the 2014 federal budget with treasury secretary jack lew and the acting white house budget director. later, news briefings with the john boehner and nancy pelosi. >> today house members question treasury secretary jack lew about the president's $3.8 billion budget request. he advised against steep budget cuts describing the economic recovery as fragile. this part of the house ways and means committee hearing is an hour and a half. it begins with committee chairman dave kemp of michigan.

>> good morning. the committee will come to order. well, >> morning mr. secretary, and welcome to the ways and means committee. last time you testify brd this committee it was as mr. director. please allow me to publicly do what i already said to you in private and that is congratulate you on your new post and as you're well aware, this committee has broad jurisdiction and interacts with many departments and agencies, no more important then the treasury department. as such it's my sincere hope we will be seeing a lot of each other and equally our staffs working a lot together as we move forward. mopped the front times of "the new york times" business section said lew digressed for growth in europe. i share your concerns over the

fate of the european economy but i'm troubled by the growth or lack thereof of the american economy. the simple true is far too many families are still struggling. they face higher food prices and gas prices twings prices for children. meanwhile, many had hours reduced and wages frozen. flozz cure-all but there are real achieveable policies that could help strengthen this economy and turn things around for american families. chief among those are fixing our broken, outdated and complex tax code and balancing our budget. i'm sure you will hear from mr. ryan and others on the need to balance the budget, which is the administration's budget never does so i will focus today on the tax code. america's tax code is broken. and i'm committed to working with anyone, republican or democrat, to fix it. and that's why i was encouraged the president put forward a plan to tackle a few of the challenges facing our tax code in his budget. but the simple truth is that the president's proposal isn't the real reform we need and it doesn't go nearly far enough to address the need of all job

creators. the problem with our tax code isn't how much money it makes for washington. in fact, our government is on track to double the amount of money it takes from from hard-working taxpayers over the next ten years, proving government has all of the revenue it needs. instead the problem with the tax code is it cost american families too much, too much in time, too much in money, to comply with it. mr. secretary, you know these facts. americans spend over $160 billion each year trying to navigate through the complexities of the u.s. tax code. takes the average american taxpayer 13 hours to comply with the tax code, gathering receipts, reading rules and filling out forms i.r.s. requires. and much of this is due to the fact over the last decade there have been more than 4,400 changes to the u.s. tax code. that's more than one a day. instead of reversing that trend and trying to make the tax code work for the commern people this, budget adds new levels of complexities and creates new credits in deductions.

mr. secretary, it's our zwrob make sense of the tax code and i hope you and the president can work with congress to deal real reform to the american people. our tax code needs to be genuinely user friendly. you shouldn't have to pay a professional to figure out taxes. but it's so layered in complexity, nine oust ten americans don't feel comfortable doing their own taxes. they are forced to pay a professal or buy commercial software. americans should have faith their government is taxing them effectively and efficiently. instead they fear the i.r.s. and potential being audited. our tax code needs to be fairer at a time when american families are just trying to make ends meet. we shouldn't be taking more of their money to bail out washington's inability to control spending. let's put an end to the special interest loopholes in the handouts and use that revenue to create simpler, fairer tax code that lowers rates for all americans. mr. secretary, across this country, people are sick of washington's gridlock.

that's why i will work with you, the president, republicans and democrats, to simplify and fix this broken tax code. this budget is the first step but the american people can do better then what the president's proposing here. it won't be easy but this committee, republicans and democrats, are willing and ready to do the tough work our constituents sent us here to do. we don't have to settle for the same old game of giving washington more tax pair money and calling it reform. it's been 27 years since this town cleaned up the code. it's time for us to do our job again. hard working taxpayers deserve real solutions that make our tax code simpler and fairer for every american. let's work together to accomplish that. i want to thank you again for being here and congratulations on your new job and i will now turn to ranking member levin for his opening statement. >> thank you, mr. chairman. welcome secretary lew. we have to get used to that title. since we've always known you with other titles, but mostly by

your first name. i'm tempted to ask you when is the first time you appeared before this committee? >> first time i was in this room is probably 1973 on hr-2 pension reform. >> all right. ly go on. well, we have enjoyed so much working with you in the past. only one of us i think goes back that far. and we all look forward to working with you in the days ahead. you're appearing today to discuss the administration's 2014 budget. that's why you are here. which follows those presented earlier by house republicans, house democrats and senate democrats. clearly the administration's budget reflects an effort to open up a search for some common ground.

unfortunately, this has been rebuffed in the responses of the house republican leadership. administration made clear that any search for common ground requires a balanced approach. my guess is the president has used the word balanced perhaps more than any other word for good reason. a combination of budget cuts and additional revenues. a republican approach is based on imbalance. the tax cuts the republicans pros in their budget would leave trillion revenue gap. yet they never provided specifics on how they would fill it. what we know is would almost certainly require eliminating or dramatically cutting tax revisions that had been vital to middle and low-income families, including the mortgage interest

deduction and the exclusion for employer-provided health care. their budget reaffirms their plans also to turn medicare into a voucher program. and repeal the benefit provisions, if not the revenues they propose keeping. in its budget the administration has also come forth with further ideas on business tax reform and in doing so it is highlighted while lower rates are important they must not come at the expense of critical investments that american enterprises need to thrive and to succeed. i hope that foundation in the theme of tax equity among others will guide us as we face the challenge of tax reform, tax reform based and reality, not namely on rhetoric. the imbalance in the response from house republicans is further illustrated even as we

hear today the testimony of you by their unwillingness to appoint conferees to consider the budget bills passed by the house and senate in conjunction with the administration's budget. this continued republican embrace of a budget deadlock is all the more worrisome, if i might say, as the sequester continues to unfold. and as debt ceiling once again approaches. i deed it was made all the more worrisome by the house republican hearing yesterday that focused on the debt ceiling in terms of the possibility of obligations, ur obligations all emanating from congressional actions. we cannot continue on this dangerous path. hopefully this hearing will serve a constructive opportunity to embrace a different path.

i yield back. >> thank you so much, mr. levin. again,s this my pleasure to welcome secretary jack lew back to the committee on ways and means. we look forward to your testimony. the committee received your written statement t will be made part of the formal record and secretary lew, you're recognized for five minutes. >> thank you very much, mr. chairman and thank you, mr. chairman, ranking member levin for your gracious welcome here today. it's an honor to appear and present the president's budget for next year. i sit here as chairman noted surrounded by four decades of memories of many important occasions when bipartisan cooperation has moved the country forward in the best interest of the american people. i sit here today looking forward to continuing in that tradition this year and in my current role. our economy is much stronger today then it was four years ago but we must continue to pursue policies that help create jobs and accelerate growth. since 2009 the economy has

expanded for 14 consecutive quarters. private employers added nearly 6.5 million near the past 37 months, housing market improved, consumer spending and business investment solid and exports have expanded. but every -- very tough challenges remain. while we have removed much of the reckon from the worst economic crisis since the great depression, damage left in its weak is not fully prepared. families are strill struggling. unemployment high and economic growth needs to be faster and while we made substantial progress, we must do more to put our fiscal house in order. at the same time political gridlock in washington continues to generate a separate set of head winds including harsh and discriminate spending cuts from a sequester drag on our economy and month as head if they're not replaced with sensible deficit reduction policies. this is my first opportunity to appear before you as treasury secretary and discuss from the vantage point how we need to confront difficult challenges. this is far from the first budget i worked on n my

experience good pument offers practical solutions the problems of its time. the president's budget does that by making investments that will drive a growing economy and reining in our deficits responsibly so we can replace across-the-board cuts immediately and restore fiscal stability over time. a good budget must also be grounded in reality. this budget deals squarely with the world as it is now and as it will be in the future. it reflects the need for compromise to have a path that could command bipartisan support and recognizes issues of major consequence like the fact our demographics are shifting. with the baby boom, number of retirees is growing. like the fact millions of americans are living in poverty today. like wages and income for middle class americans have not improved for more than a decade. that despite significant strides through affordable care act, health care spending remains key driver of long-term deficits. this budget is animated by the simple notion can and must do two things at once.

strengthen recovery in the near term bereducing deficit and debt over immediate long term. this is the president's longstand ago approach to fiscal policy and when you compare the trajectory of our economic recovery with those of other developed countries in recent years, it's clear why the president remains so committed to this path. as chairman noted, i returned from meetings in europe and it's clear demunts where austerity measures were implemented too quickly, those economies have stumbled. ours is a different story. notwithstanding need to do more, our economy continues to expand with the support of growth-oriented economic policies, even as we make meaningful progress to reduce the deficit. it's important to bear in mind how meaningful progress has been. in the last few years the president and congress has come together to hammer out historic agreement that substantially cut spending and modestly raise revenue . when you combine these with savings from interest we locked in more than 2.5 trillion of deficit reduction over the next 10 years and today putting forward policies that lower the budget doffs below 2% of gp and

bring down the national debt relative to the size of the commofere 10 years. we restore the nation's long-term fiscal health by cutting spending and closing tax loopholes. the budget achieves balanced approach through specific steps such as reforming agriculture subsidies and eliminating tax preferences for company that's move operations and jobs overseas. at the same time the budget incorporates all elements in the administration's offer to speaker bane are last december -- speaker boehner lapt december. demonstrating staying at the table and make difficult choices in staying that ground. the president would not normally put forward such as means testing through medicare premiums and adopting more accurate and less generous measure of inflation. it includes these proposals only so we with come together around a complete and comprehensive package to shrink the deficit by an additional $1.8 trillion over 10 years and remove uncertainty

that has dragged on job creation. this does not represent the starting point for negotiations. it represents pair balance between tough entitlement savings and additional revenues from those with the greatest income. the two cannot be separated and were not separated last december when we were close to a bipartisan agreement. this budget provides achieveable solutions to our fiscal problems but as crucial as these solutions are, we have to do more than focus on deficit and debt. i know the significance of balancing the budget. i will not take a back seat anyone when it comes to fiscal responsibility. under president clinton i helped negotiate the groundbreaking agreement with congress to balance the budge. as director of o.m.b. i oversaw three budget surpluses in a row and worked with many on the left and right on our plans to pay off our debt. it will come as no surprise i was profoundly disappointed to see those surpluses squandered. that does not mean we should make deficit reduction are one and only priority, not when the world demands we confront fiscal challenges and make targeted investments to propel

broad-based growth. so this budget lays out initiatives to fuel our economy now and well into the future. every one of these initiative is paid for in our deficit reduction package, meaning they do not add a time to the deficit. as the president explains in the state of the union, the surest path to long-term prosperity is strengthen the middle class. this budget does that by zeroing in on three things, bringing more jobs to our shores, making sure american workers have skills needed to do those jobs and making sure hard work amounts to decent living. to generate more jobs in the united states, we focus on growing our economy by making it more compel tive. the budget launches advanced manufacturing hubs around the country, invests in research and technology and cuts red trape to expand domestic energy production including clean energy and natural gas. it also puts people to work right away, preparing tee dear rating roads, railways, bridgets and airports so our economy can compete in the future. we made considerable headway over the last few years to improve education and worker training and can go further by helping students acquire skills

today's economy demands. that means joining with w states to give every child solid preschool education, reconfiguring high school so students can get high-tech, highway skills businesses it needs and it means making college more affordable. finally, budget would help lift communities hit the worst by the recession and adjust minimum wage so the full-time workers are not stuck in poverty. the proposal i just outlined are part of the president's framework for growing our economy and cutting our deficits. as the budget shows, we do not have to choose between the two and we must not. we can adopt a powerful jobs and growth plan as we embrace tough reforms to stabilize finances. this is the way a budget will make our economy stronger and help create job u.s. now and in the future brfment i close, i want to say the debate we're engaged in is very important. it's part of a complex sorting out prossstheas will determine our nation's future. but every on this committee knows the path before us will be a struggle. it will require difficult decision that's will directly affect daily lives of millions

of americans, entrepreneurs, immigrants, soldiers, veterans, young, elderly, working poor convenient well off and it matters we get this right w that in mind i come here today optimistic about what we can accomplish. i believe we can find common ground to stop the unnecessary standoffs and manufacture crises. we can come together to forth an agreement to right our fiscal ship and make compromises necessary to meet our obligations to future generations. thank you, mr. chairman. i look forward to answering your questions. >> thank you, mr. secretary. i'm interested in making the tax code work for families instead of special interests here in washington. and i'm interested in fixing this tax code so families struggling to get by and maybe save a little for college education can do so and this budget talks about reforming the tax code for corporate america but it doesn't talk about reforming it for family and individuals. i think we can do better. frarge, there are 15 different tax breaks for higher education,

including 9 for current expenses, 2 for past expenses, 4 for future expenses. the i.r.s. publication on tax benefits for education is 90 pages long. this sent a tax code designed for working families. it's a tax code designed to make money for accountants and tax planners. don't you think we should make sense and help working families? >> mr. chairman, i totally agree. the president's budget has in the past called for 0 individual tax reform as well. the president laid out principles to guide that. i think that the idea of tax simplification, broadening the base is very important. the president's put it into context of a fiscal plan where i think we have a number of objective that's have to be achieved at the same time. we've got to get our fiscal house in order as part of that, we need to raise more revenue and we think the tax reform ought to produce that ability to raise revenues, simplify tax code and make it so ordinary

people don't need to have complicated hours-long processes or go to accountants for simple tax forms. i participated in 1986 in tax reform. i know how hard it is to do. i look forward to working with you on a bipartisan basis to get that done. >> i was pleased to see the administration taking more concrete steps towards tax reform in this budget. again, like forward to working with you and the president to make the code simpler and fairer for families and individuals and to help strengthen the economy . when i talk to middle class americans in michigan back home in my district, their frustrated by the current state of the tax code and rightly so. they don't understand the complexity. may not know there are 4,400 changes over the last decade but certainly they know that there's been a lot of them. it seems unfair to me that the tax code forces americans to spend over $160 billion to comply and 6 billion hours,

almost 13 hours per person, average taxpayer. every year complying with the code is more expensive, more costly. particularly when you look at very tight margins small businesses are on. this is a huge cost to them and frankly it should be their time and money, not the i.r.s.'s. commind the administration for proposing revenue-neutral tax reform in the bill. but again don't you think individuals and families deserve a tax reform that makes the code simpler and fairer for them, too? >> mr. chairman, i believe we need to do both individual and business tax reform. and in the context of overall tax reform to be clear, we do not think it can be revenue neutral. we think there needs to be additional revenue to help get our fiscal house in order and budget calls for $508 billion of additional revenue. on the business side, our goal has been very clear. could not agree with you more. we need to really go at all of

the special provisions. deductions, credits that complicate the business tax system. we need to enable ourselves to lower rates so statutory rate could be more competitive with the rest of the world. our goal is business tax reform is really to stimulate economic growth and job creation. i don't believe 2 can be separated from overall tax reform. i think if you look at the decisions small businesses make, even how to organize, whether to be partnership or corporation, it meaks a big difference what their relative treatment in the individual and business tax systems are. so intellectually one ha to look at it as a hole. i think this is a big challenge. this is something that will require democrats and republicans standing shoulder to shoulder because every one of the provisions we would eliminate to broaden the base has people and business that's support it. and that's a process that can only be done through bipartisan

cooperation. >> thank you. mr. levin. >> thank you. when you look at business tax reform, the president's budget suggests we need month main ten certain provision that's relate to manufacturing and entrepreneurship. but i want to focus, mr. secretary, on the gridlock in washington today. you're the treasury secretary. and what the consequences are. so just briefly i want to start with the sequester. are you concerned? >> congressman, i think the sequester is very bad policy. it was designed to be bad policy to motivate both sides to come up with a more sensible plan to achieve deficit reduction. i think one thing we can be sure

of when you go out of your way to design bad policy, you can produce bad policy. the effect of the sequester is not anything anyone should choose. senseless a. cross-the-board cuts. at a time when we should be worrying about growing the economy, it takes roughly half of the g.d.p. growth out of the economy. it's not good policy in terms of impact of individual cuts and is not good policy in terms of overall impact on the economy. i do believe we need to have a long-term sensible path of deficit reduction. president's budget reflects that. it has to be balanced. there has to be shared sacrifice. sooner we do it the better. i think if you look at the series of deadlocks we had over the last few years, each one has led to loss of confidence in the economy. each one has caused individuals and businesses making decisions on whether to invest and grow businesses and hire to worry about is government going to cause head winds that made that

not the right time to make an investment decision. i think government should be helping, notting, in the economic recovery and replacing the see quess electric with a sensible balanced plan would do that. >> it should be done now? >> sooner the better. we don't have an economic emergency in terms of the deficit right now. our budge makes clear we need to be on a path over the next ten years not -- the cuts this year are not what matters so much as reliable path over ten years. the sooner we get the sequester out of the way, sooner the economy will be relieved of the burden of that half percent cut in g.d.p. and sooner programs people depend on will get back to normal. >> let me ask you about another piece of this gridlock, the debt ceiling. it's going to once again be bumped into. and there was a hearing yesterday about prioritization to the debts we pay. could you give us the administration's view on how we

handle the debt ceiling? >> congressman, i think the president's been clear there's no choice but for congress to extend the debt limit. the debt limit does not commit any new spending. all of the debt limit does is permit the government to pay bills congress authorized to be enoccurred and from the beginning of our industry, use always paid its bills. so there's no way to pick and choose about paying bills without being in default on one or another obligation. so the only answer is extend the debt limit, which is what we expect congress will do. >> lastly you referred to growth and there was some reference to your trip to europe. and your concern expressed there about their continued, i think at times rigid embrace of austerity. so say why there's a major jobs component within the president's budget?

>> i think if you look at the experience we had in the united states and compare it to europe, we had a stronger recovery because we have got our financial system under control, we put measures 234 place quickly to deal with the depths of the recession and we have done our fiscal consolidation, our deficit reduction over time. i think that that's a proven path. it's something we're experiencing growth that's too low and growth in jobs that's too slow. but it's much better then the general experience in europe and in much of the world. i think we need to grow the economy, create jobs and get our fiscal house in order and that's a message i brought with me in the meetings i had earlier this week. i think there's a softening in some sense in europe. they started out a couple years ago not worried about the impact of very high unemployment as much as we thought they should be. i think there is a growing concern in europe that it is a serious structural problem.

we start out with that understanding in the united states. we think 7 1/2 sprs a high unemployment rate. double-digit unemployment rates are unthinkable and you have to have policies to deal with it. >> thank you. >> mr. johnson's recognized. >> thank you, mr. chairman. mr. secretary, i realize your time constraint, so some of these questions i would just like you to answer yes or no if you don't mind. with respect to securing social security's future n. his book surprise," le retirement expert said if we fail to act we threaten the prosperity of younger generations, a prospect your former boss, president clinton, said would be horribly wrong and unfair. and i appreciated that comment. that was 15 years ago though. and that said i'm encouraged that the president's budget took favorite step towards protecting social security for today's workers by including the chained

consumer price index to calculate the annual cost of living adjustment. is this -- do you think this is a more accurate way of measuring inflation? >> i think as i indicated in my opening comments, congressman, it is something we're prepared to do as part of a balanced deficit reduction package. technically, it can be justified. but it does have an impact in terms of reducing rates of increase -- >> long term, yes. i hear a lot of talk from aarp and others using the chain c.p.i. benefits, benefits, is that true? and i think it does. >> i'm sorry, i didn't understand that question. >> they think the chain c.p.i. cuts benefits. is that true? >> reduces the rate of growth in the cost of living increases by about .3 of a point. >> basic benefits are not cut. >> underlying benefits are not cut. >> right. >> benefits still grow each year that there is inflation.

