current federal spending ends march 27th. follow the house live here on c-span when members return wednesday. in a few moments the head of the white house council of economic advisors alan krueger says automatic spending cuts are a threat to the economy. republican leaders outline their plan to fund through the month of september. and then special ops and cent com, and the head of the white house council of economic advisors says automatic spending cuts are a threat to the economy, and the longer they're left in place the longer the economic damage. alan krueger spoke about the sequester. this is 45 minutes.

[applause] >> thanks, lynn for that very kind introduction. one thing you didn't mention which was fine was that there is a picture of the cabinet meeting in today's new york times. and if you look -- "new york times." and if you look closely you'll see the back of my head. one of my colleagues said aren't you glad you got your haircut this weekend? i'm delighted to deliver the address here again. at last year's conference i spoke about the progress that we had made recovering from the worst recession since the great depression. i also discussed the near term outlook for the economy. i emphasized several reasons to be cautiously optimistic about the economy going forward.

despite uncertainly about government fiscal policy and the lingering effects of the financial crisis that were then and continue to be head winds for the recovery. i'm sure you are all aware our economy has continued to recover over the past year. real g.d.p. has now grown for 14 consecutive quarters. while many developed economies have struggled to rebound from the global downturn, u.s. real g.d.p. is 2 1/2% higher than it was at the previous business cycle peak. last year, i told you that the council of economic advisor's forecast was that two million payroll jobs would be added in 2012. employment rose by 2.2 million jobs in 2012.

and this increase was entirely accounted for by the growth in the private sector. thanks to the resilience of the american people, we've now added more than 6.1 million private sector jobs over the last 35 months. since i spoke here last year, the economy has continued to show signs of healing from the great recession. in the past year, the housing market appears to have finally turned a corner with rising nationwide home prices, sales and home construction. and new car sales reached their highest level in five years. all of these gains reflect the determination of american businesses, workers and families in the aftermath of the most painful recession in our lifetimes.

nevertheless there are much more work that needs to be done. unemployment remains too high. the middle-class continues to struggle with stagnant wages and persistently wyden iner -- widened inequality. our nation's infrastructure cries out for further investment. and on top of everything else, political gamesmanship in washington is creating unnecessary uncertainty and inflicting unnecessary wounds on our economy just as the recovery is gaining traction. the prime example of this problem, of course, is the sequester, that's washington speak for severe budget cuts. the sequester officially went into effect last friday.

as goldman sachs economist alec phillips observed, sequestration is poorly timed, less efficient than most other forms of deficit reduction and does little to address long-term imbalances that stem from demographic shifts and the excess growth of spending compared to revenues. given the ongoing debates over the federal budget, the main theme of my remarks today will be the economic case for a balanced responsible approach for deficit reduction which has always been the administration's position. a critical point, one which others have made but frequently gets lost in public discussions about fiscal policy is that the federal budget is not an end in itself. the federal budget is simply

the means through which we as a nation seek to achieve our economic priorities. as president obama eloquently stated in his state of the union address last month, the north star guiding our course as a country must be a growing economy that creates good middle-class jobs. this requires taking steps to make sure that america is a magnet for good jobs that pay decent wages and that workers have the skills needed to fill those jobs. we must also address the federal budget deficit because if we do not put the budget on a sustainable course, we will ultimately not be able to achieve our objective of growing the economy and creating good middle-class jobs. president obama has repeatedly called for a balanced approach to deficit reduction.

his plan for a balanced approach includes raising additional revenue from those who are most able to contribute , reforms to our entitlement programs so that they will be around for generations to come, and smart reductions in spending that preserve key investments in education and training, research, and national security. one thing that is often overlooked is that before the sequester, we have made substantial progress towards reducing the deficit in a balanced way. i cheeving over $2 1/2 trillion of the $4 trillion needed of deficit reduction. we're more than halfway there. and we have done this in a balanced way, cutting over $2 in spending for every one

dollar in new revenue. my theme today is that a balanced approach to deficit reduction is good economic policy, justified by considerations of both efficiency and fairness. deficit reduction that balances spending cuts, entitlement reform and loophole closing is also in the interest of the macroeconomy and economic growth. economists should reject the position that says no revenues can be raised from closing unjustified tax loopholes in order to finish the job of stabilizing our finances and strengthening our economy. i have to say after i wrote my remarks, i saw that there was a survey of members. and to some extent i'm preaching to the converted.

i see in one question when nabe members were asked -- how should deficit reduction be accomplished? 77% said with a combination of spending cuts and tax increases. that's the administrations position. also when asked about tax reform, should tax reform increase revenue? 74% agreed that there should be significant increase or a slight increase from revenues from tax reform. so bear with me as i explain why i think it's a very strong economic case for those responses. as economists we are naturally accustomed through viewing the world through the prison. s of -- through the prisms of cost and benefits and weighing them on the margin. the proper approach to deficit reduction would be to implement policies to the point that they

equate the net marginal cost of raising an additional dollars against the net marginal cost in cuts to programs such as education, research and defense. this is balance. in principle, optimal fiscal policy would weigh the very small cost to the economy of reducing loopholes in the tax code such as the carried interest provision against the rather significant benefits foregone from cutting programs like head start, research by the national institute of health, border security and other government functions as well as entitlement reform. balance means that we do some of each. can anyone believe that it is

less distortionary to preserve every loophole in the tax code in order to cut more deeply the number of children who can go to head start or the amount of research that n.i.h. can conduct in i don't think -- that the n.i.h. can conduct. compare this approach to the alternative which says that all of deficit reduction must occur from reductions in government programs. and that not a dollar more would be raised from closing tax loopholes. does anyone believe that on the margin, it is more costly to

trim back one dime of the trillions of dollars in deductions and loopholes that mar the tax code than to spare one more child a chance of pre-school education or spare one more grant to a top medical researcher from being cut or spare one more border patrol agent from being furloughed. a balanced approach to deficit reduction is not only economically more efficient, it is also more fair. as president obama said on friday, it's not fair to ask middle-class families, ask seniors, ask struents to bare the entire deficit reduction when we know we have a whole bunch of tax loopholes that are benefiting the well off and well connected. the american people don't think it's fair and don't think it's

right. across the political spectrum, economists support policies that will limit the distortion nair effects of our tax system. these loopholes don't support economic growth and job creation. so eliminating them is of little if any cost to the economy. additional revenues could be raised in the context of tax reform in which certain tax expenditures are limited or eliminated all together. this would simplify the tax code, reduce the ways in which our tax system distorts economic decisions and achieve that elusive but very popular goal of broadening the base. with respect to government outlays, it cannot be stressed enough that rising health care costs and an agent population are the key drivers of our

long-term budgetary challenges. as a result to stabilize our long-term finances, reforms to mandatory entitlement programs are needed. these reforms would insure that medicare and social security are solvent for future generations. importantly, these programs can be made solvent through sensible reforms that protect the most vulnerable. for instance, the reforms that were included in the affordable care about act which the president signed into law two years ago this month have already extended the life of the medicare trust fund to at least 2024. going forward the budgettary challenges posed by the medicare program will be largely contingent on the pace of health care costs.

now, a balanced approach to addressing our fiscal challenges must also recognize the importance of timing. the recovery is still fragile. weak growth in europe and asia are eliminating our exports. consumption remains constrained as households are still recovering from the loss of $16 trillion of wealth from the financial crieses. -- crisis. we haven't regained all of the $16 trillion that was lost although we've made substantial progress. fiscal policy should remain the focus in supporting the ongoing recovery. at the same time, we should stake steps to address the deficit in a balanced way in the intermediate and long-term.

the sequester is poorly timed and badly targeted. before the sequester, i used to say that we faced two risks when it comes to the government budget. on the one hand, we can lower the deficit too much and too soon, jeopardizing the recovery. and on the other hand, we run the risk of lowering it too little and too late, creating uncertainty and requiring sharper adjustments later on. sadly, the sequester adds a third risk. we can cut the near-term deficit in a dumb way that shortchanges the future without addressing our long-term budget problems. that is the sequester forces us to cut spending that supporting key investments in education, research, security, and infrastructure without

addressing our long run problems. as a former republican staff director of the senate budget committee recently put it, the sequester eats into "the c corn of the future." this hurts future generations and doesn't ease the burden of debt they will inherent. the sequester was not designed as a means to address our budgetary challenges. rather, it was agreed upon in the contest of avoiding national default, you might recall, as a mechanism to force congress to come up with a bipartisan solution to our fiscal imbalances. the congressional superer committee was supposed to come up with a bipartisan and balanced agreement. unfortunately, the super committee was unable to pass a plan even though they had the blunt instrument of the

sequester as their sword as well as fast track authority. as a result, the sequester was automatically enforced and went into effect last week. these indiscriminate, across the board spending cuts pose a threat to the ongoing recovery. you can't take $858 billion out of the federal budget in the remaining seven months of the fiscal year without hurting the economy and job growth. according to the budget office, the sequester is expected to shave 0.6% from real g.d.p. growth and lower employment by about 750,000 jobs by the end of this year. most of these lost jobs will be in the private sector as businesses feel the ripple effects of government cutbacks.

now these cuts may not necessarily be felt immediately and uniformly across the country but the longer they remain in place the greater the damage will be to our economy. and they will be felt more profoundly in some areas more than others. in northern virginia, for example, it is estimated that the spending is half percent of the economy. as contracts are cut, familys will have less money to spend and that will ripple throughout the economy. as the president said last week, the sequester is a slow grind that will intensify with every passing day. and what do we as a nation get

in return for the self-inflicted wound? yes, the sequester reduces spending but because it largely bypasses mandatory spending programs and doesn't make structural reforms these cuts do little to address the primary drivers of our longer term fiscal challenges. the sequester is the anthesis of smart, balanced fiscal policy. it jep dices -- it jeopardizes the current economy when policymakers should be focused on growing our economy and informsing in our nation's future. indeed bob solo warned last week that instead of reinvigorating the economy, "we're heading into an ill advised across the board austerity program." president obama has already put

forward a balanced plan that would not only put an end to the sequester but also put our country on sustainable fiscal footing for a decade. and we have already made big strides towards achieving that plan. to recap where we are as a result of the budget control act of 2011, the american taxpayer relief act of this year and earlier actions, president obama has already signed into law more than $2 1/2 trillion in deficit reduction over the next 10 years. most of this deficit reduction around $4.4 trillion is from cuts to discretionary programs. more than $600 billion in additional revenue will be raised as result of the american taxpayer relief act which was part of the fiscal

cliff negotiations at the end of last year and beginning of this year. the interest savings from these spending cuts and increased revenue amount to $500 billion over 10 years. you sum this all up and you get $2 1/2 trillion towards the $4 trillion goal that we need to stabilize our finances. as a result of this legislation and our recovering economy, you can see from this next -- from this first slide and this chart that government spending is coming down relative to the size of the economy and revenues which have fallen to their lowest point since 1950 are growing and projected to grow further. now, of course, the difference between the blue line which is spending and the red line which is revenue is the deficit here

scaled relative to g.d.p., relative to the economy. this next chart shows you the size of the economy each year. you don't have to worry about baselines. this is the way i economy economists think of the deficit. how large is it in relation to the economy? and it has fallen by 3.1 percentage points over the last three years. this is the fastest three-year pace in deficit reduction since the late 1940's as you can see in this chart. and this next chart shows c.b.o.'s projections under current law. and this shows that the deficit will continue to fall this year and next year.

and then after bombing in 2015 will slowly rise to about 3.% of g.d.p. by 2022. now the c.b.o. production is under current law which includes the sequester. this passed a very rapid deficit reduction over the next couple of years inflicts pain to the recovery and to american families. but it does not stabilize our finances. to stabilize the debt relative to the size of the economy, we need the deficit to fall below 3% and stay there. that is why we set a target of $4 trillion over the next 10 years. so we are most of the way there but we need to finish the job.

and the sequester does not finish the job. in fact, it makes the job harder by slowing growth this year and next year and distracting from the real drivers of our deficit problems providing health care costs for an aging population. president obama has offered a balanced approach to get our deficit to a sustainable level. it's frustrating to hear claims that the president hasn't proposed a plan to end the sequester and stabilize our finances. he has repeatedly. in fact, it's posted on the white house website. you can easily find it by googling white house and se quest tration plan. this shows you -- sequestration plan. this shows you what they have.

you can try this at home or on your laptop. if you click on the link, here's what you come up with. this is the president's last offer to speaker boehner in the fiscal cliff negotiations. the president proposed a balanced plan that stabilizes the debt relative to g.d.p., ends the sequester and strengthens the ongoing recovery. on the revenue side consistent with the administrations fiscal year 2013 budget, the president has proposed to limit itemized reduction for the wealthiest taxpayers and to close other loopholes. this would result in savings of close to $600 billion over the next decade. last december, speaker boehner

said he was open to $800 billion and then $1 trillion as part of tax reform that closed loopholes in deductions. now he says that our nation has gotten enough revenue, not a dime more. if you subtract the $600 billion in taxes that will be collected by allowing the bush tax cuts on the top 2% to expire under the atra, that would leave $400 billion based on his last offer. as far as spending cuts go, the president has proposed an additional $930 billion in spending cuts that address the main drivers of our deficit. you could see here the president has proposed health care savings of $400 billion which by the beginning of the next decade is in line with the amount proposed by the bipartisan simpson-bowles

commission. further more, the president has offered to use the super la active price index as a more accurate way of measuring cost of living expenses to federal programs. and the president has offered an additional $200 billion in discretionary spending cuts beyond those required by the budget control act. these are not easy cuts for a democratic president to propose. president obama has shown a commitment to doing the hard things that are needed to stabilize our finances, including interest savings, all of these tax changes would result in $1 trillion in deficit reduction and they would stabilize our nation's finances over the next decade in a balanced way. the president has also proposed a temporary growth initiative

of investing $50 billion towards fixing our nation's roads to support recovery in the near term. research has found that spending on maintenance of existing infrastructure has a very high return. in addition, it will help to put construction workers back to work right away. pursuing a growth agenda today is important because as we saw in the 1990's and as many countries are learning the hard way today, nothing restores fiscal balance faster than economic growth to which everyone can contribute and from which everyone can benefit. you could see from the next slide that the president's plan would reduce the deficit below that 3% of g.d.p. threshold and keep it there through the end of the next decade.

counting saved interest spending on the outlay side. the $2 1/2 trillion in deficit reduction that president obama has already signed into law is comprised of nearly if the sequester remains in place, this ratio would be pushed out of balance. our immediate and long-term deficit problems will still remain. if congress were to pass the president's proposed , the ratio of spending cuts to the additional revenues would be brought back into a reasonable balance of 2-1 spending cuts to the additional revenue and we will have stabilized our debt and deficits relative to the size and the economy for a

decade and made strides in addressing the longtime drivers of our budget deficit. let me conclude by telling a story. a long time ago, a young president called over to the council of economic advisers late one night. president kennedy's call was transferred to a young senior economist named robert solo. bob solo told me president kennedy said at the other end of the phone, "i always get the difference between fiscal policy and monetary policy. which is the one i get to control?" 1solo responded the fed is responsible -- solo responded the fed is responsible. he said if you get confused,

thi8nk of -- think of "m" for a term policy. the president does not have full control over fiscal policy. both houses of congress must pass legislation which the president can sign or veto. this is how our system works. president obama has made it clear that he is willing to work with the congress to find a balanced solution to our physical challenges. unlike others at the table, he did not retreat from his final offer in the fiscal cliff negotiations. he has kept on the table a balanced plan to deficit- reduction that makes responsible reform to slow the growth of health care spending for an aging population. the single biggest driver of our long-term debt. his proposal saves hundreds of

billions of dollars by getting rid of tax loopholes and deductions for the well off and well-connected. he has never said it is my way or the highway. he has kept its offer on the table in the hopes we can reach a bipartisan solution that reforms are tax code and entitlements and puts us on the sustainable fiscal course. there are many ways to reach a balanced solution. if we follow our north star of growing the economy and the middle-class, we will end up with a balanced plan that supports the economy in the near term while we take steps to adjust our long-term budget deficits. this is the ultimate test that we must apply to government policy. take you very much. [applause] -- thank you very much.

