everything we can on sanctions against russian banks? it should be at least as much as we have against the iranians. what else can we be doing to make russia pay a price for being assad's patron? >> that is an excellent point. i wish we would say to putin that there has got to be a cause -- cost to discontinued all out . i think we assad ought to talk about that. we ought to talk about resolutions. leasto not care about at an expression from the general assembly. , i think we need to understand him. putin has visions of the

restoration of the russian empire. putin believes the rightful place for russia is a major player in the world. he believes that democracy is kind of some thing that is for other countries. power and heonto will do what is necessary to hang onto the power. it doesn't mean he will have a massacre of people, although in chechnya, it is incredibly brutal. i think we need to identify him for what he is. cracks down on human rights. puts people in jail. is responsible for the death of -- at least betray him for what he is rather than this grand illusion -- at least portray him

for what he is rather than this grand illusion. we have to have the relation with russia, but it has to be an honest relationship. cap. wink or a nod or a -- or a tap. that is not the way to approach putin. and the snowden thing was just a sign of disrespect. it was a sign is respect to the united states of america that they gave asylum to mr. snowden. >> in the back. two people in the i'll. -- aisle. to beator, you are known a supporter of the free syrian army. opposition consists of appleby about a thousand people. maybe 50% of them are moderate. >> that is not true.

we disagree. excuse me. we disagree. >> i'm quoting a report. it is clear there are a lot of jihadists and groups. that call for any level of cooperation with any of the factions on the religious side? >> two years ago, there was none of them. no matter what organization you talk to, that was the case. second, frankly, i disagree. who are the still free syrian army. there are jihadist flowing in and not just from the middle -- gonet couple hundred to syria to fight on behalf of the jihadist. 5000 hezbollah. the point i think you and others are missing, syria is a moderate

nation. syria has the highest literate rate of any nation in the middle east. they are not going to submit to a jihadist or al qaeda group governing them. they will not. qaedae areas where all are, they're demonstrating against them. al qaeda is trying to oppose on them -- that is a really convenient copout to say i know who they are. i was in syria. i know who they are. units.ere are 1200 there are 1200 battalions in the u.s. army. does that mean they're not connected to each other? of course not. if you do not want to intervene, you can always find reason to do so. is it a done deal? is it easy? it is very difficult.

i guess my answer to you is the status quote satisfactory? is it satisfactory where people are being murdered and the weapons are being flown in and 5000 hezbollah -- good fighters. they are not afraid to die. 5000 that came from lebanon. doesn't that give us a positive as to what the connection is? stays inens if assad power? what is the message throughout the middle east? >> the young lady on the end. >> thank you. first, thank you, senator mccain for your service in vietnam. then we did not let go

of the date three in vietnam -- let go the victory in vietnam. there was at now suggestion that you would write an op-ed and put it on your [indiscernible] >> could i mention on that melly quick -- don't ask because i still don't understand it. mona them said they hired nine -- hardline communist. -- one of then set it on a hardline communist. my question is i feel that -- begins at home. you said that president obama was not very strong.

i believe and i applaud president obama for everything he has done. .e stayed engaged he got united nations involved. russia is involved. he is still trying to degrade the capacity of assad and his chemical weapons. view, couldint of you get back to the republicans and work on the debt ceiling and sequestration? thank you. i think we are hearing about four questions. >> very briefly, i do not know what will happen. spending bills originate in the house of representatives. i really do not know what will happen. we have seen the movie before of shutting down the government. a liberal said that this idea of

demanding the repeal of onmacare was a suicide note part of the republicans. i agree with what was said. look, this president and i have a relationship that i value. we work together on immigration reform, tried to get the debt issue under control. i supported him on the initial noion when syria -- there is -- i have a cordial relationship with the president. i think that is important. they disagree when they disagree and agree when they agree. i think that is how we should function. i have a lotta respect for the president of the united states -- i have a lot of respect for

the president of the united states. right now, i think we are on the damagingh. it could be not only now, but for the rest of his presidency. happen. iant that to do not want a president that is weakened. this is too dangerous a world we live in. >> one more. a last brief question. this is on the record. senator mccain has to zip away to something else. everyone just wait in their seats after. their secret service -- >> that lady all the way in the back. >> thank you, senator mccain. i was wondering if you could tell us what has the u.s. learned in past military action?

for example, iraq and afghanistan. thank you. >> thank you. i take questions from iraq and --ghanistan, austria, kosovo bosnia and kosovo. and sent air activity without sending in american troops. days, they decided to fold. they did so in the name of human rights. [no audio] he was slaughtering people right and left. the u.s. intervened. i do not know how

many thousands of lives. afghanistan,k at we forget unfortunately. we knew that al qaeda and the who caused 9/11 came from afghanistan. what would any president do? any president would have done what resident bush did. turn his people over and bring them to -- president bush did. turn the people over and bring them to justice. there are some who say he could done it better or differently. that is a subject for historians. on the issue of iraq, it will go down in history as a cardinal her evidence -- whatever evidence there was an turn it into an argument that saddam hussein had weapons of mass distraction, which we know now he did not.

but the secretary of state came to that security council and convinced all of us and congress and the american people and others. i do believe that thanks to david petraeus, we won the war. we should have left a residual force behind, which the president did not want to do. so, we're now seeing unfortunately a resurgence of i qaeda -- of al qaeda in iraq and moving into syria to help assad. excuse me, to enter the fight. heree seeing a turmoil that i think could have been avoided in the long run. are we a perfect nation? no. having made mistakes? yes. -- have we made mistakes? yes.

but we have learned from our mistakes. we are now friends with the vietnamese. way, there is a ship named after my father and grandfather. that shows you if you live long enough, or anything can happen -- anything can happen in the world. [laughter] it we make mistakes and errors and judgments, yes, we have. that goes with being exceptional and thehat we are reason this country is called the american century boast that we make mistakes, but the world i believe is a far better place because of american leadership and the american people sacrifice so much on behalf of of the other people's freedoms as well as our own. i believe in the greatness of america and the responsibilities of world leadership. i often ask my friends at town

hall meetings if we do not want america to lead, who do you want to lead? i know we have made mistakes. we are a very imperfect nation, but there has never been a better experiment. i am proud to have had a small opportunity to serve it. thank you for having me. >> thank you. [applause] [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute]

the house armed services committee meets to discuss the military budget and spending cut. begins at 10 a.m. eastern on c-span 3. up, house minority whip steny hoyer talks to politico about upcoming legislation in the house. that, a long-term budget report. later, the treasury secretary jack lew speaks about the debt ceiling in the upcoming budget negotiation. fed reserve chairman ben bernanke holds a news conference on wednesday to detail actions that will be taken by the fed

regarding the quarterly news conference. live coverage at 2:30 p.m. eastern on c-span 3. >> this weekend, but tv live coverage of the national book festival. -- kay bailer. and looking ahead to october -- >> how can you be in congress if you have gotten arrested? [laughter] you have violated the laws. i said, they were bad laws. there were customs and traditions and we wanted america to be better. we wanted america to live up to the declaration of independence. live up to our creed. make real democracy. make it real. when i got arrested the first

time, i felt free. i felt liberated. more than ever before, i feel free. you know, abraham lincoln 100 and two years ago -- 153 years gago, freed the slaves. rights leader and congressman john lewis will be our guest on sunday. we will take your calls and comments for three hours. also scheduled for "in depth" -- a feminist critic christina sommers. >> treasury secretary jack lew a pest -- spoke at the economic love on tuesday. club on tuesday.

you can see this event in its entirety or any time on c- span.org. right now are there any negotiations going on on the debt limit between the administration and congress on the continuing resolution? anything going on right now? secret negotiations? >> there are not and will not be any over the debt limit. >> no negotiations? >> the president has been very clear. i have been discussing the debt limit with everyone else that i have been talking with congress on a regular basis will stop i am here today. -- regular basis. i knew today. -- i am here today. the president has made clear

there are be no negotiating on the threat of the default. there have been all kinds of conversations going on. unfortunately, they tend to not come together in till the last minute. sylvia handles that. >> one story that is circulating is the discussion that the house toht propose a debt limit stanchion and attached to it a defunding of obamacare. they would send that to the senate and let them decide what they want to do. any comment? >> the president has been clear and i have been clear. or delay thefund affordable care act are unacceptable. procedure, ihe ,hink what happened last week it was a bit of a revolt in the house.

one waye gets to vote and the senate gets to vote another way. i leave it to congress to manage how those kinds of opportunities happen for everyone's vote and how their conscience works. what they have to keep in mind is that something needs to pass the house and the senate and be signed by the president. you cannot have one minority date take to others in the to others intate the senate and the white house the only path that is except the bull. acceptable. i read in the wall street journal that there is a growing awareness that in some ways it is very obvious. i think this in the 1980s. you cannot control -- -- in a hoyer revealed

politico in a view, he spoke about the budget and debt ceiling talks, held, and tax reform. -- health, and tax reform. [applause] good morning, everyone. they're super coming out this morning. i'm an chief correspondent for politico. escape script to say nice things about the money column. thank you for tuning into that live stream and everyone watching on c-span and everyone watching online. tweet us your --

questions. you canekeeping item -- keep your cell phones on so you can tweet about the event, to keep it on mute. we have steny hoyer joining us this with them. -- joining us this morning. we will discuss issues in the news. g.nk you to that peter peterson foundation for hosting these events. here are a few words from the organization. thank you. >> thank you. today. to all of you i apologize. i'm losing my voice. the peterson foundation, our mission is to increase awareness and accelerate action on the long-term fiscal challenges. so we're very pleased to be working with "politico" in partnering to bring these

issues, these important fiscal issues to the national discussion. we hosted an earlier breakfast with senator portman and we're glad to have representative steny hoyer, house democratic whip, and is a leader that's earned respect for both sides because he's worked to find consensus on policies in the fiscal area. we're pleased to have him here today and discuss these important issues. later today the c.b.o. will be coming out with the long-term budget forecast, the update for 2013, and although there's been a lot of talk of debt and deficit over the last several years and though progress has been made, the

long-term structural challenges have been made. we've done some of the easiest things, stupidest things with the sequester but haven't done a lot of the important things. so these upcoming fiscal challenges with the debt ceiling and the continuing resolution and some of the issues that are coming in the next several weeks represent another opportunity to get things right and put the nation on a long-term fiscal path that's sustainable. we're very much looking forward to have representative steny hoyer with us today and we welcome him. thank you.

