assets are patton's instead of factories. in contrast, the u.s. has one of the highest corporate tax rates in the world. we give countless tax breaks to businesses, but many do not attract or retain investment. we have stuck with a worldwide system. in some ways, we have weakened protections. as a result, we give billions per year to tax havens. the passed two decades, a number of u.s.-based -- the number of u.s.-based companies on the fortune 500 has declined. american jobs are often lost in the prospect -- process. a u.s. company based in chicago closed down their only production facility.

hundreds of americans lost their jobs. there are many examples of when of foreign country acquires a domestic company. because of these tax rules, we seem to have the worst of all worlds. how do we do that? because we use tax reform to get the results our economy needs. need to create competitiveness, more innovation, and more opportunity. most economists agree that lowering rates and getting rid of tax expenditures generates growth. tax breaks have doubled since 1986. they now cost as much in revenue as the entire income tax brings

in. some are worthwhile, but me fail to create jobs and growth. but the uncertainty impedes growth. there are only 14 expiring tax prevention's -- provisions. to date, there are 132. that makes it tough for families and businesses to plan for future investment. when we take a hard look at -- we need to take a hard look at which to promote an image to eliminate. every tax provision needs to prove it has a tangible benefit to our economy and society. if not, it doesn't belong in the code. second, it needs to support american competitiveness. the tax code must adapt to the global economy.

we need to update our corporate tax rules to keep companies from shipping profits to tax havens where they have not earned any income. we need to reduce the incentive to move overseas. many companies are choosing to keep jobs here read, and we need to encourage them. we must support innovation here at home. microsoft and apple both started here in garages. there's a reason why silicon valley and silicon alley are here in america. innovative companies create jobs. today's economy depends more on innovative fields like high-tech manufacturing and intellectual property is. we need to implement measures to put these new technologies on a more level playing field with existing technologies, especially in the energy sector. finally, we need to promote

opportunity. tax reform can boost share growth and make our society more of a meritocracy. many taxes currently give the most help to those who have the most opportunities. tax reform should refocus these benefits to help those who started out with fewer opportunities. which insures more students get more education, not just college, but votech and special training. americans are creative and the most driven people in the world. education is the key to unlocking are potential. it is the best investment we can make for the nation. a college graduate working full- time earns nearly $1 million more over his lifetime than a high-school graduate. we can get results with tax

reform. jobs and growth. i believe this puts us in the best positioned to compete in the global economy. more homegrown innovation and opportunities for all our citizens to have a chance for the american dream. a lot of talk in washington these days is focused on fiscal decisions. we need to address the spending decisions by the end of the year. but we must reach agreement on a long-term deficit reduction plan. everyone needs to contribute. deficit-reduction must include revenues. it had been to ramp up over time to avoid slowing down economic recovery. we must look a couple steps ahead to the next great challenge on the horizon. that is tax reform.

tax reform is a once in a generation opportunity. we can cement america's pre- eminence. the work has begun. we have held numerous roundtable discussions. we have spoken with businesses, labor groups. i am making progress and a detailed tax reform proposal that will attract bipartisan support. the new tax reform will be easy. when favored tax breaks disappear, someone will be unhappy. but that's the wrong way to look at. the right weight is, i think, to remember tax reform needs to focus on the results we want. it can create jobs. liukin sparked innovation. it can expand opportunity. it can put america back on top.

thank you very much. [applause] >> in the senior director of economic policy here. the senator has to get back to work. if you have a question, fire away. nancy? >> [unintelligible] >> speak up? >> senator baucus, i wonder what you are proposing on the international tax proposal? >> i'm not sure what the chairman proposed, frankly. none of us know precisely. the main thing is this. i believe telephonist town --

too often this town, folks focus on mechanics. rather we should figure out what we want to accomplish with tax reform. what are the reasons for tax reform? why are we doing this? it is not complicated. it is simple. we know all that. i don't know if we should make changes simply for the sake of simplicity or rate reduction -- which i agree with. while we're doing so, let's figure out what we want for our country. that, i think, is slightly different from the chairman cantor. i think he would agree if we talked to these points. we have had several points already. our focus must be on the results we want. the world has changed so much. there is so much at stake. it is part of the fiscal problem

that needs to be addressed. here is an opportunity to refocus our direction so our kids and our grandkids are much more likely to be better off now and we are. we have a moral obligation to leave this place in as good as or better shape than we found it. this is an area where there has not been major changes in the code since 1986. >> reuters. what do you think is the most likely scenario for an end of the year deal during the fiscal sequester? some people think the one-year extension, some kind of trigger or fast track to get tax reform going. ben, can you talk about how you see how you divide the bush era at tax cuts for the wealthy and

calling for a vote to the million or more and come? you think that is the way to go? >> with all respect to those specific suggestions, i think the better approach at this point -- june 11 -- is to do what many of us are doing. mainly coming engage in a lot of discussions, with republicans and democrats. i have attended many such meetings over the last several weeks. by and large, the minute she -- wemenici and bowles-simpson, agree on many of the details.

i am going through each one. we have an opportunity for senators to better understand what is included in each and better understand the trade-offs that are needed in order to reach a solution. starting with the settlement. people talk about what is meant by that. the state of medicare. centers in the country frankly need to know what the trade-offs are -- senators in the country frankly need to know what the trade-offs are. the same thing on the revenue side. i firmly believe that people tend to focus more on facts than the rhetoric. i'm trying to get away from the rhetoric and get people to look at the facts. in these hearings, we work together to get tax reform. and debt reduction. my view is everything is on the table. i think that is a psychology

that i think is very important to keep people talking, keep people working. i will have a meeting of the finance committee next week. members of the finance committee -- it is probably members only. we will talk about traditional extenders' only. and if there is a way to get traditional extenders down the road, extending some, repealing others, without any gains. by that i mean, democrats do not offer a tax and republicans do not offer to repeal a state tax. that is a chunk we can maybe deal with. i hope the senators will start talking amongst each other, build some more trust, try to figure out what to deal with. but the precise questions you asked, i think your questions

you will have to put off. we are going to get this solved one way or another. be better way -- the better way is to resolve with more agreement. that is also my view. we should try to avoid the private election. i don't want the members to get to locked in to then make it difficult to do "what is the right thing to do." we all know what is the right thing to do. is just a matter politically of getting their. >> [unintelligible] >> that should certainly be on the table. i know cantor has talked about that. you are making another big issue. that this should be -- that is

which one should be extended and which one should expire. the danger is that congress will not act to address the deficit. i think that is a big danger. his answer to that is the trigger. well, we looked at traders -- triggers in super committee. we will si. -- see. >> could you address, senator, the issue up held flat the code should be? it is in vogue right now that there should just be a few rates for all kinds of tax incentives and tax expenditures should be eliminated. could you achieve the goals you are talking about that kind of

flat code? >> all things being equal, the flat earth, the better. but all things are never equal. there are so many other considerations. let me put it this way. some time ago when mr. forbes was running for president, he advocated the flat tax. it was supposed to be revenue neutral. as i recall, it would be about 18%, 19%. i may be wrong on the precise rates. it was close to that. the thing is, once people start realizing the effect of that, they back of. under the proposal, that flat tax proposal, those with incomes above 200 big ones would have to pay a lot more in taxes. and a lot more people would have to pay more in taxes and get the windfall. you have to be very careful. and i must say, too, some of the

flat tax proposals also suggest major tax expenditure elimination's to get their. i think some of that is unrealistic. politically. how much that can happen. there is another factor. that is revenue. if we are going to deal with the deficit, we have to look at revenue. have to look at revenue. we have to. my major point is in my remarks. namely, it is interesting as a goal. let's see what we can do to make our country more competitive. let's see how we can make our country more innovative. one major advantage we have in america is innovation.

the major amount of manufacturing goes to other countries. the major advantage we have is our creativity. there's a reason why google and microsoft and apple and facebook are american companies. and we have to maintain that. you hear constantly around the world. we have to really make sure. that is growth. the code cannot do it all. i grant you. the code cannot address the income disparity in our country. but the code is a useful tool. and it is really an opportunity to address growth, and innovation, and try to in some way deal with income redistribution.

>> we appreciate it very much. >> that's it. >> good luck. [applause] >> my name is steve bell. of the senior director economic policy your. our moderator for the next portion is going to be christian roberts, the national journal's editor for the economy. she joined reuters in 1998. and she has had the opportunity in 2006 to do a lot of pentagon coverage, including trips with robert gates, donald rahm spell, and more policy -- donald rahm spelled -- donald rumsfeld,

and more policy experts. >> thank you very much. i'm going to give you an introduction the you don't need one. former white house budget director and widely recognized as one of the foremost experts on the subject we're talking about today. we have senator bob packwood. he was one of the architects of the 1986 reform. congressman bill thomas, chairman of the ways and means committee. widely considered one of the smartest and toughest guys that has ever walked the halls of congress. and we have robert greenstein founder of the center for budget priorities, addressing a wide variety of issues including the social safety net program. let's start with senator baucus's speech. lacking in detail sign of some

of my colleagues in the press wanted. did it move any of you? >> i was very glad to hear him say several things that he said. one, clearly we need more revenue as we address the long room -- run deficit problem. he stuck with progressive rates. he is a cautious man. i'm a more radical -- and a centrist, but i'm a radical centrist. i would go for a more dramatic tax reform. but i thought he laid out many of the reasons that we need tax reform. and he laid the now well. >> did you get any insight on with the two parties might find areas of consensus? i'm sorry -- >> [unintelligible]

>> i was referring to -- there were several questions asked by journalists to try to hone in on specifics, and i thought chairman baucus's answers were i want to avoid laying out any specific strategy of round which there would be partisan division before the election. i thought there was a consistent theme there that there needs to be behind the scenes discussions now to lay out a framework for more intensive discussions when the election was behind us. so, while on the one hand, but i do not think they were necessarily specifics that suggested further bipartisan progress as a result of the speech, but there was nothing in what he said to impede the bipartisan cooperation.

frankly, they do have things in them that impede bipartisan cooperation. i would rate it as a plus on that front. >> is this the right strategy? >> i will tell you where i come from. that is i'm a pragmatist. you need to get a majority of people saying yes. the atmosphere has been such that you are not able to at this time. senator baucus is a creature of the senate. the senate deals and concepts. i'm a creature of the house. the house deals in specifics that have to be written up ahead of time and scored before we vote. i think one of the important things we need to stress is that people should not sit around making lists of what they will not do. that automatically limits your ability to move. secondly, this panel has described -- is described as the

tax part of the debt problem. coming from the ways and means committee, the tax part is the debt problem. social security is a tax. medicare part a is a tax. medicare part b is part of the general fund. addressing that broad tax question, not splitting it up into entitlements, a social network -- if you want to make sure -- and i agree with alice -- the system needs to be progressive. you cannot vote. he will not get enough people to vote if it is not. but if you want to take someone's income or wealth and use it smartly as senator baucus said, you can talk about making changes in social security, bringing tax money from the wealthy into the social security system -- that would by the way,

saw the social security problem. you can deal with the tax portion that goes to medicare and do it in a way that you take care of people's medical and social needs, but allow people who have wealth to spend their own money on what they want beyond what medicare would provide the. believer that taxes need to be addresses in a much -- addressed in a much broader and smarter way. finally, you can talk about goals as much as you want. we have put up stop signs. we have put a stop lights. none of it ever changes. i believe going is the goal. what can we accomplish? don't have too many moving parts. addressed the fundamentals. but don't talk about what the world is going to look like and 2025 or 2030 with what we're

doing today. make sure you do not make it harder to solve our problems, but get people to guess on a simple plan that encompasses a creative approach to dealing with the problems in the system. >> chairman packwood. >> anyone who has studied entitlements knows the spending part that is the problem. the tax reform part -- you better remember what a miracle was in 1986. if you do not believe in miracles, you're not a realist. this tax reform bill in the senate was really put together in six days. at the time i had lost total control of the committee. we came back and we asked for a tax bill at 25% rate, tops.

