Transcripts For CSPAN Capitol Hill Hearings 20120215

to the next president. this president, we have an idea what he would do with it. but the nextment will sign the repeal. i worked on that and worked with each of the presidential candidates on this and every republican capped has taken a pledge or an oath multiple times for full repeal of obamacare, almost all but one of them have pledged to rip it out by the roots and not leave one particle left of it behind. it's what we must do if we are going to keep faith with our founding fathers and we mu do if we are going to protect and refurbish the liberty that was given to us as americans. if we hope to have a economic future with an unsustainable obamacare starring at us and if we are going to lead the world in providing health care, it's what we must do if we are going to preserve and protect the constitution of the united states, which we have taken an oath to uphold. these are reasons for full 100% of repeal of obamacare. needs to happen, and needs to happen in the first weeks of the next congress and the repeal needs to be set on the podium, prepared there for the next president of the unions so when he takes the oath of office, his first act in office can be to sign the repeal of obamacare right there at the podium, west portico of the capitol, and i hope to have a good seat on that occasion and i will continue this argument to position us so that this congress is prepared to pass that repeal. and i believe we should just go through a warm-up drill here fairly soon. now this is valentine's day, february 14. sometime in the next 30, 60 days, it would be appropriate for the house of representatives to renew and refresh our vote to repeal obamacare again. perhaps the people in the senate have understood how important it is and have changed their mind, but i believe this congress should remind the american people that we are still 100% of the republicans in a bipartisan way, in favor of the full 100% repeal of obamacare. that's an important message to send. mr. speaker, i would also submit that the repeal of dodd-frank is an essential component ks too. we have to do a lot of undoing of this administration before we get to the doing to start the reform process. we would have lost two or three or more years before president obama being locked up in a congress that's led by nancy pelosi then and harry reid on the floor of the senate and will have lost four years of the obama presidency. we have to make some progress. we have to make some progress and that can't come as long as obamacare sits in the way and dodd-frank sits in the way. the decisions that were made by barney frank and chris dodd to spur presumably the financial world. solutions came from some of the people that contributed to the problem. and i would suggest that we do this as a financial package, mr. speaker. and in the early days of the 1 13th congress, pass the repeal of the dodd-frank and community revifment act and move faney and freddie and some of that is in the agreements being negotiated right now but won't be strong enough or bold enough and let's repeal sarbanes-oxley. if we do that, running the table, repeal, dodd-frank, sarbanes oxley and all of those things will lay a foundation where we can write some rereasonable regulations on our financial institutions and open our country to do business again, mr. speaker. and i think it would be appropriate of this congress to remove the repeal of dodd-frank that michele bachmann has introduced. and she is the lead on repeal of dodd-frank and it would be a great way for her to come back to the conference after a brilliant run to the presidency and bring the repeal bill to the floor and it sends a message, mr. speaker. the message that it sends is that the house is for repeal of dodd-frank and send it over there to the senate and see what they want to do about it, but getting that marker down helps encourage the presidential candidate, this congress is in and will be in lock-step with the republican nominee. those principles that are universal among all republican candidates should be moved by the republican majority in the house of representatives. for example, passing officialening lir. 87% of the people in this country support english as the official language and sits there as a dormant issue because it seems as though the only agenda this congress has is jobs, jobs, jobs. people earn better pay and benefits in their jobs when they have english skills. we burn billions of dollars, and that means consumed or waste, that was hyper bowl, so to speak, we waste billions of dollars when the strongest, most powerful force known to humidity is having a -- how manity is having a common language. it is the most powerful unifying force in the world. when god looked down on the tower of babel, behold they speak one language and building a tour to the heavens with the arrogance we remember. behold one people they speak one language and nothing they propose to do will now be impossible for them because of having a common language to bind them together. and so, god scrambled their language and that's where the tower of babel came together and they split up to four winds and that's the old testament story of how we ended up with so many different nations. we know historically what has happened. people move into enclaves. even if they go with a language, it goes into something else if it doesn't interrelate with the other communications in the region, in the neighborhood and the world. so we have encouragement going on in this culture of encouraging language enclaves instead of success of assimilation. and we should move the english language unity act. 87% issue. i know nothing more popular than that. if i have an agenda here, mr. speaker, that is popular as 87% among the american people and i can't get a vote. and meanwhile the president can offer his budget, there is something really wrong with that. there is a lot of disparity between the two. that is another thing that needs to happen. let's move english, repeal of dodd-frank, repeal of obamacare. those pieces would be good messages to the american people. there are good pieces of policy to lay on the desk of harry reid and join the cord wood of the jobs legislation that this house has sent over to the senate and help the stage for the next president of the united states, who needs to come in with a strong mandate from the american people, from the united states congress with a clear vision that americans support our new president to take us where we need to go as a people. but the components of the agenda of the next president need to include a balanced budget, a balanced budget amendment, a commitment to that balanced budget amendment and a mandate from the american people to get that balanced budget amendment passed. only way we can get that accomplished, mr. speaker. and we need to call for the presidential candidates to call for a balanced budget amendment. i would go through these issues again. pass a balanced budget amendment, one that requires a supermajority to raise taxes and legitimate exemptions for a declared war or case of a national emergency, balanced budget amendment, repeal obamacare and repeal dodd-frank and let's move forward with a country that is based upon freedom, upon liberty, upon free enterprise. if we do that, the american people will take care of the rest. we have to pay down principal before we get rid of the interest bill. this is a huge credit card that has been run up. the debt of the country in trouble and the e.u., $4.5 trillion and president obama's 1.3 trillion threatening to take his term of the presidency well over $5 trillion, knocking on the door of $6 trial quon in accumulated debt in his time in office. and whatever we do that's good, we still have to pay the interest and principle on that debt so the recovery time, the debt we might have fallen a little bit further but takes a lot longer to recover when you borrow the money to do so. that is the nature of the capital and investment and risk and nature of keynesian and i'm a supply sider and i don't believe that borrowing money and handing it to people and spending that money is how we are going to recover from this economy. we are going to recover from this unward economy by producing goods and services that have a marketable economy. if we do that, we'll economy and rebalance our trade deficit and make industry strong again and be the powerhouse of the world. and when that happens, we are strong culturally, militarily, economically and we will continue to be looked up by the rest of the world. if we fail economically, if we become one huge greece as chairman ryan is concerned and as i am and many others, if we become one huge greece, there is no one to bail us out. there is no one there. we can hold our tin cup out but no economy will be big enough to put the tin cup out to get a meal. we would be in a situation of default and would be a sad, sad day in america. take generations to build our credit back again. take generations and the trajectory would be so altered that we could never recover. the power of the world -- the power is a vacuum and it fills it. if america has an economic crisis, as i'm suggesting looms in our future, that power, that global vacuum will be filled by our competitors and much of that power that is proper scrected around the world will be paid for blood and we must maintain that for the future destiny of our country and maintain it for those who sacrificed so much to project freedom and liberty. we are a great country and greatest unchallenged nation of the world. we get our strength from western civilization and free enterprise capitalism and need to understand those underpinnings of american exceptionalism and need to celebrate them and teach them and need every child to understand the pillars of american exceptionalism and recite them in the very catholic church that is standing up for our constitutional rights today along with the other faith-based organizations. it's a big picture we have going on. it's a great country that we are. great country filled with great people, people with individual spirits, individual sense of self-sacrifice, willing to tighten their belt and carry their share of the load. what do they want out of it? an opportunity to