[applause] >> we do have time for questions. please write any questions you have on cards and we will answer as many as we can. thank you very much, dr. alan krueger for your insightful comments. some experts say the middle- class will ultimately have to take -- to pay part of the cost of reducing the growth of our debt. you have indicated on the well- connected. can you clear up some discrepancies on those views? >> i cannot think they're necessarily inconsistent. if you look at who bears the brunt of the spending cuts that have already been put in place and the president has proposed,

they fall largely of middle- class families. that is one of the reasons why i think the american people think it is fair to ask those in the top income groups to contribute more. if you look at what has happened to to income inequality in the u.s., the rise in incomes and to the top to% of americans, even after the tax increases that congress put in place by the american tax payer relief act and the loophole closings' the president has proposed after-tax income for the top 1% will still be at high levels. i do not think anyone would say the problem our economy faces now is that people like incentives to be successful. this is an example of the kind of balance the president has proposed, that the middle-class is already struggling with a

lower income growth, the wages -- stagnant wages and spending cuts that have already taken place. that is what i think balanced does speak to fairness. >> instead of -- in the state of the union address, the president recommended decrease and -- recommend an increasing the minimum wage. what impact would you see on certain groups such as teenagers and part-time workers? >> the president proposed raising the minimum wage from its current level of $7.25 to $%9 an hour over the next few years. that would bring it back in terms to where it was when one reagan took office. it is a range we have seen in are not too distant past. the research is mixed on the

minimum wage. i think most of it is concentrated around finding little if any fact of modern increases in minimum wage on employment. the president'proposals were a 24% increase. in the clinton years, the minimum wage increase by 21%. that is the last time i did research personally on the minimum wage. that showed hardly an impact. i was struck by the way if you look at the igm panel of expert economists, they favor an increase in the minimum wage and split evenly on whether there would be a noticeable effect on employment. i think within the mainstream view of economics now, the minimum wage does not have much impact on employment if it is in the range we have seen historically. the economists in that survey

thought that whatever affects it may have in terms of employment, would be outweighed by helping lowest income earners and those who have done the worst over the past few decades. >> you spoke about the importance of a title match programs -- of entitlement programs. any specific measures? >> part of the president's proposal is to switch to the superlative cpi, which research suggest is a more accurate measure. partly because of substitution bias. also because of finite sample bias. the way that cpi is constructed is -- constructed because of

sampling at the lower level, that causes the index to slightly overstate inflation. if every price were measured as opposed to drawing a sample, we would have a lower rate of price inflation. that is one of the president's proposals that would raise about $130 billion in additional revenue. we would set aside money to help protect the most vulnerable from the switch in the index. more importantly, the president proposed $400 billion in medicare reforms. many of which have been outlined explicitly and in the past budgets. >> on the medicare, specifically raising the retirement age, increasing the deductibility overtime, and

other areas -- you point out health care is where the problem is. >> raising the age does not really solve the problem. it just shifts the burden. that does not seem like the right solution. the president has opposed the a's -- raising the age and has proposed means testing. making other changes to providers so that we are spending money as effectively as possible. >> in terms of a tax loophole, would you entertain looking at a mortgage deduction and how would you address that? proposal is to limit deductions for mortgage for state and local taxes for

other deductions to 28%. right now the way the tax code works, warren buffett gets a more generous tax advantage from deducting his mike -- his mortgage than the secretary does. it does not seem that warren buffett need more help buy health -- held by a house that his secretary. proposalnistration's makes a great deal of sense economically, to give the upper income groups the same tax advantage from tax expenditures as middle-class families and the or the deductible to 28%. but there are the ways. we think this makes a lot of economic sense. we are willing to discuss ways in which we can improve the tax code and eliminate or reduce the distortions. >> we have time for one final question.

where would do you see is the optimal share of gdp of revenue and tax and spending in the budget? >> i do not have a precise answer on that. i think what we want to do -- first of all, we have to recognize that because of commitments we have made as a nation to older populations and because of demographics, we face rising costs. that has been known for a long time. at the same time, i think we are ready critical point where we want to make sure we invest in research and our emperor structure so america is a magnet for jobs. other countries are -- they have learned from our success. education is a good way to strengthen your economy and the are investing heavily in education and research.

it is extremely important that we also reserve space in the budget for this critical investments. when businesses come to talk to us, they talk to the importance of having better temperature in the u.s. and that will help bring them -- help them bring more jobs back to the u.s. i cannot give you a precise number. >> i think he would all agree we are fortunate to have someone who appreciates the importance of cost-benefit analysis. thank you very much, alan. [applause] >> thank you. >> please proceed to the luncheon, which is just a floor a way. thank you. [captioning performed by national captioning institute] [captions copyright national

cable satellite corp. 2013]

>> house republican leaders spoke with reporters about their plan to fund the federal government through the end of september. this is 15 minutes. >> good morning. the house will pass a bill this week to keep the government and through the end of the fiscal year. spending is the problem. our goal is to cut spending carried not to shut the government down -- our goal is to cut spending. not to shut the government down. i hope this continuing resolution will find easy passage in the house and senate. a report on friday makes clear there is no reason for the keystone pipeline to be blocked for another day. the president and the president alone stands between these tens of thousands of american jobs

and more north american oil for our refineries. it is time for him to say "yes." after foury ears of needless delays -- four years have on the list delays, it is time to the president to stand up for a middle-class jobs. we will get that by putting the keystone pipeline under construction. >> good morning. we will train to the floor this week a continuing resolution to avoid a government shutdown. at the same time, try and reduce the level of spending here in washington. i think all of us on both sides of the aisle have said the sequester is not in the smart way of accomplishing the reduction in spending but it seems the on the kind of reduction the president lives with because he has to. it is a lot. we remain committed to continue -- it is the law.

we remain continued -- committed to continue to balance the budget and identify areas of waste. there are two americans who would not subscribe to the notion there is not some waste you could cut in washington. our committees will try to go about doing what everyone in this country has been forced to do in these tough economic times which is to tighten the belt and learn how to do more with less. clearly on the evidence of the gallup poll out lately about the president's approval rating, clearly people are tired of the political games in this town. what to see some resolution of problems. we remain committed to try to focus on resolving problems. we remain committed to help those who are unemployed. we will bring up the skills act next week. that is a bill i think both sides can come together on and

provide assistance for those who do not have the right kind of training or skills so they can act as the unfilled jobs out there in many of the industry sectors. >> as you just heard from the speaker and the leader, you heard of legislation the house is focusing on to put the country back to work. from the energy policy to eliminating waste, to a skills training to help individuals get back to work. that is the goal of the house. the challenges with in washington is sometimes we have different goals and the president. one thing i have now found, the president has a total different goal for america. his goal is to bring nancy pelosi back as speaker. on election night after winnin g, you think about what you want to a cheaper the next term. the president, what did he do?

he called nancy pelosi. he did not call harry reid to talk about legislation. he did not call speaker boehner and say the election is over, let's work together to put america first. he called the chair to say how can we continue the political play and win back the house and put nancy beck as speaker? that is not the goal of america. -- put nancy back as speaker customer and that is not the goal of america. -- put nancy back as speaker. that is not the goal of america. >> i spoke with some people who expressed their concern over the nation's spending problems. they would like a solution. they are united around the need for us to find a solution today and to our spending problems so that the next generation, young

people in america, will have a fight for future. one gal is graduated and collins. she was excited about opportunities america had to offer her -- one gal just graduated and she was excited about opportunities america have to offer her. she said i am questioning whether i will take on further debt because i do not have confidence there what it be a job waiting commis upon graduation. these challenges are not unique. waiting for me upon graduation. these counties are not unique. the $16 trillion debt is the out of control and that is threatening that next- generation, the next generation of american leaders from the

jobs they will have once they graduate and the next generation and the skills they need to make sure america will remain competitive moving forward. why is this? because spending is a problem. we continue to urge the democrats to make the responsible spending cuts and as republicans, we are committed to a smarter approach to spending reductions and reform. and getting america on track as lisa that the next generation will have a bright future. -- america on track fiscally so that the next generation will have a bright future. >> back in 2008 then senator barack obama said it was irresponsible that our national debt has increased $4 trillion. here we are halfway through an 8 yaer term -- 8 year term and th national debt has already

increased on his watch $6 trillion. we have a spending problem and yet the president continues to want to raise taxes. he got $1 trillion in taxes with his health care bill. he got nearly $700 billion at the beginning of the year and now he is roaming the country talking about closing loopholes. that i am pleased to hear because republicans in the house have been talking about closing loopholes for the last two years. but if he uses the tax loopholes to pay for his addiction to spending, then that kills a fundamental comprehensive tax reform, which is what the ways and means committee had a working so hard on. taxes are not a problem in washington. we will collect more in tax revenue this year that we have ever collected. cbo recently predicted tax

revenues under current law will double as in the next 10 years -- will double in the next 10 years. spending is a problem. every hardworking american has had to cut 2% out of their budget when they saw taxes go up at the beginning of the year. >> good morning. i am in a freshman member from montana. i have a different resonate than most in congress. i am not a lawyer -- i have a different resume than most in congress. i am not a lawyer. i am an engineer. i have been creating jobs, understanding why you need to balance a budget. you have to find ways to do more with less. i ran for congress and let the

private sector because i saw looming financial crisis. my wife and i, we have four children, i have two college graduates havetwo high school students. in montana, we require a balanced budget. this year when the legislature meets, they will have a balanced budget. we are running a surplus in my home state. we can take ideas from a hard- working moms i represent in montana, a mom -- a single mom raising kids and those she cannot take on more than she takes in. we have responsibility to the american people and our kids to responsibly manage are spending a reform our government to put

as back on the path of the next 5, 10, 20 years that will have a lasting solution and economic growth. >> i do not normally do this but to date is his birthday. happy birthday. >> can you sing the song? >> i'll pass. >> [inaudible] can you support what ryan is proposing? >> chairman ryan and the budget committee members are working with all members to try to lay the groundwork for successful passage of our budget. and have done a budget each of the last two years. hopefully the senate will keep their word and do a budget for the first time in four years.

but they are working through this and i am sure we will come to some agreement. [inaudible] >> i think we will let them work it out. >> to talk about the speed bumps -- can you talk about the speed bumps? [inaudible] >> our goal is to cut spending, not to shut down the government. q. would hope the senate would take this bill up and move it quickly -- we would hope the then it would take this bill up and move it quickly. >> can you handle ? if they do send handle? >> i will not predict what will or will not do but i hope it will take it up expeditiously

and pass it. you need a hair cut, by the way. >> it looks like you put a white flag and he was to move onto other issues like immigration and gun control. what do you feel about that? > because of the president's reluctance to cut spending, and we have been caught in this battle of having clips and deadlines. this is no way to run a government. until the president gets serious about the structural spending problem we have, we will have to deal with it. i suggested to the president the other did the best thing we can do is find a way to get the senate to finally do their work, i have a large agreement that

begins to adjust the spending problem, puts us on a path to balance the budget over the next 10 years and get out of this clift business. it is not good for the country for us to continue to go through this. i would also agree that because we have had all of these fiscal issues, there are a lot of issues the american people want us to address. next week we will be addressing the skills act. where we take the job training programs, simplify them, combine them so we can put more effort into training people for the jobs that american businesses have available today. there are a lot of other things we need to do. the have a lot list of things we would like to deal with. --w e have a long list of things you would like to deal with. on immigration, we need to continue to pour in a bipartisan fashion like we have then -- tow bipartisan fashion

like we have been. >> the violence against women act -- what is your philosophy on that these days? >> we tried everything we the fact is they couldn't resolve their differences, it was time to deal with the issue and we did. it is not a practice that i would expect to continue long term. >> on the outside of your party is you focused too much on cutting spending -- is it [inaudible] >> i'm hopeful that senate democrats will get serious about moving a bill that begins to solve our long-term spending problem. then we can deal with all the other issue us that we need to deal with.

thank, everybody. >> questions about the plan to fund the federal government through a continuing resolution came up during the white house briefing. >> the house yesterday, house republicans yesterday talked about -- they sort of unveiled a proposal to extend the c.r. through the rest of the fiscal year. it would include some pro visions that would soften the sequester somewhat on the impact on the defense department. the programs they selected might not be the same programs that democrats would select either in the house or the senate. what is the president's reaction to that? >> we're reviewing the proposed continuing resolution. i don't have a position to provide to you today. i would point you to a couple of things. one is we believe that a c.r.

should be practical, nonpolitical and be consist went levels of the budget control act. it is our understand, at least on the last point that the c.r. in question is consist went the levels of the budget control act. i would wait for a further response from us as our experts examine it and make assessments about it. our interest is not in -- as long as these goals are met that we do not, you know, go head long into another manufactured crisis. we're focused on trying to find common sense solutions to the challenges that face us. the president has, when it comes to deficit reduction, that is the issue on the table consistently put forward, common sense, middle of the road solutions that present balanced

compromise and has met the republicans halfway. we will continue to work with them as we try to reduce the deficit in a way that is fair and it puts us on a sustainable path. for the c.r. we have to wait while we assess its. >> a number of senators have said that the president has reached out to them on the sequester. >> the president is engaging be lawmakers of both parties and will continue to do so. he stood before you, i believe on friday, and talked about the need for bipartisan work around -- on common ground. we should with able to achieve that. he put forward a proposal that addresses the need for entitlement reform in a serious way as part of a comprehensive package as part of tax reform

that would close tax loopholes that speaker boehner said was his position two months ago. both sides are for tax reform. one of the issues is that is still a matter of debate, what do you do with the revenue gained by improving the tax code, closing unnecessary loophole, eliminating special breaks for the well off and well connected. do you take that and convert it to tax cuts that benefit the wealthy or apply it to deficit reduction. that is a reasonable position to have, that is the president's position. he's reaching out and talking to members about a variety of issue, not just the fiscal challenges but certainly the fiscal issues are among the issues he's talking about. >> when you say reaching out -- i guess the thought is perhaps the president or the white house is not comfortable with what the house is talking about, in terms of extending the c.r.

this might evolve into another manufactured crisis. >> i would not link the c.r., which is a measure that, again, if it meets the test that i talk about with simply to fund the government and avoid the government shoutdown. it would not resolve the challenges about sequester or more broodly how do we reduce the deficit so we can put ourselves on a sustainable path that. that work we mains to be done. the president is interested in finding the members of the caucus of common sense and working with them to bring about a resolution to this challenge. because we should be able to do it. he has put forward and, finally, there is recognition here and you do see only republican leaders, suggest that the president does not have a plan, i guess they don't have internet

in those offices. the plan is available to you. the president's budget as well as the president's proposal to speaker boehner at the end of the year, which remains on the table and available to be taken up and we hope it is. >> in a few moments the senate armed services committee hears from heads of special operations. in a couple of hours a disdiscussion on how automatic spending cuts will addict the defense department. after that the head of the white house council of economic advisors says spending cuts is a threat to the economy. looking at our live coverage tomorrow on c-span 3. in the morning the judicial

committee will hear from attorney general eric holder. at 2:00 eastern, a sub committee holds a hearing on preventing military suicides. >> one of the thicks that they cone mention in the book that always grabbed me was a report in the -- a paragraph in the report where they interviewed a guy. i think his name was mark kay. i think mark kay actually encap you lated the mentality when he said, look, i don't do research because i know charities are going to do some good. where i put my time in research is things like products. i will do research when i'm buying a micro waive. i don't need to do a -- research

for charities. part of my book is for the community to rethink it. all charities are not alike. there are good one, bad ones and one in the middle. we need to get where the best survive and the other ones don't. >> with charity for all author ken stern looks at the world of nonprofits on "afterwards," sunday night at 9:00 on c-span2. the head of military on operations in the middle east and central asia told members of congress that the u.s. should leave nearly 14,000 troops in afghanistan after 2014. the general testified by before the committee along with special on operations commander. this portion of the hearing is two hours. >> mr. chairman and members of

the committee thank you for the opportunity to testify. i have submitted a written statement to be written into the record. >> it will be. >> we've worked together for many years and continue to do so. in the middle east we confront what is significant risk to our interest in the region, especially a perceived lack of enduring u.s. commitment. to counter this missperkeppings we must communicate our -- miss perception we must communicate our intent. it provides continued support for the afghanistan forces as they set conditions for their long-term success. iran is the regional threat to

stability and prosperity. rhetoric characterize a leadership that cannot win the affection of its own people or the respect of any responsible nation in the region. iran's continued support to the assad regime in syria, coupled with its activities in iraq, afghanistan, yemen, and gaza and globally in turkey, thailand, india, niger a and here in washington, d.c., in attempt to kill the saudi ambassador and elsewhere in the world raise the risk of iranian miscalculation that could spark a disasterous conflict. as we address the challenges with face i'm confident that u.s. central command will continue working by, with, and through our regional partners to ensure a measure of stability in

the region. our military to military engagements, exercise programs and information operations will continue to need your support, including innovative and flixability authorities and necessary funds so we can continue to do what is required to protect national security trs. as the nation confronts loss host tillty is impacted by three key factors. first, my need for budget certainty. right now i don't have any budget certainty. second, my need for time to adapt to reduce budgets and take the cuts smartly. specially, my third request is for flexibility to determine where to shift available funds in a manner that reduces risks

and consistent with congress and much of that must be granted to the service chiefs. with your support and with the continued devotion to duty of our troops and commitment to the military families we will stand by our friends to maintain a regionable stability in our values and interests. i look forward to answering your questions. >> thank you very much. admiral? >> good morning. i also appreciate the opportunity to address the committee today and talk about the magnificent work that is being accomplished around the globe by the men and women of the command. i have also submitted a statement for the record. >> thank you. >> i would like to recognize my colleague, my mentor, and my friend joel mattis. he will be finishing a 31-year

career. he has led soldiers, sailors, and marines with passion and professionalism that would make every american proud. he is known for two things, his operational command and his candor. i don't know of any other general that is as well versed in the art of war and no one speaks his mind the way he does. every warrior that has served by his side feels honored and privileged to have done so and i count myself in that group. jim has been supportive of the men and women of special operations and on behalf of all the great warriors and men and women everywhere i salute you. it has been my honorer to have served with you. this is my second opportunity to address this committee. i'm proud to say we have

continued the great work initiated by my predecessor. at the same time, we have adapted to the changing strategic and fiscal environment. in afghanistan, we helped to establish a new structure that brought nato into alignment. this has allowed the special operation forces to have a common view of the enemy and singe nice our stage. it has made it more effective than ever before. at the same time we're building and training afghan security forces so they can stand on their own against this threat. in addition to afghanistan, special operation forces are in 78 countries around the world.