he said, ok, here is the interest reduction. i said what about 26%? [laughter] he comes back on the tuesday. the outlines of it were given to the finance committee the following thursday. low rates -- you can give a lot to get those low rates. that was encouraging. going toll right, i'm put together a group i know i can work with. the democrat's side -- and on the republican side. starting tuesday morning, that group started in my office with me at 8:00 i-30. tuesday, wednesday, thursday, friday. we did all this work in the morning. by saturday night, the seven of

us reached a conclusion. the only thing i had to change was at the last moment, the employees came and they want an inspection on the losses we had taken away from everybody else. i thought, i am going to need them on the floor, because i could see that problem coming. they dramatically cut the ira's. we passed the committee 22 nothing. literally 10 days -- 20 to nothing. literally 10 days later. it was done in secret. about the lame duck session. do we need to do as kim dixon

asks to force the next congress to deal with this issue? >> with a statute? >> of this agreement. >> the stop sign. a stop light. >> i think a possible approach would be something like what the gang of six proposed last summer. were basically no one thinks you're going to rewrite the entire -- where basically no one thinks you're going to rewrite the entire tax code. is very complicated, and frankly, even more complicated the 1986. it was a reduction on the individual side offset by an increase in revenue on the corporate side. >> in 1985, the top corporate rate was 36%. we cut the definition to 33% in the senate. we raised taxes even though we

cut the rate. two-thirds of the business community supported it, raising $140 billion over five-year time. >> i think there would probably be broad agreement that the tax code that has the broader base and lower rates is economically more efficient than the opposite. the literature suggests the economic gains are relatively modest, greatly outweighed by the economic gains or losses by dealing or failing to deal with our serious long-term fiscal problems, which are a much bigger threat to the economy. as chairman baucus said, there is no real solution if there is not a substantial contribution from both spending and revenue. so, i was glad to hear him say, really, as far as i'm concerned, but are not the only, but the first goal of tax reform is on like 1986, it has to raise

significant revenue. i think the possibility would be a framework agreement like the gang of six where you lay out a target for revenue. you lay out a target for reduction in private spending, other areas. and you set out a time frame. and to tie them all together for down the road. the title could do not take effect unless the entitlement reduction is it. you tie them together, and you can make it happen in 2013. >> i agree with bob. i think it is not just a stop light. i mean, we can make light of these things. but the fiscal cliff is a real cliff. it would be very bad for the economy in very bad for a lot these people care about if we let all the tax cuts expire all

at once, and the alternative minimum tax and all the things that are in the cliff, as well as this being sequestered, so that making a framework agreement for say six months to come back with a better, real tax reform, and the entitlement reform, and if you don't do that, the cliff is still there. there is a very real reason for addressing the problems. postponing, giving the congress more time -- like six months to me seems reasonable -- after all, you guys did it in six days. >> we rested on the seventh day. [laughter] >> it seems to me a very reasonable thing to do. is called kicking the can down

the road. it shouldn't be. it is moving the fiscal cliff a few months. it is still there. >> i'm not making light of it, senator, when i call it a stop like. that was a statute designed tool have workers not occur. bob packwood did a great job in 1986. lowered the rates. took away a lot of things that senator baucus was talking about in terms of expenditures. guess what happened the day the bill passed? they've worked on putting those lights back into the code. new look five and six years later, and the problems came back. ok? so, let's be pragmatic. i'm sorry. i can tell you what's going to happen in the lame duck unless you tell me who controls the senate following the november election. i can tell you what's going to happen in the lame-duck unless you tell me who wins the

presidential race. because those two factors, more than anything else, will shape -- in my opinion -- what happens in the lame-duck. probably nothing. but when the senator said "i'm going to put everything on the table," did he mean social security? did he mean medicare? i know he means defense spending. is just like the flat tax. there is always a bump in it some more. i really think you have got to look at the situation we are in, and the problem these congresses have, not the congress in 1986, or the congress in 1996 or 2006. this congress cannot have too many moving parts. it will be very hard to keep it together. you can just deal in concepts.

you have got to deal in specifics. there are going to have to be stakes in the ground on the major issues to see if you can begin to address them. i think the more you pressure them to come up with a down payment, with the structure they are going to follow after everyone raises their hand and get sworn in, at least in the legislature on january 3 in 2013 and january 20 at the white house, you're going to run into problems. @ think everybody knows what the options are. we've seen it in the commission's. you are going to see it in other plants that are being presented. presidential candidate romney has won -- one. the thing they are going to have to choose is the will to pick and choose. that is what is lacking. not the specifics. it is the will to make it happen.

any official -- any artificial deadline imposed on creating the will to make it happen is just that, artificial. >> two point your. i want to clarify certainly what i think should be done. it would be a huge mistake, and one of the biggest we could make to suggest everything down the road, even six months, a framework agreement that sets up trying to do things like tax reform and so forth, there is no reason it can, and it should. we should in extending tax cuts and not extend those above 250, and return for that, there should be specific entitlement changes up front. you do certain things up front. for the rest, there is a process. will that happen by january 1?

probably not. i think we should also explain that there really isn't a fiscal cliff. cbo says if all these things happen -- says -- if all these things happen -- sequestration, etc., etc. -- we will probably go into a mild recession. the reason i mention that, i've been thinking lately of the government shut down in 1995 when neither side would move. there was a shutdown. the pressure was so intense on both sides that within three weeks we had a deal. i think there is the potential that we go over the side on january 1. the pressure is intense. in january, there's potentially some kind of remark. hopefully with some up-front stuff that is retroactive to january 1. one final point.

there is broad agreement among both parties that you cannot read or write the tax code and lame duck -- rewrite the tax code in lame-duck. what i hope more members on the hill realize as they get into this is changes in health care are almost as complicated as changes in taxes. just as you need a number of months to get the right, you need a number of months to figure out changes in health care as well. there could be a panel for both tax reform and health. >> you mentioned the mortgage interest reduction. -- deduction. this president and congress have been almost completely unwilling to talk about tax expenditures at all. what expenditures need to be on the table for killing, frankly? >> for what? >> killing. >> that would be easy.

think about your results. let's say he won a top rate for 25%, and you want to keep as much progressivity as you could. i'm guessing 19%, 22%, 25%. to get there, you have to tax all fringe benefits. you have to eliminate charitable deductions. you have to -- >> state and local. >> state and local taxes. you add them all together, and you can get at a top rate of 25% and reasonable progressivity. the recent bull progressivity -- reasonable progressivity, the 1040 does not have a lot of deductions. the people you will hit with deductions are the very rich people who give contributions to the symphony. you can keep your progressivity

reasonably with a few rates. but you have to have the changes of rates at the bottom. but you have to decide on the rate first and then decide what we have to do to get to that and keep the progressivity, and will that be attractive enough to put together the coalition to do it? and the low rates are in a meeting attraction -- are an amazing attraction. >> with all respect, you cannot come close to a rate of 25% unless you do what he did in 1986. you must eliminate the differential for capital gains. >> we did. >> it turns out when you analyze factors, the remaining tax expenditures are proportional. we do not disproportionately help people at the top because of things like the exclusion for employer health insurance. you have a huge increase in

regressivity. >> this must happen under your conceptual framework because you're looking at it in terms of protecting entitlements and other areas. the reason the government shutdown -- the reason the government shut down in 1995 was because it was a bad temper tantrum. it was over a relatively modest argument. the reason we have not come to an agreement is we have the potential for a fundamental decision in this system, reversing some of the things that have been done, both in terms of what the republicans want and what the democrats want. that is the reason it is difficult. and i do not think we can solve it by separating income and corporate taxes with a medicare trust fund tax.

>> i have always thought 1986 -- 1996 was the recent, and sally and the kids could not get into the washington monument and congress could not stand the pressure. >> exactly. >> could i go back to progressivity? you used the word "eliminate." the home mortgage deduction, for example. you don't have to do that. you could make the advantages to homeowners much more progressive. what we did was to convert the home mortgage deductions to a tax credit at a lower rate, which was 15%. if you do that, you bring all

lot more benefits to people. those are moderate people who own houses. it is hard on high income people with very experience -- expensive houses. you have to grandfather the existing ones. uygurs bill to many very expensive houses. -- we just built too many very expensive houses. >> what you did was not unlike what gephardt did by taking me taxes at the lowest rate, not the highest rate. obviously taking deductions at 40% when you could take them a 14%, that was a big difference. >> i credited him. >> it is open another way you can get to where we are all talking about. >> when we talk about progressivity -- lower rates make it easier on rich people.

not so. many of these provisions like home mortgage advantage the upper income people. so you can have a more progressive system with lower rates and raise more revenue. >> there is nothing behind the curtain. everything is behind the curtain now in terms of tax credits and exemptions. >> your right. but pete and i put it out in front. >> there are issues of concepts. but there are also issues of math. if you do and across the board cut, it has a regressive effect. to maintain progressivity, the tax expenditure changes have to be highly progressive. favor.ongly in

senator baucus made an important point with regards to education. it's the best of four people who could afford to do this anyway. from an economic efficiency standpoint, the larger the rate reduction, the more severely progressive they should be. my earlier point was when you do the math, it is virtually in possible to get rid down to 29% in maintain progressivity without eliminating the capital gains dividend, which is part of the political difficulty. my own view is i worry that if the first thing said is the

rate, if there is a revenue target, then when tax reform is done and people see what they have to do, members of both parties, that they will blink and agree on a revenue target. hall low you get the rates depends on how far you are willing to go with tax expenditures and hit the target, which it's accompanied by a spending reduction target. >> thank you. can we get microphones out? we probably will only have time for one or two questions. >> this is what i meant by getting out of the box we currently operate under. progressivity. progressivity. all that means to the tax code is the rich pay more.

but you shouldn't just look at it in terms of the income tax some progressivity. 1 not look at it in terms of medicare? right now, the biggest cost of medicare is becoming part b, which is the general fund. my ideal world would be the democrats would create a program that creates an ok medicare structure. and everybody gets the okay of medicare structure. but above that, people who have wealth, if you want to be progressive, ought to be able to spend what they want to spend above that good medicare structure. you want to put progressive -- progressivity on the table, you put it on the table in terms of fica. the amount people pay as their

income goes up is not a corporate. it doesn't reflect what was originally proposed. that will pull some wealth out of the upper and. were you put it into the fight the tax. and it makes the social security a whole lot wholer. i know it destroys the concept of entitlement. entitlement is killing us. what you want is to get a good, socially-supported health benefits for everybody. above that, why do you have to say people who have the wealth can spend it? no. let's tax it -- progressivity -- let government play with it, and then provide you with the better benefit. not what you could have had if you want to use your money. tax the entitlement. don't give it to everybody. you let people spend their own

money above and beyond an adequate inappropriate social safety net. both for senior living and for health. that is what the debate ought to be about. that is why i included social security and medicare under the tax burden. >> questions? thank you. >> sort of -- >> can you tell us your affiliation? >> brian johnson, american petroleum. a lot of this will depend on politics. we know that. >chairman camp put out of thoughtful tax proposal last fall, territorial. is it at all telling that when i asked earlier, the chairman of the senate finance committee said he did not know what chairman camp put out and

doesn't think anyone does? >> i don't think this was in reference just to his program. he talked about the commission that was created by president obama. he talked about the minute she -- domenici. >> i would interpret it as to stay open but i'm not ready to come forward with my details yet." >> i thought of this. it jogged my thinking. here is the long shot that i know is that going to happen. but i think it is the right thing to do. if we can get agreement -- as we can as of now -- that we need revenue, that it would be great if it was somehow the tax reform

