heartbreaking subject. ms. delauro: it is a heartbreaking subject and when you think about in that budget, where we talk on average, one number is $150,000 in the tax break to the wealthiest people in the nation or $187,000. they don't worry what they're pick aing up at the grocery store. they're eating well. their kids are eating well. their grandkids are eating well. as ours are in this institution. but it's the people that we represent who are in difficulty and they need to know, to look to us to help them when it is so tough out there economically. . this program is working in the way it should. and i thank the gentleman. and someone who knows what's going on in the heartland in our country where they have suffered severe economic depression and that's in the state of ohio. and let me welcome to this conversation, our colleague, congresswoman fudge.

ms. fudge: i thank you for your passion on this subject. mr. speaker, there is a cold and cruel war being waged on the poor and hungry in america. i stand today with my colleagues as a voice of 46 million americans who depepped on the food stamp program. i cannot and will not stand by as my colleagues attempt to balance the budget on the backs of these americans. they revealed the reconciliation act of 2012. the drafters of this legislation could have proposed any cuts in any program. yet they decided to set aside reconciliation targets by cutting only one program, the supplemental nutritional program better known as snap. some may have you believe they

apply to administrative costs or an attempt to reduce fraud or abuse. they are misleading the public, mr. speaker. majority of the cuts will come from benefits. these cuts will take food from our seniors' refrigerators and food from the mouths of babies. nearly half recipients are children. the republican proposal would not only affect children at home, although that would be bad enough, but this proposal goes further. the congressional budget office says this proposal would prevent 280,000 children from receiving free meals in school. a school lunch is a meal that many children have all day. my republican colleagues want to exacerbate the problem. of all the programs that could

be cut, why attempt to balance the budget on the backs of school children. in ohio, more than 1.5 million people depend on the snap program. these are friends and they live in rural and suburban ohio. snap has helped make our economy stronger. snap is the safety net for people who find themselves unemployed. without snap benefits, the disabled would suffer. without snap benefits, seniors would be forced to make the choice between food or a roof over their head. without snap, children would go hungry. the hungry and the poor cannot afford these cuts and cannot pay all of their bills by themselves. i yield back. ms. delauro: i thank the the gentlewoman from and i recognize the gentleman from ohio who

understands the effects of the recession has been to his district and the people he represents. mr. ryan: i'm glad i follow the lady from ohio and my district is south of her district. there is severe poverty and food insecurity in the northeastern part of ohio, but all the way down and all the way into the south. and the snap program is one program that we are highlighting tonight. but i think it's important for us to recognize how this fits into the context of an overall budget that also cuts the medicaid program by a third. and you think about the stress with a, the snap program if you are utilizing it. but what is the family going to do if a third of the medicaid budget is cut and early childhood is cut and pell grnts

are cut and student loan rates go up and all the way down the line. we are talking about putting a huge squeeze on the poorest people in our society when we only have 3 or 4 million people and we are trying to compete people -- with people in china. how are we going to be competitive? few can't get enough food in a kid's belly before they go to school. we need to look at it in the context and what we need to be a successful country, period. and we heard a lot of stories tonight, stories who ended up being members of congress because of some of these programs and who is the next generation of leadership and are we going to invest in them or are we going to say you are on

your own. the nominee of a major political party in united states of america saying i'm not concerned about the poor and making light of us asking people to maybe pay a little more. they say, it's not that much money, only 11 hours of government spending and blah, blah, blah. you know what? that buffett rule can help put food in people's belly. the people in my district that are living in poverty, half of those kids, that buffett rule would help pay for the snap program. is it insignificant now? i yield back the balance of my time. ms. delauro: i thank the gentleman. my god, what we could do if we had the will to do it and that's what this is about. it's a question of our values and where our priorities are. it's about our kids or richest

1% of our nation getting $187,000 in a tax break. the gentlewoman from california has been extraordinary in her fight for the food stamp program and she hasn't been afraid to take on anyone in any party on this issue of making sure that the food stamp program is secure and i recognize the gentlelady from california, ms. lee. ms. lee: thank you very much. first let me thank my colleague, congresswoman delauro for yielding for those kinds and thank you for organizing this special order but for really continuing to beat the drum so the country can understand how important nutrition programs are important to our nation. and this is not just a job for congresswoman delauro but her life's work. and i thank her for her leadership. republicans are preparing to attack families on food stamps

and taking away protections for the poor, seniors, children, disabled. they are attempting to cut up to $33 billion from critical anti-hunger programs even as they bring up this bill, the small business tax cut, which is a tax holiday for the very healthy. they are trying to bring this up at the same time. when republicans target programs that attack programs that make children suffer hunger, they are doing it in the name of fiscal responsibility and deficit reduction. in the next breath, when they want to give tax breaks to wealth any businesses, then those same deficits don't seem to matter. mr. speaker, making cuts on struggling families during hard times is not only heartless, mean and immoral, but it makes

no sense, because it doesn't reduce the deficit nor create jobs. critical programs like snap and w.i.c. not only feed the poor and families, but it helps the economy. it generates a h $1.84 in economic activity. and the congressional budget office rated it is one of the two most cost effective of spending and tax options and boosts jobs in a weakened economy. i had a privilege to speak and i thank you, and this is your life's work, this isn't about your job. this is about you as a human being and about us and our values. many years ago, while i was raising my two small children, two boys as a single mother, i fell on difficult times like

congresswoman woolsey and she encouraged me to talk about it. i was so embarrassed and never talked about it until lynn woolsey encouraged me. i had to go on food stamps to help me feed my kids during that very difficult period in my life and it was hard. and again, i was very embarrassed. but to this day, i want to thank my government and the people of the united states for extending this helping hand to me as a bridge over troubled water even though i was embarrassed and didn't want to be on public assistance, i had to for a while and it wasn't that i was a welfare queen, you know. but this was a very difficult time. and most families, 95% of families, don't want to be on food stamps. they want to trade their book of food stamps for a living wage pay check. cutting snap doesn't make any

sense. there are four job seekers for every one job in america. and we can't cut the benefits that helps keep food on their table until they can get their jobs. for the life of me, it's really hard, it's really hard to understand how people of faith -- you know have forgotten what the scriptures say, we are our brother's and sister's keepers. this isn't a poor, developing country. what does the republican budget propose? we will create a country that we won't recognize. one that says i got mine, you get yours. this 11% cut in food stamps, which the republicans propose says you are on your own unless you are very wealthy. i know the american people aren't going to go for this. our values as a country won't allow this kind of cut in the

snap program. americans care about the common good. and so i'm confident that they are going to -- the republicans, the tea party republicans are going to hear from the american people on this. congresswoman delauro, i thank you for giving us the opportunity to talk about this. and it is a privilege to stand up for the 46 million people that need this helping hand as one who needed a helping hand in my life and helped me to live the american dream for myself and my family. ms. delauro: i want to make sure we have the opportunity to hear from three more colleagues. congressman tonko and thank you for being here tonight and we will hear from congresswoman schakowsky and congressman larsen. >> as my good friend and

colleague indicated, our budget, budget outcomes are a sum total of our priority. what has value in our society? what are those sensitivities we express and those outright requirements, basic foundational requirements of our society? mr. tonko: one of those basic needs is to have people have the soundness of nutrition and enable us to feed families that have fallen on difficult times. what we have at risk as we speak here this evening as we speak here is the snap program. the snap program touches one in seven americans. that is staggering. and for every $5 in benefits, they generate in $9 in economic recovery, a two-time economic factor. in and in my home district in upstate new york, 23,000

households are utilizing snap funds. and then we also have situations where three in four have had at least one member of the family work in the past 12 months. we have many children, one out of two on snap is under 18 years of age. we have had a tough economy and people have stumbled on tough times. why is this so important? because before the end of this month, there will be an effort made, they are asking the ag committee come up with cuts that are brutal and come up with $32 billion. put on the chopping tpwhrock are snap funds. we are are affecting the hungry among us and those families will recirculate into our regional economy. this is a sound program that needs to be continued and show

priorityization. that is sound nutrition for our american families. and i have seen it and it works, and works well and we need to set this as a high priority. a thank representative delauro to share concerns on behalf of the good people that i represent in the 21 did district -- 21st district from upstate new york. ms. delauro: i yield to congresswoman schakowsky. she is a tough fighter. . . ms. schakowsky: i thank you for the opportunity to participate in this debate where so many of our colleagues have come down to the floor to talk about it. this is the richest country in the world and yet one out of five of our children is considered food insecure. goes hungry.

that is such a moral outrage. you know, the average food stamp benefit is $1.50 a meal. that's what you get when you're lucky enough to be part of the snap program. and as this chart shows, this map shows, it's everywhere. i actually live in a district that was considered one of the least hard-hit by food insecurity. but that's all relative because in my congressional district in illinois, more than 11% of the households are experiencing food hardship. the inability to put enough food on the table. and even the least of the hard-hit districts has 7% of its families unable to put enough food on the table in the richest country in the world. it's intolerable. you know, the headline today in "politico," republicans axe aid to the poor.

makes me so sad. who are we as a country? what are we as a country? where a candidate for president, the republican candidate for president, denigrates barack obama by calling him the food stamp president. i'm proud that this president wants to defend, protect and save a program that feeds so many people. and here's what the catholic bishops say. snap, also known as food stamps, helps feed millions of households. at this time of economic turmoil and growing poverty, the committee should oppose cuts in this effective and efficient anti-hunger program that helps people live in dignity. i know we're almost out of time. i just want to say, we're acting -- asking for dignity for americans, that our -- that are struggling. the average food stamp recipient is only on it for nine months. one of the former recipients

called it a tramp lean that helps you -- trampoline that helps you get past it. i'm asking for dignity for americans and saving the nutrition programs, especially the snap program, the food stamp program. thank you. ms. delauro: i thank the gentlelady and it gives me really, i'm delighted to be joined by my colleague from connecticut, who's chaired our democratic caucus and whose career, whether in the state senate in connecticut, in our legislature there, in his work here, has been remarkable anded a its core again are our children and our families. i'd like to recognize congressman john larson from connecticut. mr. larson: i thank the gentlelady from connecticut and dean of our delegation. the deaness i guess i should say for her tireless work and advocacy on the part of not only the citizens of the third congressional district in connecticut, but across this great nation and i daresay this globe. i never cease to be amazed by

the eloquence of our members. so many of them coming forward and speaking their minds and speaking from their heart about the people that were sworn -- that we're sworn to serve and represent. this week in congress we face again legislation rather ironically where we're deeming, deeming a budget passed. almost as though we would deem that the hungry be fed. franklin roosevelt in another time recognized the great sacrifice that the nation had tone dour and president obama this past -- to endure and president obama this past january called upon the shared sacrifice that's required amongst a nation. a nation that needs to pull together in a very difficult recessionary time. and in this time it's a time where you have to make choices. and those choices have to be based on your values and have to be based as the president said

on sacrifice. roosevelt called for the warm courage of national security that comes from a shared sacrifice. 46 million people receive assistance. primarily women and children who get fed and nourished. we're going to have a debate on a budget that strikes at the core of this, at a time when we would give tax breaks of $47 billion, while we're taking away from the neediest amongst us? roosevelt said the problem with our colleagues on the other side is they can become frozen in the ice of their indifference towards their fellow citizens. every day -- everyday americans

searching and struggling in this recessionary period. and what do we get in return? we get romneycare? we get tax breaks for bank capital? we get tax breaks that are coming to the nation's wealthiest 1%? at a time where we ask the middle class who is struggling to pay for it? we're out here today talking about a very important program that provides nutrition to the least amongst us and we're calling for cuts that are not only going to take from them, but it will take from students that are trying to be able to pay off their educational loan? this has got to stop. we're a better country than this. i commend the gentlelady from connecticut for bringing this to our attention and focusing on the needs of a great nation. that in a time of budgetary

concerns has to choose the appropriate values for the country, who has to make the appropriate choices, we all agree, and the need to sacrifice, but it has to be shared and shouldn't be balanced on the backs of the middle class and the poorest amongst us. i thank the gentlelady from connecticut for her leadership. ms. delauro: i thank you. the speaker pro tempore: the gentlelady's time has expired. ms. delauro: i thank the gentleman and i thank our colleagues for joining us tonight. the speaker pro tempore: under the speaker's announced policy of january 5, 2011, the gentleman from louisiana, mr. fleming, is recognized for 60 minutes as the designee of the majority leader.

mr. fleming: mr. speaker, i appreciate your allowing me to

speak tonight in this hour that i and my colleagues who will be joining me very shortly, other physicians who are from the g.o.p. doctors caucus, perhaps nurse, our health care workers as well. in this next hour we're going to be talking about our favorite subject and that is health care reform. we're going to be talking about specific aspects, things that have been -- have actually come to light to us that i think are important. we're going to have other things that in the coming days we're going to learn about how obamacare was passed, what things were done by the other side of the aisle to make that happen. things that maybe some would call sausage making, others would say it's improper. but we'll certainly spend some time on that as the days come.

i want to continue a theme that we've been discussing and that is the broken promises of obamacare. remember that to get obamacare passed, that president obama made a number of promises and i'll start with the first one that is relevant to our topic tonight and that is, under ply plan, no family making -- under my plan, no family making less than $250,000 a year will see any form of tax increase and that was candidate obama. senator obama at the time. who talked about all the number of things that were going to be good about obamacare, but in fact we see that virtually everything that's come out with a few possible exceptions have

not been so favorable. and i think that taxes is really a very relevant subject to speak about this evening. because here we are, today is the tax deadline for the i.r.s., and we're all having that on our minds. and you know, it's interesting, whenever i file my taxes, the first thing i think about after doing that is projecting into the next year, what are the issues going to be for me and my taxes? and so i think it's only proper that nth, -- and the timing is excellent that we talk about that this evening. the candidate obama pledged he would not raise any of your taxes and promised not to tax health benefits. his health care law broke those promises at least 10 times. here's just a line-up of some of the taxes that we're talking about. $52 billion in fines on employers who do not provide government-approved coverage.

remember that under obamacare, not only is there a mandate for individuals to buy insurance, health insurance, there's a mandate on the employers, the business owners, to buy it as well. and upon both is the burden to buy not health insurance but government-conceived health insurance. that is, health insurance that the government in its wisdom, our federal government, decides and deems is proper for us. and so you have to make two fulfillments in that mandate. one is to buy health care insurance and number two, health care insurance that's approved by the government. $32 billion in taxes on health insurance plans. the actual health plans are going to be taxed as well. now, who is going to pay that tax? could you think the insurance companies are going to pay it? no. it's going to be passed down to you, the subscriber, because taxes always on business make their way down to the consumer. $5 billion in taxes for limits

on over-the-counter medication. $15 billion in taxes from limiting the deduction on itemized medical expenses. $13 billion in taxes from new limits on flexible spending arrangements. $60 billion in taxes on health insurance plans. $27 billion in taxes on pharmaceutical companies. $20 billion in taxes on medical device companies. $3 billion in taxes on tanning services, $3 billion in taxes on self-insured health plans. and $1 billion in new penalties on health savings account distributions. the health care law also includes a high income tax. that because it's not indexed for inflation. it will eventually hit 80% of taxpayers.

i draw my colleagues' attention to this slide. obamacare's rising tax burden. you can see that the tax burden in 2012, the year we're in, $190 for a family of four, that's $15 billion, and you see that the burden goes up each year, that the out year 2022, it makes it above $150 -- i'm sorry, $150 billion, 2032, the burden goes well above $250 billion and it finally tops out at $320 billion total and that's an average of $3,290 for a family of four. wh?

remember when you hear the rhetoric from the other side of the aisle, it talks about how we should be having more sacrifice from the wealthy and more sacrifice from those who have more. remember the luxury tax? what did it do? it killed the companies that made boats and luxury items, the people that were hurt. not the wealthy. they can buy those things. we came up with those silly ideas of making the wealthy do their fair share. well, we have the a.t.m. today, and where has it got us? because it was never indexed for inflation, middle-class people

are being hit by the alternative minimum tax. it isn't just a tax on the wealthy but on the middle class, the people that our colleagues on the other side of the aisle talk about. every time we come up with a tax on the wealthy, it makes its way to the middle class and working class. folks, we all know that inflation occurs every year at an average rate of % but as high as 16% in our history. any time we have a tax law that affects people with a certain tax income, we know people with lower and lower incomes because while they are absolute dollars in value are going to go up, the truth is the purchase power of those dollars go down and pushes more and more people of lower and lower income levels into

higher tax brackets. and so, again, our colleagues on the other side of the aisle, they love these taxes on the wealthy, but they can never make enough money. we heard about the buffett tax, the buffett rule that would require wealthy people to pay an additional tax. and it would only add $4 billion a year, less than 1% of the annual deficit. why is that important? it's important because if you're going to get more income from taxes, and i would argue that you never get more income from taxes,, but if you think you can, you can only get it if you spread it out from the working class and middle class and the only way is to pass it on the wealthy first and then through inflation is passed down through to albeit a lower income level

but a larger group because you can't get enough tax revenue on putting tax on the wealthy. there isn't enough wealthy people to do it. you have to push it down where there is a lot of people and that's the working place and the middle class. rhetoric versus reality on premium os costs. the average cost of annual health insurance premiums. this is what president obama in campaigning for obamacare said would happen. he said the cost would go down by 2,000 500 and what are we hearing? not only will get it go up but we already have a differential of around $4,000 from where president obama said we would be today and where we are. it hasn't gone down but actually

gone up. let's talk about a couple of more taxes and then i'll introduce a colleague here and give him some sharing time as well. surtax on investment income. $123 billion, which begins this past january, creation of a new 3.8% tax on investment earned income. now this is the homeowner real stat tax. folks, this is a terrible tax, 3.8% on investment income. now when you sell your home, it may not be classed as investment income, but it can be. but it's not just that, if you own any type of other property, if you own stocks and bonds,

mutual funds, whatever, they can be easily subject to this and it is not indexed to inflation. let me re-emphasize this, yes, it's a tax on people who make over $00,000 a year, but if you make $50,000 a year, over time, this will affect you, too, because inflation will bring those dollars up in real terms because of inflation and your buying power will stay at the $50,000 level but will show on paper you are making over $200,000. and the bottom line is that obamacare has many taxes and certainly they are trojan horses by any explanation and yes, they don't raise a lot of revenue at first, but down the road, they raise a lot of revenue, but not on the wealthy folk, but on the

working class. that's who is getting hurt. $5 billion this past january, americans no longer able to use their health savings accounts, flexible spending accounts on over-the-counter drugs. if you want to use your health savings accounts to pay for medicine you are taking for a headache, if you want to pay for it through your health savings account, you have to go get a prescription from your doctor. and the doctor is going to say, look, i'm overwhelmed with all these people wanting me to do this, we have to charge something for that. ultimately, more bureaucracy, more paperwork, more costs and up until now, part of obamacare, that's not the case, you could pay for that under your health savings account.

