r the common good. we believe on expanding opportunities so all-american have the chance to prosper. i must confess i am a little surprised to decided to be here today to criticize the efforts made over the last three years to lift the economy out of the nest that president obama inherited -- the message that president obama inherited. president bush pursued it failed policies of trickle-down theory that would boost our economy. it lifted the yachts, but the rest of the boats ran around. the financial crisis hit and jobs went into free-fall. by the end of those eight years america experienced a net loss of private-sector jobs. when he left office we were

losing 830,000 jobs a month. american retirement savings collapsed between 2007 and the day president bush left office. our nation's fiscal health saw the greatest reversal in american history from large projected surpluses to large projected deficits. i have searched the record and as far as i can tell during the eight-year. you did not challenge the bush administration's handling of the economy, criticized the excess of spending or the rising deficits. just looking at your testimony, i am looking forward to hearing it in full. you are here to tell us government actions have prevented us from the kind of "snack back economic recovery"we have seen and other post world war ii recoveries.

two distinguished economists who are often cited by chairman ryan have demonstrated the economy's hit by a system that crises do not snapback within a year or two but take significantly longer to recover. after all, none of the other post world war ii recessions require the extraordinary actions taken by their federal reserve as well as the huge wall street bailout called for by president bush to stabilize the financial system and prevent another prevention -- prevent another depression. the tarbell was huge intervention called for president bush supported by john boehner and chairman ryan and president obama and many of us on a bipartisan basis as a necessary action to prevent a total financial meltdown with

devastating consequences for the economy. even with the rescue of the financial industry mainstream america was feeling the economic pain as millions of americans were losing their jobs. we all know what the figures were. 839,000 jobs lost per month as i say, the economy was heading down at a very rapidly collapsing rate of 8.9% negative gdp. when the president was sworn in, he was determined to take action to help those americans being heart by the economic tsunami. surely we should be willing to take action to help millions of americans don't out of work through no help of their own. the nonpartisan experts at the congressional office said

created or saved up to 3 million jobs in 2010 alone. the president also believe if we rescue the banks, surely we should prevent the auto industry from being wiped out. an action that saved millions of jobs. this was not about crony capitalism as the chairman has suggested. it was not about doing special favors -- special favors for well-connected friends. it was about making sure a critical industry had a reasonable opportunity to survive given the financial crisis going on around it. gov. romney has suggested we should have led detroit go bankrupt. the crisis should have been handled through the normal bankruptcy process. former general motors vice chairman who also happens to be the republican took umbrage with this and said "it is once again the fiction that we did not need the government.

this could have been a privately run bankruptcy with the normal chapter 11. what these people always deliberately for get is there was no money. nobody had money." when they refer to this as chronic capitalism, i think many of us take great offense. we also passed the wall street reform bill to make sure that never again would reckless gambling on wall street wreak havoc on main street and the taxpayers holding the bill. i will wrap up in a minute, mr. chairman. i would like to point out that during that period of time, we were not getting very much help from our republican colleagues. not a single republican house member voted for the recovery bill. at a single one voted for the wall street reform bill.

senator mcconnell, the leader in the senate in a moment of candor said, and i quote, "the single most important thing we need to achieve this for mr. obama to be a one-term president." we have made progress on improving the economy and jobs. are we where we want to be? absolutely not. today's job numbers shows we need to make further progress. let's learn the right lessons from what happened in the past. if we diagnose the problem wrongly then we have the wrong prescription. i do worry greatly about those who say the way for word is to adopt a souped up version of many of the policies that got us into the miss to begin with. so as we go forward, i hope we will try to find a way to get

their -- i will close where i began on a point of agreement. if there is a government program that is not achieving its intended purpose, let's amended and get rid of it. if there is a regulation outliving its usefulness, get rid of it. i hope we would adopt the same approach with special interest tax breaks. let's again remember that we have made some progress and we need to make more. let's not misdiagnose the problem. that's not learn the wrong results. >> i now know why the opening statement was so long. mr. waxman just arrived. i get it now. congressman waxman, please take your seat. we preannounced you already. mr. van holland was just

announcing how excited he is gov. bush is with us today. we see things a little differently i guess. >> do you want to say how excited you are that i am here? >> why do we not go with gov. bush, then mr. edwards, then congressman waxman. the floor is yours. >> it is a joy to be here. i did not come here to criticize anybody for the record. i came to share my views. i am not use to the 9:00 food fight that starts bright and early in washington. i am from florida where we do not start that way. it is great to be here. i am here to talk a little bit about what i think is an important subject as we try to

recover the main job number is -- may jobs numbers were anemic at best. we do have an l shape recovery. is the first since world war ii where we have not had a robust recovery. there is a cloud over our country that relates to the pessimism that we cannot restore the vitality of our economy in a way that creates opportunities. more and more people are becoming dependent at of the government at every level. it is important for this committee and policy makers to reflect on that. to figure out how to get their republicans and democrats, we can restore the right to rise in our country and restore a sense of optimism to rebuild our country. i do not question the intentions of people at all. i think there is a shared belief we need to do better. the question is how. what do we need to do in this

chamber and state capitals to improve the outlook for job creation and overall prosperity should be the dominant question across our country. i would urge you to look to your primary responsibility which is to manage the budgetary affairs of the government. that is a good place to start. at 8.2 trillion dollars the u.s. budget is a powerful force in the economy. its size means entire industries operate in constant awareness of what you all do here. when you combine the budgetary power with the separate powers of cash -- separate powers of taxation and regulation, you yield significant influence over the economy. it is not an overstatement to say that right now, the united states economy operates at the direction of the united states government and not the other way around. the growing size and influence was made possible by good intentions and hopeful policy ideas.

behind every spending program, a tax incentive, and regulation there is an idea. it might be a good idea. those good ideas and the not so good ones add up. the cost of everything you do here, every rule, every car out, earmarked drains activity investment and creative effort out of the private sector of the economy. that is why my best advice is for you to perform a fundamental cost/benefit reconsideration of many programs of the federal government. consider the unintended consequences of your actions. here is one example. there are 49 federal training programs in our country today. i wonder about that number. what do we as taxpayers get from 49 job-training programs that 29, 39, 6 could accomplish? how do we know people are choosing the right job training programs?

how do we know the right people are running those programs? should all be packaged and sent down to the states to allow the laboratories to work more effectively so you can benchmark success and develop a 21st century strategy as it relates to job training? do they operate with any sense that they could or should be closed if they fail? this is the daily worthy of american businesses and our country. these programs do not worry about being put out of business. i wonder whether they keep somebody in the private sector from building a business around providing skills training and whether that person might do a better job. in short when he tried to solve one problem you may not only failed you may create several others. if you multiply that example across the economy in multiple industries in multiple ways it is not hard to see what will

happen, and it has happened. not only does the government grow bigger, it also displays is the private economy, the innovators, the people who risk their own savings, the establishment businesses that could grow by do not. we see this and taxing programs as well. tax policies that advantage certain activities are just another form in my opinion of government spending and subsidy. while the grant to some companies and industries benefits, they also tend to disadvantage other companies and industries. this is a matter of fairness. why should a company pay taxes to support government subsidies that goes to one of their competitors? i understand there may be political support for companies and industries, but we know from recent experience the government is not ready -- is not good at picking winners and losers of the economy. it is not their job.

i recognize why the government tries to control the marketplace. i recognize it is because -- i have become clear about this because i see it in the private sector as well. there are countless examples of companies that fail to move with the market simply because a smaller and more nimbler competitor arrives first with the solution. when a big company is being to the punch it either gasoline fast and adapts or goes out of business. -- it either goes lean fast or it goes out of business. when government tries to intervene to eliminate the possibilities of failure they end up creating more of it rather than to allow the more innovative approach to work. the problem with government involvement is it does not go through the same process of innovation and sometimes fail year the exists. none of us will allow government

to fail. what would occur in most private institutions, failure followed by defunding does not happen here. i was delighted to hear the approach that maybe it should begin. that is a place i think there is a huge common ground. of programs do not work, the fund them and allow for others to come in their place are not exist at all. i want to return to the rationale behind such a process. this is not about making government more efficient. it is about making government a smaller part of the economy. we have to raise freeze the impulse to solve all problems frondizi this only makes government bigger and the problems still remain. we have to ask whether the status quo is the best way to solve problems congress set itself up to solve the. i think there are better approaches to that.

i look forward to answering your questions. >> thank you. mr. edwards. >> thank you for inviting me to testify today. i will discuss for reasons why corporate welfare is bad and i will talk about the real solutions the u.s. economic growth is unleashing an entrepreneur orship. we have trillion dollar deficits. right now we cannot afford corporate welfare or business subsidies. i estimate subsidies are about $100 billion a year. that is a small part of the total budget but a good place to start cutting. corporate welfare is unfair. the largest corporate welfare program is a farm subsidies. in my view they are like a reverse robin hud program. they take from average taxpayers and give to high income farm households. 25% above the u.s. average.

