to strengthen our nuclear enterprises and investments in our icbm fleet. the focus is on assessing and developing propulsion and guidance capabilities for increased reliability. these enhancements will insure the life of the minuteman icbm weapons system through 2030. in this appropriation we deferred, divested or terminated -- to respond to program challenges as appropriate and support the revised strategy. include investing in fifth generation aircraft and purchasing 19 at 35 -- f35a's. and modifications to the f-15

and the be-2 and the b-52. for modernizing and maintaining our fleet. we're enhancing our special ops capability with four cv122's. under procurement of ammunition maintain an appropriate reserve. with the missile count of course, is our current funding. the recent decrease is because we purchased wide band global satcom satellites. in this appropriation we continue our space and utilize this to provide capability to the space industrial base. the next provides an overview of our major procurement properties. next slide, please. first aircraft. we reduced production.

this quantity will keep this on track. we have restructured the 4f- 34. in fy 13 it is part of a program. we will continue to recapitalize our special ops c130 fleet. out of this concept we purchased two high frequency satellite and in the fiscal year 15 we will procurer infrared satellites. we will purchase to gps and 4 eelv's. for weapons we keep on track with increases in health care -- hellfire missiles.

and helping us prevail in highly contested and burmans. next slide, please. in summary, this budget implements our new defense strategy which prepares the air force for the national security challenges we see emerging and meets the objective with the necessary fiscal constraints. the strategy requires air force to integrate our enduring capabilities and to combine campaigned and return of current and future capacity to deter and when necessary tonight, and defeat an opportunity -- opportunistic aggressor. our budget insures we retain the critical capabilities we have gained this past decade and maintain our ability to respond to global demand. in this budget we made the difficult decisions necessary to report early balance resources between four -- modernists, readiness, and our people.

we will meet our obligation to the american people to remain the finest air force in the world in the years and decades to come. i would like to thank you for your time and attention. this includes -- concludes my presentation. we will turn to your questions. you were the first, sir. >> you are increasing caps and systemng uas's and the upgrades you're talking about are for man the systems. should we do this budget as emphasizing manned over unmanned? >> you should not. >> can you explain? >> this is a manifestation of the strategy that was laid out by secretary panetta. our challenge within this budget was to determine how could we build a budget that would

implement that strategy and secondly, how could we do that with the necessary physical constraints as based upon the guidance from the budget control act passed by omb. those were the muscle movements we had. it is a focus on that. go back to your 48 through 24 question which is a good question. it turned out when the j rockets established the requirement of 65 caps, we could meet this with this production range. please? >> the air force was looking at the next generation uav. has that been eliminated from the budget and why? >> i think we need to take that one for record. and then ere 0---

euronext. >> it looks like you set aside $219 million to look at technologies to get this started. i understand you are focusing on improving attack but there is going to be some new developments. how do you see that ramp plan at? >> i looking for the funding or the understanding of the plans? >> the understanding of what this money is going to buy you. >> you can turn to that. >> this year, as we had talked previously, we are investing in a study and analysis of proven technologies. the program does wrapup $6.30 billion in total. i can't speak to that specific

fidep numbers. has the air force decided to punt on that and to when and i would not -- would like you to ask -- will likely to expand on the materials. $550 million procurement unit costs for the bomber. where did that come from and where is that analysis? also the kc46 restructuring. >> that is a lot. program install the base line. >> we have got development starting within the fidep and procurement in the 17 timeframe.

you do not see a lot of funding for it near term but there is program funding out there. in terms of your question about the tanker restructure, there has not been there structure of the tanker program. the contract award occurred later than we had originally expected. the funding profile has been refaced but the program has not been restructured. >> the contract was awarded february 24 last year. we still have a contract at 17. program of record is 179. we will have four systems going into development. it is a matter of the contract being awarded later. it is not a change to the program. >> analysis that went to $550 million per unit cost of the bomber -- >> i have not seen that number.

>> right now is a planning number. based on what we know about the technologies and we know about the program that is an estimate. we're going to work free hard on cost control of the program to make sure that we bring weapons -- the weapon system in. >> [unintelligible] >> the budget documents state that the service is extending. what does that mean? >> that means we have 18 and 19 built. they will be launched. this gives you more time with the current systems. we have 2 million in this year's budget to do. that is to do an aoa. so we will take the

congressional to do someaoa and determine what the fallout will be. you have satellites that have been lasting longer across the fleet. this gives us enough time to take our time and do another development so will be a new start. >> what does the word "expand" mean? >> the fact that the satellite have -- satellites have lasted longer, you do some things to make sure there are not obsolescence issues. >> you mentioned $125 million in fiscal year 12. well that -- what will that money be used for? >> that was the congressional ad and the intent, the air force will follow through with is some additional development work and study work to try to flesh out follow-on plans for dwss.

>> can you flesh out the future of this -- the three had money for in 12. that is nato ags and what is the plan -- are you going to waste tax dollars and mothball them? what will you do with them? >> we are not going to use that system. we're using the u2 instead. the cost is slightly less and the development costs is significant. the u2 is a starter system. >> your sensitive to waste and issues. it will mothball 18-year-old boy drowns -- 18-year-old drones.

>> we have not determine exactly what we're going to do for the systems we're the best thing. you take that 27. another system. it is -- when the chief talked and some people asked some of these questions. we do not know if it will go into 1000 or type 2. it is not going to -- where are digesting the system. the final disposition of is still tbs. >> a couple of questions. on the future icbm. do you plan to begin the aoa in fy 13? how much is the budget? and clarification. in your opening comments, you mentioned the air force has work to reduce sectarian violence in afghanistan. could you be more specific about what activities you are referring to?

>> let me take the second one -- the first one first. on the icbm question, we're doing aoa. the air force has always had a role on air to ground. of course isr com capabilities in space as well. >> 4 fy 14 as well? >> the name has been changed from last year. is that a name change, what is the reason and how does that change strategy? >> there is no difference in the concept. essentially it is doing a block buy. instead of building a factory

and getting non-recurring engineering down, trying to rehire those folks, this does a block buy, two at one time. we did two of one type and two of another type in 13. it is more of a name change, and actual content change -- then constant change. >> boldly -- the driving strategy behind that was to take the concepts that operationally response and space really brought. and institutionalized those across the air force base programs. a lot of those key tenets, responsiveness, agility, and those kinds of things are now factored into and will be

working to factor into the strategies and architecture is of our existing space program. >> essentially, we're going to take some money and that we provided to the center. it is a composition. this will be divided across programs pass. you will take those techniques -- technologies and concepts and give them to a wider audiences by giving this to that technology team. it is a better utilization. sir, you have not had a question yet. >> clarifications, of the reaper production from 48 to 24, is that a delay or you not purchasing those 24 reapers? will you do it in other years down the line? how many global hawks are you mothballing?

i was not clear. the last question, on the -- there is a lot of discussion about the 810 -- a10. how are you going to replace that? toglobal hoawk, we are going give us that entire line of - 30's. that is the block 30 global hawks. >> what is the number? >> it is 18. >> the quantity is tbd. we are working through contractual details. >> we are going to have a large number of a10's. we will still have over 248.

we have been engaged in detailed, long enduring stability operations in support of ground war is for 10 years. we have been doing, too. under the strategy will not decide to do the close air support for two major land wars. that is the fact of the strategy. if you take a look at what we're going to do with strategy, we will have the sufficient amount of a10's to be able to do that. aper question -- it is a reduction of how many we will buy this year. that is to adjust to the this requirement has changed. the limiting factor is not the

production or the number of systems. it is the amount of we have available. with the change in caps being down to 65, we can read that with 24. >> in 2014 you will buy 24 more or is that not decided? >> the fy 14 budget is still transitional. the concept here is where stretching the production. tousing get a better with our ability to produce. it did not make sense to have the production out that far ahead to do the processing and exploitation and dissemination function. >> nasa recently ended the space shuttle program. can you give me in terms of dollars thomas this has cost to has this cost you more or save

you money? >> nafsa's ending up the space shuttle program? >> i would have to give you an exact number. nasa is one-third of our business so you'd have to see what percent of those launches were shuttle. it is not clear to -- that there ending of the shuttle program would be a savings. let me take that for record and see if there's anything we can add. >> a mind to ask you on fa5. do you have some money set aside for concurrency, estimating it will occur? how are you estimating that? secondly, i am curious on eeov. there is a new launch strategy out there. there are four course in the budget. i thought you were going to wrap a plea -- the cores. >> give me the first question

again? >> how are you budgeting for the concurrency? >> the bottom line is the amount of money, it is what is. if they cost less, we will buy more. if the cost more, we will buy less. and so this -- the goal here was to reduce the ramp rate. it was 24, now it will be 19. the total number has not changed. 1673 is the number in the program. the number in the fidep has changed from reduced by 98. they cost what the cost. we're still sorting out the details of this program, what can currency costs are. we have had a concern -- and concurrency of $2 million to $4 million. we are in -- we're still in the

process of sorting out this program. this gave us more time given the amount of money we have to be able to stretch this program out. >> and on the eelv, i thought you wanted to ramp up. >> the economies of -- of scale, we are buying for, the navy has and nasa has one. if you look at the total eelv, it is around 8. there was a cost that was done, what was the right number? as long as you were over the four it was seen you could get the economies of state -- scale starting production of four. you have not asked a question, i do not believe. >> all their -- when they're gone, what is going to be the

replacement? is there going to be a vacuum there? >> in march will talk about medications and fore structure. it is premature to talk about that. who else has not asked the question? >> i noticed with airlift aircraft, the spending is going down from $1.80 billion to $600 million. i am wondering if you could talk about that briefly. conversely spending on ammunition has gone up $100 million. i'm wondering if you could tell me what those two -- what that rate-increase means? >> the amount of airlift we use is going to be based upon the analysis we did to see how we are conforming to the strategy. right now the ceiling for airlift is 301.

with the cuts will have here with the 275, we will need support from congress to adjust to that. it is more -- everything goes back to how we align ourselves with this strategy. >> and ammunition? small arms is doing a lot. you anticipate another contingency? >> we will be prepared for another contingency. we're trying to replenish we have used and we're starting -- there are 144 of those and we are evolving toward the emissions that allow us to penetrate and worked in a contested environment. just the emphasis on those. >> this is $22 million, an increase for small arms. >> i did not hear that correctly. >> why do you need that many considering that is not the primary weapon of the air force? >> a few more questions?

