and democrats have voted on in the past. that is why they were chosen because they were already in agreement. and yet, somehow today, they are not. how is that possible? ms. schwartz voted for the pay freeze. that is a good indication of where we are at, and yet we are continuing on this sure raid as if that is not the case. this is the president's language. which one of you is going to the

president and tell him you do not agree with his policy? i would like to see that. we have got to move forward. we have all said that this is a time sensitive issue. we should have taken care of it by the end of the year. it should have been done, but it was not. so here we are today. let's move forward. we already all agree on these provisions. let's move forward. we are $70 billion -- we are have for their. i yield back. >> senator baucus, there are 11 minutes remaining. >> mr. chairman, i think what i am hearing is sort of the classic cherry picking. president obama suggested this, and so we have to support that, when in fact, what i believe the president suggested was a comprehensive plan.

mr. waxman suggested to do with the deficit which included increasing taxes on the wealthiest americans, which you have said persistent leak is not within the scope of this conference. so to focus in on part of what the president said and ignore the rest i do not think it is instructive or helpful. what we are saying is that we have to look for, and again mr. waxman said it well, constructive ways to fund these three programs which i believe are designed to confront a real emergency in the country in terms of people without work, people who are working but need more money in their paychecks, and the srg situation. i think you also have suggested time and time again, the senate rejected this and this and this. i stand corrected to be corrected, but i think all of my colleagues on the republican side rejected the house budget that came across with deep medicare cuts. >> we all supported it.

everyone. >> every republican in the senate ordered the house passed a budget last year. >> well, that is what i opened up to be corrected. [laughter] >> it's ok. i believe in fair exchange. we are in a position that you can't go ahead and take a little from here and say, ok. it is a bipartisan issue. has to be a collective package. i think it would be terribly unfortunate to simply cut programs that benefit the same people who need these payroll tax cuts. they need these unemployment insurance cuts to do that. so i would hope very, very seriously that we can start looking at constructive ways to deal with this issue. i think the point my colleagues

have made are excellent. this goes way beyond what the president -- if you want to look at what the president. as i understand it from the information i have received, if his program with respect to these provisions for medicare part b enrollees, 14% of seniors would end up paying for it, not 25%. that is correct. under current law. again, the real point i want to make to be sort of taking this and do it fairly, taking these provisions out of context, individually suggesting that because they had the president's endorsement, fails to recognize he was talking about a much broader set of issues. frankly, if we are ready to start dealing with revenues, entitlement reductions, spending cuts, etc., the we'll be there,

but if it is just select a provisions it is unfair to characterize that this is bipartisan. this is all of us together. >> well, just to clarify. this is what the president submitted to the super committee. you are right, part of a larger package. but, it also passed the house as a part of this bill with bipartisan support. so it is come now to the conference because of that. but it is identical to what he suggested. all of the items he sent to the super committee were not somehow into related and tied together. yes, there were a number of policies that he made suggestions on, but it is really senate republicans' opportunity here. senator crapo? >> thank you. we are obviously running up

against some key philosophical disagreements about how to deal with the issues before us in the conference. it has been said that this is not a conference to reduce th e deficit. it is true. this conference's job is not to put together a comprehensive debt package that congress needs to do. but the work we are doing here is a very relevant to that effort. and at a minimum, this should not be a conference to increase the deficit. we are talking about how to deal with extending the social security payroll tax relief. we are talking about how to reform and extend the unemployment insurance benefits at the difficult times we face in our economy right now, and talking about how to reform medicare and feet sgr to make sure seniors continue to have proper access to medical care. and there are costs associated

with each of those, but one of the points we have to remember is that just because we have issues that this conference is needing to deal with, that reflect agreed costs that i think that we have brought agreement around this table to support does not mean that we simply have a free hand it to just below the debt out or to do so in a way the runs up the deficit. the bottom line is that we have got to remember, as we conduct these deliberations, that every one of the individuals we talk about in the context of our discussions today, whether it be with regard to the premier support or whether it be with regard to the justice to medicare or whether it be with regard to any other aspect of the offsets, every one of the individuals we talked about today is impacted as much by the damage to our economy and the damage to their families and

their jobs by our mounting national debt and our refusal to recognize that we have got to stop the tax and spend approach of the federal government. as much as they are by these adjustments. we are trying to find some adjustments that have the least amount of pain. we are trying to find adjustments that have broad support. but the bottom line is, we simply cannot always say that we face some of emergencies. we face a critical priorities that we need to adjust and because of that, we have to do what congress has always done and that is just put it on the credit card. we can't keep doing that. that is why we are having a difficult discussion today. and in the context of the question of whether we should address this problem by raising taxes or by dealing with the spending side, i think there has been some legitimate agreement

among all parties that the revenue peace and the spending pc to be a part of how we approach it. we should remember, and if i understand this correctly, the tax proposals are permanent tax increases. they do not just go on for two years or the year extension like we had for the payroll tax relief and the unemployment relief. they are permanent. even though they are scored for 10 years, they go on indefinitely. and what we eat -- let's -- that is just one of the difficult parts of how to put together the kind of relief we need to put together for a deficit neutral package in this committee. that would not ultimately represent a continued expansion of the federal government. and i just want to make the point that i think it's

incorrect to perceive this as cherry picking or as trying to go in and identify some of the specific areas that seem to be easier achieved and that that is somehow an inappropriate way to approach this. i really believe we have got to start recognizing that, although this is not the time and place where we will put together the large comprehensive debt package, it is the time and place for us to do the objectives of this committee's work in a way that is deficit neutral and we have to start finding the pieces as we do so. >> thank you. we are beginning to run out of time. do we want to do one more speaker on each side for the house? >> we need to limit it to that? >> i'm thinking we can have another speaker on each side and then move on. >> miss swartz will speak.

i want to say, mr. chairman, it is not going to be helpful to refer to hr3630 as a bipartisan bill because it was not. and i think we should just stop calling it a bipartisan bill. here were jsuust a few democrats and then 99% of democrats voting against it. ms. schwartz. >> thank you. roy also -- the reason we are here at this conference committee is because, in spite of the house-passed bill, it did not pass the senate. the only way we can reach compromise is by accepting the house-past bill, it is not going to happen. i think the reason we are here is because we ended up with a thank you agreement, and an agreement to come back together

and to try again. and -- in fact republicans were very clear that what you are upset about is that the extension of unemployment of benefits and the payroll tax extension for 160 million americans and the assurance that we protect medicare access to physicians for beneficiaries was not long enough and we agree. we start at the point where we agree and we want to meet those goals. there has to be some compromise with us and the senate. otherwise, we are back to where we were, and the reason we got here which was the two month extension, which you agreed you want to do for 160 million americans and so do we. that an emergency long-term unemployment is real and that we ought to extend unemployment compensation. the issue that we are talking about in the statement is specifically do we pay for it on the backs of seniors, who are

counting on the promise of medicare to help pay for their medical expenses as the seniors? understand the notion that seniors do not now pay for medicare is on true. -- untrue. it was suggested they pay nothing, and it that is not true. seniors pay into parts b and part d. it was said. in fact, they already do. it has been pointed out several times that if we have seniors already paying between 35% and 80% of part b and part d, which is physician services and prescription care, that what you are calling for in this suggestion is that it go higher and it continued to go higher and higher because we freeze the amount of the income. so that over time seniors will

be asked pay more and more of their medicare costs. i do understand that that is the goal. i am on the budget committee. we have this debate that is the goal. it is to shift the cost to individual seniors. the reason medicare exists and the -- is because, seniors in this country four years ago were going bankrupt because they could not pray for health care. we do not want to go back there. if you shift the cost to seniors, we will start to see seniors going bankrupt again because they cannot afford to see their physicians or get the health care they need. this is about health care security and income and securisecurity for our seniors. there are other discussions we can have about medicare. there are opportunities about the deficit. but to pay for the middle-class tax cut we have all agreed to, to pay -- we do not believe we should pay for the emergency spending on un employment

compensation or to protect medicare beneficiaries, access to doctors, it should not be paid for but they are paying increasing amounts for their benefits. this will end medicare as we know it. it is a cost shift and it is being raised at a time when i think it is inappropriate for us to pay for these particular expenses in this way. so i yield back and hope that we can get back to meeting the promise for our seniors in a fiscally responsible way. >> mr. brady is recognized and that will conclude this issue. >> i will be very brief. the discussion today has been good. i do not understand at all from the same point of the president has yet said yes to this provision. it is his provision. republicans have said yes. and every democrat at this conference committee has voted to require higher income medicare recipients to pay more

of their premium. this seems to be the easy as provision on the table, but nonetheless, if this is controversial, if what was at last isa no for today's purposes then i and others look forward to provisions, ideas offered by the senate within the scope of this committee that can in short that we do not go deeper in debt. the american public is looking for truth tellers. medicare is in trouble. we know this has to happen. i do not know why we keep putting it off. but if you are going to put it off, then i think it is responsible to bring back and offer that has equal bipartisan support of in the house and senate as this provision. mr. chairman, i yield back. >> you know, again, i just think it is important to note that the median income of seniors is

$25,000. currently we are at $85,000 which is the top 5%. again, these are proposals the president said. the last item on our agenda is a proposal for which the various versions have been signed into law, not once but three times, and that is recapturing overpayments of tax payer funded subsidies in the health care law. it is a policy that was first put forward in the health care bill itself and later by senate democrats and the extenders legislation. hhs secretary sebelius has described secret -- previous efforts to recover overpayments as making it "fairer for all text." paraxpayers." senatorrn it over now to baucus. >> thank you, mr. chairman. i think the outset it's important to remind ourselves that is a proposal by the house for a tax increase.

now, there are tax increases and there are tax increases, but this is a proposed tax increase. in the affordable care act, it was designed to set up the exchanges for the competition, so individuals, especially those who are not employed by a company looking to find health insurance could go up to a single site and compare, go shopping, just as one does with expedia or velocity in trying to find a car rental or hotel. the thought would be that would be inappropriate way to help people who did not have health insurance, especially individuals, to find a way to find health insurance. the act also provided that when a person shops, he or she

sends to the irs his anticipated income, because as we all know, to get more coverage in america, medicaid limits were raised a little bit so more people could qualify for medicaid. but then there are a lot of people who would not qualify for medicaid who are low-income that could not get health insurance unless they got a break, unless they got some assistance, a subsidy. so we provide subsidies to 400% of poverty. the problem of rises when 0-- arises when somebody finds out that his or her income is higher than anticipated and that happens. find a job, you never know what. things just happen. there is a thing called a true up, where irs looks at your tax

return to see if it matches the tax credit you earlier were warranted because your income was at lower levels to qualify. we in the affordable care act did provide -- if you got more credit than he should have, send some of the back to the irs. that is only the proper thing to do so people are not overpaid. the fact is that the first the act was passed, for those with income as below400% of poverty, the california 2 was50 for individuals -- was 250 for individuals. it has been increased a couple of times. the fact that that cap is quite high, which means that much more would have to return back from the taxpayer, and basically, it's -- this proposal before

us raises the maximum amount of individuals must make the irs from $250 and $2500 for individual and family respectively to $1600 and $3200, so the cap is quite a significant increase for those folks who are below 400% of poverty. the cap is pretty high as it is now. it's pretty disruptive when you have to go back and pay back more than you have to pay. i think the levels we have in current law are in adequate, -- are adequate and appropriate and it would not make sense to increase that cap that much more, because that not only is a tax increase it would be a significant tax increase on individuals. >> mr. chairman.