>> there's no doubt that we have not supported any measure that would cut the basic benefit but i don't want to be misunderstood. a reduction in the rate of growth as an impact and it's something very significant and i appreciate your recognizing that your >> long term by just 10%. does the president plan to close the remaining 90% gap or is he going to pass the bill to our grandkids and is he serious about fixing social security? >> the president has made it clear he wants to work with congress on a long-term plan and . ke scorblee security sound i think it is important for all of us to remember that in dealing with social security, the fundamental goal has to be

protecting scorblee security and --ting it our of -- scorblee social security and getting it -- >> i agree with you. that hearing will focus on the changed consumer price index, eliminating double-dipping. i'm deeply troubled that the president's budget includes no proposal to prevent the 21% cross the board cut that the beneficiaries face in 2016. that is just three years from now. they have held several committees on the program and i hope you work with us to secure the safety of that safety net. someone can receive unemployment

and social concert at the same time. i don't see how someone can work and be unable to work due to disability. so i'm going introduce a bill to stop them from receiving benefits at the same time as receiving disability benefits. i look forward to getting this bill signed into the law. i yield back, mr. chairman. >> thank you. >> thank you, mr. chairman. congratulations, mr. secretary. in new york, we live in two different worlds. we have the world of wealth and riches then we have the inner cities of poverty and eas pair. i can't believe at a time of a national crisis that those who

are doing so well are protected and those who are not doing well at all -- with all due respect to the president's calculating of the chained c.p.i. the be available would under the system would be reduced. we're living at time where the stock market is now at an all time high, is that correct? >> it has been, yes. >> would that not apply to the incomes of the chief skeffs offices. it is true they are getting paid million opposite dollars for the work they are doing? would know this better than most people? >> i don't follow the day-to-day -- >> i know. but generally speaking for the corporate leader and the holder of the economy to receive $2 million or $3 million it does

not raise any eyebrows. it seems to me when we take a look at the republicans' budget that would indicate at a time through all of this crisis we find unemployment going down. we still find increases in employment that this is the time to stop sending. now is the time to cut federal programs. cutting doesn't mean you're saving money. but at a time we're trying to cut back with the economy, that world that you spent a little time in, the private sector, where are their voices? if these people are not working, have no disposal income and small business can't sell, where are they? they are not complaining about a tax increase but they are not involving themselves in trying to resolve this issue that we found ourselves in.

i don't know what happens when you get out there, but do you hear from the private sector in terms of how we can break this gridlock? >> congressman, i have to say in the debate we had in the end of the year last year, i had a number of c.e.o.'s tell me that we should have the rate increases that went into effect. it was not that they weren't opposing it, they were more comfortable having the issue resolved because they were embarrassed about whether or not they could afford the tax rate that was enacted in january. i think, you know, going forward, it is going to be very important for the business community to stand up for the balanced approach we're talking a. they care about the end result, which is having the deficit and debt be sustainable and they care about economic growth. we're making the case for the budget in every sector that we

can, including in the business world. i think the underlying problem that you identified is what central that drives our budget. the disparity of income in this crun is a real problem. >> when we talk about increasing the minimum wage, the private sector's voices is heard so loud it is deafening if the people in the lowest income gets an increase in the minimum wage. i don't know what my republican reegs -- colleagues get so much income and they are willing to make some sacrifice to the good of the nation and they don't know how to communicate this. this is unblievable. with all the money they spend, the people in the middle of my district they don't have people to come down here to protect their interests. not even a fair, equitable way

we're going to figure out thousand cut money from them with social security. having said that, do you responed when people tell you that the president is right, we should be paying more? >> i think we heard quite a lot from the business community at the end of the year supporting the balanced approach that we're proposing. i think they are confused by the budget debate in washington these days. when i talk to the business leaders they don't know if there is a chance of a bipartisan agreement. one of the things that the president's budget is saying is there is space for a budget agreement. i hope that will invite those who care to causm the sidelines. >> do you think -- >> time is expired. >> mr. brady is recognized. >> it is not encouraged that big business leaders are willing to raise taxes on small businesses on america.

not a courageous move by any measure. this budget is not fair to taxpayers. the president's budget never has to balance, washington never has to live within its means. it is not fair to seniors that the president refuses to save social security and medicare for the seniors rather than attach all of these unrelated pro visions that has nothing to do with those programs. it is not fair for those who can't find a breadwinner in their family because this recovery has been the weakest in modern times. we're missing four million jobs because of the growth gap is getting bigger. food stamps, since the recession bottomed out, americans are more likely to be forced to the food stamp line than to walk into a company that has offered them a new job. in those who have given up hope

and dropped out of the work force, we've gone backwards to jimmy keart days. don't think this budget is -- carter days. i don't think this budget is fair to them. looking towards those areas where there might be common ground, tax reform and saving social security and medicare, i think there is a path forward. i don't think we should close loopholes so the government can spend more, i think we need to close them so we can lower taxes for everyone, small businesses, big businesses, and families. i want to welcome you back to the committee and i appreciate you the work you've done in the past. i think you can bring the valuable work ethic to this whole effort. will you commit to sitting down with republicans today, starting -- broken the brork

tax code this year? >> we're working to provide technical support for the house and senate as you do your work. >> so you, mr. secretary, as the point man for the president on tax reform are you willing to sit at the table and finish fundamental tax reform this year? >> in the context of our overall fiscal plan. we have a disagreement on whether or not we need to raise revenue. that is a legitimate disagreement. we have to work our way through that. in the context of a fiscal plan that solves our deficit problem we want to engage on a tax reform. >> is that a closer to a yes that you will come to the table or closer to a no? >> i've always been prepared to talk and i remain prepared to talk. i can't pay over what is the significant difference. >> the question isn't that there

are differences. the question is whether l you commit to coming to the table to resolve the differences? >> we've always been prepared to talk to this committee eastern committees about the important business before us. there is nothing more important than getting our fiscal house in order and part of that the tax reform is a very, very important part. >> could you be more vague at this point? second question, will you commit to fixing the broken tax code for families and small businesses as well as big businesses? >> again, as i responded earlier, we're very much supportive of both individual and business tax reform. we would like to work with you to do that this year. >> so you're point -- the white house' point is we should not do corporate tax reform alone but we need authentic tax reform for small businesses and families as

well? >> small businesses have to make the decision whether they organize under the corporate tax laws or the individual tax laws. i don't know how we create a situation where they can make a sensible decision if we don't deal with -- >> but the government's role is not to take businesses how they organize. >> no, not at all up. >> so many file as individuals. so my question is simple. will you commit to fix tax reforms for small businesses as well as big businesses? >> small businesses make their own decisions on how to organize. ne of the way they do -- the reasons they file as individuals because of the tax rate is so high. >> will you commit to saving social security and medicare for its own sake? >> i have 40 years believed in those programs.

>> time has expired. >> thank you, mr. chairman. we've been buried in a tsunami of propaganda here is there is too much spending and not enough tax relief from the people at the top. hendrix smith of "the new york times" wrote a book on who stole the american dream. he chronicles the process by which we've done that. in the process, over the 30 years, the middle-class has been hollowed out. their incomes have been stagnate, their job prospects are diminished, and their retirement is less secure. under reagan, with the disasterous cuts that favored the wealthy, it never trickled down on the rest of the country.

reagan introduced a trend of emptying out the middle-class's pockets. 401k were pop youized and pensions were ended for many people in the country. so retirement for many americans s deeply, deeply under funded. along with the reagan creation of the sub prime high interest rate housing loans that started -- to the disasterous a disaster of 2007. the bush tax cuts gave a big chunk of the deficits. now in this country, if you play by the rules and work hard you're running in place. you're not getting ahead and you know your kids are not going to do as well as you did. that is what the american people think today. there are some stuff in this budget that i like.

there's investment in the future. in the infrastructure bank, money to end the sequester, i worry about our health care history in the long run if we don't continue to invest at the national institutes of health. people get p.h.d., we don't make the advances. we allow singapore and other countries to take it away from us. the whole question of investment gets lost in all this talk about corporate tax reform. we lore the rates on corporate taxes, we come down to 15% on capital gains, where are we? the middle-class is being destroyed in this country. what i want you to do is imagine we're a bunch of workers from ohio. we're out of work for a year. what would you say about this budget that would be aimed at

letting them understand that the president is charting a new course to save the middle-class, which they feel is being crushed. they can't educate their kids, they are losing their houses, they haven't been working for a year and they are looking for some hope. >> congressman, i would say there is much in this budget that i would point to that to the working family. from the commitment to education from early childhood to higher education to make sure every child has a chance to have the skills to compete in the economy that they are going to grow up into. >> that's a long term thing. >> it starts away. >> something that they can see tomorrow. >> for the early childhood education starts right away. we can't ask them when they are 22 to see if they have the skills they need. i can make the case on infrastructure on so many levels. when i talk to c.e.o.'s one of the first thing they say to me is we're worried about our

infrastructure. ur roads, bridges, we're not going to exet -- compete in the 21st century. >> but our republican colleagues resisted almost all of the president's efforts in the infrastructure creation a couple of years ago. explain to me how you're going finance it and how it can work. how can it work? >> it has to be in an overall fiscal plan. in the long term -- the medium and long term to bring our debt and deficit under control. our budget makes clear that if you make the tough decisions you can afford to do that. in addition of what we're doing in this budget, we're ending a second war. with doing that, we're freeing up resources. as we end the war in afghanistan we need to invest here at home. as we tend war in iraq we need

to invest here at home. we need to invest in building our economy and creating jobs today. >> all right, thank you. >> growing up from a working family in ohio, my colleague is trying to engage me here in a dialogue but i'm notice going to take the bait. but back in 2010, mr. lahood pposed to a gas tax opposed to infrastructure. but i'm not going to go there. thank you. 'm going to be in a learning mood here. first question i have for you is -- you may not know the answer but if you can have your staff get back to me. it has come to my attention from folks in ohio, that the i.r.s. ticket ng to impose a tax on transportations of people

in the area for management services. they are re-enter prettying a law that was passed during the nixon administration. my understanding is that if you ook at this, they are ledge -- legislating and overstepping as an authority agency. the tax has been due all along. does all along mean since 1970? i don't know. i'm concerned about it. would like to have your staff maybe communicate with us on what you believe the i.r.s. is doing and if it is correct. >> i would be happy to look at it. >> thank you. i don't want to put you on the spot but it is an important jobs issue, not just ohio but all

over. i, along with my colleague -- who i don't think is here, creating a group on retirement savings. there appears there is a pro vision, that i would like to know more about and it deals with retirement savings. it deals with, appears capping the amount of dollar that an individual can have in a retirement account -- in terms of tax benefit and it appears e caps the revenue stream at $205,000, accumulatively at $300,000. i'm trying to learn, i'm not being critical. thinking back to my own t.s.p., which did not have $3 million in it. but thinking about what happened in 2007, between 2007 and the

it f 2008, and i'm sure represented -- my account represented what happened to most every american, based on the stock mark collapse in 2008. it significantly went down. so if you're 58 years old and you're not retiring for 10 years. your stock market is high and you have $2.9 million. do you stop saving to avoid this for retirement? do you worry about, well, is the market going to go way up or could it go way down? it could go from $2.9 million to $1.9 million in a matter of months based on what we saw. how do we, include me in this, how do we administrate a program like this to make sure it is done without any penalties being

created or encouraging people to take an early withdrawal to avoid a penalty to go over the $3 million? just thinking of where this is coming from in terms of the administrating it. i'm concerned about those impacts. >> congressman, retirement savings is a hugely important issue. for the average working family, unfortunately, retirement $50,000-$70,000 than the $3 million. for the average working family they are so far from the $3 million mark they are probably wondering what we're talking about. >> i get it. but what our task force is up here is to try to encourage everybody to be self-sufficient. what i don't want to do as a

policymaker send the message that we're going to go after someone who is trying to be self-sufficient and create a trap or penalty for them. i'm trying to figure out how do we administer that? >> we have, for a long time look at how we can encourage people to save. a simple behavioral change, which we think would improve the people saving early and through their careers. the provision here reflects a judgment that should be tax incentives up to a certain point but beyond that we encourage people to save beyond that. the tax incentives have to be looked at it in the context of the tradeoffs. to save for your retirement with tax benefits a limit of $3 million seemed like a reasonable place to draw the line so we're encouraging the vast majority of americans to save as much as

they possibly can. >> time has expired. >> thank you. >> mr. lewis is recognized. >> thank you, mr. chairman. welcome mr. secretary. i want to take an opportunity to thank you for your many years of service, not just to the congress but to our country. >> thank you. >> mr. secretary, the unemployment rate in the city of atlanta is at 8%. as you can guess, many people in my district, like people around our country, are very much focused on jobs. since first being elected president obama made it very clear that we need to invest in jobs and job creation. could you tell us how this budget reflects the administration's continued efforts to create jobs to help people get back to work?

>> congressman lewis, thank you for your kind comments. this budget is all about growing the economy and creating jobs. in a macro sense, it is about taking the steps that we need to this year and over the next few years that we have the best environment for job creation that we can produce. that is getting our fiscal house in order and providing support that we need that we have educated workers, we have an infrastructure that is sound and we need to get started with that right away. we have incentives for manufacturing. we have tax proposals that would encourage investment in the united states and not the shipping of jobs overseas. i think overall, if there's a single theme that ties this budget together, it's about being able to say we're doing exactly what you're asking. we haval path for economic growth, we have a path for job creation. we have tools in place to make

that happen today and in the future. >> mr. secretary, in spite of all the problems that we face in our country during the past few years, some people have done very well and others have been left out and left behind. can you tell us what is in the budget that is going to help those who have been left out and left behind? >> i think the disparity of income in this country is a very significant problem. we have to deal with it at both ends. we have to deal with it at the with those who are struggling by creating the ladder to get the ability to get the education they need and get the skills for the jobs they deserve. when they work, we need to make sure they get a living wage. anyone who works full time should billion above poverty. at the high-end, we need to make sure as we put in place the

policies that will put our fiscal house in order that we raise revenues for those who can afford it because they have the greatest income. this is a budget that doesn't fix a problem that has been dex , it does notmaking fix it instant today youly. >> thank you very much. i'm going to go 2:1. so you're recognized for five minutes. >> my sub committee on human resources will be holding a hearing next week on unemployment insurance. so i want to focus on -- i have one question related to unemployment insurance but also i want to use it as an example of a comment you made earlier that people, absoluting

corporations and small businesses are confused about the budget and our process here. and also, the lack of understanding what is going on. >> i think that is something we can all agree on. >> including myself. i have two documents that probably creates a little bit of confusion. first a document from the white house and then i have a document from the department of treasury. these seem to be in conflict to me. so the president's budget has a proposal that would more than double the wage base, which federal unemployment taxes are applied from $7,000 to $15,000, correct? >> correct. >> all displayed in our budget documents this would increase revenue by $51 billion over 10 years. i know these tax increases would take the form of higher federal and state payroll taxes, which in my opinion are taxes on jobs.

my question is this, why do you think a summery document prepared by the white house says that same policy strengthening the solvency of the unemployment insurance trust fund reduces spending by $50 billion? conk flict ify this for myself, the rest of the folks in the room and the people? >> i have to take a look at those two charts. i don't want to be familiar with the comparison and i could not read it from this distance. the policy on unemployment insurance is one that the administration hazard vow kated for a number of years. $7,000-$15,000 increase is that a tax hike? >> the rate -- >> what is your opinion?

>> the rate doesn't change. it puts in place -- right now we have -- >> does it increase taxes, yes or no? >> it increases the base of the income -- >> i just want a yes or no. does it increase taxes? >> it pays for an unemployment program that is not properly funded. i think the reason for the confusion -- >> by raising taxes? >> it raises it to the reagan levels. >> by raising taxes. but it says it is -- i'm confused. i can look forward to an answer that will share fie this for me? >> -- clarify this for me? >> i am help to get back to you. >> you've used the term "getting our fiscal house in order" several times today. what does that mean to you? >> our challenge that we face is get our budget on the path to have the deficit and the debt at

a percentage that is sustainable, which means the economy is growing faster -- >> what percentage would you say that would be? >> our budget gets the deficit less than 2%. >> but your budget doesn't balance? >> you asked me a different question. >> but does -- >> it does balance, not in the 10 year window. it balances quite a ways out. the challenge of balancing the budget -- >> the budget does not balance within 10 years? >> no. >> can you explain to me -- i want to be in a learning mode like my friend from ohio. can you explain to me and the folks around the country, why -- it's so important for families to balance their checkbook, balance their budget, they did not see a deficit an emergency ahead but they lost their homes. but the federal government

doesn't have to balance their budget and they continue to spend, you don't see an emergency don't the road with the deficit? >> congressman -- >> people are trying to to understand this at home. >> i spent most of my time balancing a budget and creating a surplus. i also know that in the period before president obama -- >> why is it important for people at homes to balance their budget but it is not important for the federal government to balance their budget? >> i can't -- >> that's what people don't understand. my time has expired. >> i can spond very briefly to that question? >> yes. >> family and governments are in different positions. governments around the world are measured by the standard of whether or not they can afford to service the debt they have under taken. the measures that are used to see if they can afford it is in

their budgets and if they can meet them. we need to be on a long-term ath to have more deficit balanced. but you can do more damage by doing it quicker. >> the president's budget requires an increase for the department of treasury in its programs, this includes $1 billion annual increase for the i.r.s. budget. you know, we found information just a few weeks ago about an i.r.s. studio -- production studio "star trek" videos, things of that nature. as the economy continues to sputter, families across america are having to make deep, painful cuts in their own household budgets. at the same time, we're borrowing a lot of money.