>> thank you, mr. peterson. return the mike. thank you for making these conversations possible and don't have any further delay, i'd like to introduce steny hoyer, congressman and democratic whip. [applause] >> congressman, thank you for joining us. obviously a bit of a tough day in washington today, tragic events yesterday at the navy yard. i think we need to talk a little bit about that to start before we get into the fiscal matters that we'll discuss. question for you, first, is there anything new that you can tell us? obviously you had constituents affected by this terrible event. anything new you can tell us this morning about what you know transpired and then the larger question is, will this event start a new conversation about gun control? is there anything that can be done on capitol hill at this point on gun control given we've seen past efforts fail in this regard, and there are laws that are currently not on the books that could be on the books that would have stopped something from this happening? >> i don't know about the facts. we'll find out in the coming days. i lost three constituents.

they lost their lives that were working at the navy yard. two of them lived in charles county and one of them in st. mary's county, the county in which i live. i'm sure that it will renew the discussions about access to weapons that can be used to kill a lot of people quickly. we have seen, however, in colorado, just in the past weeks, two legislators who had the courage to vote for legislation which simply asks that we do a background check so we know who's getting guns which 80% to 85% of the american public say is a sensible policy. notwithstanding that, these two legislators were recalled in a special election. now, one can analyze who comes out to special elections, but it does not bode well for asking people to vote for legislation similar to that which went down in the senate just a few months ago. but i'm sure it will renew the debate and the discussion as it should. >> in terms of his access to the navy yard, appeared to have security clearance despite some very troubling events in his background, the alleged shooter. can you tell us anything about how he got that access, is that something you'll be looking into? it seems like there was some serious breach of security there. >> i don't have additional information. you're right.

it's something that must be looked into. again, what we have seen in so many of these instances are that the perpetrators have given previous indication of instability. even inclinations to use weapons. and to talk about violence. whether they did so on a website, whether they did so with colleagues or classmates. in almost every one of these instances we've seen the perpetrators be people who individuals thought were unstable and thought, in this case apparently, this guy was prone to violence. he shot the tires out of a neighbor's vehicle. he shot through the ceiling of another neighbor. he was given a general discharge from the navy. so there was no doubt this was somebody who had a record of instability and certainly should have been, i think, subject to closer scrutiny.

particularly in access to a facility such as the navy yard, or any facility that has large numbers of people in it, that has security concerns in the united states. >> all right. of course, all of our thoughts and prayers go out to your constituents and their families in this difficult time. i want to switch to some of the economic and fiscal matters before us, starting with the next chairperson of the federal reserve. we saw larry sommers, former treasury secretary, withdrawal his name from consideration over the weekend by all accounts. he was the administration's first choice, the president's first choice for chairman of the fed. first, do you think it was the right thing for larry to do to pull his name out of consideration? obviously you are on the house side.

if you think he would have gone to the senate he would be confirmed as treasury secretary? >> i don't know the answer to the second question. i worked with him both when he was deputy secretary with bob ruben in the clinton administration. i found him to be extraordinarily competent, knowledgeable, respected, and i know that the president relied heavily on him for economic advice and felt strongly about his capabilities. i have not talked to larry sommers, but my conclusion is he decided that the controversy that would be surrounding the appointment would undermine the confidence that we need to have in the federal reserve. and so i think in a very responsible way he made a determination that he did not want to further politicize or create controversy within the federal reserve. so i think he probably did the right thing, certainly from his perspective, but he's a person of immense capability and will

continue to contribute. >> do you think fed vice chair janet yellin is the best pick for the president now that sommers is out of contention or are there other candidates? >> i think she would be an excellent appointee. i think she enjoys wide respect and i think she would be somebody that would be confidence-building of the federal reserve. but there are others as well. this is the choice the president will make and i hope he'll make it relatively soon so we can stabilize because i think given the other economic turmoil we're going to talk about, having the federal reserve as a stable, respected institution that gives confidence to the marketplace, very important. >> do you think the administration is taking too long in making this appointment? one of the arguments from folks who were supportive of larry sommers, is had they moved more

quickly some of the opposition could have coalesced and he would have gotten through the senate faster. are we at a point of this nomination not having been made is having an impact on the economy? >> i certainly think at this point in time making this appointment as soon as possible will be helpful, yeah. let's talk a little bit about the coming can he bait over the continuing resolution. -- debate over the continuing resolution. obviously we have little time between now and the end of the fiscal year and the start of the 2014 fiscal year. to tie it into the sommers question, there are some who say the president not able to get the nominee he wanted to the fed, unable to marshal support for a resolution in congress to have use of force in syria that he's operating for a fairly weak hand and the power center in the democratic party has moved to the left, going to be very difficult for the president and democrats in the house and senate to come to an agreement with republicans that continues

to fund the government. first of all, do you think the president's hand is weakened now? does he have limited support in congress, particularly among more liberal democrats? >> i think the president has good support in the congress and the united states. there was controversy clearly regarding syria in the country. i think the president has been successful in attaining a substantial movement on the removal of chemical weapons. it remains to be seen whether the russians and the syrians will be good to their road, but nevertheless, i don't think any of us would have predicted the kind of progress that's been made over the last 10 days on the issue of chemical weapons in syria.

so i think that's been -- and it was attained, in my opinion, because the president was willing to use military force to undermine the ability of the syrian regime to use weapons and to degrade the future militarily. so i think he showed resolve and i think it's had results. the test will be in the coming weeks, of course. but the u.n. report that came out confirms almost absolutely the president's representations and the intelligence community's findings. so i think from that standpoint he's had the -- not only the united nations saying chemical weapons were being used but from all of the information you gleamed from their report there seems to be an almost inescapeable conclusion that it was the syrian regime that used it. so from both standpoints -- now, on the economic front, i think the president continues to enjoy broad-based support in the -- on our side of the aisle. i think there's nobody in the democratic party that wants to

shut down the government. the president clearly does not want to shut down the government. i think we're talking about tactics of how to make sure we don't do that. >> let's talk about tactics and the substance of what might be done to avoid that shutdown. you've had a pretty hard line on eliminating sequester as part of any continuing resolution. it's hard to see any scenario under which republicans agree to that. so how do you get a bill out of the house that continues to fund the government? if you say democrats won't support something that doesn't get rid of sequester, republicans obviously are having their own difficult time finding a vehicle to continue to fund the government that does or doesn't defund obamacare, but is there a way to pass a bill out of the house that gets rid of the sequester, at this point? >> well, my observation has been that the republicans have a large number of their caucus, their conference that are obsessively obstructionists, who are so focused on defunding

obamacare, which is something that none of their leaders reasonably believe is going to happen. and in terms of getting progress, there are many republicans who agree with democrats that getting rid of obamacare is not going to happen and that the sequester is irrational. let me read, if i can -- i'm going to call this the first book of rogers. and i'm going to use this as my text in the coming weeks. and i'll read from the first chapter -- first two verses. [laughter] and he says this -- "with this action -- this action was pulling the transportation- h.u.d. appropriation bill which was being passed consistent with the

republican budget from the floor because they couldn't get the votes for this. "with this action," quoting chairman rogers, conservative from kentucky, chairman of the appropriations committee -- "with this action the house has declined to proceed on the implementation of the very budget it adopted just months ago. thus i" -- meaning hal rogers -- "believe that sequestration, the ill-conceived discretionary cuts must be brought to an and." he goes on to say, "the house and senate and white house must come together as soon as possible on a comprehensive compromise that repeals sequestration, takes the nation from this lurching path from fiscal crisis to fiscal crisis, reduces our deficits and debt and provides a realistic top line discretionary level to fund the government in a responsible and attainable way." i think that hal rogers,

chairman of the appropriations committee, reflects at least half of their caucus' opinion. >> on the question, just prognosticate for us. it's hard for me to see how we get to a deal on this before the government shutdown, given where we are at this moment. what does that deal look like in your view when we get there, what does that cap, discretionary spending cap that you'd like to see and just paint for us a picture of a bill that can pass the house and then get approved by the senate that continues to fund the

government, what will be in it? >> first, where we are in context. in august of 2011, we adopted a budget control act. that budget control act cut $1.2 trillion over 10 years. very, very substantial. probably the largest single reduction in government spending that we've had in the time i've been in congress. that would have called for a spending level in this coming fiscal year of $1.058 trillion, which was about $110 billion less than or almost 10% less discretionary spending. now, these numbers are lost on the citizens when they hear cut government spending, we need to get government spending under control, there is no republican who says, and, by the way, we cut $1.2 trillion. but that's the fact. the other figure is $1.043 trillion, which would be the next follow-on of that budget

control act for fiscal year 2014, an additional cut. and then you have two other figures. the $988 billion, which is the sequester number from that $1.058 or $1.043 trillion number and the continuing sequester number for fiscal year 2014. the reason i go through that, you have four numbers. obviously at the low end of the paul ryan budget of 967 which of course hal rogers says -- >> doesn't like. >> not only does he not like it, and this is a conservative republican from kentucky, this is not a moderate republican from new york or california. >> god forbid. [laughter] >> you know, would have no credibility, right? and he says it's unattainable. what he needs, i served with hal rogers for a long time on the appropriations committee. it is inconsistent with the responsibilities of operating government at a responsible level. from a conservative level standpoint. either on the defense side or nondefense side. discretionary spending. as a result, normally the senate has a $1.058 number.

the house has a 967 number. split the difference. so you're talking about $1.2, let's say, $1.02, for the secretary of argument. that would be a possible compromise. the problem is you have somebody twhants to be republican united states senator that is trying to get in the good graces, mark rubio, saying i will not vote for a c.r. unless it defunds obamacare. something that clearly mr. rubio's got to know is not possible. and an irrational ask for the president to get the signature. where do we find ourselves? we have mr. boehner knowing in is unreasonable and mr. cantor so they tried to construct a policy which would say to their republican hard liners, these obsessive obstructionists, you can vote for defunding obamacare, but

we'll have a procedure so that the senate can reject it and then pass without sending back to us a -- in this case, 988. >> that didn't work out. >> and that didn't work out because heritage foundation, freedom works, other very conservative groups in the republican party on the outside were going to score this and demand their members to be, in my opinion, continue to be obstructionists and unreasonable in what they would expect the other side and rejecting a compromise. compromise is the key. what do i think is attainable? i think frankly, i think mr. rogers and another 100 republicans or 80 republicans need to join the democrats in reaching a reasonable compromise. the democrats understand that we're not going to get our $1.058 trillion, which the

budget control act called for. my own view is we need get a compromised figure and we need to eliminate the sequester, we need to repeal the sequester. i think there are a good number of republicans who could vote for that but for the fact they're terrified of tea party opponents. >> will you oppose any continuing resolution that says not cancel the sequester? >> i'll oppose anything that goes out of the house that doesn't eliminate the squer because i believe the believester because i the continuation of the sequester is damaging to our government, damaging to our economy and damaging to our national security. >> let's say we get passed the continuing resolution into october. we're immediately going to run into the debt ceiling rich ue and the treasury running out of special moves to -- stall a default and a real crisis, the debt ceiling will have to be raised by mid october. republicans continuing to say they'll support only a debt limit increase with a

commensurate dollar-for-dollar equal measure of spending cuts. also long-term entitlement reforms. are there any entitlement reforms on the table now that democrats could accept as part of an agreement with republicans that raises the debt ceiling, chained c.p. requirement? >> i think the president offered that in his budget and he's made it very clear that that offer is on the table. as you know, ben, i'm one of those democrats -- and i've spoken out over the last two, three years, -- we need a balanced big deal. we need a domenici-rivlin, simples-bowles, gang of six, resolution to this -- simpson- bowles, gang of six, resolution to get us on a fiscally sustainable path where we create a consensus that understands that we are on a path that will get us from where we are to where we need to be.

now, we ought to emphasize we have the budget deficit. the president said he'll have the budget deficit in four years. it took him four years and some months. so the budget deficit is coming down. but over the long term we need to deal with both revenues and entitlements, and both sides have very strong opponents on that side of the equation. but almost every bipartisan group that's met said you have to deal with both. that's when rogers says we need a compre hencive resolution. >> -- comprehensive resolution. >> is there democratic support? >> i think. if it's comprehensive. and i will say this in the sense that when speaker boehner and president obama reached, in my view, a deal,, speaker pelosi, leader reid, mr. durbin and myself met with the president and we indicated to him that we would support that deal. we didn't think it was the president deal.

