seriously consider abandoning their commitment in the middle east if iran is permitted to do so. these are folks who are cooperating with us today, not like folks who are our enemy. them i think that leads to a closed session discussion. >> thank you. >> thank you, mr. chair. of the learned devastating effects of intentional declassification of material by an nsa contractor, which has effectively betrayed his country. now i am concerned about an millionsonal leak of of americans sensitive data, and this is a new article that i would like to ask you about. .t came out last evening u.s. intelligence agencies urged the obama administration to check its new health-care

network for malicious software, after learning that developers link to the belarus government helped produce the website raising fresh concerns of private data posted by millions of americans will be compromised. republic, thet suspected of inserting malicious code that could be used for cyber attacks. the software links millions of americans who signed up for obama care to the federal government and more than 300 medical institutions and health care providers. the u.s. affordable care act was written in belarus by software developers under state control, and that makes it a potential target for cyber attacks, one official said peter they said it -- said. it was an intimate data hijacking -- an internet data hijacking last year. rewrotersion covertly amounts of u.s. internet traffic

to belarus. officials say there are serious concerns the software contains malicious code that could be used to covertly route data from the obamacare website to foreign locations. additionally they suspect the belarusians planted secret back door openings that would permit surreptitious entry to u.s. government networks by hackers and spies. could reroutecode data to belarus or possibly permit illegal backdoor access to the healthcare.gov network and other industry networks. vulnerability could provide access to all necessary personal information of u.s. residents for identity theft and privacy violations. say thatle went on to the threat of diversion is compounded by the discovery that belarus overtly devout --

covertly diverted traffic to belarus. firmead of the security trusted security said the obamacare website was not designed well. one major concern is the system connects the health-care network to other sensitive u.s. including networks, the internal revenue service and the department of homeland security. that makes it a treasure trove , candy said in an interview. -- kennedy said in an interview. the backdoor access points are a particular worry because the chinese military linked yahweh technologies is suspected of using that. also -- also contained in the article was the statement from the national security council spokesperson am a caitlin hayden, who said an intelligence report on the belarus software

was recalled by the intelligence community shortly after it was issued. i wonder if you can comment on why the intelligence report was andlled after it was issued also could you tell this congress and the american people why in the world health and human services shouldn't immediately shut down and theerly stress test healthcare.gov website to ensure the consumers are protected from potential security risks from across the globe? >> i will have to get back to you on that. i am not familiar with the article. >> are you aware of the problem? >> i am not. the affordable care act is not my responsibility. clapper -- director --pper >> i don't know anything about

it, i will have to get back to you. clapper, the report says u.s. intelligence agencies urged the obama administration to check its new health-care site. you are the director of national intelligence. you are not aware of this threat agency u.s. intelligence last week urged obama to check the website. >> i am not aware of that. >> is there anyone at the table who is aware or has heard of this issue? ?irector brendan >> i read the report you are referencing, but that is it. >> are you aware of the intelligence communities alerting the administration to this last week? >> i am not. >> are you aware of the report? , i am not. >> are you aware of this report of the intelligence agencies that alerted the obama administration to this cyber threats last week? >> no, i am not. this is the first i have heard of the matter.

>> director flint, are you aware of this report? , i am not. >> director olson, are you reap -- are you aware? >> i am not. >> so no one at the table is aware of this report that was issued last week. i find conducted by nasa contract to her and in the middle of that, this is one of the largest unintentional leaks that could impact personally every american citizen as we are now required to sign up for health care. what this will mean. that 3sident stated million americans have signed up for health care on this website which now is potentially vulnerable to an ally of the russian government. i see my time has expired. i yield back. for youryou very much testimony today. >> one thing i have warmed over the years is not to believe everything i read in the media.

i want to thank you very much for your time today. an important dialogue and discussion. we will continue to work in a classified setting in those policy issues we believe need intention in a bipartisan way. he got to meet them all across the globe in very difficult neighborhoods. their work is a sectional. -- is exceptional. sacrifices are well respected by members of congress and the american people. for that, thank you very much. we look forward to working with you. ar [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014]

well[captions copyright national cable satellite corp. 2014]

>> more we will have more with tom ridge. before that, some of the key environmental issues facing congress and the obama administration including the keystone xl pipeline. he's the president of the league of conservation voters. in monetary policy under janet yellen. it is all on washington journal live tomorrow morning with your calls, tweets and facebook comments starting at 7:00 a.m. eastern here on c-span. rand paul is our guest on newsmakers. he talks about a potential run for president in 2016. here is a quick review.

>> i like senator reed as a person. i am still trying to find out a way that i can do things with senator reid. we do not agree on every issue. we have been trying to narrow the issues. i said the same thing to president obama when i was at the white house. there are some things we do agree on. the strike to narrow the focus to those things that pass them. i will give you an example. jobsparties worry about going overseas. we worry about our economy and joblessness here. unemployment. is of the things we could do let american problems from american companies come back at a lower tax rate. i think it will bring in this. let's do not try to make it part of some enormous bill on tax reform that will include a thousand moving parts.

take a few items like this that there is agreement on. work together., we can pass that next week. watch with senator paul tomorrow on newsmakers at 10:00 a.m. and 6:00 p.m. eastern. according to the associated press another news report, eric holder will be applying a landmark supreme court ruling to the justice department. it is reported that in remarks tonight, is expected to talk about privileges for same-sex couples and looting being able to fire for bankruptcy jointly and for federal inmates, the same rights and privileges as traditional couples. they will issue a policy memo to the employees, instructing them to give lawful same-sex marriages full and equal recognition to the greatest extent possible under the law. urge congress to increase the debt limit because he is not confident that his

department measure can last be on february 27. we talked with a capitol hill's reporter about the debt limit and what is ahead for congress. >> on this leaves town without taking care of the debt ceiling so the treasury department stepped in. he covers this for bloomberg news. all, what does he do with the debt ceiling? they plan to do on a more long-term basis? what the treasury started the first in a series of what is known as extraordinary measures. avoid thedesigned to actual debt limit. there are procedures that the treasury department says could run until late this month. certaine not set a date as of when exactly. they are expecting some time

before the end of the month. lawmakers in congress are trying to figure out a way to raise the limit. possibility that they will come up with a bill to be voted on as early as next week. that is still a bit influx. >> we do know the senate is coming back to deal with those coming back with this. because it issue deals with the budget. this is including in there. this is something they now want to deal with. this is my sense of they move -- maybe moving away from that. this is something they plan to take up. >> the new federal reserve thisman will testify

over taking down. some less than impressive job numbers friday. what do lawmakers want to hear from the new fed chair. >> i think they want to get a sense of where she's going to be taking the federal reserve. it is not very often that the federal reserve changes the person who is in charge. that is somewhat of a momentous thing. they often change less frequently these days then we change presidents. this is going to be a new direction possibly. there is some indications that she may be similar in a lot of ways. i think what people are trying to get is a really good handle on where she wants to take the federal reserve, what sort of policy she is going to have. this is going to get looked at through lawmakers in congress and what they would like to do instead. a lot of this is a sounding out period to see how close she is to what they would like to do anyways. >> when congress comes back,

it'll be a short one for members of the house as democrats lay in their policy retreat next week. who will be house democrats hear from? what are some of the issues they are expected to address? >> we are expecting to hear from the president and vice president biden. we are expecting our let's see what the president has to say about income inequality and actually doing something on that. let's see what the president has to say about immigration reform. these are things that the white house and democrats have said they want to address. they do not look like they have a legislative vehicle or push to do imminently. much's a question of how of this will be campaign related and how much will be actually policy related. we may get some clarity out of that. it is a difficult position that

democrats are in. they're in the minority. they're trying to take act the house. bandit uphill -- they have an uphill climb. if you cannot find a way to help them take it back, he will be dealing with divided government. i think the program -- the president would rather not deal with that. house republicans really hold the key to that. they really have to be in a position where they think you can actually move and win some of these seats in districts where mitt romney actually one. obama won. house forrs the bloomberg news. you can follow some of his reporting at twitter. expert the update. >> thank you very much. ona few more details

congress this week. the house gavels in i can at monday at noon eastern. they start legislative business at 2:00 and will consider the legislation to allow the financial stability oversight council to set aside regulations issued by the consumer financial protection bureau. we can also see legislation in the house to increase the debt limit. the senate is in at 2:00 on sunday. we are expecting a test vote on legislation that 5:30 p.m.. each watch live coverage on c- span2. > er from "usa today" covers breaking news and crimes for "usa today." useill talk about heroin and substance abuse. the actor philip seymour hoffman brought this into light this week. tell us what we have learned not only about his experience but heroin use overall in the united states. guest: what we do know is that heroin is soaring.

some drugs get popular, others sort of slide away, and we do not hear very much about ecstasy anymore. now we are hearing a lot about heroin. philip seymour hoffman is not the first celebrity to overdose. as you remember last year during the summer, cory monteith of "glee" also overdosed on heroin. it is kind of pardon possible of what we saw -- it is kind of part and parcel of what we saw, people abusing oxycontin, ,ydrocodone, which are opioids the same type of drug as heroin, which is an opiate. host: has it been a situation where we have prescription drug problems that are coming under control and people are looking for something else now? actually, what happened is all these people get addicted to the pain pills, the oxycodone, the oxycontin, so the

u.s. realize what was happening there was a huge countdown, suite have these things called pill mills like in florida, and doctors would prescribe thousands and thousands of these pills, people would drive up the interstate and sell them in kentucky, tennessee, north carolina, and the law- enforcement kind of got a hold of this and started shutting it down. startedill mills disappearing, states adopted things like description drug monitoring programs, which monitor how much of the oxycodone and the oxycontin you are getting, and puts it into it if you are what they call dr. shopping, going from doctor to doctor, getting different prescriptions, lots of arrests made. and also the pharmaceutical abuse proofvised an

for what i would call it abuse resistant oxycodone, which means it cannot be crushed and snorted. that is what people were doing, they were kind of chopping it up, crushing its, then snorting it or injecting it to get a quick hi and to get past the time release mechanism on it. so far my came up with an abuse pharma came upo with an abuse resistant pill. people are still addicted to opiates, and what is the next best thing? heroin. the other the crackdown on prescription pills, oxycodone and others are so expensive. is about five dollars a dose. the average addict uses about five doses a day, it is a $25, $60 habit, so much cheaper. a powdered form

