so i was really very pleased to hear your opening comments, and those of senator crapo. i both the testimony that i submitted before i heard president obama's speech to the congress the other day, and his plan to finance his new stimulus package. if you have looked at my testimony you know that i, like yourselves, favor reducing tax expenditures. but i must say i do not favor the way president obama proposes to limit tax expenditures. i think there are two reasons why his proposal are bad ideas. first, it uses the revenue to finance his new collection of government spending programs. when we need that revenue from reduced tax expenditures to reduce future budget deficits and to lower marginal tax rates. second, as you know, the president would limit the tax expenditure reductions just to higher income taxpayers, those with more than $200,000 in income. but long-term deficit reduction requires that everyone shared in that burden. if congress were to pass the president's proposal to reduce tax expenditures just for high income individuals, i think it will be very difficult

senator crapo, i'll start with you.his is going to be a tough choice for republican colleagues , those on the super committee. what happens to babineau? how do you tell your entrants are your fellow republicans in a talk in the same sort of revenue president of him is talking about? >> you put your finger right on probably the biggest issue that has to be handled between the two parties that were going to resolve it. i personally think it can be resolved in a number of ways, but to me the easiest way for us to address it is to deal with the way congress scores various proposals and does the simpson/bowles commission recommended, allow us to become more fit than an accurate underscoring the impact of various policies. what am i talking about? in shorthand comest utilizing dynamic scoring rather than static scoring. if you do that, the various tax proposals can be understood to generate the kind of economic growth tickets to revenue without raising taxes. in fact, but the simpson/bowles commission did was to reduce tax ra

crapo was talking about. do this in $1 trillion bites it is better than nothing but there is a good chance you will have to do it six more times. when you think of the ridiculousness of our situation, if you are trying to explain to a family what we are doing as the government when you start talking trillions it gets difficult to understand but when you tell the family what is happening is we are making $21,000 a year and spending 35 and we will do it for a long time. how long will that go on? most say we will have to declare bankruptcy and that is not a good thing. this problem will get resolved one of two ways. one is weaken do it now, thoughtfully and proactively and we grownups do things and when congress and the president of to do things. the other way is to wait until it gets to the point where the bond market decides they don't trust you anymore. there's a point at which they will say i want more -- i won't give more money unless you give me more price meaning a higher interest rate. if interest rates

senator crapo, mr. cody says this is the time, or some here in washington when the time was back in december when you're came out with your plan. now we are too close to a presidential election. there's no way to get a big deal now. >> well, first of all the closer we get to an election, particularly presidential election, the harder it gets. that's just a political fact of life. i refuse to accept the so-called political wisdom that we just have to wait until after the next election. for one thing, it's pretty much everybody on this panel has said, we don't have that long to wait. i think if we wait another 18 months, we lose a critical time. both in terms of being able to create the adequate solutions and in terms of being able to get the political momentum. secondly, the detail work has been done, not only by the commissions we talked about here but by many others. it's not a problem tried to figure out how to do a different solutions in the discretionary budget or entitlement budgets or in the tax r

senator crapo. >> i assume that that number mr..8 trillion out of the $14 trillion that is now in the tax code? meaning there would be about $9 trillion left in the tax code as part of the tax expenditure system? >> yes, and most of those would -- >> yes, and most of those would be on the other side. >> thank you. with these proposals that are out there with regard to the corporate tax rate, they are being proposed on a revenue neutral basis. is there any disagreement that on the other side, the corporate side, there should be revenue neutral? but i do not disagree, but we should note that -- >> i do not disagree, but we should note that some business tax expenditures are claimed by corporations, about 80%. >> thank you. getting back to the level of the adjustments that can be made in terms of flattening the code and reducing the tax expenditures -- and i think there is no disagreement among any element with regard to the fact that in some way we should do that. the bottom line to me is that there seems to be big debate over how th

senator crapo? >> well, thank you, mr. chairman. i appreciate you letting me go out of next and out of order because i have to run into another engagement but with this group of experts present i can't resist asking this one last question. there's been a lot of discussion by every one of the panel that we have to get our deficit under control. and that, you know, we may have some differences among us as to what portion of that problem relates to overspending versus the tax code or what have you. but we now have a special committee operating. and it's working to get about $1.2 trillion minimum of additional deficit reduction from where we have already gone in this congress. i am one of those who believes that is not enough. and the reason i believe that is -- as you know, i served on the bowles-simpson commission. its proposal would have reduced the deficit over 10 years by about $4.7 trillion leading us out you get there the spending and other policies. the broader picture of how far do we need to get is the question i'm asking. if