>> that is what we need to take to record. if there is anyone who have not asked. >> efforts projected it would need $365 million for global hawk. you have and $81 million jump. is it related to some issues that [unintelligible] on the global hawk block force? >> let's take that for rec. -- record. >> how do you -- with the guidance you have to be more expeditionary. be in conflict, the number of aircraft.

>> part of our transportation is within theater. we will not be involved in two major land in the first. that is the in the order plan involvement. if -- to be able -- our focus is the f-35 so we can do penetration and long range global strike that we can do penetration activity. >> the strategic piece of this is driven by the new defense strategy. when we went back and looked at that based on the strategy there was a scenario tied to the study that closely mirrored the need for strategy. that led us to revise our projected number of aircraft down to two under 75 from 301.

we have the c-17 prickleback -- program of record. that was sufficient to meet the 275 strategic airlift requirement which allows us to then look to retire the older of c-five a's. that would allow us to have c5a's that were sustaining. >> thank you.

x. that wraps up today's four briefings from the pentagon. looking at 2013 budget requests of the defense department. you can see president obama's fiscal 2013 budget request at our web site, c-span.org. we have posted their along with other budget resources. at the president's remarks from earlier today and congressional reaction. that is all at c-span.org. with this being budget week on capitol hill, we have set up a facebook question for your reaction to the budget released earlier. we want to know what your priorities are for the next federal budget. the 02 facebook -- go to facebook.com/cspan to offer your thoughts.

the house doubled in earlier today for a short pro-forma session. they will return to more for legislative work. this week, the house and senate debate highway and transportation programs for the next several years. the house bill makes a number of changes to current federal transit programs. the chamber could consider extending payroll tax cuts and long-term unemployment benefits. you can follow the house live here on c-span. the senate returned earlier today to consider a judicial nomination. when the gavel in on tuesday, they will return to work on a surface transportation bill with amendments to date expected to take most of the week. senate negotiators are currently working on a compromise with house over this payroll tax cuts. the senate is live on c-span2. with the president releasing his

budget proposal earlier today, we will hear about some of the details from the acting white house budget director. he is joined by other economic and domestic policy advisers at the hour-long briefing. >> think you for coming for our overview of the budget. we have a four part agenda as it can see on the screen. we will start with the chair of the council of economic advisory and will discuss the economic assumptions. then our turn to discuss the president's fiscal year 2013 budget. then the main investment pillars of the budget with a special

emphasis on job creation. then the pillar of education and the importance of education in our budget. alan? >> thanks. i want to comment on four of the economic slump -- assumptions that underlie the budget. first by way of background, the economic assumptions are developed jointly by the council of economic advisers, the office of -- management and budget and the treasury department. this process takes place over several months and the assumptions were locked down in mid-november. at that time, the latest report of the unemployment rate was 9.0%. that was for october 2011. that number was subsequently revised down to 8.9.

when we made the projections, the unemployment rate had been at 9%. we're at 9.1%. in the budget we assumed the unemployment rate would average 8.9% for 2012. then come down to 8.6% for 2013. these forecasts were close to the consensus private sector forecast at the time. the 20 -- 2012 forecast, 0.1% below the private sector forecasts. since we made our forecast, we have learned the unemployment rate has come down 0.8 to of a percentage point. we also seen an improvement in other economic indicators, particularly for the labor market such as initial unemployment insurance claims. as a result of this welcome

news, the budget forecast for the unemployment rate should be considered stale and out of date. private-sector forecasters have shaved over half a percentage point from their 2012 forecast of the unemployment rate as a result of the improved situation in the job market. that is over the months since we made our forecast in mid- november. if we were to do another forecast today, with lower our forecast of the unemployment rate from what appears in the budget. to be helpful, together with the budget tables, which included the january blue chip forecast by private sector forecasters of the unemployment rate as well as other recent forecasts. these forecasts have been out of date as the new blue chip survey of private sector forecasters was released last friday.

that was lowered a bit from the one for january that is included with the budget tables. that is the unemployment rate. next, we will walk through the assumptions for three other key parameters in the budget, economic growth, inflation, and the interest-rate. on a year-over-year basis, real gdp growth is assumed to be 2.7% in 2012. this is up from a pace of 1.7% in 2011 and it reflects the quickening pace of gdp growth at the end of 2011. and the presumption we will continue to get a boost from the extension of the two percentage point payroll tax cut for the remainder of this year. for 2013, real gdp growth is assumed to be 3.0%.

for inflation, we have assumed that the consumer price index will rise by 2.2% this year and by 1.9% in 2013. the interest-rate on 10-year treasury notes is assumed to be 2.8% this year and to rise gradually to average 3.5% next year. the current 10-year treasury interest rate is around 2.0%. as the economy strengthens, interest rates are expected to rise. there are a number of other economic parameters that implodes the budget but these are the key assumptions, which is why highlighted those. i will not bore you with all the other dozens of parameters. i will hand back to jeff. >> thank you. before i joined omb i spent my

entire time in the private sector. one thing i found that was often helpful to boil things down to a few slides and given that the budget is small volumes and hundreds of pages, i thought that approach would work well today. i'm going to cover for topics. first, the current policy baseline. next, i will cover the key elements of deficit reduction. then an overview of our investments in the area that is central to our competitiveness and growth. finally, the bottom line of the president's budget and how it puts us on a sustainable path. first, the baseline. we believe we have a baseline that accurately reflects our current policy. in essence, this baseline is business as usual. the baseline includes the extension of the 2001 and 2003

tax cuts in the estate and gift taxes. it has the permanent extension of the empty -- amt and sgr. permanent extension makes more sense than patching these year after year. it has the enforcement of the bca caps and the joint committee sequester. we're accounting for future disaster costs rather than ignoring them. this baseline results in an annual deficit of 4.7% of gdp at the end of the budget window in 2002. last april, the president offered a blueprint for achieving more than $4 trillion in deficit reduction. he maintained that commitment in his proposal to the joint committee on deficit reduction last september.

this budget is very similar to his proposal in september. with the addition of a year to the budget window, as you can see on the far right in green, the budget includes over $5 trillion of total deficit reduction. let me walk you through the critical elements. i will work from left to right. you start on the far left, you will see $676 billion in savings from the appropriation bills enacted last year. these include the 2011 omnibus which was passed in april and the 2012 which was passed in september. living to the right, over $1 trillion in reduction in discretionary spending, consistent with the discretionary caps in the budget control act. third bar, next, $362 billion in

reductions from medicare and medicaid and other health programs that will make these programs more effective and more efficient. then you will see $269 billion in savings from reforming non- mandatory health programs. this is 272 on this slide. these programs include agricultural subsidies, direct payments, federal civilian workers retirement, and the pbcg reforms we're suggesting. these costs are net of the costs of new mandatory initiatives. the next category, the $1.50 billion bart is revenue. revenue for deficit reduction. including the expiration of the high and come 2001 and 2003 tax cuts and the elimination of inefficient and unfair breaks

for the highest earners. the $1.50 trillion number is a net number. as we further cut taxes for the middle class and for small businesses. there are then $670 billion in net savings from capping oco and investing in a six year surface transportation reauthorization. capping oco closes the back door on security spending. there are other savings of $143 billion. these include disaster adjustments, program integrity, at the portion of oco funding for transportation that averts a general fund transfer that happens every year. as a result of all these initiatives, you have $800 billion less in debt service.

that is the bar next to the pink are. let me go to the pink are. that cuts the other direction. these are $176 billion of investments in short-term job initiatives. this is the remainder in fy 2013 of the $354 billion of java initiatives that is not spent in fy 12. -- job initiatives that were not spent in fiscal year 12. we firmly believe they sequester is bad policy. as i said, we propose that it be replaced by the larger, more balanced package of deficit reduction i have just -- described. these efforts represent more than $5 trillion in net deficit reduction. even as we achieve this deficit reduction, we continue to make key investments in presidential priorities.

these include short-term measures for job growth totaling $354 billion, tax breaks for the middle class, and small businesses amounting to $352 billion. in continued investment in our long term priorities. these include education and job training for american workers, innovation and r&d, clean energy, and infrastructure. we make these investments while biding by the tight spending caps and we make hard trade- offs. let me pull this together for you. on the left, i have compared the adjusted baseline we discussed in the first slide with the results of the president's policies. as you can see, in 2012, deficits from the president's policies are below 3% of gdp compared to over 4.7% for the

baseline. furthermore, debt as a percentage of gdp is stabilized from 2018 on. this is important for maintaining a strong investment in farming. the president's budget replaces this with a balanced deficit- reduction with $2.50 in spending cuts for every $1 and increases. -- in increases. in closing as a business person and acting director at omb, i believe the president's budget makes the right investments to make us even more competitive in the global marketplace. in achieving -- declining deficits and stabilizing our debt, are critical for business confidence and investment. this is good for business. it is good for the middle class.

it is good for america. let me turn over. -- turn it over to gene. >> thank you. the ultimate end of any budget is not any particular number or ratio. it is an economic strategy that is designed to make the middle class stronger, more secure, and more inclusive. to me that end, to meet that goal, you need a plan that as jeff said, returns us to medium to long term fiscal sustainability to give companies the confidence to make the u.s. still the place to do long-term investment and job creation. secondly, you need to have more

momentum to the recovery and job creation at this moment. we are still digging out of the largest hole and worst recession since the great depression. third, we need to have the investments that lay a foundation for the private sector to grow and become more competitive. these three goals are not contradictory. they are as common very as good hitting, pitching, and fielding is for baseball team or good shooting, rebounding, and playmaking. as we have seen in -- other parts of the world contract -- contract to quickly, it hurts job protection and is counterproductive to your fiscal goals. there is widespread agreement ranging from the federal reserve chairmen to the congressional

budget office to top economists that this time for a balanced approach of insuring strong demand and more momentum for this recovery at the same time, you are laying out a framework for medium to long term fiscal discipline is exactly the right recipe to give competence and growth in this recovery and expansion. there is equally that outside independent validation for the fundamental fiscal approach that jeff discussed and the president has called for since he has come here which is that you ultimately need a grand compromise that includes a combination of entitlement reform, savings, and revenues. that is what you have seen called for from simpson, from the cea chairman, republicans

and democrats who have called for this balance. whether or not you agree with every measure in this budget, there is no question it achieves this type of balance between revenue and spending cuts. the only question is whether the house republican budget that will come forward soon will for the first time include any semblance of that balance in their budget. this plan does include immediate efforts to strengthen the pace to recovery and job creation. there is little question that the payroll tax cut, the ui extension and the 100% expensing were treated for the resilience of our economy, as it faces its from external and the debt crisis and downgrade internal. one economist said that deal " probably saved us from another recession." the extension that we just did

this december for another two months, not the one from 2010 but the one we did that extended for two months gave the possibility, the opportunity for us to have the type of strong january that we saw. imagine, have instead of the payroll tax cut being extended in -- and ui been extended we had story after story about 160 million americans' tax increases, 1 million people losing ui, it is not likely would have seen the momentum in job creation we did this january. the payroll tax cut and the unemployment insurance are seen as having the strongest bank for the buck by independent forecasters in on be. these outside economists have said that full extension would mean half a percentage of growth

this year and well over 500,000 jobs. if we fail to extend right now, 2.5 million americans would lose the unemployment benefits in the next two months alone and the payroll tax cut as we have said would go up, payroll taxes would go up for 160 million people with the typical family losing $40 a paycheck. so this is obviously a critical part of our short-term immediate job creation strategy. we also include more aspects that we think are critical. as alan krueger would tell you, the only thing-in the -- january numbers is the teacher jobs that were lost. 254,000 teacher jobs have been lost since the end of the recession.