of oxycontin or what comprises it? guest: oxycontin is a chemical form of an opiate, so it is a synthetic opiate, and heroin is a natural form that comes from the poppies in south america and central america. that is where we get most of our heroin from. everyone has heard about afghan heroin. most of the afghan heroin goes to europe and asian, not to us. host: mainly injected? guest: people start of storing it. people do not really want to shoot themselves up with needles. that is kind of a last resort, so people start snorting it, and does their addiction progresses, they go to injecting it. host: what affect does it give you? guest: it is a mountainous high. it is a feeling of bliss -- i have never experienced it myself, but i am told. the interesting thing about heroin is that the longer you

use the, the more your tolerance builds, and to get that initial high, you have to take more and more heroin to reach a place he once did. it does make you mello. addicts sort of fa de. it is ever what the oxycodone and hydrocodone, it is a much slower process, releasing into your body because it is a prescription drug designed to relieve people's pain over time. but it can be much the same thing. host: so we just heard philip seymour hoffman describe the pill and related. if you take a lot of heroin, it can seriously depress your breathing, and you just kind of go unconscious and died. it stops your heart, and you stop breathing. one of the really tricky things

that heroin -- remember i just told you about how your tolerance builds. so then you go to drug treatment and it is all out of your system, and then you have a relapse. and when you relapse, you don't know how much heroin you will need to get that high, so you think yourself, well, i will take as much as i used to take. your body does not have that tolerance, so a lot of people come out of rehab, take too much heroin, and then they overdose, they stop breathing. overdoses in heroin are very interesting because they can actually be reversed will stop there is a drug called naloxone. a lot of people know it as narcan. it is one of the things that paramedics carry, have carried it for years, but what is really interesting now is that other first responders are beginning to carry it. so if you call police, and every state has a good samaritan law, so if you see someone overdosing, you should call 911.

you are not going to get arrested for knowing somebody who got drugged. the police will now come in some states, and they will arrive on the scene first, and usually arrive oftentimes before the ambulance, and they can give you goes rightone, which up your nose and retorts is -- and reverses the overdose. hoffman,riter, robert said the most frustrating part is that each of the deaths is reasonable because there is an antidote to the overdose. guest: yes, but you need to be with somebody falls a bit you are taking it in a room by yourself and nobody knows you overdosed -- it is very unlikely that an addict will retail for the naloxone because they like their high. one of the most common reactions to have your overdose reversed by the police or the paramedic says that the heroin addict is

mad at the police for ruining their high. host: donna leinwand leger joins us from "usa today" to talk to us about heroin and substance abuse in the united states. if you have questions, the phone lines will be open to you, and you can call them and then pick the line that best represent you. republicans, (202) 585-3881, democrats (202) 585-3880, and independents, (202) 585-3882. how does the federal government respond to the abuse of heroin? guest: the responses generally to the abuse of all drugs, and we have to put heroin in perspective because we are hearing a lot about it right now because of philip seymour hoffman and because of cory kindith, but really heroin of falls into a smaller category of abuse. the most abused drug in the united states is alcohol. the second most abused drug in the united states is marijuana. and heroin actually pales in

comparison to those drugs. it is maybe 550,000 regular users of heroin, so they fall generaler a sort of policy. the u.s. spends about $31 billion a year on drug control and prevention. about two thirds goes to enforcement, about one third goes to prevention and treatment. one of the things the city to heroin -- one of the things specific to heroin that the government has been pushing is this naloxone program. they do things like bystander programs, so for example, now that it is available nasally, i've a lot of bystanders not want to give someone a shot, but they are willing to use the nasal narcan so you can just ask for nasal spray, shoot it up there knows. the federal government has been encouraging bystander program so if you have a family member or friend who is a heroin addict, they will equip you with a

narcan kit. they are requiring first responders to be trained on it, and it takes about 20 minutes to be trained on using narcan, if that much. it costs $25 per kit. this is al from rhode island on the republican line. caller: i have a prescription in front of me, it says take every four hours if needed for pain. it is hydrocodone. six yearsiven to me ago, 15 tablets. i think i was given these because my operation on my shoulder. read i haveablets taken 13 tablets in almost six years.

it is the only thing that helps me if i am outside cutting firewood or working hard. i am 70 once you're old. -- 71 years old. the only thing that helps me when i am working hard -- i have back problems. i called my doctor and he says -- host: what would you like our guest to address? is a narcotic. i never done drugs in my life. why shouldn't i be a will to get this? -- be able to get this? host: your doctor -- guest: your doctor should be able to dispense it if he thinks that's what you need. he certainly has the ability to prescribe it. he has the right to prescribe

it, he probably has the license to prescribe it. you are perfectly legal to use it as long as you use it as directed. these drugs are very effective for pain. they are widely dispensed. operations forr people with cancer. they are incredibly useful in that perspective. if you suddenly decide you are going to crush it up and snort it to get high, that is a completely different story. twitter, who is the largest producer of heroin? the largest producer is afghanistan. host: how do is -- how does it get into the united states? heretice enjoy mexican -- mexican heroin here. afghan heroin goes to asia and europe.

host: is there a level of purity? guest: it varies. by the time he gets to street level it has been cut so many -- cut sout means at many times. something toing it, baking soda. has been some problems with heroin being cut with fentanyl. that is given to late stage cancer. it may be 100 times stronger than morphine. we have had some issues with dealers cutting the heroin with the fentanyl, which almost always results in immediate death. it is a very dangerous drug. peering the. in high because heroin is pretty cheap. have been highs

because heroin has been pretty cheap. enough is enough -- caller: enough is enough. hollywood a setting like that example. they have plans to legalize drugs. they need to adjust this problem because they set an example for children. out drugs wanting drugs legal, look at this nancy pelosi. she is a candidate -- a poster child for brain damage. it's actually not a hollywood thing. somethingug abuse is that touches every group, every economic roup, every demographic group.

10% of people are addicted to something. chances are you know a friend or family member who has a problem. it does cut across all kinds of lines. about hollywood drug abuse because everyone has seen philip seymour hoffman in a movie. when he dies of an overdose it makes news. when your neighbor's kid dies of a heroin overdose it never goes more than the local paper. glee, everyh from kid watched glee. there are heroin deaths every single day that did not make the news. what's the charge of possessing or selling at? -- selling its? host: it depends on the state.

-- selling it? it depends on the state. it is not legal in any way, shape, or form. you will face jail time or if you have a drug court, you might be sentenced to treatment. 69,000 users, -- 669 users -- 600 69,000 users, that has grown. what is that attributed to? that is attributed -- guest: that is attributed to people who were addicted to pain pills. more people were addicted to other drugs then heroine. pain pill addiction has been growing. it is larger than heroin addition -- heroin addiction.

an ability to get those pain pills and that is driving some of those numbers. the other thing that is alarming is the age of first use. the 70's. used in if the numbers weren't quite as high as they are today, one of the great differences is one is purity and the other is the age at which people start using heroin. it has gotten younger and younger and younger. and 15-year-olds are starting to use it. i don't think anyone thinks of heroin addicts as the teenagers. here is alex from carrollton, georgia. how is it journalists can abandon their responsibilities and force

-- uncoverericans thescientific evidence, collapse of building 7 -- host: not this topic. next caller. caller: i have a different outlook on this. a victim has 70 bags of heroin, anyone getting caught would have 20 years or less in prison. his go toted some of guys or drug dealers through tips from people he knew. seems like they want to charge them with manslaughter or murder. if you are using 70 bags of heroin, you don't just step in. he was producing and starring in this moving -- and this movie

ash obviously he had to be fixing all day. the producers and directors and everybody on the set probably knew he was an addict. his long-time girlfriend could have stopped it any time and have him put either in jail or a rehab. he knew he was a heroin addict -- guest: he knew he was a heroin addict and finished a stint in rehab. he had been clean for 23 years. this is an interesting thing about any opiate addition -- opiate addiction. it alters your brain. once you start using, your brain will forever crave this drug. he was clean for 23 years and then he relapsed.

i think the issue here is people are sad because he is dead. i think that is a very sad thing. caught with 70 bags of heroin, he would have surely been arrested and most surely would have gotten jail time. cycle ofe within the the use, distribution, acquiring, cutting, selling of heroin is going to be facing jail time if they get caught. him means somebody who sold the drug is also -- has also committed a criminal act. host: this goes to him were talking about -- many addicts are functional. it is hard to tell. you are probably sitting in an office all day long with someone

who is a functional alcoholic. they may be drink before work or after work or on the weekend. a lot of people do function with all kinds of addictions. alcohol, very common. host: we talked about the federal role. senator harry reid was on the floor of the house, talking about heroin use. here is what he had to say. [video clip] collect the headlines have been the death of -- >> the headlines have been the death of one of the greatest actors of our time, philip seymour hoffman. he died of a drug overdose of heroin. the reason why i wanted to say that is the government of vermont was a very visionary -- was very visionary in directing his state of the state remarks this year to the scorch that is sweeping the nation of heroin

addition that heroin addiction .ou -- heroin addiction it is a scorch. .- the scourge they will start off with prescription drugs and wind up a this. -- with this. is perpetuated by purveyors of evil, not knowing what is in it. believe they put baby laxatives in this, all kinds of stuff that looks like heroin. it is a turbo shame. -- a terrible shame. host: he mentioned vermont being a situation where this is rampant. guest: it is everywhere.