work, prosper, raise their family, live free without a government reaching in and regulating every aspect of their lives and utilize the god-given liberty that was articulated and promote that humanity throughout the world whenever there may be. mr. speaker, i appreciate your attention to the discussion i have had with you this evening and i would yield back the balance of my time. . . the speaker pro tempore: the gentleman yields back his time. under the speaker's announced policy of january 5, 2011, the gentleman from california, mr. garamendi is recognized for 60 minutes as the designee of the minority leader. mr. garamendi: mr. speaker, thank you very much. i'm joined tonight by two of my colleagues, mr. tonko from new york, mr. altmire, we're going to be talking about the president's budget and about one of the issues that we think really will propel america back to the leading edge of the world's economies. we've had some tough times but we've seen some progress and if we can once again make it in america, we're going to see this economy grow, we'll see the middle class come back to life, we're going to see an expansion of wealth and the opportunity for families to make it in america when we make things in america. let me just start off this discussion with the progress that's been made. some of our colleagues here would like to say that nothing good has happened over the last three years when in fact this chart, which is from the department of labor statistics office, points out very, very clearly where we have come from since the great re-- since the great recession began. the gold columns over on the far left, or far right, depending on your perspective, you can see the great decline that took place from 2007 until january and february of 2009 when president obama came into office. since that time, we have seen a steady improvement in the number of jobs in america. so even though we're seeing here in this 2009 period, a continued decline, each week that went by, we saw improvements, less of a falloff and we began to emerge from the depths of the great recession. so beginning here in about 2010, began to turn around and we began to see positive job growth and every month since that time, we have seen a positive job growth in america. not enough, not enough to satisfy any of us on the democratic side, not enough, i'm sure, on the republican side, and certainly as president obama said when he appeared here at the state of the union, not enough to satisfy the president. so we're now looking at the president's budget going forward. proposal came to the congress yesterday that budget lays out how he would like america to move forward and how we in the house of representatives and the senate can put into place the laws, programs, and the money to pay for the advancement of the american economy. so we're going to spend tonight building off the president's budget and the things that are in there. over the last year, my creags -- colleagues and i have been talking about the key ladders to success. those things that create opportunity in america and education, research, it's the manufacturing, the infrastructure and the opportunities that come with them. tonight, we'd like to start by focusing on one part of the president's budget which was the r&d, the reserge and development portion of the president's budget. now in any economy, if you're going to grow that economy, you have to stay in the forefront of technologies. america has been the best in the world at this and in doing so, we have created extraordinary growth in the economy and opportunities for new businesses. unfortunately in the last 20 years, we've seen those businesses go offshore but the genesis of that growth is often in the research and development, usually funded by the federal government, and that research and development comes in several different parts of the federal budget. certainly we see it in health care. the national institutes of health. we see it in the national science, in the energy department, and in the military. each of those organizations has a research budget and from that budget comes new innovation, new products, for example, the defense research agency, known around here as car pa, really did the -- as darpa, really did the grunt work to create the internet and we've seen what that has meant to america. with that introduction, $148 billion in the president's budget for all the research and development that the federal government supports gives us the opportunity to create the new solutions to today's health problems, today's economic problems, energy issues and defense issues. fortunately, my two colleagues today are well steeped and very, very knowledgeable about the research budget. my colleague from new york, mr. tonko, you ran a research program in new york. share with us and then if you would reflegget on the president's budget. mr. tonko: sure, absolutely. representative garamendi, thank you for bringing us together for an hour of thoughtful discussion, dialogue that needs to be exchanged here on the house floor so as to promote what i believe is a very progressive agenda and in my heart, i believe that the president has promoted a budget here that allows taos move forward in a progressive style. to be able to talk about sustainable outcomes, to be able to talk about meaningful employment, cutting edge ideas that will take us, as a sophisticated society, embracing our intellectual capacity, to move forward with the soundness of job creation in the rem of high tech. now, we have been -- in the rem of high tech. we have been talking on the floor for several months about the vision of reigniting the american dream. reigniting that mesh dream through the underpinnings of small business as the pulse of american enterprise and certainly entrepreneurs who are those dreamers and movers an shakers and builders that provide the soulfulness of the vision of how we can move ideas forward that translates into jobs, translates into product development. and then finally a thriving middle class, making certain that in any democracy, the measurement of a resounding future comes through the measurement of how well that democracy's middle class is performing. so we know that through reforms out there, we can go forward with this budget and address small business, entrepreneur development an thriving middle class dynamics in a way that will build the sustainable outcome. we cannot, in my opinion, i totally believe, we cannot cut our way to prosperity, cut our way to opportunity, cut our way to an economic recovery. we do it through investment, investment of the soundest order. now to your point, i had served before entering congress as president and c.e.: o-- c.e.o. of nycerta, the new york center for energy research. it was quite an eye opener to see the program development providing job opportunities of a new variety of a cut -- of a new variety, of a cutting edge opportunity. there, not all the research snare joes were perhaps a success story but without that investment, without government joining forces with academia and the private sector, we do not strike that sort of visionary outcome. and what you saw were tremendous investments made that enabled us to pave the way for investments in the internet or g.p.s. or working through the vision of how to strengthen the military and sharing a lot of that information, and that intellectual property, with the growth of jobs here, in this country. that's the sort of opportunity that's envisioned here by the president in his budget presentation to congress. and it's that sort of investment that believes in the american worker, believes in the thriving middle class, believes in the strengthening that small business brings to any community and believes in entrepreneurs, that rags to riches scenario, that has been, you know, very much the part of our american story. the american history is replete with success stories. rags to riches scenarios where america was seen as the promised land. well, we have not abandoned manufacturing, we have endorsed this idea of investing in manufacturing, investing in research, and i am really pleased to see that we're moving forward with soundness, with this budget presentation in a way that translate into jobs. no other higher priority and we do it by reigniting the american dream. representative garamendi, seeing those success stories through the lens of nycerta, the new york state energy and research trade authority, where you're seeing it in electric vehicles being built, energy retrofits for businesses, these are the sorts of ideas that a sophisticated society embraces. we don't abandon these goal well, get into it full steam. and by the way, it's because we're competing with other nations in what is a global race on clean energy and innovation, and if we don't take that in, if we don't acknowledge that we're in the midst of that race, we will watch nations pass us by an we will let down generations of american workers and that would be unforgivable. mr. garamendi: thank you very much, thank you for your experience in dealing with research and translating that research into real things americans can make. the great manufacturing center of america is represented here by mr. altmire. thank you for joining us. share with us your thoughts as we look at the president's budget and on making it in america. mr. altmire: i thank the gentleman from california and my friend from new york, mr. tonko. we have a discussion going now on manufacturing in america. our colleagues understand the relationship that exists between manufacturing and r&d, research and development. it's critical to look at those together. the discussion we're having in this country about why over the past several decades we have lost so much in manufacturing, we have lost our core manufacturing businesses. i come from western pennsylvania, we have seen the steel industry over the past several years, although there is a resurgence today, it's been many, many years since we lost a lot of that steel industry that we had in western pennsylvania and it was the core base of employment for generations in the pittsburgh area. and across the country. we've seen our manufacturing industry decimated by foreign competition. and the reason r&d relates to this, as the gentleman knows, is