thought there ought to be another increment of revenue to balance off any entitlement cuts, or reductions in growth as opposed to cuts, that we would support that. i think there is support in the >> support for a deal that doesn't include any new revenue because it's clear that republicans won't support anything that touches revenue again. >> again, if you say it's clear they won't support -- >> i don't have any reason to support that otherwise. >> is it clear that democrats won't support any restraints in entitlement growth? i don't think that's clear. frankly, i don't think it's clear on the other side. i tell you i talk to republicans and i will not out them. [laughter] because it will be dangerous for

them in their primaries, which is what they're concerned about. they're not concerned about losing over democrats. they're concerned about losing over to a very, very conservative republican. let me give you an example. delaware. mike castle was defeated. indiana, richard lugar was defeated. sharon engel became the candidate in nevada.

todd akin in missouri. arguably, had moderate republicans won any of those districts it would be difficult for the democrat to win. so the problem we have getting to revenues is, yes, you're right. there have been some very hard line stances taken on revenues, and those people -- many of those people were the same that said if we adopted the clinton program in 1993, i.e., dick army, freedom works, the economy was going to go down the crane. exactly the opposite happened. we stabilized our finances. we gave confidence to the markets and we had the best economy we've seen. >> tax reform is another issue that's critical to a lot of folks in this office -- in this office -- this audience. would be a big office. want to bring in rachel from "politico" who has a question on tax reform. i think she's right there. >> hi. can you hear me? >> i can. >> thanks for being here. >> thank you. >> so right now we know that house republicans are really trying to push comprehensive tax reform. come out with a tax reform draft. there's been talk about linking tax reform to the debt ceiling. obama has proposed sort as a corporate-only tax reform. so my question for you is, where is your caucus? where are the democrats on reform for individuals? is that something you guys want

even though the president has not necessarily pushed for it? and if so, what kinds of concrete steps are you guys willing to take in order to actually get reform going? would you guys ever be open to a debt ceiling -- linking it to the debt ceiling or something of that nature, for instance? >> well, let me say on our side of the capitol, sandy levin and the democrats on the ways and means committee has been participating very positively with the sort of working groups that chairman camp has established. i think those were positive, bipartisan, and have been useful efforts. they have not led to an agreement, as you know, at this point in time. in my own view, we are certainly opened both on the individual side as well as the corporate side to tax reform. as a matter of fact, everybody in washington's for tax reform. right up until the time you say what it is. tax reform conceptually, everybody believes the tax code is too complicated, too long, too uneven and its impact on

individuals and the corporate level. warren buffett's observation that his secretary pays a higher rate than he does is obviously something that is i shall rational and unacceptable. as a result -- is irrational and unacceptable. as a result, we need not only need to simplify it, we need to rationize it in terms of -- rationalize of it one pays a higher effective rate than their neighbor, which obviously makes them unhappy and believing the system is unfair. so the problem i see is that i've been in congress for 33 years, that's not the problem. i hope. i have not seen any major tax reform -- i've seen tax changes, but tax reform that has not had a president and a bipartisan congress working in league to obtain it because it is extraordinary difficult

objective and unless you have a large consensus and a working together of both parties and the executive and the legislative body, it's almost unobtainable. 1986 is the last time that happened. that was a very significant and important step forward. we ought to take another step like that but whether or not we can in this context i think is doubtful. if in fact the -- there is a hostage taking on the debt limit and that hostage is the debt limit and the pay-for is tax reform that republicans want as opposed to bipartisan tax reform, it's not going to work, in my view. i think it's very doubtful we'll see tax reform this year or in this congress.

but we need it and democrats and republicans are working together. you see on the senate side where senator baucus and senator hatch are working together. they came up with the zero sum game to start out with. every interest group in town was energized by that proposal. >> speaking of hostage taking, if you take hostages, the only way that scenario works is if you're willing to kill the hostage on the debt limit. do you think there is a real risk that we get very close to the point of being unable to borrow further at the treasury and to default given the differences on the fiscal issues and insistence among republicans on either defunding obamacare or cutting spending in a way that democrats would never expect? wall street, everybody i talked to there said we'll go through

the same song and dance. we'll get a c.r., we'll get a debt limit increase. we ask them how that happens, they don't have an answer for it. is it a riskier scenario than we've seen previously given how polarized the two parties seem to be right at this moment? >> i think it's riskier and i think it's riskier because what you saw in what boehner was trying to do on the c.r. and cantor were trying to do on the c.r. you saw the heritage and frimed works all very energized in a very hard line, we're going to score this vote mode, which is, as i said, republicans for the most part are concerned, not about generals, but about primaries. and they're concerned about the funding from these very, very hardline right groups, right- wing groups. and i think in that context we're at greater risk. the irony is that boehner and

cantor would both tell you if they were on this stage, not extending the debt limit is an irrational, dangerous, economically devastating policy. my presumption is mcconnell would say the same thing. he has had the same thing in the past. ronald reagan said it. and i won't read you that verse, but i've got it in my pocket. >> enough scripture for another day. >> that's enough scripture for another sermon. ronald reagan agreed on that so that almost all the leaders, and certainly every former republican president, believes it's taking that hostage is a hostage you don't want to kill. taking that hostage that if you killed that hostage would kill the economy and undermine the stability of the country and give to the world an

extraordinarily negative view of the united states' ability to manage its own affairs. the president's made it very clear and i agree with him. he's not going to negotiate. he's not going to negotiate with something that is fundamental to america's stability, that republican leaders have said ought not to be put at risk. but their politics are putting it at risk. hopefully they'll retrieve from that a bit. >> want to remind folks, you can tweet questions, #morningmoney. we'll take a couple of them. take one now because i think it speaks to this. and it doesn't seem like there's any prospect that we get to a point where we're not lurching from crisis to crisis on the fiscal front, that every past piece of legislation on funding the government will be a knockdown dragout fight for the

foreseeable future unless we get back to budget regular order. 16 years operating without a budget, only c.r.'s, will congress pass one, doesn't even matter? are there prospects for getting back to regular orders on budget and funding the government? >> first off, let me make a discloseure out front, i was an operator for 23 years. the -- appropriator for 23 years. the budget only does one thing. can set up a reconciliation process, which is meaningful, particularly in the senate, not so much in the house. it sets a top line for discretionary spending and it gives the top line for the appropriators that then allocate that gross amount of discretionary spending between the 12 subcommittees so that you can operate relatively easily without a budget because the budget, the budget control act, which we passed in august of 2011, sets a top number for spending. republicans would argue that was

the upper number and that we can do something below that. but that dispute aside, we talk a lot about budget. it gets a lot of focus. but it's the appropriation bills that apply money. in maryland, from which i came from, 12 years in the senate, the budget is the budget. it's a unified document. it does the spending. the president sends it down. the president doesn't participate in the budget process. it's not a law, in that sense, so that you don't need a budget. what you do need, however, is an appropriation process that works, that has hearings, determines priorities, determines that which is being done that doesn't need to be done and cuts that spending out. and applies resources to things that needs to be done and we have greater opportunities. that process is broken. that process being broken undermines our stability of government.

and of course it's undermine because we don't have a context in which the -- which the budget does establish of an agreed upon spending level. and so we have this extraordinary discrepancy between the 967 of the ryan budget and the $1.058 trillion. that's a difference and a large number to compromise. but it has led the senate to not pass an appropriation bill on their level. interesting thing in the house, we did pass three bills. we passed them at the $1.058 trillion. with the remaining bills, t-hud, cut far below the 967 because you had to prefund the others. so it's clear that the budget process ought to work better. what really must be conis the appropriation process needs to get back to a position where

agreement is possible. >> want to open it up to audience questions in just a minute. so think of some good wubs and -- ones and we'll get a mike to you. want to just go back to politics for a minute and talk about democrats' prospects for taking back the house. the conventional wisdom is it's not possible, not enough competitive districts for democrats to make anywhere near a number of gains you need. do you think that's true? do you see a prospect for a democratic house in the next congress? >> yes, i co. -- i do. >> that's shocking that you would say that. [laughter] and how do you get there? >> all right. let me get back to it. >> let's go district by district. >> no, i'm not going to go district by district. but i am going to go back to the example i gave all of you. charlie cook, i said, charlie cook, i understand historically you might think it's difficult

for the democrats to take bass the house. if mr. lugar is renominated by the party, joe donnelly -- i urged joe not to run. i said you can't beat richard lugar. i think i was right. the good news from joe's standpoint, he didn't have to. claire mccaskill was most threatened democratic senator in the last cycle. todd akin. and in nevada, sharon engel, the tea party put sharon engel the candidate against senator reid and i think was helpful for senator reid. what you're seeing in the republican party was, as i mentioned, the hard line -- i would call it the radical right is not allowing the appropriation process to go forward and threatening members if you cooperate in any way, mike simpson, who i think is one of the most solid, reasonable, commonsense, conservative member of the house of representatives.

chair of a subcommittee in the appropriation committee, former speaker of the idaho house is being contested by a tea party person because he's not conservative enough. why? because he believes there needs to be a balanced deal. i don't know if hal rogers will get a hard opponent. i don't believe americans are there. i don't believe independents are there. i think moderate republicans and independents are going to reject this hard right, take no prisoners, shut down the government, repeal obamacare. the repeal obamacare, when you talk to the american public, they say, no, fix it. they may not like it, but they say fix it, make it better. make it work for me and my family. they don't say, repeal it. when you say the republicans have been talking about repeal with no alternative for 2 1/2 years, they don't like that. so i any there is a definite

possibility that we democrats would take back the house. steve israel has done a wonderful job recruiting. excellent candidates around the country. and i think that we certainly have a very good chance of taking back the house. >> questions for congressman hoyer from the audience. we have one in the back there. if you just wait for the microphone. >> hi. dave, l.r.p. publications. i just have two questions. the first, i just want to make sure, are you basically indicating that the c.r. that came out of the republicans -- in the appropriations committee, that would be something that you don't believe that democrats or particularly president obama would support? and then i guess the second one is inside washington beltway thing. there's been an issue with regard to pay raise for federal employees and obviously that's been cut. do you -- is there any chance of

that coming in a final version of whatever is passed or is that probably going to have to be sacrificed again? >> well, it won't shock you that i'm for giving our federal employees a cost-of-living adjustment. not a pay raise. they are not going to get a pay raise. but cost-of-living adjustment. that has historically been what we've done over the years and we've done so in parity with the armed forces so they move together with equality. the republicans have a abandoned that process. in my opinion, this republican congress and the last republican congress has treated federal employees worse than at anytime in my career in the congress of the united states. i think that's damaging to the federal service. it's damaging to our ability to recruit and damaging to our ability to retain the kind of talent we need in the federal government that the american

people need in the federal government. so i think we are following a very unwise federal employee policy. now, let me make it clear. back in 1998 and 1999, i was supportive of a zero cola at that point in time. the economy was in rough shape. people were losing their jobs and we needed to pull our belt in a notch. and i talked to my friends and you didn't hear much -- there wasn't a great deal of controversy about that. but now we're carrying it forward. the military, on the other hand, has received raises so at the pentagon you have somebody in uniform and somebody in civis, in civilian clothes, working one desk next to one another doing exactly the same job and one receiving a cost-of-living adjustment and the other not. both of their services are valued and we ought to reflect that in our policies. secondly -- and i guess i answered them in the reverse

order -- i'm not sure what c.r. the republicans are offering so it's difficult to -- because they don't know, in my opinion, right now. they are trying to figure out what can get the number of votes. as they did on the farm bill, i expect them to move right, not to the center, not to compromise. they have not been very inclined to compromise. so i expect them to move the right. i expect them to have a c.r. that will have in fact the defunding of obamacare in it which perhaps garner them the votes of the hard liners in their caucus which are 40 to 80 of them i think probably in in a range. and they will pass that perhaps with a reckless number of votes, although it would be interesting to see how a guy like hal rogers does. i haven't talked to him about that. that wasn't in his text, but i don't believe he thinks that's a rational policy.