in the 2012 strategic guidance secretary panetta wrote we're shaping a force that will be smaller and leaner but it will be ready and will have cutting-edge capabilities joint and network advantage. it will be led by the highest quality battle tested professionals. it will have a global presence. strengthening alliances and partnerships across all regions. i believe those words speak to the strategy edge we're walking with the joint chiefs to ensure we're postured now and into the future to meet the objectives of this strategy. finally, i have made the carrying for our force and their families my top priority. my command and i have met with the military and their families. we have listened to their concerns and with the support of the services we're implementing

programs to help with the fiscal, mental, and well being of the force. we have a professional and moral obligation to take care of our warriors and their families and we appreciate the support of this committee in efforts to take care of these men and women. thank you again for your commitment to the soldier, sailors airmen and marines. specifically to those great warriors that mic up the special operations command. i look forward to your questions. >> we're going to have a seven--minute first round. admiral let me start with you. relative to afghanistan, we read -- we have read that only one of 23 afghan brigades was raided as being at the highest capability level and this is independent with advisors. now, at the same time, we also

know and have read that senator reid and i went to afghanistan so we know firsthand. 70-80% of the operations that take place in many regions, including the toughest regions of afghanistan are taking place with -- not just the leadership but with totally afghan involvement. now those reports seem to be inconsistent. can you tell us if your judgment, whether or not, first of all -- is our administration succeeding in afghanistan? secondly, can you tell us about the capabilities of the afghan security forces and whether they are on track for where we expect them to be at this point in the campaign with a little over 20

months to go at the end of the mission? >> thank you, chairman. >> i thought i would start with general madison. did i say you admiral -- i'm sorry. >> chairman, our administration is succeeding. the campaign is on track. it is a -- obviously a combination of progress and violence. when it comes to the afghan national security forces, they are proving themselves capability. obviously, when we were looking a the draw down numbers there was a certain amount of forecasting that the afghan forces would be capable. let me give you some statistics that take this beyond my evaluation. since the first of january we lost four of your troops. four of our wonderful troops

were killed in the same time 198 afghan troops were killed. they are doing the bull tosk fighting and they are doing it with our support. as a result i need to look at these statistics and how we're evaluating forces that are proving themselves in combat. on the other hand, we're saying one is capable of ncht -- with independent advisors. we need to look at how we're measuring them. as far as the amfs itself, we're continuing to see them mature and with our advisors, many of them from special forces, be also from our conventional forces, as confidence builders that sort of enabling function. we're seeing these lads are willing to take it to the enemy

and i think the taliban has listen reason for comfort right now. >> general, do you support the decision of the president relative to the reduction plan that he's announced in our troops? do you support that decision? >> the second part of your question -- >> numbers and pace. >> yes, sir. the pace is what makes it possible for me to support it fully. the pace by not bringing the american forces down until after this year's fighting season and what we're seeing in the afghan security forces, gives me a lost confidence. i support the pace and i support the numbers. >> when you say what we're seeing in these afghan forces, you're talking about a positive trend in the capability of those forces as well as the size? >> absolutely. they are getting better each day and with 87% of the country now under their lead and them proving themselves in combat,

yes, sir, i support it. >> there's been a decision made to reconsider any reduction in the size of the afghan troops. there was a nato decision some months ago that the goal was to reduce them by 2015, i believe by about 1/3 and now that is going to be reconsidered. do you agree that we should keep them at the current level, which is much higher than 250,000. >> it is 352,000 and i completely support that. that is the way to do it as we draw our forces down to make sure the enemy does not see an opportunity there. >> relative to iran, i think most of us agree with the position of the president as i said that the military options need to be kept on the table to

prevent iran from moving to nuclear weapons. are those plans being developed? are they developed now? >> those plans are fully developed. >> thank you. syria. this question relates to arming syria. should we now provide lethal assistance to the syrian opposition and -- let me start with that. should we provide lethal assistance? >> the situation is so complex i have to get some degree of confidence that the weapons we're arming them with are not going to people who are our enemies.

that would be the one caveat i would put on military advice to go forward on those lines. we don't want to inadvertly, with the best of intentions arm people who are our sworn enemies. >> you say you would have to get some degree of confidence to make that recommendation. as of this time, do you have that level of confidence yet? >> i do not, chairman. i have not been tasked at this mission so i have not looked deeply into this yet either. >> thank you. >> there's a real threat of violence in the christian communities in iraq. my question to you is, whether or not that the iraqi security forces are taking the threat of violence against those christian communities seriously? if not, i believe they are not, what can we do to make sure they

do it? >> chairman, iraq itself is in a post combat rele zolization situation. they are working out how they settle their differences politically. so far, they are imperfectly working without resorting to violence. al qaeda is conducting most of the violence. as long as they try to work these issues out politically, i believe that in the long run it is the rule of law and the political resolution of challenges that provide for all minorities in iraq the best opportunity to live safely. the military itself, when i see them in action trying to work it out with the situation to the

north, they are willing to talk. they are doing that with the sunni troubles they are having. they are trying to too to use the rule of law and not trying to provide security as the sole solution to that problem. >> i do hope you and your successor will look for ways that we can press the iraqis to do what they committed too, which is to protect minorities inside of iraq. >> in my opening statement i talked about what we did and right now it is the senator and i are heading up the effort to allow more flexibility of the chiefs. i mentioned to you, that i talked to the chiefs about this and they responded strongly that

yes in the same top line operating with the same amount of money, would we be able to reduce the devastation. would you agree with the chief's comments and any comments you would like to make about what type of thing we could do under that type of arraignment that we couldn't do with the straight cuts? >> senator, i believe that if we got some degree of budget certainty through an appropriation bill that provides us as much as the continuing resolution does now, so we know what we're dealing with for certain. like any household or business in america, we can make wise choices and the flexibility you're tacking about for the service chiefs would be critical to those choices, obviously, consistent with the congressional intent. yes, sir, we need that.

>> it is written into the draft is the assurance that we're going to follow the legislative intent of this committee. it has a level of discipline that we're going to be able to have some type of congressional oversight or veto power over decisions that might be made if they were to be influenced in the wrong way. do you have any comments about that admiral? >> i concur with the service chiefs. we have the same dilemma. as you know, i've got a budget and i have commander-like responsibilities. under that to manage the cuts that the way they are now is difficult. it is acoss the bored cut, as you mentioned. any flexibility in dealing with those cuts would be tremendously helpful to me and my staff.

>> i appreciate that very much. the chairman mentioned about supporting and arming the opposition in syria. you gave your answer but i would like to ask you closely connected to that. what is your assessment on how long the assad regime can hold into the power, at least in the sub region of syria? it is my understanding along the coast and going up to damascus, it might be the area where you have most control. the other area -- what is your assessment to how long he can hold power in that area? >> we're dealing with a fundamental unpredictable situation. however, it is -- his power base is eroding the area daily. you see him using ballistic

missles to try to impact those areas he lost control on. notice how the increased use of the missles over the last month or two has been evident. he is losing ground. i don't have the ability to forecast this well, senator. i would hate to give you a certainty that i don't sense right now. >> you know he's losing ground but at the same time, there are more stuff coming out of iran to fortify him. as we discussed during our meeting last week, we're seeing that al qaeda and other terrorist groups are developing networks that are increasingly complex. i think you're the one that stated that we can no longer go after terrorist groups in a country by country basis if we hope to be suckful.

i'm concerned that is what detective successful. i'm concerned that is what we've been doing. >> i think we understand the complexity of the al qaeda network. if you look in africa as an example. you can't isolate a single organization. then expect to solve the problem locally by going after that problem in a particular country or by individual entity. if you deal with -- >> you mention africa and most people think it is the problem

is just in north africa but there is now evidence throughout africa. so i think it is widespread. last question i have, in your professional opinion, in the efforts to stop iran from obtaining nuclear weapons capability, are they working? >> no, sir. >> how do you think iran's behavior would change after they obtain -- let's assume they obtain the nuclear weapons, which our intelligence says they will obtain. how do you think their behavior will change after that? >> senator, you know what our policy is but i believe the reason for that policy is they would be more emboldened to act like a revolutionary cause than

a responsibility country. >> i think so too. we've been talking about this since 2007, it is getting worse all the time. i just think we need to keep talking about that. do you agree with that? >> i do. >> senator reid. >> i want to add my accommodations for your service to the marines. thank you very much. let me begin to ask you this question about afghanistan. recently president karzai -- [inaudible] does that affect the short or long plans to avoid plans as part of our withdrawal. is it something that we can cope with in one instance or if it

develops into a wider scale it will interfere with your operations in our withdraw? >> i just spoke with a germ a short time ago that issue is being worked right now. so we're working this out as we can speak. obviously, we would be reluctant to see our forces unable to operate there. but at the same time, i think this is being worked at the appropriate level with the responsible people working with the president. >> so you can reverse what appears to be a final decision and going forward, i presume from your answer is that the need to operate freely throughout afghanistan is true to central to the withdraw plans? >> senator reed, i think the decision was not taken either. it is not just reversing it, it

is crafting how best we operate, which is a key route into kabul. i think it is still in play and i can get back to you once the decision is made. >> the larger issue here is, in your plans for phase down american forces. i always azumed was a robust operation capacity that could operate throughout the country. is that still central to your plans? is that something that is still viable? >> it is. one is counter terrorism and the other is to advise and submit in their efforts. it is a two-fold effort. >> the special operation forces that we have in afghanistan, as you know, are partnered with our afghan soft. as we look at the afghanistan forces you can't look at

independently at u.s. or nato forces alone. s there a network of forces that is being applied in the area of operations to deal with the threat. >> let me ask you a question about going forward. there is an issue of the size and pace of the force, is there is an issue of the role of force. there is some discussion that these forces could be enforced but not embedded forces. are they going to be embedded with them or is this training? >> we're going to have to watch how the afghan forces mature. i anticipate there will be some embedding going on. but at the current rate of

maturation they are becoming quite impressive on their ability to operate. we've got some time yet, a year and half to go, as we get them up on the step for when we'll draw down to the enduring force. during this period we'll figure out what level of embedding has to be there and what level nato forces are willing to commit to. >> final question in this area. you still retain the capability of striking anywhere in this region is there is a high-value target, as you go forward in terms of whether or not there's access to certain bases in afghanistan or other parts of the world? you can of do that from aerial platforms or land-based platforms, that ability exists? >> it does. >> let's turn quickly to syria. many people azume that the assad

regime is deteriorating rapidly. at some point it failed, what planning is going on for any time of stability operations internationally to prevent a descend argue there that would disrupt the whole region? >> senator, we have quiet planning going on with regional partners eastern partners to see -- and other partners to see which regional leadership would take on this mission. it is something that would take on with a regional partnership, after the russian veto we have limited options. but there are regional optionses that may be able to take this on.

we're doing some planning with the regional militaries and getting basically a framework for what this would look like. >> let me ask a follow-up question. what do you think the reaction of the iran yass iranians reaction would be? >> i believe they would arm militias inside the country, try to create a hezbollah effect. they wouldle double their efforts in yemen and elsewhere. i think that is on a strategic plane as we would see as part of their shift. >> part of our reaction would be to plan for that? >> we are, senator. >> thank you very much.

>> i appreciate your service and good luck in your retirement. i noticed the map that you passed around about the area of responsibility. it rain mings from cause tan and over to egypt. about half of the arab world -- about half of the arab population is in egypt? is that correct? >> a good portion. i think a third, yes, sir. >> we just had an amendment a few weeks ago offered to a storm relief bill on the floor of the senate and it would have prohibited our sale of f-16 aircraft from the united states to the egyptian military. did you follow that issue? >> yes, sir i did. >> as a matter of fact, senator

mccain took point on that on the senate floor and made a plea for us not to abandon the chance of improved relationships with the egyptian military. i just want -- i voted with him on that to not abandon our sale of f-16's to egypt. what advice would you give us going forward? we might have to take further votes on that. what affect would the termination of that sale be on our relationship and our chances of having any kind of meaningful relationship with the egyptian military? >> i strongly endorse the administration's position and senator mccain's position. i will tell you that i was just in cairo a short time ago and

the ambassador, one of the best we have in the service also endorsed it. the bottom line is that the egyptian military has maintained and built trust with the egyptian people. they have made clear their expectations that egypt will maintain its international treaties, that includes the one with israel. they are the people who provide extra security when my ships go through the suez canal. the gaza area has probably not been this quiet in 10 years. in no small part the egyptian military is going quiet operations. i think anything right now that we do that would under cut the trust between the u.s., the u.s. military and the egyptian military would be extremely unhelpful. >> what do you think the advice

of the isreali government would be to policymakers such as us with regard to that f-16 sale? because i will tell you -- i've gotten a lot of mail and e-mails from people in mississippi who are supportive of the nation of isreal. they say how could you agree to the sale of these f-16's to egypt when that can be so harmful to isreal. what would your answer be to that? >> i won't speak for what isreal thinks about this. i can't do that. i would tell you that the chief of defense of isreal was in my office a week ago and this issue did not come up. secondly as far as how to respond to your constituents, it is -- the egyptian military right now, sir, that does a bulk of the work against the

extremist threats against zrall, against egypt, against all of us. so the egyptian military is committed alongside as part of their government but has been outspoken about maintaining the peace treaty. it should not be seen as an enemy but as a stabilizing force in the region. unlike the military in libya that fought alongside -- directed by ghadafi. unlike the military in syria we had a military that did not act like that way when egypt went there their transition. >> let me switch to something. i had to step out of room to meet with a group of four retired admirals and generals representing the leadership

coalition. are you familiar with this coalition? >> only very, very little. i've heard about them. >> they are a group of more than 120 retired three and four star generals and admirals and they are coming here to meet, not about the military budget but about the international affairs budget. in other words, what we call in short hand, foreign aid. their message to me was what some people might be a surprising message, we need to to be careful about cuts in foreign aid. they view it as working hand in glove with our security operations that you two general are involved in. i just wondered if you would comment on that. have you observed that the international development budget is helpful to us in providing national defense four country?