process that would somehow find a way to get some kind of tax into this mix. you can use part of it for deficit reduction. you could use part of it to offset higher energy prices. you could use part of it to lower the corporate income-tax rate. i am one who is increasingly nervous about what is going to happen worldwide with our inability to deal with climate change. is even more serious than our inability to deal with fiscal issues. the fact that we do need some revenue year may be an opening for some kind of bipartisan agreement. >> one last question. a question over here? >> lloyd hand, king and

spaulding. thank you up for making this subject more accessible. there have been in many references to sequestration witches considered a draconian -- which is a draconian measure. you now -- know there is a requirement to spend 60 days to 90 days notice if you will have significant layoffs. that happens to occur two days before the election. here is my question. do you think inappropriate? do you think it is possible to get some bipartisan agreement to waive that provision? as in the stand, the bipartisan policy center has concluded it will result in the loss of 5

million jobs. that would be unnecessary with some framework issues to be agreed upon on lame-duck. i agree there will not be enough time to debate and lame duck, but what about removing the egregious -- consequences of sequestration? >> if there is the possibility of a job loss of 1 million could happen before the election, it will be changed. >> [unintelligible] >> ," understand what you're seeing. he even that dreadnought -- it is not something anyone going into the election wants anyone to talk about. >> it has the potential for changing what people to be the possible outcome of the election, it will affect behavior. i think very quickly on the

territorial question, everyone is talking about this. you have to remember in the 1950's, 1960's, 1970's, as we move later in the century, the u.s. did not go through devastating wars. we did not have to rebuild the economy. we talk about all the cars being made overseas. honda just announced that they are bringing production to the u.s. you can drink water from the tap right now. that is because of the currency differentials. we're now going to look at changing to be more like the rest of the world. there's the question of territorial versus world wide. those are all archaic. it takes energy to get someone to vote yes on something. i will just say this again.

there are just so many yeses out of numbers. you have to prioritize what you're going to ask them to vote yes on. it is easier to ignore something that is going to happen than to force people to vote yes to stop something that was not going to happen anyway and everybody knows it. that's why they voted to put it in. >> [unintelligible] >> final thoughts? >> despite a bit of skepticism here, i think this is a huge opportunity for genuine tax reform. however we work the mechanics of the lame duck, this is a chance that should not be missed to make our tax code a lot fairer at least as progressive and more pro-growth. and we shouldn't mess it up. >> thank you to the panel for joining us. thank you for coming. [applause]

>> we have got to think about money andthe rich's changing medicare and changing social security as well. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> and more about potential changes to the tax code coming up on c-span. we have a hearing from the house ways and means subcommittee on the tax cut scheduled to expire on january 1. then the white house briefing with press secretary jay carney. and tonight at 8:00 here on c- span, former british prime minister gordon brown testifies

before an inquiry looking into relations between the british press and politicians. >> tonight, at espn president on network expansion to different media platforms. our chief correspondent on the way technology has changed cnn. that is "the communicators," tonight it is a clock on c- span2. >> and tomorrow morning on c- span, attorney general eric holder testifying before the senate judiciary committee on his decision to appoint federal prosecutors to investigate national security leaks. the house committee is considering whether to hold the attorney general in contempt for not providing more documents to congress. tomorrow's hearing is live at 10:00 a.m. eastern on c-span. and wednesday on c-span3, leon

panetta and martin dempsey are testifying before a senate appropriations subcommittee about the pentagon's proposed budget for 2013. that is live at 10:30 eastern on c-span3. >> pulitzer prize-winning author david mariniss discussing his new book. we will look get our trip to kenya with the author in 2010. later that same night, your phone calls coming e-mail, and tweets. >> on january 1, tax cuts signed into law by president george w. bush and barack obama are set to

expire, raising tax rates for most workers. the house had a hearing on the broader issue of rewriting the tax code. >> good morning. thank you for joining us today for another in a series of hearings on water commonly referred to as tax spenders. as you may remember from april, we had the opportunity to hear from a number of our colleagues about the merits of extending for not extending many of these tax policies. by all accounts, it was a productive exercise. i commend our chairman, chairman dave camp, for providing the opportunity to examine these provisions.

his leadership in setting forward a transparent process is what the american people expect from their congressional representatives. i think it is accurate to say the days up simply rubber stamping and extending an entire package of extenders is now behind us. and today, we pivot to exploring what we hopefully will here, and that is ideas and to providing a framework that congress should use in evaluating these tax extenders. are witnesses today will share their views on -- our witnesses today will share their views on tax policy and their specific merits in the metrics against which congress should test their provisions. i look forward to the testimony and the ensuing conversation. before again, i would like to take a moment to thank the

ranking member from california today. unfortunate, congressman richie neal could not attend because he is attending the funeral service for a fallen police officer. >> thank you, mr. chairman. our thoughts and prayers are with the family of those in mr. who lost the police officer today. i know as a father of a detective, how i know is that is something that all of us care a great deal about, and we are so mindful, and we think the chairman for convening this hearing today. we appreciate that the subcommittee is going to consider some of the expiring tax provisions, as this consideration is long overdue. businesses have been desperate for certainty in the tax law

when attempting to make decisions that can help grow the economy. however, many may be today's hearing as actually increasing uncertainty for businesses and for individuals that use these tax benefits. as we learned in our last hearing, so many of these benefits enjoyed broad, bipartisan support, their extension should not be difficult. as we learned from the recent jobs report, our economy is struggling, and job creation is still too slow in coming. unfortunately, proven job- creation programs have not received adequate consideration in this congress. press reports say this can be possibly gridlock, and provisions on the president's to do list to create jobs have not made it to a vote. this is affecting the congressional bill and to act and to act quickly to turn this economy around. frankly, i do not blame them. we have had a hard time finding

agreement on many things, but it is important to know that we have many things that we can do in this committee to eliminate some of the uncertainties facing businesses. as we learned from the last subcommittee hearing, so many of these today enjoy broad, bipartisan support. in fact, many of us are league sponsors of the important job provisions, including the tax credit, the research and development tax credit, the conservation easement credit, and the list goes on. we have all worked well together on these provisions, and we should now work to get them across the finish line. i appreciate testimony from the witnesses today, evaluation of temporary measures being as important as evaluating all provisions in the tax code. there are a number of loopholes that can be closed or provisions that provide windfalls to certain industries which could be examined, project early close. the temporary nature of

provisions should not automatically make it more eligible for determination than some of the provisions in the tax code that are permanent. many of these provisions are enacted on a temporary basis due to budgetary constraints. that does not automatically detract from the merit of these provisions themselves, but today, we are talking about provisions that have already expired. businesses large and small rely on these provisions when making investment decisions. we have allowed almost 18 months of the 112 congress to pass without doing our job to move legislation providing extension of these provisions. i mentioned in detail at the last hearing, the last time we had a tax hearing a few weeks ago, just how important some of these extenders are to my district and to my constituents. i will not go into detail again but will mention that mr. and i

are looking at the conservation easement, and this is about the preservation of family farms, which protect our watershed and assures the food security. today, it has 308 co-sponsors, including the chairman, which i appreciate very much, and wish that we were marking that bill of today or, better yet, had it on the suspension calendar. i could not agree more with our chairman that this committee has a duty to assure that the tax code is working to create jobs and for our economy. it is a texas says -- it is an exercise that is necessary. this committee can act quickly and do so in a bipartisan way to extend the provisions that need to be extended and help kick- start our job creation and get the economy going. i believe that such legislation should include not only job

provisions that expired in 2011 but also proven job-creation provisions that were a lot -- were allowed to expire in 2010, including the manufacturing tax credit. the committee should engage in proper oversight and review of all of the tax provisions to identify those that are meritorious based on their performance and find ways to strengthen them and make them permanent. this oversight should not come at the cost of inaction on important job-creation provisions. i hope that this subcommittee and the full committee can get to doing our work and get this in front of a full house for a vote and in front of the president for a signature, so we can help improve the economy. thanks to the chairman for allowing me to read this testimony. >> thanks, mr. thompson, all of that no mention of grapes or vineyards. an inside joke.

speaking of consent, can i have unanimous consent for allowing the submission of the opening statement from mr. neale? without objection? it is my pleasure to introduce the witnesses here today, and we have an excellent panel of witnesses seated before us. today's witnesses bring both tax policy and oversight experience to us. today's witnesses begin with, to my left, to the right, we welcome dr. jim white, who is responsible for the gao work with tax administration and tax policy. thank you for being here, sir. second, we welcome back the director for tax policy at the center of urban institute here in washington, d.c., and his research at the tax policy

center is focused on tax reform, and he has previously served as the acting director and as a member of the president's council of economic advisers. thank you for being here, sir. third, we will hear from a research fellow at the american enterprise institute here at washington, d.c.. he is on the ways and means committee staff, and he has also served on the president's council and has served as an adviser to the president's fiscal commission in 2010. welcome back to the room, sir. glad to have you here. and finally, he worked -- we will hear from the undersecretary for the commonwealth of massachusetts. and being from ohio, there is even an added emphasis on that. thank you for being here today, folks. the subcommittee has received from each of you written statements, and they will be

made part of the formal hearing record. as you know, each of you will be recognized for five minutes for oral testimony, and then we will have questions. with that, dr. white, the floor is yours. >> thank you. mr. chairman, ranking member, and members of the subcommittee, i am here to talk about the expiring tax provisions, sometimes called tax extenders. most are tax expenditures, so i will focus on those, however, this apprize more broadly. these are deductions, referrals, and so on, which reduce the taxpayers' responsibility than what it would be under a quote normal tax. they often have policy goals similar to those of spending programs. they may promote economic development, energy efficiency, or research and development. the provisions may, in effect, be viewed as a spending

channeled through the tax system. like decisions on spending, the decisions on whether and how to extend tax provisions involve trade-offs. my written statements summarizes statements commonly used to value it government policy, including tax policy, such as some provisions. first, extending the provisions on revenue. tax expenditures shrink the tax base. they either reduce the funding available for other activities are require higher tax rates to raise the same revenue from a smaller base. put another way, revenue the government would have received absent the tax expenditure could have gone to other programs, deficit-reduction, and second, there is the effect on equity. this is a subjective judgment, but asking questions about who benefits from a provision and how their ability to pay taxes can help policymakers reached

conclusions about it. the effect on the economy is what my statement calls economic efficiency. lightly taxing one activity shipped its resources to it and away from let this -- shifts resources to it and away from others. the effect on tax payers costs depends on its simplicity and transparency. to taxpayers understand the provision? what kind of records will they need to keep? and of course, simplicity and transparency affects the ira's ability to enforce it. another fact when it considering evaluating these is whether this is the best way to deliver the benefits or rather there is some other tool or a loan or loan guarantee that could provide the same benefits at lower cost. tax benchers' may have a cost advantage when they are means test.