farm subsidies and other business subsidies are unfair. they take from average people and give to higher income people. corporate welfare does not work. well meeting policymakers want to support businesses because they believe it will make them more competitive. i think they backfire. on energy subsidies we have been subsidizing energy for four decades and it has been boondoggle after boondoggle. go back to the 1970's. you had a big project that was a republican boondoggle and ended up being a total failure and wasted billions of dollars. they had a democratic boondoggle under jimmy carter that wasted billions of dollars of taxpayer money that was a huge boondoggle. this is a bipartisan problem. why does corporate welfare not work? political pressure is often undermined sound economic

decision making. we saw that with solyndra. it changes the behavior of businesses. businesses become more spendthrift when they get subsidies. you see that with solyndra. they built a big fancy factory in california. a lean and competitive company would have done that. these companies invest in risky projects that often blow up. that is the story of enron. enron received reports $7 billion in subsidies during the 1990's from opec and many other federal programs. and ron would not have done on the risky foreign investing without the federal subsidies. all of those foreign projects that they took part of came crashing down and helped pull down the companies.

subsidies induce bad decision making by businesses. corporate welfare generates corruption in my view. i have always generated corruption. go on the way back to the first transcontinental railroad in the united states. that generated a huge scandal in the 1870's. the to ronald reagan's department of housing and urban development. it overflowed with corruption. the to the 1990's, i believe president clinton's commerce department also overflowed with corruption. he handed out business subsidies in return for campaign contributions to the democratic party. this is a bipartisan problem. corporate subsidies do not work. what can we do to spur growth? we should unleash sauntered and newer -- entrepreneurs.

it has come from new businesses creating new industries. you can go back as i have and look at american economic history. automobiles, aircraft, electronics, cell phones, personal computers, biotechnology -- those are all new industries created by upstart entrepreneurs. getting out of the way of entrepreneurs is the most important thing we can do for the economy. modern telecommunications revolution in large part is the result of mci's battling in the 1970's to compete against the at&t monopoly. federal express created a resolution the -- revolution of battling against regulation in the 1970's.

my policy recommendation, remove subsidies, tear down barriers, and i think we will unleash more economic growth. i think repealing farm subsidies would spur innovation and the agriculture industry like new zealand. we need to go in that direction. privatizing amtrack, the air- traffic control system, those sorts of reforms i think would spur innovation and give an entrepreneurs new areas to work in. last week we saw the space station, that is the idea the good job they can do if we give them some space. tax reform is in portland. i know the chairman supports lowering tax rates and

eliminating loopholes. we do need to lower the corporate tax rate and capital gains tax rate. it is very important for venture capital and angel investment. i support the approach to tax reform. that is about all my comments. we have all kinds of other proposal ofcato's website. >> thank you. >> i am honored to be among you to discuss this very important issue which goes to the question of what is the role of government and what is the appropriate way for a capitalist economy to succeed. all three of us believe in the capital economist -- the capitalist economy. how do we get that to function best and how do we deal with the market failures and inequities that have left us with a very stark contrast between the people who have a

lot and the many who have very little as well as the middle class that is getting very squeezed. we have a different sense about a division for a america. republicans will argue government regulations are bad for the economy. public investments harm free enterprise. democrats have a more optimistic vision. we believe the economy works best when the government establishes the rules of the road. adopting sensible standards, protecting the middle class, promoting competition and preventing corporate abuses. we believe public investments in our country's future will pay off. we believe educating tamara's workers, supporting on trooper newer -- entrepreneurs. we believe history has proved our side of the case. house republicans want to return to an america that

predated the new deal, the fair deal, the great society, a time when the robber barons ran this country. the legislation the republican controlled house has passed would bring back a world where there are no restraints on wall street banks and others, enriching themselves at the expense of everyone else. we tried that. in the 1930's the absence of government regulation and fair rules for competition broad as the great depression. in 2008 the same theory of government brought us the great recession. it is not government regulation that caused our economic woes. i chaired hearings in 2008 when i was chairman of the oversight committee on the collapse of wall street. what we found was the absence of cops on the beat, the heartbreak in unemployment hurting families stems from a philosophy that wall street banks should be allowed to

operate free from regulation. even if that means jeopardize in our economic future for their profits. americans cherish clean air. clean water, safe food, protections of the environment and their health. republicans in the house have voted again and again with the oil companies and corporate polluters. this is the most anti environment house in the history of this country. last year i asked my staff to start tracking anti environmental votes on the house floor. today the republican controlled house has voted to hundred times to weaken and eliminate protections from -- human health and the environment. the house voted to repeal standards that are at the heart of the clean air act with no hearings and 10 minutes of debate. when it comes to health issues the house is stunningly anti health.

not only do we see proposals to cut back on preventive care, the republican budget adopted by the house slash's medicaid by over one trillion dollars. it ends the guarantee for medicare benefits for seniors and individuals with disabilities. instead they give them a voucher and tells them to go shop and a broken health insurance market. the priorities reflected in the house budget are wrong. that would make seniors pay more for their medicare. it would preserve tax loopholes for oil companies and at the same time lower taxes for millionaires and billionaires. corporate subsidies are not just government expenditures, they are expenditures through the tax code as well. we see a lot of that going on. i find myself in common ground

with some of what mr. edwards had to say. 98% of the republican members of the congress have pledged to oppose any increase in tax rate and a reduction of tax loopholes to reduce the deficit. no wonder the wealthiest continue to grow wealthier as the middle-class troubles just to get by. no wonder we are facing a fiscal crisis. one especially clear embodiment of the misplaced priorities of house republicans is their hostility to clean energy. the international energy agency says trillions of dollars will be invested in new energy infrastructure over the next 20 years. our economic growth and our national security will be determined on whether we succeed in building these new clean energy industries for the future. house republicans want to be

fund investments in the wind, solar, and other forms of clean energy. there budget attacks billions of dollars in subsidies that the oil industry receives, a well established very profitable industry that will crush competition if the government does not stand up to allow new enterprises to take their place. the house republican position is based on science the nile. if you deny the existence of climate change, an overwhelming republican majorities the -- denies it, the urge for clean energy may not be apparent. if you live in reality you know the world cannot continue its dependence on fossil fuels. you know without government involvement we are in danger of losing the booming clean energy industry and millions of jobs to competitors such as china and germany. we can grow a stronger and

better america with jobs and opportunities for everyone who work hard and play by their roles. to do so we have to reject the defeatist anti science, and i progress, and tied jobs view of those who impose -- oppose investments and clean energy who want to preserve tax rates at the expense of the middle- class, who want to slash the safety net and and medicare guaranteed. this is an important hearing. democrats and republicans hold starkly different views about the role of government. i welcome the opportunity to discuss the differences with you today. thank you. >> thank you. so much for bipartisan comity i guess. >> are we not allowed to talk about our -- >> it is perfectly fine. >> is that class warfare?

>> we just got the number is a while ago. only 65,000 jobs added last month, about half of what the markets were expecting. the last two months, we are down 45,000 jobs. the unemployment rate has gone up to 8.2%. people who are looking for jobs that did not find one, people who stop looking for a job or people let won a full-time job went up to 14 1/8%. the economic policies we have on the working. i always try not to say what it is my political adversary is in favor of -- i will let him speak for himself -- but i think what is both parties messed this up. mr. edwards did a good job going over how with good

intentions, republicans and democrats, had believed that if they could put some kind of preference in law for a selected industry, a selective bowl, a selected company, that good things would result from that. it is helpful to us to go back and look at the track record of this bipartisan idea that government is smarter and better at picking winners and losers in the marketplace than the market itself is. what we have learned from this bipartisan approach is that corruption does occur. cronyism does occur. what ends up happening is those who are connected, those who have established connections, those who know the ways of washington end up usually getting the benefits, and those who are out there were around america working hard, slaving away, creating ideas -- they are not on the winning side of this -- those who are out there

in america working hard. it makes it harder for people to rise and create new ideas and businesses, which, as we have learned through the economy, through economic evidence, is the greatest chance of giving people prosperity, of decentralizing wells in this country, allowing people to rise and have social mobility -- of decentralizing wealth. what we're trying to do is recognize that both parties messed this up. let's not sit around and point fingers at each other. let's go back to what works -- and entrepreneurship, small business growth, risk-taking, and, yes, regulations that are fair for all. regulations that do put guard rails up so that we have

transparency, so that we have on his plate, so that we have rules of the road that apply equally to everybody. that is what we are trying to reestablish your. no one is suggesting we have some kind of dog eat dog society where the powerful and connected survive at the expense of everybody else. we are seeing the same rules apply to everybody so that you, based on your own merit and god-given talent -- that determines success so that our goal in america is to establish a starting line so we can promote equal opportunity so people can make the most of their lives instead of having people pick and choose winners in washington. what ends up happening, whether a republican is in the white house for a democrat is in the white house or whoever is running congress, is interest groups get involved and decide how it is done at the end of the day. that does not work. we have seen our friends in europe try this, and we look at the results of that now. governor bush and mr. edwards, you have seen this work.