're borrowing for every $1 spent, 60 crentses is borrowed. is there any other cuts that you can put forward other than what is in this budget? is he bulk of the increases really an i.r.s. enforcement. one of the zpwoles to make sure livelyax laws are effect enforced and there's an understanding that if you don't -- >> i fully understand that. at the same time, we're concerned about the i.r.s. wants more resources, yet we see obvious waste on the other hand. >> congressman, i'm aware of the situation you're describing. i think we made clear that actions have been taken to make ure that doesn't happen again.

across government is a need -- i agree with you, tighten our belt and not do things that don't look like they make sense. i september at lot of time going that across the government. i will continue to do that as secretary of the treasury. i don't think it is right to not have i.r.s. agents on the job. >> i understand the reason for enforcement. -- the need for enforcement. my question is, is there other portions where we can have cuts. what about this production studio, it costs like $4 million a year. are there others? >> we're taking a look at that particular item. i would point out that, you know, one of the things we do is to try to control cost in the government is do more business remotely and not have people travel when they don't need fop

one way you do it remotely is through video. we have to be careful that we don't cut off the way to do our job more efficiently. i don't think you would want every meeting to be in person when you can sit in a studio. >> i understand that but we're going top continue to look at the oversight to make sure the dollars is being used properly. you mentioned growth quite often. mr. brady was asking questions about our views on tax reforms versus what we see from the administration and the budget proposal. one of the things i get concerned about is an proposal where certain pockets of money in the forms of tax provisions get pulled out to increase spending rather than looking at tax reform. historic do have an opportunity to look at everything, with the idea of

providing es and america competitiveness. the impact of this is going to be pretty strong in oil and gas export production. in a time we're seeing shale gas revolution, if this gets put in place without tax reduction, i think you're going to kill the shale revolution with job growth and exports. so there's a little bit of inconsistency here. i urge you reconsider in the administration and working with us on real tax reform. lowering rates and really focusing on america competitiveness. >> as i said earlier, i think there is a common goal to broaden the base and lore

business tax rates. i think we have a thriving industry now in the shale area. i think the incentives were put in place for an oil industry were not what they need to do to thrive. we should work together on this as we go forward. >> on the transportation bill passed last year, there was language about reporting on the land for our ports and drudging. i would respond to me in writing on that issue. >> i resolved when i came in partisan response but the last two speakers caused me to state an obvious fact that our republican colleagues are always in fact to balance the budget when there's a democratic president. they did not say anything during the proceeding eight years. i think that bears noting as

well. the ou're d.n.a. is in legislative branch of the government. you worked for the only president who balanced the budget four times since the end of world war ii. you understand how this is done. i think that ought to be acknowledged as well today. in february, you raised concerns of the department of treasure raised concerns about a e.u. proposal about a tax in 11 eurozone countries. in its current form that will harm u.s. investors. it is more and more likely that more eurozone countries will implement a broad based f.t.t. next year. is tax is designed to have a brord global reach.

broad global reach. can you tell us what they are doing to protect the u.s. investors and paut us on your conversations as you travel to europe? >> we made a different decision as many others in europe are making. we have a financial responsibility fee that has been in our budget. we think that is a better way to raise revenue from financial service side. we have made that point at both here and conversations overseas. i think the design element that you're describing is a troubling one. what other countries decide to do in their borders is their business. it is not an acceptable policy from our perspective for other countries to create a tax that has an extra territorial reach

and would levy a on a transaction in the united states. when i had my meetings earlier this week i made that point very number of europe combran officials making it clear that we found that to be unacceptable and we almost continue to make that clear. so we're engaged with them, they understand our view. we will continue to do so. >> thank you. mr. secretary, i'm pleased you included the bill that i worked on for many, many years. so it takes time to get these things done but the proposal, i ink it is greatly positioned to help the problems that were

raised. i'm still waiting for a republican to sign on my bill. it is broad bipartisan consensus that will speak to these issues. >> i think the proposal is a very good idea. it is something that doesn't require that anyone participate in an i.r.a. it just shifts the decision point, do you opt in or opt out? we think if you make it an opt out, there's a lot of people who do not start saving early in their careers who will do so. if you save when your 24, 25 all e way through you build up a more substantial nest egg. you can't catch up for the years that you were out of retirement savings. it is a good idea. we continue to advocate. maybe it will have the ability to be given serious

consideration. >> the other part of the proposal that has particular appeal, i think insurance agents and credit unions, they would like the opportunity with the potential to expand business down the road to sell that concept. another word of thanks on the savers credit. that is important to me and i've worked on that will for years and i'm pleased to see that you paid attention to that in the budget. thank you. >> thank you, mr. secretary. you said something in your opening statement that i -- that jarred me. i wanted to confirm that you used this language because it seemed inconsist went the other themes. during the opening statement you laid out a theme of, look, i'm jack lew, i have this experience and bagged on a bipartisan basis and i've been successful in other tasks to bring groups

together. that is something we admire and aspire to. >> thank you. >> that bipartisan language is in contrast, it seems to me with this statement, you said it is important to note that this framework, the white house frames work does not represent the starting point for negotiations. so here's the challenge. it's very declarative it sounds like there is a revelation that you've had and you're making a declarative statement, this is a precondition for negotiations? > no, that is not what i said. >> so what do you mean -- >> sure i'm happy -- >> it is important to note that this framework does not represent the starting point for negotiations. >> i think the last two and half years represented a lot of movement.

we're not at the beginning of the process. this budget reflects where the president was after two years of negotiation. in december, we were, perhaps one or two turns of a wheel away from an agreement. it did not come together, that doesn't mean we shouldn't keep trying to. what i was saying is it would be counterproductive to treat this as a beginning of the conversation as the two last years did not happen. we're asking for others to do hard things. >> at the end of the year the president was making the argument around protecting middle-class taxpayers from a tax hike. since we both agree on that, let's take them off the table and, you remember that argument. it was a successful argument. what is different about that argue with the notion if there

is consensus on both sides of the aisle with your proposaled changes on social security and why not move with the same approach and with the same goal? >> look, i think they are different policies. >> why? brord bipartisan agreement that middle-class taxpayers do not pay higher taxes. we're not saying we want to raise the changed c.p.i. issue. we're saying that we're prepared to do something very hard and to solve our deficit problems we would do it. it is different. we all wanted to prevent taxes from going up on middle-class workers. i'm not going to sit here and say i want to do the chained c.p.i. we might need to but i sat through meetings where i heard leaders on your side that chained c. pifment has to be part of the budget agreement. the president put that in because he would like to reach

an a bipartisan agreement but it has to be connected in solving the whole problem, including the revenue. >> the long term discussion on medicare gets everybody's attention. yet, your predecessor gave a presentation to the house budget committee, february of last year -- it was one of those moments of clarity when he said, look, we don't have a long-term proposal. all we know is we don't like yours. meaning the house budget prormse. that was his language, not mine. you're basically doing the same thing now as it relates to medicare, isn't that right? at the end of office when the president leaves in 2017, according to the trustees. they say this so centuryvy goes out another seven years after your time in office. isn't that the same thing that secretary geithner was doing? >> i'm not familiar -- >> i will get it to you.

>> i will describe your policy in my own words, which is since the enactment of the affordable care act we have seen a reduction in the spending. we'll see more. he put in income-related provisions -- >> that is all well and good but the trustees say 2024, right? >> the president said many times we have more work to do after but this is no reason not to do it now. we probably don't -- >> do what? >> time has expired. the policies that the president proposes. >> thank you, mr. chairman. thank you, mr. secretary for testifying today. i want to focus on your comments regarding the issue and you state in our testimony on page five that the president's budget increases spending for aren't&d

investment. how does this budget propose to do that? >> this is the first year where i wasn't responsible for the accounts. so i have to defer to my colleagues at o.m.b. to go through the specific increases in r.n.d. in the budget. the pattern of increases is that we have very much put resources into energy and biomedical research, we also proposed making the tax credits for r.n.d. permanent. we have a balance approaches. we think that r.n.d. is the key to american competitiveness in the future. we've been pushing to try to increase r.n.d. as a share of what we do.

>> we have a manufacturing working group ongoing in the committee. they have been holding a number of meetings about a variety of issues involving manufacturing, including research and development. one of the things we heard on research and development was how the i.r.s. many times contest the efforts by a company to get an r.n.d. credit in a particular tax year. battle to constantly the i.r.s. to establish they are entitled to that credit. would it be possible for you to acquire information for us that would demonstrate how many times -- how many cases the i.r.s. contest the efforts by companies to take the tax credit and where the company has to take an appeal of the that process, of that initial determinations. where the company is successful

and is entitled to that tax credit. so we can get a better sense of how hard it is for the company to go through the process to get the credit to begin with from a bureaucracy standpoint. can you help to gather that data for us? with the language in the statute as to when and how you get the credit how it can be made more simple, more common sense, and more useable by companies so they can feel comfortable moving forward with research and development, which is what we all want to see in our economy. >> i am happy to look at that. i don't this v the numbers today. i agree with you that we need to make the tax code such that teach taxpayers and companies have the understanding. we have to make sure there is compliance with whatever

regulations we have. i'm happy to look at it. >> i yield back. thank you. >> thank you. >> thank you. i'm glad you clarified once again that some of these provisions in your package is pat of a previous negotiation with republican, speaker boehner in particular to solve our fiscal problems in a balanced way. there are proposals by a republicans for a chained c.p.i., which will change the cost of living from anything to social security benefits to veterans benefits and how much people pay in their taxes would be impacted. some $230 billion is save bird moving towards the republican proposed chained c.p.i. let me

ask you a couple of things. my understanding by going to the chained c.p.i., you would end up cutting benefits earned by seniors who paid into the system, you would cut benefits earned by veterans for their retirement. you will cut benefits by disabled veterans, who are receiving veterans compensation. if that is not accurate, will you please forward me a response that would explain how those payments to seniors, veterans, and disabled americans will not be cut. i wish i could not go into detail but i know we'll run out of time. >> can i respond to that? >> if you can respond in writing. i will run out of time because i have several questions about the chained c.p.i. it is disturbing that the folks will get hit hardest from moving towards a

chained c.p.i. is by impacting senior, veterans, middle-class americans. the next area is on the tax -- half of the savings of $230 billion in savings you get my moving towards the chained c.p.i. aside from the cuts to benefits -- the earned benefitted to seniors and veterans and disabled americans, if by raising revenues, raising taxes and most of that my understanding is a revenue hit, a tax increase for families who are middle class or below. my understanding is that, unless things have changed, the biggest impact hits families who are earning between $10,000-$20,000 because they will be pushed up into the higher brackets faster.

as i look at my district, the edian income is $38,000. the median income of the national american family, not just my district but everywhere in america, if you take the median income it is $53,000. i know the president fought very hard to protect middle-class taxpayers $250,000 and below, and most of america is way below. we ended up with $450,000, which would be protected from any of the bush tax cuts expiring. certainly, anyone with $53,000 would be within that $350,000 cap. et, the person who makes $ 350,000 will see a small hit from the chained c. pifment in what they pay in taxes where the

middle america will see a greater increase in their taxes. ople in my district who earn $38,000 will see a substantial increase in you were to move to the chained c.p.i. i heard you say that the president is not fan of mothering to the chained c.p.i. without a big balanced approach. but the facts are that in any letter you write to me refute that any middle-class american, especially the ones earning $38,000 will not see a tax increase, certainly is within the $250,000, which is president said was in the threshold to protect from any tax increase. . final comment is this in the years that social security has been in effect, americans have contribute bitted $13.9 trillion to the social

security system. we've seen those contributions rn $1.6 trillion in interest earnings by being saved in the trust fund. the total amount that has been spent in benefits for americans is $12.8 trillion. the result a there is an amount that has never been used in social security but the chained c.p.i. gets so much of its savings by hitting it beneficiaries by paying into them. i would like a response, if you could in writing as to how you would explain or refute that seniors, veterans, disabled would not be asked to pay more by getting fewer of their earned benefits. >> mr. secretary if you could respond in writing that would be wonderful. >> i would be happy to do that.

>> thank you, mr. chairman. let me just mention one of the things we talked about is the challenges we got today. everybody brings a differenting background. i've been doing business for 35 years before i got here. one of the things i got to do is go over to china in the late 1980's. in terms of the clinton era we were growing almost 5% a year and we're under 2%. to me, we're looking to blame each other and look at the last 10 or 12 years but the world has changed. -- bange it hing is much more a global factor. i'm concerned that people don't realize that the world has changed. it is a global economy. we have to help our business be more successful. i will give you one more point then i want your response. i met with the minister of trade in january.

himself and the vice in two separate meetings told me the same thing, we want to grow our economy 20 million jobs a year. that's what we're averaging. i think japan has been, obviously, a big factor but china and india coming online. i'm a blue color kid i've watched what is happening in manufacturing. to me, that is one of the biggest issues we're not taking into account. the world has changed. we have to help our businesses be more successful. what are your thoughts on that? >> congressman, i agree totally we have to compete in a global and competitive world. i was in china a couple of weeks ago and i made the strong case that we need to be able to compete in a fair way, having our businesses have access to their markets. they need to restructure their economic approach to increase their demand in china and shifflet the focus from

anti-supportive old industries to contributing demand. it is good for the u.s. economy demand to grow. >> let me just say. they have a >> they have a chamber and i had the chance to meet with many of them. they need to open up their markets. i agree with you. with about 20 representatives in china. i asked them what we could do to be more helpful. i agree. we have to make the case. it is low. you do not get everything you argue for, but you get progress as you engage on these issues. >> let me mention a couple of other things. a -- how do you de business? >> there are a lot of different

ways of drawing the lines. sometimes it's by the number of employees or total growth amounts of sales. rather than getting into where the line is -- >> let me move on. i want to say one thing, in terms of start up businesses, that is something we need to do everything we can to make sure we have proper tax incentives. i hear they are down about 20% or 30% for startups and entrepreneurs. that is one factor. they want more simplification in the tax code. i went to ask you another question. things were talking about and the president mentioned, i heard different numbers in terms of corporate tax rate. dealinghe co-chairs with businesses in terms of entities, i'm concerned that we

do not leave small and medium- sized businesses behind. how do we lower the rates to 25% and not leave behind a lot of folks that generate the jobs in america to be in that tax bracket? i have talked to a lot of friends. what is happening is that evolution. with loweringl the rates without dealing with small and medium-sized businesses that compete in the same industries? ini'm not sure i can answer 15 seconds. we need to broaden the base and lowered the rates on the business side. reform on thek at individual side. a look forward to working on a

bipartisan basis on that. have the president understand there are a lot of things, employees that are paying at a higher bracket. thank you. >> the full program can be found on our website, c-span.org. , jeffrey zients on the president's budget request for the next the school year. -- fiscal year. >> the hearing will come to order. welcome, everybody. while this budget maybe two months late, i want to thank to jeffrey zients for coming testify and thank you for serving.

.t is not an easy job it is arguably one of the most important and most difficult jobs in the executive branch. thank you for your services. we wish you great success. now for my speech. [laughter] now for the other side of the story. it is good to have you here. we're glad that you put out a budget 65 days late. we areiously though, disappointed in this budget. we are disappointed because it is a poor budget. it does not break any new ground. it goes over old ground. it raises taxes by $1.1 trillion. it increases spending by one chilean dollars. it would add $2 trillion to our debt.

the president often says his policies would cut the deficit by 4.3 trillion dollars, sadly, that is not true. one point $4 trillion of deficit reduction over 10 years and nearly all of those savings are from well-worn gimmicks we have established as gimmicks from both parties over the years. if you remove the gimmicks, it reduces the deficit by only $119 billion. the president's budget proposes that this does not begin until the year he has left office. the presidentat, does deserve credit for challenging his party entitlements. he has proposed increasing means testing for medicare part a and part b. unfortunately, it does not include the structural reforms we need to protect the programs.

these policy changes in the budget will not save the programs. they will make them a little less expensive, but they still go bankrupt. the president's budget is a disappointment because it is a missed opportunity. we need a new approach to meet the country's most pressing needs. that is what our side is offering. our plan balances the budget in 10 years to foster a healthier economy and help create jobs. it gives opportunity to the young and retirement or seniors and a safety net for those in need. that is our objective. i understand my colleagues choose to see the objective in a different way. i will say this -- at least everyone has a plan now. house republicans, senate democrats, and the president. that is a pretty good start. there are many differences between these plants. the president and the senate seem to believe washington knows better so there plan put more power in its hands.

their budget is never balance. we see it differently. by defending the status quo, you're letting critical programs that would let medicare with her on its watch. we cannot sit here and dwell on our differences. we need to move old. we need to find common ground. having plans on the table helps us establish a process to go and find that common ground, even if we cannot agree on everything. we need to make a down payment on our debt and make it now. i believe we can make congress. i'm hopeful that we will. i would like to yield to my friend and ranking member. >> thank you, mr. chairman. i want to join the chairman in saying thank you for your service as head of the ofmb.

it is a tough job. i think you working for the president has done it very well. you will have a lot of opportunity to respond to some of the claims the chairman made with respect to your budget. i think the important thing is that it needs to essential goals. it focuses on job growth and strengthening the economy. we have seen more americans getting back to work, but we know we have a lot more work to do to get this economy in full gear. your budget focuses on that. it focuses on reducing our long- term deficit in a balanced way, asking for shared responsibility. democrats in congress and and theans in congress president have submitted plans. i have some concerns with aspects of the president's plan, the overall thrust of it is

clearly in the right direction for our country. there is a stark contrast to the house republican plan that was put forward. first, the house republican plan would put the brakes on our economy. we know the congressional budget office has said that if we keep the sequester levels of spending in place, we will see 750,000 fewer jobs at the end of this year alone. yet the house republicans budget keeps those levels in place. i received a letter from a ceo in my district, the head of their large biotech company, who said as a result of the sequester, they froze hiring. bowling place they are hiring right now is in china. -- the only place they are hiring right now is in china. the chinese look at the american

model investment in bioscience and medicine and said, hey, that is a winning economic strategy. while we are cutting in places like those investments to keep our competitive edge, the republican budget would undermine those important investments. ipod the president for putting forward a budget that focuses on -- i applaud the president for putting forward a budget that focuses on investments to make sure we are competitive in the 21st century. with respect to the president's approach to deficit reduction, he has in his budget done what he said he would do. he does it in a balanced way. he asked for shared responsibility. our republican colleagues in their budget ask everybody to take some responsibility for deficit reduction except folks at the top of the income ladder. if you are getting a tax break

or tax benefit that benefits wealthy people, they get to keep it and they will double down and give you an extra tax break by lowering the top rates, which we believe mathematically can only be done by increasing the tax burden on middle income americans. throughout their budget, whether it is seniors who rely on medicare or medicaid, investments in kids education, the choice made in the republican budget is to say, let's put the burden on them at the same time we continue to expand tax breaks for folks at the very top. we do not think that is the way to address our budget challenges or get our economy fully in gear. where the chairman ended. we do have budgets that are on the table. we believe that the president

has clearly indicated a willingness to meet republicans more than halfway. ,s you indicated, mr. chairman some other proposals in the --sident's budget create have not been that well received by members on our site. because what he did was include certain provisions that the speaker of the house i call for as part of a negotiation with the president. whether it is chained cpi or other provisions that the president said in this budget -- you know what, i will put those in there. the speaker asked for them. we will put them in there to show our willingness to meet republican colleagues more than halfway. , thes been disappointing response from our colleagues not to recognize the president made

that good-faith effort going forward. i hope this will be the beginning of a conversation. i do hope the house republican leadership will appoint a so we can getes going and get the input from the president. thank you for your very important contribution to that effort. >> the floor is yours. >> thank you, everyone. i'm pleased to be here to discuss the president's 2014 budget. i'll work off of a few slides. the main message of the president's budget is to make critical investments to strengthen the middle class. thereat jobs and grow

economy while continuing to createthe deficit -- to jobs and grow the economy while continuing to reduce the deficit. , in termst-hand side of balance deficit reduction, it builds off the deficit reduction achieved to date and includes the president fiscal cliff coppermine's offer to speaker boehner from december. it has balance deficit reduction. at the same time, the budget opposes an important job investment to enhance economic growth and skills and competitiveness with investments in education and r&d. each of these new investments are fully offset. they are fully paid for and they do not add to the deficit. lastit reduction over the

couple of years, democrats and republicans, have worked together to cut the deficit by more than 2.5 trillion dollars. here is the breakdown of deficit reduction to date. the budget control act tax discretionary sending saving over $1 trillion. another 370 billion dollars in 2011 appropriations. reducecliff agreement billion.it by $660 interest payments, $48- 0 b0 billion. $4 trillion as the benchmark that bowls simpson and others have set to put us on a sustainable path. we are more than halfway to the