$1.4 billion that began in january, 2011, increases tax on early withdrawals from 10% to 20% disadvantage them relative to i.r.a. and tax-advantaged accounts. if you have an early withdrawal from your retirement plan, you have had a 10% plan. well, that's been doubled. so obamacare has limited the use of health savings accounts, but at the same time, made the penalties even steeper for using it. and i can tell you in my own case, apart from my own medical practice, we have used them to tremendous benefit to employees because it has lowered their costs and taken a lot of anxiety in being caught of some sort of illness.

excise tax on charitable hospitals, $50,000 to hospitals if they fail to meet community assessment needs. so this provision will increase the employee's portion from $1.45% to 2.35% to families making more than $250,000 a year. the rate will increase by $3.% on income over $ 50,000. i realize i don't make $250,000. but because of inflation and trust me, with the monetary easing in the monetary policies that are coming out of this administration, inflation gets going again, which it will quite

soon, you will be driven up, but the buying pour will be the same. you will be hit with this tax. the reality is and i'm going to be recognizing my good friend, dr. gingrey in a moment, reality is, obamacare includes tons of new taxes hikes. heritage has a list of them that is shows an increase of revenue of $500 billion in 10 years. two examples that hit consumers are 10% of indoor tab tanning services between 2010 and 23019 and 2013, the excise tax on manufacturers and importers of certainly medical devices that will raise $20 billion between 2010 and 2019. and i'm going to throw in a

couple more things. remember this discussion began with this being the april 15 -april 17 deadline for your taxes and the internal revenue services. under obamacare as many as 16,000 new the speaker pro tempore: r.s. agents will be hired. and there is no question about it that that the i.r.s. will be beefed up to the tune of billions of dollars in order to make that happen. with that, i have been joined by my colleague, dr. phil gingrey, from georgia. someone that i look up to very much. he has been a great mentor to me and a role model. is here as a physician in days past when there weren't many doctors in the house of

representatives and helped start the g.o.p. doctors' caucus and help grow our numbers from a handful of physicians and health care workers to over 15 m.d.'s and 20 health care workers that we have in the house of representatives that i think are making big, big differences in particularly health care policy overall. i would like to yield to the gentleman, dr. gingrey. mr. gingrey: i thank the gentleman very much for yielding and i thank him for his kind words and i'm happy to share the time with him tonight and plan to remain on the house floor for the rest of this hour and i will make some comments and yield back to dr. fleming, and maybe he will yield some additional time to me in the hour. but i couldn't help but notice in the previous hour, which was allotted to our democratic

colleagues their leadership hour, they went first tonight, and think chose to talk about the snap program. snap is an acronym for the supplemental nutritional assistance program which we formerly known and people know it as the food stamp program and they spent the -- talking about cutting discretionary federal spending and reducing government bureaucracy and bloatedness in saying that, you do that, you hurt the poor and the nearly poor that they desperately need these programs. and they made some legitimate points, of course. and we're talking about health care in our hour, and specifically, about the passage

of obamacare almost two years ago, indeed, a little more than two years ago now, to create a new entitlement program, the uninsured. not the programs, like the program for children, the s-chip program, it's called, the health care program for the poor, medicaid, certainly not the program for our seniors and our disabled americans under medicare, but for folks that were somewhere in the middle that maybe couldn't afford or weren't offered health insurance by their employer. but they never talked about the unintended conch sequences of what -- consequences of what would happen.

i'm sure they didn't pass a 2,600 page bill that would deliberately hurt anybody. i don't think anybody on either side of the aisle would do that or any administration would do that. but we physician members, the gentleman from louisiana, myself and others, that have worked in the health care industry most of our professional lives before we got to congress, understood far better and knew exactly what the unintended consequences would be of this legislation. that's what the gentleman from louisiana has pointed out in the presentation, slide presentation, that he has made. i could probably take the rest of the hour talking about the unintended consequences and list them as my good colleague and the colleague on the senate

side, a physician, dr. borrow aso, just came out with a white paper dated march 13. a month ago. and in that paper, he lists 10 different unintended consequences. the gentleman has mentioned a couple and i would like to take a few minutes before yielding whack to him a few of the promises that he hasn't mentioned. and this is a quote from president obama. i will protect medicare, in a 2009 address to congress, president obama promised that he would quote, protect medicare, unquote. the president's health care law, however, takes more than $500 billion from the medicare

program and uses that money -- now, he said -- and the democrat majority at the time said we street then medicare but -- strengthening medicare, but a 10% cut in medicare took that money to create this new entitlement program. the medicare actuary has written that the medicare cuts cannot be at the same time be used to finance other federal outlays such as the coverage expansion under this, and to extend the medicare trust fund. you can't pay for two things with the same amount of money. indeed, i wish we could. then maybe folks wouldn't have to be on food stamps as an example. . .

medicare provisions in the health care plan, quote, again, this is c.b.o., would not enhance the ability of the government to pay for future medicare benefits, unquote. president obama actually admitted in an interview, you can't say that you are saving on medicare and then spending the money twice. that's what the president said. but that's exactly what the law does. it's spends the same money twice, undermining, unfortunately, a great medicare program that needs to be strengthened and protected. thafts one of the promises -- that was one of the promises broken, promises made but not kept, as the senator pointed out. let me add one more. this is number five of the 10 that the senator mentioned in his paper of last month, from the policy committee on the senate side.

candidate obama said there was no need for a mandate. this is back in 2008, in that campaign against senator hillary clinton. candidate obama opposed a mandate to buy insurance and made it one of the hallmarks of his primary campaign. he claimed that penalizing people for not buying health insurance, listen to this, mr. speaker, was like, and quote, solving homelessness by mandating everyone buy a house. he said, president obama, senator obama at the time, candidate obama, solving homelessness by mandating everyone buy a house. well, this is like, you know, solving the uninsured problem by mandating that all the rest of us pay for health insurance for a lot of people that could afford to buy health insurance, but just simply did not want it.

i don't know how many millions of people make more than $50,000 a year or $75,000 a year that really didn't want -- don't want, would rather pay and say, go, i don't recommend it, dr. fleming doesn't recommend it, mr. speaker, we think they ought to have some minimal coverage and certainly catastrophic coverage, but, you know, this is their life, their liberty to choose if they want to not to have that coverage. and president obama's health care law, as we all know now, created an unprecedented federal requirement for all citizens to purchase a product merely because they exist, because they're living and breathing. and not just a product, they couldn't under this bill when it's fully implemented in 2014, the minimal coverage requirement as the gentleman from louisiana pointed out, wouldn't allow them to, let's say, to have a

mini-med policy as many of the franchises do across this country, in the fast food industry. they all had to be granted waivers. so here again, another promise made and not kept. i have a couple more that i'll get to maybe later on in the hour. but just to point that out and clearly the supreme court i think now understands much of that in the testimony they heard a couple of weeks ago. so, i'll yield back to my colleague and stick with him during the remaining portion of the time. mr. fleming: i thank my colleague. i'll return back to you for some more information, that's very valuable information. i want to get back to and recap some of the things i talked about. and that is that the taxes are tremendously increased under obamacare. let's talk about the financing

of obamacare. and i'm just going to stick with the basics. there's a lot of wayss that financed but i'm going to tell you of maybe the three major ways that it's supposedly paid for. number one, you heard my friend, dr. bring -- dr. gingrey, say that obamacare actually takes over $500 billion, that is over a half a trillion dollars, from existing medicare. and uses that to subsidize the middle class health plans for people below a certain income level. we're going to get to that in scruft a moment. i'm going draw your attention to this chart and talk about those subsidies. but not only does it do that, but as my good friend says, it's used to extend the life of medicare. so this is basically how it works. the idea of the bill is it takes money out of medicare and theoretically makes medicare last longer because it's running

out of money by taking the same money out of the middle and putting it at the end. i don't understand how that could work, but that's the way it works. that would be sort of like taking money out of your paycheck in the middle of the year and somehow living on nothing for about three months and then going back to what you took out and paying at the end. it makes no sense. but not only that, but it takes the same $500 billion, we've really honed down this in our committees, and secretary sebelius had to admit that this was true, it takes the same $500 billion that's used to prolong the life of medicare to subsidize middle class health plan. i don't know, where i come from in louisiana, we can't spend the same dollar twice. you can spend it place a and place b. my kids want to, you know, go to the movies or they want to do some entertainment or maybe they need money for their education. i can give it to them, they can spend it one time. they don't get to use the same

dollar twice. and, folks, neither can your federal government. so that is really smoke and mirrors accounting and we've called him out on it and they really basically admitted that's true. but then another way that obamacare is paid for is by over $800 billion of taxes in 10 years. which i've gone over a number these and i'm going to get back to them. it really is not paid for and we know, we're getting estimates now that's showing that as much as $300 billion to $500 billion are going to be added over the next 10 years in deficits, total debt in that period of time. so it is not paid for, all of these steep taxes, all of these smoke and mirror-types of accounting are not going to work. and furthermore, half the people who are going to get health care coverage cards that they wouldn't otherwise get are going to be on medicaid and today medicaid pays on average about

60% of what medicare pays to health care providers which is already too low and so what's the chance that 15 million americans are going to come newly on the rolls and they're going to carry a card around that pays less than what the doctor can afford to accept to even cover the cost of that care and otherwise go out of business, what's the chance they're going to find doctors? so what we'll have a a drop in the number of physicians, a steep rise in the demand in health care and so these people will all end up in emergency rooms. to my colleagues, it's one thing to have coverage in health care, it's another thing altogether to have access to health care and all you have to do is look at other countries who have socialized health care, great britain, canada and many others, and even go to the extreme steps of cuba and north korea. they all have coverage and it's free. the problem is, there's no access to it. there's shortages.

there are waiting times, as much as a year or two years to get a c.t. scan. people are dying as a result of that and they show up in their statistics. the death rates, for instance, from breast cancer and prostate cancer in the united states are much lower than they are in canada and great britain. they have access to the same medications and the same quality physicians. the only difference is their health care systems themselves. so let's get back again. i want to really focus on this topic for a moment before i yield time to my friend. and again back to this idea that many of the taxes are going to be placed upon the wealthy americans in order to pay for obamacare. and i'll just step back through them again. there's a 40% excise tax on so-called cadillac health plans which would be health plans valued in excess of $10,200 for individuals, $27,500 for families. those thresholds will grow

annually by an inflation rate of 1% which is about 1/3 or less of what it really is. so what that means is that as obamacare unfolds, having an expensive gold-plated cadillac health care plan, you're going to get taxed 40% more for having it. well, maybe that's justified. but remember that after a few years, that will not be an expensive gold-plated plan, that will be an average plan. and you will again still have to pay the same 40% excise tax. rapid creep is what they called it back some years ago and i think it applies here today. now, again, increases in medicare hospital insurance, that's a payroll tax on people who make $200,000 a year individually, $250,000 as a couple, again, only applying to people who are in that $200,000-plus range. and then of course i told you the 3.8% tax on your investments that are sold for those who again make $200,000 or more.

and again we go back to it, remember the alternative minimum tax, remember the luxury tax, remember the tax that was placed on oil, the so-called windfall taxes. ultimately those taxes all fell to the middle class and below. those are the ones who were burdened with them and why most of them have been repealed and we would repeal the alternative minimum tax if we could find a way to actually pay for it now because we're spending at a level that we can't afford to repeal it, unfortunately. so, here's this chart which is very important in this whole discussion. under obamacare there's an income threshold for receiving subsidies. if your number is just below $100,000 for a family of -- a married couple, i believe that's a family of four total, if you make less than $100,000 or about $95,000 here, you'll get some kind of subsidy beginning in 2012-2013.

however, that subsidy, that line continues out all the way indefinitely, well past 2062 and before. now if you make $90,000 or less than $90,000 today, with inflation in those out years, five years, 10 years, 20 years, 30 years, you will break through this threshold. so will you not get the support -- so you will not get the support and the subsidy in your health plan. you'll get it early so you think you're getting something. but ultimately you're going -- that's going to basically go away and you will not get that subsidy. now, also if you make $200,000 or $250,000 a year, you will be the one paying in for those who need this subsidy. but you see this line comes down. because people who make $200,000 today, in 2022 they'll still get a check that will say $250,000,

but it will be more like $180,000 in today's dollars. and with each year, it rash ets down -- ratchets down until finally you get to about 2042 or 2050, in that range, and so a check today that says $200,000 on it will buy equivalent to something like $90,000 in those years. because inflation devalues the actual currency that you hold. and so what you get is a crossover point where you see the subsidy threshold gets higher and higher. you got to make more and more money to get that subsidy. but even though your income is the same or going down, you actually drop out and you get a crossover point, where here, even though you're making $200,000 or $250,000, you're making too much for the subsidy, but you're not making too much to be taxed. and that is the problem.

ultimately obamacare over time begins to take the subsidies out for those who are middle class and lower and it begins to add taxes on those who are middle class and above. and that is very destructive, my friends. that's the way you end up with socialized health care and the kind of system that's working so poorly in many other countries. so, we still have time to discuss some of these issues further and i would ask my good friend from georgia, dr. gingrey, to elaborate on some of his points tonight. mr. gingrey: i thank the gentleman for yielding to me, continuing on the -- on the line of reasoning that dr. fleming just outlined, talking about not indexing these benefits for inflation but in fact, another thing that needs to be pointed out is that under current law, in creating these

exchanges in trying to help people who are uninsured pause it's not affordable to -- uninsured because it's not affordable to them, we, the taxpayer, are going to subsidize people who purchase health insurance in the state exchanges, even if they make up to 400% of the federal poverty level for a family of four, mr. speaker, that's 85 -- that's $85,000 to $90,000 a year. i think john q. public knew that we were subsidizing for people making up to $90,000 a year they would be appalled. the other thing, just continuing what my friend from louisiana was talking about, is, it also -- is, is it -- is it also, the law, expands the medicare program to force

state, some states didn't pass -- in past years when times were better, were covering people on the medicaid program more than 100% of the federal poverty level, indeed some up to 185%, maybe even 225% of the federal poverty level. when they could afford it. but to actually say at times like these we're going to force the states to cover up to 133% of the federal poverty level when they can barely afford to cover at the 100% level is an unfunded, and probably unconstitutional mandate, and mr. speaker, as you know mitigating circumstance colleagues know on both sides of the aisle, that was part of the argument before the supreme court as well as at that more publicized argument against requiring individuals to engage in commerce under the rules of the commerce clause. so that's a huge problem, and

as dr. fleming points out, mr. speaker, it will become more of a problem pause it's not indexed for inflation and you have more and more people being subsidized. i want to get back, though, if the gentleman will allow me a little bit more time to those failed promises that i discussed a little earlier. the republican health care policy report from senator, doctor, orthopedic surgeon john barrasso that he put out last month, we go straight to number 10, we mentioned a couple, broken promise number 10, get this, colleagues. and this is a quote from president obama, our 44th president. these negotiations will be on c-span. candidate obama promised to televise all health care negotiations on c-span.

the process that created the president's health care plan was plagued, unfortunately -- was plagued, unfortunately, and it wasn't on c-span, with back room deals like gator-ade, cutting deals with senators from certain state, you don't have to be a genius to figure out what those three states are. the president indeed even conceded the process, and he said, legitimately raised concerns not just among my opponents, but also among supporters, that we just don't know what's going on. it's an ugly process and it looks like there are a bunch of back room deals, unquote. mr. speaker, there were a bunch of back room deals and i think our colleagues are aware, we got a memo today from my

committee, the energy and commerce committee, and particularly the subcommittee on oversight and investigation, and we have been trying for almost two years, the committee staff, on energy and commerce subcommittee of oversight and investigation, to get information from the white house about all these backroom deals that were cut, negotiated, during the process of getting buy-in from stake holders that everybody in the country would recognize. now, i'm not pointing fingers or saying that anybody necessarily did anything wrong, but you know, i own american medical association, the american hospital association, american health insurance plans, aarp which remits 37 million to 40 million seniors, all of these advocacy stake holder groups were in these

backrooms and promises were made, policy changes in the law , in exchange for something special for them. i mean, you know, again, congressman fleming talked about sausage making and the legislative process, but the president promised that all of that would be out in the open. indeed, he said it would be televised on c-span. here again, that's promise number 10. all we're asking from the white house, the office of health care reform, i think deputy chief of staff nancy ann depaul was director of that effort in the white house and they have done nothing, mr. speaker, for the last two years but stone wall and we are going to continue to ask for dumonts of what went on behind closed

doors, so we, the people, the american people, can understand thousand possibly could happen and what now we know are the unintended consequences. dr. fleming has pointed out, in his presentation, in his slides, in prart todd taxation new york regard to people thinking that if they like their health insurance they could keep it, only to find out they can't, whether they're on medicare advantage or whether they get their health insurance from an employer, or whether they're working and paying $15 or $20 a week for a minimal coverage plan that has catastrophic protection, and all of those, without wavers, all -- -- without waivers, all of those plans would be taken away from people even though they like them. again, the problem is unbelievable. the unintended consequences are unbelievable.