it's a continuum. at first when america lost its manufacturing lead to other country well, kept the innovation an r&d. but the continuing that exists between someone in america coming up with an idea, an invention, turning that through r&d into a real product a ale innovation, we have always been the leaders in that in america. americans have led the way with innovation, with creation, with technology. an then turning that into the manufacturing sector, turning that toward product development, manufacturing, exportation to other country creerks ating a base of people who are going to use that product. the whole continuum is something we have seen over the last several years through foreign competition. we lost our lead in a lot of those things. because of our failure to invest in research and development, because of our failure to keep up with the foreign competition, we've lost even more than just the manufacturing sector. we've lost our competitive edge on the innovation side as well. that's why it's so critical even in the times that we face now, severe fiscal restraint, a recession that we are finally recovering from, we have to continue to make that investment in r&d because as the gentleman from new york said if we don't do it, other countries will, and they are. if we expect to compete in a global economy, if we expect to get back our lead in manufacturing, which we are starting to do, it has to begin at that first stage of innovation, of research and development. creating new products, leading to new ways of manufacturing, more cost effective ways of manufacturing and we're going to be able to do it. we're starting to see the researchence in america because we understand that continuum that exists and it would be a tragedy for workers to begin to move in the other direction. i thank the gentleman for his leadership an turn it back over. mr. garamendi: thank you, mr. altmire, thank you for the work you've done in western pennsylvania. at one time, when i was growing up, it was the center of the american steel industry and manufacturing there and to the immediate west in indiana and on, i want to put up this chart because it demonstrates the challenge that we face an the opportunity that we have. this chart speaks of the 12 years, six million american manufacturing jobs lost, way back, let's go back about 20, 25 years ago, there were just under 20 million manufacturing jobs in america. over the years it was up and down with a slight decrease an then beginning around the year 2000, we began to see a precipitous decline, basically the outsourcing of american jobs this egreat manufacturing heart an heartbeat of america just began to slow down to a rhythm where now we are down to just over 11 million manufacturing jobs. . this right here is the challenge that this house faces. and when we start with what the what the president has suggested, we start with r&d and that's where the new ideas and products have been developed. and we have to couple that with manufacturing. i want to give two examples from my own district, one i learned when i was back home in the sacramento valley. a university, university of california, davis, about 10 years ago, some graduate students at the engineering campus, engineering scoom at the university of california, davis, figured out a new way to do advanced manufacturing. they were in machine tools and they figured out a way to take machine tools and make them far more productive, innovative and capable of making them doing really different things. they took that idea and these are the interviewers that you talked about, mr. tonko and took that idea and started a small business. and in the intervening years, they began to grow. they now employ 75 people in the sacramento region for the development of these advanced machine tools. a company in japan took a look at this and said we want to do that. they bought the company and they thought about taking the company back to japan. no. didn't happen. instead, they decided to build that manufacturing facility in davis, california. that factory is now being constructed and will now soon employ 100 people. here you have an example of where research out of the university of california, davis, led to a new business in the machine tool industry and the continuation of research and development and advancement and now manufacturing taking place in california. there are a couple of other pieces of public policy that fit into this continuum of development of economic growth and they were policies that were put forth by the house of representatives when the democrats controlled the house, and it was this, for any company who wanted to make a capital investment, they could immediately write off that total investment in the first year rather than depreciating that investment over seven, 10, 15 years, they were able to take advantage of a very, very powerful incentive to make it in america, to build your manufacturing facility in america. and so this company, d.t.l. is now growing in california as a result of the research at the university, coming out, entrepreneurs taking the idea, building a business and now investments in this case by a foreign company into the united states. we call that insourcing. i'll come up to another example. mr. tonko, take it from there. >> mr. tonko: ton thank you for that lead and mr. altmire talked about the need for us to invest in manufacturing. when you look at that drop, losing the many millions of many manufacturing jobs, perhaps the largest loss of manufacturing jobs in world history, it's up there, ranks very high. why? policy, tax policy that encouraged taking jobs offshore and investing in other nations. we were rewarding that behavior. what we are talking about is putting the brakes on a process that really was destroying hope for american workers. and so now what we see is a new vision of providing incentives for those who will build opportunity in this nation. and then also, i think when we look at some of the focus that existed or didn't exist over the past decade and a half, you look at where we were going as a nation and the focus wasn't on agriculture, it was not on manufacturing, but it was on surface sector and the financial surface sector. and we know that scenario. suffice it to say, we turned our back and said, here's the key, play as you wish, no watchdog and people created vehicles in which could sir couple vept regulations. we put at risk every family that invested into their future, was put at risk. we ignored manufacturing. mr. garamendi: mr. tonko, may i flupet you for a moment? you mentioned something that we talked about last week and i just -- i want to hand you this chart. hold that one up there and let me go back to the microphone. you mentioned the effort that we made in the 2002 to change from an economy to a fire economy, finance, insurance and real estate, a fire economy, one that collapsed, because it was about manipulating money, instead of creating mechanical engineers and chemical engineers and nuclear engineers, we created financial engineers. the result, not good. the great recession. mr. tonko: it's a valid point. and where was that linear, where was that outreach, that extension into all of america with the good products we developed that would serve this nation well? and what we're talking about is bringing back some programs, what was ignored was the manufacturing extension partnership. m.e.p. is a program that i hear about all the time, from my manufacturers who are clinging on, who are working trying to be productive, offering hope to the worker, saying where is the m.e.p. program. well, it was brought back last year and reinstated for the budget this year. support the manufacturing extension partnership. what is that? m.e.p. program. what does that do? it allows for manufacturers, small and medium-sized manufacturing firms to develop additional markets. the president has said let's get into exporting and build it in america and export it to the world. that's a vibrant economy and it enable us to explore new opportunities and to adopt those technologies and retrofit our manufacturing base with that know-how, with that productivity emergencyin growing. that means greater opportunity for us to compete in the global market, to create jobs and to provide hope again for the worker. so it is good that m.e.p. is back in this budget and it is a statement, it's a statement that we care about manufacturing, we care about small and medium-sized businesses and we are going to see that as the springboard, the economic springboard to the economic recovery that we so much deserve. and it's about priorities. that's what a budget is. it's like where you are putting your investment, how are you developing that formula, and what is the hope that you anticipate that is translating to america's working families. this is the moment. this is the moment for us to move forward by re-igniting the american dream, doing it through small and medium-sized business, investing in the dreamers, those movers, those builders, those entrepreneurs and resulting in a thriving middle class. and then you'll have a strong democracy. re-ignite the middle class and we have much work to do. mr. garamendi: mr. altmire, you have been working long and hard on these issues and carry on. mr. altmire: i want to talk about the trade deficit we are facing in this country. i want to close the loop what you have been talking about, and i hear a lot back home, town hall meetings, discussions with people, about federally-funded research and seems as though there is an example somewhere of a research project that seems on the surface to be unjustifiable, in some cases, people will argue it's ridiculous we are funding certain things. and i want to give a couple examples of federally research that has paid huge dividends for every day life. there was in the late 1970's and early 1980's, big national story about federally-funded research about the eyesight of eagles. it was considered to be of no use of society. lo and behold, what did we get? night-vision goggles for our troops, soft contact lenses, we got so many innovations from that type of research, touchscreen on our ipad was funded out of the university of delaware. the g.p.s. system that so many of us rely on, the internet, created as we all