record. please proceed with your opening statement. >> good morning. i appreciate very much the motion with which certain people have addressed the loss of health insurance upon passing over certain thresholds. the article i wrote on the bed so in three years ago -- i got a little bit emotional because it seemed so unfair in socially inefficient to ve these cliffs over which people would fall. there is an opportunity you with health reform to address this. we have grown a series of supports to provide an economic safety net. one of these supports, the eitc, has a positive incentive for working. it stands out in that regard.

the impact it had in terms of increasing labor force participation was noticeable upon its enactment and expansion. it does testify to the importance of these programs. although -- there are lots and lots of stories. these people are sometimes called the murders of the system. -- gamers of the system. my own mother would complain about not having health insurance and working. she said prisoners get health care when they need it. i said, mom, you can go rob the bank. in europe, they have health insurance and is paid for by payroll taxes can sales taxes. it is not -- it has a much

bigger apparent cost than our system does. our system has a larger real cost in terms of the disincentive effect and keeping people in a certain status of society instead of moving from addressing security to moving to self-actualization. instead of realizing a human person in terms of working with diligent in judgment and a degree of creativity in their work, they are trapped in a different strata, not participating fully with the rest of us in a free society. we should want a seamless transition from the place where we have economic safety net to the place where we are free

people, self actualizing, associating with other people on the basis of a free association. i was interested in the other calculations of the number. the actual tax rate is somewhat problematic because of the cliffs golf. the eitc phases in and out. how do you handle something where you have a cliff? or you lose eligibility entirely? or the adults lose health insurance and then the children are still covered for a while and then they lose eligibility. there is some art to making those calculations. i wondered whether i should update the calculations i had in my 2009 article for this presentation. i like everybody else waiting for the supreme court to speak at the issue of health care reform and also, we have the

problem of the payroll tax going up. the federal income tax rate for the first bracket going up. and the child tax credit going down. i thought, let me just have the same calculations i have several years ago. the point is pretty clear. when you consider income after taxes plus benefits that you received, there is not much incentive for a lot of our fellow americans to work. the net affect maybe 50 cents for some or maybe as much as 100% for others. we should have a positive affect for everybody in our system. this speaks to tax simplification and tax reform act so that all pay their fair share. the focus today being that the poor not pay more than that fair

share on the marginal dollar of productivity and. the payroll tax is a very big tax and it is paid twice by the worker and their employer. it is a very large tax. why do we have that tax would we are trying to help people? if you look and an alternate measure of income for the purpose of calculating poverty, based not on the official income that we currently base our poverty rate bond, but based on income after taxes plus benefits, at you have about the same poverty rate. it would put the we did we pull the same people in and out. >> dr. thies, could use some of quickly? >> we want to have an integrated approach with a robust incentive

to work at every phase of the income distribution. >> thank you. dr. steuerle? >> members of the two committees, thank you for your virginity to appear before you. the nation's real tax system is different than the tax system we know by looking at direct statutory rates such as the income tax and the social security tax. expenditure taxes remain largely hidden from government. they actually are major influences on behavior. these expenditures, i want to be clear, our a classical liberal conservative compromise. you commented about needing to work together to solve this problem. one reason we need to do that is because it is a liberal- conservative compromise in the sense that liberals have favored

the steps of implicit texas as a way of increasing productivity. conservatives have said their ways on saving budget revenues. have resulted in very high tax rates. lower income households are especially affected. i remind you that you have these implicit taxes in pell grants and dozens of programs including most of the subsidies in the tax systems. we have done a lot of work on trying to calculate these taxes. the first grant on the screen is the same as a figure oneb, and shows the maximum benefits for which a single head of household in two children will be eligible. rates are low. they are even negative, and $10,000 to $50,000 of income. thereafter they rise quickly.

figure three of my testimony, i show the effective tax rate for households as income rises from $10,000 to $40,000. income and social security taxes take away 30% of earnings and then universally available programs, items like eic -- that raises the rate. if people are in welfare programs, it can rise above 80%. what used to be called a poverty trap is now the twice poverty trap. the high rates hit households who are in more than poverty level incomes. these studies have attempted to show the effect of these rates on work. the results are mixed. works of cities such as eitc encourage labor force participation.