>> yes, sir. i would start with the department of state budget. frankly, they need to be as fully funded as congress believes is appropriate because if you don't fund the state department fully, then i need to buy more ammunition. so i think it is a cost/benefit ratio. the more we put into the state department dip employee macy, hopefully, the last we have to put in a military budget as we deal with an outcome of the apparent of a withdraw of the american scene. >> i understood the question was -- i understand that a question was asked with regards to sequestration and the c.r. and your advice is we need to go forward with the full appropriation bill for the

entire fiscal year. let me make sure i get this answer. would flexibility help you two gentlemen in gegget through the sequestration -- getting through the sequestration issue? if the congress gave you not meat ax across the bored but the ability to pick and choose, would you be better off in performing your missions? >> sir, i can tell you that the full appropriation bill would give us the predictability, the flexibility that you referred to would be critical to the service chiefs to carry out their responsibilities and lower the risks of less money available to us. >> i think flexibility would allow us to mansion our money towards those areas that are at high risk right now. so to have the ability to manage

our budget to the cuts that are coming would be very beneficial to us. >> thank you for your service. >> thank you gentlemen for your service. recently the navy announced they were going to delay the deployment of a carrier because of the sequestration threat. can you speak to that? >> sir, ships are expensive articles to operate. we all know that. she will be maintained at an enhanced readiness level. i was onboard the u.s.s. truman two weeks ago and the captain assures me he will be ready to deployed on short notice. i have one carrier throughout.

i would caution any enemy that might look to take advantage of this situation, that would be very ill-advised. if the president orders us into action, i have what it takes to make the enemy's longest day and the enemy's worst day. >> the president decided that the second carrier needed to be out there, what is the transit time from the time he gave the order? >> sir, the carrier would deploy feaster than its is required to. right now it is on 21-day ready to deploy orders. i believe they would be out of port faster than that and it would take 14 days to get it into theater. >> so if you cut the 21 days in half, say down to 10 days, plus 14, you're talking 24 days

before it could be on station? >> that's correct, senator. i can buy the time. >> when was the harry truman scheduled to depart? >> it was about two weeks ago. senator, i would have to get you a specific date. >> i ask the questions for the obvious reasons. here's a good example of what you all had planned in the way of readiness because of some ridiculous budgetary ultimate decision is causing you not to have that second carrier out there on station. would that carrier have the opportunity to be diverted into the mediterranean instead of going to the persian gulf

region? >> sir, that would be up to the secretary of defense which commander gets her. i've always thought most commanders end up forwarding personnel and ships for my use. i'm sure i could get her, sir. >> coming back to syria, which is in your a.o.r. that's why i ask about sending it to the mediterranean as opposed to the persian gulf. it seems that on the one hand we have assad, and on the other hand we have a group fighting assad that increasingly, which is in bed with al qaeda is trying to take over. that doesn't give us much of a choice between those two.

you have any reason for optimism that the anti-assad forces are going to win out that are more amiddable to us than the other? >> senator, they have a good propaganda campaign. they are using their weaponry and their skilled foreign fighters to dig the roots into this. but at the same time, they have a philosophy that is not admired by a lot of people who are fighting assad. so there's nothing certain about them coming out on top but it could be messy. the regionalal powers that are supporting assad forces -- anti-assad forces have no truck with that group. i think you'll see more support

for the opposition of that group. but the inter2009s concerns me. >> admiral, you want to characterize for the committee any affects of sequestration on your ability to deploy especially operations troops anywhere there might be a flare up? >> thank you, senator. obviously, we have a perfect storm here with the continuing resolution and sequestration. right now, the c.r. hurts us more than the sequestration does at this point. the c.r. for me, is about $1.5 million. i'm unable to manage some of the issues in terms of new start and some of the adjustments that need to be made. the c.r. precludes me from spending at the f.y. 13 level

but it limit what is i can do there. then you add on top of that sequestration for me, which is about $800 million and, again, unable to mansion that money. it is about a 23% cut in the availability resources. so what does that equate to? for me it is a function of readiness. not so much for the for deployed. we're ready to deploy but that expense is coming at the training. my concern is not for the immediate future. i can manage that with the resources we have. we are beginning to create a readiness problem if we don't resolve the c.r. and or have the opportunity to manage the sequestration money. because i'm cutting 60% of my flying hours. i'm reducing also some of my deployments, about 20% of the my deployments going forward.

it is kind of a perfect storm of fiscal problems for us, sir. >> i want to ask you something down in the weekends. last year the defense department transitioned the service to the defense transcless tyne service. how does this affect operations? >> we've been working with the intelligence agency and the intel community to help move forward the service. i prefer to talk in closed session on the details in that but in total, we think it is a good plan. we like the direction and the initiative of the service. it puts us in a position to have more collectors supporting the defense intelligence agency. i'm behind it, sir. >> as you know, in the past

specifically, you and the c.i.a. have gotten along so well. yet, there is some concern about the two stepping on each other. >> yes, sir. we are working closely with the agency on this. i think we both understand our lanes in the road. the d.c.s. is about military intelligence and the agency has a different mandate in that term. i'm pretty comfortable and i think the senior leader in the agency is pretty comfortable in the direction we're heading in. >> thank you very much. >> i want to thank both of our witnesses to their service to our country. general, we will miss you and thank you for everything you have done for our country.

the senator asked you about you professional opinion about whether economic efforts will stop iran from obtaining nuclear weapons and i believe you said no. if that is the case, the sanctions we have imposed on iran are having a negative impact on their economy and their currency, correct? >> yes, ma'am, they are. >> so if current diplomatic sanctions will not stop us -- stop them from n your opinion from obtaining nuclear weapons capability, what do you think they are doing with negotiations? are they trying to delay us and continuing to enrich? >> ma'am, just to be clear, i fully support the economic sanctions and i fully support the diplomatic isolatization and

trying to stop this. i believe they are trying to buy time with the negotiations but that should not be in any way as con extraordinaries that we should not try to negotiation. i support the direction we're taking but i'm paid to take a dim view of the iranians, frankly. >> it is understandable why you take a dim view as you describe their active tys around the world -- activities around the world. we can't think of another country that is doing more damage in terrorism and hurting our allies. would you agree? >> i agree strongly with what you just said, ma'am. >> so if we're in a position -- what is their history in using negotiations to delay and continuing to enrich? do they have a history of doing

that? >> they have a history of denial and deceit, ma'am. >> in the recent negotiations, we offered basically, that we would backoff on some of the sanctions if they agree to keep enrichment levels at 20% at iran, as i understand it, were not able to come to an agreement there. is that right, general? >> i believe they agreed to meet again, senator. but, again, i think this is negotiations. there's nothing final about it. this is a give and take. >> here's our problem. if they have a history of using negotiations as a tactic while they are continuing to enrich and march towards nuclear weapons and we now how dangerous they are. how do we stop this pattern so they know we're serious and that we will not accept them having a nuclear weapon? >> senator, i think the more that we can accommodate a larger

coalition against them, i believe in some ways we have to recognize iran's legitimate security interests. so they are not put in a position to use illegitimate means. i think we continue everything we're doing right now but as the president has said, he's taking no options off the table and my role is to provide military options. >> how important is it that we stop iran from obtaining a nuclear weapon? >> i would echo the president's words, the commander in chief has said it is unacceptable and i believe that it is absolutely important. >> in your view, based on your position on a scale of one-10, where would you put them obtaining a nuclear weapon, 10 being the highest danger? >> ma'am, i would -- it would be

dangerous because it would ebb able iran top continue to act like a they would since your limitations and more and vulnerability conducting the kind of attacks that killed tourists and bulgaria i believe we would see more of this irresponsible reckless behavior. >> given we continue to enrich, why would we not consider cutting off negotiations and saying "here is the bottom-line ?" i fear we will be at a point where they have nuclear weapons capability and then it is too late. >> it would be too late for our stated policy that they are not to achieve a nuclear weapons

capability. i believe the negotiations are critical as we build an international consensus against them and sustain that. they are going to have to confront the unproductive aspects of what they're doing for their own interest. >> we have a press the economy dramatically. they have used negotiations as a delay tactic. insanity is the definition of doing the same thing over and over again and expecting a different result. this is a danger to the world in terms of their terrorism activity. that is what i worry about. >> they have a resistance--

economy. they are trying to raise a sense of martyrdom as a nation. that is a very dangerous type of self view if they were to get a nuclear weapon. i do not think we should stop negotiations. while negotiating, i have received additional forces in the gulf by the decision of the secretary of defense to ensure we are ready to reassure our friends that we mean business. >> thank you very much. we all share the concern. we voted on a resolution saying containment is not the policy.a and

this has been overwhelmingly bipartisan issue. we will not accept them having a nuclear weapon. i worried they're using negotiations to delay. i want to ask you a brief question on a section 841. it was copied and work we did together. we recently visited afghanistan on could january and talked to the major general about the impact of those provisions. he indicated it would be helpful in cutting off funds to the enemy when contractors were there. we are working on an effort to extend beyond afghanistan to

others come back in command and to think about extending it to other agencies including the state department. i wanted to get your opinion on that. >> i fully support both the letter in the spirit of what was in there. we did have to look in there. it was not with the contract. we found some things that were disappointing. i can tell you it has been very helpful to focus on that area. >> thank you. >> thank you. >> thank you both for being here. i know that i have some specific questions i will not have time for today about afghanistan infrastructure fund and the notion it is very hard to build

infrastructure inside of a contingency by our military without money getting to the enemy because of the huge costs of security. the problem here is not just contracting with the enemy. they passed these into law. it is about whether or not the strategy should in fact include infrastructure. should it include major projects that i am going to have some specific questions about metrics being produced to support the notion that it is an effective part of counterinsurgency efforts. i am going to talk to you about something that is, i'm going to talk about the years of service. this is something not directly related.

my background includes handling dozens and dozens of the jury trials as a prosecutor of the difficult sexual assault and rape cases. i've taken an acute interest on the pervasive problem of prosecuting sexual assault in the military. i feel a sense of urgency because of what happened last week. a colonel was convicted by a jury, a military jury, of sexual assault. he was sentenced to dismissal, forfeiture of pay, and one year in jail. with a stroke of a pen last week, a general dismissed those charges against him. a general with no legal training, a general that had not been in the courtroom, and he did it against the advice of his legal counsel.

my heart is beating fast right now. i am so upset about this. as fear trying to send a signal to women, the victim was not a member of our military. i question now whether that unit that the man returns to, whether there's any chance a woman who is sexually assaulted would ever say a word. what he said is that the jury's decision did not matter. the rules actually say that the convening authority not only has complete discretion on whether the case is brought but the convening authority also has the right to either reduce punishment or dismiss the cases for "any reason or no reason at all." is it time as we understand the majority of homeless women in

this country are veterans and if the majority of them had some form of sexual assault that we look at the ucmj and decide that we need to have something other than the arbitrary decision of one general without any other supervising authority or procedure that is necessary to overturn the very difficult decision that the jury came to? >> i do not know the specifics of this case. i've always been reluctant to comment on something where i do not know it. some of you are aware of the high visibility court cases i superintended. i have read 9500 pages of investigations before i have made decisions. let me assure you that the supreme court has upheld what congress has passed for the ucmj recognizing the unique aspects

of the military. in this case, there are rights provided to defendants in the military because no court system is more subject to being characterized as a kangaroo court than 1 where military officers who are in command also initiate it. in this case, i cannot speak to the specifics. i can assure you that justice is overwhelmingly served by the currently constituted ucmj. was not just responsible for prosecution i was also responsible for defense. commanders must balance those of those of we are to have a fair system. i do not know the specifics of this case. i do not want to be drawn in for support on something i really cannot address.

>> let's set aside the specifics. do you think that after a jury has found someone guilty and dismiss someone for the military for sexual assault that one person over the size of their legal counsel to be able to say never mind? don't you think something ought to change? the ability of a prosecutor or defense lawyer or the person they both work for calm at the notion that they could unilaterally say never mind. when that is something that most, especially when you

realize how serious this problem is, i think that the military needs to understand that this could be a tipping point. they could rise up, particularly the women, and say i do not think one general should be able to overturn a jury. >> the women commanders have this authority for a vested reason. we can look beyond the one case. >> i think i can bring you a lot of cases. cases were not brought, were victims were not taken seriously. there is a culture issue that will have to be addressed. what this decision did was put an exclamation behind the notion that if you are sexually assaulted in the military, and good luck.

>> i would just tell you that my troops generally know what i stand for. they have no doubt what i will not tolerate. i am not unique in this. you show a someone who conducts themselves in a criminal manner and i am dry eyed like to my beloved troops in jail the rest of their lives for all i care. >> in some ways i am sad this occurred right before this hearing. my time with the today is covering this. i have great respect for the leadership of the military enter service. please do not misinterpret this as anything other than a high degree of frustration into a system that appears unaccountable to the thousands of victims who are struggling for a piece of justice. >> thank you very much.

>> there is accountability for every general under my command. >> general welch will be hearing from me. it is interesting that both of these people are fighter pilots. they both have served together. that is more appearance and-- of inpropriety. >> this is the chair of the, this is broader than sexual assault. it has to do with the powers of the convening authority. this may be an appropriate time to raise it.

we will ask the general counsel, bob taylor, to address this issue. it is part of the no reason at all language that is in the ucmj and to give this committee to a source of this language. they are convening that so that no language at all. i do not want to move in a different direction than you want to go. i think it will be helpful to ask them that question. >> thank you. >> thank you for your

indulgence. let's be clear about this cut. we're still looking at $43 billion in cuts. no matter whether you have the flexibility are not, we are shooting ourselves in the foot. >> we're going to have to change our strategy. we cannot maintain it. >> the $43 billion is still a devastating blow. >> i do not want the enemy to feel brave right now. i can still deal with them. >> to somehow say this problem goes away because you are given flexibility is not accurate. is that true? >> that is correct. >> i want to say thank you for your service.

thank you for the inspiration you have provided for the men and women who have served under you. thank you for your service to the country. on the issue of syria, we are now at 70,000 people who have been massacred. the risk of spillover into lebanon and jordan is obvious. 42 syrian soldiers yesterday being murdered in iraq. everything that we worry about if we intervene has taken place because we did not intervene. would you buy that argument? >> i am not certain we could have prevented all of it.

>> have we seen a worse case scenario? >> it is the further fragmentation of the country. >> you want to make sure you get the weapons to the right people to support such a move. >> yes, sir. >> isn't the best way to give them a no-fly zone and let them establish themself as the libyans did in benghazi? >> yes, sir, that would be a way to do that. >> the flow of jihadists into the country continues unabated. the revolutionary guard is on

the ground. >> they are on the ground and bring in other foreign fighters. >> the russians are providing weapons. >> yes, sir. >> would you call that an unfair fight? >> right now assad -- >> we refuse to do something. >> there are regional partners that we have that are taking action. >> many of those weapons are going to the wrong people. >> yes, sir. >> let me switch to afghanistan. what was your recommendation for the troop levels? >> we did not use numbers.

we want to know what conditions we are expected to do. 34,000, which i do support so long as the pace left them there through the fighting season. >> did that happen? >> it did. >> what about the residual force? >> my recommendation is for 13,600 forces. >> how many nato? >> around 50% of what we provide. >> back to iraq. are you concerned about the

unraveling of iraq with the schisms between the kurds, the continued attacks that take place in increasing polarization of the sunni shia situation in places like mosul, where you have everybody there. do you think the situation would have been better if we left a residual force there? >> hard to say if the would have been better. i share the concerns about the schisms and the kurds. al qaeda it continues with its campaign. the shelling of the capital city shows they're not above going back to work their own way.

in perfectly as it is, they are still the parts of the body politic in iraq they are talking with each other. it is still a level of violence that is slightly below what it was when we were at there overall. >> barzani told me he had not spoken with maliki. that is beside the point. could we take out the assets with cruise missiles? >> not all of them. they have a number of mobile systems. we could take got a fair amount. >> the patriots could defend a

no-fly zone? they are a point defense weapon. and you gave a freeware -- you would agree to that in a till blogger fate -- typography where airpower is an important factor in assad being able to hang on. i am concerned about the withdrawal to the coast and the wonder what you think about the likelihood of that might be. >> it is and economically unstable enclave.

it could create a longevity for the regime if they were to lose damascus. that right now is something we have to consider. you will see kind of a two-step. i believe the iranians are helping them to get established. >> i've had the great honor of being associated with some outstanding military leaders. i know you will contribute to continue to our nation's security. >> thank you very much. on the democratic side -- on the republican side, lee, fisher, blunt, graham. >> our colleague senator kane is afraid you forgot they are there. they all look panic and i'm feeling for them.

>> number 5 and 6 and 7 and eight and i should have said the next four. senator joe manchin. >> thank you. thank you for being here. congratulations on your retirement. i know there was a lot going back and forth. if you knew you had flexibility and had to do the cuts, would you been able to deploy the harry s. truman on time? >> i would have to know better what the navy confronts. >> so much said about the amount of money that we spend in the department of defense versus other countries.

a quick scenario on the difference of our cost? they say the next 10 or 15 developing nations did not spend as much as we do. >> part of it is we are the gold standard. we set the standard from weaponry to the training and to the coherence of our force, the cohesion of our force that believes they are the best of the world because of the support of the hill. we also have a global responsibilities. i was born into this time. i'm often impressed and i say, sir or your highness or mr. president, how much other

countries look to us to reassure them that they can follow their better instincts and not have to accommodate some pretty ugly situations in their region. >> i find that the military is losing many of its talented people to private contractors. they are being lured away by the higher salaries.>> that was true back at the beginning of the war. we were losing a number of our senior nco's. that has tapered off considerably. right now our sessions rate is as good or better than they have

ever been and our retention is equally high. >> either one of you can speak to this. if you compare it pakistan's actions and how we are working with them as an ally, i can only imagine what your thoughts if iran is able to achieve the same status with nuclear-weapons. i'm sure we would be looking at pakistan differently but i would assume your greatest fear is iran have in this nuclear arsenal. >> that would be the most disabling event for the middle east. >> the vietnam war came to a close much quicker than this

war. if anyone anticipated we would still be going at this 13 years, it brings up the question for discussion. a combined hybrid of the draft and the services that we have now. i know we would not be in a war 13 years if moms and dads have the input they had back then. >> senator, i will not take issue with what you just said. the all volunteer force has drawn us apart but this threat is real.

the shia side declared war on us in the 1980's and continue today.the sunni side, al qaeda it is how you know them. they tried to take down the trade towers and took them down the second time. it is a real threat and america has been willing to meet real threats. i think we would still be here. i think the enemy would force the issue. >> we will be fighting the war on terror for generations to come. we were in afghanistan and move to iraq. i would rather we get out quicker and rebuild america. look at the dam that we built in the 1950's.

we went back and rebuilt it again. we spend $70 million to finish the project. the inspector general doubts that we can do that if we gave them $70 million. the money we're putting into and infrastructure that they are unable to maintain. are we moving away from that strategy? >> i will allow general mattis to address the dam issue. we work with our partners abroad. we partner with about 78 nations on any day on the calendar.

we're doing minor construction. be able to build schools and help with small infrastructure projects are critical to building our credibility with the host nation. >> we're not allowed to branded as made by u.s. we're not even getting credit for that. all the other things, schools or the water supplies and things of that sort. we were afraid or they were afraid to put our name on it and give us credit. >> i would say it is on a case by case basis. i have a great relationship with aid. we take our lead from the u.s.

ambassador and get together with their foreign assistance folks and we build a plan collectively that makes sense. we think it is more sensitive to allow the locals to receive credits. it is not one size fits all, sir. >> thank you, a very much. i want to thank senator fisher. her generosity is noted. senator lee. >> thank you for all your do. general mattis, i wanted to talk about syria.

you mentioned the dire situation in syria and the fact that there is a certain amount of disunity among the opposition groups. i would like to get your assessment on syria and iran just to a couple of questions.-- your answers to a couple of questions. what can you tell us about the composition and the objectives of the opposition forces in syria? what can you tell me about the extent to which they have a vision for the future of a post- assad syria? >> the opposition is not completely unified. it is becoming more unified day- by-day. they believe assad has got to

go. there is some populist extremist views as well as the ones we would find along the lines of how we like to see syria, out of the civil war. the vision that some of them have is inconsistent with what we would like to see. these are the jihadists elements, the foreign fighters that want to create another chaotic background where they can put in their roots and have a new place to operate. >> what is your sense to where the center of gravity is? is that were the center of gravity is? >> well, sir, when you look at

the national coalition -- i have to refer to my notes -- you have the soc. those are one and the same thing. that is carrying a message to the assad regime that there is a message against them. there is a military council below that. that is what carries out the operations inside the country. >> ok. you cannot give me a thumbnail sketch about whether this is a fringe or minority fraction or a majority faction -- fringe or minority faction or a majority

faction. >> i would say that is a significant minority that takes the extremist approach with the idea -- as kinds of organizations. >> a significant minority and not amounting to a majority that have links to al qaeda or some other terrorist group or some other group similar to allocate a -- similar to al qaeda. >> they do use humanitarian efforts in addition to their fighters to try to build a broader reach among the opposition. >> i assume the respective visions would break down according to what is motivating them now.