and in fact, you know, senator burr of north carolina said that's the dumbest thing he ever heard of. he knows that's not going to happen. so the question is, i don't know what c.r. they're going to come out with. if the c.r. comes out initially, without repealing the sequester, which is, as i told you, i think is very harmful to the operations, the effective operations of government, to the growth of the economy and to the maintenance of our national security, then i will oppose it and would urge my members to oppose it. >> i wish we had time for audience questions. i know the congressman has a need to get back up to the hill. you have a little bit of work to do there in the next few days. >> you see how much work we're doing up there. heaven forbid i miss it. >> hopefully you don't adjourn. thank you for coming out. >> thank you. [applause] >> appreciate it. [captioning performed by national captioning institute]

>> coming up on c-span, congressional budget office director delivers his long-term budget outlook report. then, treasury secretary jack lew speaks to the economic club of d.c. about the debt ceiling and upcoming budget negotiations. that is followed by senator john mccain talking about the situation in syria. on the next washington journal, a look at bipartisanship in congress. arizona representative paul gosar and ann kirkpatrick

discussed their working relationship on legislation including health-care longer they have opposing views. then congressman of illinois and a democrat of hawaii talk about their bipartisan caucus today. solutions to issues facing the millennial generation. washington journal is live every morning at 7:00 eastern on c- span. wednesday, the house services committee looks at the 2014 military budget and spending cuts. military chiefs from all four branches of the military will testify. live coverage starts at 10:00 a.m. eastern on c-span three. when helen taft became first lady, one of the first thing she did was address having cherry trees planted in potomac park. it was a mess.

the japanese heard about her interest and decided to give 2000 trees to the united states in her honor. everyone was shocked. the trees that were sent world .r -- were older it was decided that they would have to be burned. president taft made the decision. the japanese were very accommodating and understanding. they decided to send 3000 trees which arrived in 1912. >> what our program on helen c-span.org.website, we continue our series live next monday as we look at first lady's helen and edith wilson. c-span's student cam video competition is underway, open to all middle and high school students. we are doubling the number of winners and prize money. create a documentary on the most

important issue you think congress should consider in 2014. entries are due by january 20, 2014. for more information, visit stu dentcam.org. >> the federal budget is on a course that cannot be sustained indefinitely. his remarks came at a news conference as part of the release of his budget outlook over the next five years. this is just under an hour. >> good morning. thank you all for coming. i am the director of the congressional budget office. this morning, the cbo released its latest long-term budget outlook, showing what would have been to the budget over the next 25 years under a number of different policies.

today's report differs from the book we published last year. it incorporates the effects of the tax legislation in january. it includes a wide range of recent data. it has some methodological improvements. the bottom line remains the same. the federal budget is on a course that cannot be sustained indefinitely. in our extended baseline, we have projected federal debt would rise from 73% to 100% of gdp 25 years from now. even before incorporating the harmful economic effects of the rising debt. to be sure, the deficit has shrunk dramatically during the

past few years from nearly 10% of gdp to about 4% this year. we expect the deficit to decline further to about 2% of gdp. after that respite, however, we project that deficits would start growing again. federal spending would be pushed up by rising interest payments on the federal debt, and growing costs for social security and major health care programs -- medicare, medicaid, and subsidies to be provided to insurance companies. interest payments would rise. in particular, with debt so large, it would be a large effect on interest payments. projected spending for social security increases because of the retirement of the baby boom generation. it would increased number of people by more than one third in just 10 years.

spending for the major health care programs would increase for the retirement of the baby boomers, rising cost of health care per person, and the expansion for low income people. projected federal spending for all other programs taken together declined sharply relative to gdp. such spending has averaged 11% of gdp during the past 40 years. it is currently below its average i would fall to about 7.5% in 2023. and seven percent in 2038. by 2020, total federal spending apart from social security and interest on the debt, would be a smaller percentage of gdp at any time since the 1930's.

the upward pressure on federal spending comes not from a general growth but from growth on a handful of the largest programs along with the rising cost of servicing the debt. federal revenues would increase over time but more gradually than federal spending. revenues have averaged 17.5% of gdp. they are now a little bit lower. they rise to 18.5% by 2023. nearly 20% by 2038. the gap would widen steadily after 2015. by 2038, the deficit would be 6.5% of gdp.

federal debt held by the public would be 100% of gdp. that would be more than any year except 1945 and 1946. federal debt would be growing, a path that could not be followed indefinitely. in our report, we separately project how the economic consequences of the policies would affect the long-term budget outlook. the growth in debt would reduce the nation's output and raise interest rates relative to what would happen if the debt were more stable. that would lead to wider budget deficits. with those effects included, it debt under the extended baseline would rise to 108% of gdp in 2038. debt that is so large relative to our annual output would reduce output and income compared to what they would be if the debt were close to what they would be. it would require higher interest payments and increase the risk

of a fiscal crisis. we also show the effects of some alternatives, some that would produce a larger deficits and someone that would produce smaller deficits. if certain policies might be difficult to maintain or - were modified, federal debt would be much greater than 108% of gdp. we discussed a number of sources of uncertainty and present projections based on different outcomes. those are for productivity, interest rates, and federal spending for health care. any projection is very uncertain. nevertheless, our analysis shows that under a wide range of possible assumptions about some

key factors, the budget is on an unsustainable path. as lawmakers consider changes that would put the budget on a more sustainable path, they will face choices about the magnitude of deficit reduction, the policies to be used, and the timing of deficit reduction. economic theory does not say what the optimal amount of debt is. nor what the right amounts of federal spending and revenues are. but a significant reduction in debt would require substantial changes in spending policies or tax policies or both. as an illustration, if lawmakers wanted to bring debt down to 31%, they would need to enact a combination of cuts in spending that would total about $4 trillion.

lawmakers face difficult trade- offs. waiting to cut federal spending or taxes would lead to a greater accumulation of debt, and would increase the size of the policy adjustments needed to achieve any chosen debt target. however, implementing spending cuts quickly would weaken economic expansion and give people a little time to adjust to the policy changes. the short-term effects on output and employment would be large now because output is so far below its maximum sustainable level that the federal reserve could not lower interest rates to offset spending and tax policies. thank you. we would be happy to try to answer your questions. yes, sir. >> your alternative fiscal

scenario with the economic feedback puts the debt at 190% of gdp in 2038. the alternative fiscal scenario often seems plausible, but what are the key factors that go into that projection? >> the extended scenario differs from the extended baseline on the spending and revenue side. on the spending side, the alternative fiscal scenario takes away the sequestration and the spending caps and goes back to the original spending caps. it also takes a broad other category of federal spending that i noted is so low relative to historical relationship to gdp, and pushes that back up toward a more standard relationship to gdp. on the revenue side, the

alternative scenario keeps federal revenues around 18% of gdp and closer to the historical average. it does not allow them to ride to nearly 20% of gdp, as we think they would do under current law. the scenario can be viewed as taking a set of policies that might be difficult to sustain. a set of policies in current law that might be difficult to sustain. and seeing what would happen if one reverted to a more standard experience. i would not say it is a more plausible scenario. a debt of 190% of gdp would be quite extraordinary, by the standards of this or almost any other country. i do not think you should do that as a realistic projection. it is meant to show what would happen under a different set of fiscal policies. i think i should be asking people to say who they are and where they are from.

>> you look at the other fiscal scenario over the next 10 years to arrive at 31% of gdp. do you factor in what increased taxes would mean to economic growth? >> we look at three alternatives in the report. one is a particular alternative scenario which has differences in tax and spending policy. we also look at reductions in deficits. ones that we looked at earlier in the year, in terms of their effect within the 10 year budget window. there are $2 trillion worth of reductions, but not specified if they're on the tax or spending side. for the extended baseline, we

look at the long-term effects of the economy and we take into account the amount of debt and the marginal tax rate. that is the tax rate on additional dollars earned, which affect the incentive to work and to save. for those policies where we have tax policies written down that we are following -- for these scenarios, we have not specified particular changes. we are not trying to lead the congress in particular direction. we do not have tax rates to use in that sort of analysis. the economic effects of those scenarios are based on the different amounts of federal debt. >> so not accounting for the fiscal drag because you do not know how that fiscal drag would be made up. >> we do account, in the short term -- the deficits would be

smaller under those policies. it would produce some drag on the economy. in contrast, we have had different sorts of responses to specific policies. we have picked an average response. we look at how rising debt crowds out investment and reduces output. >> could you assess the role of military spending on the long- term projections? do we know what happens? >> a lot of questions in that. we show in the back of the report that federal health care spending 25 years from now would be a little more than half a percent of gdp lower in our current projections then it was a year ago.

that downward revision comes largely from the revision we made to our spending for medicare and medicaid within the first 10 years of the projection. in the ten year outlook we released in the spring, we talked about having marked down our projections a fair bit from a month ago. -- from a year ago. and over the past three years, we have a reduced federal spending in 2020 by about 15%, as a response to the incoming data we have seen. for the longer-term report, it matters a lot in terms of the cost of the programs. additionally to the downward version of the first 10 years, we have taken on more data. there has been a slowdown in health costs.

our estimate of the underlying rate of growth of spending is now lower than it was. we have a lower level of health care spending to jump off from. and a slightly lower rate of growth beyond that. the combination is to reduce the health spending by about 6/10 of a percent of gdp, which is a significant difference. the affordable care act did a number of things. we think of it in three large buckets. it expanded insurance coverage. it reduced spending for medicare and it raised revenues. taking all those pieces together, we estimated that the affordable care act would reduce budget deficits by a small amount. repealing the affordable care act would increase deficits by a small amount. in these projections, we do not try to separate all the effect of the act. the effects on medicare in particular are now provisions of

law that relate to other provisions of law. that set of provisions leads to projections we have here. there is no natural way to separate out the provisions. we do separate out the effect of the expansion of insurance coverage. we have a table that shows a decomposition of the growth in federal spending for the major health care programs over the next 25 years. that is in a box of page 25 of the report. we decompose the growth for major health care programs. of the total growth in health- care spending, the aging of the population accounts for 35%. the fast growth per person accounts for 40%. the remaining 26% is accounted

for by the expansion of medicaid and the creation of subsidies. the insurance coverage provision explain about one quarter of the increase in health spending relative to gdp over the next 25 years. i should mention that when we look at where federal health care spending is going, about 3/5 will be going to people age 65 or older. about a fifth will be going to people blind or disabled under 65. another fifth will be going to able bodied people under the age of 65. even with the expansion of federal support for health care for lower income people, a great majority of federal health care spending is not related to the affordable care act.