$4 trillion goal. the president budget finishes the job with an additional $1.8 trillion of deficit reduction. the $1.8 trillion is from the compromise the president made with speaker boehner for the fiscal cliff negotiations in december. by including this offer in the budget, the president is showing his willingness to compromise and make tough choices and his commitment to put the country on path.ainable, fiscal here are the components of the deficit reduction that take us from the two point i've trillion .ollars ---- $2.5 trillion on the left side, what we have achieved. we strengthen medicare by squeezing out wastes. next to, $200 billion from other

mandatory rogue rams, including reductions to foreign subsidies and selling unneeded federal real estate. next, $230 billion in savings by indexing annual inflation adjustments for the chained cpi. another $200 billion in discretionary spending beyond the caps. next, 580 billion dollars in revenues from tax reform by closing loopholes and reducing benefits for families that make more than $250,000 in annual income. we have $190 billion in savings from reduced interest payment on the debt. in total, this has achieved 1.8 trillion dollars in additional

deficit reduction over the next 10 years, ring in the total deficit reduction to $4.3 billion. more than two dollars in spending cuts for every dollar of revenue. to be clear, this offer includes a difficult cuts the president would not propose on its own, including cpi, which the president is only willing to do with protections for the vulnerable and as part of this balanced plan. however, by including the compromise for the budget, the president is showing his willingness to make tough choices and his commitment to reducing the deficit and putting the country on a sustainable, fiscal path. throughcit from 2012 2023. in 2012, the deficit was seven percent. the budget phases in deficit

reductions to support the ongoing recovery. 2016, the deficit is below 3%. by 2023, it is below 2%. that is 1.7%. as a result of this deficit reduction, debt has a percent of our economy is also on a declining path. ,he declining deficit and debt the president's budget achieves an important milestone of fiscal sustainability. the budget reduce that important fiscal milestone while also investing in the drivers of economic growth. in doing so, it demonstrates that we do not have to choose between deficit reduction and economic growth. it shows that we can and indeed we must do both. the country will not prosper if we have unsustainable deficits. it also will not prosper if our

infrastructure is crumbling and our workers lack the skills to compete. to have paid for initiatives , jobprepaid for all training and accelerated infrastructure investments, this budget will enhance our nations competitiveness. to balance deficit reduction, this budget will enhance confidence and lay the foundation for more durable economic growth. it is the right strategy for our andomy and creating jobs for building prosperity. with that, i will be happy to answer questions. >> thank you. attacking someth of these claims of deficit reduction. gosh, by the sound of it, it sounds like we are done. we do not have to worry anymore. problem solved. but when you measure deficit reduction in a gross non-net

way by saying, look at all of the reduction, you can't neglect the deficit increase that occurred at the same time. missing from this confrontation 3 trillion dollar deficit is a stimulus that past, numeral tax holiday, the other payroll 24% increasethe and non-defense, spending above if you go with net numbers, $500 billion of deficit reduction and not 4.3. look at the claims in this budget. claimmbers in the budget

$1.4 trillion. that is the proposed. if you take out the gimmick, that is 600 $70,000. dollars., millions of this, really remove billions of dollars. if you net all of this out, if you strip out the gimmicks that have been well worn, one hundred $19 billion of deficit reduction. all you have to point to the fact is that this budget never balanced ever. i understand maybe it holds up well to use the word balanced every third word in every sentence when you are , butibing fiscal policy

how is a budget balanced if it never balances? i think we need to be more honest about the true, fiscal nature of the situation of the problems we have. i want to ask you a couple of technical questions. , we have done this on a bipartisan basis. why is it that in this budget, you assume it is fully funded and not paid for? >> we have a balanced reduction incremental what we have achieved to date. we will not cut doctors by 30%. we fix this year over year over year. it should be in the adjusted baseline. that we you are saying

that we will not pay for it anymore? >> over all, the president's budget saves in healthcare costs. 200 billion dollars in other mandatory. $200 billion of discretionary. it is something that happens year over year. let's be honest in our baseline and acknowledges it happens every year. i think you through around a lot of numbers in the statements. it is hard to track. > >> i'm sure you have seen them. >> they are all over the place. >> at the end of the day, you have to look at the bottom line. the bottom line is that deficits are declining and that is on a declining path. of gdp by 2023.

i worry we and other spending a lot of time on baselines, but it is about the bottom line. that is not much accomplishment over 10 years. >> debt is on a decline that. - declining path. we cannot think of deficit reduction alone. >> why do we start deficit reduction in 2020? >> it does not start then. >> the policies proposed to begin in 2020. >> no, it is well in advanced of 2020. deficithow we achieve on a declining path. deficit reduction is important.

it is an important component of an economic land. put people back to work. we have to increase our global competitiveness. we had to invest in r&d and education. the most important way to achieve deficit reduction beyond the policies that we are talking about today is economic growth. not pass this budget, the deficit would drop back? spending,k atw war these high levels with the troop count we have in afghanistan right now, if you have a drawdown, you count that as savings? now we all agree that we had withdrawal occurring in 2014. that is policy and bipartisan agreement.

but we're going to count as a spending cut the idea that the baseline assumes we would be at full troop strength well beyond 2014? in if you have withdrawal 2014, that all of a sudden counts as a spending cut of billions of dollars? in other words, not spending money that was never going to be spent in the first place is now counted as a spending cut? >> let me review this. we cap the spending. it closes the back door for further discretionary spending. the savings you are talking about first is the official scorekeeper baseline are not counted in the 2.5 trillion dollars i mentioned and are not counted in the $1.8 trillion i mentioned.

but it is in your $1.8 trillion. >> i think we should go back to the slide. billion of other mandatory. of discretionary. and the interest savings. that does not include that. >> your double counting. double counting. war in iraq and the drawdown in afghanistan, we will take a small portion of that money and invest in infrastructure. that is not one point of the -- >> there in lies the issue. we are taking spending that will never be spent after using it like it is free money to spend.

that is a problem with budgeting. cbo did not have a choice. the law requires that they have a baseline that reflects current law. they have parameters placed upon .hem that allow such a gimmick the point i would make is if all of this grand deficit reduction were real, why does the budget never balance? why are we adding to the debt in this budget? my time is running out. and putting myself on a clock. i want to ask a question about ipads. in your budget, you have ipads accruing saving and 2021 and 2023. $4.1 billion. you lower the growth rate of gdp.

we're baseline claims that growth is within the parameter. where does the 4.1 come from? how does that have the mandate in this budget get that savings it gives a medicare costs are below that? aire believe the portable act is helping to drive that -- care act isle helping to drive that. you're talking about a fraction. >> i understand that. >> we believe that through continued progress in reducing unnecessary care and for mortimer costs affect of care to organizations and other innovation that medicare costs

will continue to come in and serve as an important backstop unction. we do not anticipate that backstop unction the necessary. >> the authority -- make the spending, within that. you're saying that functioning national the spending never exceeds that. >> it is a small percent. health careume spending will continue to come in and the will not be necessary. i understand the process. >> mayor there to protect seniors. -- they are there to protect seniors. >> you are saying that by 2021, the be fixed -- cap will be fix

ed. back to start producing recommendations -- they have to start reducing recommendations? >> yes. we anticipate further progress that it will most likely be unnecessary. >> thank you. .> thank you, mr. chairman i'm your response to deficit reduction and how much we have achieved over the last couple of years and in this budget, you took us to the bottom line. what is the deficit as a percent to gdp and whether debt as a gdp is rising or declining. isn't it the case when you use that measure, you standardize all of the budgets? >> absolutely. >> the president's budget

reduces the deficit to 1.7%. >> yes. >> and the house republicans budget last year and the end of their 10 window, they reduce 2.1%.t percent gdp to we are talking about half of that compared to the house republican budget. if you looknt out at the congressional budget baseline after 10 years, the ratio of debt is 77%. and cbo and omb has some different kind of substance. -- ibelieve it is 7070 believe it is 73%. >> and declining? >> declining each and every year. to lookhairman refuses

at these gimmicks, but the measures washed all those issues. the biggest whopper of a budget in these year's is a republican claim that their budget balances and 10 years and the claim that they also repeal obamacare. i would like to set up a chart if i could. this is in the 10th your other republicans budget. be $7 billion in surplus. it also claims to repeal obama care in its entirety. guarantees billions of dollars in medicare savings i ending overpayments to insurance companies and rationalizing the system. the problem budget includes this

in their budget. -- the republican budget includes this in their budget. that is shown in the red part of the chart. the republican budget also assumes amount of revenue that will come in through the tax provisions in obamacare. approximately $1 trillion. that is the blue portion. going to gety are rid of obamacare, which they claim to do in their budget, their budget would not come close to balance in year number 10. that is a whopper of a budget gimmick this year. there is another big difference in the republican budget and in the president's budget when it comes to how to deal with tax issues. you have pointed out that the very wealthy individuals

continue to benefit from reductions in the tax code. you in this budget proposed to to take thisincome approach will republicans say they would drop that top rate, it would provide a huge windfall to the wealthiest people in this country, and mathematically, if you meet the criteria that you set out, which is not to increase the deficit, middle income taxpayers would have to pay more in order forund those tax tricks the wealthy. if you can take time to the very different approaches that the president takes with the tax reforms compared to the house republicans. >> the president in his budget raises $580 billion in tax

reform. there is no raising rates. it is all. tax reform and from families with incomes more more than $250,000. the president believes we should do tax reform. individual and corporate tax reform. he put forward to specific policies that brings in that $580 billion. their deductions are at the level of the highest of the middle income families. secondly, through the buffet rule, which as anyone with over $1 million in income should pay a minimum of 30%. the president raises $580 billion from tax reform. no families are impacted that make less than $250,000 of income.

this is done through the to specific policies, the 20% limit on the deductions and the buffet rule. the president believes there is an opportunity to do tax reform to make taxes were simpler and fairer and to help the middle class. i don't know if you had an opportunity to look at some of the analysis that has been done the house republicans budget approach with respect to the tax fees. they would drop to 25%. any do that in a neutral manner without impacting middle-class families? >> in order to go to 25% for 7 triigh income folks,

llion tax rate. .ude have to add to the deficit -- you would- have to add to the deficit. the math does not work. another adds to the deficit or middle class families would have to pay for it. both are unacceptable. >> thank you. does to go to the bottom line on the, that means either republican budget would not be in balance if they did what they said they would do with respect to tax rates and tax policies, in which case it would not balance in 10 years even with

opportunity tock include obamacare when they said they wouldn't. or you would be raising taxes on middle income families. that is something we opposed in our budget. gimmick acquitted by asking you metalk about -- let conclude by asking you about the investment in the compromise proposal the president has put forward. to be infrastructure investment for our country where bipartisan issue. bipartisan unity behind it. make sure this country is number one. make sure we have the torastructure necessary support entrepreneurship and the private sector. >> in my job, i had the

opportunity to spend time with lots of groups, entrepreneurs, small and big businesses. anyone working in the economy would agree that investing in infrastructure is key for the , short-ompetitiveness term, medium-term, and long- term. the great opportunity we have is to put people back to work at the same time. the global for competitiveness, short, medium, and long-term. it also puts people back to work on worthy projects. the investment is money well spent. thank you. i want to welcome you and say thank you for your service. hairchairman and the co-c have previous commitments.

i will assist in the absence. the law of the land state that and theresident administration did not do so. he had the extra time to balance the budget. but that is not what the budget does. it increases taxes and spending. the same thing we have seen before. it increases dependence on the federal government. it grows government and not the economy. worst of all, it does not solve the challenges that need to be sought to get this economy growing again. slide.bring up the first this gross debt and percent of

gdp the president proposal always staying above the 90% drop entire budget window. that unless one gets below that 90% level, economies do not turn around. sadly, the president's budget proposal does not address the challenges we face. all sorts of other misinformation i would love to have the time to correct. that theassume president would like to see his budget passed by congress. is that accurate? >> yes. >> that being the case, -- >> that i had the opportunity to comment on the chart? >> at some point. >> my time is limited.

that being the case, with administration be willing to submit a budget resolution? >> i think right now we believe you should return to regular order. regular order is a way to proceed. >> in the past, we have formpted to allow support the budget and have been accused of not writing it in a way it would have been written. we would love to see a budget resolution from the administration. we would like to be able to have a vote on it. never heard from you that you would like to return to regular order. >> the president has said often times he has met the republicans more than half way. the president budget increases debt significantly.

we move in the opposite direction. the president's budget increases the deficit and we move in the opposite direction to balance it within a 10 year period. the president increases taxes and we do not. that is hardly meeting republicans halfway. as the chairman said, wonderful rhetoric, but it is simply not true. is it? >> no. by putting forward the compromise offer, it includes jane cpi, something the president would not do on his own. this is directly responsive to speaker boehner's request. the president is going to do that is part of a balance deal from nine to have those conditions. -- as long as we have those conditions. that $1.8 trillion is a compromise offer. c jane cpi is not -- chain

pi is not what we would select as a solution for the challenges we face. >> into something that speaker boehner and and leader mcconnell asked for several times. also raising the age for -- >> 30 seconds if i may about medicare. and grosst proposal reductions in medicaid spending , there are further cuts. how long do you think this initiation can cut payments? >> there are opportunities to make care more efficient. the more opportunities to and sent providers do not have readmissions. there is opportunity to make sure we get the same prices on

medicaret we got on and medicaid. there are opportunities to be made to make our system more efficient. we should take advantage of those opportunities. not turn it into a voucher system. >> our system does not do that. it provides greater choices for patients. gentlerecognize the denta woman. >> thank you. it does present a balanced approach and six common ground. certainly reduces the federal deficit. makes investments and moving forward with economic growth. i want to acknowledge the .anguage

it is important for us to get done this year. we should do it. we should do that. i appreciate the additional language on moving toward a new payment system. like what i have written. it should be in possible for them and cost savings the right way. probably get some bipartisan support on that as well. i went to highlight what aspects of the budget in recognition of the investment and innovation and technology. the president has proposed a small increase in nih funding. appreciate it. was the result of the sequester, we seeing cut in sent

to the greasers in this country. of research funding comes basically from the government, nih. it is the beginning of the pipeline for new devices, biotech, industries manufacturing and production of this very important life-saving .edicines and treatments that is important to our economy. many of our research institutions in pennsylvania are seeing dramatic cuts. millions of dollars. laying off scientists and not hiring new ones. may want toists create those life-saving but economy is a

big driver in many places across the country. the sequester matters. those cuts will hurt. , we may not be able to regain if we do not fix it. $3 billion which is essentially the cut the nih will see this year. repealing the tax provision of corporate jet is a good trade- off. that special treatment of corporate jets into medical research. i'm working on that. i hope we can get something done this year. talk about how important those supportare to ongoing

for scientific research in medicine and sciences. more.ould not agree the president's budget on the domestic side r&d by 9%. that is consistent with the logic you just did. let me step back. you spotlighted a specific problem with the sequester. it was never intended to be implemented. it is meant to be a forcing function for balance deficit reduction. implementing a policy that was never meant to be implemented. consequences are negative throughout the economy. american people are feeling it every day. .t will reduce our gdp by half cost us hundreds of thousands of jobs. it will impact research a life- saving breakthroughs potentially

at nih. it is impacting meals for seniors. defense contractors. impacting economy, hundreds of thousands. we need to replace the sequester. the president's budget does that. we need to pass it. i appreciate that and the fact that the president's budget creates a dialogue. alternativemocratic and republican budget. this is to be of conversation or else the economy will get hurt. >> i recognize the gentleman from california. >> thank you, mr. chairman. >> does the president believe

that deficits matter? >> yes. it is an important component of an economic plan. >> our deficits a bad thing? >> there are not a bad thing in the abstract. the president planned as deficits going down its year. >> you have deficits containing for ever. is that correct? i think your numbers are garbage. ali is another strong term. in theis conversation under yournutes, numbers, the deficits continue for ever, does it not? >> it is focused on a 10 year window. >> it the deficit continues to drop the 10 year window -- that is right deficit at

this point we are in the economy. we have to be focused on getting people back to work and investing in infrastructure. >> the deficits continue at roughly half a trillion or higher throughout the tenure limit. did i say something wrong? they do continue at half a trillion or higher. even at your numbers, throughout the tenure window. toyeah, but the right way think about deficits is a percent of our economy. the deficits are a percent of our economy. it has come down quite a bit during that window. >> so we do not have to make them go away? >> it is consistent -with bow les'sim-simpson. we would be able to create jobs -- halfling trillion dollars are

more throughout the tenure window and it will continue for ever. obvious he the president doesn't believe that we do not need to get the balance budget. julie? ?> the presiden-- do we the president wants to get the economy back to its full potential. bear with me for a second. >> i'm sorry. i went to get to a couple of things. you mentioned the only change in the town of programs here are the ones you mentioned the president put in. the president believes that social security, medicare, and medicaid are on a sustainable path where they do not need to be reformed substantially. they're not heading toward bankruptcy like the vast majority of analysts and

economists from both sides say. the president does not believe that? >> i think social security is not part of our immediate fiscal issue. the president has put forward principles for social security reform. that is not part of our immediate deficit. i medicare, $400 billion in health savings. $370 billion in medicare savings. the first decade. second decade, more more than a failure dollars of savings. that is significant -- more than one trillion dollars in savings. that is significant. we need to honor our contract with seniors. >> when you look at the costs of medicare over that time, those numbers, which i don't agree, i do not think anyone can

say that is putting us on a sustainable path. one final question really quickly -- can people make under $250,000 buying cigarettes? >> yes. a tax onu have put o those who make under $250,000. >> people need to make choices. >> people make income and they pay taxes. >> is this intended to raise fromue or to stop people smoking? this cannot do both. you indicate that this will have people havstop looking? >> we can discourage new people

from smoking and encourage current smokers to quit. at the same time, those who continue to smoke cool pay a tax. ax. will pay a t >> time is up. there's a for your testimony. i wish some of our colleagues on forother side -- thank you your testimony. i were some of our colleagues on the other side -- i do not remember this level of excitement about balancing our budget. would you say they're republican budget is a and austerity budget? that these are deep cuts? >> very deep cuts. cutsepublican budget domestic robots by 20%. -- i know you're

working on the american budget full-time. what are the austerity budgets doing and your russia mark how is that playing out -- what other sturdy budgets doing in europe -- what are the auterity budgets doing in europe? how is that playing out? >> it is not doing well. but we need to invest in johnson infrastructure. that is the right way to go the economy -- we need to invest in jobs and infrastructure. that is the right waited improve the economy. -- right way to improve the economy. there is a great partnership up all the money from defense --

partnership of public money to help spur innovation. how did this budget continue to promote initiatives like that and other initiatives like that that will lead to economic growth in industrial areas like mine? >> that is a great example pillared -- example. the budget proposes to do 16 more at $1 billion. that is directly offset. thosek we all would agree types of investments are good for the economy. we have created 500,000 manufacturing jobs or so. we need to create more and bring more jobs home. each of these investments are directly offset.