>> i figure you can use mine. [laughter] you do it? >> i got it. >> it's the angle. >> the light is much brighter when you're on top of it. when you are looking at it from afar, it is much dimmer. >> i do not think it is on. >> there it goes. >> i would admit error. i thought we were talking about the obama budget and the ryan but and i believe you were just talking about a rising budget which five senate republicans did not support. -- the ryan budget. this is not a tax increase. it has nothing to do with taxes. with all due respect. when the government pays a

subsidy to somebody to help offset the cost of insurance and it turns out to be too much, and the government says we need some of the back, that is not a tax increase. it is an overpayment. the question is how much of that overpayment should we demand? current law, the $mom is1250. this would take it to $1600. this is not a matter of principle. it is a matter of amount. the question is do you favor the current law or would you favor raising that to $1,600. a, it is not a tax increase precautio. b, not all republicans supporting underlying law. the amount set was set by democrats in the house and senate and we are proposing that amount the increase by relatively small amount, that's

all. >> mr. levin? >> in a way, it's regrettable that these are the three items before us, because i think if anyone leaves here thinking that our task is impossible, i hope they are wrong, because we need to act and act within the next few weeks. so let me just say a few words. how much time do we have? >> 38 minutes. >> i want all of us to have a chance so i will say this briefly. i think what senator baucus -- you describe the problem very well, what he called a tax increase or not. we all know that the exchanges are set up that some people are

going to have to have help expanded,we've therefore, the coverage of people. and help will be based on income which will vary from year to year. and so we knew that there would have to be some return on an overpayment that was built into the original law. what has happened is that we have increased in several cases the amount that has to be paid back. and i think we now need to look at the consequences of carrying this one step further as senator baucus said. that is what we need to do. the cbo and the joint tax estimated that when we used it previously, that the cumulative

effect would be 465,000 people would for go health insurance coverage. that was their estimates. when we're trying, some of us anyway, all of us, to increase health care coverage. and the likelihood is, according to these estimates, the same sources, as i understand, it is that if we over do this or however you want to describe it, if we carry the further step, about 170,000 more people will forego coverage of health insurance. so, in the search for -- >> will the gentleman yield for a second? >> that are 170 that will not

take coverage through the exchange, correct? >> an estimate -- i am glad you raised that. they all know exactly how many of these people will be left without insurance altogether. and it will shift, as we don't want to do, people getting health coverage instead of through insurance to the emergency rooms. and nobody 10 can be0% sure of the -- be 100% sure of the exact number, but what we can be sure of is that tens of thousands of people will be without health coverage. this estimate is well over half a million. that is the cbo. if you read the cbo and the joint task committee analysis, that is what they said. that is why the last time around, some of us proposes -- opposed legislation because of

that. i just want to raise that and realize that, as we try to stay on track of finding solutions if we might, that we do not take positions that essentially make it much more difficult. >> mr. walton? >> thank you, mr. chairman. i want to remind us that we are here to find a long-term solution. house republicans in the house were here for a one-year extension payroll tax cut for working americans. a two-year fixed so seniors can have access to doctors and a one-year extension of unemployment to help people. we offered that. the senate came back with a two- month fee proposal which we agree to because we can never have a meeting like this because we could never get conferees prior to christmas in the senate. so here we are. as we look at these things, we are trying to find offsets where we thought there was some level of common ground. this is a bipartisan offset.

every democrat on the conference committee has voted to increase the maximum amount of exchange subsidy overpayments that need to be repaid. every member. hhs secretary sebelius described this offset when it was used as part of the doc fix extender by senate democrats as making it fairer for all taxpayers. the democrats' health care a lot failed to adequately protect taxpayers -- we are talking federal subsidies to purchase health insurance. when we talk about taxes, if you do quarterly withholding any projected income at the beginning of the year in you do not adequately with cold and of each quarter, the irs not only makes to pay what you owe, but if you are off by a certain percentage, you pay an interest payment by not having enough withheld. what we are talking about is not too dissimilar. that is you think by income at the beginning of the year qualifies me for certain tax-

funded benefits, a subsidy. and as you go through the year you discover your income went up more than you thought it would. guess what? you trigger over that eligibility to be subsidized by the taxpayers. the right unlawful thing should be you do not get the subsidy. you were not entitled to in the first place. that is what this proposal is all about. it is about fairness to the working men and women who are subsidizing all of this by paying the taxes. and if he were not eligible to get a subsidy from taxpayers, you should not get it and you should pay it back. this is not fully require total recruitment from wmy understanding. it requires half. i would think if you are not legally entitled to the subsidy, why do get to keep half of that you were not entitled to? by the way, this country has a deficit problem and we should not be subsidizing people that cannot legally have the right to the subsidy to beingin with.

the house passed provision would reduce the deficit by $13.4 billion. that is less by the $19 billion introduced and passed by democratic-controlled congress, considerably less than the $22 billion saved in the 1099 repealed and passed by the senate 87-12. so this reasonable pay so we can move forward and provide the middle-class it continued tax cut for the rest of the year. picture seniors can deal with what they are covered. i am glad to hear my colleagues going back and forth on the budget. we are waiting for one of them to come across so we can take it up. i yield back. >> i do not think i have any

other -- >> let me respond. there is a lot of agreement here as to the purpose of this adjustment. we wanted to provide affordability for our of lower income wage earners. that is why we provided credit. that determination is made before we know the taxable income of the individual. people make estimates in good faith. we want to make sure that they are encouraged to use this system. that is what we want them to be. from the beginning, we recognized there was a need to do an audit at the end of the taxable year so that it was not an over credit beyond what was reasonable. you are correct. this is part of the framework

for how the credits was intended to work. it was included in the affordable care act. we have adjusted it with the payroll tax issue. we came together and said let's make a further adjustment. we did that. my concern is, where is the right level? where people are encouraged antipathy insurance that is part of the system and costs less money. we have a fair adjustment for the purposes of the taxpayer. i would feel more comfortable if we had hearings on this. and we made a decision based on policy rather than a dollar number to fit into this report. that is what makes us nervous.

his point is one we have to reflect on. there are less people using this as a result. that is something we have to think about as to what impact it has in getting everyone into the system to have a more efficient health care. i think this is a legitimate area for discussion. i regret we have not had more committee input through the regular process so our policy is based upon good health care policy and not just plugging in a number. >> i think it is the senate republicans. >> we are easy over here. we all trust each other. >> it helps you have fewer numbers.

>> we are trying to figure out who is next. >> mr. chairman, i think this underscores what has been said is that there is a danger. we are reaching a tipping point. people might choose to pay the penalty not to have insurance rather than face the danger of may recapture in their taxes. that leads to the potential of 170,000 people. most likely those people would choose to in boyd insurance of the healthiest people. syria have made further situation where, if you are ill

or you have family members coup are running the risk of paying a ,igh penalty, if you're healthy you pay the money. that defeats the overall purpose of health care reform which is to enroll the largest possible number of americans including healthy americans. what we have done in the past is we have used this. we are at the point of overusing it so we undercut and cost ourselves even more money. with that, i think that for flax what the senators have said. there is no question we have done this before. i think we are reaching the tipping point where it will have adverse effects going forward.

we will end up plant -- paying more. >> i think we had the senate republicans yield of their time. >> mr. waxman wants to say a word. >> i will try to be brief. i was always worried about the medicare premium. it could become a piggy bank. we adopted a means tested premium in the affordable care act. that made sense because it was a way to raise money by asking upper income surged -- seniors to pay more. i was trying to figure out, we all voted for this. we voted for means testing and

the affordable care act. republicans did not vote for that. they voted in the house for the proposal. at what point do these things that we voted for becoming a piggy bank? if we are going to increase the premium even more, the republican proposal goes too far. this issue of the tax increase, let me give you an example of what we're talking about. somebody who gets a tax credit is pretty low-income. the upper income does not get a tax credit. the lower income people do. suddenly you have a job and you get a bonus. that bonus pushes you to a point

where when you look how much money you actually made, you are over the amount for the tax credit that you got. it is fair to say to pay back some of that money. that is what was in the affordable care act. this provision, let me give you another example. we are talking about the tax being based on a filing of the two years ago. this year your spouse got a job and you have the job and the tax credit you got to be able to pay for your insurance is not justified because you have a hiring,. you should pay some of it back. we agree to that. congress said the should pay more back. they did that twice since the ford will care act.

that was when we had to pay for the bill to repeal the irs withholding. people did not like it. let's make these people pay a higher penalty. we did that when we have to continue to pay for physician fees. they said people will pay a higher penalty. we hardly gone to this group and increased their penalties twice. and we have not given them tax credits. this in perspective. what made -- what may be reasonable in terms of a penalty to its to a point where it is unreasonable. if you are a person in the middle to low income and you need help to pay for insurance but you heard about a friend of

yours who had to pay this tax penalty, you might not even apply for the insurance. you are taking people out of the pool to get insurance coverage. the tax committee said this could be 170,000 or the next decade. they will not even apply for insurance. if the penalty is too punitive. that is not a good result. it is not a good result for people who did not plan to be overcompensated in their tax credit. they are really hit with a whammy because they have to pay this additional tax. i think we should put both of these issues into perspective.

we all voted for these things. republicans and democrats. don't make these people be the piggy bank for paying what has to be paid for. middle-class tax cut, and doctors to be paid. why should we ask people who deserve a tax cut so they can get health insurance to pay more, or seniors to pay more, so we're not asking people who make over $1 million a year to pay more? that is what we mean by fairness. you do not go after middle income people to pay more and not those who are at the top. if you want to pay for these things. don't use the argument it does not pass the senate. that did not improve anybody.

-- impress anybody. >> this is surreal. i don't mind telling you. the question is not whether we are going to tax folks who have a greater income. the question is whether we are going to subsidize them less. this is an exchange of subsidy recaptured. -- subsidy recapture. all of us voted against it. that is another discussion. the 170,000 figure that has been pointed out that would not be eligible for the exchange, those folks -- at the level that the democrats, when the past to the

bill, said would be capable of purchasing of health coverage on their own. so, the subsidy is not a tax. it is going to assist individuals below four hundred% of the poverty level to purchase health care coverage. those individuals were paid more, given a greater subsidy, than other folks based upon their iras filings. this is the height of trying to get to fairness for all the taxpayers. so much so we have even had members of this committee and the senate leadership weigh in on how fair is. in a release earlier, mrs. the

caps -- this is the quote, "the cap on the payback would met -- amount would be on a sliding scale based on the income of the recipient of the tax credit, making the policy fairer to the recipient and all taxpayers." at the risk of beating this a little further, another quote on this policy. >> you are good. >> "this policy does not change the tax credits for which people are eligible. instead it changes the way when they have received more credit because they earn more money in a given year." i am an orthopedic surgeon.

are like a little meat on the bones. let me put a little meat on the bones. at one example of the kind of numbers we are talking about. a family of four earning $50,000 in 2014. their exchange subsidy would be $10,950. the subsidy is $10,950. if the spouse returns to work and the kids were off at school. get a job teaching school or something like that and the incumbent up to $79,800, their subsidy would go from $10,950 to $750.

that is the same amount that any family of four would be eligible for. it closed down to $750. under this proposal, instead of paying back the $7,700 of difference, we are asking them to pay back $700 of the difference, keeping $37,000 in subsidy. that is a family of four. so, every single person has voted for this idea. talk about fairness. that means that a given american making a certain amount of money is subject to the same opportunities and subsidies and taxes. this tends to equalize that.