one goal is to have an avoidance of duplication among programs, not just to save money but also avoid confusing the public. also important is the choice of tax policy tool, the choice of eight credit, for example, affecting the distribution of the benefit. too often, programs are implemented with little on how to measure the results. in the case of measuring these results, it is complicated, because the irs administers these, but it is not their functional responsibility for efficiency or community development or any of the other goals of the expiring provisions. who should collect the necessary data, and so on. now, i want to briefly illustrate how the gao has applied these factors in our reports. regarding the credit for ethanol, while and helped create the industry during its formative years, having both a

tax credit and a renewal fuel standard is applicable, and thus we consider phasing out or modify the credit. this raised transparency questions. there are multiple such complex provisions, and we found many eligible taxpayers either failed to claim anything or claimed the one that did not maximize their financial benefit. we have looked at the efficiency of the research credit. while economists tend to support a subsidy for research because of the social returns exceeding the private returns, we found the current design introduces inefficiency because incentives are distributed unevenly across firms, and it is estimated at more than half of the credit is a windfall for research that would have been done anyway. we suggest the changes to improve the bang for the buck of the credit. we also look at whether it

succeeded at moving resources as intended. it did appear to work in low- income communities. however, we also reported that its complexity made it difficult for smaller projects and resulted in less money for throwing -- flowing through the businesses that might be possible with alternative designs. we suggest that congress offers grants, with one option being a side-by-side test of the two approaches. mr. chairman, acting ranking member, and other members, we have done a number of assessments, all intended to provide congress with him about the mission factors i outlined up front, how to use the information and make trade-offs is up to policy-makers. i would be happy to answer questions. >> thank you, dr. white. doctor, you have five minutes. >> great, thank you. chairman, ranking member thompson, members of the subcommittee, thank you for inviting me here today to

discuss the perennial challenge of the tax extenders, which might better be called the tax expirers. this occurs at year end, when many changes occur. this would reduce the deficit by about $5 billion, according to the budget office, before taking into effect the weakening economy. some of this comes from the expiring and an expired tax cuts which are the focus of today's hearing. considering this, the situation is needlessly complex, economically harmful, and widely perceived as unfair, and it is widely unpredictable and fails at the task of letting us pay the bills. they create uncertainty, complicate compliance, and cost needed revenue. some make the tax code less fair, some more fair.

some weaken the economy while others strengthen it. fundamental tax reform would be the best way to address these concerns, but such reform is not likely to be soon, so you must -- must begin deal with the expirers. and recession, the housing meltdown, or regional disasters. the sec and our tax cuts that have reached a sunset. the recent omnibus' extensions mean there are not many of these at the moment, but they do exist, and third, there are some that have expired for budget rules. these look like they are the most common. they have not found the budget resources to make them permanent. to determine which of these policies should be extended in which not, you should consider several issues. does it accomplish its goal effectively and at reasonable cost? does it make the tax code more or less there?

do the potential benefits justify the revenue loss or the need for higher taxes elsewhere in the economy? in short, you should subject these to the same as others, and in this case, you should keep in mind, as jim said, that most of these are effectively spending through the tax code. you should then hold them to the same standards as spending programs. you should also reform the way you review the expiring ones. first, i think you ought to from the burden of proof. the idea today is that most of these will be extended. this is why they are called the extendrs even after they have expiry. expiring provisions will expire unless orders can justify their continuation. in short, they should be the expiryrs -- expirers. there is safety in numbers. that they do their best to

coalesce as a single herd and try to migrate across the tundra with as little attention as possible, you should break up the herd. reviewing each in detail may not be practical in a single year, given how many they are, but you can identify specific -- grips. -- grips. you should also schedule these out over time. if you're expire at any given time, you will be able to give each one more attention. third, i think you should change the tempore tax cuts. this has an unfortunate side effect. long term tax policies often get chopped into 1-year segments. in addition, 10 years of often can be used to pay for a single leader of the extension. you could require that it be assumed to be lasting no less than five years than the initial base line. proponents would then have to round up enough budget offsets

to pay for those, and you could require that the offsets happened over the same span of years as an extension. that would eliminate times where 10 years ago to pay off one year of an extension. thank you for having me today, and i look forward to your questions. >> thank you, dr. marron. >> thank you, mr. chairman, ranking member thompson, members of the committee, to discuss the tax extenders. i believe this hearing is on an important topic, as there are a number of budgetary magnitudes. these have ballooned in recent years. some of these policies can serve an appropriate goal, but many have cracked -- crept into the tax code. in 2001, 13 tax provisions were set to expire that your or the next year. one decade later, 129 tax

provisions were set to expire in 2011 or 2012. the budgetary consequences of the extenders has increased as well. for example, in september 2004, congress enacted a one-year extension of 23 tax extenders for a cost of $13 billion. in 2010, a two-year extension cost over $55 billion, and if congress were to extend those policies again this year, the cost would be even higher. let me summarize three key conclusions from my written testimony. first, no tax policy should be intentionally temporary. any tax extenders deemed appropriate, should be deemed permanent, and the rest should be allowed to expire. second, each of the tax extender provisions must be considered individually on its own merit

and against a clearly defined policy objective. each extender must be shown to meet that objective, such as promoting economic efficiency or tax equity. and third, a successful evaluation of the tax extenders, keeping the good and eliminating the bad or the inefficient, may set a useful precedent to the bigger challenges of tackling tax expenditures broadly and ultimately tax reform. to guide the evaluation of tax extenders, policymakers, i believe, must answer simply two questions. first, intent. does the intent of the provision of improved economic efficiency, increase growth, promote fairness, or achieve some other desirable goal? for example, there is the research and development tax

credit, because that generates benefits to society beyond those realized up front, but one key point is that with any tax extenders that is intended to subsidize a given activity, special care must be taken to evaluate its net economic benefit. most subsidies will increase the subsidized activity, but that does not mean it will produce such a net benefit or improve overall economic efficiency. in the absence of externalities', a credit for any given activity will lead to a misallocation of resources, more of the subsidized activity but less of everything else, and a provision that encourages a particular activity does not necessarily promote overall economic growth. the second question after determining the extent that policy makers should ask is whether the policy be effective if it were permanent.

and evaluate this on a permanent basis, regardless of the fact that it is frequently in the past or a temporary provision? let me highlight of for you are harmful consequences that i see from the constant exploration and reinstatement of the tax extenders. first, tax extenders distort the fiscal baseline and complicate budget and deficit forecasts over the future period. second, tax extenders create financial reporting problems for publicly traded companies. third and importantly, tax extenders exacerbate the uncertainty facing businesses, as they do not know whether they can depend on the subsidies ones that have expired, and four, a tax extenders may be designed to encourage oversight, but they are generally extended without much consideration. obviously, the subcommittee has held a number of hearings on this topic of oversight, but an overview historically would

indicate that more often than not, these policies are extended without serious review, and allow me to conclude by observing, as this committee knows well, that the tax base has eroded over the past 25 years. a proliferation of tax credits, deductions, and expressions has created a system that misallocates, creates complexity, and introduces compliance problems. reducing the number of tax extenders offers us an opportunity to reduce uncertainty and promote growth. this could set a positive precedent for the greater challenges this committee will face as it embarks on a broader tax reform. thank you. >> thank you, mr.brill. -- mr. brill. >> thank you, mr. chairman, ranking member, members. some of the successful job-

creation programs expired in 2011, while others were deemed not traditional extenders in 2010, regardless of their proven effectiveness. the build america bonds and the and parmesan and tax credits have created hundreds of thousands of jobs and housing units across the country. these programs play a vital role in encouraging investment in our communities. as we continue our steady climb out of the great recession, now is the perfect time to extend these programs and the clinical work that they support. let me describe each program's impact. the tax credit allocations were worded only nine years ago, and yet, this well-designed program has achieved excellent outcomes. $45 billion invested, 92 million square feet of retail, commercial, and office space developed, over 300,000 jobs created. these investments in each of

your congressional districts are restoring the things to the tax rolls, abandoned buildings, and creating momentum for further development. i wanted to provide if you examples from massachusetts. there is a western massachusetts city, once the largest manufacturer, now one of the poorest in the state. it has generated 9 million in debt financing for a full- service health center in the heart of downtown, a project that created 350 jobs. a few blocks away, a world-class technology center, a project under construction with 600 jobs already created. universities, including harvard and mit, are actively supporting these. there is one that expired at the end of 2011, but it is not too late to extend it. because of its importance, i ask congress to take three important

steps. first, make it permanent. second, extended five more years with an allocation level of $5 billion, and we think the congressman for their sponsorship in this regard, and three, allow markets to offset taxes paid under the alternative minimum tax. in the short time the build america bonds were available, less than three years, massachusetts issued close to 5 billion in bonds with be exonerated bridge program, creating 12,000 construction jobs for bridge repair. it has also been very important to many cities, including the city of boston, which issued $130 million in tax-exempt bonds, creating 14,000 jobs, and stimulating retail and commercial development where none have occurred in years. reinstating the bond program could put hundreds of thousands back to work nationwide, and i encourage you to include it in

any extenders package that the committee considers. finally, the program has created or preserved over 2.5 million units of rental housing. no other federal housing program equals this record, but the credit is not just the housing program. it creates jobs, restores the abandoned properties, and restores commercial opportunities nearby. it is highly flexible and supports construction, rehab, and renovation. it supports families, seniors, people with disabilities, and former homeless families. we urge congress to extend a fixed 9% credit established in the housing and economic recovery act of 2008. fixing this with a fixed rate, there was consistency and clarity brought to the program. mr. chairman, we appreciate your leadership on this issue, which your introduction along with the

ranking member, to make the flat 9% credit permanent. in conclusion, these community development tax credits provide many important benefits. the leverage private sector funds for private development and housing. they create jobs, we build infrastructure, and transform distress to the bruins. i urge you to extend these credits on a long-term basis so we can use them to continue to build the road to economic recovery, and as you consider ways to streamline and reform the tax code, please take into consideration the import contributions that these programs have made, especially while undertaking efforts to lower the top corporate and individual rates. thank you very much. >> thank you, sir. thank you for your testimony. dr. marron, mr. brill. you both talked about changing

the automatic nature. can you focus a bit more operationally from your perspectives on how we should put the burden on having supporters of each extender provide us and how we should then proceed with separating the extenders and their worthiness, staying? doctor? >> certainly. i think actually the last time i appeared before you, i thought it was a good start, which was to take a category and focus on it, and in that case, it was energy. you can imagine doing similar things. the tax extenders or list was a very long, and you can group it into categories, energy, what not, stimulus, and try to focus

on those as a group, figure out which one of those makes sense, which do not. >> should supporters be providing certain data points? jobs numbers? any thoughts on that? >> that would be great if they could. our friends at gao often have data on that. they could be asked to provide such information. on that particular issue, i do not want to over emphasize these particular provisions. there are a lot of provisions in the tax code in particular that do not get enough review, so certainly there are things that are in the permit tax system that will -- deserve more review than they currently get, as well, but separating them out, giving them attention, it requires data, and also, i think the other thing is if you can spread them out in time, it's a typical extender last five years, then on average, you are

only going to have one-fifth as many to look at every year, and you will be able to give them more attention. >> mr. brill? >> thank you. this is a critical issue. one is the burden of proof question. it is the responsibility of the constituents and the advocates to prove to congress the worthiness -- or is the burden on congress itself or other federal agencies to prove the policies are not working? i think we would be well served by trying to pursue both agendas. as jim noted in his remarks, there is oftentimes not a lot -- there may be oversight on the administrative side, but not a lot of a valuation by the government on the effectiveness of these programs. these are hard questions, however. simply observing that a subsidized activity -- that that activity is doing well does not prove the effectiveness of

the policy itself. for any given credit, there may be lots of energy production, but that does not mean that we are encouraging that in investment or activity. rather, we may just be providing a windfall. analysis necessarily requires that you develop -- in absence of this policy, what would be the outcome? you do not have the control case. the conclusion there is that that bar should be very high. expectations for the outcome. >> thank you. some of the work thatgao -- that gao has done on the new market tax credit suggests that we should convert the credit into a grand program.