>> i believe so, yes, sir. >> i like to talk about the threat we face elsewhere in the region. i agree with the president who said we will do what is necessary to prevent iran from getting a nuclear weapon. i suspect new line all my colleagues support that. decreasing the size of our carrier presents in the gulf war's me because it could be-- worries me because it could be sending a different message. the budget uncertainties surrounding sequestration has forced the department of defense to take some difficult steps.

the region is of such huge importance to our national security. our removal of an aircraft carrier affect our ability to deter iranian action in the gulf or elsewhere in the region? >> it is more difficult to reassure our friends and deter iran, but i believe a strong statement of political will would cause iran to take pause before they try to take advantage of what is not really an opportunity. i can by the time -- i can buy the time. >> thank you very much.

>> thank you very much. >> thank you, mr. chairman. thank you both for your service. general mattis, we'll miss you and appreciate your years of service to this country. i want to start by following up on some of the serious issues that senator lee was raising. when you were here last year, one thing we discussed was the chemical weapons in syria. secretary panetta said the situation is 100 times worse than what we saw in libya with the proliferation of weapons. it has been described as a nightmare scenario.

i assume it is safe to say your concerns have not diminished and you continued to be concerned about the presence of the stockpiles of chemical weapons in syria. >> absolutely, senator. >> there has been discussion about the red line that has been drawn should syria attempt to use those chemical weapons on their own people or on others in the region. a suggestion the international community is equally concerned about that. what happens should they try to transfer

those weapons to hezbollah and they think it transferred throughout the region? has there been planning for how to address that and how to prevent that from happening? >> that would be a policy suggestion by the president. it would be very difficult to prevent it at the beginning. as fast as we picked it up, we could disrupt it. >> has nato and other countries also been involved in those contingency plans?>> yes, ma'am . >> is for any reason we should have less concerned about what is happening rather than more concern?

how could we affect what happens with those chemical weapons? what can you share with us about the contingency plan? >> in the chaos of what assad has created and the civil war, i believe we have increasingly vulnerable sides as the fighting swings back and forth and as weapons get transferred, as the material aspects of their leadership can cause them to do things that cause us to keep a close eye on them. our planning is taking this into account to the degree that it can.

we have options prepared. >> have any of the opposition groups been involved in any of those discussions or any of those plans? >> no, ma'am. >> thank you. >> i should say not buy u.s.-- by u.s. central command. we're not engage with the opposition groups on this. >> thank you. i want to switch from syria to pakistan. that is another part of the central command where there are serious concerns about the impact on our actions in afghanistan. i wonder if you could talk about what the current status is of our relationship with the military and pakistan and how the trilateral engagement on the

border between afghanistan and pakistan is working or not working today. >> our military to military relationship with pakistan has been improving. this goes back over the last year, even in the aftermath of the incident were we accidently killed 24 of their frontier corps troops. the border itself and the corporation is much improved-- trilateral collaboration is much improved over a year or go or two years ago. it is not everything we need it to be but it is improving. we have other efforts under former secretary of state shultz that

will ship back in may where we have retired officers to find ways to continue this improved collaboration and helps set the conditions for longer-term prosperity in the region. >> how will that work after isap pulls out? do you expect that collaboration to continue? we had the opportunity to see firsthand the tent in collaboration at time when it had broken down and they were talking about the potential effectiveness of that. that is going to be critical as we withdraw in terms of maintaining stability in the region. what kinds of plants are in--

plantss are in place to help address that once isaf withdraws? >> we have now -- we no longer meet as nato isaf. the afghan security forces and we meet in these trilaterals. right now it is at least going in the right direction. day by day we build a all little bit more trust and cooperation and collaboration along that contentious border. >> thank you very much. my time has expired. >> thank you for your service and the service of those you represent as well. i believe you stated that with the sequester and the cr we were looking at creating a readiness

problem. what are you doing now that is essential and that we need to keep on doing with special ops? >> yes, ma'am. thank you. my support to the other commanders is my number one war- fighting operational priority. the problem with the cr is it is beginning to affect our forces. i have to prioritize the training. it will come at the expense of the next generation of forces. my ability to manage that budget is what i intend to do. take a look at our flying hours.

we have about 60% of far flying hours. that bathtub will continue from this fiscal year to the next fiscal year. it will get smaller but it will continue. take a look at the flying hours. i'm cutting some other training. the readiness will move to route throughout to stem the lack of readiness. we are mortgaging a little bit of our readiness in the future. >> do you believe you're putting the troops at risk when they have to be in rotation longer? the training is not there so they can benefit from some rest

when they are off duty. do you see that as a major risk? what do you see it as the major risk because of these cuts? >> i have supported service components that work for me. when my biggest concern is as making sure the operational tempo of the force is appropriate. we have taken a number of important steps to insure those forces have the rest they need when they're back in the continental united states. there are certain high demand operational specialty codes. some of the information officers, those high demand but

low density requires them to rotate more quickly forward. i'm working hard not to impress upon them additional training and give them more time in the rear. >> under the current structures, do you see any limitations being imposed on our special ops forces? >> i am pleased with the relationships we have and the command authorities that i have. i may supporting commander to people like general mattis and others. that is a great relationship. i am comfortable with that. >> you do not think any changes need to be made? >> not in terms of the forces under their control.

>> do you think needs to be any additional legal authority for our soldiers to train with our partners? >> that is an area where taking a look at. one of the amendments that presents some problems -- we have to vet the individuals and the units to make sure there are no human rights violations. we understand the value of making sure we have good, clean human rights. sometimes those units need our relationship. they understand what right look like. that is when we find ourselves more constrained than ever. we to make sure they do what is right. that is an area we are exploring

with the osd and the hill. >> you have discussed that with the regional commanders? >> i have. they find themselves constrained in certain circumstances in the units we are dealing with. we're working through the appropriate processes now. >> thank you very much. do you have any concerns being -- on decisions being made? >> we have the best working relationship between conventional and special forces that i have enjoyed in 40 years of service. there is no longer any alliance

-- lines between us. the collaboration is intense. right now the degree of confidence in each other is at the top of its game but we're not complacent. we do not want to lose this as the war's grind down. >> thank you for your many years of service. you have a sterling reputation. >> thank you, mr. chairman. i want to echo everybody's thoughts. you have given so many years of service to our country. we appreciate your commitment. thank you very much. a question about women in combat.

there is the end of the direct ground combat exclusion rule. i know you highlighted the contributions that women have made to our special operations missions. the civil military support elements and other roles. i understand the recent decision for women. this will open up thousands of new positions for women. i wanted to get your thoughts on how this will be carried out ocon. s how have women contributed to our missions in recent years and what additional contributions do you see will be possible given this policy change and how will they respond to this? how will you address the need to maintain strict standards for

selection for the male and female special operators? will there be exceptions or waivers to keep any of the units all male? >> thank you. the women that have served have done a magnificent and heroic job. we have them with our support teams and there are partnered with our rangers and seals and their special forces elements. they go on target in hostile environments and they have proven themselves again and again. they are in small numbers but have been invaluable. we're required to provide the secretary of defense a brief back on may 15 saying how we will implement the new policy.

i will brief the secretary on how we will get there. it will take us some time to determine whether we need to adjust the standards. the critical mass female students we might need to create the appropriate pipeline. we'll go through all of that analysis in the next year or so. if there are areas where we cannot meet the requirements without lowering the standards and without affecting the cohesion of the small units, we will come forward to the secretary for an exception to the policy. we will find a way to make this work.

the services all have equities in terms of special operations that we have. i will be looking at the special operations unique mos', the navy seals, the rangers, etc. i will have an opportunity to provide my input to the service chiefs. >> you said assess the standards. nobody is saying to lower the standards. >> i was asked about the concept of the gender neutral standards. we have a standard. that is the standard. it is an important standard. there is no intent to lower the

standard. we want to provide the nation the best forces we can. >> some of the women have been attached to a number of units but they have not been assigned. that has harmed many individuals and many saw the right thing -- writing on the wall. general mattis, there were questions about sexual assault. some research that i've seen from the department of veterans affairs suggests half of the women deployed to iraq or afghanistan reported being

harassed and almost 25% said they were sexually assaulted. i have been to afghanistan and iraq. i was shocked and in the bill -- an individual was concerned about the amount of food that-- fluid that they would drink in the afternoon because they found it dangerous to go to the latrine at night. to be concerned about their safety, it makes you wonder that we have to do something about it. what is the current state of the problem? what is being done to address the issue of sexual assault

while on the deployment? >> i don't believe the drawdown will present unique challenges. the environment in the unit is the environment. it comes down to the alertness of the chain of command and to the command climate and the commanders intend and her ability to articulate what is acceptable behavior and the authority of commanders to deal with unacceptable behavior things to the ucmj is more than sufficient to maintain the discipline. we take this seriously. we took it seriously ill long time ago -- we took it seriously a long time ago.

some of the act will work we get a we take that for action. we have the authority to deal with people who think that is an option. it is not an option to lack like a jerk. >> thank you for what you do for our country. >> thank you both. what are you going to do when you retire? >> i have no idea right now but fun.going to be a lot of i would hire you but we don't have a lot of money. do both and you agree with the statement that we should be army at least a portion of the rebels in syria? >> i do not believe i have the awareness to do it.

>> we could absolutely do it. a very confusing situation. i'm not sure we are in a position to do that. >> you are against arming the rebels or you just don't have enough information? in my case, that are being armed right now. >> but not by us. >> that is correct. >> should we armed a portion of the rebels? >> if we know who the weapons are going to, it is an option that would complicate assad's stay in power. >> do you think 2013 is a reckoning when it comes to iran? >> i am paid to be a sentinel for this country.

>> he said the sanctions were not working with iran. >> the nuclear industry continues. >> what is the likelihood they would work in the future? >> i believe this regime -- i think they are concerned that economic sanctions could turn people against them. they could be willing to give up the nuclear efforts to stay in power. >> do you think that is the most likely scenario? >> i think we should continue sanctions but have other options already. >> to think israel was attacked iran? -- do you believe the israelis

would attack iran? >> i would take its role at its word -- i would take israel at his word. >> would it be in our interest to help them? >> that would depend on what the objective of the strike is. is it to stop them? how long do you want to delay them? is there a broader effort? >> would you recommend a limited strike or should go after their navy, air force and the revolutionary guard? >> i think that is advised that i owe confidentially to the president on.

>> if the iranians develop a nuclear capability, how certain are you that other nations would acquire an equal opportunity? >> at least one other nation said there would not stay without a nuclear weapon. >> sorry said that is -- >> other states in the jungle region. -- in the general region. >> let's talk about the budgets. admiral mcraven, you say your budget is being reduced by 23%. over a tenure window, what does it do to your command -- over a 10-year window?

>> it would cut us by about $10 billion. sequestration alone is $900 million. sequestration alone is about a 10% cut to my budget. think about a 10% reduction with readiness and capability. >> would we have a hollow force is fully implemented sequestration? >> we would not have a hollow special operations force as a result of sequestration alone. >> what about the marine corps? >> i cannot speak for the ring core -- marine corps. we will do less in the future.

we'll keep the sense of purpose with training and good equipment. it would be a smaller force and we would do less with it. >> 2/3 of the budget is not affected, only 1/2. -- 1/3. 50% comes out of dod. toll be doing great damage our national security. am overstating that? >> no, sir. what is unappreciated sometimes is while i would take $900 million a year in cuts, i get a lot of support from the services. the service cuts they take compound the special operations

support. i can manage the special operations force. i get a tremendous amount of support from the various services and that will affect the special operations capabilities of this nation. >> my correct that my colleagues back home that sequestration would do a lot of damage to the military? >> yes, sir, it would. >> at the end of the 10-year sequestration 2.41% of gdp in terms of military spending. 3% on 9/11. we'll be at the incredibly low

number. 1962, 49% of spending was on the military, 30% on an totten. 61% of the budget today is being spent on entitlements. religious become greece -- we will just become greece and that is the challenge. ." -- >> you can see this online or when it rears. -- it re-airs in about two hours. more on how automatic spending cuts will affect -- affected defense department. from washington journal, this is 40 minutes. >> the senior defense analyst with bloomberg government out with a new report looking at

defense contracts spending by congressional district. this report focuses on this fence -- defense contracts spending. how do you define that? >> that is the money the department of defense spends on goods and services. it is somewhere around $315 billion a year. >> how to gather this data? we and just as contact data reported to the federal government. we suggest it and manipulate it and we have tools for extracting the data in various ways. one of the ways is by congressional district. host: we do not have a good number on how many federal contractors there are in the government. do we have a good handle on the money being spent on defense contracting? guest: we do not have a good handle on the number of people working on defense contractors.

even secretary gates said he did not have a good number. we know how much money is spent because all these contracts are reported to a system. there are some classified contract that deal with intelligence work which are not reported. but the rest of it is basically reported and we have a good handle on it. host: what was the headline coming out of this report? guest: that the democratic districts representing democratic members of congress tend to get more defense contra dollars in the republican districts.

host: a look at the top 10. here they are for our viewers. you can see the numbers and the members of congress. two republicans and the other -- other 8 are democrats. guest: in the top 10. a lot of this is industrial stuff and tends to go to urban areas where there's more industrial capability and those tend to be more democratic districts. host: what type of defense contracting spending is going on in these districts? guest: it is interesting. in most cases, the big contract dollars are not with the installations. the installations to spend money on contracts for services to the base. like the first one, it was a surprise, because a representative clay is not a big voice on defense issues and he does not sit on the defense committee, and he has a huge amount of boeing manufacturing, aircraft manufacturing in his district. he's in a pretty good buy, because with sequestration, a lot of his money comes from saudi arabia to purchase fighter jets for the saudi air force, but it goes through our department of defense. so he does not have to worry about that money being cut. but there's other boeing stock

that could be cut. host: what about jim moran? guest: he's the most vulnerable. his is defense services. ors not a big manufacturing things like a big aircraft. it is information technology services. the biggest company in his district is a translation service for the department of defense. he has a wide variety of companies all headquartered very near washington and doing services kind of businesses. host: some others? guest: the top republican is in fort worth tester, the 12th congressional district. mccomas hall lockheed martin, 95% of all the dollars spent in her district, it's a blow over $90, that's all lockheed. a good portion of that is the f-

35 fighter jet, which is the largest program in the defense department. these are twas defense dollars low. charter for the big pieces of hardware like the f-35 or submarines or ships, or its for services for the department of defense. host: the report puts on its head the perception that republicans protect the pentagon more than democrats. guest: there's a perception that the republicans have been more protective of the defense department historical. i don't think it's necessarily because of spending and somehow if spending moves to democratic districts that would change. what you are seeing now more with republicans is a real focus on austerity, on cutting budgets, on restricting the government and many more republicans than in the past have been willing to talk about the pentagon needs to be trimmed as well. host: how will the sequester impact the defense contracting spending? guest: sequester impacted very much. basically, for the department of defense, it's about 7.9% or 7.8% on the discretionary side of spending that is cut.