>> investment in natural science foundation, what do those look like in this budget? >> those are on the discretionary side. prioritizedt has investments in r&d, and domestic r&d is up 9% under the president paz's budget. even with the tight discretionary caps, the president has prioritized r&d and there is a 9% increase. we are very thankful for that. >> the real question is, what is the roadmap for america in the future? part of this road that needs to include the investments that are in sectors of the economy that are going to blossom in the next decade or two. we do not always know what they are. when we say we will balance the budget in 10 years, without looking at the history of our country and the big investments we have always made, whether it is infrastructure, the space

program, the national science foundation, investments in education, community colleges, pell grants, student loans, bringing those rates down, this is a recipe that has been very successful in the united states. i do not agree with everything in the president's budget and we will have plenty of time to discuss those issues, but i want to say thank you for being, in my estimation, a voice of reason and having a vision for what america needs to be like in the next decade. we cannot cut our way to prosperity. we have seen, as i mentioned earlier, we have seen a lot of our friend on the other side get very excited and the first question was, does this matter? if dick cheney were sitting in your seat, he would of had a different answer than you. he said deficits do not matter. that was the prevailing wisdom coming out of the republican party for the last -- the first

eight years of the new decade. the issuesss you on we do not agree with. i want to say thank you for making these long-term investment that will cut the in nine states to be competitive in an increasingly competitive global economy. suggest youlso cannot tax and borrow your way to prosperity. the diamond from california for five minutes. >> thank you. thank you for testifying today. we appreciate your insight. i want to bring perspective to the debate. s controlled the house with the democratic president. work together to meet the challenges before us. president clinton worked with speaker gingrich. ed balanced budgets. president clinton raised taxes 21st came into office. the final six years, he joined

the congress to address the spending side of the ledger. that is how we balance the budget and produced a surplus. however, president obama continues to be consumed by raising taxes, refuses to address spending. already pushed through $1 trillion taxes over the implementation of obamacare appeared another 600 million from the recent income tax hike, the largest tax increase in real terms, in 65 years. budgetsident's 2014 increase is passed by an dollarsal 1.1 trillion -- $1.10 trillion. now -- 1. the average per capita during ,he clinton administration

excluding defense, and the stimulus, $9,089. that is a 33.4% increase. with 315 million americans, that is $630 billion more in spending each year. about return to the clinton-era tax policies, but with the recent tax hike, we need to talk now about going back to the clinton's spending levels. it would enable us to eliminate yearly deficits and address a long-term debt. today's population is older today than in the 1990's. we spend more on medicare and social security. the bigger issue is that we cannot sustain the current growth projection of these programs. everyone agrees. this puts even more pressure on us to reform retirement programs

andkern beneficiaries injure their return. we can also use the lessons learned from working together in the 1990's on welfare reform and to apply them to other programs. president clinton alatas -- a lot of the benefits of balancing the budget. by reversing the earlier trend of fiscal responsibility, using conservative economic estimates, balancing the budget and producing a historic surplus, we help to restore our national spirit, and produce the resources to help opportunity and prosperity reach all corners of the nation. on the other hand, president obama recently stated his goal is not to chase a balanced budget just for the sake of balance. a golden90's, with era, why can we not return to the clinton era spending? do you agree with president obama, the balanced budget is

not a worthwhile goal? >> let's go to the early 1990's, when the head 4% gdp projected deficits. we did balance deficit reduction. the projection after that was 2.5%. it was not that different than where we are today. we are at 1.7%, a little below. the forecast at the time, 2.5% deficit. what do we end up with? surplus. how did that happen? economic growth. it is exactly why we need a plan here. >> the economic growth happened in the private sector, not the government. >> of course. >> it seems to me the budget before us, pro-government. >> stick with the statistics. these projected deficits for the federal government was 2.5%. we are lower than that in the present's plan. aat took us from -2.5% to

surplus of economic growth, absolutely the private sector growth. we need to do both here. we need to get ourselves on a fiscally sustainable path, down were deficits and debt as a% of gdp, but we also have to invest in our economy and get people back to work, and that is similar to what the plan was in the 1990's. getting the economy growing. >> it seems to me we have increased government spending by 33%. >> the time has expired. [indiscernible] difficultthese very times. also, let me acknowledge the hard work and commitment of everyone at the office of management and budget. very briefly, going back to the clinton era, from what i remember, there was a surplus at the end of his term. in the bush and administration, they squandered that surplus.

many of the economic policies are responsible for the recession and the hard economic place where this country is at this point. int is what i remember here the following eight years of the clinton a administration. let me also say when we talk about a budget, we have to remember it is not only a plan for raising revenues and spending the federal funds. there is also a moral document that the statement of our nation pauses principles and goddesses. some part of the present's budgets i find very troubling, but i am very pleased to see the president clearly understands the need to make vital investments in our economy and job creation, and it is a balanced approach. did create anton itanced approach and reduced and create a surplus.

i am pleased to see the investment in hiv and aids. the budget permanently extends the vital program, such as the child tax credit and the earned income credit. this helped millions of families across america in terms of a path, a ladder, from poverty into the middle class. the rise insay budget, this is a real contrast to that. he proposed -- the republicans' proposed another 6 seles trillion tax cuts for the wealthiest, while focusing 66% of their budget cuts on treading our nation's safety net. we have held some pretty productive discussions on eliminating poverty, by reducing this in half in the next 10 years, during the next 10 years.

unfortunately, income inequality and poverty rates are rising. i wanted to ask how this budget puts us on that path of a limited in poverty by reducing it in half in 10 years because, i think while i know chairman myselfnd -- brian and are concerned about poverty, all i look at their budget, of the paths that would lift people out of poverty were cut. traffic. drastically. >> it is reflected in the budget. he mentioned some areas that see more expanding and extending of the itc in the child tax credit, also, the a otc, which helps families go to college, a centerpiece we have talked a little bit about already that i want to emphasize is the

president's budget, a landmark initiative for early tide -- early childhood. the tobacco tax. ladders of opportunity, including promises loans, 20 neighborhoods, where we will really work on bringing education resources, housing resources, private-sector resources, local resources together to lift up these neighborhoods. minimum-wage, the present -- president, there is a lot of progress in this budget in what has been an important initiative from the beginning, which is helping lift people out of poverty into the middle class, crating ladders of opportunity. >> i would like to ask you if it is possible for omd to produce an appendix to the budget, a list of programs that would help low-income families, you know,

moved from poverty into the middle class, so we could understand how the work, and what they have done over the years, and how to track our decisions as it relates to the programs. i do not know if you could organize that for us or where we would go to look at that as it relates to the federal government. >> we will permit -- we will pull something together. >> that you. -- thank you. >> i find myself in rare with my friend from ohio. abortion administration, two words, he is absolutely right. some of us were very exercised about it. george w. bush was one of the most fiscally irresponsible president never history. he increased spending by a whopping 2% of gdp. the problem is the budget you are presenting today, in five years, increases it by another

two% of gdp. my problem with the obama administration is not that he has reversed bush's spending patterns, but he has taken the worst of them and double down. you called the house budget plan an austerity program in the european market. it actually seems to me that your plan is far more in the european model, the european austerity programs are headed the weighted toward tax increases. that is the problem. countries in the most trouble in europe are those with the highest marginal tax rates, including italy, and portugal. those that relied on spending cuts have done very well. take sweden between 1993 and 1997. its spending to gdp ratio declined to 51%. its average rate of growth doubled in that time relative to the prior decade. norway saw the same results. i appreciate the analogy with

austerity programs. the ones that work reduce spending, which is what the house republican budget does. those that created additional problems are those that are weighted towards tax increases, which is the budget you are presenting. a first question involves very simple question. why exactly are you here? 65 days after the budget deadline. our whole system is designed to ensure that the president as the chief executive officer of our nation comes to congress with his estimate of what it will take to implement the laws over the next year. then congress has a time frame in which it has to develop a budget. you did not do that. congress, the house, and the senate, were left to act on their own without a budget. now the trend has already left the station and suddenly you fill up with this budget. i find appalling.

tounfortunately, due congress's and ability to act, we have had manufactured crisis. >> [indiscernible] congress has acted and has adopted a budget on schedule. that process was supposed to begin with the president presented one and he did not appear that is a rhetorical question, frankly. my time is very limited. the business daily editorial today, which excoriates the budget, let me walk you through the point. this is where i would like your response. they criticize it for spending and deficits of the next to it -- two years. it increases spending by $247 billion above the base line. $157creases the deficit by billion above the base line. >> in terms of the timing of the budget, i was talking up the fiscal cliff prices -- crisis,

followed by the sequester, which made it difficult to deliver the budget until it settled an. >> pardon me, sir. the house and the senate were able to act. it is either to confirm or deny today. does the budget over the next two years increase baseline spending by $247 billion and increase [indiscernible] >> we made progress on the economy, 36 months of job growth, 14 straight quarters of gdp growth. we have a ways to go. we need to invest in jobs. cracks are they are not? >> are they or not? let me get you to answer the second point. is20 trillion, he claims it 187 to 190, and cut the $186 billion. >> we are back to our baseline set of issues. in the base line is the

sequester. >> they cancel the sequester and the claim that. >> that is right. we are very clear on how we are doing this. in the base line is the sequester, never intended to be policy. that is spending cuts across the board. we replace it with balance deficit reduction. in total, the president has $4.30 billion of deficit reduction. was it reliesne entirely on tax hikes. >> the president's budget gets another hearing tomorrow. sebeluis.om kathleen coverageas live beginning at 9:00 a.m. eastern. federal reserve chairman ben bernanke is discussing home ownership and housing in the low income community spirit live coverage begins at 12:30 eastern

on c-span two. >> saturday, but tv is live. at 10:00 a.m. eastern, maryland, 1812. the changing landscapes of suburbs and cities. at noon, america's ongoing involvement in afghanistan. at 1:00, the ever evolving rules -- roles of women in society. at 2:00, politics and america. the book festival, live, saturday, a part of book tv weekend on c-span two. evelien liu for

third prize middle school winners on the student cam competition. >> extensive budget cuts have been made in education. >> school of the take a hit when the economy suffers. >> young people, even students themselves are causing -- calling for a change. the achievement gap between the poor and rich school grows. the government is trying to solve this problem by passing laws and creating programs -- programs such as title one. according to the u.s. department of education the purpose to is it sure all students have a fair and equal opportunity to achieve a high-quality education. >> the point of title one is to close the achievement gap. elementary and secondary education act of 1995 requires that services provided in title one schools from state and local funds be at least come comparable to those provided in non-title one schools. >> the correlation between [no audio] inside the white house, one and a five children in america are homeless or living in poverty. [no audio] progress in new social and intellectual settings. [no audio] she has taught in montgomery county for 26 years and currently teaching all subjects to fourth graders.

>> you really did not feel it so much in the classroom. because i teach at a title one at a school, title one that schools get a lot of funding. so i have not seen s huge decrease in funding where we have seen a decrease, it has been in the number of hours for para educators. there were times when we would have parent educators all day long, and now they have cut their hours to four hours. that is where they begin the cuts. >> even though title one schools received more funding, those that did not qualify often did not receive enough funding. the government has done more than enough to try to increase the quality of education and the united states. the government has set up other programs to pass title one to help with the problem such as no trial but behind act. this is a reauthorization of the elementary and secondary education act. -- no child left behind act. this does raise questions and problems in numerous educators of notes. >> this created a culture of conversation, which meant we were now all talking about this

issue. being have all children successful. i think the problem has come in with the rules and regulations around it. the stress on test scores. the pressure they put on teachers to bring up the touch scores. >> how you're going to do in school based on the way you look or which group you belong to, and we know because of our predictions that it will come true. then we're doing it wrong. >> many schools face a lack of materials. numerous glasses have been cut and teachers laid off. >> all you have to do is work into -- walk into one school district around the country and see around the country it thousand educators have lost their jobs.

art and music and physical education. the courses kids need for science and math. she has been teaching for 17 years as a school administrator. the assistant principal is teaching as an english teacher in the central office. >> the budget as required that class size be raised, and they have limited hiring, and there has been an impact on human resources available. >> professional development is one thing that has been cut over time significantly. they used to be full-time positions at every school. they were cut to part-time positions, and depended on how many kids or staff members. that is something i would definitely reinstates. >> u.s. highest court discovered

tens of thousands of students are placed in oversized classrooms, taught by inadequate teachers and inadequate facilities or equipment. >> the maximum class size in a non-english class was 32. the next year it was 33. if you look across the county, you think what is one more kate? not a big deal. if you look across the county, that is hundreds of teachers. it adds up. >> i think as time goes, but the cuts really creates a more tense atmosphere. people are a little bit more frustrated because they are making do with what they have, and not necessarily everything they need or everything they want. nationalan a government do to improve education in the united states? summerlieve shortening vacation is the answer.

>> at a time when other countries are competing with us like never before -- >> children in america go to school for a much shorter time the children and other countries. japanese spent 8.5 days in school. american students are in class for an average of only 5.5 hours per day, 180 days per year. many people think our system will prepare young americans with an education they will be that will include many people from other countries. >> this will not make american citizens have become a but i do not know how else they can increase funding. >> the government has to decide they are either all in four public schools or not. the simple solution to me is someone has to decide this is what is important. education proper children will not be able to

develop the necessary skills to reach their full potential. they need teachers and resources around them from an early age to receive the roles of the country's leaders and innovators. >> nothing will have a greater impact on your success in life and your education. >> without proper education, there's no future for the young degeneration of the united states. >> congratulations to all the winners in this year's student cam petition. -- competition. >> taking a closer look at president obama's budget. two members of congress will join us.

kevin brady of texas and the democrat from new york. more about gun violence and regulations with a usa today reporter. first, calls, e-mails, and tweets next. boehner, house minority leader nancy pelosi, then treasury secretary jack lew. on the next "washington

o'keefe discusses gun legislation in the senate. discusses the central park five, five teenagers convicted of raping a jogger in central park in 1989. bell looks at the budget and entitlement programs. the the washington journal, " live at 7:00 a.m. eastern on c- span. -- house speaker john boehner discusses the general budget. this is 10 minutes.

>> the president released his budget today and the way he was talking i was hopeful. but hope is again, become disappointment. the president calls this his compromised budget. his bottom line is this, my way or the highway. if that is the case i'm not very optimistic. the president and i weren't able to reach an agreement last year because every offer he made was skewed in favor of higher taxes. this plan is no exception. his opening offer last year -- last fall was $1.6 trillion in new revenues and his final offer was $1.3 trillion. this budget would mean the total of $1.7 in new revenues. that is not a compromise, that is a step backwards. you can't portray a budget as a compromise when it ignores the spending problem here in washington. the house and senate budget committees have looked at the

numbers and found this plan reduces the deficit around $100 billion in the next 10 years. it is not serious. rather than cutting spending, this plan increases it by nearly $1 trillion. i will repeat, it increases spending by $964 billion over current law. again, i don't think that is a serious effort in addressing washington's spending problem. the president's budget calls for more tax revenue. again, it is not serious and it will cost our economy more jobs. worst of all, this budget never balances. never, ever, ever comes to balance. we spent more money than we've taken in for 55 of the last 60 years. no business in america can survive like that, no household can survive like that and our government can't survive if we continue to spend money we don't have. all this budget does is preserve the status quo. it's time to look at the cost drivers and stop the spending in washington. i'm encouraged that the safety net programs are unsustainable but only offered modest reforms. they are modest.

were's nothing close to what need in order to preserve the programs and put us on a path to balance the budget. still it is a step back from what he agreed to over a year and half ago. there is no reason why we can't make incremental progress where we agree. that is why the president's approach is disappointing. it was the president who said "when democrats and republicans agree on something it should be pretty easy to get it done. let's agree what we all agree upon." those are the president's words. now he wants to hold these modest reforms for hostage for another round of tax increases. there is no way to compromise, there is no way to move the country forward and, frankly, it is no way to lead. >> it was called a shocking attack on seniors.

are republicans going to run against democrats for trying to slow the growth of entitlement spending? >> i've made it clear that i disagree with what the chairman said. he and i have had a conversation about it. i expect -- this is the least we must do to begin to solve the problems in social security. >> will you call republicans next year not to attack democrats? >> i talked to the chairman and we had a conversation. we'll leave it at that. ishow now that the -- how the senate moving on the gun measure will you commit to something? >> i've made it clear if the senate passes a bill, the house will review it.

the judiciary committee has had hearings and the energy committee has had meetings. if the senate passes a bill i will send it to a judiciary committee for an open hearing. that's why we are the committee structure in the house. i think regular order is appropriate way to move the bill.

>> are you not bringing it to the floor for a vote? >> i've never been for a blanket make a commitment -- i do know what the product is. i expect the house will act on legislation in the coming months. but i want this to go through regular order.

i want the judiciary committee to take the time and look at whatever the senate does produce, assuming they produce something and make their determination. >> what do you say to the families who are calling for an up and down vote regardless if you agree with it or not. does that have an affect on it at all? >> our hearts and prayers go out to the families of the victims. i expect the house will act in some way, shape, or form. to make a blanket commitment without knowing what the under lying bill is i think it would be irresponsible on my part. if they produce a bill, we will review it and take it from there. >> do you think things have changed? the mindset has changed about guns? >> it the issue of guns -- they've been an issue for the 22 years i've been in congress. the thing we have to remember, laws are only as good as our citizens willingness to obey them. law-abiding citizens do obey them. criminals don't. in addition to that, we've got a system of laws that are not enforced today. i would think that before we begin to add more rules and regulations on law-abiding citizens that we would expect the law enforcement personnel and the department of justice to enforce the current law, which they are not doing.

>> mr. speaker, back in december when the president made his last offer. you said it was unbalanced. yesterday, he put it back on the table. is your last offer to the president still on the table and would you be willing to make it public to judge how close it was? >> i think there are plenty of reporting on what the offer was. >> so the -- >> the president knows what needs to be done. he knows we can't continue to spend money we don't have. this year the federal government will bring in more revenue than any history of the country.

we will still have a trillion- dollar budget problem. we programs that are not sustainable in the current form. there needs to be modifications and we need to get serious about it. i've never with drawn it. i'm not sure where it is. you probably reported on it. >> what do you think is a more important issue that has -- \[unintelligible] immigration or gun control? >> those are the only two options? >> between those two. >> there's a lot of important issues the american people want us to address. i would argue one of the biggest challenges facing us is our long-term structural debt problem that is going to imprison our kids and our grandkids.

it is hurting the economy today, hurting the ability to get jobs, keeping the wages down. it was never a rule to begin with. certainly, my prerogative or my intention is to always pass bills with strong republican support. >> would you put immigration before the committee of jurisdiction? >> there's a number of committees that are working on this issue now. how we will consider it, there has been no decisions. whether we'll go first or the senate will go first, it is hard to gage at this point. there's a lot of work being put into this and i'm urging members on both sides of the aisle to come together and address, what

i think is a big issue in our country. >> when do you expect you'll see a plan from the group? are they briefing you regularly and when do you expect that to happen? >> when they tell me they are ready. >> on the debt ceiling, how do you see it playing out? to dow -- how do you want it play out? >> the house is going to move a bill to give the treasury the ability to make interest payments, to make social security payments, in some particular fashion. but our goal here is to put our spending on a sustainable path. it isn't to default on our debt. the goal is to cut spending. wee made clear that until get spending cuts and reforms

that put us on a path to balance the budget in the next 10 years we're going to have fights. >> are you willing to have it turn out in 2011 again, to get to that level of suspense? >> i spent two and half years focused on this one issue in a big way. i think most you have understand my point to get this government to deal honestly with the spending problem. i've watched this government kick the can down the road and kick the can down the road. i swore to myself they would not do it and i'm not. >> john boehner briefing earlier. nancy pelosi had a briefing as well.