you are? >> jackie collins from "the new york times." do your latest numbers account for the states that have rejected the expansion of medicaid? >> in our projections from last winter that we released in the spring, we estimated that about 45% of people who would have been eligible for medicaid expansion would in fact be eligible for the medicaid expansion. the total number of people who could have gone on to medicare, we expect 45% would live in states where they could -- where the expansion would occur. so far, about 20 to 25 states and the district of columbia are expanding their medicaid

programs. the remaining states are still thinking about it or have decided against expanding. those 20 to 25 states account for about 35%-42% of the people that would've been made eligible for medicaid if all states expanded medicare. so that figure looks to be running a little below what we had anticipated. our projection had a gradual expansion of medicaid eligibility enrollment and a gradual expansion of enrollment in the insurance exchanges. we expected from the beginning that it would take some time and to sign up for these programs. we had a gradual expansion -- a gradual increase in the number of people enrolled and receiving subsidies through insurance exchanges. over the next few years, in our projection -- of course, with

the new projections -- the spring projections, and there has been no change in that. we will do new projections early next year. we will take on board any information we can get our hands on at that point. johnson? >> two questions. totally unrelated, unfortunately. in the long-term, you mentioned that service at 4%. the alternative baseline -- is that not paying for tax extensions? >> on your first question, we projected the budget deficit would be $642 billion. our latest sense is that tax

revenues will be a little less than we expected. federal outlays will probably be close to what we expected. the deficit will be a little larger. probably under $700 billion. still about 4% of gdp. we are not sure yet. there are tax receipts coming in this week. that is our sense as of the moment. your second question is the extended alternative fiscal scenario. i mentioned some of the key provisions that matter the most for those numbers. the scenario includes replacement of the sustainable growth rate mechanism. that is how medicare pays doctors and incorporates the extension of some provisions that are scheduled to expire. such as the higher depreciation allowances.

those are scheduled to expire at the end of this year. i think the biggest difference comes from turning off these enforcement mechanisms and from pushing back up the other categories of federal spending and from holding tax revenue around 18% of gdp, rather than let tax revenue rise. primarily, under current law, it occurs under inflation-adjusted bracket creep. the we think there will be real income growth that will move people into higher tax brackets. we talked into reports about the effects of this real bracket creep on the marginal tax rates and the average tax rates. so taxes they pay as a share of their income. the tax system by 2038 would be quite different with its impact

on people. under current law. because of the way the law will interact over time. >> you are assuming the sgr growth? >> in the alternative fiscal scenario. the extended baseline follows the concept of our ten-year baseline, which follows current law. under current law, medicare payments to doctors will be cut by about 25% at the beginning of next year. it was incorporated in the extended baseline projections. the alternative scenario is harder to sustain. it would capture what would happen to some policies that were turned off. we are showing the consequences of that. >> i am from npr. this is probably asking you to do apples and oranges math. there is a reduction in health care costs. that is subtracted from our

long-term deficit and debt problem. but then there was a tax law change. that was locked into place. how did those compare to each other in terms of the effect on the long-term outcome? >> the change in the tax law has a larger effect down the road than our vision to health-care spending relative to last year's extended baseline. the debt is a great deal larger. last year we thoughtf debt would come down from its current 70% of gdp to close to 50% of gdp. this year, we think it will go up to 100% of gdp over the next 25 years. most of that increase comes from

the change -- i think the primary factor is the change in the tax receipts because of the change in law. in the other direction, the piece of good news was our down revision to health-care spending. >> but it is tiny in comparison. >> it is about 0.6% of gdp. that is a big deal, but not as big a deal as the change of tax law. the change in tax law extended a lower tax rate for everyone except the highest income tax people. it raised the thresholds for the alternative minimum tax. previously, under current law, the thing that congress had kept not letting happen -- a year ago, many more americans would have been paying some alternative minimum tax right away, and indefinitely in the future. congress basically fixed that problem by raising the threshold. as we show in the report,the number of people affected by the alternative minimum tax rises

but not very much over 25 years. those changes were large in the 10-year budget window. but they had even larger effects beyond that window. the other thing i should emphasize in this climate of debt and share of gdp, when there is a gap between spending and revenue, that adds to the debt. next year the interest payment on the debt is higher. that adds more to the debt. these things can snowball. you see this in our projection of interest payments. these are a little over 1% of gdp today. they could be five percent of gdp by 2038. and big part comes as interest rates return to a more normal level. beyond that, as debt rises, the servicing costs rise as well. >> we embarked upon deficit reduction. we are talking about $4 trillion today.

this is showing that whenever we have done, we still have $2 trillion to do. >> there is more work to do to stabilize the debt. i gave a talk last week that show a projection of debt -- the cbo made that in 2007. and there was a projection made in early 2011. and the predictions were made early this year. in 2007, debt was 35% of gdp and we thought it would decline. we hit an economic downturn and policymakers would have pushed down revenues. that would also push up federal spending, leading to much larger

debt. policymakers took deliberate action to help households, stabilize the financial system and the economy. those policies had cost. by early 2011, our projection was not for debt at 35% of gdp heading down. it was for debt at 65% of gdp, heading up. our 2013 projection is a little lower. in the talk last week, i break down the pieces of that. part of that is health cost changes. part of that is policy changes. still, we are at a high level of debt relative to gdp. that is given our historical experience and the historical experience of most countries. under current law, debt will rise. one of our scenarios was this $2 trillion of deficit reduction phased in over the coming decades. for 10 years, there was a $2 trillion deficit reduction. we set the reduction outside that window at the same

percentage of gdp that it reaches in 2023. that is an arbitrary decision. we are trying to look at orders of magnitude. that policy leads to debt in 2038 as below the current share of gdp. as it turned out, this $4 trillion policy -- these are numbers we picked back in the spring. we are not trying to suggest a particular target that congress should have. it is a matter of judgment. the $4 trillion policy pushes debt by 2038 down to just below historical average, 38%, a little bit more than 35%. $2 trillion would keep debt close to its current high share of gdp. $4 trillion would push debt down.

it would be, by 25 years from now, a little bit below historical gdp. those are still very large numbers. remember that congress and the president have, in the past few years, raised taxes relative to an alternative scenario, but cut them a great deal relative to what is in current law, and to cut back on discretionary spending and some of the benefit programs, but not make fundamental changes in either social security or medicare or medicaid, or a fundamental change to collect or tax revenue. that is the basic choice. we have a set of programs. given the surge of people who will be eligible for them over the next decade and the rising cost of health care per person, that set of programs will be much more expensive in the future than it has been in the past. we in the society have a fundamental choice. to cut programs or to raise taxes to pay for them.

we have chosen to do very little of either. as long as that is the case, the projections will keep looking like this. >> i am with reuters. a question about interest rates. you mentioned the returning to normal of rates. what does it look like under the scenario you are talking about? after the fed announced the signal of tapering programs -- i think it changed the market. has that changed your view? >> when last i checked, the interest rate on the 10 year treasury note was about 80 basis points above what we projected it would be during the third quarter. that is a substantial difference. we had been projecting that rates would rise quite a bit

over the next several years. we view this as an acceleration of something we thought was going to happen within a few years anyway. if we were to do new baseline budget projections today, we would project higher interest costs in the next few years. in our projections from the spring, we had rate coming up a lot anyway. i do not think what happened the last few months we change our projections five years from now. 10 years from now, 20 years from now. in fact, the market read on interest rates five or 10 years from now is not much different than it was earlier in the year. we have seen an increase in rates that has come sooner than expected but not something that would change the contours of our economic forecast. but it is certainly true that as rates rise to something closer

to their historical average, that increase in rates applied to debt has a huge effect on the interest payments. i think those interest payments reach about three percent of gdp by the end of the decade. five percent of gdp by 2038. does that answer your question? >> with this window -- >> if you picture a projection of interest rates that had a steep upward slope and then leveling off, we started up sooner than we thought. that would raise projected interest costs in the next few years. we were expecting a large increase anyway. it increased early and that does not change the path further down the road. >> but you get to a situation where the deficits are bigger --

under your alternative fiscal scenario. that has an effect on the rate itself. >> in chapter six of the report where we look at the economic effects, we look at the economic effects relative to the extended baseline. we think interest rates would be noticeably higher. we do not have a great confidence in calibrating that increase. when we project the effects of debt on interest rates, we are drawing from historical perspective. u.s. treasury debt has risen and fallen relative to gdp, but it has not just headed off indefinitely in some direction. if debt looked like it were on a permanent upward trajectory, that might well induce some

reaction by financial market participants that would be out of line with what we have seen, given historical variation in debt to gdp. we do not think we have an analytic basis for quantifying that effect. the quantification we have relies on our standard models between interest rates and debt and gdp. interest rates are higher, and that matters for debt dynamics. but i would caution that we think we have and have tried to say we have greater uncertainty about projecting the effects of paths of fiscal policy that are outside our historical experience. >> that path you mentioned can only be cut in one direction. it is not going to be any lower. >> in that case we are on the high side. >> i assume your studies have supplemental tables on the website.

that is how most people get the answers. >> there is extensive extra data that went up on the website 10:00 this morning. hopefully, that will help you. >> how do you deal with the evolution of the downward adjustment with the increase in per capita medical health care costs? could you give me a couple of numbers on health? that would address a concern of mine. it appears that there is still the danger that the slowdown in health care costs -- it is coinciding with the recession. we still have a high unemployment rate. there is a danger, one would

imagine, so what do you say? >> in revising our spending projections, we have drawn on our own analysis of the data we have seen and the analysis of outside experts. a number of outside experts look at the causes in national health care spending and have attributed part of the slowdown to the ways in which the loss of income has affected health care and attributed part of the slowdown to structural factors. two of my colleagues look at the slowdown in medicare spending and published a working paper in august. they were unable to link the slowdown in medicare spending

growth to the business cycle conditions to the loss of wealth. they tried to do this not just by looking at the time series data, which in fact do not show, historically, a correlation between medicare spending growth and overall economic conditions. much more persuasively, they look at microeconomic data, households that have suffered wealth loss. other bad effects of the economic conditions. those households did not seem to have any reaction in their medicare spending. that leaves open the question of if it is not the recession, what is it? of course, this is an uncertain business. my colleagues went through and tried to quantify a number of other effects. changes in the age and status of beneficiaries. changes in the payment rates that medicare makes. change in prescription drugs. changes in whether people are enrolled in part a and part b.

the whole set of quantify factors did not explain much of the slowdown. there is another part of the paper that goes to a number of possible factors that are difficult to quantify. they try to pull together the scraps of evidence to see what stories might've been more or less important. it does not lead to a clean, sharp "here is the effect." and now we know how persistent it will be. we are trying to make projections in the middle of the distribution of possible outcomes. we want there to be equal chances that we are too high and too low. we have seen slow growth in medicare and medicaid over the past few years. and slower growth in premiums in the private insurance market and we had expected earlier. we try to construct projections for the future that balance risks.

i think there are a set of reasons why we might take the recent experience very seriously, given a lot of weight. one of those is just the breadth of the slowdown. it affects medicare and medicaid and the private health insurance markets. within medicare, it is in part a, part b, and part see. c.part it applies across regions and across beneficiaries with high and low health costs. it is a widespread phenomenon. that suggests it is not just a few factors. that is one reason to give a lot of weight to recent experience in making our projections. a second reason is the slowdown has been going on for some time. it is not two or three years. it is half a dozen years or longer. a third reason is that we have not been able to link the medicare slowdown to the macro economic conditions. on the other hand, i think there

are three reasons, as it turns out -- we did end up with lists of three. there are three reasons to put limited weight in the last few years. the health spending growth has varied a lot in the past. previous periods have been followed by a pickup in growth. some of the stories one has heard sound like some of the stories that are told today. we cannot rule out that possibility. a second reason is there continues to be developments in the health care business. i am discussing a paper on thursday that looks at the cost slowdown. they talk about a number of

areas where the taxes of health careactice of health continues to push in new and expensive directions. we may have seen a lull. that does not mean it will not recur. a third reason to put less weight on the last several years is that medicare remains primarily a fee for service system. the incentive for providing more care are still there. there are some good reasons to put substantial weight on what we have seen over the past few years and reasons to be cautious. we have projections that maintain slow growth of medicare and medicaid spending for several years. but a number of years from now, gross rates come back up in our projection. the level of spending remains

below what we have said a few years ago. we do not have a widening wedge in the long-term. >> you provide some kind of a graph that shows what you are protecting. what has been the magnitude of downward revision? >> we provided pieces. it is not easy to pull this all together. our projections get revised for lots of reasons. we change economic forecast. legislation is enacted. it is complicated to do these comparisons. we have said a number of places that for 2020 our projections of growth is about 15% below where it was in the spring of 2010. that is below where it was in the spring of 2010. our projection in 2020 of medicaid spending is about 15% below where was a few years ago.

that is a bigger difference than we have seen so far. it was about five percent in 2012. that is below what we expected. we have seen some of the slowdown and are projecting it to continue. but as i said, the gap between our early projections and our current ones do not get that much wider later on. a little bit wider. we have taken some of the news into our projection of the underlying rate of health care cost growth. that matters for these long-term projections. there is a chart that looks at last year's in this year's projections of health spending growth. this year's is lower. most of that difference comes in the next few years. beyond that, the lines are close to parallel. the lower line has a little bit less slope than the line from two years ago.