this is a self-inflicted wound. this is not something that has to happen. at the u.s. congress passed the president's $35 billion initiative on teacher layoffs and first responders, we could be gaining jobs in these critical areas that is critical for our children and public safety as opposed to losing them. the president includes $30 billion for teacher layoff prevention and to help first responders in this budget as well. on school modernization, we know the unemployment rate among construction workers is that 13%. we know there will never be a better time with lower interest rates or more available workers to rebuild our schools and to rebuild our infrastructure then there is today. the president includes as he has before the $30 billion for school modernization, $50 billion for and structure --

infrastructure investments and $10 billion for the instrument -- infrastructure bank. there is nothing disciplined about deferred maintenance. you do not get points for schools that need to be fixed eventually or roads and bridges that need to be modernized eventually and if you have to fix them, what better of the time the right now when it would make a major impact for the record-economy and jobs and strengthen our recovery and for unemployed workers who are desperate to get back to work? the president includes as part of his housing and community stabilization strategy, the project rebuild at $15 billion. beyond the immediate efforts that we need to do to get job creation going, stabilize our economy, the president laid out his pillars both in the kansas speech, the framework, the overall pillars in the state of the union, the budget today puts for those details. as you will see in the details as well as state of the union,

we put a strong focus on manufacturing jobs. we believe manufacturing punches above its weight economically. beyond implying 11 million people, it has significant effects on multiples of additional jobs that support and are part of manufacturing. it causes 70% of all private- sector r&d, 90% of patents, 60% of exports. so we put in details of the things we stock -- we talked about i instead of the union. bringing jobs back and removing deductions for shipping jobs overseas. you can see today there is a $6 billion tax incentive over three years called the manufacturing communities tax credit. this is to prevent the downward spiral that happens too often in our communities where, when there is a massive plan to closing, layoffs, or layoffs that could be related to the

military drawdowns, that we have a strategy for those communities to attract new employers. not after they have gone through the downward spiral but before. this budget will include a $5 billion clean energy manufacturing tax credit, often called 48 c. it has doubled what is in the recovery because demand is so high and this brings together the presidents pillars of energy and manufacturing. the same is true with the extension of the 1603 provisions that seem to be very effective. the budget will also call for permanently extending r&d tax credit at the expanded global of 17%. an expanded curve -- a credit to give companies the confidence

and security to make those investments. we will talk more about the innovation institute in the weeks to come. another element that brings together the president's energy and manufacturing pillars are the advanced vehicle strategy. you will see a consumer tax incentive for buying advanced vehicles, technology vehicles. these are technology-neutral. there at the point of sale. they're worth $10,000. we did not pick between natural gas and electric vehicles. we let the market determine that and give consumers the incentive to buy these cars. this will come together with the community challenge for interest -- infrastructure deployment and the first-ever tax credit for heavy truck natural tax gas credits. the first of its kind. you have seen that we have also as part of our jobs manufacturing strategy put forward an interagency trade enforcement center, $26 million. 50 or 60 new people, greater

coordination in the government and this is designed to significantly increase our capacity to bring additional trade cases that will level the -- playing field against countries around the world, including china. the pillar of education and skills i will leave largely to cecilia. overall, you see a very significant commitment to training. at this time of very high unemployment where we are still coming back from the worst of this recession, still gaining traction, try to make sure people are able to get the jobs. in this you will see a few principles. we're relying on where the evidence points us in terms of community colleges, in terms of

having training that is designed to match workers with the skills that are open now and will be open in the future. that we are increasing simplicity and reliance on community colleges as an important vehicle for that growth. this is very much where studies and evidence points us to go. and finally, the president talked about the values of responsibility and shared sacrifice in kansas, in his state of the union. that is embodied in an obviously the budget as well. one of the items that is in this budget that had not been out was the fact that we are -- the president is calling in this budget for a dividend income to be taxed at ordinary income for those making over $250,000. i want to be very clear on

something. for those in a 15% bracket or the 10% bracket, the overwhelming majority of americans, the capital gains and dividend rate will remain at zero. if you're in the 50% or 10% bracket, any dividend or capital gains income is today taxed at 0 and will continue to be under the president's budget. if you're in the 25% or 28% rate, it is at 15% and will continue to be so. what we're talking about today is only four americans over $250,000. -- for americans over two ordered $50,000. this is where was during the clinton administration. during those years it was consistent with a very strong and robust economy. the president had initially sought to keep dividend rate even for those of the highest in come at 20%, as with capital gains.

but the president believes that at this time, we're we're asking for shared sacrifice across the board in entitlements from health to agriculture to civilian retirement, we simply cannot afford to devote $206 billion for lower tax rates for the highest income americans. our system for taxing investment income for the most well-off americans is clearly broken. the best way to fix that is through hard choices as part of comprehensive tax reform and not by spending 261 billion on a tax rate which is why people who work -- make over a million dollars are paying lower rates than many and come -- middle income families. with that, i will turn it over to my partner in crime, our new

domestic policy adviser but not new to most of you, cecilia munoz. >> thank you. to round out the picture presented by my colleagues, you have for the president talked about the urgent need to make sure that our students and our workers are getting the education and training they need, not just to fill jobs that are coming online today, but the jobs that are coming online as our economy continues to expand and grow. the budget reflects two important principles that you have heard the present articulate. the first is his strong view that a quality education should not be a luxury in this country. it should be an economic imperative that is available to every family. the second view is there is a vital need to make sure we're providing training programs for workers to feel good jobs that are coming online now and which are likely to come on line based on the evidence.

set to start with the education peace, there are three or four bucket to have heard. i will take you through this quickly. the first big piece has to do with higher education. you heard the president talk about reforms he is proposing. he talked about how student loan debt is outpacing credit-card and other forms of debt. that everybody has a role to play in making sure we're making college more affordable. the budget proposes to do what the federal government can do to play its part by continuing our commitment to an expanded pell grant program, by making permanent the american opportunity tax credit and by investing in making sure that still low interest rates under stafford loans do not double as they are expected to this summer by 3.4% to 6.8%. this includes a proposal to make sure that does not happen this july when it is likely to happen. there is also a series of incentives that the budget

reflects to make sure that colleges and states are doing their part. there is a series of incentives to keep tuition affordable, to use campus based aid programs to provide incentives to move in the direction of colleges are making tuition affordable. from needy students i appear to killer. there is a piece of the race to the top program focused on eligibility. to help states and colleges and universities model innovation for the rest of the sector. it is a reflection of the notion that states have a role to play, colleges have their role to play, and the budget reflects a series of incentives to make sure we are investing in higher education. the second issue on the education side is a continued investment in the race to the

top program. it invests $850 million for a race to the top which has been successful. it has been expanded to include an early learning challenge to make sure students enter kindergarten ready to learn. this year the race to the top program includes a district level competition. you heard the president described a series of address forms designed to elevate the teaching profession. there is a $5 billion program to challenge state and districts to work with teachers did have changed in the teaching profession cannot create new career ladders to establish different kinds of leadership roles. this is a package the department

is working on to make sure we are working but teachers, with school districts, to transform the profession as a driver of change in our system. in addition, today the president traveled to northern virginia community college to announce his proposal to provide americans with more skills for the 21st century economy. a new fund is designed to forge new partnerships between community colleges and businesses to train 2 million workers for good-paying jobs coming on line now. a particular, we know we will need to fill millions of middle and high level skill positions, like health care, advanced manufacturing, clean energy, information technology, and this is designed to create a partnership that would be implemented by the department

of labor, department of education. also with states and the private sector to make sure they are building partnerships that provide training for jobs coming on line. the idea is to help committee colleges become community car rear centers. there is a piece of this that is aimed at colleges themselves. state and local governments can apply for these funds. there's a piece that is dedicated to entrepreneurship, and this bill on an arena where this administration has made great investments already making sure community colleges have the resources and infrastructure available to meet the needs of this economy and workers and

students in this economy. what this does is build on the record by making sure community colleges are linked with businesses and states to make sure they provide the training for the jobs jobs where we know industries are looking for workers and trading will make a difference. with that, we're ready for questions. >> thank you, everybody. questions. [unintelligible]

>> in terms of the first question, which was the deficit and the reduction of the deficit, when the president came into office we knew things were not in good shape, but we did not realize how bad they were. the fourth quarter of 2008 gdp at the time we thought was - 8%. so the president inherited a much worse situation under the jobs being lost per month. on top of that, during the prior administration, we had unpaid for medicare part d prescription drug, and paid for tax cuts from 2001 and 2003. i think the situation was far worse than we had anticipated, given the economic news. i started with the president's

budget cut the deficit in half in 2014, and that is one year later than the original projection, and that is explained by the situation we inherited, on the economic front. on the sequestered, it is bad policy. just look on the defense side. it would require $500 billion of further cuts. that would not be dealt with right away -- across-the-board cuts. that is bad policy. we believe the sequester should be replaced with a balanced deficit-reduction i described earlier. of deficiteasanty reduction that can achieve the $1 trillion or more. the sequester is an important function to make sure we do that

balanced reduction. the president is not calling for it to be taken away. he is calling for the money to be replaced by a balanced deficit reduction. >> to add one or two, the president's budget in november, when you look at the fourth quarter and the first quarter, and this is straight factual, do the math yourself, the average was projected to be 1.65% for the fourth quarter. it ended up 8.9% for the fourth quarter. that period, we were averaging 7.8% loss. of course, had people down the deficit projections then, they would have been darker, and we face an external shock.