>> would the gentleman yield? mr. gingrey: you better believe it because they happen. i yield back. mr. fleming: would you touch a moment, dr. gingrey, about the fact that while we're trying to expand coverage, all those things, there will be people pushed off of coverage, of health care they have today, such as by their employers. would you expand on that? mr. gingrey: i thank the gentleman for pointing that out. the law very specifically says, if you employ 50 or more people, then you are going to be required by the federal government to provide for them a health insurance policy and again, not just any health insurance coverage, but the one that the federal government, that uncle, demands that you provide. so many of these employers, particularly small business men and women and by the way, we

will be voting on a bill on thursday, on the house floor, we, the republican majority, a bill introduced by house majority leader eric cantor, from virginia, to cut by 20% the taxes on small businesses, 30% of them probably in fact are owned and orped by women. and to give them the opportunity to hire people and stim lit -- stimulate the economy, that is another -- in a way it's another subject but in a way it's the same subject, sit not? i yield back. mr. fleming: i would like you to yield for a question, that is, if one of these small business you say the threshold is 50 employee, and they lose certain subsidies or face more penalties or costs after 50, what is the chance that a small business that has 49 employers will dare hire another employee?

mr. gingrey: i thank the gentleman for yielding back that is exactly the point. they won't. they will figure out a way if they've got 49 employees, and they really need 53, they'll probably hire eight more, or whatever the math is, as -- as halftime people with no benefits because they can't afford to over their health insurance. it is a job destroyer. it's not a job creator. the other situation is, for those that employ 50, significantly more than 50, maybe they've got 1,000 employees. mr. speaker, these companies are going to look at the costs, mandated cost of coverage under obamacare and they're going to say, you know what, our bottom line will be a lot better for we wrust pay the darn fine,

which i think is about $2,000 per year, per employee, that doesn't have health insurance coverage provided by them. and if they do provide the coverage, under obamacare, as dr. fleming points out, mr. speaker, today, that would be $12 thorks a year, probably, for a family policy. but 10 years from new, that could be $18,000 a year and the only person that -- or groups held harmless from that in the taxation of the -- are the cadillac plans, are, guess who? the unions. organized labor. all good points people need to understand. the unintended consequence of the federal government trying to meddle in the marketplace and treat health care, 1/6 of the economy, just like it's any other business and you can't do that. and the american people know it and they hate it. i yield back.

mr. fleming: i thank the gentleman. great points, again. estimates are as high as 20 million americans who are on insurance today, through their employers, happy and satisfied with the coverage they have, will be pushed off. why? because the employer, the business, will find it at least financially reasonable and perhaps beneficial to just pay the fine, push the employees out into the marketplace, make them go into the exchanges and force them to have to deal with the realities of obamacare. i know people hearing me say this would say, that's coldhearted. if you love your employees, and i have a small business and we employ considerably more than 50 employees, and i love my employees. i want them to have the best possible coverage. but look, if i have a competitor out there who can lower his cost by pushing his employees out and paying a penalty, and then i go and do

the right thing and pay that, he's going to be able to sell his product at a lower price than me, that puts me out of business and not only to my employees not have health insurance, they don't have a job. and again, back to this 50 threshold, any time you have a law in the united states that penalizes an employer for hiring above a certain level that is a terrible law. by itself. disincentivizing an employer to say, well, i'm not going to grow my business. if i can't grow it by leaps and bounds and take tremendous risks and in the process bring in so much money to cover that incremental cost of health care, i'm not even going to try it. in fact, i may just close my business down altogether. but in the remaining moments we have, and i'll be happy to yield dr. gingrey further time to add some additional comments but i just wanted to, again, go

back to this broken promise that was mentioned before, both by dr. gingrey and myself, i will protect medicare. president barack obama, september, 2009. he promised he would protect medicare. and where are we today? the republicans, through the ryan plan a very good plan a good budget, we have a solution that will make medicare sustainable for an indefinite period of time. the democrats in the house say, no, we're not in for that. we're not in for anything. we have no idea. i will remind folks in this body that the actuary the c.b.o., all of the authorities tell us that medicare runs out of money, becomes insolvent, becomes bankrupt in four to eight years. so it's time somebody comes up with plan. -- up with a plan. we have one this year, we had

one last year, we modified it to make it when democrats could accept, though they still haven't signed on to it, though we have one democrat in the senate who has. but the president made the promise and -- promise and the republicans in the house are trying to keep it but democrats won't go along with that. again, to recap. obamacare cuts$ 575 billion from the medicare program and $200 billion from medicare. and forces over seven million seniors out of their current medicare plan. 15% of hospitals will close because of home paying less under obamacare. you can't cut out over $500 billion without cutting out reimbursements. it's going to be hospitals, nursing homes and many other types of services that medicare

provides. the c.b.o. estimates that medicare prescription drug coverage premiums will increase by 9% as a result of obamacare. again, mr. speaker, this is not a tax, it's not an expense, just on the wealthy. it hits the middle class and the poor as well. and the c.m.s. actuary said the medicare program could be bankrupt by as early as 2016. medicare costs are projected to rise from $3.6% of our g.d.p. to 5.5% by 2035. and the physician payment formula on medicare needs to be fixed or seniors may lose their doctors. cost, $16 billion.

physicians are beginning to back away, not because they aren't willing to sacrifice because if they do, they go out of business and can't make it. and already, access is an issue because of money problems. 12% of physicians have stopped seeing medicare patients due to the prone formula that we have and cannot be resolved and our friends on the other side refuse to address. in our closing moments, i would be happy to yield to the gentleman if he has any comments. mr. gingrey: mr. speaker, i thank my colleague. i did want to make one other point. and actually, our colleague on the other side of the capitol in the senate, senator tom coburn, ob-gyn, great physician from oklahoma, i hate that he is retiring at the end of this term, but there has been a

fantastic contributor to this debate and he has pointed out recently that if people think that once the medicare, the hospital insurance trust fund becomes insolvent, whether 2016, 2020, 2024, at the very latest, that doctors cannot be paid on their medicare claims, their hospital part of medicare even if the federal government wanted to honor those claims because the trust fund is insolvent and pay those claims out of the general treasury. as dr. coburn points out, they cannot do it, and yet we are whistling past the graveyard fiddling away while rome is burning. that's what we are getting out of this administration. and i yield back. mr. fleming: that is very important and what i'm understanding, if the trust fund

becomes insolvent and there are checks going out to physicians across america, we just can't connect a line over to the germ budget and say we are going to cover the bills. they don't get paid. checks will bounce. and so this is a problem that must be solved. to recap in the final moments that we have, and i want to thank my good friend, dr. gingrey, for joining me this evening. we vessely have a strong group of physicians and nurses and we hope to be joined by some more next year as a matter fact. we feel like the physicians are a strong force in the u.s. congress, not just because they know and understand the health care economy, which is very unique, but because physicians are unique in this way. we want to make a diagnosis and we want to treat and we want to cure. we aren't about kicking the can down the road. we want could cure the disease

on or solve the problem and move to the next one. the more physicians, i think we will. i want to reiterate for my colleagues and mr. speaker, that just because you have a card that says you are entitled to care in the united states does not mean you have access to it. i want to reiterate that. just because you have a card, just because you have coverage, does not mean that the doors will open for you. and this is where our colleagues are misguided on the other side. obamacare is all about giving coverage, all about giving cards to people, but it does not protect their access to care. because, in fact, under their system, which is based on a socialized model, the only way the government will be able to afford it is to create long lines, create shortages and say no to the traffic cops to people. and the parts of our health care

system to people today is government-run before obamacare. we are seeing shortages. inject i believe drugs that are otherwise not expensive but because of this this system are finding that the manufacturers can't make them because they don't get enough reimbursement to cover their costs. they slow down and stop making them all together. and we have diseases and cancers out there today where physicians are scrounging around working for the correct therapeutic agent which would cure their disease and inexpensive and we have to look to other countries to supply that. with that, i look forward to our next g.o.p. doctors caucus. i look forward to that. i hope that those who list yepped to us found it somewhat -- listened to us found it

somewhat informtive. and with that, i yield back. the speaker pro tempore: the gentleman yields back. >> under the speaker's announced policy of january 5, 2011, the chair recognizes the gentleman from texas, mr. gohmert, for 30 minutes. mr. gohmert: thank you, mr. speaker. interesting times we live in and i appreciated my friends, my doctor friends. we have two physicians who would certainly like to help heal america, but we have people in powerful positions in the senate as well as the white house that don't appear to be interested in

their prescriptions. i sure am and i appreciate their observations. also, they alluded to some of the energy energy issues before us in the country right now and that's certainly worth noting. first, i want to address something that we're hearing that the president over and over and over, he's spending millions and millions of tax dollars telling people that the cure to ails husband and the cure to all unfairness is the buffett rule and we're told that since warren buffett may pay a lower percentage than his secretary, warren buffett and the president are saying we need to tax the wealthy more. and we found out, the president pays apparently a lower tax rate

than his secretary, 20%, compared to a higher percentage than his secretary pays and leaves some of us baffled, if somebody really feels it's fairness or moral issue for warren buffett and the president to pay more in taxes than their secretaries, then at least have the morality to do it. don't come to congress and say, we demand you pass laws to force us to do the morally right thing, because we aren't going to do the morally right thing unless congress passes a law making me warren bivet -- buffett. the fair thing, unless congress passes a law. really?

is that what we've come to? that the leader of the free world just down pennsylvania avenue, has to have congress pass a law to get him to do what he says is the moral and fair thing to do? come on. are we in that bad a shape now? i have had within of the smarter economists in the country, art laffer, ronald reagan's economic adviser, what a great good guy. i was at his home in nashville eating spaghetti and meatballs. brilliant economist. i have had him plain to me -- explain to me how anybody who says we're going after the rich,

we're going to go after the rich and we're going to make them pay their fair share, probably not being honest. they're probably just not being honest, because if they think through their proposal, if they will look at current history, if they will look at immediate past history and long past history, what they find is this. if you're a union worker, if you're a mechanic, if you're working on an oil well somewhere, if you are working as a wait tress, you're working in a restaurant, you're working in a pharmacy, you're working in any of millions of businesses across america and you're not rich, part of the working middle

class, you cannot move if you get taxed a higher amount, because you are reliant on that job. so taxes, no matter what kind of tax you put in place, it's most likely only going to affect those who are in the middle class, no matter what else you do because only the wealthy are not tied to a resstaurnt, to a car company, to an auto manufacturer, to an auto repair place. they're not tied to those. they can own them and they can live in the next state or the next country, but they don't have to actually live at the place of business they're making money from. so when you go after the

wealthiest in america and want to make them do the morally fair thing, because without congress passing a law, these wealthiest among us can't make us do the fair thing. gee, wep can't do it unless congress makes us. what you do is tell the wealthy, we are going to slap a big old tax on you and the wealthy can say no thank you. i look stupid perhaps, but i'm not that stupid. that's how i either gained or been able to hold on on to my wealth. so i'm moving. i'm voting on where i want to live with my feet and they pick up and go to where there's less tax. we've seen it in the wealthiest moving from country to another country or island. we have seen that repeatedly.

and if the government says, well, gee, we'll outsmart the wealthiest among us, they moved to another country, so we'll figure out a new way to go after the wealthiest. and every time it fails to work. so after a while, you get the idea, let's look historically. every time a city, state or nation goes after the wealthiest people in the world to make them pay higher taxes, unless the whole world collaborated at the same time to make it happen, they will simply move. the middle class cannot do that. the middle class does not have that luxury. if you're very wealthy and gas goes to $4 or $5 a gallon.

it's an inconvenience and you can't be tied up with trivial details like gas going up $1 a gallon or $2 or like under this president go from $1.80 up to $4 and now heading toward $5 and some places i have seen over $5 for some time this year in some of the premium gasoline lines. . the wealthiest are not bothered, it's an inconvenience. they can choose to live in an estate in the country, or a town home worth millions in the middle of town, or they can choose to live on an island they can choose to live anywhere. because of the internet,

telephone, internet meetings, the wealthiest among us can do their business from anywhere. so it becomes very clear that the only reason somebody really intelligent, that understands what's going on and is willing to look at the historicals predept, anybody that's really going to be fair, will realize the only reason they would say, we're going after the wealthiest among us, is for political gain. because they're going to drive them out of the country otherwise. drive them out of the state or city where the taxes are going to be raised dramatically. the thing to do that's fair, for those of us who want, those make manager money to pay more, and those making less money to pay less, those of us who feel that way, many of us have begun to say you know, to do that, let's have a flat tax.

steve forbes has been saying it for a long time. the heritage foundation has got a new flat tax proposal that looks to have wonderful merit. there are a number of flat tax proposals. steve forbes was at 17% flat tax, doesn't matter how much you make. my conversations with art laffer, he said, you could have a flat tax and be lower than 17%, i'm looking forward to getting the full details, and have two deductions, one for home mortgage interest and one for charitable contributions, and i'm not talking about when you give underwear to some charity and say, congratulations you've now got my undergarment, i'm talking about, you know, real charitable contributions. make those things deductible.