>> the republicans deserve and f for failing. consider the republican report card. no jobs. the democratic budget begins with an initiative on growth they have been blocking a debate on democratic proposals. maybe some of you were at the

press conference yesterday when mr. highwayer made the american initiative was a legislative proposals, many made by the newest members of congress, members of the freshman class. bringing jobs home and investing in innovation and having solutions for small businesses and the middle-class. yesterday was also equal payday. today, members are lining up to sign the discharge petition for the pay equity act. we know that it is officially called the paycheck fairness introduced by a congressman who has been relentless on this issue for fair pay for women. we believe as does she leads us to when women are paid fairly the economy and our nation prospers. members are lined up there now to sign the discharge petition. this year is the 50th

anniversary of when president kennedy signed equal pay act. so we want to see how far we have come, how much farther we have to go. also today we are seeing a fuller information about the president's budget. it's a balanced approach to create jobs and responsibly reduce the deficit. it's a compromise measure. as with all compromise measures, there are some things in there that everybody doesn't love, but it is a budget for job creation, infrastructure, surface transportation and other jobs initiatives. it's about young people, education in training, early childhood through lifetime learning. nothing brings more money to the federal treasury then the education of the american people from early childhood education to lifetime learning and everything in between. k-12, higher ed, post grad, lifetime learning and that's what this bill, this budget is about. as i said, education and training from early childhood to lifetime learning ensures all 4-year-olds have access to quality preschool, fully funds pell grants, support state efforts to tackle college costs and reorganizes system initiatives to make this all more effective. and it's lifts the sequester,

limits s.g.r. s.g.r. being the -- by eliminating s.g.r., protecting seniors' access to doctors on medicare. very important issue for our seniors. republican budget by contrast continues to destroy jobs, stalls our economic recovery and ends the medicare guarantee. we're calling upon speaker boehner to appoint conferees. house and senate passed budgets. let's go to conference and do it in a transparent way to the public can see choices there. americans want us to work together to solve problems. this is a way we can do that. lift a sequester, find common ground to create jobs, grow the economy and build a strong, thriving middle class. passage there but we need to appoint conferees in order not to obstruct that path to economic growth.

good news today is the senate n. a strong, bipartisan vote, 68- 31, voted to move forward on gun violence prevention legislation addressing background checks, as you know, gun trafficking and proposals for school safety. that's all a good thing. it is about guns and budget. guns and budget. you don't know this when many of us were in college it was guns and butter. now it's guns and budget. that's in front of us now. with that i will be pleased to take any questions you have. yes? >> the reason why action needs

to be taken now, can you explain how the legislation in the senate would have prevented newtown? >> when you see newtown, it's important to note that about 4,000 people have died by gun violence since newtown. newtown, no question about it, just tore at the hearts of the american people and challenged our conscience to do everything in our power to prevent gun violence. the legislation that is moving forward in the senate and hopefully we have something similar and we will have something similar in the house is about background checks,

which i think would have been very important. the -- ending gun trafficking keep guns out of hands of people who shouldn't, draw purchases all of that and initiatives for school safety. if you just want to focus on one thing, initiatives for school safety might have protected those children a lot better. how can we ever not act upon killing of 20 little children around 6 years old each? and so we want to prevent similar situations or end gun violence in our country by having responsible, responsible background checks, responsible gun ownership, and precautions taken to prevent it from happening again. but again, it's a tall order.

and there will be other aspects of ending violence in our communities that relate to mental health issues and the rest but we must -- we must reduce the number of guns in the hands of people who would use them in a way that they shouldn't. >> president obama's budget, due release yesterday, includes hundreds of billions of dollars of cuts to medicare as well as c.p.i., two things that angered a lot of the most liberal members of your caucus. representatives protesting the white house, so upset about these type of cuts. as leader of the house democratic caucus, where do you stand on c.p.i. and billions of cuts to medicare the president proposed? >> as soon as this press conference is over, depending on how long it takes at 3:00, house democrats will be meeting to hear from experts on the subject of changed c.p.i. and subsequent meetings from the white house on other aspects of the budget. but the c.p.i. issue is one that is that has caused a great

of discussion, and we will be hearing from two versions of one opposing changed c.p.i. the other saying it done, protecting very poor and elderly, there might be a way to go forward. weyself believe whatever talk about in terms of prolonging life of social security should be considered in its own place. abouter we're doing, it's extending the life and strength of social security. it's not about balancing the budget. so that is some of the concerns that some of our members have, why is this in this bill? i salute the president for his budget.

it's great. focuses on jobs. it focuses on the future. it offers some compromises and it insists on rev lieu. remains to be seen if colleagues want to go forward in a balanced way or just want to have it their own way. but we do have to know what we're talking about when we make statements about cuts in medicare and what is that and what is the impact of changed c.p.i. what i do know about in the president's budget for the lowest income seniors and people with disabilities, they would not be affected. means tested veterans' pensions as well as montgomery, g.i. bill active duty, whether the post g.i. bill benefits won't affected. supplemental nutrition program, snap, food stamps and child nutrition programs will not be affected. pell grants will not be affected. so it goes on and on to that

effect. again t. has to be weighed against compared to what and how else can we reach balance. i think coming out of the meeting we will be better equipped to really foe what the impact is of changed c.p.i., pros and cons of it. but i think there's more of an interest in viewing it as, if social just in terms of security stability rather then balancing the budget. >> we talked about universal background check could possibly lead to federal registry on a gun. does that sound concern on his part? certainly see that's not so in the president -- excuse me, in the senate bill. the principles we have put forward on the house side, which you have probably seen, we don't have a gun registry there. >> perhaps to fight against or for or whatnot -- >> we want a bill, boldest common denominator we can pass that reduces gun violence in our country.

and we're waiting to see where the senate moves, have many amendments. don't know if that will be one of them. i hope when it comes to the house, we can have a vote. the american people deserve a vote. the american people want a vote in overwhelming numbers. some of the things in the senate bill are supported in overwhelming numbers. repeat the phrase. so we will see. but there's nothing to get to your first point that said this will lead to that, no. not necessarily. >> speaker boehner said on guns before we add more rules and regulations, our law enforcement personnel and d.o.j. should enforce the current law, which they're not doing. do you have reaction to that statement? >> it saddens me because obviously, we should enforce the laws that we have. there's no question about that. many have said that over and over again. the most recent supreme court decision on guns recognizes that there is a role to be played to regulate, if that's the word, guns. to heller decision relating the district of columbia. but that is not enough.

that is not enough. don't know how can show our faces to these families or even look ourselves in the mirror if we don't take something more serious. as i said to you over and over, any one of us as members of congress, democrat, republican, anybody, would stand in front of an assault on our children to protect them. protect them from ending attack. we should have the political courage to stand out there to protect them from gun violence as well. and more needs to be done in a reasoned way we can reach the boldest common denominator, consensus and start there and go from there. >> madam leader, i wanted to ask you what you thought about the n.r.a.'s power and what is their status like these days?

we saw they were not able to have a strong effect blocking today's procedural vote but they have been successful, 14 assault weapon bans or ban on capacity clips. i'm wondering what you think about where they are. >> we have not seen the vote on any amendments on the senate floor yet. i believe the senator feinstein is determined to put forth an assault weapon ban and others may be putting forth a high capacity magazine ban. it takes 60 votes to get an amendment heard my understanding is. i thought we go through that today. i guess on every amendment you need 60-vote threshold so that will be difficult. what do you mean by n.r.a.? if you're talking about the membership of the n.r.a. -- well, i don't -- members of the n.r.a., with whom many of us here, many are in agreement on many subjects, including first

the second amendment, the respecting the rights of gun owners and hunters and the rest, many of the n.r.a. members support background checks. you know statistics, you have seen the pulse. so the membership seems to be way ahead of the leadership of the n.r.a. on these issues. remains to be seen at the end of the day whether they can stand in the way of a vote to reduce gun violence in our country. i hope they do not. the gun owners of america, that's a whole other story. their advocacy, radical position that's they take may have an impact on the positions the n.r.a. takes. i'm not an expert on the dynamic of anti-gun safety leadership and these organizations. but i respect the concerns that

members have about how they will be affected being gun owners, being hunters, using guns for recreational use. that's why i was pleased to appoint time thompson to the head of our task force. he's a vietnam war vet, wounded vietnam war investment person who used assault weapons in combat and knows they should be banned. but nonetheless, was that a place where all of congress can come to agreement? i don't know. but he certainly is a gun owner and hunter and brings that perspective to the table to lead our efforts to find common ground.

we will see what the impact is. i don't want to predict it will be successful because i hope and pray it is not and as you have heard me say over and over, president lincoln said, public sentiment is everything and it's the public, including members of the n.r.a., understand that more needs to be done. i think we will be successful. one more? yes.

>> most people in the country want to see solvency extended. what are the options available to do that. the table.hat on is on the table to prolong its people pay in and people -- we have to take the democratic route of many more baby boomers online. and how do we strengthen social security. what our members are concerned about is mitch -- mixing that with the budget. there is no reason why you would say we have the growth of social tourity benefits in order reduce the deficit. we can reduce the deficit by having people in high incomes pay their fair share.

we can reduce the deficit by cutting spending. that includes tax expenditures. we spend hundreds of billions of dollars on necessarily giving tax loophole subsidies to those who do not need them. subjects like reduction of interest on mortgages that are legitimate tax expenditures. not these others that showed just a tax avoidance on their part. of $100in the tune billion. why are we talking about something here in relationship to what we need to do now? the report -- the president has said to the republicans, you want to see something in the area of social security and medicare and these are only on the table if we are talking about serious revenue. only on the table if we are talking about serious revenue

coming in. additional revenue. so far, we have not seen a response to that. the speaker said something to you this morning. earlier this afternoon. >> >> well, let's see what they do. the president chose to put it in the budget to give it visibility. but it might have been more useful place to be discussed on its own table on social security where you can compare one thing or another, one option or another. but we have to learn more about it erie i don't know about you, but do you feel comfortable talking about 1050i. do you know all of the ramifications to the extent that you have an appreciation for what it does and does not do? that is what we want members to do.

it should be a decision, not an emotion. prove to, you have to us that this is worth it. because it affects many other things. it is not just about social security and the rate of increase of the social security benefits. if you are very poor, it might speed up. parts ofabout other our economy that grow at the rate of inflation that would no longer do that. so if wages, for example, are rising to the weight of -- to the rate of inflation and benefits are going to the cpi, there are some answers we need for how fast one side of this gross versus the other and there are identifications in the tax code as to whether somebody get bumped into a higher bracket because of the way wages were ofsured versus other aspects

personal accounting for the american people. so it's an interesting time. i love to learn, don't you? we will see several things on what this actually does. we will learn compared to what and why it should be considered in a budget when it should be considered someplace else on a separate table. then, i think everybody has right to express themselves on this. i am not making any judgment on the resident putting this in remember wanting to take it out. what i do want and what we are fighting -- what we are finally , it: sidesay perfectly with the president's budget -- it coincides perfectly with the president's budget and

strengthen people's position against it. but we will have more people -- but we will have more knowledge on what it is. st people in the general public has really developed a life hasn't it. it will be interesting to see. if the republicans aren't going come forth with any revenue from the what is the discussion? it's a discussion for another day soon where we talk about preserving social security and medicare. it's an interesting time. today, we had a really beautiful ceremony, the day of remembrance for the holocaust. if youin the rotunda.

have never seen it, you should go next year because they have the flags coming of all of the ints that freed the people auschwitz, along minicamps. it wasg many camps. and wonderful to recognize all of those units and to see the survivors lighting the candles. i must say, i have been to every one since i've been here during .his is my -- been here during the holocaust survivors are really getting on and it's a good thing we are doing it. now it's 20 years later and many of them are still there very strong lighting the candles. just a most moving thing to remember what they saw in the description that is given of it

and how we must almost -- must always remember. in the beginning, there was no holocaust museum. and now the holocaust museum is 20 years old and they sort of sponsor it and now. it really is quite magnificent. so mark your calendar for a year from now on april and be sure to go and see the patriotism of our troops, the courage they had and have great general eisenhower and president eisenhower was at the time and how he really wanted to be sure that people saw the facts of it so that he could never be denied and it could never happen again. . a pretty eventful week people pay date. the president's budget. next week, when i see you, i will talk to you about why this is so damaging and how it's

becoming entrenched if we don't put a stop to that. job creation is so important. not only job creation, but paying a decent wage to workers and how, over the past 20 5-30 years, the disparity in income has grown to such a huge amount as to undermine the middle class and our country. and what the republicans are doing now reinforces all of that. our country is great. we can withstand a lot. we should not have america's working families put up with this. and that is what we will talk about next week. thank you all very much. orphaned at age 11, she lived with her favorite uncle james buchanan. years later, he becomes president. because he is

unmarried, she serves as the white house hostess. she is the first to be called first lady on a regular basis. names of ships and children. along with your questions and comments by phone, facebook and twitter. first ladies, monday night on c- span and c-span three. also on c-span radio and c- span.org. , house members questioned treasury secretary jack lew about the president's $3.8 billion budget request. he had devised against the deep -- he advised against it and it cuts. this part of the house ways and means committee meeting is an hour and a half hearing it begins with dave camp of michigan.

>> good morning. the committee will come to order. well, good morning, mr. secretary, and welcome to the ways and means committee. the last time you testified here, it was as director. let me abruptly -- let me publicly say to you what i said in private and welcome you to your new post. it is my sincere hope that we will be seeing a lot of each other. and equally important that our staffs will be working together a lot as we move forward. on monday, the front page of "the new york times" business section said "mood depressed the simple truth is that too many families are still

struggling. meanwhile, many have had their hours reduced and their wages frozen. there is no cure-all but there are real achievable policies that can help strengthen this economy and turn things around for american families. chief among those is fixing our broken and outdated tax code and don'ts in the budget. i am sure you will hear from mr. ryan and others so i will focus on the tax code. the american tax code is broken and i am committed to working with anyone, republican or debt retract -- or democrat, to fix it. that thee truth is president's proposal is not the reform we need and does not go nearly far enough to address the needs of all job creators. the problem with our tax code is not how much money it makes for washington. our government is on track to double the money makes from

taxpayers over the next 10 years from approving the government has all the revenue it needs. the problem with the tax code is that it costs american families too much, too much in time, too much money, to comply with it. mr. secretary, you know these facts. americans spend over $160 billion to navigate the complex these of the tax code. it takes gathering receipts, reading the rules and filling out the forms at the irs requires. . there have been more than 4400 changes to the u.s. tax code.

that's more than one a day. instead of reversing that trend and trying to make the tax code work for the american people, this budget adds new levels of complexities and creates new credits in deductions. mr. secretary, it's our job to make sense of the tax code and i hope you and the president can work with congress to deal real reform to the american people. our tax code needs to be genuinely user friendly. you shouldn't have to pay a professional to figure out taxes. but it's so layered in complexity, nine oust ten americans don't feel comfortable doing their own taxes. they are forced to pay a professional or buy commercial software. americans should have faith their government is taxing them effectively and efficiently. instead they fear the i.r.s. and potential being audited. our tax code needs to be fairer at a time when american families are just trying to make ends meet. we shouldn't be taking more of their money to bail out washington's inability to control spending. let's put an end to the special interest loopholes in the handouts and use that revenue to create simpler, fairer tax code that lowers rates for all americans. mr. secretary, across this country, people are sick of washington's gridlock. that's why i will work with you, the president, republicans and democrats, to simplify and fix this broken tax code. this budget is the first step but the american people can do

better then what the president's proposing here. it won't be easy but this committee, republicans and democrats, are willing and ready to do the tough work our constituents sent us here to do. we don't have to settle for the same old game of giving washington more tax pair money and calling it reform. it's been 27 years since this town cleaned up the code. it's time for us to do our job again. hard working taxpayers deserve real solutions that make our tax code simpler and fairer for every american. let's work together to accomplish that. i want to thank you again for being here and congratulations on your new job and i will now turn to ranking member levin for his opening statement. >> thank you, mr. chairman. welcome secretary lew. we have to get used to that title. since we've always known you with other titles, but mostly by your first name. i'm tempted to ask you when is the first time you appeared before this committee? >> first time i was in this room

is probably 1973 on hr-2 pension reform. >> all right. ly go on. well, we have enjoyed so much working with you in the past. only one of us i think goes back that far. and we all look forward to working with you in the days ahead. you're appearing today to discuss the administration's 2014 budget. that's why you are here. which follows those presented earlier by house republicans, house democrats and senate democrats. clearly the administration's budget reflects an effort to open up a search for some common ground. unfortunately, this has been rebuffed in the responses of the house republican leadership. administration made clear that any search for common ground requires a balanced approach.

my guess is the president has used the word balanced perhaps more than any other word for good reason. a combination of budget cuts and additional revenues. a republican approach is based on imbalance. the tax cuts the republicans pros in their budget would leave a $5.7 trillion revenue gap. yet they never provided specifics on how they would fill it. what we know is would almost certainly require eliminating or dramatically cutting tax revisions that had been vital to middle and low-income families, including the mortgage interest deduction and the exclusion for employer-provided health care. their budget reaffirms their plans also to turn medicare into a voucher program.

and repeal the benefit provisions, if not the revenues they propose keeping. in its budget the administration has also come forth with further ideas on business tax reform and in doing so it is highlighted while lower rates are important they must not come at the expense of critical investments that american enterprises need to thrive and to succeed. i hope that foundation in the theme of tax equity among others will guide us as we face the challenge of tax reform, tax reform based and reality, not namely on rhetoric. the imbalance in the response from house republicans is further illustrated even as we hear today the testimony of you by their unwillingness to appoint conferees to consider the budget bills passed by the house and senate in conjunction

with the administration's budget. this continued republican embrace of a budget deadlock is all the more worrisome, if i might say, as the sequester continues to unfold. and as debt ceiling once again approaches. indeed it was made all the more worrisome by the house republican hearing yesterday that focused on the debt ceiling in terms of the possibility of prioritizing our obligations, obligations all emanating from congressional actions. we cannot continue on this dangerous path. hopefully this hearing will serve a constructive opportunity to embrace a different path. i yield back. >> thank you so much, mr. levin. again, it is my pleasure to welcome secretary jack lew back to the committee on ways and means. we look forward to your

testimony. the committee received your written statement t will be made part of the formal record and secretary lew, you're recognized for five minutes. >> thank you very much, mr. chairman and thank you, mr. chairman, ranking member levin for your gracious welcome here today. it's an honor to appear and present the president's budget for next year. i sit here as chairman noted surrounded by four decades of memories of many important occasions when bipartisan cooperation has moved the country forward in the best interest of the american people. i sit here today looking forward to continuing in that tradition this year and in my current role. our economy is much stronger today then it was four years ago but we must continue to pursue policies that help create jobs and accelerate growth. since 2009 the economy has expanded for 14 consecutive quarters. private employers added nearly 6.5 million near the past 37 months, housing market improved, consumer spending and business investment solid and exports

have expanded. but every -- very tough challenges remain. while we have removed much of the reckon from the worst economic crisis since the great depression, damage left in its weak is not fully prepared. families are still struggling. unemployment high and economic growth needs to be faster and while we made substantial progress, we must do more to put our fiscal house in order. at the same time political gridlock in washington continues to generate a separate set of head winds including harsh and discriminate spending cuts from a sequester drag on our economy and month as head if they're not replaced with sensible deficit reduction policies. this is my first opportunity to appear before you as treasury secretary and discuss from the vantage point how we need to confront difficult challenges. this is far from the first budget i worked on. in my experience good budgets offers practical solutions the problems of its time. the president's budget does that by making investments that will drive a growing economy and reining in our deficits responsibly so we can replace across-the-board cuts

immediately and restore fiscal stability over time. a good budget must also be grounded in reality. this budget deals squarely with the world as it is now and as it will be in the future. it reflects the need for compromise to have a path that could command bipartisan support and recognizes issues of major consequence like the fact our demographics are shifting. with the baby boom, number of retirees is growing. like the fact millions of americans are living in poverty today. like wages and income for middle class americans have not improved for more than a decade. that despite significant strides through affordable care act, health care spending remains key driver of long-term deficits. this budget is animated by the simple notion can and must do two things at once. strengthen recovery in the near term by reducing deficit and debt over immediate long term. this is the president's longstanding approach to fiscal policy and when you compare the trajectory of our economic recovery with those of other developed countries in recent

years, it's clear why the president remains so committed to this path. as chairman noted, i returned from meetings in europe and it's clear where austerity measures were implemented too quickly, those economies have stumbled. ours is a different story. notwithstanding need to do more, our economy continues to expand with the support of growth- oriented economic policies, even as we make meaningful progress to reduce the deficit. it's important to bear in mind how meaningful progress has been. in the last few years the president and congress has come together to hammer out historic agreement that substantially cut spending and modestly raise revenue . when you combine these with savings from interest we locked in more than 2.5 trillion of deficit reduction over the next 10 years and today putting forward policies that lower the budget doffs below 2% of g.d.p. and bring down the national debt relative to the size of the economy for 10 years. we restore the nation's long- term fiscal health by cutting spending and closing tax loopholes. the budget achieves balanced

approach through specific steps such as reforming agriculture subsidies and eliminating tax preferences for company that's move operations and jobs overseas. at the same time the budget incorporates all elements in the administration's offer to speaker boehner last december. demonstrating staying at the table and make difficult choices in staying that ground. the president would not normally put forward such as means testing through medicare premiums and adopting more accurate and less generous measure of inflation. it includes these proposals only so we with come together around a complete and comprehensive package to shrink the deficit by an additional $1.8 trillion over 10 years and remove uncertainty that has dragged on job creation. this does not represent the starting point for negotiations. it represents pair balance between tough entitlement savings and additional revenues from those with the greatest

income. the two cannot be separated and were not separated last december when we were close to a bipartisan agreement. this budget provides achievable solutions to our fiscal problems but as crucial as these solutions are, we have to do more than focus on deficit and debt. i know the significance of balancing the budget. i will not take a back seat anyone when it comes to fiscal responsibility. under president clinton i helped negotiate the groundbreaking agreement with congress to balance the budge. as director of o.m.b. i oversaw three budget surpluses in a row and worked with many on the left and right on our plans to pay off our debt. it will come as no surprise i was profoundly disappointed to see those surpluses squandered. that does not mean we should make deficit reduction are one and only priority, not when the world demands we confront fiscal challenges and make targeted investments to propel broad- based growth. so this budget lays out initiatives to fuel our economy now and well into the future. every one of these initiative is paid for in our deficit reduction package, meaning they do not add a time to the deficit.