particularly for second jobs in a family or for marrying someone who has a job. medicaid will discourage work amongst the disabled more than a subsidy system such as the health exchange subsidy. that helped change subsidy will discourage work for elderly people who are encouraged to retire earlier. in major conclusion is that a program that requires workload will lead to more work than one that does not. the earned income credit and welfare reform have done better on the work front. other consequences needs examining. means testing have resulted in hundreds of billions of dollars four lower or middle income households. not marion is the tax shelter for the poor. -- not marion is the tax shelter for the poor. there is evidence that a well-

developed program can improve behavior such as school in attendance and maternal health. as an economist, i have to judge the long-term consequences of these programs. just as a classic liberal- conservative compromise goddess into this system, it might require went to get us out. among many approaches to reform better worthy of consideration are one, seeking broadbased welfare reform far beyond even when we are discussing today would rather than adopting prob-- programs one by one p. two, finding opportunities in education. it does require cutting back on programs. it means there is growth in government which continues. it is emphasized in a different way. 3, but tax rates in the tax code so they are not so hidden. four, make --

5, the about adapting a marginal tax rate for some programs. it 6, which of the tile benefits go to the child and other subsidies go to low-income workers rather than combining the two. that is to try to start including in the social welfare structure many of these low- income working single people who basically are excluded altogether and have access to the system mainly by going to prison. thank you. >> thank you. dr. bernstein? >> thank you for inviting me to testify today. my first point is that i believe that is central to broaden the question at the heart of this hearing. for policy-makers to understand the impact of policies under review, we must investigate not just any work disincentives they may engender, but also incentives. the earned income tax credit has

been found to have large worked in sent a fax. hit list millions of families out of poverty. this is why it was one of ronald reagan's favored programs. that raises another necessary dimension along which these programs must be evaluated. to what extent to they will achieve their targets? to examine only the marginal tax rates associated with our anti- party programs, riskand you cant understand the impact of the program. research on these questions finds the following -- walz benefits of means tested programs are by definition reducing income, their work disincentives differ. the eitc has yielded the

following findings from a recent comprehensive review. the overwhelming findings the empirical literature is that the eitc spent especially excess oil at encouraging employment of single parents. recent review of the poverty reduction effectiveness of the the full scope of our safety net and social insurance programs found "the combination of the means tested and social insurance transfers in the system have a major impact on poverty, reducing poverty rates by 14% in the u.s. population as a whole." the next finding from the study is particularly pertaining to today's hearing. "this poverty reduction impact is only negligible e affected by work incentives which have no effect on the pre transfer rates of poverty in the population as all hold." this research finds these large

poverty reduction affects after accounting for any work disincentives implicit in the program. other recent research has found positive generational effects of safety net programs on later education and earnings outcomes of children from families that receive such benefits. one study finds that raising a poor family to get income by $3,000 per year, which is typical, is associated with a 70% increase in earnings and an average of 135 hours of additional work per year compared to similarly low-income children whose families do not receive the benefits of these programs. one poverty expert summarize the findings as "a remarkably strong body of research based on large- scale implemented experimental research design which is implementing the earnings of the appearance, and improving

the school performance of young children." this suggests that reducing those benefits would harm future generations in terms of their educational and earnings outcomes. finally, to the extent that work disincentives exist, policy makers should consider ways to reduce or eliminate them. i offer three ways to do so. first, lower marginal tax rates by expanding phaseout range is. this increases costs. provide child care in transportation assistance. third, increase the number of jobs available to low-income workers to demand side policy. given the persistent weakness in recent years, i want to be sure to stress this. research over the last few decades shows the most effective work incentives are tight labor