but otherwise, he imin it -- eliminate all the loopholes. whether it's 12, 17, the economy would explode. there would be more jobs available. and at this time, when there are so many that are just on the edge of desperation, when they don't know what they're going to do, they can't keep paying $4 a gallon for gas. for those who have been looking so long, they're out of work because they got tired of looking. they're not counted in unemployment numbers, until we realize, gee, the unemployment is probably much, much, much worse than the administration is telling folks. but those folks -- to those folks, i would like to provide

a little hope. it won't be under this administration but if we have a different president, get a different majority in the senate, it truly ought to be springtime in america. figuratively as it is literally right now. we now know, many of us, we could be energy independent. seven years ago, when i got to congress, i didn't think so. the natural gas we found is extraordinary. and how have we done it? the technology has gone -- gotten so good at slanting holes this technology has gotten so good in sealing the -- saling the hole and fracking the formation and for those who understand how it works if you do not have a sealed formation there, and you frack, then you've lost the formation. there will be no pressure to

bring the oil or gas up. we've also had hearings in natural resources and chairman doc hastings has done a good job there. we've had hearings an discussed a lot of these things and we have some chicken litles in the interior department, energy department, and the e.p.a. running around saying, gee, i -- hydraulic fracking keeps polluting drinking water they shut wells down. each time when they've brought in the scientific study, to actually analyze, there have been some drinking water polluted by something, but when they analyze there's not anything that was utilized in the hydraulic fracking process that was able to make its way through the thousands of feet

of rock, of rock formations, to get to the drinking water. and that there is nothing in the polluted drink egg water that could possibly have come from the fracking. yet this president keeps saying, i'm for all of the above, and the best i can figure is, when he says, i'm for all of the above energy process, it means, i'm for anything we don't get out of the ground. so we'll give hundreds of millions, actually billions of dollars, to dear friends who have bundled money for the president's re-election and original election and we'll give them those billions of dollars and say, go try to make solar panels even though it's not financially feasible, it's not a viable enterprise. go do it and i will help you by giving billions of dollars, 42%

of which we're having to borrow, we'll give them all that money. someday we should be able to use solar energy but for heaven' sake we should not be depriving our social security funds of money while this president is giving away billions of dollars to cronies for energy ideas that don't work and that are not feasible and that are bankrupting america. yet that's what's been happening. 2% payroll tax cut for workers. to divide americans, seniors have been told you know what, you don't have to worry, democratic administration is going to make sure we take care of our seenors and the very times that's being said, they are gutting the social security

trust fund even though it's i.o.u.'s going in there, there's social security tax money that's been coming in since the 1930's in enough sufficiency to pay for the outgoing checks. it was not supposed to be for many years that we were supposed to reach that point where there was more social security money going out than social security tax money coming in. this president doubled down and in what is a divisive, i guess, to use his terminology, divisive, dismissive, gesture from this administration, we have undercut our seniors. this administration has been pushing to gut the social security trust fund and it has done so. now the friends of the mainstream media, trying to cover for the president, they're not talking about the

fact that last year, there was 5% of the social security payment that we didn't have money to pay from the social security trust fund payment coming in. so we had to borrow around 42% of the rest and we had to take tax money to make up the rest. and there's projections that though it was a 5% shortfall last year it will likely be 14% or 15% this year, that's not a good road to stay on. it is a road to greece. it is a road that will so undercut our senior citizens who deserve better from every administration, including this one. seniors have been hurt by this

administration, 5% last year, 15% this year, and if we don't get a different administration, a different majority in the senate, it's going to be worse after that. could be 45% the next year, if it triples one year, it could triple again. we're in trouble if we continue the policies of this administration. now, the e.p.a. apparently today, since hydraulic fracking has brought us somewhere, 100 to 300 years of natural gas, even at vastly expanded rates of usage, we could be energy independent, we could put not merely city buses on natural gas but move cars to natural gas. at the same time, up in north dakota, they've found a huge

amount of oil we didn't realize we had. in northeast utah, northwest colorado, southwest wyoming, we're told there's a tremendous amount of energy. we're told there's clean coal technology. and what's the answer of this administration? let's shut down any use of coal. why? because this administration has all of the above as their energy policy, which means they're not going to use coal because it comes from underground. we in the united states have been blessed beyond measure. we have more natural resources, more energy, than any nation in the world, china, russia, you name it, we've got more natural

energy than anywhere. and this administration has continued to put our energy offlimits. second largest coal deposit in the world in utah, we're told. was put off limits by president clinton. this administration, you know, of all the campaign promises, you would hope the administration wouldn't break, or would break, you would hope they would break the promise to see energy prices necessarily skyrocket. i would love to have seen that promise broken. yet that seems to be one of the very few that's been kept. energy prices. have necessarily skyrocketed. and then we find out today, because hydraulic fracking has thrivered the ability for this nation to become energy independent, today, the e.p.a. has declared war on hydraulic

fracking. people are desperate. the rich, we've seen how this works. president calls, the -- president calls the wealthiest among us, the wall street folks, fat cats, all they have to endure is a little name calling from the other end of pennsylvania avenue and in return they get richer than they've ever been. most people can endure name call big an individual when they know the individual is going to see they're wealthier than everyone else. wall street has done well by this administration, it's done better than most of america. americans deserved better. the president says he's going after big oil, declaring war on big oil. well, this is one of the few

areas where the president actually does have a substantive plan to go after what he calls big oil. well, we've learned from the way wall street's been handled, call them name bus make them richer, that you're going to go to war -- say you're going to go to war against big oil, what happens? we get this proposal, in writing from the president, this is his jobs about and the subtitle d of the president's jobs act is entitled repeal oil subsidy. well that word is extremely disingenuous. the president uses it all the time but the word means a grant or gift of money. there is no grant or gift of money. there are tax deductions for expenses. so he says he's going after big

oil but you look at the specific deductions that he he now has in print that he is going after big oil with and what do you find? you find out these deductions don't help big oil companies. it's so marginal it's a drop to them. who it will devastate and put out of business are the independent oil and gas operators who drill 95% of all the oil and gas wells in the continental u.s. there is a repeal in here by the president of the deduction for intangible drilling and developmental costs in the case of oil and gas wells. there is a repeal of the percentage depletion for oil and gas wells. there's repeal of the deduction for injecting, there's a repeal

of oil and gas working interest exceptions to passive activity rules. now, if anybody is interested in realy finding out the truth, go to major oil companies and ask them, would these repeals of these deductions really hurt you as a major oil company in the world? and the answer would be no, not really. . you can go to the accountant or independent oil gas operators and say, if these are repealed, would it affect independent oil companies that drill and the answer is, it will devastate them. not only is he going after the deductions that keep them afloat, they are going after the investment in oil and gas wells by the mainstream public. if you are british petroleum or

exxon, you don't put out a proposal that says we are drilling a well and here's the proposal, here's the geology and the other wells in the area and you invest x amount of dollars and we'll give you x percentage amount of working interest in this well. that's the kind of proposal that independent oil and gas companies have to make to get investments for people to invest in their oil well if they hit a huge well, then those who invest will take a percentage of the will -- well will do very well. when you invest in a dry hole, you would hope to deduct your expenses of the investment that failed. what this president is doing, not only is going to destroy the independent oil companies by taking away deductions that keep them afloat and keep them able to keep drilling another well,

he is going after their investments. so once you begin to see these specifics and you realize there are other things in here, repeal of marginal wells, repeal enhanced oil recovery, when you see the specifics, you realize, wow, maybe he doesn't know that he will destroy oil and gas independent operators. maybe he doesn't know. but it doesn't take a genius to realize if you put oil and gas operators out of business, who are the independents who are not big enough to have all the employees they need to do the drilling, who have so many subcontractors who go out and eat and go to the entertainment places and they invest in things around town and buy clothes, those people, those subcontractors, all of those

people will be without anything to do, because this administration says it declared war on major oil, but instead, it's really a war against independents, stopped 95% of the drilling for oil and gas in the continental u.s., then what happens to major oil? you've eliminated all of those in favor say aye. competition among the small independent. what do that mean? well there is only a small number of massive international oil and gas companies comparatively and you've wiped out their competition in america. it means they will charge more for gasoline, more for diesel, and there's nothing we can do about it, because they are the only ones who have any energy.

right now, before this president finishes driving or trying to put independents out of business, we have to stop this train wreck that's coming. this should be springtime in america and should be a time of renaissance, people shouldn't have to pay $4 a gallon and as soon as this president takes substantive action just to announce he will take substantive actions not to declare ware on fracking or war or oil companies in north dakota because there were eight mallards that died and therefore they had the justice department who is prosecuting the oil companies for violation of the migratory bird act and windmills are chopping them up by the

thousands and thousands, no, don't go after the windmills. when the president says he is for all of the above, he is for wind, where there are windmills driven by the hot air. it's time to start saying what we mean so that when this president tells the leader of israel, i have your back, the leader of israel doesn't realize he has to put on something that will stop a knife from coming from the back. it's time for our allies to know we support our friends and we're going to stop deporting and trying to buy off our enemies. it's time to bring peace and prosperity back to the continental u.s., all 50 states, all our territories, which truly having an all-of-the-above

energy policy and if we want to pursue renewables, don't be letting the social security trust fund or the tax money dry up and leave seniors so vulnerable. don't take away $500 billion from medicare and hurt the seniors like that, as obamacare has done. don't do those things. if you want to go spend billions giving it to your friends in solar energy, for heaven's sake, let's start leasing the federal land like it used to be done and then use 25% -- use part of our royaltyy to throw away on our president's friends, not be borrowing from china and not be taxing people to give to his buddies and we can return to spring delem time in america. thank you, mr. speaker, i yield back. the chair: for what purpose does does the gentleman rise? mr. gohmert: i move that we do

now adjourn. the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye. those opposed, no. the ayes have it. and the motion is adopted, accordingly, the house stands adjourned until 10:00 a.m. tomorrow for morning hour debate. of the houseage always here on c-span.

c-span's congressional directory is a complete guide to the 112th congress with detailed information about every congressman, cabinet member, supreme court justice, and governor. it is available for call $95 plus shipping and handling. you can order your copy at c- span.org/shop. next on c-span. a house hearing looks at the tax treatment of ira's and 401k's and other accounts. the international monetary fund presents its world economic forecast. the house ways and means committee held a hearing on the different kinds of retirement savings accounts and possible changes to retirement accounts as part of comprehensive tax reform. witnesses discussed what tax incentives are most effective in

getting workers to save. congressman dave camp chairs this two-hour hearing. >> good morning. we meet today to continue our dialogue in what i hope will result in a bipartisan pass forward to reform our income tax system. much of the discussion is separate -- is on the corporate side. japan lowered its corporate rate on april 1, leaving america with the dubious distinction of having the highest corporate tax rate in the industrialized world. it is unacceptable that american employers face such an undue burden at a time when we desperately them to get the economy growing and get 13 million unemployed people back to work. as tax filing day reminds us,

only comprehensive tax reform assures us that we address the needs of families. as such we must consider the individual side of the tax code if we are to transform today's broken code to one that improves job prospects for creation. the ira's processed 142 million tax returns and received 10.9 extension forms in part due to the complex, costly -- complex and costly nature of taxes. the code is far too complex. this complexity has led to ever- increasing costs in complying with the federal tax cut. according to the next -- national taxpayer advocate, taxpayers spent one matter $63 billion combined with the individual and income tax rules. families are not only spending more money complying, they're spending more time.

navigating through the tangled web of tax rules has resulted in taxpayers sick -- spenng over six hours to comply. whether it is the burdens or effect of convoluted rules and financial planning decisions, today's tax code is not just tampering employers, it is hampering the ability of individuals and families to plan their finances with reasonable certainty. turning to the topic of today's hearing, tax incentives for retirement savings, it quickly becomes clear why we're taking the time to lay the foundation for comprehensive tax reform by gathering input from experts. as many americans work to meet the deadline today, testimony recourse is a wide popularity of the savings vehicles. given the majority of americans access to a workplace plan, there are participating in the plan.

70% of full-time workers have access to our workplace retirement plan and 84% participate in the plan. meaning 66% of all full-time workers participate. the plan benefits taxpayers of all income levels and all walks of life. in 2010, over 70% of workers earning $30,000 to $50,000 participated in an employer sponsored plan. if such a plan was available to them. similarly, i arrest did that indicate city% of those participating in contribution plans make less than $50,000 a year. three-quarters make less than $100,000 annually. the proliferation of tax favored retirement accounts has occurred as congress creates new types of plans with different rules. some have questioned whether a number of plans, different rules, and eligibility criteria leads to confusion. reducing the effectiveness and

increasing savings. these ideas range from simplification and consolidation of existing plans and accounts to changing the default rules governing whether an employee participates to additional incentives such as the sabres credit. the committee continues its work toward comprehensive tax reform, keep in mind the savings vehicles have fact average people who depend on their -- these resources for their retirement. we must not threaten the retirement security of ordinary families. as this committee considers tax reform, there are three different -- important principles. simplification, increased participation, particularly by low and middle income taxpayers and whether the tax benefits are effectively and properly targeted. regarding the first of these principles, the president's economic recovery advisory board

presented options for simplifying savings and retirement incentives in their report. these options are worthy of consideration. and discussion. we also have an expert panel of witnesses before is that will evaluate how existing tax rules measure up to these criteria. to these criteria. i would like to emphasize said the hearing is not about conclusions but making sure that as congress approaches reform, we do so with information. we have spent too much time asking first and -- acting first and asking later. we deserve better than and trial and error approach to policy. this is our opportunity to gather input and get the facts. i yield to the ranking member for an opening statement. >> thank you for coming. today's hearing is the examination of what to tax

reform might mean for a very specific set of provisions, designed to promote retirement savings. the have benefited tens of millions of american families. the estimates of how many very. most find that 40% to 50% of workers are covered by an employer sponsored retirement plan. including defined contributions and defined benefit plans, private and public sector, hold assets of 9.3 chilean dollars -- a trillion dollars. in addition, 49 million households hold a four 0.7 trillion dollars -- hold $4.7

trillion. employers are not required to offer retirement plans. i think we will hear that employers understand the current system in that it works for them in terms of allowing them to offer retirement benefits to their workers. most of this committee agrees with that. there has been a resolution in support of our current system. it has been co-sponsored by 115 members, including 26 of this committee, reflecting bipartisan agreement that these provisions are of vital to encouraging retirement savings. that is not to say the current system cannot be improved. or sit candy. today we'll hear several ways --

of course it can be. today we will hear several ways to do that. what should be clear is that the basic structure of our current system should be preserved. it should not be repealed to pay for tax reform. tax reform should approach retirement savings incentives with an eye toward strengthening our current system and expanding participation, not as an opportunity to find revenue. one of our witnesses sums this up nicely in the written testimony -- "expenditures should not be reduced or tinkered with to pay for other initiatives whether inside or outside of tax reform. those funds are the primary retirement nest egg of millions

of families. they should not be taxed to finance more government spending, and deficit reduction, or to offset other tax initiatives, including lower marginal tax rates." and wanted to note that while today's hearing is focused on defined contribution plans, our retirement policy has traditionally been and a three legged stool. the other legs defined pension and social security. they are also vital components of ensuring americans retirement security. thank you. all of us look forward to your testimony. >> it is my pleasure to welcome the excellent panel of witnesses

before us today. they have experience in working with retirement accounts and it will be helpful as we take a look at the complexities at this part of the tax code. i would like to welcome doctor jack vanderhei. he has been with the employee institute since 1998 and has published more than 100 papers on employee benefits. we will hear from judy miller, director of retirement policy at the american society of pension professionals and actuaries. third, we will welcome mr. bill sweetnam. he specializes in benefits and tax counsel. fourth, we will hear from david

john, a follow -- fellow and financial institution adviser at the heritage foundation. he has testified on the improvement of security plans. and we welcome mr. randy hardock. he is a compliance specialist and maintains a practice focused on an rising on retirement and savings. he is testifying on behalf of the american benefit council. thank you for your time today. we have received your written statements and they will be made part of the record. each of you will be recognized for your aural remarks. mr. vanderhei, we begin with you. >> members of the committee, thank you for the opportunity to speak with you today on tax accounts. i am a research director of the

employee benefit research institute. we have conducted research for the past 34 years. ebri does not take policy positions or lobby. we have extensive research or the last 13 years as well as annual analysis on the behavior of tens of millions of participants from tens of thousands of plans dating back as far as 1996. measuring retirement income is an important and complex topic and ebri started to brightness in the 1990's. 43% of households were projected to be at risk of not having adequate income for basic expenses and health care costs. even though this number is large, this is 5% to 8% lower

than 2003. it would be my pleasure to explain why households are better off today than they were nine years ago, even after the crisis in 2008 and 2009. the in positive impact from autumn -- on a mac ii in 401 k plans. -- automatic enrollment in 401 k plans. a similar analysis for 401 k plans. the number of years they are eligible makes a tremendous difference in their times ratings. generation x are stimulated to run short of money 61% of the time were as those with 20 or

more years of eligibility have a situation 18% of the time. knowing the percentage of households at risk is important for public policy. equally important as knowing how large deficits are likely to be. the deficit numbers is estimated to $4.3 trillion. of those focus attention, they do little to help policy makers understand where they're coming from. figure three provides information on retirement shortfalls for gen x. those fortunate enough to have 20 years of eligibility to find their average deficits reduced more than 70% of the average deficit for those with no

future eligibility. ebri has shown that the traditional type of 401 k has the potential to generate a some, that when combined with social security, would replace a sizable part -- proportion for those with continuous coverage. the automatic enrollment 401 k when combined with provisions has the larger retirement accumulations for most of those covered. there has been proposals to modify the existing tax incentives by capping annual contributions or changing the before tax nature of the employee contributions in exchange for government matching contribution. the senate finance committee held a hearing that focused on the second type of proposal. ebri presented evidence of that time of a possible impact on

future 401 k accumulations. surveys have allowed ebri to do this more accurately. last month we should be projected changes on 401 k balances in reaction to the proposal. figure of 11 shows a 22% reduction in 401 k balances for young workers in the lowest income quartile. those at risk for insufficient income. the results are more dramatic four small plants. figure " shows the low-income employees at 36%. given that the financial state of the future generations appears to be so strongly tied to whether they are eligible to participate in employer sponsored plans, the logic of modifying the incentive

structure for employers for defined contribution plans needs to be examined. the potential decrease of income resulting from modifications to existing retirement plans or reducing contributions needs to be analyzed carefully when considering the overall impact. i look forward to your questions. >> ms. miller you are recognized. >> thank you. i am judy miller, chief of the retirement policy for the american society of pension professionals. we work with employers of all types but our primary focus is small business. two key features distinguish that from other plants.