know through the pentagon and federally-funded research. i would say to those who may be skeptical of serp projects, there are some that on the surface that didn't sound like a good idea in the beginning that have paid huge dividends and i would go back to lasic eye surgery and so investment is what we are talking about. it pays back so much more about research and development. r&d tax credit is key, manufacturing extension partnership that the gentlemen was talking about, a key part, bringing back a resurggent manufacturing base. what happens if you don't do that and aren't competitive in the global economy is what this chart shows. this will come as no surprise to our colleagues. this is the u.s. trade deficit from 1976 through 2008 and as you can see, you don't even need to look at the numbers and see it is heading in the wrong direction and has been heading in the wrong direction for a very long time. and there is a lot of reasons why that is, some of it has to do with our foreign competitors and joining the worldcom petition but a lot of it has to do with our foreign policies and have not had a strategic manufacturing strategy in this country and we were a little bit slow to react as to what was happening in overseas. and we have a decision to make in this country, are we going to continue to allow this to happen, sit back and wait while other countries improve, modernize, become more cost efficient, become more competitive and make this trend more worse for the american workeror take action, invest in our future and change the way that we do our manufacturing strategy, to incentivize making products in america. and we talked a couple of weeks ago, the gentleman from california and i on this floor about a provision of our tax code which may well be the most egregious and unjustifiable provision in the tax code which is if you have a physical asset, a plant, a manufacturing plant, and you want to move that plant overseas and close your operations and get rid of american workers and literally move those assets overseas, in some cases, you can get a tax deduction for the cost of your moving expenses. the american taxpayer, believe it or not, will cover the cost to move that plant overseas. that is ludicrous and no reason that provision should exist and one of the reasons you see the chart going in the wrong direction, because we have been slow to react. but we are at a turning point in this country and have an opportunity to do the right thing and change the policies that have led to our trade deficit and begin turning the corner and begin heading in the right direction. mr. garamendi: thank you very much for pointing out the eye of the eagle and we have to keep our eye on this particular prize and that is rebuilding the american manufacturing sector. this chart needs a further explanation. what we did beginning in 2000, before that, was develop a fire economy, finance, insurance, real estate, not manufacturing. so manufacturing was allowed to decline and of course, real estate, finance and insurance grew and became the essential economy in the year 2000 to 2010 and the great collapse in 2007 and 2008 which mr. tonko said, regulatory oversight disappeared. we are reversing that. mr. altmire, you talked about the egregious tax policy of giving the taxpayers when companies offshore jobs. it was 2010, just before the new congress came -- actually 2009, before the new congress came into effect, that re-enacted legislation that eliminated much of those tax breaks. there is more to be done and in the president's budget, he calls for the full elimination of tax breaks to companies that offshore jobs and as he said here in the state of the union address, turn that around and give a tax break to companies that bring job back to america. and in his budget and in his proposal are specific actions on tax law that we must take to carry out that commitment to american and foreign countries that want to bring jobs back to america. we can do this, public policy plays into this. the budget, the research and development piece of it. that is the start of the idea of a new business or a new technology. and then the manufacturing support that goes with it, tax policy. we talked about the vast manufacturing systems. all of those are the feedstock to get these companies up and going so that the entrepreneur using the research and creating a small business will ultimately create a bigger middle class and re-igniting the american dream in doing that. . mr. tonko, i think we ought to spend a few moments talking about transportation, that's ok with you gentlemen. mr. tonko: i think before we leave this talk of manufacturing growth, both of you gentlemen held up tremendous tcharts that -- charts that tell the story. what i think is interesting is when you overlay those two charts with the deficit, the trade deficit, and the loss of manufacturing jobs, they mimic each other. they absolutely trace the same curve. so as you drop those manufacturing jobs, as the commitment, the tax policy, the investment in manufacturing declined and the deficit, trade deficit impact from representative altmire's chart, they're mimicing each other. you can see the precipitous drop here. almost at the same rate as the impact of the trade deficit. so we can step back and deal with facts, or we can be in denial. we can be bitter about success and come onto the floor and try hold back success but instead of a tug of war on this house floor, let's tug together. let's tug forward to make certain that we're investing where we ought to. let's cut where we can but invest where we must. and one of those investments has got to be in the human infrastructure. we're talking about capital investment, year talking about physical infratruckture, but we need to talk about the human infrastructure with this manufacturing comeback. when i see advanced manufacturing embraced in my district where we as a hub in the 1st congressional district of new york and the capital reof new york have seen tremendous growth in clean energy and innovation, those are coming about because of clean energy technology, to transmit more electrons over cable, we talk about the investment in chips, growing those chips to a smaller and smaller dimension, so they can have an impact, energy generation, health care, you name it. any industry can be impacted by this nanotechnology investment. there's all this investment but you need the workers who are now being part of an advanced manufacturing stage in our society. where we're having more and more investment, keen intellect you need to train those workers. the president has said, look, we've got a vehicle that is very sound out there they're called community colleges. in my district we have not only hudson valley community college, fulton community college, schenectady county community college, but we have an ag and tech campus in the suny system, the state university of new york system. all of these are doing cutting edge involvement in research that gos to war that spills over to the worker. solar energy, making sure you have trade, all this is happening in our colleges. the president said let's go forward and invest, i believe there's an $ billion investment in community colleges to train the worker. let's not pull back on success. we see what's working. we know what has to happen. we have the formula based on history that ought to speak to us. and let's get it done. the worker can't wait until the next election. this decision making on this floor should be about hope and opportunity, not about the next election. but about the next jobs we can bring into the districts of this great country, the congressional districts that in a cumulative format will spell a reigniting of the american dream. a reigniting of the american dream. my district is -- district is a doe far area to the erie canal. we saw a necklace of communities emerge from that investment which came at a tough time for this nation. governor bede witt clinton said, here's a solution, we have a tough economy, let's provide opportunities for shipping our cargo, building, and what happened? a numb of immigrant patterns traveled to these shores in hope of that rags-to-riches scenario and they invested. they were the brains behind the industrial revolution. immigrants who came here and developed, along with the industrial giants, an agenda for jobs. we can do that again. this is the american pioneer spirit, the d.n.a. within my district is about a pioneer spirit, where these mill towns became the epicenters of invention and innovation an the same story can be lived today if we're willing to reignite the american dream through investments in small business, entrepreneurs and a thriving middle class. mr. garamendi: mr. con toe -- mr. tonko, thank you, you have hit one of those issues directly. we ought not move on to transportation before we deal with human capital, that is in the american worker. the president laid out $8 billion for community colleges to work directly with companies to educate the work force. i can give you a specific example new york davis, california, there's a biopesticides firm that goes out and finds mike robes or various kinds of natural occurring material and uses that and makes that into a biopesticide, not a chemical but a bioestest -- biopesticide. they need technicians in their laboratories and manufacturing they go to the community college to bring up the necessary skills and bring those workers in. there are jobs out there but they have to have the education behind them. much of what the president is proposing, not only with community college bus with pell grants and proposing $30 billion going into our k through 12 schools, so that those schools can be upgraded and an additional $30 billion to bring the teachers back into the classroom. mr. tonko: if you'll yield that one point, what i believe is also important with the community college investment is the stated purpose of creating partnerships with the private sector. and so it's not like one person working in a vacuum or one institutional network working in a vacuum but rather a partnership that is fostered by this budget process. by the thinking here of the administration working with congress. let's develop those partnerships with academia, community colleges training people, not -- and retraining. many people are starting second careers. they lost a job through no fall of their own. this was a brutal time on america's manufacturing base. let's bring that base back and give them the tools they need to be successful. so it grows more and more opportunity, we have that as sharp a competitive edge as possible as we enter into the global sweep takes -- sweep stakes on jobs. mr. garamendi: thank you, mr. tonko. mr. altmire, i see you're ready to go here. mr. altmire: the gentleman has given me so much to work with. i visited just yesterday a community college in allegheny county, they have an amazing fundraising campaign going on because western pennsylvanians, private industry, believes in the future of our country and in the future of community colleges. they have a $40 million fundraising campaign, they exceeded $30 million an the discussion was all the wonderful things happening as a result of the innovations that are taking place at the community colleges, not just in western pennsylvania but across -- across the country. we have energy resources in western pennsylvania that are unique and all the time we hear about employers saying that they have jobs available but they can't find people who are trained to fill those spots. so being right on the cutting edge, the community college of allegheny county has almost two dozen new programs to train workers and retrain in some cases to fill the new spots. geologists, managers, people out there on the work sites, all types of ways through the natural gas industry, the nuclear industry, energy, research and development, what we were talking about earlier, community colleges do play a unique role in this because of their ability to partner with local businesses, to identify the need, to retrain workers who have lost their jobs through downsizing or changes in the work force. it's an amazing resource for this country and the president is right to put a focus on community colleges as part of our reis -- resurgence in this country. on transportation -- mr. garamendi: mr. altmire, wait just a moment. you've got me engaged in this you talked about your community college, we are going to our community college in fairfield, solano community college district and we're going to take the work that was done by this congress in 2010, when it brought the pell grants down into the community colleges, previously the pell grants were only available at the four-year college level but now the community college students can also vie for the 3el8 -- pell grants and loan program that was been significantly improved back in 2010 before we lost the majority here. so that we took back from the big wall street banks the student loan programs, reducing the interest rates, reducing the hassle for students, and making loans far cheaper and more available. and just this year, the president took one additional step under his authority and stretched out the payment mechanisms so that no student, excuse me, graduated student, who had taken out a loan need to pay more than 10% of their annual income to repay that loan. all of this is part of investing in the human capital, investing in the workers. i suspect the three of us can go on for a long time about education. mr. tonko: let me mention this, last night, i spoke before the e.r.c., the research center at r.p.i., well regarded in their development of the sciences and technology experts and engineers of the future. their funding is primarily n.s.f., national science foundation, funding. there was a 5% increase in n.s.f. in this budget. and rightfully so. what they're doing in this think tank is stretching the creative genius as it refers to lighting design. lighting designs that will be used in ways that are unbelievably creative and constructive. and it's about creating the incubators of the future, the entrepreneurs of the future, it's about developing the professors that will train students into the future. it is an infrastructure unbelievably sound and it is n.s.f. funded. for people to say, well, our best days are behind us, what i'm hearing tonight is that there's optimism, there's great optimism. there's a reason to be hopeful. there's a charge for us to be optimistic by investing in opportunity. there's the tools that america's base needs. they need these tools and how dare we not provide them? rather than denouncing workers, earlier statement thopes floor were denouncing workers instead of providing hope, training an retraining people in areas that will be -- met their specific strength. we all have certain skill sets or have the potential for those skill sets. there's a passion everyone has for certain types of work. let's not denounce the worker but insert hope into the equation and provide for the infrastructure, the human infrastructure required by this manufacturing base. mr. garamendi: mr. altmire, let's take us to transportation. i was about to respond that while the lighting is obviously good, it's california where the light emitting diode, the l.e.d., is being manufactured by a startup company that's take than technology and with a little bit of assistance is going to be able to manufacture in america. is however, controlling this for the next 20 minutes, we're going to move on to transportation. mr. altmire, why don't you get us going on transportation. mr. altmire: our colleague, mr. tonko, was talking about the erie canal an the foresight and the feat it took to accomplish that. i was thinking as the gentleman was talking -- was tucking -- talking about today an the debate on transportation and infrastructure, we're going to debate tomorrow and probably vote on thursday on an underfunded transportation bill that does not contain the foresight that the gentleman was discussing occurred in new york. i think about the debate that must have occurred in new york when the erie canal was proposed and the cost and the expense and the manpower and just the time commitment that was necessary, the seemingly impossible task. think about the intercontinental railroad in the 1800's and what must the country' the bait, the political debate have been at that time? what must have been the debate in the 1940's and 1950's when president eisenhower finally got off the ground, the interstate highway system, and began connecting our roads in a way that we had never done before, and that's what we're facing right now, we have a system of transportation in this country to move goods from point a to point b. manufacturing, make it in america, what we were talking about if you make it in america, you have to have a way to move goods across the country and we can do that in all kinds of ways. we can do that on our waterways, through shipping, cargo ships, but we also have barges in my neck of the woods in pittsburgh, i have a system of locks and dams in the district i represent, six different locks and dams that average 85 years old, they were built to last 50, two of them have been rated by the army corps of engineers as in imminent threat of failure, that is a crisis of infrastructure and that's happening in similar ways across the country you look at our aviation system if you want to move goods by air, we have an air traffic control system in this country that is still based in technology from the 1950's. and there's nextgen technology that is possible through satellite technology, it is expensive but it's long overdue and it's a commitment we need to make in this country, as they've made in other countries. our competitors don't have the same bottlenecks that we do at their airport because they have more modern air traffic technology. and then you get to our rail system. we all understand the bottlenecks outside of chicago and other places in this country, our lack of modern investment in our rail system. but what we're going to be talking about this week in the house is our roads and bridges. and a highway system, i spoke earlier about the president eisenhower's vision with the interstate highway system and the way that this bill lacks that same vision because it underfuns -- underfunds that investment and it doesn't require or doesn't even incentivize products to be made in america. and there are literally trillions of dollars of need in our transportation infrastructure. certainly we don't have the ability to afford it all. but i can't think of a better way to put american workers back to work, to put american jobs back in play in the manufacturing sector, to have a resurgence, a regeneration of our manufacturing sector than through our transportation infrastructure. and i just -- i'm very disappointed at the lost opportunity that the bill we're debating presents because there are so many ways american workers can win, american manufacturers can win and most importantly america could win. and we're missing that opportunity. but through the discussion that we're having today, maybe we can move this country in a different direction. mr. garamendi: thank you, mr. altmire, for getting us started. and i've got to compliment you on the really neat segue that you used the eerie canal to move to modern transportation. that was very, very nicely done. we do have a real challenge. this week we're going to be taking up a transportation bill that the secretary of transportation, who's now been in office nearly 3 1/2 years, and who was a member of the house of representatives for i think over 20 years and a republican, says that this is the worst transportation bill he has ever seen, ever seen. this transportation bill that we're going to be taking up is underfunded, it totally eliminates the funding stream, the public transportation sector. so we're talking about amtrak, buses, light rail, the metro systems here in washington, new york, san francisco, chicago, atlanta and other places, that are going to be cut out of the funding stream. there's a whole lot of other things that are within this piece of legislation that are nonsense and nonstarters and ultimately detract from the goal that you so well stated, mr. altmire, of building that infrastructure that we need for a modern, thriving, growing economy that's based upon manufacturing. now, if all you're doing is sending buy and sell signals over the internet, i guess you don't need a highway. but if you're sending cars and rail systems and you're