you have great experience in government. has this worked that the state level? state government does not do this the lot. the stimulus, for example, sent a lot of money to the states. did that work? did these job programs, which were created with good intentions -- does that work to actually giving people the tools they need to go into getting skills so they can get onto a career path that they were in an obsolete industry that is gone? you know, where i live, we lost four of factories since 2008 -- four auto factories. the guys i grew up with and went to high school with do not have a sector to work in and people are trying to go back to school to get back on their feet again. does this approach work? did the stimulus program work? mr. edwards, give me more examples of that the canadian system. i think that is intriguing.

you are right about how canada went after a lot of this corporate welfare, this cronyism. give me more anecdotes on that. i think there is something we can learn from the canadians on this front. governor bush. >> we had a mini-stimulus package when i was governor, and for some states it works because they had chronic deficits, and they filled the gap, and they consider that stimulate rather than changing how they do things. in the case of florida, we took that money and used it on a onetime basis to try to help create -- to invest in basic research, which i think is the proper role of government. this is where my cato institute friend and i might disagree.

i think there's a role for government in building capacity, building infrastructure, and that is what we use the money for. it was not stimulative in terms of an economic recovery, but we already handled our budget because we have a balanced budget requirement. as almost every other state, we had to make decisions and challenge how we do things, and we got through the crisis quite well. similarly, i think many states did the same thing this last year. florida did not raise taxes the last couple of years. florida has not raised taxes. in fact, florida has cut taxes. the challenge became an opportunity, which happens in the private sector as well. when you do not have the pressure of a balanced budget requirement, as you all do not have here, then it does not really matter, but every other jurisdiction -- local and state governments -- have that challenge, and they adjust. i would say, to use the clean energy example, a better approach would be to spend less money, but spend it on basic research that creates the disrupted technologies that are market-based -- disruptive technologies that are market-

based instead of picking and winners -- instead of picking winners and losers that ends up protecting companies that did not have the best ideas. the market than punish them, and the united states government was out of pocket. a better approach would be for the government to do what it does best, which is to fund basic research, applied research, to be able to create the next generation of industries, but let the market solutions be the means by which we achieve the desired result. >> i believe in the 50 states as the laboratories of democracy. i believe in federalism. i believe we ought to get a lot of these programs out of washington and let the states figure out whether they want to do them. we have had job-training programs since john f. kennedy's administration. they have never worked very well. let states fund it and do it, and then the states can learn from each other to see what works. the problem is we have over 1000 federal aid to state programs now.

they are massively bureaucratic. there are rules and regulations with each of these programs. they put state governments in a straitjacket, which does not make any sense, and we see that now with no child left behind -- states have rebelled against that. we have sort of a marble cake with american federalism, and we should have a layer cake with each level of government doing their own programs and the states looking to see what works. to transition over to canada -- this is one of the things canada did. two decades ago, canada was in a horrible budget situation -- massive deficits, overspending, wall street downgrading its

debt. they did a series of five years of really big spending cuts. they cut their total federal budget 10% in two, which would be like us cutting $400 billion out of the budget -- in two years. they cut aid to foreign governments. they cut defense. they cut all kinds of stuff, and it has worked extremely well. the canadian economy did not go into recession. the canadian economy boomed for 15 years. even as these spending cuts dramatically dropped the size of their government. but a couple of numbers on that, go back a couple of decades. federal governments in canada and the united states were both around 23%, 24% of gdp. the canadian federal government is around 15% of gdp. ours is up around 23%, 24%. they cut government and

decentralized federalization, and it worked very well. >> thank you. >> thank you, mr. chairman. i do believe this is a lot of agreement, but let me just start with what got me going here. the chairman, in his opening remarks, talk about the obama's administration and crony capitalism and continued to refer to the auto rescue. not as an example a government package that created millions of jobs -- that rescued millions of jobs, but as an example of cronyism. i believe you supported the efforts that president bush took to rescue the financial sector, which, in part, precipitated the crisis. many of us believe it was also appropriate to take the actions

that president obama did to help rescue the auto industry and a billion jobs. did you support that effort? no? ok. i understand. do you agree with governor romney's position that we should have let them go bankrupt? >> they did go bankrupt, but it was in a way -- it was a government-induced bankruptcy that allowed for general motors now not to pay taxes, based on profits that otherwise they would have to be paying taxes on. that ithe form of capitalism when the government intervenes in a very muscular kind of way, and i do not believe that is appropriate. and then maybe i made an assumption. maybe i was wrong. did you support the rescue of wall street banks? >> i have never been asked that

either. now you are asking. i think given the circumstances of the potential for a meltdown that would have been hard to recover, some support was appropriate. was the next step adding regulations on top of regulations? the congressman in his remarks made an interesting point -- assuming there was no regulation on the banks or financial services industry prior to the passage of dodd- frank -- in fact, there was massive regulation. i would argue that enforcement was the problem. in short term solution to a problem that had global implications -- i think that was probably the right thing to do -- as a short-term solution to a problem that had global implications. to add on to the challenge that we face massive rules that will take years to implement that create more uncertainty and the probability of more unintended consequences that will create a

weakening economy rather than a strengthening one, i think it was the wrong approach. >> many of us believe the decision to rescue the financial industry was a bitter pill and it was worth saving millions of jobs in the auto industry. the figure of government spending is about $3.6 million. a big part of that is social security. that came about after the great depression as a way to provide retirement security for americans.

putting aside the issue of reform, i assume you think that is inappropriate intervention in the marketplace. >> putting aside reform? >> the idea that there should be some government role in providing health insurance to seniors. >> in a dramatically different way, i can accept it. we have this attitude that if you start something in the mid- 20th century it is appropriate to keep doing it the same way 50 years later. >> governor, there is a

difference of opinion as to what kind of reforms we need to take in medicare. that is a longer discussion. i think everybody around this table recognizes that we need to address those issues. we have different models and they are efforts to modernize the program. the parts of the budget most of this discussion has circled around is the discretionary budget. it represents 16% of our overall budget. it is a shrinking budget. it will actually be reduced to the lower percentage of the economy since the eisenhower administration over the next 10 years. it helps the fbi, homeland security. you mentioned basic research. i think you agree that mi -- nih does incredibly important

research. there is a lot of research that does not panned out. i am sure you agree with the logic that just because some of those investments in research partners do not pan out, the solution it is to get rid of the investment in nih. are not suggesting that are used? >> of course research never worked out exactly. through trial and error, great minds develop discoveries in cooperation with other sciences that improve the human condition. it is not a bencher capital investment. it is more related to an expenditure the with-it is not an investment capital investment -- it is not a venture capital

investment. i think the same thing that i brought out -- you should challenge every basic assumption about how this money is spent. there should be benchmarks. it is should not -- does not work, you should move on. that is not my point. >> i did not think it was. we also have student loan programs. not every student loan gets repaid. those of us who support to loans do not say, we did not get all of these loans paid, so we are going to shutdown the student loan program. i do not think the solution is to shut down the small business administration. you mentioned doing more advanced, cutting edge resort -- research in the department of energy. that is an important role.

the budget that is coming out of this house significantly cuts proposals the president is asking for in that area. the chairman asked about actions taken by governors. i know lots of governors who took efforts in the renewable energy areas. i just hope we do not take the lesson that because some of these things do not work out, we should not be making investments in basic research or implied research. let me just close with this. i agree with you. we should get rid of some agriculture subsidies. if we find a program that is not working, let's get rid of it and

reduce the deficit. i wonder if he would take the same approach to tax expenditures. if you identified a tax expenditure not serving a useful purpose, that we get rid of it to reduce the deficit? >> i would love to see, and ground to see dramatic reductions in tax expenditures. and have a dollar for dollar reduction in tax rates that would spur economic activity that would move us into a v- shaped recovery. >> you disagree with the simpson-bowles committee that says we should make the tax code simpler. we should also use some of the funds generate to reduce the deficit. you disagree with that. you agree with the form of the

grover norquist pledge. >> i ran for office three times. i was presented with the plant's three times. i never signed the pledge -- i was presented with the plan three times. i never signed the pledge. he has a right to do it. >> governor, good to see you. thank you for being here. thank you for being here as a representative of a family went extraordinarily remarkable records of public service to this country and being here as a purpose -- a person with considerable accomplishments of your own. thanks for being here.