we want to say that this budget, when you look at the ultimate goal, which is reaching deficit sustainability, it is superior to the 2010-2011 budget. 2017, after, the debt is sustained. the deficit comes under 3%. to add on the point, it is not that we think -- the opinion on the sequester is not ours. it is everyone's. the entire design of the whole rationale is to create an enforcement mechanism designed to be mutually assured destruction for but sides to force people to come to the table to come up with an appropriate balance of deficit reduction. that is what happens.

the whole design of this was as an action-forcing event to make sure we came forward with some plan of compromise. it is totally appropriate in all the budget accounting, battles going on, to look at the amount that was locked away in the budget control act over $1 trillion, and there was an enforcement mechanism that would force us to come together and agree on an amount of deficit reduction that was equal or more than the sequester, and we have come up with something more significant than that. that is where our focus should be. >> [unintelligible] the difference between your projections in this document and in the september document, because the policy largely seems to be the same, but the debt in

2001 is $1 trillion high gear. >> the difference is primarily what allen talked about, which is the difference in economic assumptions. we have proposed making the aotc permanent and the tax credit permanent. >> what about occo? >> occo is capped $450 billion, and that saves over $800 billion. a piece of that is used in the six-year reauthorization of surface transportation. the timber document, we work wanted to put forward the september deficit savings. the president thought that would

be helpful to the process. people could agree there in the super committee, knowing they have the blessing of the president. we tried to put in all the deficit savings. we did not put in all of our aspirations for making the r and d tax credit permanent. there was a purpose to that. >> [unintelligible] is this a situation where if you had a grant compromise, you would be going above and beyond the $4 trillion? if you got some deal with the speaker that you would go beyond the numbers, or are you saying they would change? >> obviously, despite my deep

affection for you, i would not negotiate the grand compromise with you now. i think that is called negotiating against yourself. we all realize that when you engage in a good faith bipartisan effort, when you have divided government, that you have a common goal, reducing the deficit, strengthening the economy, everybody will make some compromises. what is significant when we put out a budget, it has $600 billion of entitlement savings, and we have already agreed to the most significant discretionary spending cuts in decades. the discretionary number for non-security savings, to put 5% of gdp, that is boring, but that is the lowest it has been since 1964. in other words, we have put

forward significant entitlements savings. the president has taken on sacred cows on our side, and put forward entitlements' savings that you have not seen a detailed in the budget before, and he puts out an amount of revenue which is equivalent in the overall package of what has been done here, $2.50 of spending and interest cuts for every dollar of revenue. that puts forward the type of ballots that offers the opportunity for compromise. let's see if we ever see a budget coming from the republican leadership of either the senate or the house or even a framework that has that type of balance, where revenues are put on the table in a significant amounts that would be a step forward.

we will see. >> thank you very much. [unintelligible] >> on corporate tax reform, we are going to speak further on that before the end of the month. but i think as you have seen, the president has made clear what he said in the state of the union that he supports corporate tax reform, that would reduce the expenditures and loopholes, lower rates for people investing, creating jobs in the u.s., do so further for manufacturing, and that we need to have a global minimum tax so that people have the assurance

that nobody is asking doing their fair share as part of the race to the bottom having our tax code actually subsidized and facilitate people moving their funds to tax havens. but we will say more, perhaps not in gory detail, but in more detail before the end of the month. in terms of the revenues, the president is looking for shared sacrifice. budget, a democratic budget that has savings in medicaid, savings from new beneficiaries, it has agriculture civilian retirement savings. there is a lot of tough choices, how could a president

go to a town hall and an average americans who might be affected who are being asked to be part of that shared sacrifice for the greater good in strengthening our economy, how could they be asked to do that at the same time the most very fortunate americans do not have to contribute at all, did not have to be part of this at all? when you look act what it takes to get the public and general support for a balanced budget agreement, you have to have that type of shared sacrifice, for this to be acceptable to the public at large. >> [unintelligible] >> in the budget we have we have

returned to the havereturnedbysg returned to the pre-bush tax cut years. the president did not let us go to the clinton era, but in this budget he decided that was something he could not afford. in terms of tax reform, we have not tried to lay out what exact rates would be, because that is the type of thing you would have to work out, in overall tax reform, but the president has made clear that it needs to be reform that certainly needs the tax code as progressive, if not more, progressive, and it would be if you let the bush tax cuts expire. >> [unintelligible] >> this is a fair point.

in both corporate and individual sites, we do perforce to the current system as we know it. things like the dividend rate is affecting -- is a proposal under our current tax system, then we have other things where we have said where the president has made clear he would like to see a simpler, more fair tax code, and in those areas we have put out principles, so the buffet rule would be one of the principles for individual tax reform as opposed to an explicit provision in this year plus budget. >> [unintelligible] >> no. do taxaying when you reform we ought to get rid of the alternative minimum tax as it is now, which no longer serves the purpose it initially had. we have to patch it every year to keep it from hitting tens of

myriads of middle-class families and was never intended to hit. you are replacing it with what an alternative minimum tax was always meant to be, as a provision to make sure the very most well off were not able to use the arranging of their income or assets or accountants or lawyers to pay less than typical middle-class families. >> [unintelligible] >> you have the return to the clinton 39.6, and then you have the capping of deductions for those that are $250,000 at 20%. then you have corporate reform, basic common sense stuff on corporate jets, carried interests, expenditures we no longer need, and those are offset by tax cuts for the middle-class and small business. you get a net number of $1.50 trillion. at the same time, the president

is in favor of both corporate and individual tax reforms. >> [unintelligible] >> take time, and the president wants to be specific about how he wants to raise the $1.50 trillion that we need to have to have a balanced approach. spending for50 dollar every dollar of revenue. the president was very specific about where the revenue was coming from. >> we believe in a corporate -- in the individual tax reform, that we would like to see individual tax reform that would also in the and contribute this amount, $1.50 trillion, deficit

reduction as a part of the overall plan. he essentially, we are saying -- if we were saying we won the one put $5 trillion of revenue as part of the overall deficit reduction plan and reform, you might say you are putting out and number, how would you get it? we're showing you how we would get it under the current system. the same values in terms of simplicity, in terms of making sure we had a tax code that is at least as progressive as if the bush tax cuts expire, would be principles of a wooded died and reform and give some sense of what our standard would be. that $1.50 trillion is more than the republicans would prefer, but is a bit less than what the bowles-simpson called for. it is part of an overall deficit

reduction. >> one last point, but to make it clear that there are no tax increases for families of $250,000 or less. no increases for 200 to $8,000 or less. -- for $250,000 or less. >> you can capital gains at 20%. you roll back from the campaign promise to maintain the 20% rate on capital gains. does that get you most of the weight to revenue that you wont, limiting the capital gains and dividends? allen, take your point that the unemployment rate is lower than you projected. you still have a relatively optimistic gdp projection.

>> when we make our projection, we do it under the assumption that the president's proposals will become law. most importantly, the extension of the payroll tax cut, and continued extension of unemployment insurance benefits, which was mentioned the cbo has concluded has a very high bang for the buck. i do not know what the forecasters a suit in terms of policy going for. our forecasts are based on the perception that the president's proposals to help strengthening the economy will be in place. >> i am worried if i answered you will confuse everybody, because there is apples and oranges there, in light of what they're talking about. because the buffett rule is part of tax reform, where say in tax reform there is a number of

different things to do with dividend cut capital, rates. whenever that is we want to say at the end there should be a basic rule that people over $1 billion should be paying an effective rate of 30%. if you were, which we're not, we are not proposing the buffet role in the current law. if you were, adding that the that that -- halving the dividend rate go higher would mean less people would be hit by having a buffet role as an alternative minimum tax. if you considered that is how some people most famously in warren buffett to end up getting such low tax cuts, was as he said arranging for himself to get income that could have been waged in come as dividend income and being at the 15% rate. there is a little bit of apples and oranges. if you were putting the buffett rule and our current system and the dividend rate was back to

ordinary income and the tax rates were going to where they were in the clinton era, you would have a smaller percentage hitting. the idea of the buffet role was not to be the main force of raising revenue. it was to be a minimum tax, and we have said from the beginning we never expected the most well off people would hit that. many well off people get their money in wage in, and pay over 30% rate. this is the sign for those who somehow either park their money somewhere or a range for their money to be in preferential rates said that a combination of that allows tens of thousands of very well off people to pay less taxes than ordinary middle income families. >> time for one very quick last question. >> [unintelligible]

>> i do not week think -- i do not think we take a pass. the affordable care act saved more than $1 trillion in the second decade. we have specific savings in medicaid and medicare, another $63 billion in this budget, and $270 billion in savings in areas like the federal employee retirement, agricultural direct payments and subsidies, pension benefit guaranty, so we are taking a serious path at deficit reduction and on the entitlement side. we have a balanced package that has $2.50 of spending for every

dollar of revenue, and most importantly we have deficits declining year over year and we reach a point where our total debt is stable as the percentage of gdp, which is important. >> if you look at the ninth or 10th year of our budget or look at the amount of savings we have, on the health care side, it is the same in 200021 as the savings in the bowls that simpson planned. we are very comparable in the long term to where we were in polls-simpson. -- -- bowles-simpson. everything happening in terms of dramatic expansion of people on that, because of the aging of

our population, all that was known in 2000. we knew in 2000 that between 2000 and 2020 there would be a large increase of people on social security, medicare, medicaid, and with those projections, we were able to project balanced budgets, even surpluses, a lot of which changed since then. the fact that aside the cost that we are dealing with, the financial and economic crisis this president inherited, the ongoing cost from the fact that there were two major tax cuts come at push production drug benefits, much of which we support, but all of which was not paid ford, and the legacy of that is well over $500 billion a year. legacy and of being the difference between us struggling with deficits and having a very

low deficit as percentage of gdp. that makes the case you need to deal with revenues on those who are most fortunate and entitlements at the same time. we never said it was one or the other. we always said we needed a grand compromise of spending, savings, and revenue cities, particularly on those who are the most well off. and that is what we have been trying to achieve, that is what the president has been trying to achieve, that is what he put in his september submission, that is what he put in his budget. >> [unintelligible] >> what matters economically it is what our external debt is as a percentage of our economy and whether it is rising or coming down, and what you have now is when you do -- what matters most, external debt that does