>> at some point, a timeline. a news report talked about the possibility of prices brought on by that. what is your assessment about options the treasury may have if it decides to refinance its debt? >> we plan to produce a volume of budget options this fall. i will not be more specific than that. that is a daunting task for us. last time we had about 100 different options and a lot of writing to go with it. that work is underway. i do not know what else congress needs from us.

as far as rollover risk, what we mean by fiscal crisis is a point at which investors lose confidence in the government's ability to manage its finances, and thereby will not lend the government money at affordable interest rates. we have been clear that it surpasses our ability and we think anybody's ability to predict when such a point might be reached. the language from the report today is, how long the nation can sustain such growth and federal debt is impossible to predict with any confidence. every country that has had that problem has different in some way. the united states is different from other countries in ways that matter.

we do not have enough experience from this country or other countries for much we can untangle all of the other factors to produce some estimate about how much debt the country could have before it encounters that kind of problem. presumably, it depends -- the answer would depend critically not just on some amount of debt, but what people thought would happen to fiscal policy in the future. it is not a matter of today's borrowing. there is expected future borrowing, and i think a matter of confidence in the government ability to make policy decisions. i do not think there is a number out there that is the number. and i do not think anybody knows how to find it. absolutely. jackie. >> for purposes of comparison with the $4 trillion alternative. pick your 10-year window.

can you quantify how much congress has achieved in that window? >> we have not done that. in the talks i gave last week, i highlighted a revision to two different categories of the budget. one can see there are categories where there has has not been -- we did not try to work out the numbers. >> there is a statement out of $2.5 trillion. is that in the ballpark? >> we have not tried to do that kind of precise calculation. i do not speak about other people's comments. if we had an estimate, i would happily share that with you. but i do not know of any estimate we have done of that sort. >> so $4 trillion is on top of that?

>> it is a general matter. we are giving congress a sense about where we are going. it is a benchmark for them to consider changes under current law. whatever they have done in the past has been accompanied by a collection of good and bad news out of the world. we are at a certain place now. we have projections about where we are expecting to go into the future. that is what those numbers are based on. >> is there a reason you have not done that calculation? is it impossible to do? or not really? >> it is difficult to do. our projections get revised for a lot of reasons. to go back is a little challenging. not impossible, i think. but, again, our focus is not so much on the things they have

done, but where we think the budget will go under the laws that are currently in place. whatever the goal was viewed to be three years ago, what matters is the situation as it stands now and what deficit and debt objectives that congress has. >> the economic feedback analysis -- i do not think we have seen this before. >> we have done this before. it is complicated to do. in our 10 year projection, the budget projections and economic projections are consistent with each other. the economic projections -- it is not quite true in most of this document.

it is a more challenging task. the basic budget projections all hold the economy fixed. income grows as it has tended to over the past. it does not incorporate the effects of the budget policy. that is in the first several chapters. debt reaches 100% of gdp in 2038. then we go on and incorporate the effects of the economic impacts. debt reaches 108% of gdp. that is the reason for the difference. we have done that analysis in the past. >> june 2012? >> there was a version of that in the june report as well. last year, it was done separately from the budget projections because of the complexity of doing this. also, complexity of doing it when fiscal policy is on an unsustainable course.

>> [inaudible] light on theany treasury? >> there is still a great deal of uncertainty about when the treasury might run out of cash including, how large the tax receipts will be this week. as you know, the treasury said that it expected to reach its borrowing limit in mid-october. about $50 billion in cash on hand at the time. that projection seems plausible to us. given the likely cash flow after that date, we think that the treasury will properly -- probably run out of cash sometime between october and november. without some change in the borrowing limit.

we will be releasing a report next week that will provide our latest review at that time. including information we can glean this week. the date on which the treasury will run out of money is likely to be uncertain even at the very end because federal cash flows bounce around. ofso what happens at the end theyer -- that is when will not be able to pay off? >> yes. we think that without some increase in the debt limit, the treasury would be unable to meet its obligations sometime between the end of october and mid- november. that is a good note to end on. i should emphasize that we don't

-- we aren't engaged in the day- to-day cash management of the government the way the treasury department is. we watch what is happening to federal spending and revenues but the precise mechanics, the tools they would have under those circumstances, we just don't know. the projection i offered was based on a set of extraordinary measures that have now become fairly common. what else the treasury might do, i don't know. for example, the ability of the treasury to delay payments is not just something that we can speak to. also givesection other options? -- i have tove think about that more carefully. can'tojection -- if they

sell as much debt, and they could sell more on another day. i don't know how to think about your question. offer solutions under the regular workings of the cash management. the point at which we think they would not have as much cash as they would need to make the payments they would normally make on that date. what else might happen or what they might do is other people's jobs in this town. ok. when we stopped there. thank you all very much for coming. if you have further questions, we are happy to answer them.

>> there's two problems and don't ask me -- i still don't quite understand it. one of them's online and one of them is a hard-lined communist. we're submitting it to both probablies. >> and i would suggest you send one to the p.o.a. as well. that it n is, i feel stops at home. you said that president obama was not strong. i believe and i applaud president obama for everything he's done because he's stayed engaged. he's now got the united nations

involved, russia involved and 0 more countries, and he's trying -- of assad with those weapons. but with you from your point of view to get us stronger, will you get back to the republicans nd what will the debt ceiling, and the budget because i believe with that we'd be stronger. getting more re questions. >> i really don't know what's going to happen. i do know i've seen the movie of shutting down the government. hat renowned liberal charles krauthammer said this idea of demanding the appeal of obamacare was a suicide note on the part of the republicans.

and i agree with charles. look, this president and i have a they value. we work together on immigration reform. we've worked together on trying to get the debt issue under colorado i supported him on the debt l action in syria -- issue under that. i supported him on the initial action in syria. the loyal opposition agree when they agree. and that's how i think we should function. and i have a lot of respect for the president of the united states in many, many ways including his ability to communicate with the american people as he proved in his re-election campaign. but right now, as i have articulated, i think we are on the wrong path that could be

very damaging not only now but for the rest of his presidency. and i do not want that to happen. i do not want a president of the united states to weaken. this is too dangerous a world that we live in. one more. >> one more, great. last brief question. i want to remind everyone this is on the record. and senator mccain has to zip away to something else. so i've been asked for everybody to wait in their seat. >> about half hour after the secret service -- >> and the lady all the way in the back with her hand up. >> thank you, senator mccain. i was wondering if you can tell us what is the u.s. has learned om past military action, for example in iraq and afghanistan and from this situation. >> thank you very much.

i take lessons from iraq, fghanistan, bosnia, kosovo and other conflicts which we have been involved and which we succeeded. but in kosovo we did what i want us to do and actually yes to some degree in syria where we bomb and sent air activity without sending in american troops. and after 78 days mr. milosevic decided to fold. and we did so in the name of human rights. mr. milosevic didn't pose any particular threat to the united states of america. but he was slaughtering people right and left. and so the united states intervened and we saved i don't know how many thousands of lives. so when i look at -- and i look at afghanistan and we knew -- we forget -- we forget unfortunately that we knew that

al-qaeda and the people who perpetrated the atrocity of 9/11 came from afghanistan. what would any president do? any president would have done what president bush did and said turn these people over and bring them to justice. taliban refused to d that. we had no choice. was it mishandled? could we have done it better, differently? that will be a subject for historians. on the issue of iraq, i think that it will go down in history as a cardinal error to accept whatever evidence there was and urn it into an argument that saddam hussein had weapons of mass destruction which we know now he did not. but the secretary of state went to the united nations security council and convinced all of us in congress and the american people and others.

do believe that thanks to david petraeus we won the war. but we lost the peace because we should have left the residual force behind which the president did want to do. and so we are now seeing unfortunately a resurgence of al-qaeda in iraq. al-qaeda moving into syria to help bashar al-assad to enter he fight not on bashar al-assad. we are seeing turmoil that i think could have been avoided in the long run. are we a perfect nation? no. have we made mistakes? yes. this young lady was just talking about vietnam. but we learn from our mistakes. we are now friends with the vietnamese. they are not friends with us. by the way there's a ship, a

destroyer that's named after my father and my grandfather. it paid a visit to the port of maine that shows you if you look long enough that anything can happen in the world. make mistakes and errors in judgment? yes, we have. but that goes with being the exceptional nation we are. and the reason why the 20th century was called the american century. we made mistakes but the world i believe is a far better place because of american leadership and the american people who have sacrificed so much on behalf of other people's freedom as well as our own. i believe in the greatness of america and the responsibilities of world leadership and i often ask my friends at town hal meetings, if you don't want america to lead who do you want to lead? somebody's got to lead. but i know we've made mistakes.

and i know we're a very imperfect nation but i don't think there's been a better experiment invented yet and i'm proud to have had a small opportunity to serve it. i thank you margaret for having me. >> thank you. [applause] [captioning performed by national captioning institute] [captions copyright national able satellite corp. 2013]

>> today the house services committee looks at the 2014 military budget and spending

cuts. ports chiefs from all of the military will testify. live coverage on c-span 3. >> federal reserve chairman ben bernanke holds a conference to detail action to be taken by the fed. live coverage at 2:30 p.m. eastern on c-span 3. this weekend look for book tv's live full-day coverage of the national book festival. featured authors include kay scott utchinson, kay bird. looking ahead to october. >> how can you be this the congress? you got arrested. you violated the laws. and i said they were bad laws.

they were customs. they were traditions. and we wanted america to be better. we wanted america to live up to the declaration of independence, live up to our creed, make real our democracy. take it off the paper and make it real. so when i got arrested the first time, this book said that i felt free. i felt liberated and today more free er before i feel and liberated. you know abraham lincoln 150 years ago freed the slaves but it took more than the civil rights movement to free and liberate a nation. >> civil rights leader and congressman john lewis will be our guest sunday the sixth. and he'll take your calls and comments for three hours. also november 3, biography kitty kelly.