-- grant program. i have two questions related to that. first, since 2003, the program has been about $5.2 5 billion. in exchange, it is allocated roughly $29 billion in tax credits that have resulted in a roughly $45 billion in new market investment. that is the leverage of 821. in addition, some estimates -- that is a leverage of 8 to 1. also, they estimate that new jobs are retained at a cost of 17,000 hours per job. $17,000 per job. can you elaborate on the thegao's perspective on how that program in the place of the tax credit program? >> yes. the question we are looking at with the grant program is the

amount of money flowing through the treasury to beneficiary community-based businesses. because of the way the credit is structured, credits are allocated and then sold to investors. there is a fairly complex process for raising the funds from the private sector. in effect, tax credits are sold to them. in that process, not all the money is flowing through to these all to mid beneficiary -- the ultimate beneficiary businesses in the communities. the question we have is whether a grant would allow the same cost to the treasury and more money flowing through to beneficiary businesses. we suggested running an experiment. divide up the funding, have summer gr reant -- have some run to a grand program, have some -- as a grant program, have

some ground to tax credits, and see which one is more beneficial to community businesses. >> it appears to me that one of the driving factors in gao's conclusion is that tax credits are running at discount. certainly, the economy and recession have probably intensify that issue. so mr. gorenstein suggested that one way of improving that is to treat the new market taxpayer program like the lower income housing program by exempting from the alternative minimum tax.

what are your thoughts on that? >> it would allow more money to flow through to the beneficiary businesses, and a whole separate issue, what we are talking about now is how much of it flows through. the second issue is the effectiveness of these programs over all, and we have tried to look at that. our work suggests that there was an increase in the amount that investors were investing in this sort of program, and those are two questions. one is the effectiveness of the money from the treasury flowing through, and the other is the effectiveness of the program over all. >> since you brought it out, i will ask you a question. >> let me get to the grant

versus the tax credit issue, if i can very briefly. the tax credit attract significant investment, in very targeted communities, and i think the gao study found that the survey of investors, 88% would not have made the investment without the tax credit, so that will not give you the leverage that is so important to getting funding into these communities. second, it brings participation in both an underwriting process, which you would not have under a grant program. and secondly, i think this obviously brings the appropriation risk, and as there is so much pressure on the domestic programs, we are certainly going to run into that, so those are some of the concerns we would have. the program is working well. it is becoming more efficient, as you point out, since the recession, after the two-year

extension. we have seen the yields going up. we have seen record levels in 2011, so we think we are on the right path, and a permanent extension would even do more. >> thank you for your testimony today. >> thank you very much. >> mr. thompson is recognized. >> thank you, mr. chairman. i want to follow up on the new market stuff on behalf of mr. neill. i want to know a couple of things. one, all the issues that have been explained, from uncertainty to the difficulty of the code are clearly important. the effect of this committee's work on local tax code and the economy i do not think should be overlooked. >> we are in a unique position here. a lot of this stuff is just a math problem.

it is the political side that gets in the way. that is where this committee's responsibility really needs to be stepped up. we need to get beyond some of the political bickering and a focus on what tax policy is going to improve our economy and the lives of american people. we need honest debate. i know that you mentioned in your written statement the whole issue of the provision. -- nascar provision. it gives the impression that the tax code is full of private interest giveaways. it only keeps them from keeping one at theme park like another

theme park, basically. we did the same thing a couple of years ago. it was media fodder over the errors. -- arrows. there was a company in san diego that made aluminum errors. -- arrows. they're going to move offshore because the tax code made it more lucrative for them to make the arrows in correa rather than -- in korea rather than in the united states of america because they could make them one place and assemble them here and get a tax break. when that was fixed, it kept a bunch of jobs in the united states. we handled aluminum eras the -- arrows the same way we handled aluminum baseball bats. they talked about it being a giveaway to the bow and arrow

makers. which i think was ridiculous. we all have a responsibility to honest. i appreciate your bringing that up. i hope that we can get to that honest debate to make sure that we have honest policy. one that meets the criteria that you have mentioned. on at the new markets tax more discussion. not only is this in a -- important in massachusetts, but -- not only has it worked in massachusetts, where there has been job creation, but it is being used all over. i have a clinic on the north coast of california that is one of the major health care providers on the north coast. they are looking to do their expansion. not only is a growth in construction jobs, it is a growth in medical jobs.

you know this. doctors, nurses, nurse practitioners -- all the folks who have good jobs. when you are all done, ityou have good jobs and a good infrastructure, which saves us money in the future as well. on behalf ofmr. neill, i would like to ask you this question. he would like you specifically to comment on the gao's recommendation on this issue. could you please do that? >> as i have said before, we certainly have to look for every way to make the new market tax credit more efficient and effective. i think the community welcomes the scrutiny and evaluations and appreciates all but the gao has done to point out areas where it could be strengthened.

we do have concerns about shifting to a grant program. that would be around the issue of leveraging private-sector investment. it is critical to get the private sector involved in these distressed entities. investing in low-income neighborhoods. this is a highly targeted tax credit that is benefiting thousands of low-income people in low-income neighborhoods around the country -- as he cited, in california as well. it is a program that brings oversight from that private- sector a round underwriting. this is true in the low income housing tax credit. you are getting the market discipline imposed and having another set of values on these projects in underwriting and ongoing monitoring to ensure that the benefits continue going forward. again, new markets. the housing credits are very high, i believe. -- score very high, i believe,

in that regard. the very nature of the tax credit is a reason for that. >> thank you, mr. chairman. >> you are recognized for five minutes. >> i want to thank you for the series of hearings we are having on these temporary tax provisions and a thoughtful approach taken care -- taken towards them. gentlemen, i share the oversight -- chair the oversight committee. we have been looking very intensively at a number of tax credits and administrative problems -- propensity for fraud and abuse. those kinds of things. dr. white, while it is fairly easy to look at that particular aspect, you mentioned a number of other areas that we are looking at and some of the challenges.

i am curious -- help us figure out what we should be looking at while we try to make distinctions between a tax provision that is very well written but yet hard to measure vs one that may be flawed in the way it is written -- that treats measurement problems and distortions as well. -- creates measurement problems and distortions as well. could you give us an idea of how we could approach that dilemma as policymakers? >> yes. a couple of things i would emphasize. first, as some of the panelists have discussed, first to be setting clear goals for the programs, spelling out what the affect is that you are looking for. >> would you do that in a statute? >> it could be done in a statute. the community development program -- is focused on construction or jobs? is it focused on jobs for existing residence or new jobs

-- for existing residents or new jobs in that community that might come in from the outside? a second issue would be focusing on evaluation. and there, one issue, especially in the case of tax issues, is what agency ought to be responsible. the irs administers tax provisions, but they are not an executive-branch agency responsible for housing programs not or community development programs. what happens with tax provisions is that they are administered by the irs, an agency with functional responsibilities that in many cases does not pay much attention to the programs. defining responsibility for actual -- doing assessments of the program would help. >> thank you. do any of you want to comment further on this? mr. brill, do you?

>> i just want to add briefly to jim's comment. the valuation of the effectiveness of any given tax- policy extender or otherwise needs to also occur while recognizing other programs from the other side of the ledger. we need to think about the net consequences of tax policy -- for example, towards housing -- but also spending policies. we need to put those in a single from work and make a determination. >> if i could shift gears for a moment. he said that tax policy should be intentionally pat -- temporary. as we go through tax reform, we clearly want to streamline the process, see more permanency, creed and environment of certainty. that sounds of great, but if we are going to have provisions that sunset, what is a reasonable timeframe? clearly, one year makes it very

difficult. when you are doing things year after year -- several of you have elected that -- highlighted that. it also creates problems for oversight. what is a reasonable time frame for a temporary provision? >> i think it depends on the policy itself. fought in the past about how to create a temporary policy that convincingly -- that is convincing to the beneficiary is that it is permanent. in essence, how you work around the budget constraints systems yet still convinced the users that this is something they can rely on? certainly, on the reinstating policies retroactively is to create a windfall benefits. on the other hand, looking back

to 2003 when the caps were lowered on a temporary basis due to a budget process issue. at that point, it was viewed that five years would give that amount of certainty and confidence to the market. other policies were considered at that time that were much shorter and not pursue because of the importance of convincing beneficiaries or constituents that the intent is to create policy determinants. >> thank you. my time is expired. >> thank you, mr. chairman. mr. brill, over the years, the various industries have urged the adoption of tax provisions with the stated purpose of incentivizing investment in certain types of energy. in selling the merits of these to congress, it was indicated that these taxpayers supports would only be required for the amount of time necessary for these industries to mature.

today, very few, if any, of these industries have independently determined that the subsidies are no longer necessary. could you address the methods and criteria that congress have used to make their own of valuations as to whether or not the originally stated exact -- objectives of these subsidies have been achieved, and what the appropriate means of discontinuing this taxpayer funding would be? >> this goes to one of the hardest questions for congress or the private sector, which is the rate of technological progress. while many will be hopeful that their technology will quickly mature and that the cost of production will fall quickly in

such a way that they will no longer need the government support, these are very hard issues to ultimately predict ahead of time, how well these markets will mature. we are seeing a lot policies work their way into code on exactly that argument. we only need this encouragement for a limited date of time. -- a limited period of time. altman, the industry can -- ultimately, the industry can grow to be dependent on these policies. economic activity will rely on the availability of a taxpayer subsidy. the ability to wean and industry off of these credits is proving very difficult. i would suggest that, to the extent that the committee pursues an effort to reduce these credits, you need to be careful, perhaps, about a transition or a phase out that might see how they will step down and ultimately and.

>> so a strategy for an energy source that is heavily reliant on the subsidies -- >> a strategy to come to this -- a strategy to come to this committee would be to demonstrate very clearly at what not need a subsidy anymore and then codify that and put that into law? >> that is exactly right. if you codify the step down or phase out of that policy instead of having it go away overnight, that might make it more likely that the policy will actually terminate. >> in the investor community, an investor would look at that and make a decision whether that investment was, in fact -- if you could tie the risk of the investments to the step down of it. it might more realistically reflect how actually feasible

that industry was. mr. white, you mentioned in your written statement that, with some tax expenditures, it is difficult or impossible to determine whether a provision is having its intended effect. should congress decide to extend a given tax expenditure, what steps should it take to measuring its impact? >> as i said earlier, i think that setting goals, assigning responsibilities to an executive branch agency for doing the of violations -- that ought to be responsibility, not irs.

irs is a tax agency. i cannot think they should be in the business of assessing a housing or energy program. that agency then would make some determinations about the type of data that would be needed to actually conduct of valuation. right now, the only data that is collected on many provisions is stated that the irs needs for ensuring compliance with the law. information suitable for assessing the effectiveness of many provisions. >> thank you, mr. chairman. >> as a follow-up to that question on energy -- i am sure your blues -- glued to your computer screen while we had on both sides of the aisle talking about the reduction of tax

credits. we had a lot of consensus from members and supporters on this issue of phasing out the tax credits over the period of several years. that is interesting. as a side question, since this is already expired, having an impact on reinvestment. people do not know whether or not we are going to be extended. as we look at this, how does that impact policy? it is already expired and you have advocates now saying we will phase it out. >> there is no question in my mind that many of these policies have real, measurable, observable consequences in the market. taxpayers act or do not act depending on whether or not they are getting quality. -- these policies. it is a determination that

subsidy is desirable. one more of that activity. there are many that work that way. it is observable in the energy sector how the level of investment has decreased and -- increased and decrease overtime as the credits have changed or expired. in particular, with regard to letting them lapse and then going back, or than arguing about whether you are going to back and reinstate them, that will have a big consequence to, creating additional uncertainty for that industry. to that extent that we are trying to develop a policy where washington is free and private -- freeing the private sectors to do as they wish or setting up a policy that encourages them, but not constantly interfering -- we are failing that test when we let credits expire and then reinstate them. >> can yield? >> i will yield for one minute.