not include assets, things like student loans. you have that around 67%, and you have a coming down around 2014 or 2015. anytime you're looking at a country's economic stability, that is what you look for most of all. the president worked very hard to get a grand compromise over the summer. he is putting out and tied of the changes that i have never seen in a president's budget before, agriculture subsidies, civilian retirement come on the military side, medicaid, medicare. i think this president has stepped up to the plate, both in the negotiations in the summer and on this budget, and all that has been holding us back from progress has been, quite honestly come out the resistance from too many other republican side, particularly in the house of representatives, to do a

balanced package with the revenues. there are some republicans who would like to engage in that kind of got a grand compromise, but unfortunately not enough. >> are out of time. our office at omb as well in the white house, we can answer any questions you have, so please get in touch with us by e-mail or phone, and we will be happy to answer your questions. thanks. [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> you can see president obama's remarks today on his budget proposal at 8:00 eastern on c- span. you can read his request at our

website, c-span.org. we have it posted their along with other budget resources, plus congressional reaction. that is all at c-span.org. we have setup a facebook question for your reaction to the budget. we want to know what your priorities are for the next federal budget. offer your thoughts and comments. >> night, the fourth in a series from this year's consumer electronics show. the impact of global networks on society and improving spectrum use. also, what is an ultrabook? tonight at 8:00 eastern on c- span2. >> the house dabbled in earlier

today for a short pro-format session, but they will return tomorrow for legislative work. this week the house and said debate highway and transit programs for the next several years. the chamber could consider extending payroll tax cuts and long-term unemployment benefits. you can follow the house on c- span. the senate returns earlier today to consider a judicial nomination. when the gavel in on tuesday, they will return to work on a surface transportation bill. senate negotiations are also working on a compromise with the house on the payroll tax cuts. the senate is live on c-span2. >> subscribe to c-span's youtube panels.

>> there was a sad incident in beaumont, texas, there was a story about a black man having raped a white woman, and when this story spread into the shipyards, several thousand of the shipyard workers, some say at least 2000, shipyard workers came out of the shipyard and came downtown to the city hall and to the police department to try to find the person who had allegedly committed the crime. >> there are hundreds of the diaz to choose from online. subscribe @ youtube.come/cspan. >> steven chu briefed reporters

on budget requests for his department. this is 40 minutes. >> good afternoon, everyone. welcome, members of the press, and c-span. i am the deputy chief financial officer at the department of energy. is my pleasure to welcome you all ought to receive our presentation of our fiscal year 2013 budget request. i will run through some ground rules here. we will hear from the secretary. i will be available to run through the presentation of some of the numbers we have. we will move into a question and

answer period. i will mc that. we also have the undersecretary joining us that are available to answer questions. if we are unable to field questions and the session here, we will be sure to make an answer to you before your deadlines. to give a flavor of our budget here, and the budget cuts we are under, we're down to one lamp in the department. the secretary is running i.t. training for us. without further ado, mr. secretary. >> thank you. i want to talk about the budget and will begin by quoting president obama, who spoke about an america with our reach, a

country that leads the world in educating its people, that attracts a new generation of high-paying jobs, a future where we are in control of our energy, our security, and prosperity. this budget reflects that. it's invests in clear energy, sibley harnessing energy resources. it saves money for families and businesses by saving energy, and it cuts costs. it reduces dangers environmental nuclear risks. a lot of this is modeled after two perreault reviews led by a long-term -- two thorough reviews, and that quadrennial

technology review was reflected in some of the things in this budget. first, the budget is $27.2 billion, and reflects tough choices to cut back in certain areas. what are we cutting? budgetsident's eliminates $4 billion in unnecessary fossil fuel subsidies. it scales back work on projects of the sodium ion batteries, because it was successful and is being commercially deployed. it is on track for viability. it is also cutting back on things that we have funded which did not work, and with the consent of the grantee, we have discontinued funding for a total of 35 projects that did not

reach their milestones. we are investing where we think we will have the greatest impact. as an example, given the commercial success of wind, air not directly funding wind research. that is getting to be an established technology. offshore wind is a good story. the cost is estimated by a number of independent studies to be about 7 cents a kilowatt hour. it is becoming very competitive with any form of new energy. natural gas is a little less, but if you compare it to other forms of new energy, it is next least expensive. we're also committed to fiscal management and responsibility.

as an example, if you look across the department of energy, we have programs in energy, and we are coordinating the costs of those different funding streams, and we want to maximize the technology r and d we do across those areas. we are doing this in solar energy, batteries, biofuels, and if it is a coordinating efforts of keep track of what we're doing, and we are approaching this in a business sense, so we can be the most effective in stimulating new innovation. that would not have occurred without us. we are under gun during -- undergoing a number of things that will save taxpayer money through efficient operations.

we are of $43 million in costs to reduced travel. we found the previous policy and the department to use fully refundable airline tickets, and in most cases, -- you could save a lot of money by purchasing non-refundable tickets, and in most cases, that means you purchase tickets three full weeks or four weeks ahead. there are rare examples where you would not use the tickets. we think we can save money that way. we are a cheating or roughly $330 million in pressure meant savings, and we have overhauled the energy.gov website and saved $10 million annually. we have reduced the fleet in washington and headquarters, germantown, by 35%, and the

labs have been asked to do the same. these are government-owned vehicles. we are reducing that. we are reducing the time to hire by more than 40%, and want to continue to improve on that. we are better at leveraging our innovation resources and delivering products to the market, so the connection between the national he never said the research fund and how that it's up to the private sector, where looking at every nook and cranny to make sure that process, the intellectual property that develops, makes it into the private sector. we have streamlined the corporative -- the credo so it could be done much faster. we used to require companies provide three months of funding for projects could start, and

they would remain three months ahead. we have reduced that to two months, and we're looking at whether we can reduce that to 1 months. the tax payers are still protected because the contractors will then backstop what would happen should there be a shortfall. that would enable us to work more with smaller companies. there is another -- we have a top energy innovator in michigan. we completed a contest where small companies with great ideas run for selection. it is a vote on our website. you can click on these little movies and they advertise their particular innovation. there were over 500,000 likes or dislikes cast, and we have

announced the top three finalists, which is a great thing. we have also made it so that companies, especially pertinent to smart startup companies, if they want to have a low-cost option agreement for licensing in national labs, all that would have to do in order to get this option is $1,000 option fee for up to -- greatly reducing the process. they can take the option and shop around to the investment committee to see if there is interest there. that does not mean it is $1,000 for a patent. we think it is going to add a lot of flexibility. we are also allowing -- we realize one size does not fit all, and we're saying in certain cases, if you are a smaller company, you will not start a

business unless you have an exclusive license. in many instances, exclusive licenses are preferred, it is a case by case basis, as to what you do. all with the intent of getting this out into the private sector, discovering a turning an invention and innovation. we have implemented the act or agreement for commercialization technology, the program of more than six or eight labs that have signed up for this, an alternate way, different from the crada's to show some flexibility. we're focused on saving money by sitting anergy. our budget contains $310 million to improve building efficiency. it supports the president's

better building initiative. that is a photograph of president obama, president clinton, who has also been equipment did -- instrumental in getting this started. the budget promotes that passage of home starts, family rebates, helps families invest in energy at great spirit we want to strengthen u.s. manufacturing. the president spoke strongly for this. if you look at advanced technology products, it is a balance between what we import and what we export. you find about 2002, 2001, we went negative . we started importing more high- tech lng best high technology

goods. is not good for a lot of goods, but mostly not good for more than anywhere else we believe the united states can compete in advanced technology manufacturing. our budget reflects that. it asks for $290 million for advanced manufacturing to support r and d to help manufacturers cut costs. this is not 20 years out in the future. we're talking about things that can help manufacturers in their factories produce advanced steels, and alloys, like we materials come all sorts of things that could help our competitive edge. manufacturing supports doe'. this is tied to advance manufacturing, but if you look within our energy programs within -- mostly in energy, we

are also supporting advanced manufacturing through advanced -- and also signs support to advanced computing. it means you design in silico, reduce the number of prototypes before you go into production. this is working quite well and is certainly something where we have a big advantage internationally. we are forming efforts in manufacturing, r and d, and across. we want to lead in clean energy technology. ed inotto is inventio america, made in america, sold worldwide. $330 million in initiatives to develop next generation technologies that can remain

competitive with the rest of the world. it also supports gyatso more -- geothermal pared its supports crosscutting work and advanced alternative batteries and the other technologies. it does not support paint jobs. the first time since 2000 a, in 2011, the united states reclaim the title from china in leading countries in terms of total clean energy investment. you have to look at the numbers , so it is a slight edge. we are concerned as to whether we will keep this lead. that leadership in 2001 was due to government programs like the grant in lieu of tax credits and a production tax credits. the president's budget calls for

the extension of the 1603 program and a tax credit for 48-b for advanced manufacturing, to keep the momentum. continuing on this modtto, our budget calls for 143 million for smart grid and energy storage technology. it calls for investments in nuclear energy, especially important was the launching of the program, this year, but to continue that and to engage and licensing of new reactors, and $155 million for storage and r and d, and to support carbon catcher and utilization sequestration. many of the companies view this as a first that if you -- if the

private sector is much to invest hundreds of millions to billions of dollars and carbon capture and storage. they also had utilization as part of that. the lessons learned in utilization, talking about catching carbon, or the department of energy exists in the modern verification of the carbon storage, but we also assist in the car to capture part, we think this is a good partnership. we want to harness american anergy. if you look at this graph, this is a plot of where the natural gas supplies were coming in the united states from 1990 up until 2010, and the predictions going beyond. in 2010, if you look at unconventional gas, what you find in 2010, about 50% of our

guest was from these unconventional sources. in 2011, it will be over 65%. the day that is not fully in for 2011. i want to remind you of the role the department of energy place in all these sources of natural gas. there are many quotes out there, this one from a member of the member -- the american petroleum council, he said the department of energy was there with research funding when no one else was interested, and today we are reaping the benefits. r and d in gas ands help to catalyze the development today. beginning in the mid 1970's, there was a coordinated program beginning in 1978, and here you

see the department of energy funding. we stopped in 1992. in 1991, hydraulic fracturing was picked up. it was being handed off to industry, and as industry began to realize maybe there's something in this, you see the increase in type gas, increase and methane, and the increase in shale gas. it was that funding that led the way. our budget calls for an modest amounts, funding, not in shale gas, but in other things like methane gas. this is methane hydrates gas. in any case, we think we have the upper cyndi to help fulfill the promising opportunities of energy technologies.