sending equipment back and forth across america, you better have all of that transportation infrastructure in place so as we rebuild the american manufacturing sector we will need this in place. now, mr. tonko, you took the train from new york today. mr. tonko: i did. mr. garamendi: what happened? you were talking about -- mr. tonko: there's concern expressed on that train that the transportation bill advanced in this house falls grossly short of what's needed. and you know, when you look at the many sectors of the transportation and -- or rather infrastructure community, it's not just our traditional roads and bridges which require assistance. it's mass transit, it's rail, but it's also telecommunications and it's energy. and it's water. so all of this infrastructure requires an investment and how do we make up ground where we have underinvested in this area? well, the president proposes a $10 billion infrastructure bank bill that will leverage government moneys and private sector moneys that will enable us to provide for the sorts of investments that are required. now, investing in our transportation infrastructure has great merit. many of us can cite those weaknesses out there. my district, in montgomery county, lost 10 people when a bridge collapsed along the new york state thoroughway. there are deficient bridges out around the country that need immediate attention. there are those situations where many believe we're going into a water economy in the next 10, 20 years. if that's so, how are we treating that resource of water? are we being most sufficient? and energy, if we're going to move into a creative, innovative arena for energy supplies and diversify our mix, we need to retrofit the grid system, in order to make it all work. in order to incorporate these ideas. or we can stay beholden to a fossil-based infrastructure for energy supplies. which means that we'll be beholden to nations that are oftentimes unfriendly to the united states and use those energy consumer dollars, american consumer dollars, to pore into their treasury and develop their troops to fight against the american forces. so it's an issue of national security. so there are many dynamics here that need to be addressed in a full picture view. not just dealing in some sort of snapshot of denial, that does not produce an infrastructure bill that is worthy of the needs of americans out there, from coast-to-coast. and, you know, sometimes, representative garamendi, you're looking for that sputnik moment. that's what inspired our win in the global race on space. u.s. versus ussr. we had it all. got knocked on the seat of our pants, stood up, dusted off the backside and said, never again, and we won that global race on space. what is our sputnik moment today? is it bridges collapsing with people dying? is it paying god awful prices for energy supplies and not creating our new energy supplies? is it ignoring a water economy that is to come and will be a strength for this nation and a wisdom to invest in a water resources? all of these moments could be referred to as sputnik moments and we need to take those experiences and that recent history and have it influence our thinking and have us go forward with a sound investment in infrastructure. so, i see great potential here in this budget. i see great opportunity and i see investing our way to opportunity, investing our way to an economic recovery, investing our way to the reigniting of the american dream which is our principle foundation by the democratic caucus in this house. let's reignite that american dream, let's do it through small business, through investment in entrepreneurs and a thriving middle class and infrastructure is prime amongst those areas of investment. mr. garamendi: mr. tonko, you are so very correct about reigniting the american dream and one of the dreams i have is to drive down interstate five in california and not have my car knocked to pieces on the unimproved and the falling apart highways. in america today we have 150 ,000 miles of roads that are in desperate need of repair. 150,000 miles. that's about 50 times back and forth across america. now, if we did that and repaired those highways, what could happen? what could happen if we actually built a real robust transportation network in america? well, back to the jobs issue. back to making it in america. what if our tax dollars were to be used to buy american-made equipment? this piece of legislation, h.r. 613, is now working its way into the transportation bill, the bill that our republican colleagues put out has a very, very weak buy america. this particular bill, h.r. 613, i happen to be the author and kind of proud of the piece of legislation, would require that our tax dollars, which will be used to fund the transportation program, the airports, the nextgen system, the roads and bridges that both mr. tonko and mr. altmire talked about, that those be made in america. that we make it in america. we use our tax dollars to actually make these things in america. so if we're going to build a high speed rail, let's make it in america. and in fact, that's happened. in the stimulus bill, the american recovery act, there was a provision for some $12 billion for high speed rail in various parts of the united states. and an additional sentence was added to that law that said, all of this money must be spent on trains and equipment made in america. guess what happened? foreign companies that build high speed systems decided, oh, $12 billion, we want a piece of that. and so they came to america and they built manufacturing facilities, right -- one in sacramento. our secretary lahood was there a couple of days ago visiting that factory. a german company built a large manufacturing plant in sacramento, california, to make light rail, to make locomotives for amtrak, to make and to be prepared to build the high speed rail systems that are coming. why did they do it? because it was the law of the land that said your taxes -- your tax money, american taxpayer money must be spent on american equipment. what this bill does is to extend that idea as we go forward, so that when we build bridges, the steel is american steel and it's put together by american roaders and by american iron workers and that the cement is american cement and that the computer systems that are being used to develop these things are american-made. we can rebuild the american manufacturing sector when we decide it is the public policy that we use american taxpayer dollars to make it in america once again. there's another piece of legislation that does the same thing for energy products. you've heard of solar systems, the photo votake systems, the -- photo votake systems, all of those energy products are essential elements in the future and once again our taxpayer money is used to support that and my legislation says, if you're going to get american taxpayer money to support your solar system or your wind farm, then you're going to buy american-made solar panels, solar equipment and wind turbines. we can make it in america. so all of these things fit together. a transportation program that is going to give america what it needs to travel and education programs that our workers are prepared and r&d, research and develop, program that allow louis us to innovate for -- that allows us to innovate for tomorrow's economy. mr. tonko, could you wrap it up for us? mr. tonko: sure, absolutely. i think beyond the innovation and the ideas that translate into jobs, research equals jobs, research equaling jobs, there are these benefits of connecting us as a nation. we're a large nation geographically. and the interconnecting that can be done through the investment in infrastructure is important. now, we know beyond the roads and bridges and the rail and the grid system for our energy supplies there's a telecommunications network. and that effort to create a national wireless initiative is very important. it will range from first responders with interoperable communications devices for first responders to a high speed internet system so that we're wiring into remote areas and enabling this country to truly prosper. so tonight we have heard such great comments about what we can do, what we must do about cutting where we can, by addressing inefficiency and waste and fraud and outmoted programs. but maintaining the vigilance about investing where we must. if we do not invest we deny the american dream. if we invest we reignite that american dream, we reignite the dream through the investment in a historic display of what america is at her greatest, when she invests in ideas, she invests in her workers, invests in infrastructure, in small business, entrepreneurs, those dreamers, shakers, movers, builders and invest in a thriving middle class. it can be done and it will be done, if we put our minds to it. mr. garamendi, we have work to do. . mr. garamendi: we have work to do, mr. speaker. we yield back. the speaker pro tempore: the gentleman yields back the balance of his time. under the speaker's announced policy of january 5, 2011, the chair recognizes the gentleman from texas, mr. gohmert, for 30 minutes. mr. gohmert: thank you, mr. speaker. mr. speaker, happy valentine's day for you. thank you for this time. so much going on. and we have had in recent days the testimony of the director of c.b.o., congressional budget office, making projections. we have had the white house dictating what religious beliefs people could observe and practice and which they could not. and then what was said to be a compromise so that individuals, actually institutions, could practice religious beliefs, the insurance companies, which they utilize, will have to provide the coverage that the president dictates, even though it is against the religious beliefs. and then naturally the way things work, insurance companies will spread out the costs and help pay for them any way, which will be once again in breach of their religious beliefs. it's quite interesting and i have been trying to take this in, mr. speaker, as we have seen obamacare basically rammed down the throats of americans with the majority not wanting the bill passed, with the vast majority in congress not having read the bill and speaker pelosi saying we will have to pass it to find out what's in it. well, as people