market with rising pre-tax wages. policies such as job creation measures will prove more effective in incentivizing work them lowering marginal tax rates on safety net benefits. it would be a significant policy mistake to require recipients of benefits to work without first ensuring adequate job availability. even in a climate of strong work incentives, without adequate job this is a recipe for rising poverty. thank you. >> thank you. dr. brannon? >> thank you for the invitation to speak. the one thing i have realized through the year is looking at the research is that tax rates matter. very high tax rates, no matter where you are, deters employment. and how much people are willing

to work. one of the things we have seen from a plethora of research in the welfare rolls is that because of all of these various programs, you have marginal tax rates that regularly reach 40% for low-income people and can go up as high as 80% or 100% if you take into account state and local programs. no one really designed the program to be this way. just like the tax system, we should have our welfare system that looks like it was designed on purpose. every program was put in by well-meaning people. when you have 12 or 13 different programs at the federal level and sometimes at the local level, these things act to create tremendous disincentives. i think -- i am preaching to the choir. i think this is something that

appeals to the number of the committee. instead of having several different programs that might be at odds and combine to create tremendous disincentives to work, it makes more sense to have one program. it is difficult to implement. i understand that. especially when you consider people who are low-income at the federals that say level. having a federal government design one welfare reform program can be very difficult. it might be impossible to tell the states to put out -- butt out. we need to do something so people are not facing 70% tax rate. congress is have looked at these programs and there have been bipartisan effort to do this.

in 2002 or 2003, there was talk about reforming on insurance -- unemployment insurance. if the unemployment benefits go on for 26 weeks, what happens is that when 100 people get laid off, 30 or 40 people find new jobs the first month and another five or can find them the second month and then hardly anybody finds them in month 7. if you extended to nine months, the magic number is 13 months. they wanted to change that too personal reemployment accounts where people were laid off. instead of given monthly benefits, they were given an account that they could use to

support their family or education. it is totally eliminates the marginal disincentive the unemployment insurance provides to recipients against work. doing such a thing might be difficult or impossible. it is a model that people need to realize. people respond to incentives. they might not have college degrees but a welfare recipient is able to figure out whether it is worth their while to work. what we do not want to do is make sure that people get just enough to get by and then provide disincentives for them to work. thank you. >> thank you. we will want to questions. i would like to recognize the chairman of the select revenue subcommittee for five minutes. the >> thank you. i have a chart that you will see on the tv monitor.

in your testimony, you know that for each percentage point lower unemployment, the increase in real hourly wages for low-wage workers is at least like that of high-wage workers. in january of 2009, you were the co-author of the administration report titled the job impact of the american recovery and reinvestment plan. he may remember you forecasted unemployment rates would be 5.7% with the administration's stimulus plan passing. as we know, today to attack unemployment rate is at 8.2% and has been above 8.2% for 40 straight months. is it your testimony that low- wage workers has disproportionately lost out on higher wages due to be elevated unemployment rates we have seen, especially compared with the unemployment rates you forecast in the stimulus plan?

>> yes. the research is very clear on this. the wages of low-wage workers are more elastic to the unemployment rate than wages of higher income workers. their unemployment rates are higher, as well. >> so what happened? >> you are asking about the forecast? >> yes. >> clearly, a different topic than marginal tax rates on safety net programs. that is the administration's forecast for unemployment. that is the same one that shows up in the first budget. it is the forecast of what is called omb council of economic advisers in the treasury. that forecast was made by an

incoming administration that was just forming in the fourth quarter of 2008. at that time, unbeknownst to us, the economy was cratering. gdp was falling and 9%. now, if you look at the statistics from that time, as we did, it looked like the economy -- the recession was more mild than that. that is why the forecast for unemployment was actually the median forecast of all the professional forecasters at the time. you are right in debt we missed the depth and severity. so did almost everyone else. once the recovery act was implemented, it was a matter of two quarters later. by the third quarter of 2009, gdp was rising again. that is a real mark of how successful it was in breaking the back of the great recession.