-- attempts to equalize that. did you not agree with the exchange, at all. the compromise is very clear. i would urge my colleagues on the other side to please look back at your voting record, look back interstate mints, and let's move forward on this. >> my troops are dwindling. [laughter] we have been depleted here. i think each side expressed their view pretty well. >> i am prepared to conclude this issue. i think everybody has an

opportunity to speak. do want to finish? we will finish one on each side. >> i think we can accommodate that. >> this proposal could end up costing $700 to a family, middle-class family, which would wipe out any tax cut they might get through the payroll tax cut. it would pay for the cost of this proposal on the backs of modest, middle-income families. the first proposal would have put the cost of extending the payroll tax cut on the backs of 3 million middle-class workers, wiping out their payroll tax

cut and exceeding that and taxing them beyond. the second proposal we discussed on medicare would put the cost of extending the payroll tax cut on the backs of 2 million seniors in america today who are not millionaires. $80,000 is not a millionaire. in the future years, not far from now, that would be reduced because of the bracket that would occur. you're looking at a senior making $40,000 who would pay more. this would approach 10-15 million seniors who would be paying more in benefits for medicare to cover the costs of this payroll tax proposal. whether it was the first for the last proposal, so far the only

folks who have been asked to contribute our modest and middle income families. simply put, if we ask millionaires, by the way, when we talk about asking millionaires, we are asking folks who are 1/5 of 1% of taxpayers. some 7000 millionaires last year did not pay a single cent in income taxes. if we are asking who has contributed, the workers have a party have their pay frozen. they have contributed. seniors did not get a social security cost-of-living increase. they have contributed. americans who do not have decent health insurance have been paying for a long time. if you did a simple surcharge on

the wealthiest in this country, the 1/5 of 1%, you could avoid putting this on the backs of seniors and middle-class families. the senator said we should find adjustments that have the least amount of pain. i agree with that statement. he said we should be fiscally responsible. i agree with that. there is no reason why we cannot make the adjustments that have the least amount of pain without putting the burdens on seniors and middle-class. there may be some cases were some of these proposals moved for other reasons. as we try to figure out how to do this, i hope we would realize we're trying to keep the mission of advancing the economy and rewarding the middle class and coming up with common sense solutions. with that, i yield.

>> thank you, mr. chairman. i think it has been a good discussion. i would ask us to keep in mind, as we proceed, the issue of balance. we take an approach that is perceived by the american people to be fair. the president's recommendations were cited several times. the recommendations he made to the joint committee. at the time the president made those proposals, he made it clear that his proposals would require changes in medicare contingent on making other changes like closing corporate tax loopholes. but me q -- let me quote what he said. you have to look at his proposals in the context of the

full recommendations. "i will veto any bill that changes benefits for those who rely on medicare but does not raise serious revenue by asking the wealthiest americans -- americans to pay their fair share. we're not going to have a one- sided deal that hurts the folks who are most vulnerable." when the president made those proposals, and he made them as part of a package approach asking all the american people to be part of the solution and not single out seniors or middle income families to take a disproportionate brunt of the hit. >> to conclude, i would say that the purpose of this is to protect taxpayers from overpayment. these are payments that people

are not entitled to because their income has changed. some may be because they got an increase or somebody in the family got the job but also because of fraud. the proposed eligibility that it did not ultimately provide. what was important with the example of doctor price was that under this proposal, we are asking them to pay back a small fraction of the overpayment or subsidy they are not entitled to. in the example he suggested, the family would keep an overpayment of $7,000 under this proposal to only return $700 additionally. it is a reasonable proposal. it has received support in other

legislation sure it i think it is one that one that deserves more merit than it received in the discussion between the parties. this would reduce the deficit by a significant amount, a $13 billion. it is an important part of making legislation we're trying to move forward. with that, before i close the meeting and describe what might happen, i will turn over to the senator. >> i am hopeful that we can close that out. on the larger issue, it is a number of weeks, a drug- testing, waivers, so forth.

i think it might not be a bad idea if we sent to the house an offer on that. you could expect to see that very soon. >> we will look forward to that. that is one of the core issues we have to come to an agreement on. the payroll tax holiday and sgr. i do think that it appears from the conversation today that the democrats rejected the legislation. i think we do want to get an offer on those as well. i look forward to engaging with my colleagues on trying to find a way to go forward. if we are not successful, we

will have three choices -- to go outside the scope of the conference, increase the deficit, which even the president does not want to do, or begin looking at scaling back some of these policies we have identified. that would mean less time in less generous benefits. at this time, i think those options will guide us going forward. i look forward to receiving the proposal on unemployment insurance and look forward to receiving an offer on other pay- fors if the current -- these are not acceptable. >> we do not have much time. for all intents and purposes, it is by the first part of next week. there is a recess coming up. that will take a couple of days before the recess begins.

i urge assault to be flexible. -- us all to be flexible. i think the basic principle is good. but there could be modifications that could be within the scope. beyond that, we are going to pass it. it will be the whole package. it will be the one supported by both political parties. in the senate, i cannot speak for the house, by definition we will agree to waivers needed because it will be a bipartisan package. you mentioned a couple of other

alternatives if we do not reach a solution. i urge all of us, i do not want to be corny, but the american people want is to find a solution. the american people want us to work together. it is amazing to me when you return here after visiting with your constituents how different this place is. there is an echo chamber sure that is not constructive. i urge us when we are trying to figure this out to remember the people we serve. what would their guidance before us? would they want us to compromise. to come up with a solution. would they want us to reach an agreement? the answer is clearly yes. i urge us to remember our

constituents, the american people who do want us to get our work done. and maybe, maybe the approval rating of this out for it just might go up. but that is not the reason why we want to reach an agreement. we want to do it because it is the right thing to do. speaker picture in mind trips >> mr. levin? >> just a couple of things. there is an urgency here. there is no alternative but to succeed. number two, i hope very much that when republicans receive ideas from us on unemployment insurance that they will be taken very seriously. number three, i think if we are going to succeed we need to find a way to have a lot of back-and- forth among all of us on these

issues. and i am not exactly sure what the procedure is or what the structure will be, but we need to intensify our discussions. i go back to, as i said earlier, the only conference i remember. there have been so few here. this was many years ago relating to welfare reform, which was a very controversial issue. but we had subgroups that sat down and exchange ideas back- and-forth, house, senate, democrats, republicans. i think we need to do the same thing in one way or another on all of these outstanding issues. thank you. >> thank you. i very much appreciate the sentiment of the remarks both from mr. levin and from a senator baucus. our time is short for. we do need to find pay-fors

that will pass both bodies. i will ask all of the conferees to remain flexible because we do not have a lot of time left. in terms of scheduling, i cannot give a prediction, but we do need to remain flexible to be able to get together on a moment's notice if. with that, this meeting is now adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] road to the white house continues with campaign results from three states. the gop primary in missouri has been called with more than 80% of precincts reporting. rick santorum is the projected dinter with mitt romney withsecn and ron paul third.

in minnesota with nearly 30% of caucuses, rick santorum is on top again, then ron paul and mitt romney. and the results in colorado, it's rick santorum, newt gingrich and mitt romney. in early results, rick santorum is ahead in all three states. ou can see some of ron paul's supporters there. he is expected to speak at the metropolitan ballroom in minnesota. we are hearing that rep ron paul is in the building and getting ready to speak. we will hear from mitt romney from downtown denver. and rick santorum in st. charles, missouri, where he's the projected winner there.

while we wait, we will hear about money in campaigns from this morning's "washington journal" continues. host: we're joined now by melanie sloan, executive director of citizens for responsibility and ethics in washington, who is leading a petition asking president obama to fix the federal election commission. guest: citizens for responsibility and ethics in washington -- the federal election commission in recent years has refused to act on almost anything. five of the six commissioners are sitting despite expired terms. it's up to president obama to nominate new commissioners. host: what is the purpose of the

federal election commission? guest: this is one of the important government agencies americans do not know about. fe was created post-watergate to deal with campaign finances and it monitors are campaign -- campaign contributions. they are supposed to monitor to make sure everybody plays by the same rules. they are doing a lousy j of it, frankly. we're seeing millions and millions of dollars -- this presidential election will doubtably run to over $1 billion because of all the money pouring in. the fec is basically just sitting it out.

host: the history of the federa election commission. it was created by congress in 1975. it's an independent regulatory agency disclosing campaign finance information. it also has an enforcement arm. the enforcement to enforce limits and contributions. talk about the judicial role of the fec. guest: the fec is supposed to enforce campaign finance laws. there are contribution limits. all of these things are supposed to be monitored here by the fec. when they violate the rules, the fec is supposed to step in. groups like mine, citizens for responsibility and ethics in washington, routinely filed complaints with the the federal election commission against candidates who have violated the rules. it is the fec's job to enforce

the law. one of the problems with the commission, it's made of three democrats and three republicans and yet you need four votes in order to accomplish anything. host: we are with melanie sloan with citizens for responsibility and ethics in washington. we're going to do the phone lines standard this time. host: melanie sloan, you talked about that some of the commissioners of the fec terms are expired. how are they still able to serve? guest: they are allowed to serve until their replacements, and. there have been no replacements even nominated. thiss something we're very

critical of president obama for. there have been a lot of problems with campaign finance. the citizens united decision has changed the election landscape dramatically. congress has refused to pass any campaign financial information. president obama came in on a pledge of campaign finance reform and he has not really follow through. a lot of groups, including common cause, public citizens, have all been pushing this petition. the white house has set up a petition process whereby if you can get 20,000 signatures, the president will respond to your question. we put together a commission aski the president why he has not nominated new the fec commissioners and asking him to do so. host: talk about the citizens united decision. you are very critical of the decision. there are people out there who say more money and helps more people get involved in politics,

can get the message out to more people. is it not getting more people involved? guest: i do not think too many americans feel like they are not seen enough negative campaigns. we are seeing, for example, a contribution of 0 million to a superpac for newt gingrich that has basically allowed newt gingrich tuesday in the race. it used to be that candidates needed to get money from small donors across the country in order to show that they have some support for a presidential election. yet, newt gingrich has brought in almost no money. that lack of support would generally force people to give out of the race. and yet, mr. gingrich is still in the race.

the citizens united decision is allowing billionaires' and multimillionaire's to have much more influence. host: we want to get your reaction to a story on the front page of "the new york times" this morning. the headline -- host: does this article concern

you because the obama campaign has not taken money from some of these pacs in the past? guest: in the first campaign, he did not want to see that kind of money spent in the campaign. he wanted to control his own message. this election cycle, we've seen so much money poured into restore our future, mitt romney's superpac, and newt gingrich's superpac. given the huge influx of money, president obama's finally concedes that if he does not ta the money from the superpacs, it would be at a considerable disadvantage. host: say louis, missouri. caller: with all the money that pours inbut little man does

not have a chance. what about a corn -- about acorn? guest: i agree with you that the regular person has been sidetracked in this will nomination process. now we see independent expenditures made by these superpacs on behalf of congressional candidates, as well. congressmen and congresswomen are now more concerned with special interests than they are with the interest of regular americans. they're constantly raising money. the money has totally over power of our political system. host: james on twitter writes -- is that possible, to abolish the fec. guest: john mccain calls the

fec a little agency that cannot. it has really been a disaster. the formation was a good idea of. the way it is currently nstituted, with three republicans and three democrats means they really cannot get anything done. it's time to consider abolishing the fec and starting over with a new type of system that would better enforceour campaign finance laws. host: wasn't the commission set up so one party could not punish the other, to force them to make decisions in a bipartisan fashion, and that just has not happened? guest: that did work until 2009. at that time, senator senator mitch mcconnell, the minority leader, had appointed several republican commissioners who had said flat out said they do not believe in enforcing campaign finance law. they were led by tom delay's finance lawyer. he has said he does not believe in campaign finance regulations and will not enforce them.

heelieves his job is to help republicans. host: a few facts on the fec commissioners themselves. no more than three can represent the same political party. they are appointed by the president and confirmed by the president. at least four votes are required for any official action. back to the phones. line. is on the democrats' good morning. caller: good morning. that was interesting information she just gave to us. did my thing is that -- my thing is that people who say they hate government in that government is too big, why aren't they in government? all they do is destroy those things that are supposed to help us and then they turn around and say, "see, gernment does not wo." one last thing.