>> can i say that my brother says his warm drink -- his warm regards to congressman waxman. >> i am sure he does from a distance. >> i appreciate your brother's class since he has left office in the manner in which he has handled himself. we saw that yesterday in the way that was reflected well on him and first lady obama. if our committee operated the way we saw at the white house, maybe we could get farther down the road. i want to ask you about a couple of problems we are going to be facing quickly. the 2001 and 2003 tax cuts are

set to expire. the president must have thought those tax cuts were in the best interests of the economy. he that things he wanted as well, extension of unemployment and a payroll tax cut. i would like your views on whether those tax cuts should be extended and what other things within the tax code you think we should be doing to try to achieve the objective you outline in your remarks. >> given the economic circumstances we are in, they should be extended. the idea that a cut in taxes that took place 12 years ago is an extension of a tax cut rather than what it truly is, which, on december 31, if nothing happens, a massive tax increase. close to 3% of gdp, which would

be an historic tax increase. the country has not done anything on that scale. it speaks to the language of washington. i have never understood why we would not -- maybe it is because of budget considerations. basically, you are talking about a massive tax increase. i do not think that is the proper way to restore economic growth. i think the objective should be that if we are growing at 1.5% per year at a time where, historically, at this time in the cycle, we should be growing at 4%, 5%, 6% and have sustained growth -- the 2% incremental growth over a 10 year period -- is how you look at your budget and it creates a germany in the 10th year. the incremental growth creates

$2.90 trillion of additional economic activity. based on the effective tax rate in our country, state local and federal, that is over $1 trillion in revenues without raising taxes. the focus should be how do you create sustained economic growth? you restore the proper balance of government. assuming we are only going to grow at 1% per year, we are in a lot of trouble. there is no way to get out of the mess we are and and 40 cents of what we spend is financed with a monastery -- it might take policy that yields zero interest rates. we are not going to be slightly larger than the smallest country in europe and the focus of financial institutions and investors will be looking at the

united states. we are not prepared because we have not dealt with the structural challenge we are facing and we have not dealt with the economy. the price we pay is enormous, particularly for the next generation. the place where you can get the greatest sustained growth is with an energy policy based on our own resources. i am of little out of step with my own party temporarily. i would argue for looking at immigration as an economic solution to our problems. we identify aspirational people and let them come in to pursue their dreams in our country. existing regulations on our country today -- to apply to defer century rolls would be a burst of economic activity -- rules would be a burst of

economic activity. you can have your budget fights and they will go on without me. that can help create sustained economic growth. the debate might not be about the ones we are having in washington today. it would be about something different. tax reform and those things i brought up would create an interesting climate for sustained growth. >> thank you, governor. i yield back. >> your immigration views sound good to me. >> they sound good to me, too. let me ask if you support the dream act so that young people who came here through no decision of their own as a child have a path to citizenship if they have played by the rules and are ready to contribute to america. >> i have not seen the current form of the dream act. >> it is the same version we

have had. >> i have read senator rubio's idea. >> it does not provide a path to citizenship. that me go to something you are familiar with. your testimony raises the right question. why should a company pay taxes to support government subsidies for one of its competitors? mr. edwards answered that question by saying the place to start was to limit $100 billion of business subsidies every year. do you agree with him? >> yes. this is a place where there seems to be common ground. there are all sorts of subsidies. >> the you agree with him that we should eliminate all kinds of subsidies?

>> give me the specifics and i will answer. >> i will give you a specific that is included. $4 billion in corporate and tax treatment -- tax treatment to exxon, chevron for drilling off of our coastline. do you favored eliminating those subsidies? >> in return for lower tax rates, that is exactly what we should be doing. >> great. we have had discussions about simplifying the tax code. everyone is for it. it has been impossible to get a description of any preferential tax provisions or loopholes that should be closed. can you identify, in addition to closing bring to a treatment for exxon, any tax loopholes or preferential tax provisions that you favor closing? >> just to be clear because this is a gotcha kind of environment.

i am not specifically for closing loopholes for exxon. this should be industrywide just for lower rates. are you asking me if we should target one company? >> i am asking you if we should lower corporate rates, which is something i actually agree with you on, and we are not going to borrow from the chinese or the saudi arabian to do it, would you be willing to close the loopholes for exxon and chevron to pay for that? i am asking you if you can identify anything else. if i can i get my colleagues to identify any tax loopholes they would close, which ones are you in favor of closing to get lower corporate tax rates and not have to borrow 40 -- on the chinese? >> maybe you could come up with

an idea and start with all of them being eliminated and build from that basis. i think the general approach should be that this crisis that we face is an opportunity to recast who we are as a nation. do we trust the american people interacting amongst themselves in ways that have historically created more prosperity than this command-and-control approach -- >> i appreciate that. we have had some bipartisan commissions looking at our budget. the simpson-bowles commission. everyone of them said we cannot get our budget in balance without new revenues. republican president candidates would offer the choice of $1 of new revenue for $10 of reduced spending said they would not agree to a bipartisan agreement on that. would you?

>> this will prove i am not running for anything. [laughter] >> i appreciate your candor. we cannot close the budget gap without any new revenue, as all of those bipartisan commissions have recommended. >> if you can bring to me and majority of people who would say we are going to have $10 of spending cuts for $1 of revenue enhancement, put me in, coach. $10, that would be wonderful. would be spectacular. >> thank you. thanks to all of you. it is interesting when you talk about targeted tax cuts. we all ways that we always go back to the same area. -- we always go back to the same area.

the top five energy companies and how much money they make. i rarely hear anyone talking about the top five technology companies, who make more than the top five energy companies. the conversation is always about what do we do to get the oil companies? this body, trying to determine who they like and do not like today and then to determine tax policy and to determine that company makes too much money and i do not like -- do not like them and that company makes a just enough money and i like them. the challenge becomes, how do we handle a tax policy that reform system and clean out all of the preferences that are out there? you have made multiple comment on this. i enjoyed hearing your comments on some of the issues on how we start the process you see of working through this system. it does not come down to this body say i like you, i do not

like you. >> the most important tax policy in the united states is to lower our tax rates. the chairman mentioned canada. canada dropped to their corporate tax rate to 15%. a 15% corporate tax rate and our 35% corporate tax rate. the corporate tax raises exactly the same percentage of gdp in revenue. what is going on here? what is going on is that there has been a massive reduction in tax avoidance in canada. the corporate tax whole is not be legislated loophole. there are automatic loopholes. if you have a higher rate, it pushes companies to bend the law, to move their profits offshore in fancy ways with

fancy financial accounting. if we lower our rates, that money would come back to the united states. you mentioned the difference between technology companies and energy companies. apple and microsoft are great at legally moving their profits offshore because their profits are mobile in the global economy. intellectual property is mobile. these companies move their intellectual property of shore. we can only get their money back if we lower our corporate tax rate. >> let me mention a couple of things. i understand the number of times we talked about the general motors bailout -- that was a bankruptcy process. it was controlled by the federal government with a lot of new bankruptcy rules. american airlines is currently going through bankruptcy.

there is this perception that if gm went through bankruptcy, we would not have automobile dealers and manufacturing because it would all go away. i will get on an american airlines flight later this afternoon, which is currently going through bankruptcy. you go back to the preferences of how we pick and choose what is our favorite group and now we are point to help them and not another one. there was not a rush to go out and bailout american airlines when they started going through bankruptcy. another one is the venture capital. there is an entrepreneur in oklahoma city that created a product that he is making a lot of money off of. he is helping a lot of companies. this body spends time saying, we have access to a lot of money and we should do the same thing. is entrepreneur loves to do that kind of stuff.

it is his money. -- this entrepreneur love to do that kind of stuff. when we moved to the difference of research to implementation -- >> with a venture-capital and angela investments, tax rates are important. capital gains tax rates are important. these are often wealthy people and they have built up a lot of money and invest in new companies. what is their return for investing in new companies. they have to patiently wait a few years to see if the company makes it into profitability. if it does, they get a capital gain as a return. the capital gains tax is a direct tax on them. an incentive for them to invest. tax rates are important because a lot of people in the top income group are small business

people and angel investors. there are about 300,000 and zero -- 300,000 angel investors. they will have less cash and less incentive to put their money into new companies. we have to look at tax policy to spur more entrepreneurship. >> thanks to the panel. my family owns a barbeque establishment down in your area.

the campaignbout finance system. do you think we should change the campaign finance laws because of the money in the political system? you have seniority. >> age? >> you testified first. >> i love the idea of campaign is being funded directly rather than indirectly. people who are offended by a

large donor, the candidate would have to accept responsibility for the message and for the amount of money and who gave it. that would be a better approach. magic wands do not exist. congress should show more restraint about allowed that money to influence things. this should not give them a special deal that can boast -- hinders our ability to recover. >> we have the koch brothers.

they are going to spend $100 million dollars on this election. >> corporate leaders have a fundamental right to lobby congress. i do not think there is anything we can do about that. that is always going to happen. you can pass as a loss as you want. i cannot think it will stop it. you can stop sending the money out. having business subsidy programs throws fuel on the fire.