the blue ribbon commission came up with recommendations. we are taking those seriously. the budget includes $69 that aligns with recommendations of the blue ribbon commission. in unleashing the american innovation, the president said the world is shifting to an innovation economy. today's innovation economy needs a world-class commitment to science and research. to that end the budget calls for $5 billion to the offices of science, which funds most of our fundamental research with its mission being the department of energy missions. we have now five hubs that are up and running, two more in a press report -- preparatory stage, and if you add to that, the bio energy centers, which we

are the prototype of the hubs, there is a lot of good things coming out of the first set of hubs. our budget calls for a new hub on -- systems, the navigation a power distribution, how you synchronize grenoble's with energy storage. -- synchronize grenoble's with energy storage. these centers have published more than a thousand papers, filed patents, very productive. as are the hubs. the budget asks for $250 million to fun rpe.

they received moneys over the last four years and received private capital funding, after they did the research. this is based on the strong performance and early successes. we think this is money very well spent and we are asking for an additional increase in funding. to nuclear security. we're asking for 11.5 billion dollars sna to support the objectives. let me walk you through this. this means we are responsible for our weapons systems. we're also trying to lock down all vulnerable nuclear materials around the world. we are responsible for work and non-proliferation. in terms of the budget in order to reduce the dangers,

environmental risks, we asked for $7.6 billion to maintain a safe nuclear deterrent. to put five brand dollars for our non-proliferation work. $5.7 billion to clean up the cold war legacy. with that i give it back to our visual expert. >> thank you. the next slides, but it is published on-line, so you can get the details, justification materials. if you do not have this presentation, we will make it available to you online. i wanted to run through some numbers. this is the main budget table. our request is $27.2 billion for fiscal year 2013. this is a 3.2% increase over

2012. during the process here, when we started planning for the formulation for this budget, we worked thoughtful in terms of priorities he wanted at the size, but also in terms of what we wanted to de-emphasize. we are also mindful of the economic environment we have been in, and have challenge ourselves to find resources and the department to program elsewhere. we have taken a real steps, and not only have we look at areas where we could avoid significant costs, we're looking at program activities. we have done some of the simple things, whether something straightforward as setting the default on our printers to double-sided copying come to some of the things the secretary mentioned moving toward a

nonrefundable ticket policy which generates real savings every time and an employer contracts to travel. we have had a prado -- pretty thorough review of the balances. are appropriated no-year money. we believe are not going to bear in the duration, and we have rescinded those balances and use money to offset our budget request here pretty significantly. the grazed investment is in the energy efficiency sector. a request is $2.3 billion. this is above our fiscal year 2012. this is a material investment within the context of our budget. we did not -- we were thoughtful and how we put our budget together, and if you look at the

line items in this part of our budget, we have made significant trade-offs between various programs and areas. for example, in advanced manufacturing, $290 million investment, up 150%. we have 150% we have added things to that program. we have also looked at our program areas and changed the shape of those programs. our wind program stays steady at $95 million in our budget request. we have looked at the content request. we are focusing on the technology challenges. we spent a lot of time and a lot of effort going to the program areas and making some significant trade-offs among the bottom line.

for our delivery and energy reliability, a pretty steady. this is a new hub for an adjacent -- systems. for fossil energy, a pretty steady. the numbers here are better than they are. we canceled a major product last year and use that to offset our budget authority. we also found within this area of the r&d work. in our nuclear energy program area, we are at $770 million, a decrease of 10%. within this, we are focusing on small modular reactors as well as funding up to $60 million of some of the recommendations coming out of the blue ribbon commission. we are continuing to ramp up our investment to three and $50

million. it is a 27.3 -- to $350 million. it is a 27.3% increase. we have terminated some of the grants that have been issued. it is early on in the program. they were not meeting milestones, technical content. in science, we are pretty steady. we are just under $5 billion for a request. it is a 2.4% increase over our enacted budget in 2012. there are other agencies who have increases in their request. indicating an investment -- a

continued investment in science activities. i would say, we also made some tough choices in what we were emphasizing in science and what we were not emphasizing as much. it is reflected in this budget. our budget, $11.50 billion this year. 4.9% increase over fy12. focusing on a weapons activities and non- proliferation. those received significant increases in investment. em is that it. no major change there. $5.60 billion request. even with our fy12 enacted. legacy management, no change. ramping up with inflation. a loan programs, we are not seeking any additional loan authorities or appropriated

credit subsidies for our programs. we are continuing to request for administrative expenses to cover the loan programs. we will continue to work with the applications we have under the various loan programs we have. there is plenty to keep us busy. finally, in how we run the support operation, we are trying to live within our means. a pretty flat budget for all of the offices to help run the department and support the mission -- for all of the officers who helped run the department and support the mission. you can find all of this budgetary information at energy.gov. i am happy to open up for questions. >> the requested level is $22 million, less than the $55

million in the agreement with michigan state. why is it less? >> i will ask bill to respond to that. come up to the microphone. >> our priorities have been in clean energy. the budget of the nuclear physics part of research has gone down some. this year, we could not afford the full $50 million. what we are doing, we do not see being able to do all the things that were proposed. we will do a revaluation of the program.

>> on the $60 million nuclear waste are in the -- r. and d., can you give us more detailed breakdown of what work will be done? is any of that funding coming from the waist fund it? will any of that work be done administratively? >> i will give you a few examples. as noted by the blue-ribbon commission, they noted there is a waste fund. it is not directly accessible. it depends on appropriated dollars. what we have to do is work out of what congress gives us. we do not have direct access. with that in mind, what we are proposing in our budget, one example of the things we would like to see within our

administrative authorities is the blue ribbon commission talked about as a high priority, beginning to take some of the fuel in reactors sites that are no longer operating as reactors, we are still paying guards and security to look after that fuel. the site is closed down. you want to start consolidate those things, get them to where you have operating reactors. in order to do that, it makes sense to have -- to take this fuel, you want to put it in dry storage. take the rods out. you also want to put it in a structure that will allow safe transport to another site. you want to have its standardized and licensed by the nrc. there are a number of companies

that are doing this. to support the standardization and licensing, it could be much more economically done. that is one example of the steps we can take. >> if you could stay your name and affiliation before. >> i'm with the washington bureau. if you had a choice of facilities, the tennessee facility, it sounds like postponing the work for five years. can you talk about the reasoning behind that decision? >> would you like to? >> this is not a matter of new mexico or tennessee. this is a matter of what the country needs to do its job. we took a look at our capabilities on the plutonium and the iranian side. there is an average and need to move the functions we have in

the building in uranium work, move it out of there. it is a high risk activity. we understand that. we had to move on that. with respect to plutonium, we have decided to defer that decision. it is not cancelled, it is deferred. we know that we have existing capabilities in our infrastructure. we have a building next door we just built. we are going to maximize the use of that. we are going to take advantage of the capability we have. if we need additional storage for material, one of the reasons for this facility, we have decreased volume by 40%, if we need additional storage we have other options, whether it is a device assembly facility, or the

like. the country had options on plutonium. it did not have options on the iranian side. >> let me reiterate what tom -- on the uranium oxide. >> let me reiterate what tom said. we chose the ones we thought were most critical. >> the products that were canceled. i think you said there were 38 that were cancelled. >> 38, including ere and others. there were 6 and 7. >> could we get a list of those? >> sure. >> does that money go back? >> it goes back to the funds. i was giving a talk at a material workshop that the department of energy and initiated that would bring the

national lab cluster in with industry is so there is tighter in the -- interaction with this idea of facilitating the transfer of intellectual property into innovation and industry. i gave a talk, followed by the chief technology officer vice president. he got up and gave his talk. he said, normally you do not talk about your failures, but let me tell you about a billion. it was an rpe funded project. he said, it was a great idea. this is what we were trying to do. it was the right decision. if it did not look like it was going to make it, get out fast. there is an old adage i used to tell all my students that a learned when i was 30 years old. it is ok to fail, but fail fast

and move on. >> i would like to get that list. >> in the middle. >> you are going to move ahead with the nuclear and fossil guarantees. $10 billion and $8 billion, how many do you have an house? what timeline daisy projects under? are we going to see action this year? >> that is a difficult question to answer. you are right, we have money in those programs for that. in the end, it depends on the private sector, whether they are going to make investments. it is up to them what they want to go forward. this is something one cannot predict. we believe that nuclear energy is -- should be part of the

energy portfolio in this century. in the end it is going to be a financial decision. what affects some of these decisions by things like the price of gas and have the way in that perspective these other things. -- and how would do you weigh in that perspective those other things? we would like to pick up carbon capture as well. it also depends on how they decide. >> [inaudible] >> that was once that. it was a positive -- was one step. it was a positive approval of the application. that project continues to go forward. we expect that one too close and go forward. there are a number of other milestones. four other companies to impart,

they have to decide whether it is in the best financial interest. >> unfortunately, i think we are out of time. we have another event to run to. we have members of our press of this year. -- press office here. we are happy to hang around and answer questions if we can do that. thank you for coming. i appreciate your time and effort. thank you for the opportunity to present our budget. >> this computer goes to the next one. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> you can see president obama's remarks on his budget proposal in about 45 minutes from now on c-span. you can read to the president's request at our website, c- span.org. with this being budget we, facebook questions for your reactions. we want to know what your priorities are for the next federal budget. go to facebook.com/cspan. >> tonight, the fourth in the series from the sea of's

consumer electronics show. the look at the impact of mobile networks on society. the president and ceo of erickson. also, what is an ultrabook? and the latest in smartphones. tonight, at 8:00 p.m. eastern, on c-span to. >> tomorrow morning, the government settles with the nation's largest banks. our guest is the massachusetts attorney general. we will discuss the proposed budget with the republican rep kevin brady of texas, vice chairman of the joint economic committee. "washington journal" is live every day at 7:00 a.m. eastern. a look at the budget in scoring by the congressional budget office, from this morning's "

washington journal." >> we're back with the former budget director from 2004-2005. you are prominently displayed this morning. here is your quote. by expectations could not be lower. that is on the front page of "the washington times" this morning. what do you mean? guest: my concern is this, the first budget he put out show the you was going into the debt spiral. it was at the point where we were borrowing to pay interest on previous borrowing. it is the kind of thing where world credit markets they just work it. that was in the midst of the crisis. we said it is a crisis, we have to do this. the next year put out a budget that did the exact same thing.