i feel like -- america, if you do not understand wh the unions were for, this race to the bottom is going to destroy us. talk about being in this of money that the rich have -- you won't get any money. guest: i think the caller may have been more to your earlier conversation. host: warren on the line for independents from delaware. good morning. caller: good morning. the democrats are not as the lesser evil. it seems like the republicans does everything for the rich and thenrickled down. all the money that accumulated, they are not spending that money investing in america. host: are you concerned about federal election commission. caller: i was a speaking about

the economy. host: let's go to their role -- to daryl from south carolina. caller: thank you for taking my call. who came up withhis idea of superpacs? why isn't there some way you can level the playing field given that if >> c-span's road to the white house continues with gop campaign results from three states. republican presidential candidate rick santorum is the projected winner in missouri. colorado has not been called yet. we are live to hear from rick santorum. he will speak to supporters of the convention in missouri. ♪

♪ ♪ ♪ [applause]

>> wow. conservatism is a lot of and while in missouri and minnesota. [applause] -- conservatism is alive and well. it is great to be here. i just cannot thank the people of missouri. we double the here and in missouri. -- and minnesota.

i also want to thank, i have to always think. i want to thank god for giving us the grace to be able to persevere through the dog days and blessing us and our family, my wife, karen here, what a rock through these last few weeks. we have had more drama than any family really needs. she has just been an amazing rock and a great blessing to me. i want to thank you in particular, my sweet girl. i want to thank my kids and all of the kids listening at home. i will be home in a couple of days. it has been awhile. and i want a particular little note to bella who i know is

looking at your daddy. i love you, sweeite. get healthy. your votes were not just heard loud and wide across the state of missouri and minnesota, but they were heard loud and louder all across this country. particularly in a place i suspect may be in message to sits there are heard particularly loud tonight -- in massachusetts. tonight was not just a victory for us, but tonight was a victory for the voices of our party, conservatives and tea party people who are out there building the base of the republican party and building of voice for freedom in this land. thank you.

there is probably another person who may be is listening to your cheers tonight and that might be at 1600 pennsylvania avenue. you had better start listening. [applause] but, then, i would not be surprised if he is not listening. why would you think he would be listing out? has he ever listen to the voice of americans? no. why? because he thinks he knows better. he thinks he is smarter than you. he thinks he is someone who is a privileged person who should be able to rule over all do. but we have a different message for him off. he is someone who, all well, let's look at the record.

if you look at when it came to the wall street bailout, did the president of the united states listen to you when it came to bailing out big banks? >> no. >> why? because he thought that he and his friends on wall street knew better what was good for this country. when it came to the problems that were being confronted on obama care, when the health care system in this country. did president obama, when he was pushing for his radical health care ideas, listen to the american people? why? because he thinks he knows better how to run your lives and managed health care. when it comes to the environment, did the president of the united states listen to the american people or did he push for radical cap and trade agenda that would crush the energy and manufacturing sector of the economy? did he listen to you? no.

because he thinks he knows better. ladies and gentlemen, we need a president who listens to the american people when the majority of americans oppose these radical ideas and they speak loudly against them, we need a president who listens to them. here's the problem. the problem is in this republican field, you have been listening. tonight, the voters of america, the voters in missouri and in minnesota and i am hopeful the voters in colorado, right? [applause] i hope you have been listening to our message, because if you listen to our message and you found out that on those issues of health care -- health care, the environment, cap and trade and on the wall street bailout -- mitt romney has the same positions as barack obama. in fact would not be the best

person to fight for your voices for freedom in america. ladies and gentlemen, i do not stand here to claim to be the conservative alternative to mitt romney. i stand here to be the conservative alternative to barack obama. [cheers and applause] >> need neewe need rick we need rick >> tonight, we had an

opportunity to see what a campaign looks like when one candidate is an out spent 5-10 r 10 to 1. by negative ads that distort the record. this is a more accurate representation of what the fall race will look like. governor romney's greatest attribute is that i have the most money and the best organization. he will not have the most money and the best organization in the fal. . we will have to have somebody who has other attributes to commend themselves to america. somebody that can make sure contrast with president obama, someone who can point to the failed record of this administration and say barack obama needs to be replaced in the oval office.

people have asked me, of what is the secret? why are you doing so well? is it your jobs message? . yes, we have a great jobs message, particularly here in the industrial heartland where they still make things in missouri, by the way. the message of, as "the wall street journal" called our economic plan, supply-side economics for the working man is resonating in minnesota and in missouri and across the country, and you see that when you have republican out there talking about growth for everybody, right? that americans respond. because i do care about not 99% or 95%, i care about the very

rich and the very poor. i care about 100% of america. the real message, the message we have been taking across the country is a message of what is at stake in this election. this is the most important election in your lifetime. this is the election, we have seen it so evident here in the last week. this is an election fundamentally about the kind of country you are going to handoff to your children and grandchildren, whether they are going to have the level of freedom and opportunity you have. and we have a president of the united states, as i mentioned, who is someone who believes he knows better. that we need to accumulate more

power in washington d.c. for the lead in our country to be able to govern new because you are incapable of liberty. the that you are incapable of freedom. that is what this president believes. and i understand -- and americans understand that there is a great, great deal at stake. if this president is reelected and what if we do not have a nominee that can make this case and not be compromised on the biggest issues of the day, but can make the case to the american public that this is about the founders' freedom, this is about a country that believes in god-given rights and a constitution that is limited to protect those rights.

the president does not believe that. the president over the last few years has tried to tell you that he, the government can give you rights, the government can take care of you and provide for you. they can give you the right to health care, like with obama- care. >> no. >> well, look what happens when the government gives you right. when the government gives your rights, on light. god gives you rights, the government can take away -- unlike when god gives you rights. when the government gives you rights, the government can tell you when to exercise those rights. we saw that just in the last week with a group of people, a small group of people, just catholics in the united states of america. [applause] who were told, you have a right to health care, but you will

have the health care that we tell you you have to give your people whether it is against the teachings of your church or not. i never thought as a first generation american whose parents and grandparents loved freedom and came here because they did not want the government telling them what to believe and how to believe it, that we have a first amendment that actually stood for freedom of conscience, that we would have a president of the united states who would roll over that and impose his secular values on the people of this country. and it'sit is worse than that. when one of the catholic bishops tried to communicate that, , thegh army chaplain's obama administration said you cannot do that. because your language is seditious.

they made them change the language of a letter from the bishop to his people. freedom as at stake. we need to be the voice for freedom. in that document at the end of that document, those founders signed their names. the last clause said we pledge our lives, our fortunes. every generation of americans does not create freedom but they have a harder job. they have to maintain freedom. your charge tonight here in missouri because we're not done yet with you here.

you have a caucus next month. gordon pledge not alive, maybe your fortune. but your honor. the honor that you stand on on the backs and shoulders of your ancestors, the people here in st. louis in missouri, across this country who sacrificed for this country for the freedoms we have. america's honor. your honor is at stake. blowout and preserve the greatest country in the history of the world. thank you all and god bless.

[applause] >> rick santorum is the projected winner in two states and i in the primary with more than 90% of precincts reporting. there is a 30% gap between rick santorum and mitt romney who is second in missouri and ron paul who is third. in minnesota with more than 50% of caucuses reporting santorum is the winner again. it is early for their results in colorado caucuses. rick santorum is on top with 50% of precincts reporting. newt gingrich followed by mitt romney. we have a way for you to give your thoughts about tonight's results. it can go to our facebook page to register your comments. you can also answer your question there.

does rick santorum's wynns in minnesota and missouri change the gop presidential race? you can answer that at facebook.com/cspan we will hear ron paul's comments. he is expected to speak shortly.

[applause] [applause] >> wow, what a ride this has been. i cannot thank you all for all your tremendous work. you cannot to the caucasus, you went from calling and went door- to-door talking to neighbors. you brought people at two caucuses and we're doing pretty well. he know what is beyond the votes? you know what they cannot see? [applause]

ever wear tonight we elected delegates, the stories i am hearing. you did it text but. and electing delegates out of these precincts. whether or not we won the straw poll. you were the first up to bat running for delegates and to one those. the best is yet to come. there is so many other people to thank here. these guys come all these people. this is -- these people become like family. a crazy and very dysfunctional family. that have -- i have come to love. our staff members, especially the ones who have been with us in from the start. sherra word at the back.

matt is here. matt collins is right here. and then the team that came in to help us out. we have fought to think -- to thank dan vicks. and state representative brandyn peterson and his wife for here. and other representatives to not -- you're not here. -- who are not here. they will be helping us through the next phase of this journey. some who have been here every day. guy.n't forget our pizza

all that pizza you guys put away. good stuff. american pie. i am not going to take too much of your time. here you wouldone like to see. all the work you have been doing. we are very grateful for the man who started this revolution. the guy who was able to articulate his ideas. the man who has been laboring in obscurity, thankless work. when he was the only one who was alone and being ridiculed. he did not blink. no one had to vote no when the bill violated constitution every time. how many of us can hold up to that pressure?

let's not wait any further. let's bring out our man, the champion of the constitution, dr. ron paul. [applause] [cheers and applause] >> thank you. thank you. thank you. thank you for all your hard work and live in not, we did very well tonight and have a strong second place and it is going to

continue. we have had some good news today. maybe you have seen. there was a recent writer is poll. the first time we came in second in a national poll and the republican primary. and we do have to remember the straw vote is one thing but there is one other thing called delegates. [applause] that is where we excel. we know what to do about getting delegates. even in a state that is confusing. i understand we are going to do very well in nevada in getting delegates.

and of course tonight i have heard nothing but good stories about all of you stay around and going through the process, understanding the process and voting and getting delegates. when the dust settles, i think there is a good chance we're going to have the maximum number of delegates coming out of minnesota. [applause] there is other good news. it is an ongoing caucus and it is over on the east coast. the state of maine. well there and we will hear some results on saturday. i think those results are going to be very good as well. i want to thank you for the effort and the one thing i am convinced of, those who joined the campaign for liberty and promote this cause believe in something. it must be a lot more fun believing in something and then just campaigning for nothing.

that is what makes it easy going. this is what the effort has been all about. i have been so impressed. i have been involved for a long time but it has been these last several years especially since last campaign four years ago. the world has changed dramatically and our views are not only be accepted, there being saw after. for so long, people have said as long as we're rich and as long as we can borrow money, as long as we can print money and people will take care of us. we will not have to worry. guess what happened four years ago? all the sudden the bankruptcy was declared and this is the reason why the economy is in bad shape. the world economy is in bad shape. everybody thinks we're going to bail them out and they think the dollar will bail them out. most americans are saying no way you can do it. there is no way you can keep the entitlement system and that rising over $1 trillion a year.

we have to challenge the entitlement system and the foreign policy that gives us these perpetual war is. [cheers and applause] the biggest problem we have had is convincing people who are in office that they're spending too much in washington. the american people are way ahead of the people in washington and frankly, i think it is important to know that there is only one candidate and one campaign that offers real cuts and in the first year of a new presidency it will be a $1 trillion cut from the budget. [applause] people tell me once in awhile they said, you could do better if you could change your tune on

this foreign policy. i guess what? it is the foreign policy that has built our campaign. some people think foreign policy is separate from economic policy. what usually happens, it has been known in most recent history, is for a policy is the economic policy. whenever had to fight the soviets. i was re much aware of the fight with the soviets in the cold war, but lo and behold, the soviets self-destructive. then expanded themselves too far around the world. it went bankrupt. we did not have to fight them. we're facing the same problem. we have extended ourselves too far around the world. we have gotten involved in these wars that are not constitutional and have never been cleared. we do not know why we're there and we do not know when they're over. the most important thing a new

president could do is bring our troops home. [applause] it would save a lot of money. we do not need to pay this money to keep troops around the world. 900 basis. also just think, bringing the troops home rapidly, there would be spending money in home and not in germany, japan, and south korea. a tremendous boost to the economy. under wartime conditions, people get more careless about their civil liberties and that is what has happened in this country. we have permitted our government to undermine our civil liberties in the name of safety and security. we were told that you should never sacrifice your liberties for safety or security because you'll end up with any there. this is the reason i have come to the conviction you never have to sacrifice your liberty if you

want to be safe. never. [applause] were living in an age where civil liberties are poorly protected. we have a patriot act that has canceled of the fourth amendment. we have had a bill, the national defense authorization act which now permits the arrest of american citizens by the military without a trial and put in prison indefinitely. that is not part of what america is all about. those laws have to be repealed if we want to live in a true republic. [applause] our government is too big. the bigger the government gets, the smaller our liberties become. government is too big and that is where we're losing our liberties. we're losing our economic liberties and personal liberties. what we must do is cut back.