they are efficient at delivering and come across the spectrum. unlike other incentives, retirement savings are deferrals. they are not permanent. when mortgage interest and deducted, and they will never be taxed. with a traditional tax, no income taxes are paid when they are added to the account. but they are included in taxable income when paid from the plan. every dollar exempt from tax now will be subject to tax in the future. since most of those are outside the budget window, looking at the expenditure for retirement plans overstates the cost of this incentive. new estimates show that a better measure for define plans is more than 50% less than the estimate over five years. as you consider these issues,

this is a deferral. that amount to romney you might think you're raising is not real revenue. it is a bookkeeping fiction. the second feature make sure that incentives to not discriminate in favor of the highly paid. this incentive is more progressive than the current code. households making less than $100,000 paid 26% of all income- tax is but they get 60% of the tax incentive. this understates the benefit for these households because it does not recognize a good part of a business owners is transferred to workers in the form of contributions. a small-business owner considers a plan when businesses are profitable. it could save enough money and the personal income taxes to pay most of the cost of contributions required for

employees by nondiscrimination rules. it is a beautiful thing. become curring contributions for workers. the data shows the key to promoting security is workplace savings. 7% of workers participate in a plan at work. lesson 5% save on their own. 78% of workers have access to retirement plans with 84 percent anticipating. that is a success story. more needs to be done. we support the proposal as a way to expand replace savings by building on the current structure. recent proposals include cuts to contribution limits, a cap on the value for households making over a certain dollar amount, or conversion to a credit. all of these proposals would

reduce the incentive for small business owners and would be a step in the wrong direction. i have 20 years experience selling plans to small business owners. the current tax savings was a critical factor and often the only factor supporting the decision to put in a plan. it is not that they're selfish. in real life, they are not sitting on a lot of cash. savings generated provides cash to help make contributions required. reducing the incentive reduces the amount of cash. there is not a doubt that reduced incentives would mean fewer plans toward retirement. one of the questions is whether or not there are too many types of plants. the simple answer is no. a proposal to put them all into a single type plan michael >> implication but combining them

would disrupt savings. when you're talking to an employer, about setting up a plan, options and flexibility are not the enemy. one size does not fit all. that is not to say simplification is not needed. we support the pension promotion act and would be pleased to work on the committee on these and other simplifications. the road to improve to security -- is the opposite of what needs to be done. i would be pleased to discuss these issues further with a committee or answer any questions you have. >> mr. sweetnam, you are recognized for five minutes. >> thank you for the opportunity to testify.

i am part of a law firm that focuses on employee benefits. prior to joining i was tax counsel at the office of tax policy at the department's treasury. i will testify today about the simplification proposals for retirement savings that we developed at the office of tax policy and that were included in the bush should ministration's proposals for 2004 and 2005. i am speaking today on my own behalf and on behalf of the firm or any client. one of the reasons to simplify, the code provides incentives for individual retirement savings and for other savings, such as the payment of medical expenses or education. all of these savings have different eligibility requirements and the amount of benefits could change based on income status or participation

in other programs. employer provided savings present their own level of complexity. there are a number of savings vehicles that employers can adopt, including 401 k and others. some very depending on the type of plan and there are limitations that can adopt certain types. multiple nondiscrimination rules add complexity to the administration of these plans. while they are a means of making sure that lower-paid employees share in the benefits provided under these plans, some argue that the level of complexity is excessive in relation to the benefits that lower-paid employees receive. the 2004 proposal outlined a simplified system of retirement savings with three types of vehicles. lifetime savings accounts,

retirement savings accounts, an employer savings accounts. individuals would be able to contribute $5,000 to an lsa. amounts contributed would grow on a tax-free basis. no limitations on who could contribute. distributions could be made at any time, regardless of the individuals aged and could be used for any reason. those individuals with limited means to save might be more willing to contribute to anlsa because they could access the money in the event of an emergency, which is different and making contributions to retirement based system. rsa's, individuals could contribute $5,000 with account

earning scrolling on a tax-free basis. no income limits would apply to contributions. qualified distributions, those made after an individual was aged 58, would be tax-free. all other distributions would be included in income to the extent the distribution exceeds basis. employer retirement savings accounts. it would be available to all employees regardless of the type employee of etiquette. it would follow the existing rules for a 401 k plans, including the limit, and the availability of a broad contributions. rules would be simplified and eliminated if lower-paid employees had high savings rates. although the efforts did not

advance in congress, our efforts to review and recommend a comprehensive changes to the current system was worthwhile. any effort to advance tax reform will likely include a review of retirement savings. if one goal of reform is to simplify the current system, i would recommend the committee examine the work of the office of tax policy during the bush should ministration. thank you for this opportunity. i would be happy to answer your questions. >> mr. john, you're recognized for five minutes. >> at trichet the opportunity to testify before you this morning on ways to ensure that all americans have the opportunity to save for retirement. i am a senior research fellow at the heritage foundation and the deputy director of the retirement security project. this is an issue that transcends ideological and

partisan differences. for those who access to a deduction savings account, the system works well. millions of americans lack credibility. in theory, they could say it in an ira but only 5% sent to seoul on a regular basis. many of these workers who lack the ability to save through payroll deductions are part-time employees of smaller businesses, women, minority groups, younger workers, or all of the above. social security only provides half of the retirement income needs. either we can insure that everybody has the ability to save to provide for themselves or the congress will face demand for additional benefits. those demands will be hard to resist. insuring that all americans have the opportunity save will require hard decisions.

the proposal core automatic ira's would find a simple way for millions of americans. the automatic ira would enable them to save by allowing them to contribute from their own paychecks. the plan is simple for employers and employees. employees would be automatically enrolled in to the automatic ira. it is a process that is proven to build participation, which employees light and under which employees have control of their own retirement savings decisions. to avoid confusion, all of them would offer a three, and only three, investment choices. for employers the plan is also simple. they would be asked to do the same thing they now do except

that the money would go into an ira and senate do -- instead of to the treasury. employers would not be required to comply with other types of regulations that apply to 401 ks. eliminate almost all of the costs associated with an automatic ira. it also includes a tax credits designed to cover any other cost. while the automatic ira is valuable for new savers, it would also be valuable for others to change jobs or from a --mpany that off 401 k for sa offers a 401 k to other companies. under the automatic ira, and they could roll over their 401 k and continue saving. it would also work if they went

to a larger company. this is not a partisan proposal. the concept has been endorsed by a number of publications such as national review and conservative and liberal officials and other types. earlier this year, richard neal introduced h.r. 449, the arm -- automatic ira act of 2012. while the heritage foundation is a non-profit and does not endorse any legislation, a policy contained in his bill would improve our savings system. my written statement also discusses the value of simplifying the current savings accounts so that ordinary americans can better understand them. in addition, a statement discusses proposals to use tax information to encourage taxpayers to consolidate their

accounts if they desire to do so and to include social security administration on an annual 401 k statement so that the countdown has a complete picture of their expected income in time to make a change so they could increase savings and improved their potential outcome. it also discusses a multiple employers to share a platform and a thought or two about retirement savings. i would happy to be discussed them -- to discuss them at any point. i look forward to your questions. >> mr. hardock, you're recognized. >> thank you for the opportunity to speak with you today. i am an attorney with 30 years' experience specializing in retirement plans. i served at tax counsel for the treasury and was the senate finance committee tax counts

responsible for retirement issues during the 1986 tax reform act. this committee has been responsible for every major improvement in retirement savings, including the bipartisan act passed in 2001. the legislation that established a successful framer for defined contribution plans that is still in place today. that bill was co-sponsored by you, german camp, by you ranking member 11, thank you for that. it was co-sponsored by -- cha irman camp, by new ranking member levin, thank you for that. it was co-sponsored by others. it is an area where republicans and democrats have been able to agree and we urge you to continue your support in the context of tax reform.

the current system is working. it is working for the 80% of full-time employees with access to plans. it works for the 100 million americans who have saved a through iras. the first and martin -- most important principle to consider when you discussed tax reform is do no harm. in 2012, 80% of households with defined plans said that tax savings or an incentive to contribute. almost half said they would not contribute at all 20 retirement savings if it were not for their defined contribution plans. today coverage and various other rules insurance of the benefits are delivered across all income groups also providing bounced incentives that encourage business owners to maintain

retirement plans encourage employee participation. any major restructuring of the system that tries to reallocate existing incentives is a gamble we cannot afford to take when dealing with the security of working and retired americans. reducing savings to pay for other initiatives would be counterproductive. proposals that appeared to increase tax revenue from changes in their retirement savings get those additional revenues because individuals are saving less for retirement. making matters worse, short term revenue gains from changes under the current rule is an illusion. when a worker saves less money today, it will mean smaller distribution and less revenue when the person retires. the attack expenditure also does

not paint an accurate picture. the book of the estimated retirement expenditures comes from six savings already in retirement plans and ira's. not from new contributions. that number cannot be turned into revenue. not without taxing the nest eggs of americans. that would be seen as a breach of trust by those who contribute and those employers on the assumption that the money would grow tax free and be taxed on the distribution. the retirement system can and should be improved for all americans, especially those with lower incomes to find it difficult to save. tax reform offers the opportunity to do that by building on the existing system, not by tearing it apart. employee sponsored plans make effective use of payroll deduction, and typically

include employer contribution. more americans need access to those savings plans and all americans should be encouraged to save at higher levels. when area that deserves attention is the automatic enrollment and increase strategies. though aren't -- workers must opt out rather than opt in and where the dog -- default contribution levels are increased each year. these increased participation and savings rates, especially for low-income and minority workers. more employers are adopting these designs each year but greater incentives should be considered. much could be done to reduce the cost of administration. regulations on delivery of notices should be brought into the 21st century to better accommodate electronic delivery. we are ready to work with members to assist members in

continuing its history of promoting savings. >> thank you for that excellent testimony. today is tax filing day. americans have to spend millions of hours preparing their taxes. because our system is complex, not only is compliance complicated, but long-term financial planning is complicated because of bar code. i would like to explore and ask each of you how the tax code is performing in security and employers who want to offer a plan, they have a choice. there are many proposals with different rules. individuals trying to save for retirement have one set of rules, individuals trying to save for health have another system, and families trying to

save for education also have many options. each with its own set of rules. my question is, should the system of existing tax advantaged savings, should those be consolidated to make it easier for individuals to save? do you have an opinion on that? >> most americans are happy with the plans they have. planned participants cannot choose between 401 k, they simply have one. those choices are not difficult and when they come into play they are made by employers. what you get if you try to consolidate is you make everyone reconsider and amend their plans.

that can be disruptive for the individuals and expensive for the employers that have to do that. and other members are concerned about any proposals that would consolidate retirement savings options with savings for other purposes like education or health. most people out -- confusing that message could be counterproductive. >> i understand what my colleagues said but when we talked to multiple small businesses, the number of types of savings plans are confusing. it caused anxiety among small businesses that were considering starting some sort of a plan, especially the ones early in the process. something that would consolidate

or simplify, not the least of which is a simple technique to change the name of the blasted thing. what is a 401 k would be exact -- useful. there is another aspect that you referred to savings for different things. there are a wide variety of types of advantages or treatments. it would be simpler if you treated all savings the same way and exempted it from income without having to have one level for 401 k, one for college savings and others. savings that is not consumption is a valuable thing and should be encouraged. to the point you look at

simplification, it is not just -- it is the matter of savings itself. >> mr. sweetnam. >> let me focus in on the individual savings. one of the things we tried to do was to eliminate the income limits because when you have them, you're not sure whether you are eligible to make a contribution to an ira. if any of you remember prior to the income limits being put on, banks used to stay open on tax day until midnight in order to accept ira contributions. there used to be blinds to make those contributions on april 15. once we put in the income limits, they went away. i think that was one of the

things we tried to do. the second thing we tried to do, and i think david alluded to this, was our lsa proposal. it was a means for people to save and to pull money out of those accounts for any reason. one of the things people have to realize is that people's savings means change over time. young people may be thinking about savings but they may not be thinking about retirement savings. i have a 30-year-old son. what is he saving for a tax saving to buy a house. when he gets older, he is going to be saving for retirement. what we tried to do with our proposal was to give lower

income people, people on the margins, a way to have a tax vehicle in order to savings. -- to have savings. one of the things you have seen, over the years congress legislates to make the difference between the various types of retirement plans less and less and less. what we were trying to do in our proposal was to take the final step. we had all of the plans with the same contribution amounts. we said, let's take the final step and eliminate to the various code differences between the two. congress has been going that

way over the last few years. >> i would like to focus on the employer side of this sanitizing to the individual in that when you're talking to a small employer, it is not that confusing. when you say here is this and this and this. but if you are saying he wanted a retirement plan, he want to have an ira or one that has a trust that your employers are more likely to put your money in. for them, and they cannot pull it out right away. a simple plan, they might run off with it. then you are really talking about how much can you afford and what would you like to do? this is where i get concerned about the proposals for individual savings in that right now we have the $5,000 ira moment and then you can go up

to $10,000 for a simple plan. there are rewards for stepping up and providing better benefits. that is why the system has been working so well. there is a proposal for -- it deferral-only safe harbor of $8,000. what happens is if you have somebody that can put $5,000 in an ira, there is no reason in the world in terms of what they can save for them to put in a simple plan. right now, they have the $5,000 ira. $10,000, there are going into a simple plan. you have to be careful that what you're doing does not disrupt the structure that works well on the individual employer side. when you look at it from an

employer's perspective, there are options. there are things you can do as opposed to the ira or it is telling you when you cannot do something. with the employers, it is, here are your options. >> ebri does not take for -- positions on proposals. i find a lot to agree with what randy and judy said. from an abstract viewpoint, if you look to employers, you introduce a new set of non- discrimination testing if you did something like this. the other thing is many employees are targeted in what they're saving for. what you would need to keep in mind is if you make it amorphous, it is going to be more difficult for any individual to find out whether or not they are on track for a

specific income. >> thank you very much for your testimony. i think this is a hearing that has significance for tax reform for this issue and beyond. while there are some differences among you, some, i think everyone believes that we can improve the system. i think your testimony issues a warning to those who propose to eliminate all tax expenditures or those who equate tax expenditures with tax loopholes.

because this tax expenditure is not a loophole, it is a policy. some have said, let's start by eliminating them all and go on from there. some proposed getting down to a certain point, assuming the elimination of all tax expenditures. do any of you favor eliminating this expenditure? no. >> no. >> no. >> i am not sure this is the way to put it. mr. hardock, you said, after

talking about the importance of retirement savings, for that reason the first and morris important principle we urge the committee to consider -- most important principle we urge the committee to consider is to do no harm. i am not sure i would put it that way but maybe as to this area, that is true and the same is true in other areas relating to policies embraced in tax expenditures. i will leave it at that except to say, mr. sweetnam, i think there is a distinction between what you save for. i am all in favor of support

for education purposes and for buying a house, the proposal to eliminate the present provision on purchasing a home, eliminating that without reference to any income level or anything else is a mistake. but i do think that you feel the retirement structure is more or less working. i think we need to be careful not to lump everything together and to induce the emphasis -- and lose the emphasis on a strong social security system which is added to buy savings for retirement. i think we need that combination

and i think we want to drive home, you mentioned that the percentage who save has improved a bit but we need to try to build that up and not by eliminating so-so security but adding onto it. i think your testimony as importance for this issue and all other issues relating to tax reform. we need to look at it but with care and not with such broad strokes that we would sweep away a system like retirement savings that is working, basically working. >> may respond? >> i think we are having a good discussion. it is important that i do not think anyone is proposing

eliminating this area. the closest thing was the commission on fiscal responsibility, which capped this but did not eliminate this. there is no proposal to do such a thing. >> in the chart on page 29, it has a number of alternatives. including eliminating all tax expenditures. >> that is one reason i voted against the commission. >> thank you for your work you put in the automatic proposal. as somebody from a small business, the first question that many small-business owners will have about any kind of mandated ira is, what is this going to cost me? would automatic iras create any burden on employers who offered

them? >> it would not. it is simple enough that most employers that are covered, 97%, according to studies by a variety of firms, already use some form of a payroll processing software. for those, having had discussions with both of those industries, this would be a new module that would be added. plus the fact there is a tax credit. it has two components to it. one part, which would cover any capital costs of setting up, and the other which would last for six, and could be extended, would provide a certain amount to cover the cost of putting

employees on and off the system. it is a simple, easy to understand system and we found and major insurance company that did research with employees and founded the more they discussed it with the employers, the stronger the support for the proposal went up. >> did the rest of you agree with this? >> i definitely would agree with that. even for those who do not use a current pyrrho provider, we have members who are interested in providing this. the credit should more than cover any costs incurred by the employer. >> mr. john, i and stand your proposal would utilize private financial institutions. in the past, there has been proposals to create a personal

retirement accounts that would be administered by the social security administration. some might argue witte would be simpler for small businesses if this -- would be simpler for small businesses if this was tied together. can you discuss this? >> this is separate from the proposal in 2005 to set up a personal retirement accounts. there is a private sin -- sector funds management industry which works well. we do not see any reason to supplant it by government entity. we do have the ability, if the private sector choate -- chooses to have it, a retirement savings account similar to the bond which has been at a savings account for a number of years.