and so he appointed a commission, his own fiscal reform commission, which came forward with a set of proposals that i thought made a lot of sense, the fundamental problem was spending. it is all spending. if you want to act on europe have tax reform. he put out a budget with the recommendation. here we are at budget member for, and we have yet to see serious reform on taxes come and get to see anyone preserve the safety net of social security and medicaid for the next generation of americans and seniors. those strikes me as the issues of our time. we are in the midst of a great debate of fairness. the fundamental injustice is being perpetrated to the children who were going to

inherit a load of debt that is unimaginable. if we're not careful, an economy that is not performing as well as it should be. host: is now the time really to do all of the things you're talking about? medicare and security? can we really afford to cut spending and raise taxes right now when you have a fragile economy? guest: think about social security. any restructuring would be an attempt to avoid the current plan. that is a terrible plan. what would you do? you would exempt people who were already retired. we would typically exempt those near retirement. that means we will not change

the current spending a bit. it will change the plant. and it will send a signal to people who were my age and younger that there will be is also security there for you when you retire and to lenders that the u.s. will be responsible for finances. host: can we still look for the bush era tax cut? guest: we need a debate about tax reform so we can fix the loopholes people have identified in raise the revenue necessary to pay the bills. that is arithmetic. people have to perceive it as fair. the big problem is the business taxes, which are crippling the best corporations. host: president obama's budget is expected to say let's raise taxes on those that make more than to under 50,000 per year in order to help raise -- help with the deficit. guest: the average tax rate is 30%. it will not change the average amount of taxes from those people a bit.

and some pay less than 30%. the tax percent is not there just for that. we of housing subsidies, higher education subsidies. it reflects the realities of's combined administration. if someone is legally lowering the tax liability, it is because they're contributing in some other way. rather than just add another broken piece on to a tax code, which will only raise $35 billion in a world where we of a 1.3 trillion dollar deficit, let's fix the tax code. stopped rolling extra about policy on it. -- stop throwing extra policy on it. the notion that there is no way politically is just wrong. the question is, it is just wrong.

so we have seen the same thing year after year. it may be politically advantageous, and i get that, but it is not serving the nation well. ist: the president's budget expected to exhume an extension of apparel tax cut and assume the extension of unemployment benefits. alan blinder writes today the safety net needs to stay in place. two more percentage points translates to about $1,000 per year. about 160 million americans will see taxes rise as the government collects another 10 billion a month in revenue. that is doing more than helping

needy families. it is a source of badly needed purchasing power in an economy that is short on demand. guest: i, and i think everyone who was watching this expected that to happen as it is already. i am not inside the room on capitol hill. everything i hear says it should happen, and it is not appear again i would like to see that made more quickly. >> do you think republicans might use this perception, this battle perception-wise with american voters? >> i think the democrats is an equal recipe. washington is very unpopular. that includes the white house, senate, of the house of representatives. in the senate the president's budget is dead on arrival. harry reid said we're not born

to do a budget. it is not so much that republicans are at risk. the leader of this and as as we are not even born to look at it there is something seriously wrong. host: + if you set modest reform. democrats went from 99 to 33 weeks. would you say that is modest? guest: that is modest. the appropriately the unemployment benefits is hard to figure out. we go to things are true. if you give someone an unemployment benefit, it enables them to maintain the standard of living and the world golf to search for a better job. the longer they do that, the more the skills tend to deteriorate and the job may ultimately it will pay them less and does not serve them well. somewhere in there there is a balance. host: is 57 weeks to strong? guest: it is well above what we

typically done in a recession. we're so far out of the norm, it is almost indescribable what is the right number. host: let's get to the phone calls talking about president obama's 2013 budget. caller: good morning, mr. director. i hope you're feeling well today. i would like you to confirm or correct numbers for me. as i understand it, with long- term interest rates at historic lows, the government is borrowing currently at roughly 2% as you combine the three month and all of that. and with such borrowing, we're paying an interest of $286 billion a year on our debt as it currently stands.

going forward, if we get into a normal interest rate environment, that would more typically be 4-6% for government borrowing, which would therefore mean that if we are projecting 10 years of deficit reduction, we almost have to include an extra 2.8 trillion dollars that we're going to go, because the interest rates are going to double. is that correct? >> your numbers are about right. the concern is we do have extraordinarily low interest rates at the moment. the truth is we should all hope for higher interest rates, because it would trigger a return to normalcy. i am one of those that is very deeply worried about the that the u.s. has of the future. right now the u.s. debt of the

united states is over 100% bigger than the size of the economy. the history of the research says if you're over 90%, to things happen. number one, you grow more slowly. -- two things happen. you have a much higher probability of getting into trouble. it is not predictable. you do not know when. getting a handle on that is important. the second thing is countries rely heavily on short-term debt. if interest rates to come up, your stock. when you look to the president's budget from last year, and you roll it for 10 years, we're still running a deficit of 1.2 trillion dollars a year. 950 billion of it was interest on previous borrowing. that is a recipe to be borrowing to pay off the previous credit card. when interest rates go up, but that is a disaster.

if you are borrowing to pay interest, you were just giving one new credit card past the old one. we are the united states of america. we are the largest economy on the planet. we are not immune from the laws of arithmetic. host: why are corporations making record profits? guest: half of the big corporate profits were in europe. it is now already contributing to our trouble. that good news story has diminished somewhat. the concern over the corporate tax is that it is largely paid for by u.s. workers. the evidence is increasingly growing that you tax and

corporation a dollar, 70 cents gets paid for in the form of lower wages, reduce compensation or jobs lost. this is a tax that has perverse impacts. one of the reasons it does that is our tax is way higher than anywhere else in the world. we tax in a way that is correct for the beginning of the 20th century, but out of line with the 21st century. all of our competitors, those company paid taxes. we're always double taxing power companies. -- double taxing those companies. host: responding to criticism that president obama promised to cut the deficit in half by the end of its first term. here is what he had to say -- >> when the president took office we were losing jobs at a rate of 750,000 per month.

that means the economy was softer than anyone knew at the time and we have less revenue coming in. and there was a deeper hole to dig out of that anyone could have envisioned in june were 2009. guest: we have heard this before. each time the projected deficit comes up, they talk about what they inherited. you could put anything else on the president's budget. they make economic projections and budgetary proposal. those numbers do not reflect what they inherited. they have complete ability to have those budgets at up. and that reflects the priorities they put on it. i used to think there was a secret memo in the west wing of

somewhere. president obama comes in, there is a big recession and national crisis in the financial sector, in the promises to cut the manhattan of the end of the second term. i used to think it was a memo that went from president to president. host: does that make a cbo director cringed at promising to cut the budget in half? guest: yes. at some point you have to pay the bills, and we are not. but go to phone calls. rosemary in virginia. -- let's go to phone calls. caller: it concerns me that senator reid can state he will not consider a budget and does not think we need a budget. is it not a constitutional issue?

could you please answer. thank you. guest: it is not a constitutional issue. one of the marvels of the constitutional system is we do not have the federal budget ever. the president makes proposals. the house and senate are expected to pass budget resolutions, and to agree on that plan for the congress, but the president never signs the budget resolution. we have always had a system where giving the white house, house come and senate have been difficult at best. host: and the role of the appropriators in all of this? guest: there the kings of the annual spending cut discretionary spending. they have historically been an interested in having budgets placed on them. that has been a constant battle. host: new york. democratic calller.

caller: thank you. i just wanted to know, why is it that everyone is putting pressure on obama, and no one will tell the real reason we are in the deficit? bush did nothing. why not blame it on him? i just want to say to you, and i am not trying to be crass or anything, but i want to know why is it that white people think nobody has [inaudible] that is the only problem with the president. he is not white. that is the big problem. nothing wrong with obama. he is the best present we have

had yet. host: let's take the point of bush not paying for things. democrats bring that up. the wars were not part of the budget. guest: it is something no one can defend. the practice of putting the afghanistan war as a supplemental appropriation. they gave us them the appearance of being temporary in some sense. clearly they are not. it in no way constitutes good budget practice. then a republican criticize the administration for this. i think that stands out. just because they did not put on the budget, does not mean they will not pay for it. we do. the do medicaid prescription drug bill, $400 billion over 10 years. entirely debt as of finance. -- debt financed. of the increase in the deficit

rss what bush inherited, up 50% is due to economic inheritance. about 50 percent of increase and that this is from that period of the rest, it is about 16% on the tax side and the rest on the spending side. to my eye, the biggest mistake of that era, roughly the first 10 years of this century, we did not fix social security come in medicare, and medicaid. right now, ted nelson seniors for day. -- 10,000 seniors per day retirement. i am saying the same things now that i did in 2003. that is a big missed opportunity. host: want to get your take on the short-term tape of the economy.

host: in 2011 much of the nimeiry was people giving up for work. the more recent gains have been underpinned by actual hiring. consumers are less indebted than they were a year ago, and the housing market showing tentative signs in improvements. 49 economists surveyed put of the recession and the next year at 60% down from 33 percent signed. guest: that strikes me about right. i have never been in the double dip camp. i've always seen as as recovering i think the economy is growing at 2% per year. i expect by the end of the year it will be at 2.5%. that reflects the resilience of the economy. i think there are reasons to be

more optimistic. the problem is it has taken too long. when you look at the policies you should worry about where you grow slowly, you should not be looking for jobs starts the and quick sugar burst of economic policy, which is the stimulus approach. you should look at a deep, structural things you can do to allow the economy to grow more rapidly. that was my deep discontent with this budget. no deep, structural changes. caller: good morning. i of a ph.d. in chemistry. i started my own business when i put up my first production unit. when i turned over the business from day to day operations, we had 700 workers/employees.

the first thing i want to do is to brought points. we're very concerned this president does not follow the constitution. look at what he did when he lied about the moratorium. there were four circuits up of what he was doing as unconstitutional. we cannot count on this president to be definite and what kind of decisions he makes. we do not know when he will come in and tell us how to do it and so forth. you are a number sky. right now we see the bush tax cuts are going to expire. that means the marginal tax rate will be 39.6. look at obama care. there is already a 3.8% surcharge, and there is also for a self-employed, another 3.84 medicare taxes with no ceiling. it all adds up to a marginal tax rate of 47.2 percent signed.