how did we get into this trouble? there is always an appetite for big government. there is this temptation of getting something for free. there is the motivation, we will help the poor people. once you endorse the principle of the redistribution of wealth, even though they pretend it will help the poor, the redistribution gets handed off to the rich and they are the ones to benefit. they're the ones to become wealthy and when they get into trouble, guess who gets the bailout? the wealthy and the wall streeters and the bankers. this is the reason there should be no bailouts at all. [applause] there is a simple trick they played on us. that trip was played on us in the monetary system. they figured it is a wealthy country. freedom produces wealth and that

is fine. we can tax the people to a certain point and the people get annoyed. the politicians want to pass out the goodies. we will keep growing until interest rates go up. interest rates going up, that will hurt the economy so we have to have another gimmick. that was invented in 1913. it was made a disaster in 1971. the destruction of the currency through an illegal operation, an unconstitutional operation of the federal reserve system which we should address and have a full audit and find out where and how they're spending all their money. [applause] we get into so much trouble because the constitution has been ignored. whether it is going to war or the constitution still says only

gold and silver can be legal tender. i would say that it would be proper to send only people to washington and those who are there hold their feet to the fire. we want people to obey the law of the land which is the constitution. it cannot print money, you cannot go to war without a declaration. you cannot undermine our privacy any longer. [applause] the solution is not difficult. it was once well known in america and that is when we understood and respected personal liberty. understanding that liberty came as the declaration of independence indicated it came from our creator. we have a right to our life and liberty. we should have the right to keep the efforts of our labour.

[applause] we have undermined that system by having too much government, too much spending, too much borrowing, too much printing press of money and regulations. the reversal is to obey the constitution and get the government out of the way. people say there will be no regulations. there would be tougher. the people who are supposed to go bankrupt would go bankrupt and it would not get bailed out. [applause] the wonderful thing about a free society is a prosperous society. we should be humanitarian and unfortunately we who advocate this position have not done a very good job over the years because we should have convinced people those who grab the moral high ground and say we're going to take care of the poor, what do they do? welfare and inflation and socialism.

they produce the poor. it is freedom that produces the prosperity that gives us the broadest distribution of wealth and gives us the biggest middle class and the wealthiest. that is being undermined and destroyed and it can -- the problem can be solved by a true understanding and conviction and the restoration of individual liberty. the wonderful thing about the principle of liberty is it brings people together. everybody will not use their liberty in the same way. if you understand that you will tolerate other people and how they spend their money and how they run their lives as long as they do not hurt people. for this reason people of diversity would come together. they do not want to lose their liberty. the respect other people's liberty as well.

this is why the solution is not that difficult. we have had this experimentation. we had the greatest success and we lost our faith and confidence and that is what we need restored. we have to understand it. it is not going back to the old days. we do not have to go back to a gold standard or back to those principles. we need to pick up the pieces and advance and modernize this. we need an advancement of the cause of liberty and understanding. this is the only solution if our goal bp said prosperity. is the only way you can achieve peace and prosperity. that should be our goal. it should not be the goal of governments and mischief makers to run your life, to please what you do, to police other people around the world for to tell you how to run your economy and spend your money. it is because of liberty we must restore and we're well on our way. we're going to keep this momentum. thank you very much. thank you.

♪ >> after the results are in the presidential campaign moves to arizona and michigan for primaries on territory 28. then washington state caucus on march 3. super tuesday is on march 6 with primaries and caucuses in 11 states. you can follow the candidates on the campaign trail and that --

at c-span.org. we are live at mitt romney's headquarters in downtown denver. if we're expecting to hear from him shortly. ♪

♪

♪ ♪

rick santorum is the projected winner in two states. missouri and minnesota. results from colorado's caucuses are coming in. rick santorum is leading with 47% to 22% for romney. mr. santorum spoke at the convention center in st. charles, minnesota. we will watch his speech until live coverage of mitt romney. [applause]

[cheers and applause] >> wow. conservatism is alive and well in missouri and minnesota. what thank you is so very, very much. it is great to be here. i cannot think the people of missouri. we doubled them appear and in minnesota. -- doubled them up here and in minnesota. i have to always think god for giving us their grace to be able to persevere through the dark days and blessing us and blessing our family.

my wife karen is here. what a rock through these last few weeks. we have had more drama than any family really needs. she has just been an amazing rock and a great blessing to me. i want to thank you in particular, my sweet girl, for all you have done. i want to thank my kids here and the kids listening at home. i will be home in a couple of days. it has been a while. i want a particular note to bell.a -- bella. rhodes were not just heard loud and wide across the state of missouri.

there were heard loud and louder. all across this country. in a place that i suspect in massachusetts they were heard particularly loud tonight. [applause] tonight was not just a victory for us but tonight was a victory for the voices of our party. conservatives and tea party people who are out there every single day building the conservative movement in this country, building the base of the republican party and building a voice for freedom in this land. thank you. there is another person who may be is listening to your chairs and that would be at 1600

pennsylvania avenue. [cheers and applause] i would not be surprised if he is not listening. why would you think he would be listening now? has ever listened to the voice of americans before? why? because he thinks he knows better. he thinks he is smarter than you. he thinks he is someone who is a privileged person who should be able to rule over all of you. but we have a different message for him. he is someone who -- let's look at the record. if you look at when it came to the wall street bailout, did the president listened to you when it came to bailing out the big banks? why? he thought he knew better. he and his friends on wall street knew better than what was

-- what was good for this country. when i came to the problems that worry -- were being confronted on obamacare. did president obama when he was pushing forward his radical health-care ideas listen to the american people? why? because he thinks he knows better. how to run your lives and manage your health care. when it comes to the environment, did the president listened to the american people? did he pushed a radical tapppan trade agenda that would crush the energy and manufacturing sector of the economy? did he listen to you? he thinks he knows better. we need a president who listens to the american people. when the majority of americans oppose these radical ideas and they speak loudly against them, we need a president who listens to them. here's the problem. the problem is in this

republican field, you have been listening. tonight, the voters of america, the voters here in missouri and minnesota and i am hopeful the voters in colorado, right? [applause] i hope you have been listening to our message. because you listen to our message and you found out that on those issues, health care, the environment, a cap and trade and on the wall street bailout mitt romney has the same positions as barack obama. >> we will leave this that was taped earlier to go live to mitt romney speaking in downtown denver. >> thank you. thank you so much. thank you. that is a little smaller than

the 2800 people last night but you guys are just as loud. thank you. it is great to be in denver. a lot of snow on the ground and pretty cold blood warm to be in this room with so many friends. the race is too much -- close to call. i am confident we will come in number one and number two. i am looking for good showing. there is still people getting back from caucuses but i want to say thanks to the effort you made to get out to caucus and support my efforts. i want to say thanks to people in missouri and minnesota who took their time to vote today. this was a good night. i want to congratulate senator santorum and wish him the best. i expect to become our nominee with your help. [cheers and applause] i want to congratulate all my

fellow republicans, particularly senator santorum. i look forward to the contest to come. we're right to take our message of liberty and prosperity to every corner of the country. when this primary season is over, we're going to stand united as a party behind our nominee to defeat barack obama and restore the values that have made america the greatest nation in history of the years. -- earth. three years ago, barack obama came to colorado to except his party's nomination. for the presidency. he rented out the stadium and got some of those star from greek columns and he had to giant tv screens. he made some even bigger promises. he said the democrats had a different measure of what constitutes progress.

under his definition, progress would be measured by how many people can find a job that pays the mortgage. that was his definition. what has happened? more americans have lost their jobs during president obama's term than during any other president in modern history and more americans have lost their homes during president obama's term than any other in modern history. under his own definition, president obama has failed. we will succeed. [applause] in that same speech he went on to define progress and he said, progress will be determined by "whether the average american family saw its income go up instead of down." and during the last four years the median income in this country has fallen by about 10%.

by his own definition, president obama has failed. we will succeed. kendig obama went on to say that we can measure progress in determining whether someone with a good idea can take arrest and start a business. have you seen what has happened to small business in this country? there were almost 100,000 fewer new business start-ups this last year than there were during the years before president obama came to office. by his own definition, president obama has failed and we will succeed. one more promise. he said we would see progress in an economy that honors the dignity of work. under president obama, the average duration of unemployment has more than doubled.

there is 14 million more people on food stamps today than when he took office. by president obama's own definition, he has failed. we will succeed. this week, you heard president obama on tv say he deserves a second term because "we have made progress." on to the definition of progress made here for years ago in denver. you have not made progress. three years ago, president obama after his inauguration said that if he could not turn this economy around in three years he would be looking at it one term proposition and we're here to collect. we will take back the white house. this is a moment in time when our country is crying out for

fundamental change and reform. washington cannot reform itself. washington will never be reformed by those who have been compromised by the culture of washington. this is a clear choice. i am the only pay it -- person in this race who has never served a day in washington. in the world come from, leadership is about starting a business. not trying to get a bill out of committee. i have said over and over this campaign is more about changing the soul of america or protecting the soul of america, sitting the soul of america than it is about changing a president. we all know in our hearts the soul of this nation can be corrupted by a washington culture of reckless spending, voting to raise their own pay, saying if they support term rents and running for reelection time after time, it is that washington we have to change and when i am president, we will.

this is not a moment when we can continue to do business as usual. this is not a moment when we can expect those in washington to realize suddenly they have been wrong all the time and they will get it right xm. this is a time for real change in washington. fundamental, bold, dramatic change. i stand before you're ready to lead this party and the nation. i have led businesses, led the olympics, i had the chance of helping to lead this state. president obama said he is learning. tool, toohe is learning late. the presidency is not a place to learn how to lead. it is a place to exercise the judgment and leadership that has been learned over a lifetime. that is precisely what i will do.

[applause] i know that many of us are concerned about our future. over 30 years i cannot tell you how many times i have heard a situation as hopeless or heard a long list of recent something cannot be done. i never have been good at listening to those people and i have always enjoyed proving them wrong. it is one of the lessons i learned from my dad. my father never graduated from college. he apprenticed as a lath and plaster carpenter. he could take a handful of nails and spit them out pointing and forward. on his honeymoon he put aluminum paint in the trunk of the car and sold it to pay for the gas and hotels. there were a lot of reasons my father could give up and set his sights lower but my dad believed in america. the america he believed and, --

in, a lath and plaster guy could end up being governor where he also sold aluminum paint. [applause] for my dad and for hundreds of thousands, millions of others like him and like my mom, this was the land of opportunity where the circumstances of birth was no barrier to being able to achieve one's dreams. in dad's america, small businesses, entrepreneurs, these were encouraged and respected. the spirit of an uprising and innovation and derring-do propel their standard of living and economy passed out of every nation on the planet. i refuse to believe that america is just another place on the map with a flag. we stand for freedom and hope and opportunity.