we know of it as an urban drug. baltimore in the 70's was the hot spot. but that is not true anymore. it is everywhere. it is in the rural areas of .owa, maine i was talking -- of iowa and maine. i was talking to an addiction doctor and he was telling me some of it would start with lumberjacks, who would work hard chopping down trees. they all had back issues. doctors would prescribe them a , they would become addicted, the doctor would cut them off but they were still wanting that drug. they either had pain or their brain altered in such a way that they were craving that drug. all of a sudden the rehab centers are starting to see people you wouldn't expect coming in with heroin and opiate

addictions. does this have to do with nih research and development? guest: they are the ones telling us that overdose deaths have surpassed car accidents. they tell us what the problem is. we know an awful lot about how heroin works in the brain. we have a lot of ways to treat heroin and opiate addiction. you may have heard of you been enorphine, of eup which blocks the opiate receptors in your brain. people can function and go back to being productive members of society and this pill stops there addiction. it has been around a decade. to have to be licensed prescribe it and you have to see

your doctor a lot. us, she coversns breaking news and crime. we are talking heroin and substance abuse. there he for michigan on the democrats line. thank you for holding on. caller: i am more interested in the doctor's aspect of this. i busted my back 35 years ago and i have never had insurance. thearned a little bit about medical care we have in this country. i have never been addicted to drugs. i never had a problem with drugs until i started dealing with doctors. i can get one or two pills and it is all i needed. i have an addictive personality, and i know that. when you go to the doctor and you 10 they will tell

will do you. and you wind up with 90. doctor but you a probably have to have a conversation with your doctor. tell them you only want 10 pills. i'm sure most doctors would oblige. you can also tell the pharmacist that you don't want only the pills. is up next from alabama on the republican line. i understand that under the affordable health care act that they are core to pay for all this couple would hundred percent -- all this, 100%. have you heard of anything about obamacare under the affordable care act, are they going to expand this and pay for it? congress has passed some

mental health and addiction parity acts. this does cover substance abuse treatment and many methadone programs fall under the coverage. he will have to check with your specific coverage, what ever you .lect to have if you are visiting a methadone clinic, which is a very popular and effective way to treat an heroin or opiate addiction, then when you sign up for insurance pay close attention to what your plan covers. a viewer on twitter want to ask about -- that is the drug was talking about you and they go by different names. name.k that is the brand

a blocker in your brain that goes to the opiate receptors. that is where the opiate used to reside. when you took heroin, it would thisbusiness desk go to receptor in your brain. -- when you take heroin it goes to this receptor in your brain. as primary care doctors can prescribe it, which is changing the way we treat addiction in this country. the previous caller talked about having to go to a methadone clinic. it used to be you would have to show up every single day at a methadone clinic, get your dose of methadone, which replaces the heroin in your system, and you had to build your day around that. that you canills

take. you can take the prescription home for 60 to 90 days. you don't have to visit your doctor for two or three months. it has been a very effective and popular treatment. kathy from sterling, virginia, independent line. hower: i would like to know do drugs very across income lines or income levels. seeing that in a love communities. in your lower communities, whether it is latino or african americans, you find more use. say it is marijuana or maybe cocaine. amazing to me that there is such a divide. i may have it wrong, but there is a divide among the combo choice -- among the truck of choice.

it is unfortunate that this is what brought the attention to the country. people die apparel when every day. i think the intention is unfortunate but every day someone dies of heroin and i think this is making a mockery of the situation. let me address your first question, which is which group uses which drugs. all groups use all drugs. there really isn't that much difference among affluence. price of thethe drug, if you are poor you are obviously going to go for a cheaper drug. a tou are rich you may be afford them or spence of drug. -- a more expensive drug. are people who are addicts polydrug users. they use whatever they find that

is available. if they cannot go -- cannot get cocaine, they may go to methamphetamine. people mix all kinds of drugs together. it does cut across all income lines and all ethnic groups. there are definitely drugs that go in waves across certain ethnic roots to become popular in a neighborhood. that has way more to do with than something like personal ethnic choice. your second question about philip seymour hoffman's that. hoffman's death, i have been writing about heroin addiction that happens to people in more than a decade. it is true that when somebody famous dies we get very much interested.

i would encourage you to go to usa today and read the series of articles. there is a lot more to it. host: dorothy from maryland. thank you for waiting. back in the late 70's when the pain centers began, new drugs were given. i began taking my friend to a pain center. while i did not realize she was on drugs. noticing what she was doing. i would look over and she would be dozing off, going off. i talked to her one day and asked what she was taking. painkillers,was on

they give them at the pain center. it was oxycontin. hall, ir wandering the took her to her apartment. she used to work at a center. i said, you don't go to work, it's nighttime. she became ok and talk to her family over the phone. i came back to my apartment. unfortunately, i was very close to her, and it hit me very deeply. i am terribly sorry to hear about the loss of your friend. it is a common problem. one of the things the dea and local police departments were concentrating very much on for the last decade is shutting down rogue pain clinton's at pain clinics -- pain clinics.

there are plenty of legitimate pain clinics that some doctors should set them up to make money. cursorye you a examination and prescribe lots and lots of pain pills. there is money to be made there. when you know of a dr., the da -- the dea has a hotline you can call. it is a very common problem. survey onnational drug use and health shows -- maryland -- shows marijuana tops the list at 18 million. heroin is at the bottom of that list. it is not the most commonly abused drug. it is one of the ones that will kill you. a lot of people use marijuana. you don't hear or about people

dying for marijuana. he may use marijuana and die in a car crash. heroin has a much higher death rate. that is why we tend to hear more about it. more and more people have been overdosing. it's not that we have so many uses on every corner. we have been at a real low for heroin use and now it is taking up again. it is taking up in very significant leaps. the avenues for prescription drugs are being closed. has public is what

health and epidemiologists and your local cops alarmed. tomorrow they will discuss this. and winterland in russia. the wall street journal reporter joins us to talk about the federal reserve monetary policy under the new chair, janet yellen. this is live every morning with your tall -- call, tweets and facebook comments. >> what our program on first lady laura bush today at 7:00 p.m. eastern on c-span.

atch our recent interview 830. >> it is all an evolutionary process. my sense is that you never get comfortable if you're always pushing for change and growth. you are never done. you never feel like you can do at the same way all the time. >> michelle obama. also on c-span radio and c- the commercial budget office read least a report saying the health care law will create a disincentive to work for about 2 million americans. the ceo director testified the how -- in front of the committee about the economic outlook. is 2.5 hours.

>> the hearing will come to order. i want to thank the director for joining us again. we appreciate your taking time to meet with us today and we know this baseline was late because congress was a little late. i am glad we got time to get to this. you have put together a very informative report. we still have a lot of work to do. we will run a deficit of $514 billion. that is less than last year but nothing to brag about. the debt that deficit will start growing in two years by 2022, we will be running trillion dollar deficits again even though we will be taking in a historically large share of revenue. even though taxes are at a

historically high place we still have trillion dollar deficits in the future. because spending will be growing twice as fast as revenue. over the next ten years we will add 10 fully in dollars more to our national debt for a grand total of $27 trillion. it is hardly time to start congratulating each other. i was glad to see we passed a bipartisan budget deal last year. it was a step in the right direction but only a step. we need to do more. we need to do much more. it is deja vu all over again. we know what the problem is. auto pilot spending and interest payments are driving our debt. palmer acare add trillions in government spending and made things worse for the economy and working families.

by 2017 cbo projects as if 2.5 million people stopped working full time by 2024. between 2017 and 2024 labor compensation will decline and these changes, disproportionately affect low-wage workers. translation, washington is making of a poverty trap much worse. report points out weak spots in our economy. low investment, high unemployment, people leaving the work force. if we get our act together we could start paying down the debt and give our economy the certainty that it needs. tax reform, regulatory reform, energy development. all of these could create jobs and increase take-home pay. if you could bring up from the cbo report slide 2.8. this is a point i would like to

highlight. this report says not only does the debt get worse, we have slower economic growth compared to the last forecast but what is particularly troubling is cbo's projection of the labor force participation. cbo's says half of this decline is attributable to the aging of the population. baby boomers are coming, retiring, fewer people following them into the work force. a problem we had for a long time we have yet to solve but most notably in this report is cbo also says government policy especially the president's health care law discouraging work. washington is making this problem worse. this does not have to be our fate. we need to reverse this decline. i consider this a call to action. we know what the problem is. we know how to fix this problem and i believe we can work together to get it done. the debt won't take care of

itself. it is up to was. the men and women in the representative branch of government elected to serve and represent them. we need to take action. i thank you for this report, dr. elmendorf. i look forward to a great conversation and i would like to recognize the ranking member, mr. van allen. >> i joined the chairman in welcoming you, dr. elmendorf, welcome to you and your entire team for the good work you do. as i look at the most recent cbo report it is good news/bad news story. the good news is we have seen economic growth over the last few years and continued economic growth going forward. the economy has added over 8.2 million private sector jobs over the last 46 months. on the other hand, this report projects very sluggish growth in the job market. in fact as i read it you project

the average unemployment rate in 2014 will actually be higher than the unemployment rate in december of last year and that clearly is not good news. page 3 of your report sums of this next story when it states, quote, economic growth is projected to be solid in the near term but weakness in the labour market will persist and that sums up our challenge and it seems to me we should therefore take actions that are within the control of this congress. congress can change that trajectory. your report is based on current law but congress can take action to date that will actually change that story for the remainder of this year and increase job growth and the president and house democrats put forward clear ideas to do it. a jobs plan calls for a significant additional investment in national infrastructure in roads and bridges and broadband to help

boost our international competitiveness and put people back to work. we can increase the minimum wage which allows more americans to keep the fruits of their labour and by putting more money in the pockets of relatively lower income individuals who tend to spend it more, they can create more demand in the economy and at the same time, we have a chronic problem with long-term unemployment we can't extend unemployment insurance to 1.7 million americans and the congressional budget office has said that will create additional jobs this year. 200,000 being the last projection so there are things we can do today to get back to work and get the country back to work and one thing we should not do is mess around with whether or not america pays its bills on time. that will create uncertainty in the economy and hurt economic

growth and jobs. dr. elmendorf, a comprehensive report. one thing that has gotten attention on the front page, the thing chairman roger and referred to, i have to say this is an example of when one misinterpretation gets out of the b goes around world and we should focus on whether there's a demand for jobs today and instead what the chairman was focusing on was beginning in 2017 when the economy gets back to full employment as a result of the affordable care act more americans will be able to voluntarily choose, choose to work fewer hours or not take a job because they don't depend on that job anymore for the provision of health insurance because before the aca if you lost your job you lost your

health insurance. now you can go to the exchange and get affordable health insurance and as a result people may choose differently. i find it kind of ironic that back in 2008 when senator mccain propose the health care reform plan the heritage foundation and conservatives heralded it as a plan that would help break job lock. they said today, changing jobs leaves behind health insurance in a place of work. individuals who work to change careers or leave the work force to raise a family or retire early take substantial risk. by god the mccain health care reform plan will end that job block. the affordable care act does end that job lock. allows americans to choose to spend more time with their family or pursue their dreams. that is not a bad thing. it is a good thing. what is a bad thing is the lack of available jobs today and the fact that in the house we have on one note focus on trying to