that would allow them to accumulate $5,000. then that would be rolled into the private sector. we feel that the private sector is going to be more innovative and create more jobs and do a better job of keeping costs lower. >> thank you for holding this hearing and your leadership on these issues and tax reform. as someone interested in pension and retirement issues, i look forward to working with you. and others on this issue. i think we need to make sure that americans have the tools and the education necessary to feel as though they can make the right choices with respect to retirement. one of our panelists did a study.

only 14% of americans are confident to afford retirement. more than half reported they had not calculated how much they will need to live during retirement. you are nodding your head in agreement. those are unbelievable numbers. i have a friend of mine who is a lawyer who took a 401 k plan and and a real-n ira estate investment. it is doing well according to him. verses' others who have not quite an understanding of how much they can put in because of the limits or what they can put it in. my question to all of you, carl start on my right, whether it is

simplification, reform, whatever it is. how do we get more americans to change the 14% number so they have a better understanding and can make better choices and can have that number be something substantial, like the americans who feel they can live and understand what they need. how do we get there? >> i like to think of the american people falling into three buckets. there are people who are not going to save matter what you do. there are people who will save matter what. that is my mother.

then there is almost everyone else that wants to do the right thing, knows they need to save, and does not know how to do it. doesn't want to government telling them how to do it. but wants to do the right thing. strategies like ottawa enrollment send -- auto- enrollment send a signal that these are the levels you should be achieving to get to retirement security. bill's son is saving for his first home. my son asked me, he wants to buy a home. but the money in the 401 k plan first. do people say it for retirement? we need structures and incentives that let people know how much to save. we will see those numbers start

to go up even more by starting them young and getting them involved and changing the culture of saving. >> i have four thoughts and they repeat. you will hear much of the same thing. obviously everyone has to have access. we can talk all you want about doing it on your own but 95% of people do not. the second is to start young. another thing is doc otto enrollment -- is the auto enrollment and escalation. look at the 3% default rate for auto enrollment. people will have the same participation rate if it is 5%, 6%. people think they are doing the right thing and the 3%, that

must be the right amount for them to save. they find themselves in a trap later on. >> when of the things we were looking at when we did our proposals is that we thought, we were trying to harness the industry to do more advertising with regard to savings. one of the things we looked at was eliminating the income restrictions for iras so people in, there would be advertisements for people to do this. we saw this happen when congress enacted the roth ira. i was working on his staff at that time. when the roth ira was enacted,

for all of different types of savings, everybody was promoting it. >> i see we are over that time. >> i think it is an important hearing to have to talk about. i agree, we have the same concern over people's security. i go back and forth between seattle where united airlines has its largest base. most of the flight attendants are 55 to 60 years old. one of them told me a story. i would like to -- you to respond to this. her husband worked for a paint in seattle. washington mutual. one day they close to the bank and he lost his entire 401 k. boom, gone. all gone because it was invested

in the bank. because he was required to invest it in the bank. they have gone through bankruptcy, united airlines. each time they go into bankruptcy, the first thing the judge does is to scrape off the retirement. this woman, who has flown for 29 years, now has a guarantee of $231 a month from a pbgc, on top of social security. middle-class americans who did everything right and they got clobbered by the system. i want to hear that this automatic system is going to protect those people. this woman said, i and my husband are going to work until we die because we have nothing but a social security.

>> the situation is horrible. congress has acted to prevent a company for some employe to put their money into employer stock. that is no longer permissible. you guys did a great job on that. hopefully that will not happen again. the key on automatic enrollment is all of the defaults. one of those is investment. nppa >> you heard him talk about how many people know how to invest or understand. 14%. how in the world can anybody sit up here and sensibly believe that we could design a system that says we are going to give all of your choice, but only 14 term know what there is an? >> most people do not take advantage of that.

i think the key is still having a six year and appropriate default investment. there are changes made. i think there has been a recent study. >> does that mean they have certain places they can put the money tax can they do whatever they want? >> they choose the provider. the type of investment is a find. day fund.e a target date by en there is ample evidence that what ever you say is where most people are going to end up putting their money. >> they could put it into something that is judged to be

by whom? who would say this is a safe investment. >> you define the parameters. >> the treasury will ultimately put the blessing. they will bless the company that will make these investments. >> it would be that the sponsor would be the one that is using their investment adviser. the investment adviser will have judiciary responsibility for choosing a company that provides this. >> who is on the hook if they made a bad choice? any investment counselor would ?e responsible for this ta

>> in theory, there are not many situations where you have a company that the investment has gone down to zero. when you have response of people -- responsible people tousing investment advisers, and there are horror stories. there are more rare. >> this is what you will get? >> this is a whole other thing.

>> this is a very equal important area of retirement security. you need to look at how you can promote responsibility and savings. whatever we do, i certainly appreciate the attitude. can we simplify and yet maintain flexibility? i remember when i was running a small medical practice and focusing on the clinical side of my practice, oftentimes individuals come into work. they have worked somewhere else. they have a retirement account. if they may also have an ira on top of that. there are a variety of rules

that govern this. talk to me about the complexity that these present to a business owner. is this an area we can simplify? >> i will just start by the problem you have described as been around since 2001. it allows individuals to combine when they switch jobs assets from one employer to the next. this was a major improvement in aally made it possible tfor

business owner to take the assets in. it is complicated. you have items that were put in pretax and others that were post-tax. they exist today. the cannot take away anyone's treatment. we have made enormous strides in improving those roles. >> i think there has been awful lot of progress made. i also think if you look at the options that are available, it these days you are more likely to have someone that comes into your practice that also had a 401k plan. there is more simplicity. sometimes we talk about consolidation, in the medical practice maybe there was a 403b.

the rules have been simplified. in most instances, you now will have somebody coming from a similar type plan. i think that really sniff it. there are roles that can be change that make it a little easier. i think we should get rid of the rules that trip people up. they would apply. it is plain common sense. >> if i may, people forget to combine. i have an ira that was rolled over 20 years ago. i keep meaning to roll it into the plan. i have yet to do that. we have seen people who lose their accounts, especially over the years when the employers go out of business and the

providers change. there is a suggestion in my written testimony about a way to use tax and information to allow people to find their accounts and encourage them to combine them. >> are there steps that allow them to have an annuity problems? >> i think this is something that the irs and treasury department are currently looking at. it has been something that policymakers are really looking to give people that ability to address to use an annuity. i am not speaking for the current treasury department are

the irs. i think what they do to eliminate some of the difficulties under the current law to move into this product. i think this is something they have been looking at. >> thank you very much. >> thank you for holding this. i have a question for you. 2013 budgett's proposal includes a capping individuals itemize deductions to 28%. the exclusion under the proposal includes the exclusion deduction for pretax employee contributions to define contributions. given that this is a deferral

and not a permanent right off, resultt eliminating this in double taxation? what are your thoughts on how the president's proposal would affect retirement savings rate and small-business owners ta? >> i appreciate this question. i was very disappointed to see entirretirement savings included. it would mean double taxation. this is a deferral. if you have someone who is at its 31% marginal rates and you are given them 28% cap on that, that they are paying factories are now. when they pull it out, there is the special accounting.

on ite pulling taxes again. it really is double taxation. if you are being honest, why would they want to put themselves in that position? i do think it would be harmful for small-business owners. it will discourage customers. >> your testimony mentioned that following the proposal is simplified this area. many interested parties work concerned about the proposal. it offers a savings vehicle. the 2005 budget proposal address some of those concerns. can you elaborate on what you heard?

>> the others to things that were problems, one in 2004, we had be lsa and rsa amount at $7,500. we reduced it to $5,000. some people might say that i can in my lsa and minels

rsa, and i don't need any further savings their employer provider. we tried to simplify some of the nondiscrimination rules. one of the things we did was we pulled out, we eliminated all the various testing methodologies that are currently available. one person simplification is tother person's opportunity make the various changes. we listened to them. we just reduced the general complexity of the test.

we did not reduce some of the opportunities that small businesses would have been ordered to create more flexible types of plans. >> thank you. i yield back. >> i have a longstanding issue. i work with bill thomas before here is the chairman of this committee. this is not a favor at the time. he carried the rsa proposal. the clinton proposal was an addition to social security. the bush one was a substitute for social security. i introduced this bill five

years ago. at least three of the panelists have already endorsed it. i suspect the other to have some sympathy. this proposal that could raise it by nearly a billion dollars a year, endorsed by brookings. now with hard work we have developed this proposal. it is not everyday that a massachusetts democrat legislation is endorsed by the foundation. we have done just that. but we tell you who else supports it, the aarp. the latinos for secure retirement. putnam provincial. i must say i cannot get one republican to sign on to this legislation.

he was headed in the right direction. he was headed in the right direction as it began to question it. >> we enjoyed working with you. i also enjoyed working with their staff. savings changes behavior. it takes people and it brings them closer to the community. it makes them more future oriented. a variety of cultural changes that are very important.

a second one that is equally important is that they have the alternative. this allows people to start of one company and move to another and continuously save. inevitably, we are going to see the data that he had initially. people do not have sufficient retirement savings. we do not have the money for that. >> can you tell me why you have endorsed the ira proposal? build on the i employer structure. you cannot do this about having an employer involved.

we feel that once employers are used to doing this, they feel comfortable with that. it'll be easier to approach them. once they're in the system they will feel more comfortable moving up. >> de require no matching contribution. 30 years ago, a different story. it to be so easy and so little trouble for the employer to make this work. >> why you liked the proposal? >> we need to do all we can to get more employers. this of be a big step in this direction.

it gives incentives to employers to do that. it is attractive for employers to go in that direction. it is something well worsworth employers doing it. >> thank you. >> thank you. i want to thank our witnesses. we have 10,000 baby boomers retiring every day. a lot of them are very uptight about they are planning on retiring with all the concepts they have. now they're getting to the point that they can retire.

what can congress do to help bring a little more security and dignity? what would be one thing that we could do that we are not doing to make a difference? i am slowly getting to that age where friends are concerned. they're working longer. >> we're talking about baby boomers. there are catch up situations. it is still very good.

it is really important to engage in a number people. we need to look more at the delivery of things. we're very supportive of disclosures. people do not necessarily a book there. if we could approach people more was something that is interactive, it should be easier for them to plan and get engaged. it does allow you to enable more electronic delivery. >> we are talking about where they are at. they rely on social security.

>> if you reach for 6546 economy do not have the flexibility. we have a second crisis that is coming with the baby boomers. the first, not having enough money. the second is not managing an appropriately. they are even more worried when they're 85. >> in terms of congress, i am concerned there are a lot of small employers of their where employers would like to have some kind of employers.

what incentive can we help a small businesses in terms to make sure that as many provide some type of retirement package? >> i think many members of this committee are supporting incentives and start of credits for small business. they are sending that signal. we will help you with that. i think he has this in. others in the past have supported it. they can easily be expanded. that is where our problem is. this is partly because of the cost. it is amazing how expensive it is to send out of this paper. >> thank you. back.leyield is

>> you both state that despite what some may claim, study shows tax incentives for savings and retirement are quite progressive. what would be the effect on progress if you lower the top marginal rate to 25%? >> that is a very complicated question. it depends onin part on what you have done. it is a pact that as it decline, there is less consensus for tax deferral. you're saving less money when you contribute. there are other competing ways

to save. it depends in part on what is happening with gains and dividends. if you have the tax, it becomes very difficult to incentivize an employer to put in a plan unless you have a target if tax credit or some other specific benefits. i think this is something that is particularly sensitive. there are also declined. you have to be careful not to give it a double hit. maybe you need to increase the contribution limits in order to maintain an incentive there.

>> thank you. >> i like to just amplify this a bit. we had done some work last summer, looking more at the some symbols type commercial. i think a lot of this could be expanded if you are reducing the marginal ones. you are changing the talks later of providing that to the employers. -- employees. judy has a grass that actually shows as much as an 11% decrease in the number of small plants because of the 20/20 limits. we could very easily modify that to look at the impact of decreasing it could be.

i will get back to you on that. >> i think we would be interested in that. that is an all of our proposals. what would be the overall effect on retirement savings of adopting the 2020 proposal? >> i am not a macro economist. i'm not really modeled it. >> we have a figure that takes a look at what would happen. as the biggest hit would be on this. we found that people if it were applied today would have about 815% reduction on average on

their retirement balances. what comes as a surprise to many is that the second-biggest hit actually comes on the lowest income poured tile. that is because of the 20's because of the 20,000. a lot of times people will come back into the work force later. they may find that because of ketchup or what ever they have the ability to put much more of their one in. they end up turning the 20's term as opposed to the high income that trigger the 20,000 -- 20% as opposed to the high income that trigger the 20,000. >> i think that is understated. small-business owners would have about zero incentive for pretty

a plan in. the safe harbor executions would be gone. i think that really understands the negative impact. >> thank you. >> thank you. >> thank you for holding this hearing. >> there are folks up there that can benefit for some good work. i want to follow up on a couple of questions that were asked by other members. you mentioned that employers to do not offer any sort of and chairman plan site business concerns. does your research show any

downturn of the folks that were offering its? >> i do not have any data on that. the plan is gone. employers say they're putting this in. there are a few of top line reasons. they do not think the employers care. if they say give me cash, and the employer would rather just give them cash. small businesses are notorious for not lasting very long. if you are not sure you're going to survive, and then you are hesitant to do something that says i have arrived.

most commonly the issue is that they do not feel they can afford to make a contribution or to promise to make a contribution. they will find that employers really do appreciate it. wicking kind of get over a couple of hurdles at the same time -- you can kind of get over a couple of hurdles at the same time. >> i told him i was co-author this bill. is anything there that knocked your socks off? >> they were both good and bad.

if they nipponese zealand, new zealand's has a form of the ira. the only have three -- if you look at new zealand, a new zealand has a form of the ira puree to the only have three. the one that is a huge mistake if the united kingdom. they went through. back in 1997, they increase the taxes of retirement plans by about 5 billion pounds a year. the net result was a collapse. the u.k. continuously tinkers. they said the program. they have a brilliant program that starts to go into effect this fall. the government just announced within the last week for so that they're looking at a completely different approach. it breeds confusion and distress.

>> is there anything we should take from different programs that you evaluated and look at? >> they start people young and keep them saving their out. australia has a mandatory system. it works exceedingly well. it is possible to do a very simple system like the ira and keep it sheet. we studied overseas systems very extensively. >> thank you for being here. >> thank you. obviously, if the goal in this whole thing is how do you make it simple and easy to pick the right plan.

part of the testimony you talked about simplifying things and having an automatic ira. my question to you, and a simplification come first? do you do this and then do simplification after its? >> given the simplification, it is crucial because the people do not save and not get started early on, it does not matter if you simplify its are not? >> i have one out of the box question. people are going through different jobs.

a lot of younger people have been to two or three different employers. here is what they are offering. has there been anything out of the box? they would make the decisions on what is the right package for them. as they went in and out of different careers and jobs, employers might pay into their individual plan rather than the sponsor plans. >> there have been some examinations of that. key factor is that most people do not have the expertise to make that kind of choice. this is the value of the

employer sponsored plan and the payroll deductions. as time goes on, a proportion of people who started out in auto enrollment took more control over their activities. >> i think it is very hard to motivate an employer to participate in that kind of an arrangement. they are looking at the tax benefits. they're also looking at what works for their company. it is forgotten when talking about a simple plan. employers still use schedules. if they're putting on a contribution, it might be fully

vested because it is a safe harbor. they do not like the idea of giving money to something that is going right away. the money will not necessarily be vested right away. it will divest after a few years or graduated schedule. there is the flexibility that they have. >> thank you. to follow up on his sentiment, one of the issues icy is the need. we talk about employers and the government. they are the ones to choose the individuals. they have this attitude appear that i tried to fight every day of washington knows best, just

trust us. i want to get to the ways to try to enhance individual accountability. people are allowing them to control their own destiny. are there things we can be doing to encourage literacy and comes to financial planning? any ideas or thoughts from the panelists and where we can change the mindset of individuals as they go into the workplace? we need to have something in the bank to take care of us. >> all of the back to the electronic delivery in getting people engaged. there are some amazing things going on in terms of enrolling people and having their own individual information set up on their ipad are setting them up. they'll see what it is really

going to be like. there are constraints on how everything has to be handled right now that minimizes what you can do. it almost ties -- this market is incredibly creative. it cannot always do what it needs to do. >> can you give some examples of those constraints? regulatory tax affects their regulatory constraints. we have all this paper that is due out for disclosure on investments. it is going to be where we support the disclosure. people are going to be getting a stack of paper. i do not think they will read it. if you were able to have their e-mail address, we get people at work and e-mail address. you cannot use that as they are not routinely -- if that is not

routinely part of their job. they have may use part of the web site. he should be able to drive them to the web site. once they're there, there are fun things you can do. right now you have to send them the sack of paper. it is really a major expense. it really discourages creativity and a truly engaging people that are so much into electronics. if we cannot deliver this information on their iphone, and they are not reading it. >> i agree with everything judy has said. there are other areas. the u.k. has a thing called the platform which combines a retirement savings account.