you that 8 percent signed-10% state and locals on businesses, and we're looking at and near 60% coming out of marginal tax rate bracket. host: what sort of right of steve howe? -- write-offs do you have? caller: that does not make a difference. we're talking about marginal tax rates. when one of my boilers' go down, i'd better have money to pay for it. what i have to send it to the federal government and the taxing entities, that is not fair. i do not go and shake down a company and say i need money, i have to pay for it. to get the tax on marginal tax rates are exactly right. those are at the top of the the combination of the 2001-2003 loss of the affordable care act.

and the reality in the united states is we tax many of the business entities through the individual income tax so it is impossible to disentangle tax policy toward the idle rich versus toward the altar rich. -- ultra rich. this is one of the reasons the commission the president appointed, all of the commissions that have looked at this have said we need a tax code so we can get a handle on a broader base that will allow us to get out of the marginal tax rate and raise revenue we need. host: another tax question. the effective rate in 2009, 10.8 percent said 2010. it is huge write-offs, subsidies, tax credits. >> there are many things that are write-offs and tax reform.

the biggest thing that is misleading about that type of calculation is the first thing that all companies do is pay taxes in the home country abroad. add up the total in their tax more heavily than competitors. caller: good morning, douglas. i appreciate your openness to describe some of the details of tax rates and tax codes. i think all too often on c-span and other channels that delivers some information, that people leave so much off the table and speak out of context. when i hear of warren buffett talking about his secretary making a certain amount of dollars in making less than he does, it is ridiculous. he is a passive income man. his secretary goes to work. anybody in the united states is entitled to passive income.

an immigrant coming it can buy a home and read the outer room, and that rent is passive income. people that have money in do not have money, they can take advantage of the tax code. sales tax. you can control all of this, but people who speak about tax, they want to look at little details taken out of context, and deliver the message is to the public that a completely untrue. guest: i concur with the sediment and that one of my frustration is washington wants to talk about taxes. there is a lot to the tax policy. how you raise the money matters. those details are reported to me, but that is one of the reasons i am not would to be a media star. i like to go on c-span because you do get to say that.

host: as former cbo director, what goes into calculating that? guest: when i look at the president's budget, you have initiatives, but not a lot of details. the new additional alternative tax, it is part of a tax code, how are you going to do this? the president's budget should reveal exactly how he does it. there should be details there. he talks about alternative tax for corporations. what does that mean? he talks about tax breaks and double special tax breaks. you is the manufacturer? last time mcdonald's qualified. -- who is a manufacturer? these things matter enormously. my concern with the budget, and i do not want to sound like a broken record, that is not tax reform. but a special stuff for chosen

constituencies. we need tax reform that treats everyone fairly and raises the revenue. caller: what you're saying is fundamentally not true. the bush tax cuts, the war's, it was all put on the supplement budget. it will not add to the deficit. also, to solve social security, which is not adding to the debt, all you need to do is raise the cap. everyone who makes money should be paid on it. you did not give people a raise that were paying social security. that were drawing social security. -- that are john social security.

guest: the calller is wrong about whether the medicare part b is on the budget or not. it was on the budget. the wars were funded by supplementals, but the way the debt accumulates is spending comes in, spending goes out. it does not matter whether you put it on the budget in advance or not. if spending happens, you borrow to cover it. the numbers i gave on the contribution of the different pieces to the deficit are what the cbo has basically done again and again. that is the state of play. there's no question about it. >> this comment on twitter -- guest: it was a huge missed opportunity in my view. this was a plan no one thought was perfect. i could find the warts in it from my perspective. it was a plan that did not get 100% of both sides of the

ideal, but it had elected representatives from both parties. i am saddened it was left of the sideline. host: would it have passed through congress? guest: we do not know, but unless any president takes the leadership from you do not get big changes. only a president can say to the members of this party, i know you did not like this vote, i will raise the money and you will be fine. only the president to go to the other side and say i will help you. host: republican and pennsylvania. caller: i was listening to the previous calller say something about how somebody does not lock -- does not like obama because of color. we have a presidential candidate. his name is dr. ron paul.

he went back to stop the debt limit from being raised in the campaign in order to do what he has been doing for years. he has been going after every one of these spending increases better unconstitutional, including rick santorum who comes in income and i heard a calller from pennsylvania talking about him like he was a hero. i guess he did not look at his record. host: i want douglas to analyze for you and others ron paul's plan. guest: it is extremely ambitious. i do not think there is anything close to the unanimity in congress to get it through. the international security aspects are on both sides of the ideal widely viewed as far

too aggressive. while it is aggressive, i do not think it is politically realistic. things have to be done in a bipartisan fashion. if they are not some of the other party will start overturning of the first chance they get. i hope is we get something that looks closer to proposals that the white house can push in congress understands that. host: we will go to louisiana next. independent calller. caller: i am looking at the whole tax situation. i have quite a memory on me. i go back to the beginning of the class warfare, which was instituted by ronald reagan, it was been enshrined because of it. what he did is shift the tax burden from the wealthy and corporations to the middle

class. my taxes doubled during the reagan administration. along with that, minimal wage has been held down for three decades. considering this money would go into the treasury, if people made more there would be war going into the treasury. it is like they're having their cake and eating it, too. the class warfare, but the wealthier are getting will figure. this is not unheard of behavior. and as far as the united states, corporations being taxed more than others, i think we lead the charge, and the rest of the world had to try to be competitive with us.

that has the whole world in one hell of a mess. this insane experiments with the supply-side economics and go back to the keynesian model where we cannot share the wealth and have more taxes paid to the treasury. guest: first and foremost, i will repeat the point i made earlier which i think the fairness issue is not to the rich of the poor today, it is between us and the next generation. people are not going to do that. we have a fundamental choice to make. we cannot support the spending programs that are currently in golf by taxing the wealthy. there is not enough money there. the tax policy center and non- partisan entity in washington did a calculation that the top marginal tax rates would have to be 90 percent signed to balance the budget over the next five years.

that is not feasible. if we want to have an enormous government, much larger than today, the middle class will pay a lot more in taxes. i have done calculations that show if we're going to look like europe -- the middle-class in europe pays a lot of taxes. in europe they pay about 30. the middle class has to pick up the burden of an enormous state. i would argue this would impinge on growth and we would regret it. or we can get realistic about the spending side and raise the revenue to pay for it in a sensible fashion. >> here is a piece written recently of the cbo and how they have done estimates. it says the cbo studies i have examined use keynesian models as the basis for the calculation. if their order to estimate the effect of gdp in jobs, they will apply them to different categories. the model they use guarantees

growth. when they look ahead to 2012- 2013 and applies similar models to projected tax increases, they will automatically conclude that growth will be slow and of the glove at high. -- in the unemployment high. guest: that is correct. cbo has a requirement to do it in a consensus fashion. it has to do it based on what is out there and the literature and what is out there in the practice. the reality of most business cycles, most formal attempts to capture what is going on in the economy have a keynesian foundation. you cannot get the stimulus package that sales in those models. i understand the criticism. i think any cbo director is very cautious.

they said it could be from here to here. it is usually a big range involved. it reflects the fact there is not a lot of confidence in the capacity to forecast the economy come into model the impact of the policies. host: is a bad thing that keynesian policy is used by all cbo directors? guest: i am not exactly fond of it, but the reality is there is not a lot of alternatives. we have keynesian models, and some alternate models. i liked about presentation better. caller: is it not true that when push came into office he made a statement such as the government is receiving too much money from the surplus, and therefore he implemented the bush tax cut? they may be meant a few hundred

to even $1,000 for individuals of the country, leading us into trillions of dollars of debt? i do not get the comparison between tax cuts with individuals of $100,000, and then the country goes into debt with trillions of dollars? is there a comparison between individual receipts of a few relatively -- relatively few dollars. it makes no sense. grover norquist has government official signing a pledge saying no more taxes. unbelievable. where do you get this kind of reasoning? think you very much. -- thank you very much. guest: at the moment president bush took office, the cbo had projected a very large surplus. taxes have reached 28%.

typical number is 18%. the logic he talked about on the campaign trail was we have big surpluses, extraordinarily high taxes. the bush tax cuts were about the same percentage across the board. history is a cold master. we've seen surpluses were driven to lot like the bubble -- the dot com bubble that went away. we suffered a lot from 9/11 and the recession. there are bubbles followed by a not very rapid recovery. we want to be about how we've think about policy in the world. host: if president obama will talk about the budget later on today, around 11:00 this morning traveling to a community college to talk about students about what is in the budget proposal.

shortly after that the white house will be releasing the budget. if you're really want to, you could download all four volumes. guest: i encourage everyone to read that. [laughter] host: we are also covering other events. people respond to the president's budget, and all of the different agencies will be talking about their separate budget. there will be response from republicans as well, and the office of management and budget will talk it 12:30 today. that is live on c-span. go to our website to look at all of the different things we're covering of the president's budget, and we will talk about it again tomorrow. we will dig a little bit deeper into the details once we know them. of the republican side of the idle, let me go to the tweet.

i am wondering what you think of republican proposals out there to lower the deficit by freezing federal pay, salary. what kind of a dent does that really make? guest: that is reality. we know something from history. we're not the only country to get into a situation where we of bad debts and little growth. the poster child for getting it right is canada in the mid- 1990's. what you do? do tax reform. and you cut government spending, but not all spending is created equal. you want to preserve core functions of government. basic research and education. cut government employment. we do not have a lot of

government employees, and transfer programs, which means entitlements for the next generation. host: someone might look at canada and say they provide free health care. one of the biggest costs -- how does that equal out? guest: their budget adds up. they run a surplus. when they did this come it was a liberal government. it was the federal government taking national level expenditures and pushed out a lot of responsibility. the perception was they were politically more capable dealing with problems. i look at the u.s. and say maybe the states are more capable of addressing that the federal government. host: the government was able to take on a huge expense like that and balance the budget? guest: budgeting is about having priorities and you pick

something and give up others. we're good at picking and bad and giving up. the canadians make good choices. host: thank you very much for your time this morning. >> on "washington journal," we will examine the government's settlement with the nation's largest banks. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> will discuss the president's proposed budget with kevin brady of texas, a member of the ways and means committee. "washington colonel" is live on c-span every day at 7:00 a.m. eastern. the white house rolled out its new $3.80 trillion budget today. the president promote his budget at a community college