eliminate affordable care for millions of americans rather than focus on creating more jobs for millions of americans. that should be our focus, mr. chairman. that is the conclusion of this report if you look at the entire thing instead of a few paragraphs and i thank you, dr. elmendorf, for your work. >> dr. elmendorf, the floor is yours. >> thank you, members of the committee, congressman van hollen, i am pleased to discuss cbo's report on the outlook for the budget and the economy as well as our companion report released yesterday that dug more deeply into the slow recovery of the labour market. beginning with a budget the federal budget deficit has fallen sharply during the last few years and is on the path of decline further this year and next year. we estimate under current law the deficit will total $500 billion this year compared with $1.4 trillion in 2009. at that level this year's

deficit with = 3% of the nation's economic output or gdp close to the average percentage seen during the last 40 years. the baseline projections show what would happen to federal spending, revenue and deficit over the next ten years of current laws were generally unchanged. under that assumption the deficit is projected to decrease again in 2015 to 2.5% gdp. after that deficits are projected to start rising in dollar terms and percentage of our nation's economic output. because revenues are expected to grow at the same pace as gdp, spending is expected to grow more rapidly than gdp. why the more rapid spending growth? in our baseline spending is boosted by four primary factors, the aging of the population, expansion of federal subsidies for health insurance, rising health care costs per beneficiary and mounting interest payment on federal

debt. with no change in applicable laws spending for social security would increase from 5% gdp in 2014 to 5.5% in 2024. spending for the major health care programs include medicare, medicaid, children's health insurance program and subsidies through insurance exchanges requiring more under current laws. net interest payments by the federal government are projected to grow rapidly mostly because of the return of interest rates to more typical levels. in sharp contrast, the rest of the federal government's non-interest spending for benefit programs apart from the ones i mentioned and all other nondefense activities is projected to drop from 9.5% of gdp this year to 7.5% in 2024 under current law. that would be the lowest percentage of gdp since at least 1940 which is the earliest year

comparable data had been reported. plus the sharply increasing share of the federal budget will go to benefit from a few large programs and shrinking share will go toward most of the rest of the government functions under current law. the large budget deficits recorded in recent years substantially increase the federal debt and the amount of debt relative to the size of the economy is very high by historical standards. we estimate the federal debt held by the public will equal 74% of gdp at the end of this year and 79% in 2024 under current law. such a large and growing federal debt could have serious negative consequences including restraining economic growth in the long term, giving policymakers less flexibility to respond to unexpected challenges and eventually increasing risk of a fiscal crisis. in terms of the economy we expect after a frustratingly slow recovery from the severe recession of 2007-2009 the

economy will grow at a solid pace the next few years but will continue to have considerable unused labour and capital resources. further growth in housing construction and business investment should raise output in employment and result in increase in income should boost consumer spending. in addition under current law the federal government tax and spend policies will not restrain economic growth to the extent they did last year. state and local governments are likely to increase their purchases of goods and services adjusted for inflation after reducing them for several years. as a result our baseline shows inflation-adjusted gdp expanding more quickly from 2014-2017 conlan average rate of 3% year than it did in 2013. we expect increases in output will spur businesses to hire more workers pushing down the unemployment rate and tending to raise the rate of participation in the labour force as some

discouraged workers returned to the labor force in search of jobs. that affect in participation will keep the unemployment rate from falling as much as it would otherwise. we project the unemployment rate will decline gradually over the next few years finally dropping below 6% in 2017 and edging down further after that. nevertheless the labor force participation rate is projected to decline further in the next few years because according to our analysis the increase in participation, improvements in the economy will be more than offset by downward pressure from demographic trends essentially the aging of the baby boom generation. after 2017 when the demographic trends will be unfolding but the effect of cyclical conditions will we expect largely wayne participation rate is projected to decline more rapidly. that is the main reason beyond 2017 we predicted economic growth will diminish to a bit more than 2% year, a pace below

the average seen over the last several decades. thank you, happy to take your questions. >> all right. a few questions about the health care law and how it is affecting the labour market. what is your best estimate of the effect obamacare will have on the total number of hours worked which is the issue we are talking about? i want to make sure we accurately understand what it is you are saying? >> we think the affordable care act will reduce the total number of hours worked in the economy by one% or 2% between 2017 and 2024 relative to what would have happened in the absence of that act. >> what is that in equivalent to full-time equivalent workers? >> given the fact the calculation we have done, translate that, suggests the equivalence between 2.5 million production in full time

equivalent employment, to make sure -- >> i think 2 million equivalent, in 2024. just to understand, it is not that employers are laying people off, but people aren't working in the work force, supplying it labored to the equivalent of 2.5 million jobs in 2024 and as a result work force participation rate, less labor supply lowers economic growth. >> that is right. >> who are these workers? who are the people typically in this category? what kind of worker from an income scale side are being affected by this? >> the effect is principally on the labor supply of lower wage

workers. the reason is what the affordable care act does is provide subsidies focused on lower and more middle income people to buy health insurance and in order to encourage sufficient number of people to buy an insurance like health insurance the subsidies are fairly large in dollar terms. those subsidies are then withdrawn over time for people as their income rises. by providing heavily subsidized health-insurance to people with low income and with trying those subsidies as income risess, creates a disincentive for people to work relative to what would have been the case in the absence of that act. the subsidies are of course make those lower income people better off. this is an implicit tax, the government raises taxes we are worse off and disincentive to work more but providing a subsidy people are better off but they have less incentive to

work. >> i understand the better route in the context of health care but better off in inducing the person not to work who was on the low-income scale, not to get on the ladder of life, to begin working, getting the dignity of work, getting more opportunities, rising the income, joining the middle class, this means fewer people will do that. that is why i am troubled by this. in the report we are seeing a significant labour force participation rate, 2.8. i will make a point here. this is what is so concerned about this. if i understand your point a big part of this is something we knew which is boomers are retiring so we are effectively basically doubling the amount of retirees we have in the country over a generation and fewer people are following them into the work force. something like 100% increase in retirees and a 17% increase in workers' on demand so that is already a problem. where we are not prepared for

the boomers and retirement but what this is doing is adding insult to injury. you are saying because of government policy and welfare state expands the incentive to work declines meaning grow the government you shrink the economy. fewer people are going to be working and the economy will be slower as a result, we have about a trillion dollars in less revenue because of slower economic growth from your last forecast which goes to the deficit, to the debt and makes it less prepared to get ready for the baby boomers to pay off the debts. that to me is jaw dropping. if you look at this budget, i am rounding your social security and medicare near the double over the window, the ten year window, medicaid more than doubles but interest on the debt quadruples. is that about right? >> in nominal dollars. >> your base line shows us adding $10 trillion to the debt

over the next 10 years, 57% increase in the amount of the national debt at the same time interest payments as i mentioned quadrupled to $880 billion by 2020 for. here is what i am worried about. you assume stable interest rates, you assume normalization of basically no inflation on the horizon over the decade and the ten year goes 4.8 or 5% at the end of the window. >> 5%. >> we have a 4 they trillion dollar expansion of monetary base, we are in uncharted territory with respect to monetary policy and the federal reserve. they had just begun to normalize. we are seeing reverberations in the third world and the emerging markets and they have tapered little bit. what happens if interest rates don't go as we hope they do? what happens if we have a spike

in interest rates? >> reporter: we try to forecast the middle of possible outcomes. we think interest rates could be higher than we project for lower. >> give me a sense of 1%. >> as you know mr. chairman, changes and economic conditions would affect the budget. these are meant to be used only roughly. the rough estimate is an increase in interest rates of one industry being one percentage point higher than we project for the entire decade would increase the deficit by $1.5 trillion over that period and correspondingly interest rates one percentage point lower than we project over the entire decade would reduce the deficit by $1.5 trillion. i would say, mr. chairman, there's upper pressure on interest rates from all large amount of federal debt and we take that on board in our projections and downward pressure on interest rates from easing of the population. economy is with slower economic growth tend to have lower interest rates, taking them on

board in our projections as well and we do not see any sign of inflation over the past year has been unusually low and over the last dozen years has been at or below the federal reserve's goal of 2%. we do not see inflation as a substantial risk going forward. but mackerel economist should never say never. >> ten years out it is hard to project. here is the issue. i think you could make a good case the federal reserve has been bailing out fiscal policy for some time since the crisis by keeping interest rates artificially low and depressing true fiscal picture that we have. unfortunately congress did not take advantage of that moment to lock in a real fiscal consolidation plan and long-term debt reduction plan to tackle entitlements which the budget we passed three years in a row did. of the budget pay off the debt that would be entitlements. federal reserve normalize,

basically pulling back, still very loose, $65 billion a month. still buying more assets. just not as fast as they were before. but they are showing signs of normalization. >> we have never been in this territory before. whenever had this kind of a balance sheet. it is all new. if they get it wrong. if unforeseen things happen, it is not $1.5 trillion increase in deficits. time is running out. we are looking at the fact that we squandered the opportunity in the last five years to do something about this and in the future is more uncertain because monetary policy isn't going to bail us out like it used to be. that is my concern. let me ask you one point in relation to that on the driver of this, figure 1.2 in your report, page 15 in your report is interesting.