>> congressman waxman, would you like to comment? >> the rich and powerful what to stay rich and powerful. now that we have opened the campaign laws to unlimited and dead end, unreported contributions from corporations , it will not be the lower income people who will benefit. it will be the well-to-do. the koch purse and other imaging companies do not want competition. they want to squash competition. some on the committee said we should fund research. right now, on the house floor, we are dealing with the appropriations for the energy and water bill. we are cutting the money from the energy research by below the administration post or request. we are cutting back on research

and we are hearing that everybody is to blame, so what we need to do is that the government do less and that the rich and powerful state rich and powerful. >> governor, what would you say about infrastructure? >> i am an old school guy. i think the will of government is to provide security on the street. it is the means by which we should build the infrastructure so we can grow. build capacity so that these gaps in income are dealt with in a more fundamental way. people can be prepared to be competitive in a more open system. i am a conservative.

beyond that, everything should be challenged. if he did not challenge it, those of the things that get squeezed out. >> thank you, mr. chairman. i appreciate all the witnesses. it has been informative. i associate with tom coburn of oklahoma. i was proud to be an american last night, how your family acted and how the obama family acted. i also do not think you are old school. i think you believe in the plain meaning of the constitution. it is the greatest document to prove exceptionalism. it is the first time goes values came together in the same place and i hope we never lose sight of that. i want to focus on my colleague, mr. waxman's comments.

he has some questions to answer. we are at a crossroads for the heart and soul of this nation. i was intrigued by his use of the term rules of the road, as if that is what one of the groups around here wants to do and as if the other group wants to engage in anarchy, which could not be further from the truth. there is a need for government to have reasonable elations. this is about how much control is a program for the government to have over an

individual. i participating in something called red tape rollback. it is 1 congressman's attempts to roll back the boots of the federal government. we had individuals right -- write us. not all of them made the paper. what a group of people want to do goes far beyond rules of the road. one person said that the government wants to regulate the dust that the truck picks up.

that is not a rule of the road. another group of farmers said they want to limit the kind of work that firm kids do. this country was built on a work ethic, character, liberty. all those qualities, in past generations and the current generations, occurred from work on a firm and work in another place. the department -- work on a farm and work in another place. they are thinking of prohibiting youth soccer referees. they want to protect -- they want to prohibit these kids from are earning $10 a game. that happens after school all over this country.

for some of us, that is establishing the rules of the road. for others of us, that goes way beyond what is necessary. i do not know any of the country on the face of the arab that is more masochistic and we are. when it comes to carving something out of the ground and considering its wealth. every other country understands this and exploits it in the best sense of the word for it to benefit except for a group of people here in america who cannot understand that. that is beyond the rules of the role. we as american people are being told what like bolts to use, how much water can be in our toilet , a farmer has to get a permit to use pesticide on his crops, but has to get two or 3 pesticide permits from the same

agency. we have a medical device taps being proposed. medical device companies in indiana started through entrepreneurship. a group of us think it is within the rules of the road to put a tax on these folks and think that they are going to keep innovating, they will keep creating. that is just a couple examples in this document, mr. chairman. i think for the time and i yield back. >> i want to thank tthe pan elists being here this morning. i am a teacher. we have talked about free enterprise and barriers to free enterprise.

what we are hearing are high points and low points of each party's positions. what do you disagree with in each other's presentation in terms of a balanced appreach to our economy? do you think money behind each person gives power to the vote? each individual's some bitter power of his own vote.

one guy, 1 vote, regardless of his standing. where would we be today in this country if each person had the same amount of votes without reference to their economic standing or the power of their pocket? how do you think that will that our economy in this country? >> we would be in a heap of trouble. and our people to make decisions for the future is what i was saying. in relation to politick, we have parity -- in relation to politics, we have parity.

>> excuse me, governor. with respect to one person, one voted. e. 1 votin >> money goes to both parties. it is an equal opportunity to honor. but you are suggesting that the wealthy are more powerful. >> it the situation existed that each person had a vote and they thought that voted counted without respect to the pocketbook, how would that be different from what we are looking at today.

>> the main reason why policymakers make a decisions is because the voters in their district wants it. we already have equality between voters like that. >> why do we need supreme court decisions that define corporations as people. he machines have the power of the vote. >> the one mentioned the idea that corporations have so much power in washington, more power than anyone else. if that is true, how can we have the highest cap -- high corporate tax rate. if they were so powerful, they would have cut the corporate tax rate and have done other things that would benefit them. corporations spend their time to push forward these narrow benefits often to get a competitive advantage against other businesses.

i want the government and the timing to be a referee, to provide equal treatment. i am against britain treatment to individuals or businesses -- i am against preferential treatment of individuals or businesses. >> some influence people to get their way at the expense of taxpayers. he is absolutely right. some win elections by extortion -- by distortions. there is a myth that the epa wants to regulate farm dust. they have not proposed anything like that. that idea is being used to under met -- undermined a bill that governor bush's father signed.

there are talks and the best toxic pollutants that -- there are toxic pollutants that poison kids. they take a little example that does not exist, blow it up, you do not know who is paying for the ad and then they get their way to try to repeal the bush that i respected the most, president george w. it. -- george w. bush. the benefits of regulation outweigh the costs in terms of protecting people's health, saving lives, promoting an image that can work together and accomplish great things. money speaks loudly. that supreme court decision gave

a big megaphone to people who have a lot of money. >> thank you, mr. chairman. i will thank the panel for being here as well. i wanted to pass on to governor bush that i had a chance to visit with your son, george. we have exchanged some e-mails. he is a great guy and i am glad to get to know him. i am surely reflects the values you taught him. i appreciate your family. i want to talk about states' rights and state responsibility and where the states are the solution to the problem we have. i believe the states are going to be the solution to the problems the federal government has created and has been a major part of. i was in the indiana legislature in 2004-2005 when governor

daniels was elected. we had a transportation hole to fill. we were talking about bonds, gas taxes. those were good options. none of us felt it was the right thing to do to raise taxes or borrow money from the future. the toll road that we have in the indiana, for 3-point $8 billion from the private sector. washington wants to punish indiana because we were creative. we were trying to find other ways of finding transportation programs. governor bush, if you could talk about that the? -- if you could talk about that? i can we find solutions within

the states and why should washington punish those states were being created? >> thank you, congressman. i love that deal because they overpaid. in this case, indiana and leased out a road that people in indiana and ohio pay disproportionate fares 4. the money was invested in a of sharks shirt. it was a created deal. this is commonplace. it seems as though this idea of public/private partnerships is common. production needs have lagged behind other countries. this is an example of, we must do things the way we were doing

it because we have been doing it rather than pausing a moment and saying, there are better practices to allow states to be the laboratories for this to work out. that would be a great idea. can that, to use the canadian example again. the-canada -- canada is an example. this was not an ideological battle. it was a recognition that there were structural problems that existed. thicks the structural problems. that seemed to be -- six six- --

vfix the structural problems. florida got a waiver on medicaid. it has proven to be more effective. we moved effectively to a defined contribution system, away from a pay and chase system that the pro-government pays enormous amounts for. we empower people to make decisions for themselves. it yielded a better result. the state law has changed based on that. the law is better than what we propose. the law is based on see what the pilots yielded. they are in front of president obama's administration to see if they can get an extension of the waiver. >> you are right to let states

try things on their own. california has a medical malpractice law that has held down insurance rates for doctors. what do the republicans want to do when faced with 30 million people without insurance? they say, let's adopted federal law, take the power away from the states. that is their solution to health insurance inequities where people cannot buy let the states do things. let's not print them. >> senator bingaman, the two punished in vienna -- to punish indiana, can you help me with that? >> mr. waxman, have two questions.

after july 2010, the government ended subsidizing banks to make federally guaranteed student loans switching to a -- saving taxpayers. did you think reforming the stand-alone program was in the best interest of the taxpayer and put the students first? a second question involves the hearing you had in 2008 world -- in 2008, for you had hearings into the wall street collapse. can you sure about the -- can you sure we learned about the testimony? >> they have to pay their taxes, but they look to see if they can expand loopholes to their benefits. that means that sometimes we

have to look at the lawson ribeyes compared the student loans have been abused a lot -- look at the laws and revise them. the stew loans have been abusing a lot. we have a chance to lower the interest rates for students that are struggling under the cost of student loans higher interest that will come about if we don't change the law. and yet to figure it had to pay for that. we have to prevent diseases rather than figure out how to pay for them later. they want to take away the ability for the states to raise money for their medicaid costs through taxes on the providers. it has been used by many -- i don't know about fla. -- but in california, if the state cannot provide service for the very

poor, we have to cut the benefits for health for the very poor, usually disabled people come in order to pay for stallone's? that doesn't make sense to me. we have -- to pay for student loans? that doesn't make sense to me. alan greenspan, who had to the powers to regulate some of these loans to be used for mortgages and or diced and sliced and sold off, he had the power to regulate and he did. i asked him if his ideology to confirm recognizing the feeler the market. he said he was absolutely shocked that he was blinded by his ideology. he said markets would correct themselves. what i am concerned about with chairman ryan and others is too much believe that markets

will correct themselves. companies will do things right if they have the rules of the road to regulate them and make sure they don't abuse their powers. they're often very powerful and want to scrap competitors. we want to protect health and well-being. one of the biggest loss of the 2008 recession was that we have laws that were not being enforced and the cops were not there to tell the banks you can use other people's money and -- tell the banks you cannot use other people's money and take risks.