thank you. >> thank you, senator crapo.ry much appreciate the opportunity to testify before this committee. i am glad that congress is taking a very pronounced effort to come to grips with that. tax reform is a major part of any program of fiscal reform. it will contribute to a restoration of american competitiveness and a vibrant economy that goes with it. the fiscal success we achieved in the early 1990's was essential to contain budgets that seemed prone to excess. the great irony of those years was that the surpluses that emerged from 1998 to 2001 as a consequence of that success, undermined fiscal prudence. we have now come full circle to a point where as much as i wish it were otherwise, there is no credible scenario of addressing the current fiscal problems without inflicting economic pain. we have been procrastinating far too long. and coming to grips with the retirement of the baby boomer generation, a fiscal problem that has been visible for decades. by 2006, with chronic surplus is already a distant memory, the m

i became a big fan of senator crapo and his equally conservative republican colleague senator coburn.y worked through the arithmetic and realized it would take revenue. i have always been a fan of senator durbin. he also came to the difficult conclusion that this is going to take training in the entitlements. -- reining in the entitlements. it was a display of courage and compromise that i hope will spread to the rest of the congress and especially to the select committee. [microphone whining] >> you have made the point of $4 trillion is a minimum instead of the maximum we should be thinking about. if you get to $4 trillion, you stabilize the debt. it is still well above our historical averages. they were below 40% of gdp. we would still be at 60% and moving down. you do not want debt levels to be high because you need fiscal flexibility. you need to borrow if you are hit with emergencies or other wars. those are the things you need to be able to borrow four. it is important that people understand as much as we wish you could balance the budget in a couple of years, it is critically i

is going to be a multi step approach and sadr crapo i think articulate it when he said you can set the goal, set the parameters come up with the bumper guards out there and then say kennedy's coming you have a certain time to do it. it's a shorter time line. we can't write it and bought it. they can put the parameters and go and i think the congress and the administration to step forward and embraced something they can see that the majority supports this and is going to be a single vote because that is the most historic other than the war in the modern history this is going to be a historic vote and the business community is saying step up, don't fall short, go big and we have to work together and it's not easy but we are going to do it. >> i want to make a confession. i didn't think i was coming here today to listen to these people appear because i didn't think they had much to tell me, but i will tell you right now that i don't know you, andy, i know all of you and you are notorious. [laughter] that doesn't mean - for positive it just means that you are well known. when you just said

. >> senator crapo, they suggest this is the time, and now we're too close to a presidential election. there's no way to get a big deal now. >> well, fist of all, the closer we get to an election, particularly a presidential election, the harder it gets. that's just a political fact of life, but i refuse to accept that the so-called political wisdom that we have to wait until after the next election. for one thing as pretty much everybody on the panel said we don't have that long to wait. i think if we wait another 18 months, we lose critical time, both in terms of being able to create the adequate solution and in terms of being able to get the political momentum. secondly, the detail work has be done, not only by the commissions we've talked about here, but by many others. it's not a problem of trying to figure out how to do the different solutions in the budget or entitlement budgets or tax reform. it's a problem of building the political con consensus, and i personally believe now is the time, and it is doable if we will not tell ourselves that we can't do it. we have the capacity

senator crapo. >> i appreciate you letting me go next and out of order. with this group of experts present, and cannot resist passing this last question. there have been -- asking this last question. we have to get our deficit under control. we may have some differences as to what portion of the problem relates to overspending of versus the tax code or what have you. but we now have a special committee operating and it is working to get $1.2 trillion minimum of additional deficit reduction where we have already gone in this kahne -- this congress. i am one of those who believes that is not enough. i believe that because i served on the balls-simpson commission. its purpose -- bowles-simpson commission. the broader picture of how far we need to get is the question i am asking. if you took the $4.7 trillion figure and played it out for 10 years, assuming that congress did not get around it, we would barely have kept our head above water. our debt to gdp would be the same as it is today, although it will not skyrocket like it would with no action. it seems t