it compares where we were in 1974 to where we are going to be in 2024. we are on track to increase the deficit ten fold compared to 74. meanwhile if you look at the upper right side of this, we will have cut defense in half, we will be collecting a full percentage point more in revenues. given these facts what is driving so people are clear, what is driving the tenfold increase? growth in spending for social security, medicare and medicaid above all else. by aging the population, expansion of health insurance subsidies and rising cost of health care per person. >> thank you, mr. van hollen. >> thank you, mr. chairman. a quick comment on the fed. the federal reserve pointed out perfect that congress created a fiscal drag on the economy, made things worse than the fed made some accommodating actions but

their message to congress was sequester is doing harm, hurting economic growth, hurting job growth and it continues to do so to this day, this refusal to take action on investment and infrastructure and the foundations of our national economy in many areas. there has been a lot of talk about the report and what you said about the affordable care act. i want to go through a couple things. you found the premiums offered in the exchange would actually be going down 15% compared to your earlier projection. >> for 2014. >> on page 125 you point out there is, quote, no compelling evidence that part-time employment has increased as a result of the affordable care act. is that right? >> that is right. >> we heard a lot of statements about how people are forced into part-time work by the affordable care act. one of the findings of cbos is there is no compelling evidence that that is the case. there is nothing in this report

that changes cbo's earlier assessment that over the ten year window and the longer-term window the net effect of the affordable care act is to reduce our national deficit. isn't that right? >> that is right. >> doesn't reducing the national deficit especially as the economy gets into higher gear mean stronger economic growth? >> yes. >> as a result of deficit reduction impact the affordable care act in 2017 and beyond the affordable care act will spur economic growth? i want to talk about what we are focusing right now because on page 125 the cbo talks about the impact on the labour market on labor demand today. it says, quote, on balance the cbo estimates aca will boost demand for goods and services over the next few years and you go on to say the net increase in demand for goods and services

will in turn boost demand for labor over the next few years. .. >> let me be clear. we've not broken down the size of the various pieces we talked about in this actress i don't have any estimates of the

effects of a particular channel he appointed by the that is, in fact, something we think spurs employment and would reduce unemployment over the next few years. >> so i think it is a factor and as a result if you repeal the affordable care act you will at least in the near-term increase the unemployment rate because it will be less demand for jobs. and over the longer term because the affordable care act reduces the deficit you will actually spur economic growth as the economy continues to recover. now, i think it's really important that that information gets out there because as the media themselves confess, they bought hook, line, and sinker some of the talking points from our republican colleagues, and, unfortunately, misrepresentations go around the world three times before the truth begins to catch up but maybe it will begin to catch up at this point. now, in terms of the long-term deficits and debt, as the chairman indicated, as you go out into the future, we will see

rising deficits. it is important to point out that your findings show that right now our deficits are dropping and will continue to drop for the next couple of years, but as more baby boomers retire and more people on medicare, social security, spending was let go, isn't that right? >> that's right. there will be one-third more people collecting a decade from now that are doing so today. whatever the benefit is per person, multiply that by a much larger number of people, the overall cost of rice very sharply. that's right. >> we're talking tens of millions of people. i believe in the range of additional 30 plus many more people on medicare. and just the people who are following this understand, this is not because they're increasing the medicare benefits. this is just more people coming into the system. this is a demographic change, is that right? >> yes, that's right. >> that's a big driver. now, our republican colleagues say those deficits concerned them. however, they are only willing

to look at the spending side of the equation, meaning if you want to address those spinning problems it means you got to reduce the benefits and social security or medicare somehow. if we are looking at those two pieces, right? >> yes. unless one is willing to contract the rest of the government and the where was as a show of economy in 1940. if one wants to cut spending. >> as you would -- we've squeezed those programs to the lowest point in reported budget history, is that right? >> will have a few years from now. >> so our republican colleagues which is simply to look at squeezing those benefits, which helped millions of americans, including a lot of middle income struggling seniors. they have refused to look at the revenue side of the equation. it is their decision that you cannot close a single tax loophole for the purpose of reducing the deficit, right? that's the grover norquist pledge.

you can't close one loophole, taxes for the oil and gas can do hedge funds or to help reduce the deficit. and my question, dr. elmendorf, if you go back a little weight in his, when was the last time we had a balanced budget? >> in 2000 or 2001. >> 2001. and, in fact, the last time we had a balanced budget over a very limited time was the years 1998, 1991, 2002001? >> that's right. >> for decades before that, we were running deficits and since 2001 we run deficits. now, dr. elmendorf, you look at the revenues as a% of dvd -- as a percent of gdp during that time. they are hire in each of those years than they are today, is the rights because that's right, congressman. >> and their higher, are they not do, in each of those years

than it will be as a percent of economy 10 years from? >> yes, that's right. >> my calculation is that the average amount of revenue as a percent of gdp when the last balance the budget was 19% of gdp. during those four years the average amount of revenue was 90% of gdp. now, you have just testified that the main reason that we're going to see an increase in the deficit in the out years is because we have tens of millions more americans on programs like social security and medicare, right? >> yes. >> our republican colleagues position is that we can somehow deal with that huge increase in the number of americans on social security and medicare with less revenue as a percent of gdp in lebanon last balanced the budget in 1998-2001 women had a lot fewer americans. on social security and medicare. that is the problem, mr. chairman, a lot of our democratic -- you take the

position that you will close a single tax break for the purpose of reducing the deficit. you say you care a lot about the deficit. you recognize that you that tens of millions more americans on social security and medicare, but you still want the government to operate on less revenue as a percent of gdp than the last time a balanced budget when we didn't have all these americans and social security and medicare. so the only solution that our republican codes are proposing, unless they want to cut even more deeply into investments in defense and scientific research and infrastructure, is to simply cut these other programs. and the irony here is the affordable care act actually was able to reduce the medicare spending i reforming it instead of cutting it. we come as a result of the affordable care act, dr. elmendorf, we are seeing reduce medicare costs, isn't that the case?

>> yes, that's right. >> that's a significant part of the reduction or repair time, right? >> yes. >> our republican colleagues after initially lambasting that an demagogy that, they included a provision in their own budget so they would achieve those deficit savings. so we were able to achieve medicare savings without hurting beneficiaries. and that is the model that we will continue to look at, and combined with closing tax rates or special interest in order to meet these long-term challenges. but our immediate challenge is to put people back to work, and that's why we need to adopt our infrastructure investment plan, pass the minimum wage, and for the folks who are still out there hurting, we should extend emergency unemployment insurance. and we certainly, mr. chairman, should not mess around with one that we pay our bills on time. thank you very much. >> dr. price. >> dr. elmendorf, welcome to the committee once again. appreciate the good work cbo has done anything my friend from maryland says the report is good news and bad news.

and i would agree with that. the problem is that when you compare it to last your support and reports prior to the, there's more bad news issue than it was last year, and less good news this year. our friend makes a comment about decreasing medicare spending. spending in medicare has decreased by $700 because of the affordable care act but it is forced reductions and as a physician i can say that my former medical colleagues will say that it actually is harming health care for seniors. and so the challenge that we have here is to put in place programs that don't harm seniors. and our friends on the other side seem to be willing to put in place programs that do harm seniors. dr. elmendorf, what happens in a fiscal crisis to those benefits for seniors? >> well, it depends on the nature of the crisis and what the congress does to respond to it but the fiscal crisis as we use the term, at a point in

which investors are unwilling to buy u.s. government debt unless it carries very high interest rates. and that then put determined to squeeze on the rest of the government budget -- >> a squeeze that might happen is that services to beneficiaries actually decreased significantly under a fiscal crisis, is that not correct the? >> that could happen. >> your estimation that congress hasn't done anything to address challenges of a fiscal crisis in the last year's? >> as you know that congress has taken a number of steps and i don't want to diminish those that it is clear from our report that the fundamental fiscal challenge remains, which is significant increases in spending for certain programs, and even all the rest of the government is on track to become smaller relative to the size of economy we show high and rising debt. the country will need to make choices that have not yet made about cutting back those large programs or raising tax revenue to pay for them. >> which is a great segue to the medicare program. trustees say the medicare

program is going to go bankrupt by 2026. what does it mean to real people? it means that services that been promised to seniors, there won't be the resources to be up to provide those services. so what our side, and i love how our friends on the other side of you like to characterize our solution. effect of the matter is our solution actually solve the problem. in fact, we put forth multiple solutions for the mandatory program any and medicare, we talked about a pregnant support system and i want to draw your attention, if of may, dr. elmendorf, to report that cbo put out last september that modeled premium support systems. and it wasn't the specific one but the question that i want to get the answer to is, it brings support system may, in fact, be possible without to quote the report, combined spent by both the federal government and beneficiaries that premiums and out of pocket costs would be less than if current law

remained in place under premium support system. is that the conclusion you alter? >> yes. as you know, there are many, many specifics that can affect the budgetary outcomes and the effect on beneficiaries of an awful lot so one should not take that as a statement about anything that would be labeled a premium support system but that would be affect by our estimates of the system we analyzed. >> a premium support model, that is, something that saves medicare for seniors would decrease spending in potential decrease in to the federal government and decreased spending for beneficiaries. i think it's important when folks are listening to solutions that the solutions be explained by those individuals that actually promote the solution, not those that criticize the solution to in the short, i have remaining i want to touch on this issue of the interest rate question that the chairman got to. again as i said, i think this is more bad news than there was last year. and table de- 1 the pilot stage the british interest rates, a

percent increase, 1% increase in interest rates last year was projected to cost $1 trillion. this year it is $1.5 trillion. what happened? what's the difference? >> i believe, congressman, most effective change in a projection of the amount of debt. yeah, so jeff is pointing out that on some issue to this day was two years ago. we did a more abbreviated report last year because congress acted even later under more time constraint. two years ago it is more expensive because larger debt projection but it's not funny extra trillion dollars of this years provisions in this year year, included provision lecture which was much larger, remembered him because our current law based on before that -- >> what it means him as the chairman said, time is running out, it's time to act. >> thank you, mr. chairman.

dr. elmendorf, nice to see. thanks for your testimony. i want to dig deeper into the methodology that you use to assess the impact of the affordable care act on hours worked. and the chairman i think was mentioning an example of a young person, at least that would be a shame if somebody couldn't find his or her way up the economic ladder starting to work and so forth. my son is 30, single. he found insurance through the kentucky exchange, pretty good coach for him at $180 a month. so we talking about $2200 a year, premium. if he got 100% premium support, subsidy, what in the world kind of incentive would he have to not work? >> well, by working your income is dependent on many other

things. health insurance is only one of -- >> seems to me there's an impression out there that you talk about a disincentive to work as a part of the impact and i'm guessing i'm committed of the methodology because i can understand why a 62 year-old under the affordable care act mindset i want to retire, and now i can retire because i guess i can find coverage that i can afford, whether and not i get a subsidy or not. i understand that example. i'm trying to figure out the example of somebody who is at the lower end, who, where it would be an incentive not to work spent i guess you are right, pakistan, if some of these people, the early retirees as you describe. the way i put the other part of it is, it's not so much an incentive not to work. it's less of an incentive to work. so under the law prior to the affordable care act, if one were to, decided to work more hours,

then one would earn higher cash wages and what made receive health insurance. but would give up some of those extra cash wages in the sense of paying some tax on them or losing some of the benefits. by providing additional benefits to people of very low income, a significant one in the form of subsidized health insurance been increase in the standard of living of those people would have been working working more hours would be smaller than would b be otherwise. those who have a higher standard of living by working, but the standard of living wouldn't be as much high relative to what could have if they didn't work or if they work fewer hours. so by providing a somewhat smaller incentive to work, somewhat fewer people would work. >> as i understand it, the subsidy was set up in a way to you should not have, know what you got to be more about 9% of their income for health insurance. could you give me, and -- not on the spot, some kind of numerical