>> that is all i need. talking about the energy tax provisions -- we talk about all of them, not just the renewable. $1.99, the deduction for gas and oil -- are talking about everything? >> i was speaking generally of tax credits for activity in a given sector, including energy. >> so the reduction for gas and oil would be when you are talking about? >> that is not an expiring provisions. >> i understand. it is not exprir -- expiring. but if you will talk about energy tax provisions, i do not side without talking about the other side. >> section 199, which applies for manufacturing income through energy production, may have an effect on the allocation of resources towards those activities in a way -- >> similar to tax expenditures on the allocation of resources

as it pertains to renewable energy. >> that is correct. >> thank you. >> i was actually trying to be helpful. >> me, too. >> thank you, mr. chairman. first of all, thank you for your thoughts on this issue of the new market tax credit. i share your view on keeping the program as is and growing it in terms of the amount of allocations. i think it does a fairly terrific thing in a lot of communities. if i can, however, go back to your testimony or your gao report that its into good tax policy. i am interested in the terminology you use.

criteria, includingsimplicity, economic efficiency, transparency, as well as the relationship to other policy tools. interestingly, as we are talking about what you say and what should be taken out of the tax code as we go through this process in the hope of simplifying it, you would think, in most of the conversations we have had centered around job growth, making it more easy to grow capital and making it easy for investment economy -- you term it as economic efficiency. can you describe more fully that term relative to jobs, relative to capital formation, as a criteria for how we ought to look at a lot of these provisions down the road? >> yes. essentially, what you are doing with the tax provision -- and

this applies not just to taxes, this applies more broadly to extending programs or other types of programs -- you are shifting resources, providing incentives to move resources from one area in your economy to another activity. in your economy. the question is whether there ws a net gain from doing that. there may be a net gain from that. the research credit, it is argued that private businesses will under invest because they cannot capture the benefits of that research. there is a justification there for some gusset -- government subsidy to shift additional resources into basic research. tax provisions are one way to do that but not the only way to do that. and does that ruling to the issue of relationship to other pawlenty tools? let's take the new markets tax credit that can be used in an older community to undertake renovation of older housing stock and turn it around for affordable housing project.

you can find umpteen other programs that will do that. say, hud programs. is it better to use a credit but then allow the formation of capital to do that project or just have some entity go and file a grant application with hud and get it done that way? or get -- take a look at a situation where you might have an r&d tax credit or rather than a tax code approach, go get an sba 7a loan to do something. could we -- should we look at the tax code extender and reform issues not only from the context of what would happen sector wise, but also what is available on the programmatic side that is

also available to people and maybe think about whether those programmatic approaches to doing -- see what happens in the private sector, those out to be may be reduced and provide better opportunities in the tax code twithout having to go through the bureaucratic process of filing an application, go to a grant review, get the grant or maybe not. relying -- not relying on government to give them some benefit through a bureaucracy. have a tax cut that can be more responsive to what they can do in our communities to improve the quality of life. >> there are some different advantages and disadvantages to using the tools of government spending programs versus tax programs. the private sector does have

some incentive overtime to ensure that the projects that are billed to stay in compliance with the rules as a way to bring in some private sector management experience there. another example of what we're talking about is the assistance provided to higher education will have a title -- where you have title iv spending and you want to apply these criteria across the board to all those programs. one of the things we found is it appears the mix of these programs is not very transparent to many people. they're either not claiming anything at all even when they are eligible for their -- and they're claiming -- and their claims are using the wrong program. they seem to be overwhelmed by the choice and it has resulted in confusion and people making bad decisions from their own financial self-interest

perspective. >> does anyone else have a thought on that in terms of the relationship of current grant the loan programs that are administered through the bureaucracy in washington to stimulate private sector investment? >> one more point about that. the grant programs are important but it is the tax credit new markets that are the engine that drives these deals. the grant programs are not alone to move forward on most development projects in most communities. you need a combination of the biggest resource, the most powerful one is the tax credit. it is not extended or there is uncertainty and we're not getting the yields, it will have a detrimental effect on our ability to do more projects in targeted communities.

>> any others? thank you. >> thank you and thank you for a leadership on new markets and tax credit. in my district which is urban- suburban in my current district. if you and i drove through it and saw the differences of housing policy at the federal level between housing authority, a hud property verses low- income tax credit investment policy or go to a new tax credit policy that has private sector involvement and oftentimes local support from cities and counties, the differences are unbelievable. i would love to see you do a study on how those different policies at the federal level impact in the end what the wrecks and mortar -- bricks and

mortars are built on the ground. some of you have done that? >> i do not think we have done as country of -- as comprehensible as you are asking about. i have visited project myself. i have seen that difference as well. it boils down to questions if you are comparing programs, does one deliver more bang for the black and also the overall affect of the combination of programs. to what extent are the program spreading out private-sector investment in area? that would be part of the evaluation. one of the things we found in our reviews of the new markets tax credit. did appear to increase overall investment in the targeted

communities. >> you would not -- probably could not come out and support the amendment to the appropriations bill to zero hud grants and transfer them -- just kidding. >> i had better cut in there. thank you and i think the panel for being here. this is an important, great discussion that is the next debt. there's no question, the problems we have with the tax code, the uncertainty, the unpredictability, it has caused so much doubt throughout our economy. that is one of the key things that we need to get fixed if we're getting our economy turned around. having said that, there has been a lot of discussion about comprehensive tax reform. that is something many of us would like to see happen. i would like to ask the panel, we have the extenders.

if we do that outside the box of a comprehensive tax reform, what are we accomplishing? should they not be part of this comprehensive tax reform? everyone that is a beneficiary of these, the discussion is make them stand up and say, here is why this is important. let them stand on their own merit. that is important. the comment about so many of these are short-term because of the budget problem. these are some long-term decisions that need to be made as well as long-term comprehensive tax reform. my question is, can we do this outside that, or should they all be part of this comprehensive tax reform? >> i think you want to do both. you want to look at the merits of individual provisions for the package of programs targeting a specific area such as assistance

for higher education. with tax expenditures as a whole half are so large that affects what tax rates -- tax rates have to be higher or their economic consequences. there is a tradeoff there that needs to be taken into account at a more macro level. >> i agree. the fundamental would be to clean up everything. there are provisions that ought to be permanent features of law because they're good tax policy. one may correct an error that is out there. those kinds of things ought to be addressed permanently as part

of overall reform. the challenge is the clock of legislation does not suggest we will have such tax reform before people deserve some resolution in the near term about what will happen to these provisions, especially those who have expired. those who are under consideration. you have an opportunity to let some of them die permanently and maybe keep them out of the next discussion of tax reform. the clock will require that you address a bunch of these for another year or two as another bridge to the hoped for tax reform of 2013 or 2014. >> i would note that many of the policies in the tax incentive package are tax expenditures and there has been a dialogue over the last two years or so more focused on the notion of broadening the bat -- the tax base. whether they are temporary or permanent parts of the tax code

today. and then with a broader tax base that is more efficient. there is an opportunity to reduce tax rates and reduce the deficit in some combination. policy makers will have to wrestle with. we should consider these extenders and the discretionary effects that have had just as we have had a debate in the code. >> given the urgency and the need to extend the expiring credits, i would hope congress would move quickly on that as soon as possible. and not wait for the broader reform package which has been pointed out may or may not happen by the end of the session. new markets in particular, the flat 9% fixed in terms of the low-income housing tax credit.

two very high priorities. >> on the issue of the comprehensive tax reform and getting the rate down. no weu agree that -- i kne need to do it. do you agree it needs to be revenue-neutral? you do not think we should grow the debt and the deficit in order to do this? >> faris -- the u.s. is on a long-term budgetary path that is not sustainable. >> should tax reform be revenue- neutral? >> i think that has got to be answered in the context of how you are going to reduce the debt, bring down the deficit.

>> the phrase revenue-neutral, there is enormous debate on what on earth that means including the extenders. it is easy to say yes or no to that. the way i would summarize your point is we need a tax revenue target for tax reform. my reading is when you look into the future, the federal government will have to raise more revenue than it has given the spending pressures that are building and continued to build. >> anyone else want to answer? >> we need to think about what that level needs to be. we need to find a balance. it is a question that needs to be answered. there are significant spending pressures. >> the gentleman from tx. >> thank you.

i will be very brief. i would like for our committee to also interject another aspect of the extenders and the viability of them. that is the probability of that program or extender having the same ability to attract investment in the proper amount of investment. in a reformed tax code where if i am at 39% and i am an investor, i am looking at deals based on the tax effect on my personal tax return. i am looking at the income credits and at that point, the value of all those credits and the value of that investment -- if we follow through and i believe we will as a committee and lower the tax rate, simplify

the code, in one year or two years, many of the programs that we renew our put back on the books -- or put back on the books will not have the same level of liability because they simply will not have the horsepower to attract the investment they will at the higher rates. i would like to interject that as another criteria when we look at these extenders and see if there is -- >> this concludes today's hearings. you have provided some excellent testimony and i appreciate the dialogue. even some questions outside the area to which we attracted you here. to give your expert opinions and we will continue as a committee and as a subcommittee to go through this process and try to determine what extenders' should

be extended and what should not be extended and what should be part of a permanent form of tax reform. we appreciate your iinput. questions and the answers will be made part of the official record. i would like to thank you for taking time out of your busy schedule. thank are members for being here today, this great discussion. this meeting is adjourned.

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technology has changed cnn. and the small business focus on "the communicators" on cspan2. gordon brown testifying and discussing his relationship with news corp. chief corporate rock. he denied saying he would " declare war on rupert murdoch" after his statements. live coverage starting at 5:00 a.m. eastern on cspan2. testifying tomorrow, former prime minister john major. following, the labour party leader. later this week and next week,

two congressional hearings on whether financial firms such as jpmorgan pose a threat to the u.s. financial system. we will hear from jamie dimon, jpmorgan's ceo. the senate banking committee's hearing is wednesday at 10:00 a.m. eastern live on c-span and radio and online. next week, jimmy diamond appears before the house financial services committee. >> david marinus traveled to research his book, visiting places like kenya and kansas to examine the president's family tree. we give you a preview with exclusive pictures and visit

[inaudible] on "book tv." >> john bryson was charged with felony hit and run after car accidents in california. the commerce department said he had a seizure behind the wheel. at the white house briefing, press secretary jay carney declined to talk about mr. ricin's future in the white house administration. >> good afternoon and thanks for being here. before get started i want to welcome -- we have a number of local television anchors from different parts of the country joining us today. welcome. -- welcome to the white house

briefing room for your daily briefing. the president will nominate two outstanding individuals to serve on the united states court of appeals for the district of columbia's circuit. she is a nationally recognized appellate litigator who has practiced extensively before the supreme court of the united states, the u.s. court of appeals, and the appellate courts of the state of new york. the president was deeply disappointed that a minority of the u.s. senate blocked her not -- nomination and he urges her reconsideration especially given her broad bipartisan support. he is a highly respected appellate advocate who has spent a distinguished career litigating before the u.s. supreme court and court of appeals on behalf of the u.s. and in private practice.

it is worth noting that he is the first -- will be nominated to the court. he will be the first south asian name to any judge. i will take your questions. >> i wanted to ask about secretary bryson and i had a followup on the economy. >> the president has not spoken with the secretary. >> given the events -- i do not have a detailed read out of that conversation. we're concerned about the incident and about the secretary's health-related issue

that played a role in this incident. >> can you give us a basic sense of what happened? >> i would refer you to the commerce department for details. he was engaged as has been reported in a couple of incidents. as the commerce department has said, he suffered a seizure. he was hospitalized. beyond that i refer you to commerce for details. >> can you tell us whether the president was aware the secretary had a medical condition that made him prone to seizures? >> he has been an effective commerce secretary since he was confirmed. >> is the healthy and fit to serve? >> i would refer you to the commerce department for details on secretary bryson for details.