one of the things that they found that works exceptionally well is that because the employer knows how old this employee is and what stage of life they are common they can shoot them little target of videos. if the individual has a child, if they can shoot a video about what you can do to start saving for your child's future. if you just married coming here is what you can do to start saving for a house. we found studies that these work exceptionally well. they work better if the person who is recorded is someone that is a co-worker. >> what about the elementary school? any thoughts of? >> my older daughter he was 25 went through one of the finest high schools in the united states in montgomery county.

she took a variety of courses in photography and cooking. she did not have to take a single financial literacy course. >> that is a great point. >> mr. lewis is recognized. >> i want to apologize to members of the panel. i had to run out and speak to a group of eighth grade students. bake at me for a while. i heard your testimony. i want to thank you for being here. i thank you for your service. it is good to see you again. thank you for all that you do. many of the people who criticized this argue that there for the wealthy. these laws favor high income

people. if you finis to beecher? do you have any ideas as to how we can -- do you find this to be true? see you have any idea is to make it easier for people to save for retirement? >> that is a question. if you look at this, there is a cap on compensation that can be considered. it is 250,000. i cannot help but think we have already capped it. we are testing for nondiscrimination. someone might make a million dollars but when you are comparing this, use the 250,000. we are have something that is built in. if a business owner wants to put

in the maximum of $50,000, those workers are going to be getting a contribution. they're going to be getting employer money. there really is additional money. there have been some people who say you not be getting that anyway. if there is a 401k plan, it is new money. it is a matter of getting access to more people. something like the ira program that will make these arrangements available to more workers. >> he mentioned and that another

time that -- you mentioned that in another time the banks would stay open. i had all my hair. this is before the banks closed. what happened to that. ? what happened? >> that was one of the things that we proposed doing in the bush administration simplification proposal. we put income limits on who could make contributions to the iras. when we were seeing the lines going in and the bank staying open, it meant that everybody could make a $2,000 ira contribution. not everyone can not make a

$2,000 deductible. it depends on whether they have -- what they're modified it just adjusted gross income as. i two pages worth of charges that talk about who can and cannot make contributions. before you did not have that. everyone could go. the banks could say come on in. we will set up your ira. that is the difference now. >> thank you. >> could i yield the balance of my time? >> there's only 30 seconds. >> thank you. >> thank you. with had a lot of the discussions. i appreciate the testimony.

we're not talked about the stock ownership programs that enable workers to accumulate substantial amount of retirement savings. there are studies that even showed the value of the accounts could have been worked there. there would average $100,000. you compare that to $45,000 of an employee with an average for a 1 k account. the statistics show up these have been successful when it comes to their requirements. should congress make sure that we protect this in the context of retirement the calls as we tackle tax reform an attempt to simplify the contribution system? >> money looked at the

simplification, we bought that it was probably fine. we did not try to modify them at all. a personal thoughts are i dealt with these options. they provided very good benefits. one of the things that you're hearing from everyone here is that we should not be cutting back on retirement benefits. these are an important benefit. i think everybody is fine with continuing on. >> should they be used as a

model? >> i think it is important to maintain them. i am not sure you can say they are a model. it does not always fit the situation. it's it's alongside other retirement programs. >-- it sit alongside other retirement programs. >> there are rules apply to 401 k plans to make sure they can benefit from these plants. can you talk about how these rules work? >> i can speak to this. most commonly, if you're dealing with small businesses, a problem

there at capt. has said those see so and so about putting this retirement plan. they're finally making some money. i have this $30,000 sitting there. they can use some of the tax savings to meet the requirements for other people. then you say to them you can take this bonus home. you can write out a check to uncle sam for 31% of its. or you can put in this plan and give that money. speaking give it to your employees. most of the time, they are very eager to have it themselves and

to help their employees save as well. the tax incentive is a key part of it. you have to show them how it can be better used. >> anyone else ta? >> thank you. >> thank you very much. i apologize. i been in the budget committee defending the interests of the ways and means committee. >> thank you for that service. >> it is a pleasure. i am sorry that i was the able to be more of a part. it strikes me as something where our time is well spent. with all of the beggaries, retirement security seems to me to arrange a very large.

we are looking at the big picture at things that encourage employers to provide a range of choices. i know at times it may be bewildering. that is why i have supported the enrollment. it is why i and the co-sponsor on the esop. i was struck by something about the experience in great britain. the careful about tinkering and taking an already confusing system. with all the best of intentions changing its again. it seems to me that with your help and advice, there is zeroing in on this.

i think the investments that have been made could have made retirement savings, insurance. these are things that a lot of people are relying on. it takes a while for the consumer to be educated i wanted to express my strong support for the committee working on this for the advice and counsel about refinement at a time when americans have hit talking you

water economically. millions of people have lost what they thought was the value of their home. maybe it was artificially inflated. they are talking about refinement not tinkering. they have innovative approaches that have continuity and follow- through. i appreciate the courtesy. i'm sorry i was not with the more. i think the contribution is very important. this hearing is very important. >> thank you. to another member, dr. price.

i want to thank you for your testimony on what i think is an incredibly important issue. i want to hone in and asks y yo folks tell me there are instructions and sue the employer and the employee being able to contribute to what may be a more open flexible. if you have to identify the greatest impediment for setting up a flexible responses retirement plan, what would that be? >> i will focus on their response a part of that. one of the major improvements we

have had since 2006 is the increase adoption of automatic enrollment an escalation. a number of employers have a perce automatic escalation. it currently has 10%. if you talk to most financial planners, they would say that in addition to what the employers probably matching 3%, it you need, especially for employers tours starting this late in their careers, something more than a 10th term contribution. i think if there are ways to have employers increase the defaults contribution rate would allow those employees who want

to have their contributions to escalate over time to go beyond the 10%. >> on that same issue, there is some data in the testimony that shows that when you do that it is like telling your kid that "c" is a good enough great. if you set it higher, you do more. they see the bar. they say that is what i'm supposed to do. >> auto enrollment is not as popular with smaller employers as it is other ones. it is too easy. it is too easy to trip up. then we get hit with penalties. we need to take a look at some issues that would make it easier

for small employers to do this kind of thing without incurring additional expense. if you're automatically enrolling, once on completes their service, you sign them up. sometimes you forget that it passes. you get to the end of the year. whoever is doing it works. if they happen to only have this, it is ok. if they were out for close to a year, the small business owner not only has to put in what ever match they would have made, the have to put in the enrollment contribution. they do not want to bother. they also have top-heavy rules.

there's minimum contribution of three% of pay. they have to make a contribution for everybody. they are constrained by these things that are particularly difficult. >> there has to be this right balance. would you say this balance has been struck right now? >> there is room for improvement. >> great. i would appreciate each of the panelists if you desire to follow up on those score, identifying what it is less

helpful to employers and employees. thank you. >> i want to thank our panelists for excellent testimony today. some good testimony was transmitted. this hearing is now adjourned. eighth detailed informationt every cabinet member, supreme justice, it is available for $12.95 shipping and handling. coming up next, president obama announces a plan that restricts speculation on the oil market.

>> this weekend on " tv, live coverage from the los angeles times festival of books. 2:00 eastern on saturday and sunday. at 7:30, call in with your questions for stephen -- steven ross. a panel on surveillance and it secrets with laurie andrews. >> president obama has announced a new plan on oversight of oil

markets. $52 million proposal would require congressional passage before it can take effect. >> good morning, everybody. lately, i've been speaking a lot about our need for an all-of- the-above strategy for american energy -- a strategy that produces more oil and gas here at home, but also produces more biofuels and fuel-efficient cars, more solar power and wind power and other sources of clean, renewable energy. this strategy is not just the right thing to do for our long- term economic growth, it's also the right way for us to reduce our dependence on foreign oil right now.

it's the right way for us to put people to work right now. and ultimately, it's the right way to stop spikes in gas prices that we've put up [with] every single year -- the same kind of increase that we've seen over the past couple of months. obviously rising gas prices means a rough ride for a lot of families. whether you're trying to get to school, trying to get to work, do some grocery shopping, you have to be able to fill up that gas tank. and there are families in certain parts of the country that have no choice but to drive 50 or 60 miles to get to the job. so when gas prices go up, it's like an additional tax that comes right out of your pocket. that's one of the reasons we passed a payroll tax cut at the beginning of this year and made sure it extended all the way through this year, so that the average american is getting that extra $40 in every paycheck right now. but i think everybody understands that there are no quick fixes to this problem. there are politicians who say that if we just drilled more then gas prices would come down

right away. what they don't say is that we have been drilling more. under my administration, america is producing more oil than at any time in the last eight years. we've opened up new areas for exploration. we've quadrupled the number of operating rigs to a record high. we've added enough new oil and gas pipeline to circle the earth and then some. but as i've said repeatedly, the problem is we use more than 20 percent of the world's oil and we only have 2 percent of the world's proven oil reserves. even if we drilled every square inch of this country right now, we'd still have to rely disproportionately on other countries for their oil. that means we pay more at the pump every time there's instability in the middle east, or growing demand in countries like china and india. that's what's happening right now. it's those global trends that are affecting gas prices. so even as we're tackling issues of supply and demand, even as we're looking at the long-term in terms of how we can structurally make ourselves less

reliant on foreign oil, we still need to work extra hard to protect consumers from factors that should not affect the price of a barrel of oil. that includes doing everything we can to ensure that an irresponsible few aren't able to hurt consumers by illegally manipulating or rigging the energy markets for their own gain. we can't afford a situation where speculators artificially manipulate markets by buying up oil, creating the perception of a shortage, and driving prices higher -- only to flip the oil for a quick profit. we can't afford a situation where some speculators can reap millions, while millions of american families get the short end of the stick. that's not the way the market should work. and for anyone who thinks this

cannot happen, just think back to how enron traders manipulated the price of electricity to reap huge profits at everybody else's expense. now, the good news is my administration has already taken several actions to step up oversight of oil markets and close dangerous loopholes that were allowing some traders to operate in the shadows. we closed the so-called enron loophole that let traders evade oversight by using electronic or overseas trading platforms. in the wall street reform law, we said for the first time that federal regulators will make sure no single trader can buy such a large position in oil that they could easily manipulate the market on their own. so i'd point out that anybody who's pledging to roll back wall street reform -- dodd-frank -- would also roll back this vital consumer protection along with it.

i've asked attorney general holder to work with chairman leibowitz of the federal trade commission, chairman gensler of the commodity futures trading commission, and other enforcement agencies to make sure that acts of manipulation, fraud or other illegal activity are not behind increases in the price that consumers pay at the pump. so today, we're announcing new steps to strengthen oversight of energy markets. things that we can do administratively, we are doing. and i call on congress to pass a package of measures to crack down on illegal activity and hold accountable those who manipulate the market for private gain at the expense of millions of working families. and be specific. first, congress should provide immediate funding to put more cops on the beat to monitor activity in energy markets. this funding would also upgrade technology so that our surveillance and enforcement officers aren't hamstrung by older and less sophisticated tools than the ones that traders are using.

we should strengthen protections for american consumers, not gut them. and these markets have expanded significantly. chairman gensler actually had a good analogy. he said, imagine if the nfl quadrupled the number of teams but didn't increase the number of refs. you'd end up having havoc on the field, and it would diminish the game. it wouldn't be fair. that's part of what's going on in a lot of these markets. so we have to properly resource enforcement. second, congress should increase the civil and criminal penalties for illegal energy market manipulation and other illegal activities. so my plan would toughen key financial penalties tenfold, and impose these penalties not just per violation, but for every day a violation occurs. third, congress should give the agency responsible for overseeing oil markets new authority to protect against volatility and excess speculation by making sure that traders can post appropriate

margins, which simply means that they actually have the money to make good on their trades. congress should do all of this right away. a few weeks ago, congress had a chance to stand up for families already paying an extra premium at the pump, congressional republicans voted to keep spending billions of americans' hard-earned tax dollars on more unnecessary subsidies for big oil companies. so here's a chance to make amends, a chance to actually do something that will protect consumers by increasing oversight of energy markets. that should be something that everybody, no matter their party, should agree with. and i hope americans will ask their members of congress to step up. in the meantime, my administration will take new executive actions to better analyze and investigate trading activities in energy markets and more quickly implement the tough consumer protections under wall street reform.

let me close by saying none of these steps by themselves will bring gas prices down overnight. but it will prevent market manipulation and make sure we're looking out for american consumers. and in the meantime we're going to keep pursuing an all-of-the- above strategy for american energy to break the cycle of price spikes year after year. we are going to keep producing more biofuels, we're going to keep producing more fuel- efficient cars, we are going to keep tapping into every source of american-made energy. and these steps have already helped put america on a path to greater energy independence. our foreign -- our dependence on foreign oil has actually decreased each year i've been in office -- even as the economy has grown. america now imports less than

half of the oil we use for the first time in more than a decade. so we are less vulnerable than we were, but we're still too vulnerable. we've got to continue the hard, sustained work on this issue. and as long as i'm president we're going to keep placing our bets on america's future -- america's workers, america's technology, america's ingenuity, and american-made energy. that's how we're going to solve this problem once and for all. thank you very much, everybody. >> wednesday, a look at the cost of gasoline. frank pallone talks about efforts to oversee oil markets.

more on the issue with the republican from georgia. later, james bamford on the building of the and as a data center. >> jury selection began on the retrial of roger clemens. >> let me read to you what his wife said in her affidavit. i do depose and state in 1999 or 2000, and he told me he had had a conversation with roger in which roger admitted to him using human growth hormones. once again i remind you you are

under oath. he have said your conversation never happened it. if that were true, why would he remember and the telling her about the conversation? >> once again, i think he really -- does not remember about the conversation we had. if he was knowingly knowing that i had taken hgh, who would have talked about this subject. >> watch the 2008 testimony online at the c-span video library with over one quarter century of american politics and foreign affairs and your computer. >> you are watching are watching2 with politics and foreign affairs. on week nights what's key policy even send every week and -- past

schedules. >> the outlook for the global economy has improved according to the international monetary fund which released their economic forecast. while the united states is expected to have slightly growth, europe will see the economy shrank as it deals with the debt crisis. >> good morning everybody. welcome to this press conference on the latest world economic outlook. this is a live on the record press briefing. let me introduce the panel.

today we have with us descressin. next is mr. tom helding. i will pass this on. he will give some opening remarks. we will open the four to questions. >> good morning to all of you. i hope my voice will last for the duration of the press conference. i apologize to you if it does not. for the last six months, the world economy has been on what is best described as a roller coaster. in the fall, a european crisis

became acute threatening another lehman size the event and the end of the recovery. strong policy measures were taken. new governments came to power in italy and spain. the european central bank injected badly needed liquidity. things have quieted down since. one has the feeling the that at any moment things could get very bad again. this very much shapes our forecast. our baseline forecast as you will see in a minute his for an advanced countries, especially in europe. we have a downside risks being extremely present.

the baseline forecast -- the assumption that another will be avoided. uncertainty will linger on. it recognizes that even in this case -- even in the absence there are still very strong breaks and advanced economies. amid talk about those briefly. fiscal consolidation, it is needed. it is clearly weighing on growth. bank the leveraging. is also needed. it is leading to tight credit. in many cases also in particular in the united states, some households -- not all, but some

are burdened with very high debt. this leads them to have low demand it. how are these reflected in our forecast? let me give you a few numbers. we forecast growth of 1.4% in 2012. 2% in 2013. these are low numbers. for the united states, the numbers are 2.1% for 2012 and 2.4% for 2013. where things are worse are for the euro area where the numbers are -0.3% for 2012 and 0.9% for

2013. this negative number for the euro for 2012 reflects negative growth in countries such as italy and spain and positive growth in germany and france. within the baseline, let me turn to the merging and developing economies. our forecast for continued strong growth are somewhat lower than they had been in the past. for many countries the challenges come mainly from the outside in the form of lower exports to advanced countries because of these volatility of liquidity prices. and the high volatility that we have continued to see. our forecast reflects the belief

that they will be able to handle these challenges by using appropriate tools to deal with the volatility of capital flows and in the high domestic credit growth. let me give you a few numbers here. our forecast for 2012 are for 8.2% for china. 6.9% for india. 3% for brazil. these are roughly the same numbers as we gave you in january of last met. our forecast for russia as 4% which is higher than it was last january. we turn for developing countries like sub-saharan africa, our forecast is for continuing strong growth at 5.4%.