examples of someone who have a disincentive to work because of subsidy, whether 90% or 50% or whatever it is? i'm having a hard time understanding how that could possibly make sense. >> happy to send you an example. they have a smaller incentive than they would otherwise. >> moving on, as we look at the long-term repercussions of deficits and projections and so forth, and the impact of entitlements, ma social security, medicare and so forth, have you done an analysis of what immigration reform would do to soften the impact of those expenditures? i shouldn't prejudice as you. to change the long-term impact of health care costs, such as grid, benefits and also of economic benefits? >> yes. so we did a very thorough

analysis of immigration bill that was passed by the senate last year and we found that legislation would reduce budget deficits and lead to larger economy, and over time lead to higher output per person in this country. >> and it does that because you could have a lot of younger people paying into social security and paying the medicare tax, but not receiving benefits for 30 years or 40 years, isn't that kind of just -- >> the age matters, also the composition of the additional people who would be let into the country and given a chance to work under the senate legislation. so a number of those people would we think we see some benefits but a number would be high skill, high educated people who would be paying a lot in texas. >> thank you very much. i yield back. >> mr. campbell. >> thank you, mr. chairman. thank you, dr. elmendorf. if there's one good thing to you

from both sides this morning is no one is saying it's great that the deficit has increased and that it's going to get to a trillion dollars. everyone is interested in reducing the deficit, that is a good thing. let's talk about taxes, that decided to read bunch of tax increases in 2013. those are reflected in these projection. also 2014 there's about 60 tax, i think it is tax credits and deductions that expired. had to include those in this as well? >> no. the provisions that have expired as you we follow current law on the projection but we do provide some alternatives, policy scenarios for your use. one of which extends all of these expiring tax -- >> but in summary table one can you assume to expire. >> that's right. >> they were tax increases in 2013. they were tax increases in 2014, and they think there's even some

in 2015. that are reflected in this which is what revenues go from 15 points 7% of gdp last year the summer between 18-18-point for. >> two key factors. one of them which is the change in a tax provision and the other is the strengthening of the economy which pulls in more revenues as a share of gdp. >> okay. but a number of tax increases from 2013-2014 are included. we have had tax increases. you mentioned four things and i have probably 30 seconds for each one. i'm not going to mention the order you did in your opening statement that you said are driving the deficit from certainly from the spending side. one was interest on the debt. two reasons for that, interest rates are not expected to stay at these historical low level but the others is the deficit itself feeds more debt which feeds more interest. so the best cure for that is to eliminate the deficit, right? >> i mean, all other

considerations aside, yes, a small deficit would lead to less interest payments. >> venue talked about the cost of medical care going up and now that's affecting the various medical programs, so you're still rejecting the cost in medical care will go up but i'm trying to balance that against the argument that obamacare is reducing the cost curb. >> congressman, there's been a very pronounced slow down in the rate of growth of health care costs per person come in both federal programs and the private sector over the past half-dozen years or more. we've taken significant lesson from that end of lowered our projections for the federal program going forward. but we're not lower them so much that they have no more growth left. that would be a really quite extraordinaire turn of events. what role the affordable care act has played in this is i think quite unclear to analysts. >> said you're basically saying that there are conditions out

there before obamacare, whatever, that increased health care costs independent of government actions to continue to some degree? >> exactly. not at the rate we thought before but at a positive spin you mentioned aging of the publisher which is something that guess what, we here in congress for chilling cannot control. so those two factors are what is driving up the cost of so many of the major entitlement programs. so if we're going to get the steps under control we got to do something about those, don't we? >> i think you either need to cut back on some of those large programs or raise revenues to a larger share of gdp, or some combination of those two policies. >> we just did raise revenues as a share of gdp -- >> to some extent, yes. >> okay. then the last thing you mentioned was driving this was

obamacare. so that's driving on the cost side to understand their our tax increases involved with it but it's driving a lot of additional costs as well. >> yes. the expansion of medicaid and subsidies, the tax credits to be provided through exchanges is part of what's pushing a federal healthealth care spending. >> while the two-and-a-half million full-time equivalent job loss, whatever that is, 2 million, doesn't that retard revenue as well? that's people who aren't working to aren't making money, aren't paying taxes. >> yes, relative to not having those attacks. that lowers tax revenue. revenue still rising of course. it means it would've happened without that effect, that reduction in implementing reduction in gdp, has a reduction in tax revenue. >> thank you. i yield back. >> that morning, mr. chairman. director elmendorf, do you believe that when social security was passed, it had an

impact on labor supplies since we're distinction between labor supply and demand? >> yes, absolutely. >> very clearly in a similar way you would project obamacare will have? >> i think, the specifics will be different but the basic point is in which is the provision of them, -- over 60 doses of have allowed some of them to choose not to work who otherwise would have felt compelled to work. >> i wonder if there's a headline back then in 1936-37 about what was going to happen to demand. if it were revealed, let me ask you this question. -- repealed the court benefits were quite cut through privatization, an option, that would have an impact on labor supply, wouldn't it is? >> yes, that's right. >> how? >> it would push up labor supply. in fact, with an aspect of the

effect of raising the eligibility age for social security. we think that would increase the amount of work that people do primarily in the '60s. >> particularly with seniors more would work beyond -- spent they would work longer than they could under current law. >> the fact that americans would be tied to a job they don't want or need so because of its the only way for them to get affordable health care, it's a feature of obamacare. as i look at it. director elmendorf, if your assumptions prove cracked, 2.39 americans -- proved correct, what effect will that have on the unemployment rate and on wages? >> we think that people will be leaving, choosing not to work because of the incentive provided by the affordable care act would have essentially no effect on the unemployment rate big we said that very clearly in our report. the ethics and wages can we did

not analyze formally, complicated, depends on how the capital investment responds to changes in work, and we've not tried to model that our estimate that specifically. >> what you're saying is because of the security of obamacare, that it provides, a six-year-old, let's take that as an example, to retire and open up a job for someone who is unemployed today, is that correct? >> yes, that's right. >> this is an example of a drop in the labor supply. now, in fact the cbo report, you specifically state the estimated reduction spends almost entirely from a net to climb the amount of labor that workers choose to supply rather than from a net drop in businesses demand for labor. i didn't see this any of the announcements about this yesterday. i just wonder why.

very trees about that. you said it, i didn't. so in other words, this isn't employers cutting jobs, newly empowered workers choosing to go a different path. i think that's a good thing. chairman ryan, my good friend, you said in 2009 when we were debating obamacare -- [inaudible] why not? we want to address job loss, this is what you said. so the key question that ought to be addressed in any health care reform legislation is, are we going to continue job loss, or are we going to allow individuals more choice? and probability, affordability to fit the 21st century workforce, unquote. i agree with you 100%. i think the answer is yes, giving workers more choice is not unique to obamacare. other federal programs have

reduced the amount of labor that workers choose to supply just like social security, right, mr. chairman speaks i will take the rest of your 39 seconds to respond. >> go right ahead. >> a couple points. the purpose of in was to help produce a system so that older workers could not be destitute and can be for younger workers for jobs. so it sort of the opposite intent which was to bring under workers into the workforce by providing those yesterday benefits back during those days. this is the opposite. this is saying, younger workers, the very people we want to go into the workforce to work are being disincentivized to do that. so it is certainly opposite of what you're trying to suggest -- >> can i take my time to speak with i will continue. i told you i was going to do this. job loss in this case is a subsidy that ends and it's a

cliff to try. what we've always said is common it should be structured differently so that you don't produce this kind of effect. so we have literally a very different idea how to address this issue so that you always encouraged a person to go into the workforce, so you always encourage a person to work. and obamacare is structured the opposite of what -- >> that's your opinion. that's your opinion. we are still evident and basically talk about older workers -- >> my point -- >> i'm glad which is a because now we can all agree it's not a socialist at scheme. >> the gentleman's time has expired. [talking over each other] don't ask one to get a position of the other because you won't get a straight shot. mr. cole. >> thank you very much. although i hate to interrupt that debate, it was actually pretty good. [laughter] i may just yield my time back to

both of you. [laughter] but a couple specific points and for someone to thank you for the work is exceptionally helpful. and i think very fair. i'll just say for the record i'm exceptionally -- i think most of us are disappointed. we worked and made a little progress here in the last few years on the deficit. i thought -- mr. chairman, you did as well. the budget agreement that you negotiated with senator murray also restrained discretionary spending. that made a little more progress in the right direction and some mandatory spending as well. we were spending $164 billion less indiscretion budget and we were spending in the last year of the bush administration, fiscal year 2008. so that's real problem -- progress. when you look at this report it really doesn't translate in the long-term deficit reduction for

the simple fact we simply haven't done enough on the endowment fund. is that a for statement? >> i think congress hasn't done enough on and commerce and revenue and some commendation. it's not our place to say which side of the budget you should -- >> between the two which have we done more on, revenue or entitlements? >> well, that depends on how you view extension of expiring tax provisions. a few years ago. under current law assumptions we worked on, the extension of most of expiring income tax cuts in the early 2000s produced a big cut in revenue, and a big increase in the desert. i recognize that's not what many of you have thought about the starting point in your own mind. >> i know, that's why want you to answer it. are we going to have a lot more revenue than we would have had, had we retain all of the bush tax cuts speak with you would have had more revenue, exactly.

some were allowed to expire. >> roughly how much more over a decade? >> i would guess a trillion dollars or so but i'm not sure that we -- >> ballpark but if you want to correct it later, that's fine. >> i think my ballpark has been agreed to. >> let me ask you this. if we had $1 trillion worth of reforms and empowerment programs? >> well, the transfer made substantial reduction in spending for medicare, as you know. i really have not tried to assess what that would look like over the same 10 year time period as s. like some of these tax cuts to expire so i think i should not speculate those numbers i haven't looked up. >> let me come at it -- politically, it's obviously i think the revenue picture is easy to do within the entitlement picture is easy to deal with. i don't care which side of the aisle you're on. that's just the case of it. we saw the struggle with

entitlement spending, frankly, in the budget agreement between chairman ryan and chairman murray. that's just politically a very charged every. let me ask you this. of the entitlement programs, which are the largest conservators to the deficit going forward over the next decade? >> the largest program, single largest program is social security, the programs that are growing, whose increases our sharpest in dollar terms are social stratum medicare and medicaid. >> let me ask you this. this is going to be a pop on both houses. has either party put forward a plan to deal with social security? >> we've not analyzed any plan, in the last few years. years. >> i suggest that's because one hasn't been present. we have not presented one on our side of the aisle because it's politically -- our friends and the administration haven't presented one. it's probably statistically the easiest one to deal with because we got to know how many people

turn -- it's much more predictable, much easier and yet neither party has had anything to say about it, is that correct? >> well, we have provided congress with a large menu of possible changes to sosa security and other parts of the federal budget. >> i'm not suggesting -- [inaudible] >> the last person who tried to lead visiting with president bush who actually did put forward proposals and did do something. so i would actually, i would say this for the record for my friends because we'll have a lot -- this is in a way think we ought to sit down. is where got to go down. our friend, mr. delay come on your side of the aisle had an interesting bill to make congress vote up or down the same way we do in brac. i would suspect it would be full of unpalatable choices for both sides of the aisle. but that's something i would like to see us begin to look at and did. are most important single program we have, most likely, the one most americans want us to ensure and yet neither side of the out has put a plan on the table. yield back.