>> thank you. you testified on the additional work penalty the new exchange subsidies provided by obamacare. i would like to highlight that the subsidies in close -- impose a marriage penalty. that is because under federal poverty guidelines, for a family of two, it is 135%. that means that two single individuals earning $22,000 a year will lose about $1,400 per year in subsidies if they became. in one household earning 44,000 rather than 22,000 each. can you expand on that? this is a major problem with the affordable care act.

it provides a subsidy to people to go to the change can buy health insurance. the phase-out is relatively steep in order to contain costs. research done on this subject laid out a marginal tax rates for certain individuals going up anywhere from five percentage point to 10 percentage points based on the face out of the subsidy to the exchange associated with the affordable care act. >> this impacts low-income individuals at the lower marginal rates? not just in this area of the tax code. >> right. >> thank you. i yield back. >> thank you. the chair recognizes the other member for five minutes. >> do you agree it is important to maintain the air earned income tax credit? >> yes.

>> the positive part, yes. if possible, i would like to eliminate the phase-out or blend that into the tax code. >> i would actually expand it to try to figure out ways to include single people. by the way, i would do this as a substitute for the title social security tax breaks that i believe are on the supply size grounds, a weaker incentive for recovery than could be some expansion. >> thank you. i would add that the expansion is that congress supported to be eitc in their recovery act have proven to be extremely helpful in all of the ways you have heard this morning. i would try to ensure that those expansions remain a permanent part of the program. >> let us talk about health care just a little bit. if i had a high-tech employees who has a great idea for a

startup, but a family of children with serious illnesses -- it is an informed decision for that person to stay with their group health insurance rather than going out and benefiting society by creating a tax start-ups. similarly, if i have a poor person who can qualify -- in texas it is difficult because the state is mainly about trying to prevent anyone from getting health care -- if they manage to qualify for benefits in the state of texas for health care with a sick family, and they choose not to seek a higher wage and job in order to maintain eligibility, that also would seem to be not an indication of a lack of willingness to work, but of an informed decision to try to provide health care

protection. we attempted to respond to both types of informed decisions with the affordable health care act. over time, the expansion of access for poor people to health care more moved into a cliff or disincentive to work, to create new jobs and new businesses and new economic opportunities. >> yes, i think you are adding the kind of new ones that i tried to reflect in my testimony. that must be brought -- these criticisms must be brought of the implicit tax rates and the affordable care act. there are a lot of moving parts. one of the most important is that the affordable care act expands medicaid, therefore pushing out and lowering any marginal tax rates or work

disincentives associated with that program. one of the studies i brought with me today simulates the impact that the affordable care act -- accounting for the disincentive of the incentives i just meant -- mentioned would increase the employment of single mothers. the affordable care act reduces job loss, which is what you mentioned. it increases subsidies for small businesses and its successfully lores health cost. all be positive for job creation, as well. what i tried to express in my testimony is that you simply cannot do what some of my colleagues have done today, which is looking at the marginal tax rates and assume they reduce labor supply. you have to get into the actual functioning of these programs and look at the empirical outcome. we cannot do that would be affordable care act because it is not in place. with one exception.

massachusetts has a health plan much like the affordable care act. there is a very nice study that looks at the employment effects of health reform in massachusetts compared to those that don't have the health care difference. i would be very wary of the simple prediction that says if a tax rate bumps up nextx, it must have y fx. >> thank you. >> thank you. the time is expired. >> thank you. economists and researchers have noted for decades that the interaction between welfare and tax benefits can create little incentive for low-income families to work. is that still pretty much the

consensus among economists? >> i think what has happened over the last two or three decades is we have moved out what used to be called a poverty trap do what i now call the price poverty trap. if you actually ask about what those reforms have done, they have probably increase labor force participation. what the research is showing is that although it has done so the incentive can only be positive -- the incentive is only positive -- once you get to about 15,000, that is when the disincentives' largely strike. that is also one reason why we get mixed effects on how your are measuring work. you could actually decrease

productivity, but increase the number of workers. if a second order does not take a job at $40,000 but a couple low-income workers work for 10 hours, you increase labor force participation yet decrease output. i realize i am giving you a more complicated vested. the same thing occurs with the affordable care act that we were just discussing. you have moved away from this disincentive of medicaid and you have moved the distance and a higher in the income distribution. i pointed out that the affordable care act probably will help the disabled to go to work. it probably will encourage more elderly people to retire because now they can get health care without having to retire. it is a complicated message. high tax rates discourage work. the question is, how much and for whom and is this particular

design better than some other design? >> that is part of the testimony of secretary smith. they had seen some disparity in those that are disabled. as you know, in our system, we have almost 700,000 more people on our disability rolls than we did before the recession. i would like each of you to make a comment about whether you think this disability -- this enrollment in disability has to do with obtaining the benefits of medicare/medicaid it is there -- in his case, he said there was very little incentive for someone who was disabled in the u.k. to go into the ranks of the employed.