across-the-board, so it will affect the contracts. the department of defense as it does not want to break contracts, which it can do, but it pays penalties. so it doesn't want to. host: carter big penalties? -- are they big penalties? guest: they can in some cases. if the pentagon terminate the contract for convenience of the government, there is a negotiation between the contractor to say these are costs including profits and here's the money we have are spent and we are entitled to it prepares a negotiation process within the government and the contractors to decide what legitimate expenses are permitted there's a disagreement, they have a special court that deals with it and they can appeal. in a lot of cases the government may happen ability to scale back the amount of money they will spend on a particular contract and we will buy one or two less fighter jets this year so they don't have direct contact but it will scale back the spending and then they don't have to pay the penalty. host: we are talking about bloomberg government posing new report on defense contracts spending. this is what they have found

out. so all 436 members if you count the district of columbia get defense contracts ending. guest: yes. i think there's a district in brooklyn that only gets about $300,000. this is 2012 data. these are what we call crime contract produce of the contracts of companies directly doing business with the government. there's a lot of subcontracting work. means lockheed build a fighter jet, it gets paid by the program and then it in turn pays 60% to various subcontractors to make various parts of the jet. you can take that down many levels.

as the guy who makes a part of the f-35 and then there's another guy who makes the rubber for tires. host: you made this point in your report -- what do you make that connection? guest: it's interesting to see how the money flows. the primary reason for a lot of this is that the democratic districts tend to be more in the urban districts. that's where a lot of these companies are located. a lot of republican districts are rural districts and there's not a lot of defense business and manufacturing in those districts. some of the military bases are in areas that tend to be more republican. but not as many big contract dollars flow from the military bases. our services, but most of its

personal dollars. salaries of the men and women in uniform or the civilian defense employees. those employees, the civilians are going to feel the impact of sequestration. the military personnel are exempt. host:greg in hindsville, alabama, republican. you are up first for robert levinson. caller: thanks for taking my call. i am in the area that was no. 6 for the impact. in hindsville, per square inch we have more rocket scientist than anywhere in the world. it's one of the most dedicated counties in the world and in the country. in madison county there's 350,000 people. 41 cows and will be directly impacted. -- 41,000 will be directly impacted. six jobs will be associated the -- associated with every job impacted. i keep hearing that we're not going to feel the pain, that it will not be a big impact. but it will be in barnesville,

alabama. -- in huntsville, alabama. my wife and i are both business owners. this will directly impact a lot of people's lives in the community. one thing that irritates me the most is a lack of leadership. i keep hearing republican and democratic. we're all americans. the federal government's job is to federalus. -- is to protect us. host: we have to leave it there. guest: that area gets a lot of missile and space activity. he's right. there will be pain. in terms of the overall number for sequestration in the overall economy is not a huge number. but then it's concentrated in certain areas like hindsville, alabama. defense contractors will lay people off as their contracts are reduced. -- hunstville. federal employees will get 22 days of unpaid leaves, which is

one of the bears salary being cut for the rest of the year. host: house republicans want to put a bill on the floor by thursday that would keep the sequester in place by giving the pentagon and veterans administration's some flexibility. what does that do with sequester? guest: with the veterans administration, it does not do much. veterans is basically exempt from the sequester. for the department of defense, it would give it flexibility to make some strategic cuts. defense officials have said at this point we only have seven months left in the fiscal year. even if they have the flexibility, it does not help them that much, because they have to do so much in such a short time. they've got to reduce the spending by the end of the fiscal year. the president has said he does not want that flexibility,

because he does not want to acknowledge that everything has to come from cuts. he still looking for compromise that. republicans are not accepting that right now. we still seem to be at an impasse. host: on twitter -- guest: there always are problems with contracts. but something's really cannot be done by troops. some of the services, they talk about world war ii troops peel potatoes and work conditions. the troops don't build weapons systems. a lot of that is building a 35, that's private industry that does that. the u.s., task to go to industry to build various pieces of equipment. there is the dispute about some of these jobs that could be done by soldiers or federal government employees. depending on how you look at the cost, it's often hard to tell there's a real dispute, because federal employees have good retirement benefits and sent to have a longer life time cost. contractors can have a much

higher up-front cost in terms of the actual salary? they earn on a day-to-day basis. host: mike in wisconsin, independence. caller: i just got a question that i'm not trying to be sarcastic. who is going to clean the buildings and scrub toilets? host: you mean it sequester happens? caller: yes, would that not be federal contractors who do all that sort of stuff? guest: absolutely, it is federal contractors that do those kinds of services in most cases. when i worked in the pentagon, a lot of that is done through special companies that employ handicapped or developmentally disabled people. they work as picking up the trash and things in the pentagon and other places. they are federal contracts and they will be hit. somebody still has to take out the trash. instead of twice a week it will be one day a week or things like that. host: on twitter -- guest: hawaii is a case where there is a lot of money that is associated with military installation.

you've got pearl harbor and a beale air force base. the army has an installation. so why he has a lot of money coming to it. -- so hawaii has a lot of money coming to it. i don't know how much you have heard from the delegation. you had senator inouye who was tear but then the provisions committee and he was pretty vocal about this before he passed away. he was a strong voice against the defense cuts, always considered really hawkish in terms of spending money on the department of defense. host: new york, g democratic caller yorkreg. -- greg in new york. caller: the overreliance on contractors, something that was from imperialial, something that leads to a decline.

if you look at the line graph of defense spending and the u.s. debt and deficit, they plot almost identically. i was wondering when that bubble will collapse? host: you are talking about a bubble in defense spending? caller: yes, if you look at the line graph of defense spending historically, american defense spending it is pretty parabolic and i wonder when the bubble will collapse? host: so defense spending keeps going up historical in, he is saying it is an economic bubble. does it burst?

guest: defense spending tends to go up during wartime and then it comes down. we have ended the war in iraq and we are getting out of afghanistan slowly, so defense spending does tend to come down. historically, defense spending goes up during a war. we are in one of those times called the drawdown. if you look at korea, vietnam, the cold war, defense spending came down by as much as 1/3 and it usually takes 10 years to do? . host: kevin -- calvin in kentucky. caller: i have a question on the military. i am a retired coal miner. i have killed myself in the coal mines. the sequestered, they say it is not point to hurt people. i have three granddaughters that are just starting a headstart program. it's gone to cut that out. what are they going to do about

that? just like social security, they want to take billions of dollars out of social security, and for what? iran or somewhere. they're not putting a dime back. host: those are two different topics for another day. we are talking about defense contracts spending this morning. bloomberg government is out with a new report on that. ann next in alabama, a democrat. caller: i am a widow and my husband was in the military and got killed. i want to know what is going to happen as far as entitlements, as far as us women. host: again, that's another topic for another day. sorry about that. sheila in connecticut, independent. if we are talking about defense contracts spending.

and we have a fourth line for those in the military and defense industry. 585-3883. we want to hear from you as well. caller: good morning. i have a statement and question. i feel that not another penny needs to be spent on defense. we are the superpower. we have more than enough weapons and fighter jets for what we need to accomplish for i don't know how many years. also, what annoys me most is when we have the lottery and all those millions are given out, someone 1 $1 billion the other day on the powerball, then walk away with $683,000. where does the rest go? i ask the politicians and all they tell me, in the general fund. we don't need that. put that towards the people in social security and medicare. forget about defense spending.

it's only for the defense contractors. keep the people going. host: you have some spots, robert? guest: sheila is getting at an important point. the time to debate what proper level of defense spending is. a lot of money does go to contractors, but it does go to the pay of the troops and military retirees and things like that. but we do have to have a discussion about what is the proper level. there is a legitimate discussion to be had about how much money to spend as we're coming down from a war. i don't think anybody thinks it can go down to zero, but it is a legitimate debate to have. historically, in periods like this it has gone down by as much as host: 1/3 on twitter -- guest: well, i guess what i would say is it is important. these are jobs and does affect the overall unemployment rate. defense contract intends to be concentrated in urban areas. most of these jobs, a lot of them are really good jobs, well- paid jobs, high skilled workers.

cutting back on that, there's going to be an effect on unemployment rates. host: andrew in maine, republican. what's the name of your town? caller: bodine. i worked at an ironworks company in maine. i was wondering about the contracts for the ddg 1000. i want to know what they see happening? guest: they do a lot of navy shipbuilding up there. those contracts, like everything else, are going to get looked at. those tend to be good contract with long lead times and things like that.

the navy just signed a new contract yesterday for a combat ship. so these contracts will go forward they may scale back the buy or the pace. they will not cut out the programs completely. host: on twitter -- bill in new jersey, democrat. caller: the medical contracts when our personal comeback for morris, they go to the va hospital, these medical contracts, do they go directly to drug companies and there's a big problem with folks like myself who have to take a particular kind of medicine. i think the prices are very inflated, but i really don't know. host: you are just talking about in general, not talking about defense contractor and? caller: well, i did not know, because i got on to the program late. i was wondering when guys come back from wars. they've got to have a specific

kind of drug and you get that drug directly from the drug companies or is it through a contractor? guest: there is the military, which provides health care for about 10 million people. that's military, active duty, their family members, and retirees and their family members. there's also the veterans administration. in both cases, the contract for a lot of these medical services and they buy drugs. sometimes there's a middleman or distributor. they go and buy drugs the same way. the va has the ability to negotiate drug prices, and like medicare, which is prohibited from doing that. the va is getting a better price on some of these things in some cases. those drugs are not manufactured by the government, so they have to buy them from the company that makes them. host: on twitter -- guest: well, there's a lot of discussion along those lines.

the idea is fighting another big ground war like we did in iraq or afghanistan. the military really does not want to do that again and they have talked about a strategy released in january of last year, they talk about not wanting the size of the forced to do that again. so there's a lot of discussion about the kind of enemies warfighting and the kind of technology. maybe a lot of the big heavy equipment off is not suited. and there's things like space capabilities or cyber capabilities or special operations that maybe should receive more emphasis. host: jeff is in tampa, florida, in the army. caller: since we were going to reduce the military in a time of war, since the cannot pre- plan these things, i wonder if they will reenact the draft so they can build up the military during that conflict. we have not been able to plan any of the wars we ever had.

i am concerned about our future. thank you. host: why are you in tampa, florida? caller: i'm an army reservist. i have almost 30 years of military service between active and reserve. i assigned to a unit in orlando, florida. host: thanks for the call. guest: first, thank you for your service, jeff. we all appreciate that. in terms of a draft, we still have selective service. everybody -- every male was 18 or older has to register. we could reinstitute a draft, the radically. i don't think it's a realistic possibility. they are talking about cutting the size of the force. everybody likes the all- volunteer force. one of the interesting debates

they are having now, with opening up positions for women in combat, there is discussion about whether or not women will need to register for selective service as well. that should be an interesting discussion to see go forward as the debate continues. host: another phone call in florida. rich, democrat. caller: i am concerned. the thing that bothers me over the years is defense contracts developing weapons systems or an airplane, the contract overruns and its five times what the original contract was and the government goes along and pays it. why is that allowed? is there any penalty for the person who cops out from the contract? guest: it's a very good point and other are often cost overruns in a lot of these contracts. these days, with the budget coming down, the government is getting much more aggressive about these kinds of things. there's a new contract with boeing for a tanker.

it's a fixed price contract. have been overruns and boeing has to eat the cost overruns. they're running into the hundreds of millions of dollars. the government says you promised it at that price and that's what we're going to pay. there are cases where the government is being more discerning about that, forcing contractors to eat some of the costs. on the other hand, sometimes the f-35 fighter jet was first conceived in 1996. technology has changed a lot. sometimes estimating what these things are going to cost in the beginning gets a little tough and in some cases nobody can anticipate the cost. i would say the government overall is being a tougher taskmaster on a lot of these things and looking to the contractors to eat more and more these costs because people are getting tired of the government constantly paying for the overrun. host: on twitter -- guest: there have been some

moves to renegotiate on the pentagon only but and there are others particularly in the administration but say they want to undo this thing but i'm not really willing to just absorb the pentagon of these cuts. some of the republicans are more concerned about the pentagon, but the democrats a we don't like any of this and we want to renegotiate all of this. and the president has said that as well. i don't think it's just about the pentagon. but the pentagon is the biggest bill payer in the sequestration. so there's a lot of attention being focused on it. host: we're talking about the bloomberg government posing new report on defense contracts spending where they found the top tender's 642012 defense contracts spending included eight democrats and two republicans. chris in jamaica, new york, independent. caller: my question concerned the outsourcing of contracts overseas. you covered how we breakdown the contracts across the united states.

i was wondering what percentage of contracts are outsourced overseas? i know than it supports the economies overseas more than ours. i was just curious about that. also, you mentioned this morning about the f-35. are -- i spot the f-22 was going to be the last land jet -- manned jet aircraft moving forward. host: got it. guest: the outsourcing contracts overseas, a lot of the support for our bases overseas go to foreign companies. everything from picking up the trash at a base in germany is going to a foreign company. are some big foreign companies. bae is the largest one that does a lot of business and sells a lot of weapons.

they sell more to the u.s. than to the british military even though they are british company and they have a u.s. space division. there is some of that. some of the subcontracting work may be outsourced overseas. i cannot really track that kind of thing. a question about the f-35, the f-22 was the last fighter jets that we completed. the air force purchased 187 of those. but the f-35 is a man aircraft. it's a process of making an unmanned version that we may see a some point in the future because the aircraft will be bought. the last scheduled buy is in 2024. you may see it go to an unmanned versions in the not so distant future. host: in pittsburgh and in the army, troy. caller: i was calling to talk about when clinton was in office, for every entrance remand there were eight statistical people, one works in the army and seven are in the defense contract.

now they have gotten rid of those seven contractors that are there to help the maintenance guys do their job. now we are crippled, logistically. bae, who you were just talking about, is an american company that merged with them. i just cannot believe they have done this, but they have crippled the united states army. when we went into iraq, most of the equipment we fought against did not have people manning the equipment, so we ran through it like it was nothing. when we went to the afghanistan, these are thugs, not soldiers. guest: i don't know if i would agree that we have crippled ourselves logistically. the contractors to provide a lot of logistic support. occasionally there are issues with that.

but i am not really aware of future complaints that the forces are crippled and not able to do their combat mission. it's always an issue of the contractors being dependent on them and for how many of them should you deployed for? if you replace them with military personnel, which we try to do sometimes, the military personnel are expensive as well and often their missions are very critical in the front- line combat positions. so it's a real question of where do we put the contractors and how much do we rely on them? i don't no. i agree that things have been crippled. host: there might is a former marine in evansville, indiana, independent. caller: why is it contractors get paid such large amounts, between $100,000.100 $50,000 for service overseas when the average soldier or mean only makes $38,000? guest: it is hard to say. contractors do in many cases get pretty good salaries. but they can be terminated very quickly. sometimes you have to look at the lifetime cost. they don't always have all the benefits.

they do get some tax breaks for serving overseas. again, this is a constant area of debate as to how much contractors are charging and how much they should be paid. i don't know that there's any agreement, but constantly comes up as an issue. host: richard and misery, a democrat. -- in missouri. caller: when i was in the service we did our own cooking and so forth. we did it for patriotic purposes, not for the money. we have a mercenary army now. we have a bunch of white elephants sitting up there and it costs a billion dollars, working for nothing. guest: he mentions the idea of soldiers doing kp or kitchen duty. that used to be done by soldiers. those were draftees soldiers in a lot of cases and we did not

pay them very much. now we have an all volunteer force and we want to provide those men and women in uniform will volunteer a pretty good package of salaries and benefits. so it does not make sense to pay people in uniform to do some of these jobs that you can pay a contractor and probably pay a contractor a lot less in cases like that to do those jobs and save your soldiers in uniform for the really critical combat jobs and service in dangerous areas where you don't always want to put contractors. host: on twitter -- guest: these are areas that are really under discussion, as part of the overall global footprint. we still have a lot of forces in japan, a lot of forces in germany, significant forces in korea. a lot of people to think maybe we need to scale back some of these commitments. there have been various studies about pulling back out of particularly germany raping there's not much of a threat in europe.