and february 3, christina hoff ommers and mark levin. >> house minority whip steny hoyer revealed that he lost three constituents on month's shooting at the navy yard. he also spoke about the budget and debt ceiling talks, tax reform and the federal reserve chairman. his is 45 minutes. [applause] >> morning, everyone. thank you for coming out this morning. i'm ben white, chief economic correspondent for politico. it says in my script to say nice things about the morning money column. hopefully some of you read that. i want to thank everyone who

are tuning in from the live stream, everyone on c-span. you can follow the discussion #morningmoney. i'll ask cram hoyer when we bring him out. one housekeeping item if you have cell phones have you keep them on and tweet this event but just put them on mute if you can or vibrate. delighted to have steny hoyer the democratic whip joining us this morning. have a lot to say about the budget situation, the debt ceiling, the fed, other issues on the news. i would like to thank the peter g. peterson foundation that has been instrumental in fostering these events. here's a few words from michael peterson, president and chief operating officer of the peterson foundation. >> thank you, ben. i just wanted to welcome all of you today. i normally don't sound as tough as intimidating. i apologize for my voice.

at the peterson foundation our mission is to increase awareness and accelerate action on america's fiscal challenges. we're very happy to be bringing these issues the national discussion. e hope that an earlier breakfast with senator rod portman and we're pleased to have the democratic whip, steny hoyer. he's a leader that has earned respect on both sides because he's willing to find the consensus on both sides. later today, he will be coming out with his long-term budget forecast, the update for 2013. although there's been a lot of talk in the last few years. our long-term structural challenges still remain. we've done some easy things. we've done some of the stupid things with the sequester. but we haven't done a lot of the important things. these upcoming fiscal

challenges with the debt ceiling and the continuing rezzlation represent another opportunity to get things right and put the nation on a long-term fiscal path that's sustainable. we're very much look forgot ward to have representative steny hoyer with us today. and we welcome him. thank you. >> thank you, mr. peterson. return the mic. thank you for making these conversations possible. without any further delay i would like to introduce steny hoyer, the democratic whip. [applause] >> congressman, thank you for joining us. obviously a bit of a tough day in washington today. tragic events yesterday at the navy yard. i think we need to talk a little bit about that to start before we get into the fiscal matters that we'll discuss. question for you first. is there anything that you can tell us.

obviously you had some constituents affected by these events. anything that you can tell us this morning about what you know transpired. and then the larger question is will this event start a new conversation about gun control? is there anything that can be done on capitol hill at this point on gun control given we've seen past efforts fail? and are there laws that are not currently on the books that could be on the books that would have stopped something like this from happening? >> well, frankly ben, i don't know enough about the facts. we'll have to find those in the coming days. i lost three constituents that lost their lives. they were working at the navy yard. two of whom lived in charles county and one that lived in st. mary's county, the county in which i live. i'm sure it will renew the discussionings about weapons that can be used to kill a lot of people quickly. -- renew the discussions about

weapons that can be used to kill a lot of people quickly. we have seen in the last two weeks two legislators that had the courage to vote for regulations that we do a background check so we know who is getting guns. 80% to 85% of the public say is a sensible policy. these two legislators were recalled in a special election. one can analyze who comes out to special elections. but it does not bode well for asking people to vote for legislation similar to that which went down in the senate just a few months ago. but i'm sure we'll renew the debate, the discussion as it should. >> in terms of his access to he appeared to have clearance. can you tell us anything about how he got that access? is that something that you'll

be looking into? it seems that there was significant breach of security there? >> you're right. it's something that must be looked into. what we have seen in so many of these instances are that the perpetrators have given previous indication of instability, even inclinations to use weapons and to talk about violence whether they did so on a website whether they did so with colleagues or classmates. in almost every one of these instances we've seen the perpetrators be people who individual's thoughts were unstable. in this case apparently, this guy was prone to violence. he had apparently shot the tires out of the neighbor's vehicle. he shot through the ceiling of another neighbor. this was somebody. he was given a general

discharge from the navy so that there was no doubt that this was somebody who had a record of instability and certainly should have been subject to closer scrutiny particularly in access to a facility such as the navy yard or any facility that has large numbers of people that has security concerns in the united states. >> of course, all of our thoughts and prayers go to your constituents and their families at this particular time. i want to switch to some of the economic and fiscal matters before us starting with the next chairperson of the federal reserve. we saw larry summers withdraw his name from consideration over the weekend. by all accounts he was the administrations first choice -- the president's first choice for chairman of the fed. first, do you think it was the right thing for larry summers to do to pull his name out of

consideration and obviously you're on the house side but do you think had he gone out to the senate he would have been conformed? >> -- confirmed? >> i don't know the answer to the second question. there was obviously controversy. worked with him when he was deputy secretary. i found him to be extraordinary competent, knowledgeable, respected. i mo the president relied on him heavily and relied on his capabilities. i have not talked to larry summers but my conclusion is that he decided that the controversy that would be surrounding the confirmation or his appointment would undermine the confidence that we need to have in the federal reserve and so i think in a very responsible way he made a determination that he did not want to further politicize or

create controversy within the federal reserve. so i think he probably did the right thing. certainly from his perspective but he is a person of immense camebility and will continue to contribute. >> do you think janet yellin is the best pick or are there other candidates? >> i think she would be an excellent appointee. that. that she enjoys she would be confidence building of the federal reserve. but there are others as well. this is a choice the president is going to make. and i would hope that he would make it relatively soon so that he could stabilize. because i think given the other economic turmoil we're going to talk about, having the federal reserve as a stable, respected institution, very important.

>> do you think this race has been taking too long, one of the arguments of folks who were supported of larry summers that had they moved quickly they would have moved faster? are we at a point where this nomination not being made has had a negative impact on the economy? >> i think making this appointment as soon as possible will be helpful. yeah. >> let's talk a little bit about the coming debate over the continuing resolution. obviously we have very little time until the end of the fiscal year, to 2014 fiss equal year. there are some who say with the president not able to get the nominee to the fed, unable to gain support for a resolution, first the use of force in syria that east operating with a weak hand and that the democratic

party has moved to the left. going to be very difficult for the president and the democrats to come to an agreement with republicans that continues to fund the government. first of all, do you think the president is tpwheak that? does he have limited support in congress? >> well, i think the president has good support from the congress of the united states. there was controversy clearly regarding syria in the country. but i frankly think the president has been successful attaining now a substantial movement in chemical weapons. remains to be seen whether the russians and the syrians will be good to their word. i don't think any of us could have predicted the kind of progress that has been made in the last 10 days on the issue of chemical weapons in syria. and it was attained in my opinion because the president was willing to use military

force to undermine the ability of the syrian regime to use grade their future militarily. we showed resolve. the test will be in the coming weeks, of course. but the u.n. report that just came out confirms almost absolutely the president's representations and the intelligence community's findings. rom that standpoint he had the only the not information from the report there seems to be an inescapable conclusion that was the syrian regime that used it. now on the economic front, i think the president continues

to enjoy broad range support in the -- on our side of the aisle. i think there's no -- nobody in the democratic party who wants to shutdown the government. the president clearly does not want to shut down the government. i think we're talking about tactics and make sure we don't do that. >> let's talk about tactics and the substance what might be done to avoid that shutdown. you've had a pretty hard line on eliminating the sequestor as part of a continuing resolution. it's hard to see a scenario where republicans agree with that. so how do you gate bill out of the house that continues to fund the government? if you say the democrats won't support thing that won't get rid of the se quest every. republicans are having a hard time to find vehicle that continues to fund the government that defunds obamacare? is there a bill that gets rid

of the sequester? >> my observation has been that the republicans have a large number of their caucus, their conference that are obsessively objectionists who are so focused on defunding obamacare, which is something that none of their leaders reasonably is going to happen. and in terms of getting progress, there are many republicans who agree with democrats that the -- getting rid of obamacare is not going to happen and the sequester is irrationale. let me read if i can. i'm going to call this the first book of rogers and i'm going to use this as my text in the coming weeks. and i will read from the first chapter, the first two versus. [laughter] and he says this. with this action -- now this

action was pulling the transportation hud appropriation bill which was being passed consistent with the republican budget from the floor because they couldn't get the votes from it. with this action quoting the republican chairman, conservative from kentucky, chairman of the appropriations committee. with this action the house has declined to proceed on the implementation on the very budget it adopted just months ago. thus, i, meaning hal rogers believe that the house has made its choice. se quest tration and its unrealistic and ill-conceived discretion nal cuts must be brought to an end. he goes on to say the house and senate and white house must come together on a comprehensive compromise that repeals se quest tration. takes the nation off this lurging pass from fiscal crisis to fiscal crisis. reduces our deficit and debts

and provides a realistic top line discretionary level to fund the government in a responsible and attainable way. i think hal rogers the chairman of the appropriations committee will flush at least half of their caucus' opinion. >> on the first day. > on that question, just prognosticate for us because it's hard for me to see how we get to a deal on this before the government shutdown given where we are at this moment. what does that deal look like in your view when we get there? what does that cap that you'd like to see and just paint for us a picture of a bill that can pass the house and then get approved by the senate? what's going to be ahead? >> first of all, we need to put where we are in context. in august of 2011 we don'ted a

budget control act that budget control act got $1.2 trillion over 10 years, probably the largest single reduction in government spending that we've had in the time i've been in congress. that would have called for a spending level in this coming fiscal year, 1.5 trillion dollars which is about $110 trillion less discretionary spending. these numbers are lost on the citizens and when they hear "cut government spending," there is no republicans that says and by the way we've already cut $1.2 trillion. but that's the fact. tore figure is $1.4 trillion which would be the next follow on of that budget control act for fiscal year 2014, an additional cut. and then you had two other figure, the 988 which is the

sequester number from that 1.58 and then the 967 which is the continuing sequester number. the reason i go through that. you have four numbers. you have paul ryan budget of 67 which hal rogers -- >> doesn't like it. >> not only does he not like it. this is a conservative republican from kentucky. he's not a moderate from california. >> god forbid. >> you know, would have no credibility, right? and he said it's unattainable. what he means by unattainable. i served with hal rogers on the appropriations committee. it is inconsistent with the responsibilities of operating government from a conservative republican standpoint either on the defense side or the nondefense side, discretionary

spending. normally what you would do, the house has a 967 number and you split the difference. you're talking about 1.2 let's say for the sake of argument. that would be a possible compromise. mow the problem you have, you have somebody who wants to be president of the united states, republican united states senator, very concerned about getting in the good graces of the republican. mark rubio said i will not vote for a c.r. unless it defunds obama care something that clearly mr. rubio's got to know an irrational request of the president. so why where do we find ourselves? we find ourselves with mr. boehner understanding that's not reasonable. they try to construct a policy

that would say to these republican hard liners these objectionists you can vote for defunding obamacare, but we'll have a procedure so the senate can reject it and then pass without sending back to us a -- in this case 988. >> and that didn't work out. >> and that didn't work out. because heritage foundation, freedom works, other very conservative groups on the republican party on the outside were going to score this and demand their members to be in my opinion continuing to be obstructionist and unreasonable in what they would expect the other side and rejecting of compromise. compromise is the key. what do i think is attainable? he and frankly, i think 80 republicans need to join the democrats in reaching a reasonable compromise.

we understand we're not going to get our 1.58. my own view we need to get a compromised figure and we need to eliminate the ser. we need to repeal the sequester. i think there are a good number of republicans who could vote for that but for the fact they're terrified of tea party opponents. >> would you oppose anything? >> i would oppose anything that goes out of the house that does not eliminate the sequester. the continuation of the sequester is damaging to our government, economy and to our national security. >> let's say we get past october where we run into the debt ceiling issue and the trade we're running out of special moves to -- first of all, a default in a real crisis.