it allowed the banks to take all those risks and with those risks, the taxpayers ended up having to pay the cost and a lot of people still suffering because of unemployment. >> with the remainder of your time, if you'd like to elaborate on the document. want stupid regulations. to say that all regulations are stupid, we don't want that. regulations are needed in order to protect the public interest. president george h.w. bush signed a law that would place a cap and trade program that pooled private enterprise you figure out how to reduce the sulfur emissions that cause acid rain that is killing the forest and the streams in the northeast

and did canada. he said, we cannot allow that. industry came in and said, oh, my god, will go bankrupt. they did it at a fraction of the cost that they said it would and it was successful. >> this is an interesting conversation. mr. edwards, we talked about tax deduction and subsidies a little bit. one program that i have become aware of in visiting a number of the industries in my district, those that are in the food production area have made me aware of market allotment, something that i did not know much about until i had them and educate me. the fact that coming in the sugar program, we have an allotment program to certain producers based on their history and their expected production, this has made it extremely

difficult for new entrants to come into the market, which they tell me really does cause unnatural high cost for sugar. does the sugar program through these market allotments, in your opinion, provided structural barriers to entry? >> yes, the sugar program is a thing and have written about. it is something that is corporate welfare that is off budget. basically, in my view, the united states has a soviet-style system for sugar production. we have import barriers. we have the tib quotas. we have loan programs that guarantee the price. unfortunately, what it does, by blocking entry into the industry, it raises the domestic sugar prices. usually, the price varies, but it is usually twice the world sugar price. it affects consumers and there have been consumer reports on

this. it hurts consumers by two billion dollars a year. so companies like kellogg and companies that make chocolate bars and confectionaries, they have had to move out of there -- they have had to move their production out of the country to access the lower-priced sugar. the program, in my view, is corporate welfare. it helps home sugar producers, but it creates broader damage to other businesses. >> i want to note that one of the pieces of information they gave me was an actual advertisments coming from the canadian companies to say produce your cake here in the united states, but send it to canada to get its sugar frosting. because they can save some as many. this is true. we see now a market that is leading into canada, taking jobs away from us, and also increasing the cost to the consumer at the of the rent. i appreciate -- at the other end. i appreciate your comments.

are there other allotments you would raise here besides sugar? >> the milk program -- we have a similar program with u.s. dairy and sheep and the like. it is blocking competition in favor of existing producers and it pushes up the price of milk and dairy products, which often hurt lower-income americans, for example. i think there is a lot the federal government does that helps certain businesses, but it hurts consumers, particularly lower income consumers. >> thank you very much. gov. bush, we had health care in the state of tennessee at the same time that you're dealing with medicare issues. i know it was a very successful program. unfortunately, i did not have the support needed to bring that same model to the state of tennessee. given what you're saying about the success of their, would you

agree that block-granting medicaid would be way for states to come up with their own ingenuity for how they can best provide for those who need that safety net? >> i do. i think that their role to be -- there ought to be a careful review of the block branding. you don't get a waiver from some of the requirements. that would be a challenge. but it is a far better approach to be forced to innovate. state budgets -- i don't know if there is a single state that doesn't have a challenge with their medicaid budget. and they're forced to either stop spending on other things, because we have balanced budget requirements, or reform how medicare works. been given the freedom to reform and innovate and return for some

fixed amount of money that would come, in our case, i believe we were when half of the growth projected. we gave up that half of the growth in return for the ability to innovate. but that is a good tradeoff. >> thank you for that. i think i too many times, we continue to think about taxing and bringing in more revenue through taxing to help subsidize these programs. yet, there are innovative ways to do it. using market competition. >> welcome to our panel. if i have learned anything in my 45 years is that nothing is black and white. there are very few absolutes in this world. that is one of the reasons that i think the extreme tea party ideology is so divorced from reality. free enterprise and government

are not either/or propositions. thank goodness, we have both. and we celebrate capitalism and free markets in america. but i hope that we recognize that, after living through the worst economic collapse in our lifetime, that reasonable oversight of wall street excessiveness is important. when you talk about government in america, i view government as a way to secure opportunity for all. in fact, thomas jefferson wrote in the declaration of independence that we are all endowed by our creator with certain inalienable rights, among these are life, liberty and the pursuit of happiness. but jefferson went on and said that to secure these rights, governments are instituted. people want good government. and thank goodness come in this

230 + year experiment, we have had successes in government. when other countries look at us, they see the premier government- funded medical research center second to none across the globe. .e can build bridges, airports our commitment to taking care of our veterans is second to none across the world. that is something government does a pretty darn good job of. and our public schools and colleges and universities are the envy of the world. people want these institutions to succeed. i just don't understand the extreme tea party ideology that says the government has no role to play in the free markets -- and the free markets are the

answer to all. really, what i think drives citizens crazy more than all this these impediments to free enterprise and good government when special interests and achieve an unfair vantage or when special interests use campaign carter mission to political influence to gain endued vantage when it comes to public policy. i have seen it in the stock -- gain undue advantage when it comes to public policy. i have seen it in the state of florida. you are a outspoken advocate for school vouchers. that is no secret. skyview vouchers as kind -- i view vouchers as a kind of a corporate welfare were you were taking money from the schools and giving those bonds to private for-profit centers. oftentimes, those vouchers come

with no accountability to student success or fiscal responsibility or oversight. and i fear what is happening with your porsche to take taxpayer -- your push to take taxpayer dollars into the digital classroom as a substitute for a good teacher /good classroom. as a supplement, fine, but to drain public resources and hurt our public schools by forcing on a digital classroom that has a poor record of success, i think that is questionable. so here is the inconsistency. vouchers, digital schools without classrooms, private 4- profit tutoring companies that came in after no child left behind, these are not free enterprise. it would be an independent private school not dependent on government funds. but what we have here is government-backed, government-

funded businesses. what do you call it when a private 4-profit business uses political context to get the government to funnel money to private business rather than to public schools? is that crony capitalism, of the term that is going around here, or just effective lobbying? the national education public policy center said that these policy prescriptions are part of a corporate-driven agenda to access public education funds. these folks talk about the free markets, but they could not exist without taxpayer dollars. >> since you used up all of your time in a question and it is directed straight to gov. bush, go ahead and answer. >> the voucher programs that exist are three in florida. you have a corporate tax scholarship program where companies voluntarily give a

dollar-for-dollar credit to an organization that is not for profit that provides for low- income floridians a chance to go to a private school. the best i can tell is a -- the best second took place one of those is a non-for-profit. if a parent is not satisfied based on federal law with the individual education plan and do theidea law, they can take dollar for dollar the money. it is not the government's money. it is their money. for their child to go to a private auction. best to recall, everyone of those entities is a nonprofit entity as well. you used the thomas jefferson analogy. i do not think that president jefferson, if he knew we were spending of the level we're spending, if he saw the size and scope of the federal government, he would be appalled.

why not empower people that don't have choices to be able to go to another option? it has worked. public schools in the state of florida are better rauf based on the only measurement that matters -- better off based on the only measurements that matter. we have gone 29th out of 20 -- 29 at 41 in fourth grade reading to something like 11th at 56. >> but the same accountability standards have not been applied -- >> the time for the delay has expired. you get the time to respond since you used up all the time asking the question. >> individual learning, the great majority of forces on individual learning will be done in the classroom, high-quality content brought in, using the internet and the abilities for

adaptive software to enhance the learning experience seems to be a 21st century solution that ought to be embraced by everybody. and fact, the majority of people in the state, left and right, are supporting this. thank you. >> thank you. >> i want to thank you for being here. i'm glad the gentle lady -- i guess he prodded the mckay scholarship issue. i think it is a tremendous model. it has been a very successful program. i applaud the state in doing that and medicaid reform and presenting some options. in the state of kansas, we have tried to emulate and implement some of those. even a member of the hhs, it is interesting that we put the proposals before her as a state that she wanted to do when she was governor and we look for her approval of those. one thing i do want to talk about this morning is the obama jobs deficit bill. based on projections of the

administration with the stimulus package, if nothing had passed in the stimulus package, they project that the unemployment rate today, this month, would be 6%. it is sitting at 8.2%. the obama jobs deficit is a 13 million jobs failure that its impact has not worked. can you tell us why you think that stimulus plan failed? it will cost about $1.10 trillion. >> i think the governor mentioned that it is the slowest recovery of any of the recessions since world war ii, which is remarkable. what market economies do when they are left alone is that they adjust wages and prices. had received economy growing again. we have seen that in every recession. when we see the give and leave it to go, it starts growing again could back in 1921, there was a terrible recession

unemployment soared to 15%. the government did not do anything and the u.s. economy quickly adjusted and started growing again. i think there have been lots of mistakes. the jobs problem is ultimately a business investment problem. people look at the national income accounts of data, u.s. companies are not building new factories. they're not expanding their factories. they're buying equipment, but investment in new factories has not recovered. it has plunged to very low levels. when businesses invest, they need to hire new workers and we need to get the business investment firms, which is why i suggest corporate tax rate cuts. the extended an insurance employee benefit artificially puts up the unemployment right -- unemployment rate.