-- in germany where there has not been much of a threat in europe. some of it's a legacy from the cold war. there's a lot of discussion along those lines. it's not clear how much money you would say if if if you bought those soldiers back home. if you still have to pay the soldiers. some of the support costs overseas are paid by those foreign governments. but this is an area being discussed. host: duncan in ohio, republican. caller: there are two things i want to say. first, i want to ask a if you are familiar with the industrial military complex and explain to the audience how it relates to defense spending. there were callers who asked questions that had nothing to do with the topic this morning and that shows people are not familiar with this sort of thing as much as. do you agree? guest: the military-industrial complex, president eisenhower as he left office, he talked about be where the military-industrial complex.

what he is talking about is the alliance between the defense department and the industries that supply it and members of congress and lobbyists and people like that. that is certainly something to be concerned about. there are members of congress who have interests in particular weapons systems because they are manufactured in their district and they also get donations from weapons companies. sometimes it's not clear they are really buying the stuff that's most important for our national security, but really helping out special interest. this is a constant area of discussion. when you are spending on the defense budget that over half a trillion dollars, there's corn to be a lot of people interested in that money. we have to be careful that we are spending the right money for the right reasons and not spending just because if it's helping out a particular industry or region but rather is something the critical for our national defense. host: will in columbia, tennessee, independent. caller: good morning, greta. i appreciate c-span. i was just thinking about this. i am thinking about defense as well as the analysis for the money that's going into the defense program.

i was thinking about how obama came out during the newtown incident where the children were taken out by automatic weapons and how much money goes into all this. relate that to what is going on with the drones that are going overseas now that are being used and million-dollar warheads that can go to the afghans or iraq or even iran, which has already threatened the united states. the sad thing about this whole situation is there's quite a bit of hypocrisy going on. who is taking care of the defense spending? in the days of jesus christ, he said to the political leaders as well as the religious leaders and even the military leaders in rome, he simply said, "how can

you escape the damnation of california is coming?" we don't realize it, but we have great powers coming to life and they're getting ready to look at us as an easy candidate for overtaking us. guest: i don't know that anybody would say the u.s. is an easy candidate to be overtaken. we still have a dominant military power in the world. we spend more than the next 17 countries combined on national defense. most of those 17, with the exception of countries like russia and china, our allies of the united states. even with the cuts that are coming, we will still be the dominant military power of in the world's. we are the only superpower that has aircraft carriers that can go all over the world and corporate we still have a nuclear deterrent which is substantial. despite what people say about some of these cuts, we have to be careful to not overhype them. the u.s. will continue to remain the dominant u.s. power for quite some time.

host: tammy works for a federal contractor. caller: my husband is part of the military readiness mission. my husband and my brother, we are five generation military family. the problem that i am seeing is that in two weeks my husband will be furloughed. so these cuts will affect the training and readiness of the military, which will at some point wekaen the military -- weaken the military. i keep hearing we are large power and that is true. but if we start cutting deeply into the readiness program and things like that, it will have a serious impact.

my brother has already been laid off. he builds military training facilities all over the united states. he works for a subcontractor that does that. he has already been laid off. so we're getting into dangerous territory with our nation. guest: i think jamee brings up a really good point and it says along with the sequester and the amount of the cuts, one of the real problems is the across- the-board nature of the cuts. -- tammy. to talk about readiness, which is a function of operations and maintenance. right now, under the sequester, those are where the biggest cuts are coming from, which does affect readiness. this is one of the reasons a lot of people object to the across- the-board nature. we have talked about efforts to perhaps give the department's

more flexibility so they don't affect readiness. the army has talked about they will really only be training those brigades they're moving directly into afghanistan and they will have to cut back on readiness for a lot of the other brigades and the flying hours for the air force. these are critical areas. cutting into the readiness, she's exactly right. it is something that needs to be looked at. host: robert, thank you very much. >> the u.s. house is scheduled to take the spending bill tomorrow that bonds the government through september. the plan keeps in place automatic spending cuts that kicked in a few days ago. the current continuing resolution expires march 27. the new bill was approved by the rules committee late this afternoon. here is a portion. >> the facts of the case are

that we are spending money in that we borrow. when you borrow money to fund the operations, whether it is a family or a business or the government, at some point you have to pay it back. our government will spend around $275 billion a year that we will pay on interest. in a normal year where interest rates were different, that could move to $500 billion a year. this means that my children and others will have a diminished opportunity to have freedom and to make the american dream work. this member is no different than any member up here. we wish we were not in this role but we are. you too have given us a

direction with a great headlamp for the future. i am glad we are able to come to an agreement to move forward. the chairman has tried to negotiate this on a bipartisan basis and we will see how we do. thank you to both of you. >> thank you, mr. chairman. i want to thank ranking member for coming today. i know you have done a lot of work along with the staff to get as to this place so we can keep the government funding. i understand when you are saying and i agree with you about the fact that the sequester is not good for the defense of this nation. if you have not read bob julyard's boo, page 326 on 26, this is a direct quote --

"at 2:30 pm, white house budget director jack lew and legislative affairs director went to the senate to meet with harry reid and david crone. we have an idea for the trigger, lew said. sequestration." i hope you have taken your pleased to the president and to his death. >> well the gentle lady yield for a quick question? .> not yet after i -- thank you. i hope very much that you have made your appeal to the president because we have made the appeal and i think you know that we passed two bills last

year to stop the sequester and to make what we thought were sensible, smart common sense cuts. able to geten't been bipartisan support for those. i think it is very important the american people understand this is the president's's sequester. this is not the republicans of the house sequester. yes, some of us voted for it. but like many other people, we hoped it would never get to this point. but the idea came upon the president. i tell school groups when i meet with them all the time the no. 1 role of the federal government is the defense of this nation. every other thing we do from the federal level practically can be done at the state and local levels. but not defense. if we do not have a strong

defense and we are not a free people, the rest of it does not matter much. if we are not free, but cannot do the other thing. i appreciate your appeal and your concerns about defense. i believe they are wholeheartedly felt on your part. but i think that our colleagues on the other side of the aisle are directing their concerns to the wrong people. it is the other side of the aisle that need to pay attention to where we are and with that, i yield to my colleague from massachusetts. >> thomas mann has put out a piece that discredits the bob woodward book. did the gentle lady say she voted for the bill that approve the sequester? >> i believe i did. rex i tell kids is the

separation of power. at the legislative branch, all we can say yes or no. you voted for the sequester. the fact we are here basically in a state of this function as representatives of the lack of leadership here in the house of representatives. i wanted to point out her definitive remark about the president is not so definitive. >> i realize we have a separation of powers and that we have three branches of government. i would say to you that the house is only half of the congress. the white house is controlled by democrats, the senate is controlled by democrats. the republicans in the house are not in a state of dysfunction. we have passed bills last year it twice asking this be taken care of and they were not and it was not taking care of. the president, all the president

would need to do would be to ask senate to pass the bill that the house sent over or to pass their own bill. we are still waiting for the senate to pass a bill and send it to us so we can go to conference. >> that means she must support the questor if -- support the sequester if she voted for it. >> i yield back. >> if i may respond, if i recall, there was a vote for the sequester in the summer of 2011 in the cut, cap and balance act. important-- think it's to make the point because i think we are adults and we all care about the long-term debt and the deficit. i have three children, eight

karen children -- eight grand children. we did pass the budget control act which took $1 trillion in the long-term debt over the 10 years of the decade and put $550 billion on discretionary spending. i also want to make it clear that discretionary dollars as a percentage of the gdp is at its lowest level in the last 45 years. so we do cut. i guess there is a difference in philosophy. i believe we have to decrease the long-term debt but i also believe putting people to work

and vesting in temperature, making sure we deal with our roads, bridges, highways is the way to do it. so this request to cut that was part of the cut, cap and imbalance act, i do not think is a responsible way for legislators to legislate. >> sequestration is one thing. continuing resolution is another. we are here about a continuing resolution. sequestration is upon us and we will have to deal with that but not now. this bill is only about operating for the balance of the year. i hope we can stay within the balance of that. >> i agree with the gentleman. in reference to the political remarks that have been made, let us remember it was speaker john boehner and our majority leader eric cantor hussain we will not

allow the government to go into chaos -- eric cantor who said we will not allow the government to go into chaos. the resolution was one they all worked together. we can look back and think we did not like it but it did become law and we are there. thank you very much for the comments. >> thank you, mr. chairman for an opportunity to speak. i do know what we can do about it. mr. van hollen will come up for the fourth time and try to get his amendment made in order. that would do away with sequester and save us an awful lot of money with regard to oil companies and instituting the

buffett rule. i hope we can find in our hearts today. the [inaudible] thank you fo >> did the light just got out? [laughter] 10% of the light. >> i told you to stop talking about sequestration. [laughter] >> i am glad to see you both. >> that may be a precursor. we were before the committee this morning asking for a budget for this year. we may have gotten an answer. i hope we paid our bills. zation. mr. bishop?

>> thank you, mr. chairman. before i engage in the political spin of the day, would you mind if i asked you some specific questions about the bill that's actually before us? i do have about three. actually, i have the first is the most important question. mr. chairman, i would wonder if your friend and acquaintance from back in the good old days, if you have any stories we can use and be successful here. >> the gentleman does, i'm not sure how successful those would be and i don't find those germane to today's argument, but i will say this, with respect to that, we have mutually assured destruction of each other in mind. so, thank you for checking on that. i'll give you his business card. >> we'll talk to you in the hall afterwards. >> see, i'm in trouble, blake. thank you. >> this c.r. and some of the media reports i think was inaccurately described as adding $7 to $10 billion to the current

c.r. levels. i understand that is not accurate to that, but you do shift or at least allow the shifting of funds into the operation and maintenance of the military. if you could just simply tell me what you actually do in the shifting or allowing the shifting of those funds and perhaps what would be the offsets that were put into the plus-up for o & m. >> essentially, the -- unless we pass the d.o.d. appropriations bill that we've included in this bill, if we don't do that and they stay under the old straight-out c.r., they are going to run short of operations and maintenance account money, so what the bill does is shift money, as the bill that passed the house did, shifts money into the operations and maintenance bucket. >> you have -- maybe one of your

staffers has from whenst that money comes to o & m? >> the o & m would be reduced if we don't do this by about $11 billion. that's because a c.r., plain-old c.r., keeps each account static. all funding remains at last year's levels. that means important funds are kept from accounts at which they are needed. while billions are given to obsolete programs or programs that should be reduced. for example, things like iraq operations. $500 million, for example, in

savings from spare parts that are excessed to what they need. the c.r., regular c.r., does not allow for new starts. we lose billions more in increased production delays and contract slippage. for example, construction of the next aircraft carrier would be pushed back a year. construction of new destroyers would be halted. 17 hospitals, which are needed to treat our wounded warriors, would not be billed unless we do this. things like that. the defense budget is a very fluid account, more fluid than any other of the government, because you've got so many things going out at one time. and year-old divisions of money, which a regular c.r. would provide, would take away the department's ability to spend money where they need it rather

than where they would be made to do it under the old law. >> so this misrepresentation on the part of the media, $7 to $10 billion, that's flexibility, that's the number roughly you're putting back into o & m in the military? >> flexibility -- let me mention briefly, too, bill young is in the room, chairman young, he's the author of the defense bill that we're incorporating in the c.r. his subcommittee, which he chairs, and which was approved also by the senate committee. it's a refreshed new look at how d.o.d. wants and needs to spend the money they get, given the inflexibilities to move money around to fit today's needs. >> do you see this kind of shift of the o & m budget as helping lessen the impact of some of the large civilian furloughs that

may be threatened within the defense community for the civilian employees? will this give them some flexibility to play around with that concept? >> this bill does not address the sequestration problem. it will give them flexibility to try to absorb sequestration costs better than they could have otherwise. but it will by no means solve the sequestration hit on defense. >> just in this one area then with furloughs, sans this change, this appropriations attached to the c.r., there would be very little opportunity for them to try and move some money around to mitigate that kind of condition. this gives the military, as i understand it, a flexibility to see if they can put some area, some mitigation, into the impact it would have, or not, am i accurate in that? >> are you talking about contract employees? >> civilian work load that may be furloughed.

does this give them flexibility to play with the furloughs? >> i don't think it would have any impact. each agency has >> covers operations in middle east and central asia. later, a discussion of how automatic spending cuts will affect the defense department. on the next "washington journal,

we will discuss the effect of auto magic spending cuts. -- automatic spending cuts. we will be joined by eighth a representative, the illinois democrat fifth she serves on the energy and commerce committee and was a member of the simpson- bowles deficit reduction commitment -- the fifth we will focus on a variety special report on entertainment here in our guest will be the chief international editor of the magazine, tim gray. live on fees and every day at 7:00 a.m. eastern fifth. the fifth eastern. >> i believe the united states has many fans half of fifth

the ninth made-for-tv the fifth free fifth we have with other people often call a fifth enclave theft how, -- 99% of the time, we make our enemy. >> sunda ynight -- sunday night.

the next this is 45 minutes. -- >> this is 45 minutes. [applause] >> thanks, lynn for that very kind introduction. one thing you didn't mention which was fine was that there is a picture of the cabinet meeting in today's "new york times." and if you look closely you'll see the back of my head. one of my colleagues said aren't you glad you got your haircut this weekend? i'm delighted to deliver the address here again. at last year's conference i spoke about the progress that we had made recovering from the worst recession since the great depression.

i also discussed the near term outlook for the economy. i emphasized several reasons to be cautiously optimistic about the economy going forward. despite uncertainly about government fiscal policy and the lingering effects of the financial crisis that were then and continue to be head winds for the recovery. i'm sure you are all aware our economy has continued to recover over the past year. real g.d.p. has now grown for 14 consecutive quarters. while many developed economies have struggled to rebound from the global downturn, u.s. real g.d.p. is 2 1/2% higher than it was at the previous business cycle peak. last year, i told you that the council of economic advisor's forecast was that two million payroll jobs would be added in

2012. employment rose by 2.2 million jobs in 2012. and this increase was entirely accounted for by the growth in the private sector. thanks to the resilience of the american people, we've now added more than 6.1 million private sector jobs over the last 35 months. since i spoke here last year, the economy has continued to show signs of healing from the great recession. in the past year, the housing market appears to have finally turned a corner with rising nationwide home prices, sales and home construction. and new car sales reached their highest level in five years.

all of these gains reflect the determination of american businesses, workers and families in the aftermath of the most painful recession in our lifetimes. nevertheless there are much more work that needs to be done. unemployment remains too high. the middle-class continues to struggle with stagnant wages and persistently wyden iner -- widened inequality. our nation's infrastructure cries out for further investment. and on top of everything else, political gamesmanship in washington is creating unnecessary uncertainty and inflicting unnecessary wounds on our economy just as the recovery is gaining traction. the prime example of this problem, of course, is the sequester, that's washington

speak for severe budget cuts. the sequester officially went into effect last friday. as goldman sachs economist alec phillips observed, sequestration is poorly timed, less efficient than most other forms of deficit reduction and does little to address long-term imbalances that stem from demographic shifts and the excess growth of spending compared to revenues. given the ongoing debates over the federal budget, the main theme of my remarks today will be the economic case for a balanced responsible approach for deficit reduction which has always been the administration's position.

a critical point, one which others have made but frequently gets lost in public discussions about fiscal policy is that the federal budget is not an end in itself. the federal budget is simply the means through which we as a nation seek to achieve our economic priorities. as president obama eloquently stated in his state of the union address last month, the north star guiding our course as a country must be a growing

economy that creates good middle-class jobs. this requires taking steps to make sure that america is a magnet for good jobs that pay decent wages and that workers have the skills needed to fill those jobs. we must also address the federal budget deficit because if we do not put the budget on a sustainable course, we will ultimately not be able to achieve our objective of growing the economy and creating good middle-class jobs. president obama has repeatedly called for a balanced approach to deficit reduction. his plan for a balanced approach includes raising additional revenue from those who are most able to contribute, reforms to our entitlement programs so that they will be around for generations to come, and smart reductions in spending that preserve key investments in education and training, research, and national security. one thing that is often

overlooked is that before the sequester, we have made substantial progress towards reducing the deficit in a balanced way. achieving over $2 1/2 trillion of the $4 trillion needed of deficit reduction. we're more than halfway there. and we have done this in a balanced way, cutting over $2 in spending for every one dollar in new revenue. my theme today is that a balanced approach to deficit reduction is good economic policy, justified by considerations of both efficiency and fairness. deficit reduction that balances spending cuts, entitlement reform and loophole closing is also in the interest of the macroeconomy and economic growth. economists should reject the position that says no revenues can be raised from closing unjustified tax loopholes in order to finish the job of

stabilizing our finances and strengthening our economy. i have to say after i wrote my remarks, i saw that there was a survey of members. and to some extent i'm preaching to the converted. i see in one question when nabe members were asked -- how should deficit reduction be accomplished? 77% said with a combination of spending cuts and tax increases. administrations position. also when asked about tax reform, should tax reform

increase revenue? 74% agreed that there should be significant increase or a slight increase from revenues from tax reform. so bear with me as i explain why i think it's a very strong economic case for those responses. as economists we are naturally accustomed through viewing the world through the prison. s of -- through the prisms of cost and benefits and weighing them on the margin. the proper approach to deficit reduction would be to implement policies to the point that they equate the net marginal cost of raising an additional dollars against the net marginal cost in cuts to programs such as education, research and defense. this is balance. in principle, optimal fiscal policy would weigh the very small cost to the economy of reducing loopholes in the tax

code such as the carried interest provision against the rather significant benefits foregone from cutting programs like head start, research by the national institute of health, border security and other government functions as well as entitlement reform. balance means that we do some of each. can anyone believe that it is less distortionary to preserve every loophole in the tax code in order to cut more deeply the number of children who can go to head start or the amount of research that n.i.h. can conduct in i don't think -- that the n.i.h. can conduct. compare this approach to the alternative which says that all of deficit reduction must occur from reductions in government programs. and that not a dollar more would be raised from closing

tax loopholes. does anyone believe that on the margin, it is more costly to trim back one dime of the trillions of dollars in deductions and loopholes that mar the tax code than to spare one more child a chance of pre- school education or spare one more grant to a top medical researcher from being cut or spare one more border patrol agent from being furloughed. a balanced approach to deficit reduction is not only economically more efficient, it is also more fair. as president obama said on friday, it's not fair to ask middle-class families, ask seniors, ask students to bare

the entire deficit reduction when we know we have a whole bunch of tax loopholes that are benefiting the well off and well connected. the american people don't think it's fair and don't think it's right. across the political spectrum, economists support policies that will limit the distortion nair effects of our tax system. these loopholes don't support economic growth and job creation. so eliminating them is of little if any cost to the economy. additional revenues could be raised in the context of tax reform in which certain tax expenditures are limited or eliminated all together. this would simplify the tax

code, reduce the ways in which our tax system distorts economic decisions and achieve that elusive but very popular goal of broadening the base. with respect to government outlays, it cannot be stressed enough that rising health care costs and an agent population are the key drivers of our long- term budgetary challenges. as a result to stabilize our long-term finances, reforms to mandatory entitlement programs are needed. these reforms would insure that medicare and social security are solvent for future generations. importantly, these programs can be made solvent through sensible reforms that protect the most vulnerable. for instance, the reforms that were included in the affordable care about act which the president signed into law two

years ago this month have already extended the life of the medicare trust fund to at least 2024. going forward the budgetary challenges posed by the medicare program will be largely contingent on the pace of health care costs. now, a balanced approach to addressing our fiscal challenges must also recognize the importance of timing. the recovery is still fragile. weak growth in europe and asia are eliminating our exports. consumption remains constrained as households are still recovering from the loss of $16 trillion of wealth from the financial crieses. -- crisis. we haven't regained all of the $16 trillion that was lost although we've made substantial progress. fiscal policy should remain the focus in supporting the ongoing recovery.