[cheers and applause] these last few years have not been the best of times but while we have lost a few years, we have not lost our way. the principles that made this the greatest nation on the earth than the leader of the world have not lost their meaning. they never will. we can bring back america. in the selection, let's fight for the america we love because we believe in america and its founding principles. thank you so much. [cheers and applause] we got a long way to go. i sure love this country. thank you so very much. thanks, you guys. ♪

>> rick santorum is the projected winner in the gop contest in two states, missouri and minnesota. results are still coming in in colorado. the latest is with 30% of caucuses reporting, rick santorum is leading with 43% to 20% for mitt romney. ron paul is in fourth place behind newt gingrich. should ron paul stay in the presidential race? you can tell us what you think at our facebook page. that is at facebook.com/cspan. after all today's results are in, the presidential campaign moves to arizona and michigan for primary on trowbridge 28. learn washington's -- then washington's, is on march 3.

then super tuesday with caucuses in 11 states. you can follow the caucuses at c-span.org/campaign2012. >> my most important point, we cannot tell them. it would be better if a month before the election will announce we're running for president. the media's access of desire to know who is your leader? is it rush limbaugh or glen bac corsair palin? they want us to tell them who are leader is so they can destroy him or her. >> this year's conservative political action conference begins thursday. c-span will cover their bets through the weekend. watch past speakers on line at the c-span video library. archived and searchable at c- span.org/videolibrary.

>> republicans and democrats continue to disagree on how to pay for an extension of a payroll tax cut and unemployment benefits that expired at the end of the month. members approved a short-term extension in december because they could not come to an agreement. this house and senate conference is trying to figure out how to pay for the $160 billion package. >> good morning. last week, we had a good discussion on the policy merits of extending the payroll tax to the end of the year. extending and reforming the and implement a program as well as the fix and other medicare extenders and i think i heard pretty broad consensus that those three policies are at the heart of this conference committee. i also heard members suggest that some of those items could not be fully concluded until we had a better idea of what the pay fors are. they were set in december.

there were also fully paid for in the house bill and my back of the envelope mouth shows these policies would cost between $150 billion and wondered $60 billion. there will be differences of opinion on some of these items but for today's purposes, i will start with three policies within the scope of this conference that have enjoyed bipartisan support in the past. we will have 45 minutes to discuss each of the following. the first is a one-year pay freeze for members of congress and federal employees which could save $26 billion. the president's proposal to reduce medicare subsidies to wealthier seniors which saves $31 billion and recovering payment of subsidies in the health care law which could save $30 billion. these three bipartisan proposals total $70 billion, close to half

of the estimated total trade with that i will turn over to senator baucus to begin our round robin discussion. >> thank you. thank you for the technical support. >> thank you. .e're making real progress here the american people are counting on us and i am hopeful that this discussion here will help frame

the positions of senator so that we can sit down and get to work. getting to work means reaching an agreement. we do not have time -- we have less time than we think we have. by that i mean we have to wrap this up. close to wrapping this up in a matter of days. i would urge us to be thinking of ways we can compromise. i suspect and i am hopeful that -- for we compromised during this discussion, it is also helpful for both sides learn what can and cannot be

accomplished to help us reach a compromise. we do not have time. we have very little time. i urge us to go ahead and began talking about the offsets that are going to be necessary to one degree or another in this bill. are we leading off? >> yes. >> ok. my understanding is you will go ahead. >> on the first item which is the extension of the pay freeze for members of congress and civilian workers. let me talk about our federal work force and how much i oppose the phrase included in this report and would urge us to reject it in its entirety. let me first point out the federal work force is -- has made substantial sacrifices to bring our budget into better balance. we have had a two-year pay

freeze which equates to about $60 billion of deficit reduction that has already been on the backs of our federal work force. if the president's proposed 0.5% increase is approved for this coming fiscal year, that would be another $18 billion of deficit reduction that our federal work force is putting on the table. asking our federal workers to do more services with less people. the number of federal workers has been declining. the amount of responsibility they are being asked to shoulder has increased. i want to address this comparable pay study that has been quoted substantially by members of the congress and take issue with how the results are being interpreted. when you look at that study, it points out that the lower wage federal workers, those are at

the high school graduation level or less, when you look at their salaries you find that in fact, there received comparable benefits that are higher than the private sector. that is because we provide retirement benefits and health benefits. i hope we will not have a race to the bottom. the private sector when you look at the lower wage workers, they're much less likely to have health benefits, they are less likely to have retirement benefits, and i would hope that we're not trying to race to the bottom when it comes to our lower wage workers. it is interesting when you look crs report when it deals with those who have professional degrees that are working for the federal government and we have quite a few. we have those working at nih researchers, those were working at nist as engineers, at fda. we look at the professional

workers who are working for the federal government you find their salaries are last in the private sector. making it difficult for us to recruit and retain those that are trying to answer some of our most difficult challenges. whether it is to find cures for cancer, it -- whether it is to keep america competitive in developing the best technology is for the future, whether is dealing with our food supply, keeping a stiff, and the list goes on. the work that is being done by our fellow workforce. let me point out that the study does not reflect the fact we have had a two-year pay freeze. that in itself has made the federal work course -- workforce less competitive than the private sector. i want to close with a study that is telling. i think this is part of the misconception that is out there.

the private sector pays men more than women, whites more than blacks, old more than young, but the federal government does not reproduce all these differentials because its pace system, demographic traits are irrelevant. federal pay is a trudeau -- attributable to the job. i think it is true to a large extent. the federal government as a model for pay fairness that we do not see duplicated in the private sector. when you look at our federal work force to find that 25% of our work force are veterans. private sector is about 8%. you talk about doing right for our veterans. let's take a look at those who are working for the federal government and make sure that we do not treat them unfairly. mr. chairman, you put on the schedule only the pay freeze this morning but i have to point out that the house bill came over to us with other offsets for the federal workforce

including significant changes in their retirement calculations. the cumulative effect of what you put in would have a major negative impact on our federal work force. and want to talk about fairness. i want to talk about how fair would be to tell federal workers that we are doing this payroll tax holiday so you'll get more money in your paycheck. you will pay more than that and lose more than that through this pay freeze over time. that is basically what we're telling our federal work force. the middle income families that are working for the federal government will not get the benefit of the payroll tax holiday. that makes no sense at all from the point of view of fairness. the relief that we're providing through the payroll tax is temporary. it will last through the end of 2012. the pay freeze is permanent damage that is done to middle income families. where is fairness? we have a challenge with the

federal budget. i understand that. that is not the issue before this conference committee. the issue is whether we're going to extend tax relief to middle income families. whether we will deal with the protections of unemployment insurance and make sure our seniors have access to their doctors. that is the focus of this conference. not the deal with the underlining budget problems. i hope we get to that discussion. i hope we get the $4 trillion of deficit reduction over the next decade and a balanced -- in a balanced and fair way. when you start working -- using the federal worker here, that tells me we're not serious about deficit reduction and coming together with a balanced approach. lastly, let me talk about fairness. i do not know how any of us could go back to our districts and tell our border security patrol people, our fbi agents, or are nih researchers that we're going to freeze their salary.

but the hedge fund operators on wall street and those who have made obscene amounts of money during this recession, they are going to keep their tax rates just where they are now which by the way, are lower than your tax rates and by the way, we will put another freeze on your salary when they get the benefits, where is the fairness in this? where do we come out with fairness? mr. chairman, i urge us as quickly as possible to put this bad issue aside. this bad proposal aside. it should not be in our proposal. i think it is a friend to the furnace in our society to make sure all this contribute. our federal workers have had a two-year pay freeze. >> thank you. i will defer to our colleagues.

>> i will ask chris van hollen to discuss this. i do not think we should only ask those who have a higher percentage of federal employees and the rest of us to carry the entire load. because this is an issue that affects all of us and all the country. there are federal employees working everywhere, and i think would ban -- what ben cardin has said is not all parochial. and what chris van hollen is going to say is not at all parochial. it is something that is national.

in that regard, i wanted to point out that the three issues we're discussing today basically hit middle income taxpayers. there are few exceptions. i suppose there are some federal employees who would not be classified as middle income but they are very few. and for the bulk, they are very much in -- middle income taxpayers and middle-class families, and when we talk about health care and pension benefits, for federal employees, those benefits has -- have helped them become an important part of the middle class of this country. and all three of these items on the agenda today essentially would hit middle income taxpayers.

the freeze, the health care coverage provision, and the medicare payments. i want to pick up, before i turn it over to press -- >> we will be moving to the republican if he did not conclude soon. we will not have doubles and then one. we're trying to keep this even. >> let them finish and let them go. >> we will come around. >> let me say a word aboutcoppe. baucus and others said. we must reach an agreement. we must reach agreement for 10 months. i think that means we need to

resist a finger-pointing and really work hard together. the urgency demands it. >> thank you. >> i will let the next part of the apple be postponed. >> the light is on but it does not work. i want to say a couple of things. this provision is with in the skull of the conference. we included it in the house bill. we had a separate vote on this item under extension. it passed nearly three-one. i want to compliment my colleagues for voting for it last week.

99% of federal employees that were eligible last year for a step increase, they have the table, and they know where they are, nearly 100% who were eligible for a step increase in fact got it. it averaged $1,300 per person. our rules is if you have more spending, you have to have the offsets. this was part of the agreement. this is a pretty sizable offset that we on the house side are looking at. i would say that the median household income this year was $52,000. maybe as we look for an agreement, even though many of

us with supports a total pay freeze on federal employees, maybe you look at the workers that are earning more than $52,000. maybe that should be included as an offset for this new spending. americans across the country are looking for congress to sacrifice. literally the first week last year we had an amendment on the house floor that that congress spending below what it was the year before. we did it again this year as part of our budget. federal workers know that they are being asked to sacrifice here. in return, we are trying to make sure that the deficit does not go up. we took concrete steps on discretionary spending to make sure that it did not. i yield back. >> senator baucus. >> anybody?

do you want to add some more? >> very briefly, those with professional degrees you work for the federal government are the ones that are in the greatest risk of us losing their talent. thee talking about researches at nih and scientists to commit more money in the private sector. i would resist -- who can make more money in the private sector. i would resist. we fully expect there would be a vehicle through the appropriations process. i do not think we should confuse the issue of our federal work force with embers of congress. let's not put them in the same category. >> if there is no further speakers?

>> he would like to take a bite of the apple. >> we are trying to have one speaker per side. we will keep doing additional rounds. if there is a senate republican he would like to speak out of that is who is up next. >> the goal is to help people speak their piece. i would like to yield to senator casey and a senator kyl. >> just a couple of items. you can parse this a couple of ways. the statistics are what they are. federal employees on average make a whole lot more than people in the private sector. taxpayers that pay our salaries would like to see some shared sacrifice. what happened to that concept that we heard so much about shared sacrifice? people on social security did

not received it in two years. they understood the reason. arizona public employees have not received an increase in five years. the reality is a washington -- the people that work here are very well paid. we have very good benefits. the people that pay their salaries are the ones that are going to be making a lot of different sacrifices. i think it is fair to ask employees to make a sacrifice as well. at the end of another year, that there will have been a two- year pay freeze. we have not had a two year pay freeze yet. the commission said we should have a three year pay freeze. we talked about how wonderful the recommendations are. except when it comes to this. there are a lot of reasons why it would be perfectly appropriate to ask them to make

a sacrifice. i understand why those who represent more of the federal employees would be making the argument that they are. i probably would be making them as part of the effort as well. all of us have to view ourselves as represented as a whole. it has to be fair that we extend for a relatively short amount of time the high level of payment with no increase for federal employees. >> mr. levin? >> i will turn this to chris. i just want to say there are federal employees everywhere. the house proposal that passed on a partisan basis, only a handful of democrats, i am talking about the proposal that

came over from the house and federal employees, a $63 billion. there are two proposals. we all have federal employees everywhere. >> thank you. i think we all benefit from the federal employees that are doing research at nih into lifesaving cures and treatments. we all benefit from the folks in the intelligence committee to track down osama bin laden. this is not an issue of whether or not we represent a small number of federal employees. we all benefit. i think the american people benefit. let me start with the vote that mr. upton reference. the reason it had such a big vote is because you couple that with a freeze on all federal employees salaries.

it is a question of the pay freeze for congressional salaries. we can all support that. if they want to entertain a motion, we can do the right now. let's not mix of the two. the reason you have that vote is because they were afraid they'd be accused of trying to protect their own pay if they voted against that provision. let me briefly get to the threshold questions as to offset. i do not want to go into great detail. we have this before. we do have this new standard being applied to payroll tax cuts. the majority in the house change the rules to say when it comes to tax cuts for folks at the top we do not have to pay for them. week and put another trillion dollars on the national -- we can put another trillion dollars on the national credit card.

we did not have to have a penny. now when it comes to tax relief for 160 million americans, we have a different standard. it seems when we are considering offsets, we will insist on offsets and to look at some of the offset that have been suggested by our democratic colleagues originally in senate with the surcharge and other proposals to close tax loopholes. i say that by the way to mention that federal employees are prepared to sacrifice. federal employees recognize that they have to be part of the solution here. federal plays have seen a two year pay freeze. it is about $60 billion. social security recipients are now getting their call list.