all wheat -- we're in the process of gathering information about it. he was on private time, not with his security detail. you understand that this happened -- he was alone; he was on private time, not with a security detail; he was hospitalized. so there's more that needs to be learned. >> my quick question on the economy -- when the president said on friday that the private sector is doing fine, and then governor romney and other republicans jumped on that, as you know, the basic complaint we heard from the white house was that the sentence was taken out of context. and i'm wondering, since that's the standard, then, can you assure us that the white house and the people who speak for president obama will not take some unflattering sentence from governor romney and use it out of context? >> that's a rather remarkable question. i can simply refer you, again, to what you heard the president talk about as he stood here before you and the context of his rather full discussion of the state of the economy, and the simple fact that in a recovery that has seen 4.3 million jobs in the private sector created, it has also seen a situation where because

of massive layoffs of teachers and firefighters and police officers -- a reduction in the public sector. and by "public sector," we're talking about state and local governments who have had to lay off teachers from classrooms, firefighters from the force and police officers from the force. that was the context in which he was speaking, which i think everyone in this room was aware of at the time. >> right. i'm just asking -- you're asking for fairness -- isn't it fair that the standard go both ways? >> well, certainly we believe that you all ought to do your jobs and report on context -- of course. and we think that's important generally. you're asking me to speculate about what someone might say in the future in the context of it, and i simply can't do that. but if you're asking me if we're for good reporting filled with context, the answer is yes. >> in statements from the white house? >> again, i would say that our general position is we're for

truthful, factual, accurate reporting that's done in context. >> jay, what's the white house's view of the deal agreed to in the european union this weekend to bail out spain's banks? does that change the intensity of headwinds from europe? how do you see it? >> with regards to the specific development, i think you heard secretary geithner address this, and i would simply echo what he said. we welcome spain's action to recapitalize its banking system, and the commitment by its european partners to provide support as concrete steps on the path to financial union, which is vital to the resilience of the eurozone. broadly speaking, the eurozone crisis remains a headwind to the u.s. recovery. our economic stake in europe is immense, as you know. europe is our largest economic relationship and our financial systems are deeply connected. and it is because the stakes are so high that throughout this crisis the president and his administration have been in close contact with their european counterparts and closely engaged in developments as they emerge.

i can refer you obviously to the g8 summit at camp david, to the upcoming g20 summit in mexico, to the conversations that we read out just in the past week the president had with chancellor merkel, president hollande, and prime ministers cameron and monti. >> is there anything specific you could say about the president's response to the weekend deal? >> i don't have a specific response. i think that our position, the president's position, was articulated by secretary geithner this weekend. ann. >> thank you. does jack lew consider the secretary bryson's incident a serious one -- two car accidents? and any questions about his health? >> i think i just answered this. i don't have a specific response to give you from jack lew. i think our response is what i said in general, which is concern about the incident, learning more about the incident, obviously the health- related aspect of this. but i don't have any specifics for you and i would refer you to

the commerce department. >> is health taken into consideration when the president vets somebody for a cabinet position? >> i don't have any specifics for you on those procedures. the president obviously nominated secretary bryson because he believed he was capable of serving as commerce secretary, and he has served effectively as commerce secretary since he was confirmed by the united states senate. >> apparently he had some kind of episode when attending a board meeting a couple of years ago. >> i have no information on that and don't know even if it's true. >> is that the kind of thing a secretary should keep in touch with the white house on? do you know -- >> again, you just told me something that is speculation, and now you're asking me if it's something he should have made people aware of. i don't know anything about that incident, and i do not know whether or not it's accurate. >> should secretary bryson's office have gotten in touch with the white house earlier than last evening? >> well, we're in discussions with the commerce department about this. again, it was a unique -- let me just step back and say, whenever a senior official is involved in an incident of this nature or any kind of incident like it, it's obviously important that the white house find out about it.

this circumstance was pretty unique in that secretary bryson was alone, was not with a security detail, was on private time, which is common for certain members of the cabinet, and it resulted in him being -- both having a seizure and ending up in the hospital. so, for that reason, you have to recognize this as somewhat unique. but in general, certainly it's important that the white house be informed as soon as possible. ed. >> jay, fast and furious -- the house is moving towards a vote on contempt charges. what's the white house view on this? >> the white house view -- as you know, ed, fighting criminal activity along the southwest border, including the illegal trafficking of guns to mexico, remains a priority of this administration. the attorney general has also made clear that he takes the allegations that have been raised very seriously, and that is why he asked the inspector general to investigate the matter. it is also why you see the

department cooperating with congressional investigators, including producing 7,600 pages of documents, and including testimony at hours and hours of congressional hearings. the attorney general himself has appeared eight times on the hill, including four hours of testimony just last thursday. so have several senior justice department officials, including the assistant attorney general for the criminal division and the assistant attorney general for legislative affairs. given the justice department's efforts to accommodate the committee investigation, i can only refer you to the republican house judiciary member who recently conceded that this investigation is "politics." >> thank you for that one. on the president's comments about the economy on friday, you have the local anchors here in part to talk about rural america, agriculture, other issues like that. when you look at the bureau of labor statistics and their numbers on unemployment, agriculture unemployment right now is 9.5 percent -- month of may.

construction workers -- 14.2 percent. when you look at the unemployment rate for government workers, it's something like 4.2 percent. -- 4.2 %. so when you were talking about these massive layoffs -- and they are serious --they've hit teachers, they've hit firefighters -- hasn't it been much worse in some other sectors? so why are you saying there's a crisis among government workers when the unemployment rate is worse elsewhere? >> well, i appreciate the unusual cherry-picking of statistics there, ed. i think it is a fact that since the recovery began, there have been 4.3 million -- >> -- construction is at 14.2 percent -- >> no question. and i'm glad you brought that up. >> that's a fact. >> ed, i'm glad you brought that up, because as you know, and i'm sure you reported on it in depth and regularly -- (laughter) -- one element of the president's american jobs act was aimed specifically at the need to put construction workers back on the job. unfortunately, republicans rejected that. they also rejected the element that would have put tens of thousands of teachers back to work who had been laid off in various communities around the country. the american jobs act was

designed with the weak spots in our economy in mind. that was the overall purpose of the american jobs act. that is why, to this day, it is vital for congress to take action on it. because, again, you have a situation where, as we recover from the worst recession since the great depression, a recession that was in full bloom when the president took office, that resulted in more than 8 million jobs lost by americans, we have made some substantial progress. we have seen the economy grow. we have seen it produce 4.3 million -- or almost 4.3 million private sector jobs. one area where we have seen job loss in that same period is at the state and local government level, largely teacher layoffs and police layoffs and firefighter layoffs. we have also seen, because of the housing bubble that burst, construction workers out of work.

and that only elucidates the need to take action to put those construction workers back to work, hence the aspect of the american jobs act that specifically addressed that weakness in our economy. and the president, you heard, discussed this on friday. there is still much work that needs to be done. i think that's reflected in the rural report today that the president and the administration released, and it's reflected in the elements the president talked about friday. we suffered from the worst economic crisis in everyone's lifetime here in this room. and when the president took office, we knew we were in trouble. we only found out later just how much trouble we were in economically -- a situation where the economy shrank by almost 9 percent in the fourth quarter of 2008, a situation where the president -- in the month the president took the oath of office, the economy shed more than 750,000 jobs. so the hole was deep and filling it back in takes some time. and we've made some progress.

there is work to be done. thethat's what you heard president talk about friday. that's reflected in the rural report. and it will be reflected in every action the president takes as long as he is in office. margaret. >> thanks. the unitedhealth group over the weekend announced what could be very big news -- or it could be good or bad, depending i guess on how you analyze it -- which is that even if the supreme court strikes down the health care overhaul, they would keep most of the protections, but not the ones covering preexisting illnesses. so i want to ask what is the white house's overall reaction to unitedhealth care's announcement? and are you having discussions with them or with other health providers, in terms of anticipating getting ready for the supreme court action? >> i'm not aware of any

discussions of that nature and i'm not going to speculate on an outcome that we do not believe will come to pass, because we are confident that the affordable care act is constitutional. so i don't have any comment specifically on that speculative announcement. >> do you see it as a positive sign that the group, no matter what, is prepared to go forward with all these other elements? >> well, margaret, i think i would simply go back to what i said, which is, we believe the affordable care act, which includes numerous provisions that are of great benefit to the american people is constitutional. there is a great precedent to back up that view. and we'll obviously wait to see what the supreme court decides. >> let me -- i want to call on some of the folks who are here visiting us. matt smith, from green bay, wisconsin. is he here? yes. >> hi, jay. speaking of wisconsin, there's a notion among republicans, some democrats, that what happened in the recall last week is a test for november. after analyzing it for a week, what's the administration's position on that when it comes to the policy and i guess the amount of money spent in that

election, as well? >> well, i think my view -- our view is what i expressed last week, which is that this was a unique situation that involved a rematch, if you will, of an incumbent governor running again against the same opponent. it was a situation in which the incumbent governor, because of i think the peculiarities of campaign finance rules in wisconsin, had a seven or eight to one financial advantage over his opponent. and what you saw was a result pretty similar to the one that you had originally. the president believes strongly that his message about where we have been and how we need to keep moving forward economically will resonate with voters in wisconsin, as it will voters in that region of the country and around the country. so i'm no longer a political analyst. i was once one, but i am no longer, so i'll leave you and others to make judgments about whether or not that specific

election result has much if any bearing on what november will look like, and i certainly could refer you the president's reelection campaign for more analysis on that. let's see. mara. >> after all the events of last week, there have been a new round of calls for the president to lay out more clearly his agenda for a second term, and rely less on just trying to convince voters that things are going in the right direction albeit too slowly. and i'm wondering where are you in your thinking about a big economic speech or something? >> well, i think the president made clear when he stood before you on friday that what we need to do right now to help this recovery continue, to help the economy grow and help it create jobs now is not a mystery. we've been at this -- both as an

administration and in negotiations with congress -- for a number of years now, since the president took office and amidst the worst recession since the great depression. the parameters of the actions that we need to take are pretty clear. we know where the weaknesses are. i referred to some of them in answer to questions from ed. we have a situation where despite substantial job growth in the private sector, we still have things we need to do like the production tax credit, the refinance initiatives the president has taken that will help the private sector, will help the economy grow. we need to take measures that will put teachers back in the classroom, which is something that creates a compound benefit. it is good for the teachers, for their families, obviously, that they're employed and they have a job. it is good for the children in those schools that those teachers are back on the job so that the classrooms are not overcrowded and they're getting the very best education that they can in their scol system.

and that, then, is good for the overall economic economy -- because contrary to some commentary, education is an economic issue. in fact, it may be one of the most fundamental issues. so -- and then again if i could just mention the need to take action to put construction workers back to work -- that's an element of the president's plan. i am sure, and i think i can assure you, that the president will continue to talk about the things we can do and we need to do on the economy, both the measures that he has proposed in the past that congress can act on and the things that we can do in the future. i don't have a preview to give you of future speeches by the president. he believes that we have much work to do. >> but isn't there danger in focusing on this agenda that you want congress to pass and they're not going to do it -- doesn't it make the president seem powerless? >> look, i think that the public is very much aware of the dynamic that exists in washington. i mean, i don't know if you -- we have had a situation for the past several years where the president has -- working with

congress, and where he could, using his executive authority -- taken significant action to help the economy recover from the worst recession since the great depression. there is still much work to be done. and what we have seen in recent months has been a dynamic where this congress -- and i speak, obviously, mostly of the republicans in congress -- don't take actions simply because the president says it's important, they take action because they are pressured to by the american people, by their constituents. and that was the case when, after great resistance and reluctance, congress took action to extend the payroll tax cut and congress took action to extend unemployment insurance benefits. that was the case in passage of some other bills earlier this year that the president was able to sign into law. and the president believes that pressure from the american people on congress to act now, and not simply to sit on their

hands this year because it's an election year, will result in some progress because the people demand it. the american people aren't willing to wait until january or after november for their elected leaders to work on their behalf. they expect their leaders to work now on their behalf. and there are things we can and should do now for the economy that will help it grow, will help it create jobs. and the president expects that to happen. norah. >> senator mccain over the weekend accused the obama administration of intentionally leaking information to enhance obama's image as a tough guy for reelection. do you have a response to that? >> well, my response is the same as it was last week, which is that is wrong and absurd. the president addressed this himself from this podium on friday. he takes very seriously the need to protect classified and sensitive information, and that

has been his posture since he took office. >> how can you say unequivocally that it's wrong and absurd? have you done an internal investigation? >> i can tell you that this administration -- this white house, under the guidance of the president, takes very seriously the need to protect classified and sensitive information, the need to do so for our national security interests to protect our counterterrorism operations and other operations that are undertaken by our forces and our government. i can point you to the authors of some of the materials that have led to this discussion and what they've said about the fact that they were not directed to or provided information by the white house in regard to this, that their work was the product of long investigation and reporting elsewhere. this president -- i just would point you to his comments on friday about his views on this matter. >> the president says he has zero tolerance for these kinds of leaks.