do we have a similar trap in our system now? >> i would say if people have a robust incentive to work, we could rely on their good judgment about whether they are permanently disabled or not. when we do not have that robust incentive to work, we might suspect that the person is not balancing the consideration. in terms of having a safety net in place. >> you are asking the toughest question -- how we design a program for the disabled? as i mentioned, amongst those near retirement, disability

insurance favors this ability. it creates that kind of incentive. if you have moderate disabilities to try to figure out if you cannot tap out of the system. among those who really are disabled and had huge medical needs, the system has a huge disincentives once you get the medicaid going back to work. you are scared about losing your health insurance. you are not sure how long he will last on the job and then you are afraid of having to get back to the system. i do not have an easy answer for you. i think reforming disability is actually -- absolutely required. it is a tough issue to handle. >> two very brief points. first of all, and this is just

repeating something that i think was said a minute ago, the affordable care act, by pushing out -- expanding medicaid eligibility actually reduces a work disincentive and is pro worked inducing for folks with mild disabilities. it reduces the cliff there, which is helpful. i think implicit in your question was the idea -- the extent to which disability rolls are rising faster. our long-term unemployed people using disability employees of unemployment insurance? research suggests there is some of that going on here one of my colleagues has looked at those numbers. adjusting for age.

as the population ages, there is going to be more visibility. that has created a pressure on the rolls, as well. it pushes back on the idea that boats are illegitimately -- >> thank you, mr. chairman. i would like to -- one of the things significant about the massachusetts plan is the consumer satisfaction rate. it remains pretty popular across the board. i think that bears noting in a discussion we're having. once it was implemented, people had a chance to see the fruit of the investment, it has been very well met. i do not know anybody in the state who is talking about going back to the previous system, including the association.

they have made sure it would work. people in massachusetts are committed to making this plan work. nobody talks about bricking it out. before i go back -- i have an issue with you. i spoke earlier -- one of the things we did in 1996 with the welfare reform bill, which was a series of artful compromises, we did talk about job training, transportation incentives, child-care, day care -- one of the things that was very important that was done on a bipartisan basis was the whole notion of child support. would you speak about that experience? i think it bears noting as we go forward. >> if i make comments --

creating -- we did a study looking at the impact of the affordable care act on businesses. creating a well functioning insurance market prevents an inefficient allocation of labor away from small firms by leveling the playing field amongst firms of all sizes in competing for talented workers in the labor market. that is a complicated way of saying that sense large firms are much more likely to offer comprehensive health insurance for their workers, a system like the one we have today outside of massachusetts gives them an advantage and a disadvantage from the worker's perspective in terms of job loss. if you have a more comprehensive system, small firms are then will lose a competitive disadvantage to large firms in competing for talented workers. child support was one of the many works supports that go for

further in incentivizing work than tweaking marginal tax rates. subsidize employment worked very well in the recovery act in incentivizing employment. these kinds of work supports have been shown to be much more consequential in helping people move the from welfare to work. >> we saw the textile industry and the old-line manufacturers began to depart over the last few years, i must tell you that based upon the solid manufacturing history, i never met anybody inclined to extend unemployment benefits if they thought they could get another job.