finding out what's in it, they aren't terribly happy. when you realize it as some of us were arguing on the house floor before it passed, that if the president's health care bill passed, it would be such an intrusion into the rights of americans that, as i said here on the floor, it would be about the government running running -- everything. that includes setting aside people's religious beliefs when it came into conflict with the president's health care bill. we knew it would run up tremendous debt. we knew that it would cut medicare by $500 billion, something our friends across the aisle don't like to talk about a whole lot, but before the supercommittee fiasco ever occurred, the democratic majority in the house and the senate passed a bill, majority of the americans want didn't want passed, that would rest control away from americans in so many different areas and would take control and give it to the federal government in a way that was never anticipated in the constitution. so as we have seen, this white house dictate to the catholic church, the catholic hospitals what they would be allowed to practice in the way of their religious beliefs. it has been quite interesting. and we've heard many catholic leaders who have said, you know, gee, we supported president obama when he was senator, running for president and we thought he would do all these wonderful things. from conversations, as president jenchingkins had with president obama, never anticipated that there would be usurpation of religious practices and one to practice religious beliefs. anybody hoe wants contraception in america can get it. that's not an issue. and in fact, it's been interesting to hear people say, people have a right to have contraception provided when i look at the fifth amendment of the constitution, there is a right to bear arms, but i don't remember anybody who was pushing for the government to basically provide whatever people want in the way of health care paid for by somebody else. i don't remember them saying, well, the constitution says the right to bear arms so the federal government must provide everybody guns. there's all kinds of things that are assured under the constitution and under the bill of rights, but it doesn't mean the federal government is supposed to buy them for everybody. in view of the white house's position, president obama's position on what practices, what religious practices he would allow the catholic church to observe, mr. speaker, i figure we really need to make an addition to the constitution since the president has already taken these actions, and i think maybe we need to observe some language that we insert into the shadow of this, so where it says in amendment one to the constitution of the united states, congress shall make no laws respecting an establishment of religion or prohibiting the free exercise delf, i think in order to make the president's actions and the white house actions consistent as those reflected by secretary sebelius, we need to insert there, a line that comes up and says, but only if your -- you are a religious institution and your beliefs agree with the president of the united states, because if your religious beliefs come into conflict with secretary sebelius or the white house, unless the white house is willing to make some insurance company deal with your practice, then you are going to have to set aside your religious beliefs. so, apparently the paragraph has been inserted into the constitution. i'm hopeful that on this issue, the supreme court will strike down obamacare and say there are so many aspects of this bill that are unconstitutional. the mandate to buy a product for the first time in american history is only one of them, but that mandate, of course, is central to the bill itself. but then the way it supersedes the religious institution's beliefs, why don't we say religious institutions is because the president and secretary sebelius and so-called compromise, have not been willing to recognize an individual's beliefs, which i have always understood the constitution has been talking about. they say, it is confined to the religious beliefs and practices of a religious institution, because under this white house's interpretation of the constitution, if you're an individual and you are combap ties, cagget -- if you are catholic, jewish, muslim -- and apparently the f.b.i. have been meeting with the con spiritors in trying to eliminate any language that might offend people that supported terrorist, we don't want to offend those who want to kill us, this white house sees it if you are an individual and not a religious institution, then you have no right under the first amendment to practice your religious beliefs if they are in conflict with president obama or kathleen sebelius wants to do. you have to set them aside. it's only their interpretation of the constitution and of course we know the president was an instructor, not a professor and i'm sure he understands the constitution, but under their beliefs you have to set them aside. if you are not a religious institution, you have no right to demand to put your practices into use. so, apparently, first amendment, according to them, only applies to religious institutions. you know, i never learned that in law school. we were taught that if you read the declaration of independence and how that ended up by the end of the revolution opening the door, of course, for the articles of confederation and four years later for the constitution, that all this worked together. that there was a belief at that time in the rights of a individual, not a religious institution, the rights of an individual. that's why one of the statutes here -- statues here in the capitol, one of the two from pennsylvania is for a reverend named muhlenberg and is he is taking off his ministerial robe because he believed that we were endowed by our creator with certain unalien able rights and there comes a time when people have to stand up for those rights. and so, reverend muhlenberg was preaching and he was talking about chapter three that there is a time for every purpose under heaven. and when he got to verse eight, there is a time for war and a time for peace. he took off his ministerial robe, and there he was in an officer's uniform and in essence said, ladies and gentlemen, now is a time for war and recruited people from his church to join him in the fight for revolution that recruited people from the town and by the end of the war, muhlenberg was a general and his brother, who was also a reverend and a story told that his brother did not agree with him recruiting from the pullpit, but after his church was burned down he became active and became a participant in the revolution and ended up being the first speaker of the house of representatives. those who know where the term separation of church and state came from know it came from not in the constitution. no wherein here, no where before the end of the constitution do you find the words separation of church and state, nor do you find the words wall of separation. those are both contained in a letter that jefferson wrote to the danbury baptists. in the constitution, you don't see any prohibition against them dating the constitution itself with these words, done in convention by the unanimous consent of the states, present this 17th day of september in the year of our lord 1,787. they apparently did not think it offended the constitution to date it as being done in the year 1,787, that being in the year of our lord, 1,787. so, imagine the founders' surprise to learn that the bill of rights that they put together , when it said the government would never prohibit the free exercise of religion would somehow base beliefs on something unwritten in the constitution as giving the president of the united states and his appointed representatives, kathleen sebelius, health and human services, the power to order people to disregard their religious beliefs, set them aside and do what the president ordered. . for people who were willing to go to war over a tax on their breakfast drink, they probably would have been even more riled up if king george had taken this kind of action. so, we're told that everyone in america must pay their fair share. yet we're told by the president he does not mean to divide america. and yet i would hope that by the end of this year, before the election, he would put the law where his mouth is and say, you know what? i've been saying for so long now that everybody should pay their fair share, i am finally going to go along with the republicans who say, we ought to have a flat tax. doesn't matter who you are, warren buffett, or whomever, we're going to have a flat tax. steve forbes said it could be done with a 17% flat tax. even allowing for a mortgage interest deduction, even allowing for charitable deduction. and that way if you've got a flat tax, then warren buffett would not have to sue or his company would not have to sue as it is now to avoid paying the millions or billions in taxes that are alleged to be owed. he wouldn't have to fight the i.r.s. so hard at the same time he's saying he doesn't mind payinging more. it wouldn't be any question. it's a flat tax. just take your income, multiply it by the flat tax, no matter who you are, how much you make, and that will be your tax. because with 53% of americans being the only ones that are paying more in income tax than they get back, we better act in a hurry. because once we cross that line where people who are voting get more from the government than they pay in, we're not coming back absent a miracle of god. so, i am hopeful that the president's going to realize that all the speeches he's been giving about paying fair share really lead you to one unavoidable conclusion, it's time to quit saying some don't have to pay any tax, it's time to say, look, everybody pay their fair share, everybody has a percent of their income. now, of course steve forbes had proposed under his flat tax that in order to shield the poor and of course we could debate on what poor is, but in the united states his proposal was that if you're a family of four, i believe it's $46,000 or less, you wouldn't pay any tax. how could anybody argue with that? a flat tax could do that. in the meantime, we have a proposal from