then why not support a special prosecutor? >> again, the president addressed this; i addressed it. there have -- i think our seriousness about this matter in general -- about these matters in general has been demonstrated while the president has been in office. i would refer you to the department of justice and the fbi when it regards questions of matters under investigation or potential investigation. so there is no need for a special counsel. these things have consistently been investigated when that's appropriate. >> the charges that -- given that this investigation will be led by two u.s. attorneys who then report to the attorney general of the united states, that it's not an independent investigation. >> i think there are very capable people in the department of justice and i would refer you to them for that matter. the attorney general has spoken on this. let me go again -- kristen remington from reno. are you here? hi. >> yes, reno, nevada. i'm so happy to be here. hi, everyone. (laughter.) nevada has the highest unemployment rate in the country at 11.7 percent, highest

foreclosure, highest loss of income. we're here obviously to learn more about the rural economic report, as well. how soon do you think that funding will get to small business owners? and will it really make a difference pulling america out of the recession? >> well, i can tell you broadly speaking that whether it's the housing situation in nevada, which hit that state so hard, or the actions that this administration and congress -- working with congress can take to help small business, that there's no one single action that will lift different sectors of the economy up after such a terrible recession. this president has signed into law i believe it's 18 small business tax cuts. he is pushing congress now as part of his "to-do" list for congress to extend the production tax credit, which has assisted small businesses around the country, and we've seen numerous small business owners speak to the need to extend that production tax credit.

it directly relates to their capacity to hire more workers and grow their businesses. there are i think some positive things going on in the rural economy, things that have happened as a result of some of the initiatives the president has pushed and congress has passed, including investments in clean energy -- the largest investments in clean energy development in history that have been of assistance to rural industries. and the president is going to continue to push that. this president's approach to recovering from the great recession is much like his approach to our energy challenges -- it's an all-of- the-above approach. and he has acted in a number of ways on the need to help homeowners refinance, on the need to provide small businesses the kinds of tax incentives that will get them hiring again, on the need to pass legislation -- as was the

case in the recovery act and should be the case if congress were to act -- to make sure that teachers aren't laid off and that policemen and firefighters are back on the job. so this is the principal business of this administration and this president, and will continue to be while he is in office. >> jay, on secretary bryson, what was the timing of the seizure in relation to the accident? >> i would refer you, as i said in the past, to the department of commerce for more details. >> i've been asking them for hours. >> i just don't have those details for you. so i think i would refer you to the commerce department. >> can you explain why there seems to be a parsing of -- it just seems the commerce department is saying he was involved in accidents and he had a seizure, but there's really nothing connecting the dots and it's really an important point. >> well, again, as i pointed out, there was -- the commerce secretary was alone; he had a seizure; he was involved in an accident. i would refer you to the commerce department for more details.

those circumstances i think speak to some of the difficulty in getting details. but beyond that, i just don't know and i would refer you to the department of commerce. >> does it seem like it's causal, though, the seizure and the accidents? >> again, i'm certainly not a doctor. i certainly didn't -- >> but you've seen -- >> i was not a presiding doctor on this case, so i would refer you to the department of commerce. >> he was involved in several accidents. you said, "an accident" just now. >> okay, i read the reports, april. he was involved in several accidents. >> i mean, for the record -- >> thank you for the correction. i think i acknowledged what you all have read, is that there were several accidents as part of this incident. >> and can you speak to how the white house came to be alerted? >> the white house was informed yesterday evening. >> by? >> by the commerce department. i don't have an individual for you. and the president was informed this morning. >> jay, one more on that. can you say whether the secretary is now on medical leave or if you expect -- >> can i refer you to the

commerce department? they would have the best information on that. >> it's the kind of thing the president would probably know about, so that's why i'm asking. >> i would refer you to the department of commerce. >> just one more thing on the doj leak investigation. what kind of access is the white house prepared to give the prosecutors on this? will they have unfettered access to emails and officials? >> i simply don't know that much about it yet. the attorney general -- i would refer you to the department of justice on it. we obviously -- this administration, again referring to what the president said and his zero tolerance, the views that he expressed here reflects the approach that this administration, this white house in particular has taken. but i don't -- i cannot speculate about an investigation that has not begun. >> no, i'm asking from a white house -- >> again, i cannot speculate about what our disposition is going to be to an investigation that was just recently announced. april. >> jay, when a secretary is

confirmed, are there any types of mandatory physicals and examinations that they have to take once -- >> april, i appreciate the question. i don't have any details about that. i think that, again, i can simply say that the president, when he nominated mr. bryson to be commerce secretary, believed that he was capable of serving as commerce secretary, and, in fact, secretary bryson has served effectively as commerce secretary since he was confirmed. i don't have any details of the process of the nominating process beyond that. >> in the last question, you've pointed out so clearly and wonderfully that we have guests that have been asking questions, particularly from i guess states that could be purple or trying to be purple. what's the effort in having questions come -- we welcome them, but talk to us about the white house picking up this regional -- >> well, today we're hosting another installment of our "live from the white house" series, inviting local television anchors from across the country to broadcast the evening news from the south lawn. this time we've invited anchors

from markets with significant rural populations so their viewers can hear the president talk about his administration's record of and commitment to investing in rural america. these interviews come as the white house makes two announcements today. one, president obama announced investments to help rural small businesses expand and hire. last august at the white house rural economic forum, president obama announced a new commitment to invest in rural businesses through the small business investment company, a program at no cost to taxpayers. now he is announcing that more than $400 million has already been invested in this fiscal year in these businesses through the small business administration's small business investment company program, and that nearly $2 billion in additional funding will be invested at by the end of fiscal year 2016. secondly, the council of economic advisers, the white house rural council, and the department of agriculture released a new report, which notes progress that has been made in the agricultural economy, and details steps the obama administration has taken

to help strengthen the farm economy and support jobs and growth in rural america. broadly speaking, april, i'd say this is part of a series that we have undertaken here at the white house to bring local television and other reporters to the white house to talk to the president, because while we believe the white house press corps, the national press corps serves a vital role and is an important avenue through which people across america get their information, the fact is a lot of americans get their information from local news, from local television, local newspapers, and the president is very interested in talking to reporters from those outlets. >> did they submit their questions to you ahead of time? and how did you know who they were? >> well, because we invited them and i have a list of their names. (laughter.) >> did they submit the questions to you? >> no. voa. >> thanks, jay. overseas just for a second before we get back to that issue. (laughter.) on pakistan, u.s. negotiators have been pulled

out. the pentagon says they may be sent back in on short notice. but why is the whole process of resolving the issue of supply routes in such trouble at this point? it just seems like it's been many weeks since nato, and there was indications before that. >> well, i appreciate the question. most of the technical arrangements have been worked out, but there are still several issues outstanding. we believe that all can be resolved, and we remain ready to conclude this agreement as soon as pakistan is ready. so i think they've been working on this. we saw it as the right move to withdraw the -- those technical consultations have been completed largely, and so it was determined that they could return home. we are ready to send officials back to islamabad when the pakistani government is ready to conclude the agreement. and it certainly remains our goal to complete an agreement

as soon as possible, and i would note that the pakistani government has said the same thing. >> secretary panetta said we're reaching the limits on our patience. i mean, hadn't we already reached the limits of our patience? >> our relationship with pakistan, as you know, remains both extremely important and extremely complicated. because it is so important, we devote a lot of time and effort to working on that relationship and discussing all the key issues that are involved in that relationship, and this is one of them. >> may i follow up on pakistan? >> sure. >> the pentagon says that they've been there for about six weeks and they deserved a rest. i mean, are we withdrawing these negotiators because they were tired? >> i think i just addressed this. the technical consultations are largely complete, and we are ready to have the necessary officials return to islamabad when the pakistani government is ready to conclude the agreement. we've expressed our desire to conclude the agreement. the pakistani government has said that they want this agreement concluded, and we look forward to that taking place. >> so what is the holdup? has pakistan shut the talks down? >> i don't have any more details for you on it.

i think there are still some remaining issues that need to be resolved, but they do not require the kind of technical people that were involved in the gloc consultations for the past 45 days. >> does that mean they don't need to go back? >> again, we will -- we are prepared to conclude this agreement when the pakistani government is ready to do so. >> two questions, jay. the first: commerce secretary bryson was hit with the felony -- in california. has the president expressed his confidence that he can serve with this felony -- >> well, you're asking me to speculate on a legal matter that is in a local jurisdiction, so i won't. i can tell you that the president is obviously -- he learned about this incident this morning. he is concerned about secretary bryson's health and broadly about the incident. but we are still early days here and learning more about the situation, so i don't have any more to provide you. >> on holder, a couple of leaders have said that -- have

expressed their concern with holder -- first, with the probe into the leaks, and then also with this vote that's coming up holding him in contempt -- >> and which folks would those be? >> capitol hill republicans. >> right. >> but i'm wondering what you have to say about that. does the president feel that he's fit to serve, especially with this contempt -- >> i think i addressed the contempt issue -- the substantial level of cooperation, the numerous hearings, the thousands of pages of documents, the number of times the attorney general himself has appeared on capitol hill, including four hours last week. and i cited a member -- republican member of the house judiciary committee who described this as "politics." so don't take my word for it, take his word for it, in terms of what's behind this. the president has absolute confidence in the attorney general. yes, go ahead. >> thank you. is there a political statement about shimon peres being here -- (inaudible.) and will the

president have private policy talks with peres? >> i have no meetings to announce to you with regard to that. and in terms of -- the first question was about why he's here for so long. i think i would refer you to him in his office for that. >> he's a guest of the u.s. government, right? >> well, if i have more details on that i'll get them to you. michael cogdill. yes. greenville, south carolina -- also parts of ashville, north carolina. yes, sir. (laughter.) >> you took notes, didn't you? >> robert reich, jay, has called the rural initiative a "policy miniature" -- i believe is what his words were. how concerned are you that that particular economist isn't in love with it? >> well, we don't develop policies so that economists fall in love with them. we develop policies because we think they're the right actions to take for the issues they're meant to address. i wasn't aware of that particular comment.

the president believes that the actions that he has taken, the actions that he's proposing, are the ones that will help our economy continue to recover -- different sectors of our economy to continue to recover -- will result in greater growth an greater job creation. again, we are continuing to emerge from an economic crisis, the likes of which none of us in this room have ever experienced before. and the fact is that 4.3 million jobs have been created over the last 27 months and it is a measure of how severe the recession was that that is not nearly enough. and that's why we need to take further action to help the economy grow and help it create jobs. thanks very much you all. [inaudible]

eight years ago this month, the soviet union invaded afghanistan. to no one's surprise, the afghanistan has turned into a bloody war with no victors. a group of human rights lawyers documents countless acts of terror perpetrated against the afghan people. >> the current house minority leader and speaker was honored. watch those tributes at the c-span video library. >> former premise and --

prime minister gordon brown [no audio] [no audio] >> david marrinus traveled the world to research his book. examining