as the president explains in the state of the union, the surest path to long-term prosperity is strengthen the middle class. this budget does that by zeroing in on three things, bringing more jobs to our shores, making sure american workers have skills needed to do those jobs and making sure hard work amounts to decent living. to generate more jobs in the united states, we focus on growing our economy by making it more completive. the budget launches advanced manufacturing hubs around the country, invests in research and technology and cuts red tape to expand domestic energy production including clean energy and natural gas. it also puts people to work right away, preparing tee dear rating roads, railways, bridges and airports so our economy can compete in the future. we made considerable headway over the last few years to improve education and worker training and can go further by helping students acquire skills today's economy demands. that means joining with w states to give every child solid preschool education, reconfiguring high school so students can get high-tech, highway skills businesses it needs and it means making college more affordable.

finally, budget would help lift communities hit the worst by the recession and adjust minimum wage so the full-time workers are not stuck in poverty. the proposal i just outlined are part of the president's framework for growing our economy and cutting our deficits. as the budget shows, we do not have to choose between the two and we must not. we can adopt a powerful jobs and growth plan as we embrace tough reforms to stabilize finances. this is the way a budget will make our economy stronger and help create job u.s. now and in the future. before i close, i want to say the debate we're engaged in is very important. it's part of a complex sorting out process that will determine our nation's future. but every on this committee knows the path before us will be a struggle. it will require difficult decision that's will directly affect daily lives of millions of americans, entrepreneurs, immigrants, soldiers, veterans, young, elderly, working poor convenient well off and it matters we get this right w that in mind i come here today

optimistic about what we can accomplish. i believe we can find common ground to stop the unnecessary standoffs and manufacture crises. we can come together to forth an agreement to right our fiscal ship and make compromises necessary to meet our obligations to future generations. thank you, mr. chairman. i look forward to answering your questions. >> thank you, mr. secretary. i'm interested in making the tax code work for families instead of special interests here in washington. and i'm interested in fixing this tax code so families struggling to get by and maybe save a little for college education can do so and this budget talks about reforming the tax code for corporate america but it doesn't talk about reforming it for family and individuals. i think we can do better. for example, there are 15 different tax breaks for higher education, including 9 for current expenses, 2 for past expenses, 4 for future expenses. the i.r.s. publication on tax benefits for education is 90 pages long.

this sent a tax code designed for working families. it's a tax code designed to make money for accountants and tax planners. don't you think we should make sense and help working families? >> mr. chairman, i totally agree. the president's budget has in the past called for 0 individual tax reform as well. the president laid out principles to guide that. i think that the idea of tax simplification, broadening the base is very important. the president's put it into context of a fiscal plan where i think we have a number of objective that's have to be achieved at the same time. we've got to get our fiscal house in order as part of that, we need to raise more revenue and we think the tax reform ought to produce that ability to raise revenues, simplify tax code and make it so ordinary people don't need to have complicated hours-long processes or go to accountants for simple tax forms. i participated in 1986 in tax reform. i know how hard it is to do.

i look forward to working with you on a bipartisan basis to get that done. >> i was pleased to see the administration taking more concrete steps towards tax reform in this budget. again, like forward to working with you and the president to make the code simpler and fairer for families and individuals and to help strengthen the economy . when i talk to middle class americans in michigan back home in my district, their frustrated by the current state of the tax code and rightly so. they don't understand the complexity. may not know there are 4,400 changes over the last decade but certainly they know that there's been a lot of them. it seems unfair to me that the tax code forces americans to spend over $160 billion to comply and 6 billion hours, almost 13 hours per person, average taxpayer. every year complying with the code is more expensive, more costly. particularly when you look at very tight margins small

businesses are on. this is a huge cost to them and frankly it should be their time and money, not the i.r.s.'. i commend the administration for proposing revenue-neutral tax reform in the bill. but again don't you think individuals and families deserve a tax reform that makes the code simpler and fairer for them, too? >> mr. chairman, i believe we need to do both individual and business tax reform. and in the context of overall tax reform to be clear, we do not think it can be revenue neutral. we think there needs to be additional revenue to help get our fiscal house in order and budget calls for $508 billion of additional revenue. on the business side, our goal has been very clear. could not agree with you more. we need to really go at all of the special provisions. deductions, credits that complicate the business tax system. we need to enable ourselves to lower rates so statutory rate could be more competitive with

the rest of the world. our goal is business tax reform is really to stimulate economic growth and job creation. i don't believe 2 can be separated from overall tax reform. i think if you look at the decisions small businesses make, even how to organize, whether to be partnership or corporation, it makes a big difference what their relative treatment in the individual and business tax systems are. so intellectually one ha to look -- one has tole. tlook at it as a whole. i think this is a big challenge. this is something that will require democrats and republicans standing shoulder to shoulder because every one of the provisions we would eliminate to broaden the base has people and business that's support it. and that's a process that can only be done through bipartisan cooperation. >> thank you. mr. levin. >> thank you.

when you look at business tax reform, the president's budget suggests we need month main ten >> i want to focus, mr. secretary, on the gridlock in washington today. you are the treasury secretary. what the consequences are. briefly, i want to start with the sequester. are you concerned? thatngressman, i think the sequester is very bad policy. it was designed to be bad policy, to motivate both sides to come up with a more sensible plan to achieve deficit reduction. i think one can -- thing we can be sure of is that when you produce that policy, who produced that policy. the effect of the sequester is not something anyone he should choose.

they are senseless across-the- board cuts. at a time we should we should be worried about growing the economy, it takes roughly 0.5% of gdp out of the economy. it is not good policy in terms of the impact of the individual cuts. it is not good policy in terms of the overall impact on the economy. i do believe we need to have a long-term, sensible path of deficit reduction. the president's budget reflects that. there has to be shared sacrifice. the sooner, the better. if you look at the series of deadlocks we have had over the past few years, each one has led to a loss of confidence in the economy. ,ach one has caused individuals businesses making decisions on whether to invest and hire, worry about, was government going to add headwinds that would make that the not the right time to make an investment decision? the government should be helping, not hurting him in the economic recovery.

placing the sequester would do that. >> it should be done now? >> the sooner the better. we do not have an economic emergency in terms of the deficit right now. our budget makes clear that we need to be on a path over the next 10 years. the cuts this year are not what matters so much as much as the reliable path over 10 years. the sooner we get the sequester out-of-the-way, the sooner the economy will be relieved of the burden of the burden of that 0.5% cut in gdp. the sooner programs that people depend on get back to normal. anothere ask you about piece of this gridlock, the debt ceiling. it is going to be bumped into once again. there was a healing yesterday -- yesterday about prioritization in terms of the debts we pay. if you give us the administration's view? has think the president been clear that there is no choice but for congress to

extend the debt limit. the debt limit does not commit any new spending. is thatdebt limit does it permits the government to pay the bills that congress has authorized to be incurred. from the beginning of our history, the united states has always paid its bills. there is no way to pick and choose about paying your bills without being in default on one or the other obligation. the only answer is to extend the -- the debt limit. >> lastly, you referred to growth, and there was some reference to your trip to europe and your concerns expressed their about their continued rigid austerity. a major jobs is component in the president's budget. >> if you look at the experience we have had in the night dates compared to europe, we have had a stronger recovery because we got our financial system under

control. we put measures in place quickly to deal with the depths of the recession. our fiscal consolidation, our deficit reduction over time. i think that is a proven path. it is something we are ,xperiencing -- growth in jobs it is too slow, but it is much better than the general experience in europe and much of the world. i think that we need to grow the economy, create jobs, and get our fiscal house in order. as a message i brought with me in the the meetings i had earlier this week. i think there is a softening in some sense in europe. they started out a couple of years ago not worried about the impact of very high unemployment as much as we thought he should be. i think there'll is a growing concern -- there is a growing concern in europe that there will be a structural problem. he started out with that understanding. we think 7.5% unemployment is a high unemployment rate.

you have to policies to deal with it. >> mr. johnson is recognized. chairman.ou, mr. mr. secretary, i realize your time constraints, so some of these questions i would like you to answer yes or no. with respect to securing social security's future, in his book, athe predictable surprise," retirement expert said if we fail to act, we threaten the prosperity of younger generations. that is a prospect your former boss president clinton said would be horribly wrong and unfair. i appreciated that comment that was 15 years ago. i said i was encouraged that the president's budget took a first step towards protecting social security for today's workers by including the chained consumer price index to copulate the annual cost-of- living adjustment. do you think this is a more

accurate way of measuring inflation? my openingicated in comments, congressman, it is something we are prepared to do as part of the balance is reduction package. technically, it can be justified. but it does have an impact in terms of affecting benefits long-term. fromhear a lot of talk aarp and others that using the itined cpi benefits -- affects benefits. i think it does. >> i'm sorry did not understand. it reduces the rate of growth in the cost-of-living, an increase of about 3/10 of one point. >> basic benefits are not cut. >> the underlying benefits are not cut. >> benefits still grow each year. >> there is no doubt that we have not supported any measure that would cut the basic benefit, but i do not want to

be misunderstood. reduction in the rate of growth has an impact, and it is something that is very significant. i appreciate your recognizing of that in your opening comments. it closes the long-term social security deficit by 10%. does the president plan to close the remaining 90% gap or is he going to pass the bill to our grandkids and is he serious about fixing social security? >> the president has made it clear he wants to work with congress on a long-term plan and make social security sound. i think it is important for all of us to remember that in dealing with social security, the fundamental goal has to be protecting social security and getting it -- >> i agree with you. that hearing will focus on the changed consumer price index, eliminating double-dipping.

i'm deeply troubled that the president's budget includes no proposal to prevent the 21% across the board cut that the beneficiaries face in 2016. that is just three years from now. they have held several committees on the program and i hope you work with us to secure the safety of that safety net. someone can receive unemployment and social security at the same time. i don't see how someone can work and be unable to work due to disability.

so i'm going introduce a bill to stop them from receiving benefits at the same time as receiving disability benefits. i look forward to getting this bill signed into the law. i yield back, mr. chairman. >> thank you. >> thank you, mr. chairman. congratulations, mr. secretary. in new york, we live in two different worlds. we have the world of wealth and riches then we have the inner cities of poverty and eas pair. i can't believe at a time of a national crisis that those who are doing so well are protected

and those who are not doing well at all -- with all due respect to the president's calculating of the chained c.p.i. the benefits that would be available under the system would be reduced. we're living at time where the stock market is now at an all time high, is that correct? >> it has been, yes. >> would that not apply to the incomes of the chief skeffs offices. it is true they are getting paid million opposite dollars for the work they are doing? would know this better than most people? >> i don't follow the day-to-day >> i know. but generally speaking for the corporate leader and the holder of the economy to receive $2 million or $3 million it does not raise any eyebrows. it seems to me when we take a look at the republicans' budget that would indicate at a time through all of this crisis we

find unemployment going down. we still find increases in employment that this is the time to stop sending. now is the time to cut federal programs. cutting doesn't mean you're saving money. but at a time we're trying to cut back with the economy, that world that you spent a little time in, the private sector, where are their voices? if these people are not working, have no disposal income and small business can't sell, where are they? they are not complaining about a tax increase but they are not involving themselves in trying to resolve this issue that we found ourselves in. i don't know what happens when you get out there, but do you hear from the private sector in terms of how we can break this gridlock? >> congressman, i have to say in the debate we had in the end of

the year last year, i had a number of c.e.o.'s tell me that we should have the rate increases that went into effect. it was not that they weren't opposing it, they were more comfortable having the issue resolved because they were embarrassed about whether or not they could afford the tax rate that was enacted in january. i think, you know, going forward, it is going to be very important for the business community to stand up for the balanced approach we're talking a. -- about. they care about the end result, which is having the deficit and debt be sustainable and they care about economic growth. we're making the case for the budget in every sector that we can, including in the business world. i think the underlying problem that you identified is what central that drives our budget. the disparity of income in this country is a real problem.

>> when we talk about increasing the minimum wage, the private sector's voices is heard so loud it is deafening if the people in the lowest income gets an increase in the minimum wage. i don't know what my republican colleagues get so much income and they are willing to make some sacrifice to the good of the nation and they don't know how to communicate this. this is unbelievable. with all the money they spend, the people in the middle of my district they don't have people to come down here to protect their interests. not even a fair, equitable way we're going to figure out thousand cut money from them with social security. having said that, do you respond when people tell you that the president is right, we should be paying more?

>> i think we heard quite a lot from the business community at the end of the year supporting the balanced approach that we're proposing. i think they are confused by the budget debate in washington these days. when i talk to the business leaders they don't know if there is a chance of a bipartisan agreement. one of the things that the president's budget is saying is there is space for a budget agreement. i hope that will invite those who care to cause them to be on the sidelines. >> do you think -- >> time is expired. >> mr. brady is recognized. >> it is not encouraged that big business leaders are willing to raise taxes on small businesses on america. not a courageous move by any measure. this budget is not fair to

taxpayers. the president's budget never has to balance, washington never has to live within its means. it is not fair to seniors that the president refuses to save social security and medicare for the seniors rather than attach all of these unrelated pro visions that has nothing to do with those programs. it is not fair for those who can't find a breadwinner in their family because this recovery has been the weakest in modern times. we're missing four million jobs because of the growth gap is getting bigger. food stamps, since the recession bottomed out, americans are more likely to be forced to the food stamp line than to walk into a company that has offered them a new job. in those who have given up hope and dropped out of the work force, we've gone backwards to jimmy keart days. i don't think this budget is -- carter days. i don't think this budget is fair to them.

looking towards those areas where there might be common ground, tax reform and saving social security and medicare, i think there is a path forward. i don't think we should close loopholes so the government can spend more, i think we need to close them so we can lower taxes for everyone, small businesses, big businesses, and families. i want to welcome you back to the committee and i appreciate you the work you've done in the past. i think you can bring the valuable work ethic to this whole effort. will you commit to sitting down with republicans today, starting now, to fix the brork -- broken tax code this year? >> we're working to provide technical support for the house and senate as you do your work. >> so you, mr. secretary, as the

point man for the president on tax reform are you willing to sit at the table and finish fundamental tax reform this year? >> in the context of our overall fiscal plan. we have a disagreement on whether or not we need to raise revenue. that is a legitimate disagreement. we have to work our way through that. in the context of a fiscal plan that solves our deficit problem we want to engage on a tax reform. >> is that a closer to a yes that you will come to the table or closer to a no? >> i've always been prepared to talk and i remain prepared to talk. i can't pay over what is the significant difference. >> the question isn't that there are differences. the question is whether l you commit to coming to the table to resolve the differences? >> we've always been prepared to talk to this committee eastern committees about the important

business before us. there is nothing more important than getting our fiscal house in order and part of that the tax reform is a very, very important part. >> could you be more vague at this point? second question, will you commit to fixing the broken tax code for families and small businesses as well as big businesses? >> again, as i responded earlier, we're very much supportive of both individual and business tax reform. we would like to work with you to do that this year. >> so you're point -- the white house' point is we should not do corporate tax reform alone but we need authentic tax reform for small businesses and families as well? >> small businesses have to make the decision whether they organize under the corporate tax laws or the individual tax laws. i don't know how we create a situation where they can make a sensible decision if we don't

deal with -- >> but the government's role is not to take businesses how they organize. >> no, not at all up. >> so many file as individuals. so my question is simple. will you commit to fix tax reforms for small businesses as well as big businesses? >> small businesses make their own decisions on how to organize. one of the way they do -- the reasons they file as individuals because of the tax rate is so high. >> will you commit to saving social security and medicare for its own sake? >> i have 40 years believed in those programs. >> time has expired. >> thank you, mr. chairman. we've been buried in a tsunami of propaganda here is there is too much spending and not enough

tax relief from the people at the top. hendrix smith of "the new york times" wrote a book on who stole the american dream. he chronicles the process by which we've done that. in the process, over the 30 years, the middle-class has been hollowed out. their incomes have been stagnate, their job prospects are diminished, and their retirement is less secure. under reagan, with the disasterous cuts that favored the wealthy, it never trickled down on the rest of the country. reagan introduced a trend of emptying out the middle-class's pockets. -- 401ere pop youized and

k's were popularized and pensions were ended for many people in the country. so retirement for many americans is deeply, deeply under funded. along with the reagan creation of the sub prime high interest rate housing loans that started us into the disasterous a -- disaster of 2007. the bush tax cuts gave a big chunk of the deficits. now in this country, if you play by the rules and work hard you're running in place. you're not getting ahead and you know your kids are not going to do as well as you did. that is what the american people think today. there are some stuff in this budget that i like. there's investment in the future. in the infrastructure bank, money to end the sequester, i worry about our health care history in the long run if we

don't continue to invest at the national institutes of health. people get p.h.d., we don't make the advances. we allow singapore and other countries to take it away from us. the whole question of investment gets lost in all this talk about corporate tax reform. we lore the rates on corporate taxes, we come down to 15% on capital gains, where are we? the middle-class is being destroyed in this country. what i want you to do is imagine we're a bunch of workers from ohio. we're out of work for a year. what would you say about this budget that would be aimed at letting them understand that the president is charting a new course to save the middle-class, which they feel is being crushed. they can't educate their kids, they are losing their houses,

they haven't been working for a year and they are looking for some hope. >> congressman, i would say there is much in this budget that i would point to that to the working family. from the commitment to education from early childhood to higher education to make sure every child has a chance to have the skills to compete in the economy that they are going to grow up into. >> that's a long term thing. >> it starts away. >> something that they can see tomorrow. >> for the early childhood education starts right away. we can't ask them when they are 22 to see if they have the skills they need. i can make the case on infrastructure on so many levels. when i talk to c.e.o.'s one of the first thing they say to me is we're worried about our infrastructure. our roads, bridges, we're not going to exet -- compete in the 21st century. >> but our republican colleagues

resisted almost all of the president's efforts in the infrastructure creation a couple of years ago. explain to me how you're going finance it and how it can work. how can it work? >> it has to be in an overall fiscal plan. in the long term -- the medium and long term to bring our debt and deficit under control. our budget makes clear that if you make the tough decisions you can afford to do that. in addition of what we're doing in this budget, we're ending a second war. with doing that, we're freeing up resources. as we end the war in afghanistan we need to invest here at home. as we tend war in iraq we need to invest here at home. we need to invest in building our economy and creating jobs today. >> all right, thank you. >> growing up from a working

family in ohio, my colleague is trying to engage me here in a dialogue but i'm notice going to take the bait. but back in 2010, mr. lahood opposed to a gas tax opposed to infrastructure. but i'm not going to go there. thank you. i'm going to be in a learning mood here. first question i have for you is you may not know the answer but if you can have your staff get back to me. it has come to my attention from folks in ohio, that the i.r.s. is seeking to impose a ticket tax on transportations of people in the area for management services. they are re-enter prettying a law that was passed during the--

reinterpreting a law that was passed during the nixon administration. my understanding is that if you look at this, they are ledge -- legislating and overstepping as an authority agency. the tax has been due all along. does all along mean since 1970? i don't know. i'm concerned about it. i would like to have your staff maybe communicate with us on what you believe the i.r.s. is doing and if it is correct. >> i would be happy to look at it. >> thank you. i don't want to put you on the spot but it is an important jobs issue, not just ohio but all over. i, along with my colleague -- who i don't think is here, creating a group on retirement savings. there appears there is a pro vision, that i would like to

know more about and it deals with retirement savings. it deals with, appears capping the amount of dollar that an individual can have in a retirement account -- in terms of tax benefit and it appears the caps the revenue stream at $205,000, accumulatively at $300,000. i'm trying to learn, i'm not being critical. thinking back to my own t.s.p., which did not have $3 million in it. but thinking about what happened in 2007, between 2007 and the end of 2008, and i'm sure it represented -- my account represented what happened to most every american, based on the stock mark collapse in 2008.