>> thank you very much. at the outset i would like to say, chairman ryan, i was listening to your opening remarks and it was interesting because you kind of echoed some of the language president obama from his state of union address. you said you hope this is a call to action, and the president last week said they should be a year of action, so i hope there's a way we can come together to focus on speed. [inaudible] >> economic opportunity, economic growth and there is some goo good news because we he made progress on job growth. but we have to do more to the economy has added private sector jobs for 46 consecutive months, and the total of 8.2 million jobs has been added over that period. this is reflected what i hear at home in florida where small businesses are doing better. it's been a very difficult kline from out of the great recession that kind of his earlier in

housing in 2007, but he we are 2014 and people -- businesses are hiring again. the economy looks better. except we have this intractable problem, it's kind of a jobs crisis. and the cbo report demonstrates that the outlook for job creation remains weak. and then we are dealing with the retirement of the baby boomers. that's what every time there's an announcement on jobs numbers, every month the unemployment rate is going down but yet people are retiring and dropping out of the work force. so we're going to have to be much more strategic in how government partners with this is to create jobs. and that's why it was a very concerning to me, the part of your report that highlighted congress is eroding commitment to scientific research, education. you say now that that kind

discretionary spending that has been really, that provides the jobs for the future is going to be at its lowest level in 40 years but can you expand on that and take us through some of the areas, whether its r&d education, or tell us where that weakness is? >> yes. we wrote a report in the fall about the facts a federal investments that have the amount of federal investment has changed over time. i think roughly speaking, about half of non-defense discretion spending can be viewed as an investment in physical capital like highway, bridges, in human capital, economist called in education and training of workers. and the research and development. and that nondefense discretionary spending will under, current law, under the cap, fall two a share of gdp. lower than any point in 50 years for which there is date on that

has been collected in that way. now we don't know, congress does not just how the money under this category allocated for different activities so we can do projection, research investment, spending directly. but that estimate about half of that total amount of discretion spending over time. and if that sure is maintained in future and the federal government will be do less investing relative to the size of its economy by the second half of this decade and it is in any point in my lifetime. >> so that's education? >> education. it is investment in physical infrastructure like roads and highways to it is investment in research and development. >> so that's the national institutes of health, nih, national cancer institute, medicine speed all in that category, yes. >> infrastructure and defense as well? >> defense, discretion spending is also on track have also lower

share of the economy than it's been at any point in the last 50 years. and again how those cutbacks are allocated between the research done by the defense department in the things the defense department something that congress we did decide in future appropriation bills. >> a lot of folks are believed that this question has been replaced here in the short term for a couple of years. and they tend to focus on the crisis that is right in front of them, but the challenge of looking ahead in the next decade is going to be how we maintain these investments in what makes america great in education and research and development, and infrastructure. and that's why i do think it's important for us to work together as we learned that the aging population is going to be a challenge, a fundamental budget jumped into my colleague, mr. gore, i would agree to work with you -- mr. cole.

i don't think it's fair to say that the democrats haven't been focus on social security. we are focused like a laser. i would recommend congressman ted deutch bill from florida. i agree we need to work together to make sure that we are being -- >> thank you. >> thank you, mr. chairman. and thank you for the work on this as well. let me just bring a couple of things together we've talked about already. there's been some conversation about discretionary spending obviously. there's been a lot of conversation about discretionary spending. is it the cbo's conclusion that there is no additional waste in government and the government is running as efficient as it can possibly run so there is no additional places in the discretion area where we can do with whistles been? >> no. our volume of budget office in the fall which provided to congress was a dozen of options for cutting back on discretionary programs if you choose to go that direction. we also noted that i think the entire staff of options we give you would all be needed and

maybe more than that in order to meet the caps are already in place because the caps are such that the current set of programs, there will be enough money to continue the current set of programs and services under those caps. even under current law you and your colleagues would need to take event of a wide range of cutbacks and programs in order to meet the caps spent programs and services come with it in reducing duplication and try to do with some of those inefficiencies, inappropriate payments and all that? >> congress and, that would depend on what the cost i doesnt also on people's interpretation. my experience, some members of u.s. ways, other members view as important. not my place to judge that. >> i've noticed that as well i suppose. let me mention a couple things on interest. last year once we get the tender when the we get the 2023. you estimated the interest payments alone at 857 billion. that interest payment in 2020 is

819 billion. so we have made some quote unquote game at that point. but a i've also noticed the amount of interest with a versus the increase in the deficit each year, that number is strikingly similar many years. some years the interest payment increases higher than the deficit and some years it's a little bit different. but if i try to just the increase in how much interest we are paying, it's very similar in numbers to actually the increase in our deficit every single year. so this seems to be a problem that is driven primarily right now, obviously there are other factors as well, by an increase in interest rates going up as well. am i tracking that correctly? from 2017-2018% increase in interest payments of $89 billion. at the same time there's an increase in deficit spending of 74 billion. so if the interest rate wasn't accelerating, we would make progress but we are not. it's increasing but if the go

between 2018-2019, it's an increase of $76 billion in interest payments that $97 billion in deficit spending. can we talk about the interest? >> yes, congress and to your right, one can isolate the interest is that all the rest of government spending and revenues, the gap between them would actually be fairly stable in dollar terms over the coming decade and -- spinning but what do you asked with rising interest payments, why is that interest them accelerating at this point? >> interest payments are rising part because of rising debt. but even more so because of rising interest rates but interest rates as you have been unusually low over the past half-dozen years and we expect as financial markets expect those rates to return to typical levels. so interest rates on the 10 year treasury note will be rising from 2% something to we think

5%. that's the cause of a very sharp rise in interest in the government will have to make. >> ten years in our only payment is $880 billion speak with yes. in the 10th year, 2024. >> 2024. >> this concept of simply getting to the primary balance and we're just going to try to get the balance for separate interest is what pays the same with hud get the balance except for around the last trillion. >> we are not testifying that but you're right, the interest things will be very, very large. >> i want to make it, that is not related to cbo and a square structure. each year, the conversations there is a scoring issue that deals with manager programs. where we take money from existing in a fund to move into the next is fun, count that as savings. would you consider that -- i know cd officially considered that savings. would you consider a change of program or an account to be an actual savings? >> yes, congressman. we think that if an

appropriations bill make a change in mandatory program so the government pays out less in the year, that is a real savings. you are right that the budgetary passion is comfy and these things can look -- and next year we tend to focus on you done in appropriations and make the change demanded for spending part of our mandatory spending projection. but i don't think we believe that there's anything that is fake about the changes in medicare programs, not you really haven't made a change in law that cuts been is a, then that's a we are recording when we give you an estimate. >> i yield back. >> thank you very much. drama. first of all, thank you and welcome. 50 years ago, the war on poverty represented a dramatic shift in the federal government's priorities for helping those who are left behind in the growing economy. we hosted president and lady bird johnson's daughter, last

month, she reminded us that the major legislation that was passed during that time was bicameral, bipartisan and was with the leadership of the white house. and it worked, even though we have a long way to go. i want to thank the chair, congressman ryan, chairman ryan for at least beginning to engage in a debate around poverty. in the omnibus appropriations bill, the president signed into law january 17 come we were able to secure link and i just want to read this just want to reduce the, it says poverty is far too prevalent in the united states. congress and the administration should work together to implement in the agency efforts and support proven antipoverty programs that reduce the existence of poverty and the suffering associate with it. so i want to ask you, what policies are antipoverty initiatives tend to get the most bang for our buck in terms of

boosting economic growth? for example, what is the impact of economic impact of not extending unemployment compensation for the 1.7 million people have lost their checks what they're looking for a job? will we see them fall into the ranks of the poor? does raising the minimum wage boost economic growth and reduce poverty? what's the impact on poverty and economic growth rate as a result of, unfortunately not, the impact of structural and long-term unemployed as we continue to recover from the recession and can't seem to get any jobs past. i would like for you to respond to this issues around poverty, given the sense of congress that was put into the omnibus bill. >> yes, congresswoman. we have estimated that if the congress were to extend the additional unemployment insurance benefits that expired, that would add about a quarter of a percent in 2014.

and would have a couple hundred thousands people to the ranks of the employed. and we've not done an estimate of the poverty rate but that would be good for people. some people who would otherwise be below the poverty line in the above the poverty line because of extra benefits. we've not tried to quantify that. on the minimum wage, we are currently doing an analysis with respect to raising the minimum wage, both in terms of the high wages income for people who keep their jobs and in terms of people who would probably lose their job. and we hope to present that announces to the congress in just a few weeks. so i don't want to speculate at this point about the results of that analysis. on the long-term unemployed, you are exactly right that for many people who lose jobs and cannot find jobs again, the economic consequences to them can be devastating. and, in fact, the consequences

on families on on the health and so on come and there's a substantial amount of research about this and we report on it a few goes -- a few years ago. many independently bad shape and end up below the poverty line. i begin we have not tried ourselves to quantify just how many more people that would be, but persistent level of high unemployment. we should and are labor market report, a company the outlook, that the rate of long-term unemployment remains today, although it come down from its peak of you is is a, remains toy than at any high point before this last recession and weak recovery. the economic and human costs of that are very, very large. >> i would like for you to look at the language in the bill, in the senate bill, and see if it's appropriate and possible to give us some of your suggestions as it relates to congress and the president, what we should do to implement the policies and interagency effort, and support

and to operate from programs. we would like your perspective on what we voted into law. finally, i have a few more minutes. let me ask you about the cbo report last year as it relates to the public option. in the health care exchange. i think you said it would reduce the federal deficit by 158 billion through 2023, which reflects a 37 billion reduction in at least. and 121 billion increase in revenue. now, with your new report, have you recalibrated that or do we think that still hold? >> we've not we estimate that, congresswoman, but this estimate was to be quite applicable. >> thank you. >> turn one. director elmendorf, thank you for joining us today. i'm sure that americans, real-world americans that are watching today's adjustment, their eyes are glazing over, so for that i would summarize -- >> i'm offended.