i don't believe that the basic idea of keynesian spending stimulus works. already stimulus bill's ended, but we still have a trillion dollars worth of stimulus. that is stimulus and look at the results. the results are still very high unemployment. i don't think this model works. i think that, when the chairman spends more money, it takes away from the private sector. the private-sector is more efficient. the bigger the game and gets, the more you put down gdp and it has not been working. -- the bigger that government gets, the more you put down gdp and it has not been working. >> no matter the tax breaks, i will not hire more people unless there is a demand. in europe, austerity has put england into a double-dip recession.

we see people all over europe bridling under this yoke of austerity. what we needed to do in this country was to work together on a bipartisan basis to do something about it. but everything that the president -- that president obama proposed, the republicans rejected. >> i appreciate that. i do have a question for you. the stimulus is 13 million jobs short of what the president offered us. i was not here. i presume you voted for it. this idea that -- this is a question the constituents ask me. do you think washington politicians and regulators can make better decisions than businessmen and women? >> that is a good question.

there are things called market failures and their things called government failures. there are market failures and that is when government needs to step in. if you don't regulate the best solution, the waste disposal in to the year would be free, the market provides no incentives for polluters to control pollution, and imposes social cost on everybody in terms of disease and death which far out with the cost to clean up. the other area where there is a failure in the market is insurance companies. i have some many people tell me -- >> could you enter the question, mr. waxman? i am out of time. i'm wondering if you can add to the question. >> i am trying to answer your question. insurance for health care, people cannot buy it if there is no -- if there is previous middle conditions.

they have to raise the cost of insurance for everybody. the idea behind the romney plan behind massachusetts and the obama plan was to office said -- was to offset between them. i wish that there were some republicans who would have helped. you have republicans in the house who voted to help obama. >> thank you. i believe you answered his question. chairman ryann. >> we covered a lot of ground here this morning. i want to go back over a couple of things. first of all, with the auto bailout and the government getting involved, the reason the government got involved was because there was not in the private sector money to help marshal them through this bankruptcy.

a state like ohio, one in every jobs is tied directly to the auto industry and there are good manufacturing jobs and we would have lost a lot of those. it was my republican car dealer friends were coming to washington, d.c. to tell us how we needed to do this. and i will quote bob lutz talking about some of the other republicans allowing the auto industry to go belly up. "it is once again the fiction that we didn't need the garment and this could have been a privately-run bankruptcy with a normal chapter 11. what these people always deliberately forget is that there was no money. nobody had any money. and that is why the government had to intervene. for those of us in ohio, we're very glad that they did. there's also an issue of -- i think it is this balance between

public and private partnerships. we talked about the indian of turnpike. it is important for those who are listening to know that the tolls on the indiana turnpike have doubled in the last five years because you're not only maintain the roads, not only making sure it is cared for, you also have to factor in the profits. so the polls on the indiana turnpike that has been privatized has doubled in the last five years. >> will the gentleman yield? >> sorry, man, i will have five minutes. i would be happy to. you cannot alter the facts and those are the facts. the the thing you mentioned, gov. bush, and i agree with you wholeheartedly, the issue of canada and how they solve their problem by the conservatives and the liberals coming together to solve the problem. the issue in canada though is that the conservatives in canada would be moderate democrats in the american political system.

there's no question about that as well. what we're trying to argue is that it will take a balance. it will take both parties. and it has to be a moderate approach, like i think you probably is bows and like your father certainly espouses well. down the middle. would you like to comment on that? >> structural reform is not really ideological, but it did take out your entitlement costs and pension costs and modified them in a way that made it possible for them to reduce their size of their government as related to the size of the economy. i am not sure that is a -- that is not an ideological thing, but reality checking. when you have structural problems, you have to pause and deal with them. many countries do that. i would disagree that conservatives are moderate

democrats or moderate liberals or whatever. >> nobody in canada said to take away the health care for all the people. they said let's do things on a bipartisan basis. that makes sense been here we have proposals that cut the state assistance out of the poor. takeaway medicare so that millionaires and billionaires can have tax cuts. that makes no sense to me and it does not make any sense to the american people. and the auto bailout this a success. why are we arguing about a success? >> i agree. the debate of investments and the role of government today is a very important question for us. in the florida budgets, when you were governor from 1999 to 2006, it went up significantly from $48 billion in 1999 to $78 billion in 2006. what were the investments that were made? what were the priorities given?

and explain some of those increases parent has florida yielded some of those benefits of the investments that you made? >> you have 30 seconds left. >> the largest increase was the medicaid budget, which the federal government was there partner in increasing. it grew dramatically because we had no control over it. we did spend increased money in real terms on public education. we increased money on land conservation and things -- the objective was to take one-time money as fast as possible and spend them on long-term things. we created a research focus, taking one-time money over the long haul and brought fiver six private research institutes from california -- five or six private research institutes from

california. our government grew slower. we had 20 two thousand fewer state workers despite the growth of government. and i think our job creation in the state, it was not because of the government, but there were good times. we had a good business climate. we created more jobs than any state in the united states. roughly 20% of all the jobs during that time. it was a different time than we are in right now. that is for sure. >> thank you. >> let's say the tax code disappeared and you had a blank piece of paper in front of you, we do tell me your top three principles that you would use as your guide in writing a new tax code? >> economic efficiency, simplification, and visibility and transparency.

lowering rates down to 10% and 25%, simplification -- the tax code is usually complex, especially for business and small business. that is a compliance tax on the overall economy that does not do any of us good. and transparency and visibility , americans only see half of the social security-medicare tax on their pay stubs of a couple of weeks. they'll know half of the giant cost of social security and medicare. i would make that visible on a pay stub. that is that the thing i would do. again, the most important thing, economic efficiency, lowering the corporate tax rate is the single most important thing we can or should do in this country. that has been a bipartisan reform around the world. even the most socialist welfare states in europe chopped their

corporate tax rate because they want their businesses to do well in the global economy and we should do the same. >> where does any corporation get the money to pay the taxes? where does that money come from? >> of course, corporate taxes are really the ultimate burden on workers, consumers or workers for corporations. every economist left and right agrees with that. there is disagreement on where corporations pushed down the burden. but in a global economy, the general rule is that the burden lands on the most emotional factor production, the most -- the most in mobile factor of production -- labor. american workers. there have been studies that find that most of the tax burden has to do with lowering the burden of employees.

>> a place that creates the most efficiencies for economic growth and for the government to receive the revenues that they need to do the basic things. time and time again, you see examples of higher rates not necessarily yielding higher revenues for government. there is a point where there is a balance, a place of efficiency were the rate will yield a greater amount and will create, at the same time, economic activity, which ought to be the objective. a growing economy based on our tax code creates far more revenue for the government, disproportionately more. >> if we reform the tax code to eliminate the expenditures, take

the savings and apply it to a lower rate, that is the effective rate, which is what it is -- have we really done anything to gain competitiveness? or do we need to go below the effective rate? >> the first thing that happens when you do that is that you're shifting power away from washington and the surrounding areas, which is probably the place of greatest economic prosperity right now, back to the rest of the country where economic decisions are made by individuals who want to risk their capital and pursue their dreams. right now, it is fun to go to dulles airport, drive by the -- these are major companies that have huge growth, lots of construction parent housing prices are incredibly high. income levels here are the highest in the country. why is that? i'm sure that maryland has a great business climate and so does virginia. but this is a source of business now that is incredibly important for all sorts of

businesses. so you would shift power away from washington and you have more economic activity if you simplify the code that would generate more revenues for the government. >> thank you. thank you for being here today. you used the phrase that republicans want to go back to the era of robber barons. a robber baron is a government that steals money from middle- class hard-working taxpayers and gives it to rich bunglers like solyndra. thank you. i yield back my time. >> i don't think that was a question. >> the gentle lady from florida. >> we've met. it is good to see you. welcome to the budget committee. i want to ask my questions and

frame it from my standpoint as a mom who is raising three young children and attending the public schools in florida and as someone who served for six years in the legislature with you as governor. the one-time money is you just referenced were created to lower densities from california. you're here today under the guise of removing barriers. you spearheaded a deal to use more than $600 million in public money to lure the scripps research institute to build the facility in florida. as state legislator, was called into special session of the legislature so that we could pass a one-time $310 million gift to the scripps research institute from federal stimulus money allocated from florida. palm beach county and give up $269 million to pay for land and money for scripps. you're quoted as saying that

there is no better way to end the stimulus money by -- i was on the appropriations committee and i was questioning your staff and about the importance of accountability with that investment. you insisted that was not necessary. paris -- i remember it distinctly that we could ensure that the -- that if the promise jobs were not created, scripps would have to pay money back to the state. you oppose that and said it was not necessary current despite strong reservations about this get cop -- this gift, democrats and i voted for the bill. we tried it your way. these are the result could has a 2010, scripps florida employed 72 people. there were to employ it 545 people by 2014. in the scripps floated deal and

the promises of massive job creation were massively overblown. depending on which proponent you're listening to, it would create 2800 direct jobs after 15 years. but as of year seven, scripps florida has 377 people. estimated spin-off jobs in of the companies were largely overblown, from 6500 at times to 40,000 or 50,000 were quoted. in fiscal year 20 -- 2004, it had only created 615 full-time equivalents. in 2003, the year that the scripps giveaway passed in four, there was a $30 million cut to state universities. given the employment numbers which were far lower than projected, was it good decision to fund private education -- private enterprise over public education?

