mr. schatz regarding the overall spending versus military spending. i wanted to know, my understanding is 50% of our tax dollars go to the military. and the ndaa bill at the end of the year that's for national defense authorization act, when these bills come about you can pretty much throw anything in it and if anyone questions it, they come back with the old, you're not supporting our troops. then there was the cost plus spending i learned of from the film "iraq for sale" about 15 years ago. i wanted mr. schatz to address these things that i just brought up. >> much longer conversation talking about military spending, but we do care about it. in the congressional pig book we identify wasteful spending on defense. going back to the grace commission, $424 billion of wasteful spending. 25 of that was defense. defense is not 50% of the budget. it's half of discretionary spending but there's also non-discretionary entitlement spending which is 60% of the budget these days. >> paul from greenfield center, new york, on the republican line. good morning. >>

mr. schatz regarding the overall spending versus military spending. i wanted to know, my understanding is that 50% of our ,ax dollars go to the military and i remember the military-industrial spending, and the bill at the end of the year for national defense authorization act, when these bills come about, you can pretty much throw anything in it, and if anyone questions that they come back with the old you are not supporting our troops. and there was the kloss -- cost plus spending that i learned about on the show iraq for sale, 50 news ago. i wanted mr. chas to address these things that i brought up. longerit's a much conversation, talking about military spending. in the congressional pig book we do identify wasteful spending. going back to the grace commission, which under president reagan found $104 billion of wasteful spending, 25% of that was defense. defense is not 50% of the budget, by the way, it's about half of discretionary spending but there's also non-discretion entitlement spending, which is 60% of the budget these days. host: let's talk

mr. schatz regarding the overall spending versus military spending.ted to know, my understanding is that 50% of our ,ax dollars go to the military and i remember the military-industrial spending, and the bill at the end of the year for national defense authorization act, when these bills come about, you can pretty much throw anything in it, and if anyone questions that they come back with the old you are not supporting our troops. and there was the kloss -- cost plus spending that i learned about on the show iraq for sale, 50 news ago. i wanted mr. chas to address these things that i brought up. longerit's a much conversation, talking about military spending. in the congressional pig book we do identify wasteful spending. going back to the grace commission, which under president reagan found $104 billion of wasteful spending, 25% of that was defense. defense is not 50% of the budget, by the way, it's about half of discretionary spending but there's also non-discretion entitlement spending, which is 60% of the budget these days. host: let's talk to pau

mr. chairman. you said prices are going up, correct? why else are prices going up? >> given that it has gone up at rates as high as 35% a year, and sports costs even worse -- up? schatz: profitability mr. powell: not for the cable industry. profit margins have declined over the last year. schatz: do you see any curbing to the crisis, or are prizes like to go up until the end of times? think it is to create new bundles and business models that might be able to do that. for example, they have launched what we call scaling bundles, a smaller scale of programming at significantly lower prices. sen. schatz: does anyone want to disagree with them? i do, senator, thank you. we have a huge competition problem here. we see that some are beginning to slow the rise in prices a little bit. i think chairman powell is right prices are -- g sen. schatz: some of the top services are being subsidized so that they can grab market share, so that by the time they are used as a justification for further consolidation, then there may be only a few players left, and then everybody raises their prices. mr. aaron: i think that is a risk, senator, and we have to watch carefully these emerging

schatz. >> thank you, mr. chairman. thank you to all of the testifiers. let me start with mr. powell. i think i heard you say that the main reason that prices are going up is we're paying providers more -- excuse me -- content creators more. is that correct? >> it's a principal reason, yes. >> why else are prices going up? >> well, given that those costs have increased at rates as high as 35% a year, i do think -- and sports costs even worse, i think those two are the most massive drivers. >> is profitability up? >> not on video. it's up for the cable industry. >> but cable industry, right. >> right, which also has other services like broadband, which are dramatically more profitable. actually profit margins in the video business have declined over the last ten years. >> do you see any path forward in terms of reducing prices, or you think this is just a fact of life, that prices are going to go up and outpace inflation by two or three times? >> i think it's a challenge. i think what we're seeing is innovative experimental efforts to try to create new bundles and new business models t