the debt ceiling would have to be vazed by mid october. republicans continuing to say they will support a commensurate dollar for dollar the equal measure of spending cuts, entitlement reforms. are there any entitlement reforms on the table now that democrats could accept as part of a -- an agreement with republicans that raise the debt ceiling? >> i think the president has already offered the budget and he's made it very clear that offer is on the table. as you know, ben, i'm one of those democrats an i've spoken out over the last two or three years, we need a balanced big deal. -revlan.a diminuci e need a solution to get us on

sustainable fiscal path. that will get us from where we are to where we need to be. the president said he's going to have the budget deficit in four years. it took him four years and seven months. so the budget deficit is coming down. but over the long-term we need to deal with both revenues an entitlements. both sides have very strong opponents of one side of that equation. but almost every bipartisan group that's met said you've got to deal with both. >> do you think there's enough -- >> that's when roger says we need a comprehensive solution. >> do you think that can get through both houses? >> i think it is. if it is comprehensive.

when speaker boehner and president obama reached in my pelosi, l, speaker leader reid, mr. durbin and myself to the president and we indicated to him that we would support that deal. we thought there ought to be another increment of receive view to balance off any entitlement cuts but that or reductions in growth as opposed to cuts. that -- we would support that and i think there is support -- >> it doesn't include any new revenue? because it's clear they're not going to touch anything that supports revenue. >> if you say it's clear that they don't support the revenue. is it clear that deposit cats won't support any restraints and title reforms. i don't think it's clear on the

other side. i will tell you i talked to republicans. and i will not out them. [laughter] because it will be dangerous for them which is what they're concerned about. they're not concerned about losing the democrats. they're concerned to losing to a very, very conservative republican. >> let me give you an example. delaware. indiana, richard was defeated. sharon engel, todd angle in missouri. and it would have been difficult for the democrat to win. so the problem we have getting to revenues is yes, you're right. there have been some very hard line stances taken on revenues. and those people are the same. those people are the same people that said if we don't the clinton program in 1993,

i.e. deck army, freedom works the economy was going to go down the drain. the opposite happened. we had the best economy we've seen. >> tax reform is another issue that's critical to a lot of folks in this office -- in this audience. rachel day has a question on tax reform. i think she's right there. >> hi, can you hear me? >> i can. >> thanks for being here. >> thank you. so right now we know that house republicans are real cri trying to push tax reform. there's been talks about linking tax reform to the debt ceiling. obama has proposed a corporate only tax reform. my question for you is where is the caucus? where are the democrats on reform for individuals. is that something you still want even though the president has not necessarily pushed for

it? and if so what kinds of concrete steps will you guys take in order to get reform going. would you guy bs open to a debt ceiling or something of that nature, for instance? >> let me say that on our side of the capital and the democrats have been participating very positive with sort of the working groups that chairman camp has established. i think those have been positive. they've been partisan and there have been useful efforts. they have not led to an agreement as you know at this point in time. in my own viewer certainly open both on the individual side as well as the corporate side to tax reform. as a matter of fact everybody in washington is for tax reform. right up until the time you say what it is. , everybody rm

believes the tax code is too mplicated, too long, too uneven on it impact on individuals and the corporate level. warren buffet's orkse that his secretary pay as higher rate than he does is obviously something that is irrational and unacceptable. as a result, we need not only to reduce the complexity of the tax bill, simplify it but we also need to rationalize it in terms of equal effect on taxpayers. so that one taxpayers pay as higher rate, effective rate. they all might have the same nominal rate but play a different effective rate. and they're neighbors which makes them unhappy bleing that the system is unfair. so the problem is i've been in congress for 33 years. that's not the problem, i hope. is that i have not seen any

major tax reform. i've seen tax changes. but tax reform that has not had a president and a bipartisan congress working in league to attain it. because it is extraordinary difficult, objective. large ess you have a consensus and the work together of both parties and the executive and legislative body, it's almost unattainable. >> 1986 was the last time that happened. that was a very significant and important step forward. we ought to be able to take another step like that. but whether or not we can in this context, i think is doubtful. f, in fact, the -- there's a hostage take on on the debt limit and that hostage is the debt limit and the pay is tax

reform as opposed to bipartisan tax reform, it's not going to work in my view. i think it's very doubtful that we will see it in congress. democrats an republicans are working together. you see on the senate side where snarnt baucus and senator hatch are working together. they came up with the zero something game to start out with. every interest group in town was emergency jiesed by that proposal. >> speaking of house taj making. if you take hostages the only way that scenario works is if you're willing to kill the hostage. on the debt limit, do you think there is a real risk that we get very close to the point of being unable to borrow further frer the treasury and given the differences on the fiscal issues and insistence among

republicans on either defunding obamacare or cutting spending in a way the democrats would never suspect. debt limit a increase. but you ask them how it happens and they don't have an answer for it. is this a riskier move? >> i think it's riskier. i think it's riskyier because what you saw in what boehner was trying to do on the c.r. you saw their heritage and freedom works and club for growth all very energized and a very hard line, we're going to score this vote. which as i said republicans for the most part are concerned not about generals but about progress. and the concern about funding

from these very, very hard-lined right, right-wing groups. incorrect groups but right-wing groups. and i think that in that ontext we're a greater risk. the irony boehner and cantor would tell you if they were on the stage, not raising the debt limit is an irrational, dangerous, economically devastating policy. my presumption is mcconnell would say the same thing. well reagan said it. and i won't read you that verse but i've got it in my pocket. >> that's a scripture -- >> that's a scripture for another sermon so that almost all the leaders and certainly every former republican president, taking that hostage

is hostage you do not want to take. taking that hostage that if you kill that hostage would kill the economy and undermine the sablet of country and give to the world an extraordinarily negative view of the united its ability to manage own affairs. the president's made it clear. he's not going to negotiate with something that is fundamental to america's stability, that republican leaders said ought not to be put at risk but their politics are putting it at risk. hopefully they'll retreat from that a bittle -- a bit. > you can tweet questions that peaks to this. piece of have

legislation is going to be a knock down drag out fight unless there's a larger deal to budget regular order. at 16 years orting without a budget. when will congress pass one? is there any prospect getting back to regular order on budgets and funding the government? >> well, first of all, let me make a disclosure out front. i was appropriated for 23 years. the budget's an interesting document. but the budget really only does one thing. can set up a reconciliation process so that it's very meaningful. but what the budget does is a top line for discretionary spending. to it gives that top line them and between the 12 subcommittees so that you can operate relatively easily without a budget. because the budget wants -- the

budget control act which we passed in august 11, set a top number for spending. now we believe it set the numbers. republicans would argue that was the other number and we can do something below that. but that dispute aside, we talk a lot about our budget but it's the prorkse bills that actually applaud money. the budget is the budget. it's a unified document. it does the spending. but the president sends it down. the president doesn't participate in the budget process. it's not a law in that sense so that you don't need a budget. what you do need, however, is an appropriation process that works that has hearings. determines priorities. determines that which is being done that doesn't need be done. applies resource us to things that need to be done and we

have greater opportunities. broken. ess is that process undermines our stability. and obvious, it's under mined because we don't have a context in which the budget does establish. so we have this extraordinary discrepancy between the 967 and e $1.8 trillion that's a large number to compromise. but it has led the senate to be unable to pass an appropriate ill at their levels and want us to pass three bills. we did pass three bills. we passed them at the 1.50 trillion level. ones, it emaining

caught 1 one. what really must be done is the appropriation process need to get back to a position where agreement is possible. >> i want to especial it up to audience questions in just a minute. so take some good ones and we'll give the mic to you. why don't we talk about the democrats prospects. conventional wisdom is this is not impossible. not enough competitive districts. you would need -- do you think that's true do you see a prospect for a democratic house? yes, i do. >> it's shocking that you would say that. [laughter] nd how do you get there? >> let's go district by district. >> i'm not going to go district by district. but i am going to go back to the example. i tell charlie cook i understand that historically

you must think it's difficult for the democrats to take back the house. what is easy is for the republicans to lose the house. and these are senators. go back to delaware. mike castle wins that pry markse i think mr. koontz has real trouble winning that election. if mr. lugegar is nominated, i urged joe not to run. i think i was right. the good news from joe's is the most threatened democratic senator. todd aiken. and sharon engel was the candidate against senator reid. i don't think it's helpful to senator reid. as i mentioned the hard line -- i would call it the radical right is not allowing the

appropriations process to go forward and threatening members if you corporate in my way. mike simpson is one of the most solid, reasonable, common sense chair of the subcommittee from idaho. former speaker is being contested bay tea party person because he's not conservative enough. we believes that we need a balanced deal. i don't know whether al rogers will get the opponent or not. i don't t the -- believe independence is there. i think modern republicans and will reject this hard right, take no prisoners, shut down the government. repeal obama claire. when you talk to the american public, they say, no fix it. they may not like it. but they say fix it.

make it work for me and my family. they don't say repeal it. when you say the republicans have been talking about repeal with no alternative for 20 1/2 year -- 2 1/2 years. i think there's a possibility that we will take back the house. we have excellent candidates around the country. and think that we certainly have a very good chance of taking back the house. >> questions for congressman hoyer from the audience. we have one in the back there. just wait for the mike fobe. -- microphone. >> i just have two questions. first i just want to make sure, are you basically indicating that the c.r. that came out with the republicans in the prorkses committee that would be something that you don't -- eve the democrats were

that obama would support. issues the cut. is there a final version of whatever is passed or will that be sacrificed again? that t shot you to know i'm for giving our federal employees cost of living adjustment. not a pay raise. but a cost of living adjustment. that is historically been what we've done. and we've done so in party with the armed forces so that they move together with equality. the republicans have abandoned that process. in my opinion has treated federal employees worse than at in the career. it's damaging to our service.

it's damaging to our ability to recrew. and it's damaging to the ability to retain. so i think we are following a employee federal policy. now, let me make it clear that n -- back in 1998 and 1999 i was supportive of a zero. people were losing their jobs. and we needed to pull our belt in a notch. and i talked to miss mom and you didn't hear much -- there wasn't a great deal of controversy. the military on the other hand has received raise izzes so that the opinion gone who has something in uniform. one vilian clothes working

desk. doing exactly the same job and one is saving on the adjustment and the other is not. secondly -- i gets i've answered them in the reverse order. >> what are the plupts offering. they don't know in my opinion. they're trying to figure out what can get the number of votes. as they did on the farm bill. i expect them to move right not to the center not to compromise. they have not been very inclined to compromise. so i expect them to move the right. i expect them to have a c.r. that will have in fact, the defunding of obama care in it. which is perhaps garnered the votes of their caucus. and that will pass that,

perhaps with a reckless number f votes. hall rogers said that wasn't in his text. but i don't believe that's rational. and the fact that senator byrd said that's the dumbest thing you've ever heard of. so the question is i don't know what c.r. they're going to come out with. but the without repealing the equester which is i told you is important to the growth of the economy and to the maintenance of our national security. then i will oppose it. and will under my members to oppose it. >> unfortunately, the congressman need to get back out to the hill. you a little bit of work to do. have observed that.

>> i want to thank the peterson foundation and thank all of you for coming out. [applause] > appreciate it. [captioning performed by national captioning institute] [captions copyright national able satellite corp. 2013] >> coming up on c-span this rning, congress officer doug elmendo frrvings live at 57 a.m. eastern. the u.s. house returns for its egislative business to work on

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