-- colas. the president has proposed a half percent which still represents $18 billion that would be dedicated toward deficit reduction. that comes to $60 billion that they would help contribute to deficit reduction as they shed. -- as they should. the question is not whether federal employees will be part of the solution but whether they should be singled out as the piggy bank for all these other issues. if you look at other and legislation, they seem to be the main target. i am talking but using it as the transportation bill. they may be an easy target for a lot of people. i think it is counterproductive to move in that direction. i want to talk about a couple of different studies. there have been a lot of studies. this comes up in the context of the joint committee.

it comes up in the context of other reduction efforts. what we really need to do is take a comprehensive look at this issue. if you look at the federal salary council, if you look at the bureau of labor statistics data, they are underpaid by 26%. what is the different? the difference is the methodology you use. with the bureau of labor statistics, but they look at the responsibilities of a particular job of day employee and try to compare it to federal jobs with similar responsibilities. for example, you have somebody who has been a pediatrician but then goes to work at nih. he is supervising 30 or 40 researchers in the area trying to find treatments for cancer. when the folks at the council

look at that comment they say not just a solo practitioner pediatrician, but they see somebody who also has responsibility for managing 30 people. it seems to me that is a reasonable distinction to be made. it is somebody who is managing people in the private sector. take a simple prison cook. you could say they should receive the same amount of money as a cook anywhere. prison cooks also have to be trained to take care of of violence in the prison or an outbreak. that is why you have these big disparities in a different studies that have been done. the council said on average when you compare actual job responsibilities, federal employees are 26% underpaid. now you have the cbo study that looks simply at democratic

characteristics. -- and demographic characteristics. if women are underpaid and the work force, that would translate through into that same analysis. that is a different approach. what the cbo approach also shows is that they agree that you have people who are underpaid. every study shows that with highly skilled workers you have people that are underpaid in the federal work force. according to the cbo analysis, it was around 18% underpaid. some of the folks there trying to recruit in some of the most sensitive positions are underpaid. these are people i would think we would want to make sure that they were able to continue to have in the federal government. to take a support is the wrong

way. even if we were going to try to segment out groups here, that would be a mistake in the sense that this is an area that requires a more comprehensive view. people have proposed taking a steady and looking at the discrepancies. they are really getting to the bottom of this wretched and taking an across the board wax. they are able to go after federal employees. i would urge my colleagues to step back, ask yourself the question why there are these big discrepancies between these huge steadies, and take a comprehensive look at this issue before we do what i think could be long-term damage not so

much in the federal workforce. if we do not make these decisions in a smart way, ultimately the taxpayer will be hurt. they are not going to be able to have the set of skills that are necessary to make sure that federal employees can do the job that needs to be done. >> thank you. >> dr. price? >> thank you. the taxpayers that are being hurt are all the american taxpayers. there is a lack of responsibility when it comes to spending. nobody is criticizing the federal workers. did they do great work. i want to commend the senator from maryland for standing up and representing their constituents. it is a commendable thing. folks at home are looking at us and say what is going on?

we believe that these policies are appropriate. an extension of the temporary payroll tax is inappropriate policy. however, we do not believe that we ought to do it without paying for it. we do not believe it ought to be paid for with money we did not have. american people say find the money. we know there is money there. the numbers are clear. they have been reviewed by a number of folks. the management steady in october of 2011, the average federal government salary was $75,614. that is commendable. the average salary out there in

the real world is $52,000. the average federal worker makes about 45% more than the average individual out there in the private sector. a half million federal employees make under half a million dollars. that increase 36% over those that make over $100,000 since the recession began. it is incomprehensible that the u.s. department of transportation, which when the recession began had one individual whose salary was over $170,000. now, 18 months later, 1690 individuals are making over $170,000. they all may be appropriately compensated. however, when the american people look at this and they know the tightening of the bill they have had to undergo an the

conversations they have had, when they look at each other and say i do not know how we will be able to send our son to college or pay for our car payments so that we can get to that second job or i do not know how we will be able to do that. when they look to us are around this table -- to us are brown this table, it is incomprehensible that we cannot figure how to pay for this out of another pot. there is clearly room for improvement. what has happened in the past? we will go a distant past. 1933, franklin roosevelt did not ask for a pay freeze. he put it in place a pay cut for federal workers. folks could argue that it is not dissimilar to where we are now. the bulls since the commission has been mentioned.

today mentioned a three-year pay freeze. this is not something out of the ordinary. it has been touted by folks on both sides. we need to recognize that others outside of the microphones has said it is a reasonable thing to do to have a pay freeze. remember the pay freeze is not include the step increase. it is the cost of living adjustment. it is what our seniors have done in this country for the last two years. they have not had an increase in social security. we all want to pay for these policies. we all want these policies to occur. we need to pay for its with money that we have, not money that we do not have.

>> sister -- senator reid. >> thank you. i think the point that he made deserves to be reinforced. if you look at the pace scales of federal workers, lower paid workers tend to make more than lower-paid workers in the private sector. i think that is a reflection of what has been happening over the years. wages have not increased. benefits have not increase. as a result, the differentials go back to the issues that a lot of people are talking about. it is a growing inequality in this country. from my standpoint, cooks and federal correctional facilities not only have to be prepared to cook but also to do other things, they are probably being in fairly paid. when you get to the other side of the equation where high

skilled federal workers, we see much less. there are many examples of this. frankly, we're asking people who are receiving high levels of pay relative to federal workers to share their pace of the people they regulate, compare the facilities and computer system and the institutional support they have with the people they're trying to regulate. there's no comparison. we want to attract good people into the federal government's to have intellectual capacity and skills to essentially regulate effectively and fairly this is not sending the right signal. again, when this argument is tied up with congressional bids, there's no one that does not understand that we lead by

example. when you look at the federal work force, you have to recognize that they are highly confident. everyone will say when they go back to michigan and look at the people who are federal workers, and they're doing a great job. they're doing more than they should. they go around to different facilities. they're very talented. frankly, like everyone, they certainly want to be paid. there is a dedication and they are committing beyond a paycheck. i have seen that was civilians. they have a public duty. when we are not focusing on trying to pay for these necessary tax cuts for middle income working americans,

you're also looking at the other side. we're singling it out. we are not doing what is effective on what is appropriate. >> senator baucus, i do not know if there's a senate republican who like to respond now. >> apparently not. go ahead. i could say a word otherwise. go ahead. >> thank you very much. i want to look at this may be from a different perspective, the question of pay fors and how we will reach a compromise. we have to ask ourselves a couple of basic questions. how do we get a compromise here that will result in a payroll tax cut? how do we do that in a way that

is reasonable and fair? how do we do it in the time with which we had? i think we have to start from the basics. the goal is to get a payroll tax cut, which i think we all share, in place. we know the folks that will benefit the most our folks in the middle who had a tough time. here is what i believe. this is based upon legislation that i introduced. the first bill i introduced at the end of last year had a surcharge on income above 1 million and 1.25%. we got 50 votes. we tried it again a couple of weeks later. between the first vote in the second, i dropped to 1.9%. it is evident from that from

that legislation that i think the payroll tax cut or at least part of it should be paid for by enacting a surcharge on income above $1 million. the operative word being "above" a million. they can help share the burden, not just the burden of paying, but the burden of continuing the recovery by helping directly 160 million american workers. i said i jotted down the surcharge proposal to 1.9%. that would raise $145 billion. that is more than enough to cover not only the extension of the payroll tax cut that we heard resolved, but more than that. that was an attempt at compromise. that was rejected. we still have about 50 votes on

that. here is the reason why i think a lot of americans believe this makes sense. but here is the reason why i think a lot of americans think this makes sense. this is a reasonable way to help us at this time. there is a direct connection between our reasonable surcharge and direct help for 160 million workers. it is not as if we are saying a surcharge would go into some broad general fund that no one knows where it is going. so, i think the directness is what people are supportive of this. secondly, i think a compromise is essential. both sides have to figure out

how to compromise, to come to some conclusion about the principal issue that we face, which is making sure the payroll tax cut is in place. we need to come together. we need to compromise. in terms of the legislation, i would like a 2.5% surcharge to drop to 1.9%. 1 not in -- why not in the interest of trying to solve this, why not have a surcharge for incomes above $1 million? i am told by my staff -- we can check this again -- that would result in $76.3 billion. and put that on the table for your consideration. >> thank you. >> before i go to mr. levin, just want to say the proposal you put forward has billed the senate several times. it did pass the house with bipartisan support. that is why that is something that has to be considered. mr. levin? i know we are running out of

time. i know there are several speakers on the house side that would like to speak. >> on terms of average, the average income of the hedge fund taxpayer is probably 10 times to 20 times that of a federal employee. so, if we want to talk about fairness, let's speak were broadly. the average. i am sure that is true. >> alright. they pay their salary. >> thank you, mr. levin. >> what? >> i think there is a difference -- why don't we let my colleague make his remarks. >> thank you, mr. chairman. to me, too rapid a look into what we are supposed to do, does this proposal advance our mission? as far as i can tell, our best tactic is to keep the economy moving forward, rewarding it the hard work of the people who need to make this country be --

even though it has been very tough, helping our middle-class families moving forward, and certainly finding a common-sense solution. and i know we just said the proposal left before us, to tax middle-class workers, up has been proposed before and it had bipartisan support. there are two answers to that. if you cloak the proposal with the faces of the members of congress taking the hit, certainly a lot of people will vote for. if you remove the faces of the members of congress and leave

it what it really is, the bulk of the money coming out of the hides of almost 3 million american workers, most of the middle class, i think most americans would say no. this is not how we want the payroll tax cut to move forward, to essentially get 160 million americans who work the chance to get the payroll tax cut, but doing it by asking close to 3 million american workers to pay for a. they will be getting a payroll tax cuts on their paycheck in one instance at the same time close to 3 million american workers would see a cut in their pay and benefits to cover the 2% payroll tax cut they would be received -- it would be receiving. i do not think this is how most americans would want us to do business. i think it would not be fair to create the tax cut for 160 million americans by asking 3 million americans to take the hit for the. -- to take the hit for them. we have until the end of this

month, the 20 of us, to come up with a solution. to my thinking, what senator casey's has proposed as a great deal of resonance, and i think it has a great deal of resonance with the american public. every two years, to contribute a little bit more. we think that would be a good way to do it. i am asking them to take a surcharge of less than 1% on income if they make more than $1 million. we could not only take care of this, but probably some of the other things we wanted to in this package and those three big priorities we have, dealing with reimbursing are doctors and medicare so 40 million and get their services under medicare and helping americans who are out of work through no fault of the rahm. i hope that the solution that we come up with, that common

sense to move us forward -- i hope this does not mean we are beginning a race to the bottom of solutions for americans. we need to lift up anyone in this country who is willing to work. let's elevate and help folks. we want to thank them. i urge moving beyond to something that is common sense and that we all can agree on bipartisan. >> before i invite one or house member to close, with nearly 13 million americans out of work, you have the cbo issuing a letter or week or so alone -- a week or so ago, saying on average the federal workers are paid more than their private

counterparts. it seems to me a cola freeze, still allowing federal workers to get step increases, is a reasonable approach. >> thank you, mr. chairman. yesterday, i was in paterson, new york. the business has been in the business up for 30 years locally in the valley and they export machines that create components for manufacturing throughout the world. they are a great success story. i actually had occasion to find out about the burdens we place on our private enterprise, hard-working private enterprise

sector throughout departmental policy, tax policy, fiscal, financial policy. the number-one problem the owner mentioned to me was to settle the deficit. this was the number one problem. he was trying to earn for his employees, for all those who rely on him, based on his inherent worth in the marketplace. he has to prove himself. his workers have to prove themselves every day. right now, it is a situation analogous to a business who is far exceeded by its cost, and they have to ask for sacrifices, unfortunately from our employees. unlike the private sector, unlike the enterprise sector, the federal government coerces its operating resources out of

the american public, and you cannot use -- will argue with one white. you cannot justify that role employees are paid a much higher rate on average that hardware and -- that federal employees are paid at a much higher rate on average than the average american employee he. and by the same token say that the private sector is something we can tap into. if government is the engine of growth, then we would not have the unemployment we do today. we would not have 63.7% of the work force participating at this point. we would not have nearly 40 million americans either out of work or underemployed. nobody can argue that.