at the same time, we should stake steps to address the deficit in a balanced way in the intermediate and long-term. the sequester is poorly timed and badly targeted. before the sequester, i used to say that we faced two risks when it comes to the government budget. on the one hand, we can lower the deficit too much and too soon, jeopardizing the recovery. and on the other hand, we run the risk of lowering it too little and too late, creating uncertainty and requiring sharper adjustments later on. sadly, the sequester adds a third risk.

we can cut the near-term deficit in a dumb way that shortchanges the future without addressing our long-term budget problems. that is the sequester forces us to cut spending that supporting key investments in education, research, security, and infrastructure without addressing our long run problems. as a former republican staff director of the senate budget committee recently put it, the sequester eats into "the c corn of the future." this hurts future generations and doesn't ease the burden of debt they will inherent. the sequester was not designed as a means to address our budgetary challenges. rather, it was agreed upon in

the contest of avoiding national default, you might recall, as a mechanism to force congress to come up with a bipartisan solution to our fiscal imbalances. the congressional super committee was supposed to come up with a bipartisan and balanced agreement. unfortunately, the super committee was unable to pass a plan even though they had the blunt instrument of the sequester as their sword as well as fast track authority. as a result, the sequester was automatically enforced and went into effect last week. these indiscriminate, across the board spending cuts pose a

threat to the ongoing recovery. you can't take $858 billion out of the federal budget in the remaining seven months of the fiscal year without hurting the economy and job growth. according to the budget office, the sequester is expected to shave 0.6% from real g.d.p. growth and lower employment by about 750,000 jobs by the end of this year. most of these lost jobs will be in the private sector as businesses feel the ripple effects of government cutbacks. now these cuts may not necessarily be felt immediately and uniformly across the country but the longer they remain in place the greater the damage will be to our economy. and they will be felt more profoundly in some areas more than others. in northern virginia, for example, it is estimated that the spending is half percent of the economy. as contracts are cut, familys will have less money to spend and that will ripple throughout

the economy. as the president said last week, the sequester is a slow grind that will intensify with every passing day. and what do we as a nation get in return for the self-inflicted wound? yes, the sequester reduces spending but because it largely bypasses mandatory spending programs and doesn't make structural reforms these cuts do little to address the primary drivers of our longer term fiscal challenges. the sequester is the anthesis of smart, balanced fiscal policy. it jep dices -- it jeopardizes the current economy when policymakers should be focused on growing our economy and investing in our nation's future. indeed bob solo warned last week that instead of reinvigorating the economy, "we're heading into an ill advised across the board austerity program." president obama has already put forward a balanced plan that would not only put an end to the sequester but also put our

country on sustainable fiscal footing for a decade. and we have already made big strides towards achieving that plan. to recap where we are as a result of the budget control act of 2011, the american taxpayer relief act of this year and earlier actions, president obama has already signed into law more than $2 1/2 trillion in deficit reduction over the next 10 years. most of this deficit reduction around $4.4 trillion is from cuts to discretionary programs. more than $600 billion in additional revenue will be raised as result of the american taxpayer relief act which was part of the fiscal cliff negotiations at the end of last year and beginning of this year. the interest savings from these spending cuts and increased revenue amount to $500 billion over 10 years. you sum this all up and you get $2 1/2 trillion towards the $4 trillion goal that we need to stabilize our finances. as a result of this legislation and our recovering economy, you can see from this next -- from this first slide and this chart that government spending is coming down relative to the size of the economy and revenues

which have fallen to their lowest point since 1950 are growing and projected to grow further. now, of course, the difference between the blue line which is spending and the red line which is revenue is the deficit here scaled relative to g.d.p., relative to the economy. this next chart shows you the size of the economy each year. you don't have to worry about baselines. this is the way i economy economists think of the deficit. how large is it in relation to the economy?

and it has fallen by 3.1 percentage points over the last three years. this is the fastest three-year pace in deficit reduction since the late 1940's as you can see in this chart. and this next chart shows c.b.o.'s projections under current law. and this shows that the deficit will continue to fall this year and next year. and then after bombing in 2015 will slowly rise to about 3.% of g.d.p. by 2022. now the c.b.o. production is under current law

which includes the sequester. this passed a very rapid deficit reduction over the next couple of years inflicts pain to the recovery and to american families. but it does not stabilize our finances. to stabilize the debt relative to the size of the economy, we need the deficit to fall below 3% and stay there. that is why we set a target of $4 trillion over the next 10 years. so we are most of the way there but we need to finish the job. and the sequester does not finish the job. in fact, it makes the job harder by slowing growth this

year and next year and distracting from the real drivers of our deficit problems providing health care costs for an aging population. president obama has offered a balanced approach to get our deficit to a sustainable level. claimsustrating to hear that the president hasn't proposed a plan to end the sequester and stabilize our finances. he has repeatedly. in fact, it's posted on the white house website. you can easily find it by googling white house and se quest tration plan.

this shows you -- sequestration plan. this shows you what they have. you can try this at home or on your laptop. if you click on the link, here's what you come up with. this is the president's last offer to speaker boehner in the fiscal cliff negotiations. the president proposed a balanced plan that stabilizes the debt relative to g.d.p., ends the sequester and strengthens the ongoing recovery. on the revenue side consistent with the administrations fiscal year 2013 budget, the president has proposed to limit itemized

reduction for the wealthiest taxpayers and to close other loopholes. this would result in savings of close to $600 billion over the next decade. last december, speaker boehner said he was open to $800 billion and then $1 trillion as part of tax reform that closed loopholes in deductions. now he says that our nation has gotten enough revenue, not a dime more. if you subtract the $600 billion in taxes that will be collected by allowing the bush tax cuts on the top 2% to expire under the atra, that would leave $400 billion based on his last offer. as far as spending cuts go, the president has proposed an additional $930 billion in spending cuts that address the main drivers of our deficit. you could see here the president has proposed health care savings of $400 billion which by the beginning of the next decade is in line with the amount proposed by the bipartisan simpson- bowles commission.

further more, the president has offered to use the super la active price index as a more accurate way of measuring cost of living expenses to federal programs. and the president has offered an additional $200 billion in discretionary spending cuts beyond those required by the budget control act. these are not easy cuts for a democratic president to propose. president obama has shown a commitment to doing the hard things that are needed to stabilize our finances, including interest savings, all of these tax changes would result in $1 trillion in deficit reduction and they would stabilize our nation's finances over the next decade in a balanced way.

the president has also proposed a temporary growth initiative of investing $50 billion towards fixing our nation's roads to support recovery in the near term. research has found that spending on maintenance of existing infrastructure has a very high return. in addition, it will help to put construction workers back to work right away. pursuing a growth agenda today is important because as we saw in the 1990's and as many countries are learning the hard way today, nothing restores fiscal balance faster than economic growth to which everyone can contribute and from which everyone can benefit. you could see from the next slide that the president's plan would reduce the deficit below that 3% of g.d.p. threshold and keep it there

through the end of the next decade. counting saved interest spending on the outlay side. the $2 1/2 trillion in deficit reduction that president obama has already signed into law is comprised of nearly three to one ratio. if the sequester remains in place, this ratio will be pushed well out of balance. our immediate and long-term deficit problems will still remain. if congress were to pass the

president's proposal, the ratio of spending cuts to the additional revenues would be brought back into a reasonable balance of 2-1 spending cuts to the additional revenue and we will have stabilized our debt and deficits relative to the size and the economy for a decade and made strides in addressing the longtime drivers of our budget deficit. let me conclude by telling a story. a long time ago, a young president called over to the council of economic advisers late one night. president kennedy's call was transferred to a young senior economist named robert solo. bob solo told me president kennedy said at the other end of the phone, "i always get the difference between fiscal policy and monetary policy. which is the one i get to control?"

solo responded the fed is responsible. he said if you get confused, think of "m" for monetary policy. the president does not have full control over fiscal policy. both houses of congress must pass legislation which the president can sign or veto. this is how our system works. president obama has made it clear that he is willing to work with the congress to find a balanced solution to our physical challenges. unlike others at the table, he did not retreat from his final offer in the fiscal cliff negotiations. he has kept on the table a balanced plan to deficit- reduction that makes responsible reform to slow the growth of health care spending for an aging population. the single biggest driver of our long-term debt. his proposal saves hundreds of

billions of dollars by getting rid of tax loopholes and deductions for the well off and well-connected. he has never said it is my way or the highway. he has kept its offer on the table in the hopes we can reach a bipartisan solution that reforms are tax code and entitlements and puts us on the sustainable fiscal course. there are many ways to reach a balanced solution. if we follow our north star of growing the economy and the middle-class, we will end up with a balanced plan that supports the economy in the near term while we take steps to adjust our long-term budget deficits. this is the ultimate test that we must apply to government policy. thank you very much. [applause]

>> we do have time for questions. please write any questions you have on cards and we will answer as many as we can. thank you very much, dr. krueger for your insightful comments. some experts say the middle- class will ultimately have to pay part of the cost of reducing the growth of our debt. you have indicated on the well- connected. can you clear up some discrepancies on those views? >> i do not think they're necessarily inconsistent. if you look at who bears the brunt of the spending cuts that have already been put in place and the president has proposed, they fall largely of middle- class families. that is one of the reasons why i think the american people think

it is fair to ask those in the top income groups to contribute more. if you look at what has happened to income inequality in the u.s., the rise in incomes and to the top 2% of americans, even after the tax increases that congress put in place by the american tax payer relief act and the loophole closings' the president has proposed after-tax income for the top 1% will still be at high levels. i do not think anyone would say the problem our economy faces now is that people like incentives to be successful. this is an example of the kind of balance the president has proposed, that the middle-class is already struggling with a lower income growth, stagnant wages and spending cuts that have already taken place. that is what i think balanced does speak to fairness. >> in the state of the union address, the president recommend increasing the minimum wage. what impact would you see on certain groups such as teenagers and part-time workers? >> the president proposed

raising the minimum wage from its current level of $7.25 to $9 an hour over the next few years. that would bring it back in terms to where it was when one reagan took office. it is a range we have seen in are not too distant past. the research is mixed on the minimum wage. i think most of it is concentrated around finding little if any fact of modern increases in minimum wage on

employment. the president's proposals were a 24% increase. in the clinton years, the minimum wage increase by 21%. that is the last time i did research personally on the minimum wage. that showed hardly an impact. i was struck by the way if you look at the igm panel of expert economists, they favor an increase in the minimum wage and split evenly on whether there would be a noticeable effect on employment. i think within the mainstream view of economics now, the minimum wage does not have much impact on employment if it is in the range we have seen historically. the economists in that survey thought that whatever affects it may have in terms of employment, would be outweighed by helping lowest income earners and those who have done the worst over the past few decades. >> you spoke about the importance of entitlement

programs. any specific measures? >> part of the president's proposal is to switch to the superlative cpi, which research suggest is a more accurate measure. partly because of substitution bias.

also because of finite sample bias. the way that cpi is constructed because of sampling at the lower level, that causes the index to slightly overstate inflation. if every price were measured as opposed to drawing a sample, we would have a lower rate of price inflation. that is one of the president's proposals that would raise about $130 billion in additional revenue. we would set aside money to help protect the most vulnerable from the switch in the index. more importantly, the president proposed $400 billion in medicare reforms. many of which have been outlined explicitly and in the past budgets. >> on the medicare, specifically raising the retirement age, increasing the deductibility overtime, and

other areas -- you point out health care is where the problem is. >> raising the age does not really solve the problem. it just shifts the burden. that does not seem like the right solution. the president has opposed raising the age and has proposed means testing. making other changes to providers so that we are spending money as effectively as possible. >> in terms of a tax loophole, would you entertain looking at a mortgage deduction and how would you address that? >> president's proposal is to limit deductions for mortgage

for state and local taxes for other deductions to 28%. right now the way the tax code works, warren buffett gets a more generous tax advantage from deducting his mortgage than his secretary does. it does not seem that warren buffett needs more help buying a house that his secretary. the administration's proposal makes a great deal of sense economically, to give the upper income groups the same tax advantage from tax expenditures as middle-class families and the or the deductible to 28%. but there are other ways. we think this makes a lot of

economic sense. we are willing to discuss ways in which we can improve the tax code and eliminate or reduce the distortions. >> we have time for one final question. where would do you see is the optimal share of gdp of revenue and tax and spending in the budget? >> i do not have a precise answer on that. i think what we want to do -- first of all, we have to recognize that because of commitments we have made as a nation to older populations and because of demographics, we face rising costs. that has been known for a long time. at the same time, i think we are ready critical point where we want to make sure we invest in research and our emperor

structure so america is a magnet for jobs. other countries, they have learned from our success. education is a good way to strengthen your economy and the are investing heavily in education and research. it is extremely important that we also reserve space in the budget for this critical investment. when businesses come to talk to us, they talk to the importance of having better temperature in the u.s. -- infrastructure in the u.s. and that will help them bring more jobs back to the u.s. i cannot give you a precise number. >> i think he would all agree we are fortunate to have someone who appreciates the importance of cost-benefit analysis. thank you very much, alan. [applause] >> thank you. >> please proceed to the luncheon, which is just a floor a way. thank you. [captioning performed by national captioning institute]

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>> house republican leaders spoke with reporters about their plan to fund the federal government through the end of september. this is 15 minutes. >> good morning. the house will pass a bill this week to keep the government and through the end of the fiscal year. spending is the problem. our goal is to cut spending. not to shut the government down. i hope this continuing resolution will find easy passage in the house and senate. a report on friday makes clear

there is no reason for the keystone pipeline to be blocked for another day. the president and the president alone stands between these tens of thousands of american jobs and more north american oil for our refineries. it is time for him to say "yes"" after four years have on the list delays, it is time to the president to stand up for a middle-class jobs. we will get that by putting the keystone pipeline under construction. >> good morning. we will train to the floor this week a continuing resolution to avoid a government shutdown. at the same time, try and reduce the level of spending here in washington. i think all of us on both sides of the aisle have said the sequester is not in the smart way of accomplishing the

reduction in spending but it seems the on the kind of reduction the president lives with because he has to. it is the law. we remain committed to continue to balance the budget and identify areas of waste. there are two americans who would not subscribe to the notion there is not some waste you could cut in washington. our committees will try to go about doing what everyone in this country has been forced to do in these tough economic times which is to tighten the belt and learn how to do more with less. clearly on the evidence of the gallup poll out lately about the president's approval rating, clearly people are tired of the political games in this town. what to see some resolution of problems. we remain committed to try to focus on resolving problems.

we remain committed to help those who are unemployed. we will bring up the skills act next week. that is a bill i think both sides can come together on and provide assistance for those who do not have the right kind of training or skills so they can act as the unfilled jobs out there in many of the industry sectors. >> as you just heard from the speaker and the leader, you heard of legislation the house is focusing on to put the country back to work. from the energy policy to eliminating waste, to a skills training to help individuals get back to work. that is the goal of the house. the challenges within washington is sometimes we have different goals than the president. one thing i have now found, the president has a total different goal for america. his goal is to bring nancy

pelosi back as speaker. on election night after winning, you think about what you want to a cheaper the next term. the president, what did he do? he called nancy pelosi. he did not call harry reid to talk about legislation. he did not call speaker boehner and say the election is over, let's work together to put america first. he called the chair to say how can we continue the political play and win back the house and put nancy back as speaker. that is not the goal of america. >> i spoke with some people who expressed their concern over the nation's spending problems. they would like a solution. they are united around the