it significantly went down. so if you're 58 years old and you're not retiring for 10 years. your stock market is high and you have $2.9 million.>> do you stop saving to avoid this for retirement? do you worry about, well, is the market going to go way up or could it go way down? it could go from $2.9 million to $1.9 million in a matter of months based on what we saw. how do we, include me in this, how do we administrate a program like this to make sure it is done without any penalties being created or encouraging people to take an early withdrawal to avoid a penalty to go over the $3 million? just thinking of where this is coming from in terms of the

administrating it. i'm concerned about those impacts. >> congressman, retirement savings is a hugely important issue. for the average working family, unfortunately, retirement savings is like $50,000-$70,000 than the $3 million. for the average working family they are so far from the $3 million mark they are probably wondering what we're talking about. >> i get it. but what our task force is up here is to try to encourage everybody to be self-sufficient. what i don't want to do as a policymaker send the message that we're going to go after someone who is trying to be self-sufficient and create a trap or penalty for them. i'm trying to figure out how do we administer that? >> we have, for a long time look

at how we can encourage people to save. a simple behavioral change, which we think would improve the people saving early and through their careers. the provision here reflects a judgment that should be tax incentives up to a certain point but beyond that we encourage people to save beyond that. the tax incentives have to be looked at it in the context of the tradeoffs. to save for your retirement with tax benefits a limit of $3 million seemed like a reasonable place to draw the line so we're encouraging the vast majority of americans to save as much as they possibly can. >> time has expired. >> thank you. >> mr. lewis is recognized. >> thank you, mr. chairman. welcome mr. secretary.

i want to take an opportunity to thank you for your many years of service, not just to the congress but to our country.a >> thank you. >> mr. secretary, the unemployment rate in the city of atlanta is at 8%. as you can guess, many people in my district, like people around our country, are very much focused on jobs. since first being elected president obama made it very clear that we need to invest in jobs and job creation. could you tell us how this budget reflects the administration's continued efforts to create jobs to help people get back to work? >> congressman lewis, thank you for your kind comments. this budget is all about growing the economy and creating jobs. in a macro sense, it is about taking the steps that we need to this year and over the next few years that we have the best

environment for job creation that we can produce. that is getting our fiscal house in order and providing support that we need that we have educated workers, we have an infrastructure that is sound and we need to get started with that right away. we have incentives for manufacturing. we have tax proposals that would encourage investment in the united states and not the shipping of jobs overseas. i think overall, if there's a single theme that ties this budget together, it's about being able to say we're doing exactly what you're asking. we haval path for economic growth, we have a path for job creation. we have tools in place to make that happen today and in the future. >> mr. secretary, in spite of all the problems that we face in our country during the past few years, some people have done very well and others have been left out and left behind. can you tell us what is in the

budget that is going to help those who have been left out and left behind? >> i think the disparity of income in this country is a very significant problem. we have to deal with it at both ends. we have to deal with it at the with those who are struggling by creating the ladder to get the ability to get the education they need and get the skills for the jobs they deserve. when they work, we need to make sure they get a living wage. anyone who works full time should billion above poverty. at the high-end, we need to make sure as we put in place the policies that will put our fiscal house in order that we raise revenues for those who can afford it because they have the greatest income. this is a budget that doesn't fix a problem that has been dex

cades in the making, it does not fix it instant today youly. >> thank you very much. i'm going to go 2:1. so you're recognized for five minutes. >> my sub committee on human resources will be holding a hearing next week on unemployment insurance. so i want to focus on -- i have one question related to unemployment insurance but also i want to use it as an example of a comment you made earlier that people, absoluting corporations and small businesses are confused about the budget and our process here. and also, the lack of

understanding what is going on. >> i think that is something we can all agree on. >> including myself. i have two documents that probably creates a little bit of confusion. first a document from the white house and then i have a document from the department of treasury. these seem to be in conflict to me. so the president's budget has a proposal that would more than double the wage base, which federal unemployment taxes are applied from $7,000 to $15,000, correct? >> correct. >> all displayed in our budget documents this would increase revenue by $51 billion over 10 years. i know these tax increases would take the form of higher federal and state payroll taxes, which in my opinion are taxes on jobs. my question is this, why do you think a summery document prepared by the white house says that same policy strengthening the solvency of the unemployment insurance trust fund reduces

spending by $50 billion? can you clarify this conk flict for myself, the rest of the folks in the room and the people? >> i have to take a look at those two charts. i don't want to be familiar with the comparison and i could not read it from this distance. the policy on unemployment insurance is one that the administration hazard vow kated for a number of years. >> so the $7,000-$15,000 increase is that a tax hike? >> the rate -- >> what is your opinion? >> the rate doesn't change. it puts in place -- right now we have -- >> does it increase taxes, yes or no? >> it increases the base of the income --

>> i just want a yes or no. does it increase taxes? >> it pays for an unemployment program that is not properly funded. i think the reason for the confusion -- >> by raising taxes? >> it raises it to the reagan levels. >> by raising taxes. but it says it is -- i'm confused. i can look forward to an answer that will share fie this for me? >> -- clarify this for me? >> i am help to get back to you. >> you've used the term "getting our fiscal house in order" several times today. what does that mean to you? >> our challenge that we face is get our budget on the path to have the deficit and the debt at a percentage that is sustainable, which means the economy is growing faster -- >> what percentage would you say that would be? >> our budget gets the deficit

less than 2%. >> but your budget doesn't balance? >> you asked me a different question. >> but does -- >> it does balance, not in the 10 year window. it balances quite a ways out. the challenge of balancing the budget -- >> the budget does not balance within 10 years? >> no. >> can you explain to me -- i want to be in a learning mode like my friend from ohio. can you explain to me and the folks around the country, why -- it's so important for families to balance their checkbook, balance their budget, they did not see a deficit an emergency ahead but they lost their homes. but the federal government doesn't have to balance their budget and they continue to spend, you don't see an emergency don't the road with the deficit? >> congressman -- >> people are trying to to understand this at home.

>> i spent most of my time balancing a budget and creating a surplus. i also know that in the period before president obama -- >> why is it important for people at homes to balance their budget but it is not important for the federal government to balance their budget? >> i can't -- >> that's what people don't understand. my time has expired. >> i can spond very briefly to that question? >> yes. >> family and governments are in different positions. governments around the world are measured by the standard of whether or not they can afford to service the debt they have under taken. the measures that are used to see if they can afford it is in their budgets and if they can meet them. we need to be on a long-term path to have more deficit balanced. but you can do more damage by doing it quicker.

>> the president's budget requires an increase for the department of treasury in its programs, this includes $1 billion annual increase for the i.r.s. budget. you know, we found information just a few weeks ago about an i.r.s. studio -- production studio "star trek" videos, things of that nature. as the economy continues to sputter, families across america are having to make deep, painful cuts in their own household budgets. at the same time, we're borrowing a lot of money. we're borrowing for every $1 spent, 60 crentses is borrowed. -- cents is borrowed.

is there any other cuts that you can put forward other than what is in this budget? >> the bulk of the increases is really an i.r.s. enforcement. one of the zpwoles to make sure -- goals is to make sure their tax laws are effect lively enforced and there's an understanding that if you don't >> i fully understand that. at the same time, we're concerned about the i.r.s. wants more resources, yet we see obvious waste on the other hand. >> congressman, i'm aware of the situation you're describing. i think we made clear that actions have been taken to make sure that doesn't happen again. across government is a need -- i agree with you, tighten our belt and not do things that don't look like they make sense. i september at lot of time going

d spent a lot of time at omb oing that across the government. i will continue to do that as secretary of the treasury. i don't think it is right to not have i.r.s. agents on the job. >> i understand the reason for enforcement. -- the need for enforcement. my question is, is there other portions where we can have cuts. what about this production studio, it costs like $4 million a year. are there others? >> we're taking a look at that particular item. i would point out that, you know, one of the things we do is to try to control cost in the government is do more business remotely and not have people travel when they don't need fop one way you do it remotely is through video. we have to be careful that we don't cut off the way to do our job more efficiently. i don't think you would want every meeting to be in person

when you can sit in a studio. >> i understand that but we're going top continue to look at the oversight to make sure the dollars is being used properly. you mentioned growth quite often. mr. brady was asking questions about our views on tax reforms versus what we see from the administration and the budget proposal. one of the things i get concerned about is an proposal where certain pockets of money in the forms of tax provisions get pulled out to increase spending rather than looking at tax reform. we really do have an historic opportunity to look at everything, with the idea of lowering rates and providing america competitiveness. the impact of this is going to be pretty strong in oil and gas export production. in a time we're seeing shale gas

revolution, if this gets put in place without tax reduction, i think you're going to kill the shale revolution with job growth and exports. so there's a little bit of inconsistency here. i urge you reconsider in the administration and working with us on real tax reform. lowering rates and really focusing on america competitiveness. >> as i said earlier, i think there is a common goal to broaden the base and lore business tax rates. i think we have a thriving industry now in the shale area. i think the incentives were put in place for an oil industry were not what they need to do to thrive.

we should work together on this as we go forward. >> on the transportation bill passed last year, there was language about reporting on the land for our ports and drudging. i would respond to me in writing on that issue. >> i resolved when i came in partisan response but the last two speakers caused me to state an obvious fact that our republican colleagues are always in fact to balance the budget when there's a democratic president. they did not say anything during the proceeding eight years. i think that bears noting as well. now, you're d.n.a. is in the legislative branch of the government. you worked for the only president who balanced the budget four times since the end

of world war ii. you understand how this is done. i think that ought to be acknowledged as well today. in february, you raised concerns -- the department of treasure treasury raised concerns about a e.u. proposal about a tax in 11 eurozone countries. in its current form that will harm u.s. investors. it is more and more likely that more eurozone countries will implement a broad based f.t.t. next year. this tax is designed to have a brord global reach. -- broad global reach. can you tell us what they are doing to protect the u.s. investors and paut us on your

conversations as you travel to europe? >> we made a different decision as many others in europe are making. we have a financial responsibility fee that has been in our budget. we think that is a better way to raise revenue from financial service side. we have made that point at both here and conversations overseas. i think the design element that you're describing is a troubling one. what other countries decide to do in their borders is their business. it is not an acceptable policy from our perspective for other countries to create a tax that has an extra territorial reach and would levy a on a transaction in the united states. when i had my meetings earlier this week i made that point very clearly to a number of europe

combran officials making it clear that we found that to be unacceptable and we almost continue to make that clear. so we're engaged with them, they understand our view. we will continue to do so. >> thank you. mr. secretary, i'm pleased you included the bill that i worked on for many, many years. so it takes time to get these things done but the proposal, i think it is greatly positioned to help the problems that were raised. i'm still waiting for a republican to sign on my bill. it is broad bipartisan consensus that will speak to these issues. >> i think the proposal is a

very good idea. it is something that doesn't require that anyone participate in an i.r.a. it just shifts the decision point, do you opt in or opt out? we think if you make it an opt out, there's a lot of people who do not start saving early in their careers who will do so. if you save when your 24, 25 all the way through you build up a more substantial nest egg. you can't catch up for the years that you were out of retirement savings. it is a good idea. we continue to advocate. maybe it will have the ability to be given serious consideration. >> the other part of the proposal that has particular appeal, i think insurance agents and credit unions, they would like the opportunity with the

potential to expand business down the road to sell that concept. another word of thanks on the savers credit. that is important to me and i've worked on that will for years and i'm pleased to see that you paid attention to that in the budget. thank you. >> thank you, mr. secretary. you said something in your opening statement that i -- that jarred me. i wanted to confirm that you used this language because it seemed inconsist went the other themes. during the opening statement you and laid out a theme of, look, i'm jack lew, i have this experience and bagged on a bipartisan basis and i've been successful in other tasks to bring groupsand together.and that is something we admire and aspire to. >> thank you. >> that bipartisan language is

in contrast, it seems to me with this statement, you said it is important to note that this framework, the white house frames work does not represent the starting point for negotiations. so here's the challenge. it's very declarative it sounds like there is a revelation that you've had and you're making a declarative statement, this is a precondition for negotiations? and >> no, that is not what i said. >> so what do you mean -- >> sure i'm happy -- >> it is important to note that this framework does not represent the starting point for negotiations. >> i think the last two and half years represented a lot of movement. we're not at the beginning of the process. this budget reflects where the president was after two years of negotiation.

in december, we were, perhaps one or two turns of a wheel away from an agreement. it did not come together, that doesn't mean we shouldn't keep trying to. what i was saying is it would be counterproductive to treat this as a beginning of theand in conversation as the two last years did not happen. we're asking for others to do hard things.and >> at the end of the year the president was making the argument around protecting middle-class taxpayers from a tax hike. since we both agree on that, let's take them off the table and, you remember that argument. it was a successful argument. what is different about that argue with the notion if there is consensus on both sides of the aisle with your proposaled changes on social security and why not move with the same approach and with the same goal? >> look, i think they are

different policies. >> why? >> there was a brord bipartisan agreement that middle-class taxpayers do not pay higher taxes. we're not saying we want to raise the changed c.p.i. issue. we're saying that we're prepared to do something very hard and to solve our deficit problems we would do it. it is different. we all wanted to prevent taxes from going up on middle-class workers. i'm not going to sit here and say i want to do the chainedand c.p.i. we might need to but i sat through meetings where i heard leaders on your side that chained c. pifment has to be-- cpi has to be part of the budget agreement. the president put that in because he would like to reach an a bipartisan agreement but it has to be connected in solving the whole problem, including the revenue. >> the long term discussion on medicare gets everybody's attention.

yet, your predecessor gave a presentation to the house budget committee, february of last year it was one of those moments of clarity when he said, look, we don't have a long-term proposal. all we know is we don't like yours. meaning the house budget .rormse.-- propsal that was his language, not mine. and you're basically doing the same thing now as it relates to medicare, isn't that right? at the end of office when the president leaves in 2017, according to the trustees. they say this so centuryvy goes out another seven years after your time in office. isn't that the same thing that secretary geithner was doing? >> i'm not familiar -- >> i will get it to you. >> i will describe your policy in my own words, which is since the enactment of the affordable care act we have seen a reduction in the spending.

we'll see more. he put in income-related provisions -- >> that is all well and good but the trustees say 2024, right? >> the president said many times we have more work to do after but this is no reason not to do it now. we probably don't -- >> do what? >> time has expired. the policies that the president proposes. >> thank you, mr. chairman. thank you, mr. secretary for testifying today. i want to focus on your comments regarding the issue and you state in our testimony on page five that the president's budget increases spending for aren't&d investment. how does this budget propose to do that?

>> this is the first year where i wasn't responsible for the accounts. so i have to defer to my colleagues at o.m.b. to go through the specific increases in r.n.d. in the budget. the pattern of increases is that we have very much put resources into into energy and biomedical research, we also proposed making the tax credits for r.n.d. permanent. we have a balance approaches. we think that r.n.d. is the key to american competitiveness in the future. we've been pushing to try to increase r.n.d. as a share of what we do. >> we have a manufacturing working group ongoing in the committee. they have been holding a number of meetings about a variety of issues involving manufacturing,

including research and development. one of the things we heard on research and development was how the i.r.s. many times contest the efforts by a company to get an r.n.d. credit in a particular tax year. they have to constantly battle the i.r.s. to establish they are entitled to that credit. would it be possible for you to acquire information for us that would demonstrate how many times how many cases the i.r.s. contest the efforts by companies to take the tax credit and where the company has to take an appeal of the that process, of that initial determinations. where the company is successful and is entitled to that tax credit. so we can get a better sense of how hard it is for the company to go through the process to get the credit to begin with from a bureaucracy standpoint.

can you help to gather that data for us? with the language in the statute as to when and how you get the credit how it can be made more simple, more common sense, and more useable by companies so they can feel comfortable moving forward with research and development, which is what we all want to see in our economy. >> i am happy to look at that. i don't this v the numbers today. i agree with you that we need to make the tax code such that teach taxpayers and companies have the understanding. we have to make sure there is compliance with whatever regulations we have. i'm happy to look at it. >> i yield back. thank you. >> thank you. >> thank you.

i'm glad you clarified once again that some of these provisions in your package is pat of a previous negotiation with republican, speaker boehner in particular to solve our fiscal problems in a balanced way. there are proposals by a republicans for a chained c.p.i., which will change the cost of living from anything to social security benefits to veterans benefits and how much people pay in their taxes would be impacted. some $230 billion is save bird moving towards the republican proposed chained c.p.i. let me ask you a couple of things. my understanding by going to the chained c.p.i., you would end up cutting benefits earned by seniors who paido