>> i also come from a major manufacturing center. in the early 1980's, calif hitter went through the recession. -- caterpillar went through the recession. a great example was that was had in our home town. what happened is that anyone who had home building done or work whoically hired someone who d forecasted with no taxes paid. people might be working, but they are not necessarily reporting their income. you see a lot of them. >> you are suggesting that people with that strong history of work did not want to go back to work if they could find a

good job similar to the one they lost? >> i think if you have a blue- collar job and you get laid off for a few months, you get -- it becomes a rational decision. if you decide you realize you are getting half your salary, it might make sense for you to take a few months off. when i was a professor, i knew people who worked at a trucking company. when they knew they would have to lay off workers, they would ask for volunteers. there are all kinds of people who would do that because they have various other things they wanted some of it was they had jobs they wanted to do on the side in the winter. >> thank you. >> thank you. >> thank you, mr. chairman. thank you for being here. this is a critical debate and probably will not be totally solve today. our goal is to lift people out

of poverty and try to create a system that encourages the end result where people are self sufficient. the thing that is clear today is the programs and the tax -- these are combined to create an unintentional barrier to lift people out. we talked about the dead zone and poverty traps. my question is really simple -- how do we fix this to encourage people to work? mr. thies, if you want to start. >> i think if we could address the payroll tax, it comes in on $1 of the earnings. while the federal income tax is highly progressive and has a very generous zero bracket, the

working people of low-income and moderate-income of today are paying much higher taxes and then the people during the 1960's when the payroll tax was cut to% -- 4%. >> by first comment reflects the conversation on disability. there is some evidence that if you design a program so you have quick early intervention, it seems to make a lot of difference because in some places we take some cases, it is the habits that have developed that continue. there are some proposals trying to figure out how to put more incentives to employers and to try to do this -- i mentioned a lot of other relative chefs we can make. once we agree we will have a social welfare structure, we will have this issue. what are some relative shift we

can make? we can make work a greater requirement for some benefits. that would help. i have been examining our social welfare budget expanding. if the economy doubles, maybe we will devote 90% more if republicans win. it is growing. we can orient that towards incentives to work. i have other proposals in my testimony. i do not want to take too much time. >> congressman, if we're going to have means tested programs that phaseout as incomes rise, we are going to have these marginal tax rates. the best we can do is have that

faceup be as long and gradual as possible. there is a tradeoff there with costs. i think the evidence is quite clear that that helps in the case of the eitc or in certain states with the steps where the marginal tax rate is low. work supports are important. i would argue more important than the marginal tax rates. third, the adequate availability of jobs -- i would not think of adding work acquirements to other programs in a kind where there is an adequate job availability. >> i just want to pick up something that was said about the importance of people entering the work but day world. , to add that the minimum wage

can also have that this incentive for young people, especially young teenagers to enter. >> thank you. i yield back. >> the chair recognizes mr. larsen. >> thank you. i want to commend you for the spirit and bipartisanship in which this is. i had a recent opportunity to travel to china and i got in a heated debate about china currency and also trade disparity that exists between our countries. a former ambassador said, how many people do you think we have lifted out of poverty? i did not know. it was around 320 million.

that is the entire population of the u.s. they were able to do so by investing in their infrastructure. to prove that point, we drove from beijing to mongolia. i raised this point because you mentioned the adequacy of jobs. after all the discussion about the marginal tax rates and incentives versus disincentives, fundamtally, people would not be able to work if jobs are not available. while there has been much talk about how we are going to create jobs, we sit in in congress where we have yet to take up a transportation bill and the

president's request of having his bill taken up in terms of jobs what would the effect of passing the jobs would plan -- the jobs plan be on american american -- on americans that cannot find a job? the german system where they incentivize people staying, they provide the company with direct city to retain the person in that job instead of having them go out to work. >> if i may, we have a work sharing program here. i think it is exemplary. some of my colleagues may well agree that there is no better social welfare program for

reducing poverty than an adequate availability of good jobs for people. instead of an excess supply a of lower wage employers, there are more demands for them. in the 1990's, there were a lot of things going on. even in the midst of all of the disincentives that we have been talking about today, we saw the employment rate of disadvantaged workers go to the highest rates on record in poverty rates dropped to the lowest rates. simply put, no better program. >> and thinking making very good point. we could learn a lot from the german system.