students could have received $3.2 million in assistance. it doubles down on a policy that benefits large private corporations and the wealthiest americans and leaves the middle class and working comes to fend for themselves. florida has had one of the worst high school graduation rates in the country. and they require remediation when they go to college. and we are paying for a company that relies on importing employment. this year, universities were cost to -- >> is the gentle lady going to give the gentleman a chance to respond? >> you just took some seconds off my time. >all because the economic policies designed by you that could have gone to education and infrastructure and other important investments. here's my question. from your testimony this

morning, you said my best advice to use to perform a fundamental cost-benefit assessment. you go on to us what would it cost-benefit analysis showed? are they being measured on the success with which they get people retrained? good question been how do you think, if we apply your advice to the scripps deal, with two $0.3 million of state funds per job holdup? how do you justify giving away $600 million of public funding with no accountability? >> again, welcome to the budget committee, gov. bush. you have nine seconds to respond. >> the scripps research institute is not a corporation could is not a for-profit company. it is a premier not-for-profit

research institute that does world-class research. the accountability that you voted for -- i am glad you voted for it. it was based on the money going out based on the 575 jobs. this is an idea to spur innovation, to spur additional activity. it gets hit by the downturn in the economy, but there have been significantly higher spin-off jobs or jobs created because of scripps and burn a man torrey pines and other institutes. i have not followed the budget of the state since we left, but we increased funding for universities as well pair of florida has gone from the back of the pack to aspiring to top tier status. in terms of research spending,

we are probably no. 5 or no. 4. 10 years ago, we were probably 25 or even higher than that been from their perspective, it ought to be reviewed. i completely agree with that. there ought to be analysis done a good bet for something that is work in progress, i would say it is a success. if we had not spent this one- time money on long term things, the money would have been spent and it would have been spent creating huge recurring gaps that many other states have had to deal with that would have ended up creating higher taxes for floridians. it would have hurt our economy and made our business climate worse. >> i will not respond. >> do you intend to include something in the record? >> let me just say what it is. it is an article from the "sun the -- l" that shows that da

>> without objection, the gentle lady's article be included in the record. gov. bush. >> it is a joy to be here. >> it is amazing. thank you, mr. chairman. thank you for being here. i will like give a five-minute campaign speech. mr. edwards, to what extent is it necessary for the government to provide infrastructure and how much can the private sector do? >> the governor mentioned we are behind a lot of countries around the world in terms of privatizing our infrastructure were moving at least to a public-private structure. the indiana toll road was mentioned. but where i live in virginia, the capital beltway is being widened with $1 billion of private money. there is a lot the private sector can do it in terms of

infrastructure spending. i am on a monthly e-mail list that tallies the global total in private money going into public infrastructure. the united states is way behind. countries like australia and canada are ahead of us on this. there's a lot we can do. canada, in terms of infrastructure, the privatizing their air traffic control system back in 1996. people in this country think that is crazy, something like the air traffic control system. in canada, it is a self-funded non-profit corporation. has been a huge success. it has an international award for innovation. the private sector can do a whole lot if we open up these barriers to investment. >> mr. waxman earlier talked about market failures when my colleague from kansas was speaking to him. q. have any general thoughts about market failures -- do you have any general thoughts about market failures versus

government failures. >> there were market fillers that led to the crash in 2008. the banks and the federal reserve held interest rates too low. the idea of more regulation is really problematic. some of the biggest scandals -- the burning madoff 1, for example, was not the result of lack of regulation. that is because the sec was sitting on its hands and ignoring the obvious signs. think regulation will solve our problems. >> people are paying most of their taxes to the fed drove government rather than to state and local governments. do you think that is the right balance? should we shift in the long term toward more taxes going to local government rather than federal government? >> for a century, there has been this huge pressure centralization in the united states, which i think is really

problematic. if you look at total spending in the united states, it is 70% federal and 30% state and local, which is astounding. it should be the other way around in my view. the to do government should have some basic functions we all agree with and we ought to leave a lot of things like infrastructure and education to the state and local governments. i believe in the laboratories of democracy. when state and local governments fund their own programs and have control over their own programs, there's a lot more innovation. the programs are leaner and better run. that is the direction we should move in. >> as i talk to constituents, whether they are tea party people or people in the occupied movement, there seems to be a lot of anger about similar things -- the bailout, the subsidies, the revolving door between wall street and the treasury department. these other kinds of things -- crony capitalist features that seem to be a part of interventionism.

do you think that cronyism, corruption, and waste are a natural byproduct of interventionism? when you have a government this big, you will get cronyism, corruption and waste. >> absolutely. we will always have lobbying. that will always be a problem. but we don't need to have all of these subsidy programs. i would calculate that the to do government has 2000 different subsidy programs, all the way for medicare down to hundreds of programs we have never even heard appeared all of those 2000 different programs get lobby groups. they grab on to them and lobby for more and more and more. that is a fundamental problem. net think that -- i think that they need to cut them. >> gov. bush, do you have any thoughts on that?

>> on what? >> cronyism in general. >> the more complex, the bigger government gets, the more the actions, the bigger unintended consequences. and the less clarity on what the rules of engagement are. the good example of that is dodd-frank with different world- making processes. the unintended consequences of this will play out and congress will have to justice. but in the interim, it freezes job-creating types of activities. it does not about regulation. we have regulation in place. if the federal reserve chairman at the time said we did not apply the regulation that law had allowed. >> greed is unique to people. therefore, you need to

establish restrictions so that people don't take the vantage of others. that is why we have police. that is why we have law. the rule of law has to apply. the government and individuals -- there is abuse in the private sector. all we have cronies' decide the salaries of ceo's also have contracts with those different companies, there will be an inflated slate for the ceo. that is just rampant greed. the advisers for compensation could not also be the consultants for corp., but they did not pay attention to that. there was abuse because of greed. let's keep that in mind. >> thank you. >> i would like unanimous consent to place certain news people articles in the record. >> without objection. >> along with the governors

biography as presented to the committee. >> it is already in a record. >> thank you very much. welcome, thank you all for being here today. gov. bush, i read your testimony. i was on the floor and i could not be here for the earlier part of the hearing. but in your testimony, you state " to stand there may be political support for specific industries and companies and we know from recent experience that government is not good at picking winners and losers in the economy and fundamentally it is not the job of the government to pick winners and losers in the economy." , would like to learn more on your thoughts on the -- i would like to learn more on your thoughts on the financial services industry. shortly after you left the governor's office, you went to work for lehman brothers in what is described as the in-house investing arm of the company.

was that correctly reported? >> i was on the private advisory council of the private equity arm of lehman others. >> thank you. and you were working for or with lehman brothers when it collapsed? >> i was a consultant and advisor to lehman brothers. not an employee. >> do you still work for -- you do receive compensation for the engagement? >> yes, sure. >> do you still work for lehman brothers merchant banking, which i understand was spun off? >> no. >> thousands of people lost their jobs when lehman brothers collapse and a lot of people lost money. what was your job of lehman brothers exactly? >> i was an advisor at lehman brothers. i dealt with basically spent most of my time dealing with their customer base, providing insights and things like the

madness of washington, d.c. sharing my experiences with customers to try to add value in the relationship. it was not related to internal functions of the company. it was related to client interface. >> if you could provide a specificity for the record, it would be greatly appreciated. do you think the government pick winners and losers during the financial bailout? >> i think government oversight was lax. the roles created afterwards, the oversight was lax. sure. >> of like clarification on another small point because of some reporting. for whom do you work now and do you have any relationship to barkley's? >> i do. >> what is your relationship? >> a senior adviser to barclays capital. >> it was reported in 2010 that

a u.s. bankruptcy examiner concluded that grounds existed for holding accountable -- the newspapers said that it 2002 under page forensic report -- >> you have a question about the subject of hand. do you have -- are you aware of any of these allegations? >> no. >> d