by taking active dollars that would be put into the actual engine of growth and prosperity that pays for everything the federal government does, private enterprise, we would be further towards what we need to grow. right now the people who pay our federal salaries are at nearly $60,000 in the whole. -- in the hole. and that is why we are asking our employees to make a sacrifice. thank you, mr. chairman. >> thank you very much. the the next item on our agenda is -- >> yes, i would like to make just one point here. we're talking here about discretionary spending. the budget control deficit pact, the debt control act in august cut discretionary spending $2 trillion. that is have been and half the

sequester. $2 trillion. i supported a freeze on national pay. the proposal we're talking about here is the extension of the freeze that was in the act, and i do not know if it is wise and frankly -- i do not know if it is wise frankly and dig deep into non-defense discretionary. there are a lot of other places to find revenue. just to remind us -- we have already cut $2 trillion in discretionary spending. which should not go so deep -- we should not go so deep that we are hurting people. the government can raise revenues elsewhere. >> i think the reason that this

additional year is important is the president's commission on fiscal responsibility, the some symbols commission -- the sense and bowls commission -- simpson-bowles commission reconciled federal pay. i think that is why it is important to consider this. let's move onto the next item on our agenda, the president's proposal to reduce the medicare subsidy for seniors. the policy would ask the -- >> chairman, i thought we were going to -- >> i thought we were going to parts b and c. >> i had the wrong agenda. >> alright. they would pay it a little bit more to their part b and d premium .

we will of 45 minutes to debate on this issue. we will begin with the senate. >> ok, basically, mr. chairman -- we see medicare beneficiary premiums by $45 billion -- reducing medicare benefits your premiums but for two billion dollars i believe is not good. we pay doctors more. we're taking it out of the hides of beneficiaries, which does not seem to make much sense to make. if we want to cut docs by the same amount, that is fairness. that is balanced. i do not know whether the american people think it is fair to pay more to doctors and to

get out of the hides of seniors. i just do not think that is what you want to do. i will have more to say at another time, but let me just say i think it is totally unfair. there are other places you can find more fair and balanced of says dennis. we should not be -- more fair and balanced offsets it then as. we should not be penalizing seniors while increasing dr. pay and making that adjustment here. anybody else want to speak? >> senate republicans? >> thank you, mr. chairman. i will just speak briefly. my colleague wishes -- there are other ways to do it. the only other ways we hear our

tax increases. i thought we all agreed that high income beneficiaries that are eligible for medical programs paid for by the taxpayers could afford to make some sacrifices here in receiving a little less in the way of benefits or paying a little bit more for what they received. we have all heard about warren buffet. i do not think taxpayers need to subsidize their annual -- his annual exam. this is what it is all about keeping these high-income people do not need to receive the same medicare benefits as others. this is not a new idea. this is something the president proposed. this is something the white house proposed when we first began our discussions. back in the biden group. we all agreed to a. i do not know why all of a

sudden now people want to put a surtax on millionaires to not want their medicare benefits affected. they do not need these medicare benefits. low-income subsidies, which we provide to them, it seems to me only fair that we ask some of

the people at very high end to be willing to pay a little bit more. as chairman baucus has said many times, we just talked about the discretionary part of the budget. we need to look at the entitlement side. i think is a no-brainer to say we believe that hard-working taxpayers should not be subsidizing the cost of very wealthy retired americans. those people cannot afford these medical benefits on their own. >> the fact is, there is a big difference between the so- called millionaire surcharge and what is proposed here. millionaires make above a million. these people do not make above a million.

is fair tonk it compare the two. i will just take a middle position here. those incomes of one and the thousand dollars, the medicare premium is 50% that they have. if your income is $160,000, it is 65%. that is a pretty good hit for somebody making that income, and a proposal before us is to raise that significantly more. that is in effect a premium those folks would have to pay. we are not talking about millionaires here. we are talking about folks that don't come close to a million. add to that asking medicare

beneficiaries to pay for the payroll tax cut. we have generally tried to confine the cost of health care items to pay for the sgr's so the seniors can continue to go to the doctor. that is another reason i don't know if this makes a lot of sense. >> listening to the discussion, it discretionary spending is off the table, do have mandatory spending. this is mandatory spending, and i do think we need to just keep in mind, we are talking about retiree income, so the right now

at $80,000, that only hits 5% of the seniors with incomes. i do think while we are throwing around the salary levels, it is important to be reminded these are retiree's income levels. $8,000 at a retiree level means it is a significant out of income behind that. >> i think it is useful we are having this discussion. i think all of us want to try to exchange views and not essentially say that there is not any -- let's have a good discussion about what this is really all about. with all due respect, this is not about millionaires and billionaires.

there are some people who are millionaires that have been, over a million dollars in just a tiny percentage of cases. we are talking about medicare beneficiaries who have been come much much less than a million dollars a year. much less than $500,000, much less than $200,000. i think we should understand what the potential impact is. people in the high middle income brackets will have paid more in medicare taxes in many cases than those in lower income brackets. that is the way the medicare system works. to start off with, these are people who have contributed

substantially and most likely they worked, in most cases. essentially, what the house bill does is over time, because there is not an inflation factor, it is going to increase the impact on middle income seniors, and they may be higher middle income seniors, but in most cases they are not very wealthy seniors. the president proposes as part of a very dramatic, multi trillion dollar approach. what is being proposed here is part of the effort for us to extend these three major, major programs for the rest of this

year. what is being proposed here is a change that will ripple through for many years and have an increasing impact on taxpayers who it in the vast majority of cases consider themselves middle income, and aunt who in the clear majority of cases are people who are middle income. oflet's have a discussion what this is all about. this is mandatory, i don't think we should be impacting discretionary, but when we impact of mandatory, as senator baucus has said, we need to do it in the right way. i think the question is, is this the right way when we really

look at all of the factors involved with these people under medicare. these are not millionaires in most cases. they surely are not millionaires in most cases. these are not going to be people who have income of $100,000 a year. the position is that we cannot touch the taxation of people whose incomes are over a million dollars a year. they are multimillionaires. thank you. >> mr. brady. >> clearly with the deficit is the country is racking up this year, more than a trillion dollars, we don't have the money to spend more provisions without finding savings to pay for it. we also know medicare does not have the money. it goes insolvent in 12 years.

today, we start some of the reforms that frankly, all the republicans and every democrat roundtable has voted for. this is the president's proposal. when he pounds the desk and says i am sending you a bill, send it to me, this is exactly what we are doing. this is this provision that he recommended to the super committee. the provision he includes in his budget this year. he has pitched this policy, as senator kyl has said, to strengthen and make medicare more solvent. like the other two provisions today, these are bipartisan provisions that republicans and democrats support. i know senator casey is support -- sincere at looking at higher taxes.

that approach has failed five times in just this session. 6 if you count unanimously rejecting the president's budget. we can run that a seventh time, but with the clock ticking, why don't we focus on provisions that have been supported, and making sure that after they retire, they are still making $160,000 per family or more, pay a little more of their medicare premiums. that is what we have done in part be already. it is working well. this clearly is a bipartisan, common sense step forward. it seems to me because we don't have this money. we are looking at bipartisan proposals that can keep us from borrowing more money from lenders and foreign countries this year. this is one of these common- sense provisions we ought to pass, and it seems like today we

are just hearing know for the sake of hearing know. we have all voted yes on these proposals. why don't we agree and accept them as bipartisan proposals and get on to the other hard issues that we have in this congress. i yield back. >> let me concur with senator baucus in that today it is illogical to say we are going to ask medicare beneficiaries, those who do not work, to pay for the temporary tax relief giving working families under the payroll tax holiday. i just think that is not a logical way for us to be doing our business here. i concur with senator baucus's observations and that we should not be looking at this type of cost. let me agree with senator levin.

i think the point that he raised is worth repeating. the intent here is to freeze the bracket at $80,000 to start. freeze it permanently until we reach 25%. one out of every four seniors would be subject to this higher part b premium. talking about getting up to as much as 25% of our seniors who would be subject to the surtax. let me also point out the fact that we already have a progressive, financing mechanism that we have to make more money to pay more. medicare benefits are comparable for all seniors, but we ask those who have higher in come to contribute more currently. i think we need to emphasize that. as i am sure everyone here is aware, the payroll taxes that people pay for social security is capped at $106,000.

but the amount that is contributed by the fica taxes for those for medicare is not capped. if someone makes $500,000, that person today is paying every year about $7,200 in just the medicare trust fund, where someone is making a maximum on the social tree with holding, $106,000, they are paying a little less than $1,600 into the medicare trust fund. we already have a progressive way for those who are more well- off paying for their benefits when they retire. secondly, we changed the law on medicare part b in 2007. that has already been pointed out by chairman baucus. we already have a part b premium increase for those who make over $85,000, starting at 35% and going up to 80%.

we are already asking those who were retired who have more income to pay more. lastly, in the affordable care act, we put in an additional surtax for higher income payers starting in 2013. we have gone to the source three times. there is a big difference between someone who is currently earning taxable income over a million dollars and someone who is retired who has an $80,000 income. there is a big difference here. i think we would acknowledge that difference. the last point i would make is this. medicare part b is voluntary. the more we put these types of payment structures in place, the more people who are well-off will choose not to enter the medicare system, the party

system. it is their choice. if they start to have to be paying close to 100% of the cost, why would they opt into the system? a think this is a slippery slope to changing the program where all seniors are eligible to participate to one that is means tested and basically becomes the safety net program rather than a social insurance i think that is a dangerous path for us to be down. we have taken responsible steps here to make sure those who are well-off contribute more. i think this would take it too far in that direction. i would urge us to modify or reject this. >> i would just say that every democrat on this panel voted to freeze the income threshold for a decade. president obama is suggesting to continue that for a bit longer until the top 25% of seniors are income threshold

tested. we are suggesting this as something every democrat has voted for, the president forward did it to the super committee, and we are trying to find a way to pay for the policies we are doing. and this, to me, is a bipartisan suggestion from the president that we are trying to get -- >> mr. chairman. >> our colleagues to accept. >> you were the one that raised the 5%. >> currently $80,000. >> if this program goes forward, it would be well over 25% of seniors subject to this thing. i think that was misleading to say 5%, because it will be a much larger number. ultimately, it will affect a significant number of our seniors. >> current law is 5%. >> current law is 5%.