putting things together, this forecast implies -- forecast for growth improving to 4.1% for 2013. you may want to ask, how does this relate to our forecast as of last january and september? it is about 0.2% higher than forecast in january. about 5% lower than they were in september. let me turn to the risks. the geopolitical tension effecting the auto market is surely a risk. the main risk remains that of another acute crisis in europe. the building of the so-called

firewalls, when it is completed, will represent major progress. but by themselves, firewalls cannot solve the difficult fiscal competitiveness issues that some of the european countries face. bad news on the macroeconomic front. the risk of triggering the type of dynamics that we saw last fall. this takes me to the last part of my introductory remarks, which are implications for policy. first about the baseline and whether they can be made stronger. most of the policy debates center around how best to balance the short-term effects of fiscal consolidation of bank the leveraging against defects

in the long run. in the case of fiscal policy, the issue was complicated. it is further complicated by the fact that the markets appear somewhat schizophrenic. asking for fiscal consolidation but asking adversely when consolidation leads to lower growth. we think the advice is the same as what we have given before. while some immediate adjustment is needed for credibility, you cannot just say, i will do it tomorrow. the search should be for credible long-term commitment. you do this by passing measures that decrease spending and by putting in place fiscal rules that reef -- reduced deficits

all the time. designing such a in a immediate plan is especially noticeable in the united states and in japan. turning to bank the leveraging. it is to make sure there is the leveraging. it does not lead to a credit crunch at home or abroad. public recapitalization of banks should remain on the agenda. to the extent it would increase credit and activity, it could easily pay for itself, more so than most ever -- most other fiscal measures. turning to policies aimed at reducing risk, the focus again is clearly on europe. the measures in response to the crisis will present important

progress. measures must be taken to decrease the links between sovereigns between the states and the banks. now that the fiscal pact has been introduced and is being put in place, euro countries should explore the scope for introducing sovereign bonds. finally, taking one step back, perhaps the highest priority at this point, the most difficult to achieve is to increase growth and decrease unemployment and advanced economies particularly in europe. it not only makes for a subdued baseline forecast and lasting unemployment, it also makes for

a much harder fiscal adjustment and much higher risks upon the way. the search for fiscal returns that help in the long run but do not depressed demand in the short run should be very high on the policy agenda. thank you karen >> just want to let you know that the opening remarks will be available to you at the end of the press conference. we opened the floor to questions. please identify yourself and your affiliation. >> i would like to address what you call in your introduction the holy grail. take the case of spain where you have austerity have commentators

on the right and left calling this insane. with house prices declining there is a lot of forecast that says the fiscal problem in spain will worsen. is it correct for the ecb and other european institutions to insist on further austerity when growth is not even on the radar screen. >> i will star with answers specifically and that spain. there certainly is a need for fiscal adjustment in spain. the deficit is very large. reducing it is more akin to america than spain. we fill the spanish government has the right balance between supporting growth in moving forward with fiscal consolidation. at the same time, it will be very hard -- it will be very

important to do something about reforming the labor markets. they have dealt some strong demands. the key is implementation. finally there is the financial sector which needs to increase its capital and liquidity. they are good plans that need to be followed through. you might say there is no light at the end of the tunnel. i think we disagree there. there are various indicators that are turning around and assuring the policies are working. he see the current account deficit in spain having narrowed quite considerably. second, you see the prices have slowed down. this is all part of rebuilding competitiveness. third, the fiscal deficit is going to be much more this year than it was a couple of years back. before growth and will return it will take some time.

these are all prerequisites to get it going again. we expect by 2013 growth will be positive again. >> let me take the more general issue of fiscal consolidation in europe. many of these countries face two challenges. the first one is fiscal consolidation. the second is competitiveness. fiscal consolidation is needed for the long run. in the short run it is not conducive to growth. it is no great surprise that fiscal consolidation is not leading to positive growth this year. the other question is not whether there should the fiscal consolidation or not. there should be. the question is at what speed. with spain the question is complicated by the question of markets. when we look at what spain is

doing in terms of the measures the are taking. for example, improvements in the relations between regional governments in the central government, we think these are the right ones. what we would not like to do is more fiscal consideration than that. if activity were to slow down, we would be reluctant to agree to further fiscal consideration. where possible, stabilizer's should be left to play. this is a remark about spain and other countries as well. >> the gentleman back there. >> financial times deutschland with two questions. mr. glenn charged, you said --

mr. blanchard, could you explain how you would avoid problems and the economic outlook says there is further scope of monetary easing in the eurozone. what would you say to countries like germany, where there are fears of the beginning of price bubbles in the housing sector? >> on the first one, clearly, if you are going to have a common bond market, you want to make sure that the fiscal policy of those countries is responsible. before there was a fiscal pact, i could see the extreme reluctance of some countries to participate. the european union now has agreed to a fiscal pact, which is a very tough one. i think most countries intend to

abide by it. in this case, the moral hazard is limited. i do not think there is the degree of trust and control which would allow for a common eurobond market as a whole. i think this is a goal, not something that can be done overnight. there are a number of proposals around which are more limited in scope. and decrees or even eliminate the moral hazard. one that strikes me as a good first step, none of these are the solution to our problems, is a set of euro bills. having common euro bills with maturities of less than a year to the market. that would be a very useful step in the construction of the euro bonds market. there is a german proposal with -- which also makes a lot of

sense in trying to deal with moral hazard. we should start, now that the fiscal pact is in place, there is more room for thinking about this all along these lines. it could make a substantial difference to the functioning of the eurozone, starting as soon as it is put in place. on monetary policy, if i remember, monetary policy is not aimed at making germany right or wrong. it is aimed at the euro area. the goal of the cb -- of the ecb is to have euro inflation remain within the target. this is its job. if this leads to pressure in one country or another, we tend to think of this as largely desirable, that the country's doing better have a relative increase in prices. the countries that are doing worse have a relative decrease. that is part of the adjustment.

if it leads to bubbles in the financial market, then it seems to me that countries in which this happens should use the credential tools they have to address the issue. this is not for the ecb to do by itself. the ecb should not be concerned about inflation in germany as opposed to inflation in the eurozone. this is my insight. >> thank you. that woman over there, of the lady in blue. right there. >> i have a question on the outlook of italy. you present a figure that is 1.9 minus 1.9 for the year. i want to elaborate on the

reason -- i want you to elaborate on why it is going better, why it remains the worst performer in the eurozone and what should be done to close this gap? >> we have moderately revised up the outlook for chilly mainly because tensions in interned -- in financial markets have been somewhat and because the global outlook is slightly better than what it was in january. it still remains one of the worst performances in europe. 2012 will be a very difficult year for italy because they are implementing, rightly, about half of fiscal adjustment. this will weigh on growth but put the economy on trajectory for a stronger growth in the

future. like in spain, they are very -- there are positive steps being taken with respect to reforming the labor market. these reforms need to be pushed through. the third ingredient is to, again, increase the capital and liquidity rates of the italian banking system. we believe that the policies have taken a decided turn for the better in italy, that the right policies are being pursued. now it is a matter of being steadfast and we expect growth to return in 2013. >> back there. >> i am from argentina. i have questions for you. the focus for argentina's 4.2% for 2012, i want to know if that

is the official figure for -- or if you have some other information to do this focus? also, the difference between private statistics you are using and the official one, the index one. that is the first question. the second is about the announcement that the president issued late yesterday, announcing she was going to nationalize 51% of the oil company. i wanted to know what effect this will have been forecast. taking into account that it will upset the investment platform. thank you. >> thomas. >> starting with the investment climate, i think there has been

some deterioration in the investment climate in argentina over the past few years. that is already built into the forecast. in general, and discretionary government intervention worsens the investment climate, makes it more unpredictable, not helpful for investment and long-term growth. in terms of our forecast for argentina, our country desk uses those -- uses both official and unofficial figures. the difference is the largest in the area of inflation, where argentina has been asked by the imf to improve its inflation figures. >> thank you. i will go all the way back there and we will come to you.

>> i am from dow jones. i know from experience that self-critique is difficult. but i am wondering if the imf now believes that it is pushed for fiscal consolidation in the last year was too strong and now europe is reaping the-benefits -- the negative benefits or whether the imf suggested appropriate fiscal balance and now europe is just too aggressive? >> self-critique is always difficult. but it is not relevant in this case. if i look back at what was said since the beginning of the second phase of the crisis, the

consolidation phase, it has been very explicit about two things. the first one is what is needed, fiscal consideration. the second is that it should come, for the most part, from a steady improvement of the medium term, fiscal consolidation, putting in place rules that slowly decrease spending and deficits. it has recognized that some initial measures have to be taken for credibility quite apart from market pressure but even more so on the market pressure, and these principles, very clearly stated in a peace which came at the very beginning of the fiscal consideration of the amendments, we are sticking

to it. what is the central is for governments to have a credible, medium-term plan. if you do not have a medium-term plan that is credible or you do not have one at all, then you will fall -- it will fall to markets to consolidate quickly. this has effects on growth. the answer is not that you should do this but that you should go back and try to find medium-term measures which are going to be credible and make a difference. we have been very consistent on this throughout. >> that gentleman there and then you and then you. >> i am general morella is from the philippines. -- morales from the philippines. what is the faster growth

outlook for next year and what are the downside risks for this? what needs to be done for the philippines to of faster growth? maybe even faster than its neighbors? thank you. >> the philippines growth is projected to increase to 4.2% from 3.7% last year. there are various factors behind that. this is an environment where global growth is pretty weak. supporting growth is strong domestic demand. strong government consumption, and the implementation of various public and private partnerships. in terms of the philippines' performance relative to its

neighbors, a key element is basically strengthening investment, both infrastructure investment by the public sector and improving the business climate so that private investment strengthens. in terms of risks, the main risk externally is a read- intensification of the euro area crisis. we have estimates of what impact such a scenario might have and our estimates are that it could lower output relative to our baseline by about 1.25%. >> thank you. >> mario allyson of the guardian. i have a question in three parts. what are the chances of a country in the eurozone deciding they have had enough of austerity and leaving the euro altogether. if that were to happen, what with the contagion risks for the

rest of the eurozone be and what would be the impact on the global economy? >> we are working on doing everything possible so that this does not happen. my sense is that if i look even in countries like greece, to public opinion, there is very strong support for staying in the euro. the euro has costs and benefits at this stage. we see one of the costs, which is the adjustment, especially the competitiveness adjustment as harder and we tend to forget the benefits. people are aware that the euro has changed their life in many ways. for the moment, there is no plan be. we are doing whatever we can to help countries succeed within

the constraints of the euro. the cost to any country of leaving the euro would be extremely large. it would surely lead to, at least in the short run, a very large dropping out. on the contagion risk, this would be one of, if it were to happen, this would be one of the circumstances where the fire walls would be needed. the issue would be if that country goes out, what happens to the others? there would be pressure in a number of sovereign bond markets. the issue would be what to do. in that context, being able to give reasonable financing to the other countries would be the central.

-- would be essential. if this was done, the damage to the world economy would be limited. i want to repeat a that we are working in a scenario where countries stay in the euro and adjust. >> thank you. the gentleman in the second row. >> i am from palestine. i would like to ask about the forecast for the arab countries in light of the crisis in europe and arab spring. how do the arab spring and the crisis in europe affect the economies? >> in terms of the impact on the outlook for the arab countries, it is helpful to distinguish between the oil exporters and the non-oil -- the oil importers in the region. starting with the latter, 2011

has been a difficult year. on the rest, not in all countries, there has been a contagion, so to speak. declines in confidence, uncertainty which has undermined investment, which has held back aggregate demand from these economies. at the same time, there has also been declining tourism for a number of countries. eight countries directly -- in countries directly affected by the unrest and in other countries. exporters of oil have been less affected except in the case of libya, as we know. they have benefited from higher oil prices. a number of oil exporters have increased oil production, notably saudi arabia, which has provided a boost to growth in 2011. looking forward, we see the oil

importers, we see a restoration of confidence, which will bring some relief on investment, on the domestic private demands. it should also bring a return of tourism slowly over 2012-2013. what will be weighing on growth is that the uncertainty has also led to uncertainty about policies, has put pressure on exchange rates, in part, and has necessitated fiscal adjustment. there will be some fiscal adjustment. for example, if you look at jordan, there has been some reduction in subsidies on food is manager items -- on food expenditure items, which will reduce private expenditure. in contrast, the higher oil prices will benefit them. the higher production which took place in the latter part of 2011

will spill over into growth in 2012. oil exporters will do well. >> howard, the gentleman back there. >> thank you. i would the washington post. i was wondering if you could give us a little more precision on your guidance where countries are facing schizophrenia. you are saying to anger expectations in the medium-term, yet that is not anchored by markets. you either risk current growth and satisfy the market's or risk the market backlash. in that case, which spain is up against, which risk is better to take? >> you are absolutely right. this complicates a lot for policy makers. this crisis is damned if you do and damned if you don't.

if you can establish credibility through a larger set of measures, i suggest -- i suggest this will speed all of it -- to become -- to be concrete, the measure that everybody agreed should have been taken years ago but was not because of political implications, which is now adopted by the government, playing a very tough game and making sure that the measure goes through, that government is likely to acquire more credibility than by cutting infrastructure, spending by 1% this year. i think that is what governments have got to do. the markets will listen and you have to convince them that you are credible, you know what your doing. you can do this by passing some structural reforms and sending a signal that you are tough. you can do this by passing

medium-term fiscal measures and tried to do so in a credible way. and explain and explain and explain. if you do not do this, you have a very hard act to perform. >> the gentleman in the red over there on the right. >> good morning. i am from jamaica. two quick questions. the world economic outlook revised the growth for jamaica to be down 0.5% from the forecast in september, which was 1.7%. what were the factors that led to that downward revision? in regards to the euro area, what are the contagion risks in general and for jamaica in particular, especially given that spain has a lot of

investments in the caribbean and a lot of banks will be deleveraging to improve their balance sheets? what are the contagion risks for jamaica in that regard? >> thomas. >> on the dowler revisions to growth in latin america and in general and in jamaica, in particular, most of the downward revisions for 2011 and looking to 2012 are explained by the change in the global environment. jamaica is not different from most other countries in latin america, where of lower prices, lower demand from advanced economies has weighed on growth. in terms of contagion from the exposure to european banks and other companies, it is clear that this has put additional

depressed growth. looking forward, the question is whether there is a substitution for this exposure. what we have seen in latin america in general is that yes, there are subsidiaries of spanish banks. they have been relatively less affected by the deleveraging of european banks because they are mostly locally funded. in that sense, they are a bit shielded. clearly, to the extent that spanish firms operated in the caribbean are constrained by the financial conditions in europe that could weigh on growth in jamaica, on the other hand, there is always substitutions that these companies with operations outside the eurozone can work on something else where. one past due way the direct-

effects -- one has to weigh the effects. >> we have received a lot of questions on-line. let me take one. what about the situation in germany? this is from german tv. >> germany -- we have also marked down the growth forecast relative to september. the euro area crisis has had a large effect on germany. notwithstanding, they are in a much better position to cope with it. in our view, there is a fiscal adjustment in germany. they have a lot of space as the rest of the euro area is doing so. appropriately, much less than the euro area. it can loosen up if the situation in the euro area were to become worse.

like others in the euro area, it faces its share of structural challenges. for example, the banking sector is very much influenced by the public sector and that will need to be reformed or the medium- term. there is also a need for structural reforms to raise investment. why is this important? not only would boost activity in germany that would help the rest of the euro area, it would reduce the large account service that germany has and help internal balancing in the euro area. >> thank you. we are going to be wrapping up shortly. just two or three more questions. the lady in the back, there. >> i'm from reuters. i have a question. if china widens the trading band, how much further up risch -- how much further appreciation is needed and will it help

global rebalancing? >> first, we welcome the widening of the band. additional exchange-rate flexibility would be helpful. one key challenge that china faces is to rebalance internally the economy from one that is driven by investments and exports to one driven by consumption, which is also what their five-year plan is. as far as the exchange rate and what more is needed is concerned, we have significantly revised down our projection for the current account surface of china over the medium-term. we foresaw that it would be around 7% of gdp in 2016. our current forecast is closer

to 4%. what this means for the extent to which it is a line with fundamentals is not entirely clear to us. we are in the process of changing our methodology for assessing the sustainable current accounts liquidity and exchange rates. we are looking at all economies to come to a verdict. we expect to be ready to do so soon. thank you. >> the lady back there in the last row. >> thank you. i have a question about japan. japan has serious energy problems right now. could you explain how deeply you are concerned about that and what would be the impact on the economy? thank you. >> yes.

that is one of the risks facing the japanese outlook right now. nuclear energy accounts for 30% of the energy supply in japan and it has been cut dramatically. only one nuclear plant out of the ones that were operational is still operational. we do not have estimates of what impact that has. we look at energy shortages as a risk to the baseline, along with the other risks coming externally from the euro area crisis and a possible oil shocks emanating from tensions in the middle east. >> one last question. should we end with you? yes, you. on greece. >> good morning. i am from greece. since we are talking about

outlooks, could you tell us what is the prediction or outlook for greece? some people in europe are talking about the program. what is your assertion? >> on the outlook for greece, which is what is directly relevant for this press conference, we have seen growth negative in 2012 after contracting by about 7% in 2011. we expect it to contract another 4% in 2012. there are a couple of key factors. the first is a very large fiscal adjustment that is taking place. the second is significant reduction in minimum wages, which is one ingredient in rebuilding competitiveness of the greek economy. in the short run,