the german system is especially good at sponsoring a printer ships and favoring education of people who do not go to college. my colleague work somewhat on this issue. i mentioned i think you could change the incentives and engage the employer in the sense that maybe you could experience this more so there are consequences to the employer. it is not that they have to play the full burden but it would be nice to have someone help with the early intervention. i think there are ways in which we really could learn from the german system. >> government works best when it is a collective enterprise. by using the term collective, i think what he meant is that by embracing our academic labor

sector and government pulling together, we do have this engine of growth and opportunity. what models would you suggest? do you have any we should follow to achieve those goals? >> eavis thick skin with what was just said. the long term engine for all of this is economic growth. the economy will expand overtime. i encourage you to think about how we've restructure or social welfare system in a broad sense as we move forward. if you look at the government budget put forward by president obama, we are planning on spending a trillion dollars more. about a trillion dollars more. almost all of it is going for

interest on debt and social security and medicare for not -- not for children. if we think about how government ships resources toward favoring employment, we can go a long way. then, if you get economic growth, the relevant ways for working starts growing. we're tied bigelow marginal tax rates. -- we are talking about marginal tax rates. >> do you agree that the war cost of three trillion dollars and having tax cuts -- >> the gentleman's time is expired. on page nine, you say it would be a significant policy mistake to require recipients of benefits to work without first ensuring adequate job availability.

this is exactly the same argument some made against welfare reform in the 1990's. that makes me wonder, how you define adequate job availability? >> fair question. i was there at the time, writing about welfare reform. i did not mean to imply that there should be guaranteed jobs for everyone. my statement was meant to stress that absence stronger labor demand -- right now, if you look at the low-wage labor market, you'll find there are four more job seekers banderillas availability. that is partly a reflection of -- function a recess in. -- recession. if you look at welfare reform, which i would argue is quite

successful, it has actually been quite unsuccessful ever since. even with relatively low overall unemployment rate in the 2000's. welfare reform really has not been a success as the job market has weakened. you have to have a very strong demand side functioning on the low-wage labor market if you are going to require work and expect it to reduce poverty. >> with any other panelists like to comment? >> it is understandable during depressed economic conditions that through administrative discretion the private charity system also will relax eligibility standards. extend unemployment benefits. because of the objectively more

difficult circumstances facing people who are vulnerable. having said that, it is understandable that when we do have a robust recovery, we will revisit some of those things. >> dr. steuerle? >> if we had taken more of the stimulus money and put into job subsidies for lower-income people, that could have cost west and it would be a better keynesian stimulus because people -- it would have been a better supply-side incentives. >> thank you. >> an economist testified in front of the budget committee that if you look at what happened in 2008 or 2009, we increased spending on a wide variety. we did each one individually.

i could back to the point that we really have haphazard welfare systems that create terrible disincentives. not only relatively low incomes, but it has distanced dennis -- disincentives for higher incomes. >> i want to thank all our witnesses for coming today here for your patience for the yearly changes in schedule. the insights you have provided have been very helpful. oakley, we will work together in the time ahead to address -- kopelman, we will work together in the time had to address the various agencies to harmonize and get to the point that mr. brannon talked about. if members have questions, they will submit them to you.

we will appreciate it if you reply to the committee so we can have those inserted into the record. thank you. with that, i conclude the hearing. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> next, your calls and comments on "washington journal. then, "newsmakers" with henry waxman. after that, reaction to the health care law on president obama. >> this is the conversation we need to have in this country that nobody is willing to have. what role should the government play in housing? enson detailsorgan se

government subsidized home ownership in her new book. >> if you want to subsidize housing and we want to talk about it and the populist agrees that it is something we should subsidize, put it on the balance sheet and make it clearer and make it evident and make everybody aware of how much it is costing. when you deliver its through these third party enterprises, with private shareholders and executives who can extract a lot of the subsidy for themselves, that is not a very good way of subsidizing home ownership. i think we have seen the end of that movie in 2008. >> more with her tonight at 8:00 p.m. on c-span's "q&a." aboutis morning, we speak wit the political reactio t