>> no offense to you. but i would like to summarize that economics is essentially a mathematical expression of aggregate human and business behavior. and in that vein i would say that this latest cbo report i think is a better reflection of aggregate human employ an employer behavior over time as a result of government policy. obamacare is one policy that has been enacted by the federal government in addition to that there were several other policies had been enacted over the past five years that have affected our economy. in your report you talked about the impact, the affordable care act or obamacare, on the supply side of the equation in terms of what employees are prospective employers did come and use of equipment of 2.3 million jobs would be lost due to expressed,

let me rephrase that. hours of labor would be less, would be offered and job losses would be 2.3 million to not be 2.3 million. not to sit 2.3 when jobs would be lost. have you looked at the demand side of the equation? the affordable care act, or obamacare, has a huge impact on employers. and they're making economic decisions to determine how many employees they hire and what sort of hours that they ask these opposed to work. can you tell me in a short amount of time what impact that would have? >> yes. we looked in report and outlook on the effects of the affordable care act on the demand for labor. we highlighted two channels, one was defective the overall demand for goods and services and unemployment. the other is the effects of the employer penalty, the demand for labor. in the very short run, requiring

employers to pay something the amount for each of the employees in some circumstances amounts to raising the cost of those employees and would lead employers to reduce their number of people they hire. but we expect as other analysts believe that over time, costs that employers bear for their employees into being borne by employers in the form of lower wages, health insurance causes one example in this mandate would be another. so we think after a few years the cost of implementing is basically showing up in wages, and are affecting ultimately workers supply of labor, but no longer employers demand for the most part. >> just to summarize, you potentially, essentially took the potential negative impact on labor demand and translated it further into labor supply. >> because we think wages will adjust. >> i can live with that. i mean, i don't like the fact

that we are labor supply or labor demand, even when. i think that's bad policy, and we as republicans in the house are looking forward to our replacement, alternative that doesn't do that. does the cbo routinely analyzes administrative actions and tries to trim the impact on the economy. that's -- that process isn't terribly transmit at this point but when you take obamacare and epa action and department of labor actions, just to show actions, you could after every agency and they have issued tens of thousands regulations over the last five years. what has been the impact? i ask you from this frame of reference, as a person has created or helped create hundreds of jobs in the real world, i know firsthand the impact of that policy but i was

wondering, do you have accused the number of potential jobs lost because of obamacare and all the government policies that been an active the last five is? >> i'i'm sorry, we do not to our focus as you know, legislation that congress is considering the we got to go back and look at how the law is a minister and as part of why we look at the affordable care act again this time but we don't in a sort of copper into the analysis. >> i think that would be well served because i mean, one of the reasons the inflation rate is so low because employers have decided that they can't hire those types of employees where they stand and so -- prospective employee base has given up. i would just say that the government policy allows the use has expanded the poverty trap but it's dropping, pushing them out of middle-class and hurting opportunities. i yield back. >> the gentleman's time has expired. i just want to keep us on the

clock. >> thank you, mr. chairman. and thank you, mr. director, for your testimony. i believe you testified last year that the imposition of sequestration would cost the economy potentially 750,000 jobs that would be lost, is that correct is? >> that sound right. i don't remember without looking. >> there are estimates that engineered unnecessary reckless government shutdown post a comment about $24 billion in lost economic productivity, correct? >> i've seen investment but we're not done investment ourselves. i can't vouch for it. >> i believe cbo itself is set as it relates to the failure to renew or extend unemployment compensation, that could cost the economy 200,000 jobs during this calendar year, correct? >> yes, that's right. >> so that our choice this congress has made or will make moving forward that could

adversely impact the economy economic productivity and job creation moving forward, correct speak was yes, congressman. >> as it relates to the cbo, discussion concerning the aca, if you estimate that the aca will result in the decline of full-time equivalent employment, correct? >> that's how, one of the ways we have measured the effect that we've and alaska yes. >> just so i understand, this stems from a net decline in the amount of labor that workers would choose to supply. i believe you said that on page 117. >> exactly. >> as an that estimate on impact of the aca's -- this estimate of the impact the aca would have on labor market participation, you yourself nonetheless go on to characterize its substantially uncertain, true?

>> yes spent the reason why is because this is a new program and the impact of the imposition and the effects of the program are on clough, correct? >> correct. >> notwithstanding all the hysteria that has been created over the last 24 hours related to asthma on the impact of labor participation, by her own as mission is not even clear that there will be an adverse impact moving forward, correct? >> we've not tried to quantify the uncertainty. in some cases we give the congress not only our best estimate but a range of possibilities. that requires more analysis. we've not done that in this case. >> on page 118 of your report you state that the actual effects of the aca code, on labor participation, could differ notably from your estimates, true? >> yes, that's right. >> now, it's my understanding

that the cbo also concludes that the impact of the aca on the supply, even assuming that your estimates prove to be true, will be small or negligible for most categories of workers. is that also your position? >> yes, that's right. >> okay. now, just so i understand, and i believe this was pursued in an earlier line of inquiry. the reason why you estimate that the aca could have an adverse impact on labor participation is because the aca its older workers in particular in a better position than they otherwise might have been at a certain stage of life, is that true? >> it puts a set of workers in a better position. some are older and some are younger so we've not tried analyze this for different age cohorts separately. >> because it puts a set of workers in a better position, they might voluntarily decide not to participate in the labor

market at numbers that they otherwise might have done, correct? >> exactly, congressman. >> okay. now, at the turn of the century did the imposition of child labor laws reduce the impact on labor participation? >> i guess, i think so. i never thought about that question. >> this standardization of the 40 hour workweek in america reduce labor participation in this country? >> it reduce the number of hours, total number of hours worked. i think, yes. >> would you also say that the successful assault, not complete, but the successful assault on sweatshops in american reduce dissipation in the labor market? >> yes, i think it probably has. >> thank you. i yield back. >> mr. rush. >> thank you, mr. elmendorf. is a really interesting

material, and getting my hands about, still a freshman congressman. i have some questions that probably i should know, but i just need clarification. trying to add up these alloys in this figure. what percentage, total spending -- what is the percentage of total spending -- total spending as a percentage of gdp in 2024 based on the statutes? >> in 2024 we think the federal government cover outlays will be 22.4% of gdp. ..

>> revenues will be about 1% of gdp. >> so, at what point -- i know economists speculate what point of the revenues of gdp will drag on the economy. if you collect too much it begins to drag on the economy. what percentage is that? >> there is no tipping point that economists are aware of, congressman. in part because the effect depends an awful lot on how the tax code is structured. it's not just a total amount of revenue raised, it is even more so the way the revenue is raised and so this has do with the nature of the tax code and the

particular incentives and disincentives created by the provision. >> said it could be 50% of gdp and it wouldn't be a drag on the economy? >> i didn't say that. but i want to say is there is no magic number. the higher the tax rates are, all else equal the more that distorts people's behavior. and if you're taxing work and saving the more that will reduce the amount of work and saving all else equal. the amount of debt we have depending on the gap in the revenue and outlay also affect economic growth over time. so what else is equal in the = the calculations. but leaving aside when you have taxes of a certain level, the higher the tax rates are, the more that would tend to distort the behavior. also, the more revenue than you might raise and reduce the deficit and have beneficial effects. but in our analysis we take on board the benefit of the tax rates on the economy but there

is no number that you go beyond where it is a problem and it becomes an increasing problem as you work your way up. >> i don't have any more questions. thank you. >> thank you mr. charan and doctor ellmendorf. i want to talk about the jobs portion of what you have. first if i can briefly -- i know it's repetitive but i think it's important given the new i got the chance to see the washington misinformation sheehan yesterday. when we had the best panels because of the affordable care act and i got to see up close around the 2.5 million jobs it was going to cost it was employed there would be a decreased demand for labor from businesses that somehow people would be reducing the number of hours people are working and the economy would be worse off.

i want to verify and doublecheck these things one more time. you said that workers would be leaving participation because they are going to be choosing to leave rather than businesses demand for labor reducing, correct? >> yes, congressman. >> second, you said there is no compelling evidence part time has increased because of the aca? >> yes congressman. >> you also sent by allowing low-income households to redirect some of the funds they would have spent on the purchase of other goods and services they have increased overall demand which would induce some employers to hire more workers or increase the hours of current employees during the period. >> yes chairman. >> i know it happens, sometimes perception becomes reality rather than reality becoming reality so i want to emphasize those points. >> the reason we don't use the term lost jobs is there is a critical difference between people who like to work and can't find a job or have a job

that's lost for reasons beyond their control and people who choose not to work. if someone comes up to you and says the boss says i'm being laid off because we don't have enough business to pay any other person feels bad about that and we sympathize for them having lost her job. their job. if someone says i decided to retire or stay home and spend more time with my family and spend more time doing my hobby, they don't feel bad about it, they feel good about it and we don't sympathize. we say congratulations. >> i think it was just inferred earlier that somehow if fewer people -- you mentioned that they would be better off in your report and language presented to us and it was implied people had an opportunity to get to middle-class you wouldn't be better off. but part of it is you're saying in the aging population people aren't participating. that's part of statistic for people who like my mom don't have to do that, but secondly it

could be on the the low were and who is now working two part-time jobs instead of three part-time jobs and instead they might be able to tuck their child in bed at night and read a bedtime story or go to inactivity which means they are better off. at least that's what it means in my part of wisconsin. then let me ask a question about what we can do in your report about jobs. as we talked about with mr. jeffries, the sequester was about 750,000 in full force. i know we released some of the pressure this year but we go back to putting a lot more of that in 2015. we are going to lose jobs because we are not extending unemployment extensions. while people want action by congress rather than the president, the problem is that congress isn't acting. we aren't doing anything to create those jobs come in jobs, therefore someone has to do something about that. what policies tend to get the biggest bang for theb