the president for a budget for this year. and it's quite interesting. there's a "wall street journal" article and i'll quote from this, the amazing obama budget, and it's dated today, valentine's day, 2012, says, federal budgets are by definition political documents but even by that standard yesterday's white house proposal for fiscal year 2013 is a brilliant bit of misdirection. with a tax increase on the wealthy and defense spending cuts that will never materialize, the white house says that in president obama's second term revenues will soar, outlays will fall and $1.3 trillion in annual deficits will be cut in half like the lady in the box on the stage. all voters need to do is suspend disbelief for another nine months, ignore this first three years, it says four, but the first three years of his administration, the real news in mr. obama's budget proposal is the story of those years where the tale will tell. it says down further, all of this is added an astondishing $5 trillion in debt -- an astondishing $5 trillion in debt in a -- an astonishing $5 trillion in debt in a single presidential term. it keeps rising to 77.4% next year. economists believe that when debt to g.d.p. reaches 90% or so, the economic damage begins to rise and this doesn't include the debt that future taxpayers owe, current and future retirees through the i.o.u.'s and social security trust fund. it goes on to say, mr. obama's chief economic advisor reported that the president wants a new global minimum tax. talking about a new tax. it's a global minimum tax. wouldn't it be easier just to say, you know what? we're just going to have a flat tax, everybody needs to pay their fair share. i don't have this in a blowup, but the debt boom, according to the office of management and budget of this white house, shows that for 2012 and 2013 we go from a federal debt held by the public as a share of g.d.p., around 35%, just spiking up as "wall street journal" points out to between 75% and 80%. pretty dramatic. there's an article from jeffrey anderson today said, according to the white house's own figures, the actual or projected deficit tallies for the four years in which obama has submitted budgets are as follows. $1.293 trillion in 2010. $1.3 trillion in 2011. $1.327 trillion in 2012. and $900 billion in 2013. that's because that's the year that hasn't happened yet. further down it says, to help put that colossal sum of money into perspective, if you take our deficit spending under obama and divide it evenly among the roughly 300 million american citizens, that works out to just over $17,000 per person or about $70,000 for a family of four. that's just the debt that has owe crewed -- that has accrued with president obama at the helm. i think it's also important to note that under the bill that i was against but got passed away, the -- passed nay, the debt ceiling extension last summer, to give the president all the debt ceiling authority he would want that should carry him clear through the election, it's already appearing that it wasn't near enough. and of course we have the supercommittee that was going to protect us and take care of us, make the cuts that were necessary and now that those haven't happened, we're gutting our own defense. gutting our own defense. anybody that studies history knows you never put your national security on the table for negotiations. and we've done that. now, this chart is pretty telling and it's based on the testimony of c.b.o. director before the senate budget committee. makes it pretty basic. director of c.b.o. and the projections for this year has projected the u.s. tax revenue will be $2,523,000,000,000. the head of c.b.o. in his february 2, 2012, testimony projects the federal budget this year will be $3,601 ,000,000,000 approximately. that is a deficit for one year of $1,079,000,000,000. our national debt currently appears to be $15 trillion. according to the director of c.b.o., our budget cuts from 2010 when coupled with the ones projected for 2012 -- 2011 actually amounted to around $41 billion. so, that's kind of hard for some of us to understand, when you're talking about numbers with so many zeros. so it may be far more effective , my staff has done a gleat job of -- great job of putting this together for me, by removing eight zeros from all of those trillion-dollar numbers, it makes it more easily decertainble if you say, all right, let's look at it as a family budget. a family budget. they're bringing in $25,230 for one year but they're going to spend $36,010 in that same year. that's going to increase their debt that they're going to obey $10,790 -- owe by $10,790, it should be $10,7802 looks like -- $10,780 looks like. so that's on the new credit card. when we already have a credit card balance of $153,480. that should put it in perspective. as a country it's basically like being a family making $ 25,000 spending $36,000, not once but four years in a row under this president. and we already had $153,000 in debt and we're only bringing in $25,000. and this is like credit card debt. it's not secured by a home. except for america. we have put our future, america's feature, our children, grand -- future, our children, grandchildren's future, all in hoc -- hawk for this much and we can proudly say those that don't understand, i get sarcastic time to time, we can proudly say that since 2010-2011, if you take away the eight zeros we have cut $410 of our spending. we got a lot of work to do. we owe the american public better than we've done. and it's time to take a stand. we've been told of course that whether you're republican or democrat that when you're elected as a freshman your odds of being defeated in the first election, you stand for as an incumbent, are 10% to 20%. that means there were some fantastic freshman republicans that were elected in this last election. 10% to 20% of them may get defeated in the next election and what will they have to show? unless we stand up and say, enough is enough, mr. president, senator reid, we're standing on our principles so that we can lead the next generation -- leave the next generation as good or better country as we inherited but we're going to have so tart moving and we're going to have to start standing on principle very quickly. easy to do. some say, oh, it will be so hard making all these cuts. no it won't. we can go back to the 2008 budget that the most liberal congress in history had passed, didn't hear a lot of complaints about not enough spending that year, go to that budget. that knocked out $1 trillion right there. enough of the games. it's time to stand up for america, stand up for a responsible budget, cut the wasteful spending, stop the crony capitalism for groups like solyndra and let's get this economy going back again. strong, stronger, strongest ever. with that, mr. speaker, i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. pursuant to clause 12-a of rule 1, the house stands in recess subject to the call of the chair. >> the legislation includes provisions that will expand oil and gas drilling. also this week, a tentative agreement reached on extending payroll tax cuts and unemployment insurance. the current funding expires february 29. in a few moments, treasury secretary tim geithner testifies on capitol hill about the president's new budget proposal. in less than two and a half hours, more about the budget from mitch mcconnell. then our coverage of the chinese vice president's visit to washington that included meetings with president obama and secretary of state clinton. >> speeches from last weekend's conservative political action conference. >> we must outsmart the stupid people that are trying to ruin america. >> it is about one country united under god. we're not read americans. we're not to americans. we are up red, white, and blue, and president obama, we are through with you. >> they can get along and cut our throats as long as we are foolish enough to raise taxes and term money in the center of the table, and then they can get along like the scene in the movie after the bank robbery, and they are all happy. >> you can share of videos at c- span.org/videolibrary. tim geithner told the senate finance committee tuesday that the president's proposed budget will, over time, reduce deficits. republican members suggested the plan's proposed tax hikes would hurt small businesses. this is a little less than two and a half hours. >> the committee will come to order. thomas jefferson said the value of an idea lives in the idea of losing of it. mr. de the budget proposal was issued -- yester day the budget proposal was issued for the next 10 years. we need to review these ideas to create economic growth. the top issue facing our country is job creation. we have made progress in our job creation efforts. the jobs picture is improving. the economy is showing signs of getting better. we have added 3.7 million jobs in the last few months. there are still far too many people out of work. 12.8 million americans are unemployed. they doomed more to -- the president's budget contains critical policies to do just that. starting with a payroll tax cut. extending this cut to the end of the year will save families an average of $1,000. these families will spend this money at local businesses. the budget renews unemployment benefits for workers who have lost their jobs through no fault of their own. these workers are sure to spend these benefits which will help support create more jobs. according to the nonpartisan score keeper, everyone dollars in unemployment benefits can create $2 in economic growth. failure to extend the tax cut and unemployment insurance would cost up to 500,000 jobs. we cannot let that happen to working families. continuing our smart trade policy to open new markets is also key to our competitiveness and job esther at home. last year we pass three trade agreements they will help generate $12 billion in new exports and pretense of thousands of new jobs at home. we also extended a critical worker assistance program to make sure workers have the tools they need to compete and take advantage of new opportunities. this year i am working to grant permanent trade relations with russia. once we do, u.s. exports drescher could double in the next five years. this will create more american jobs, particularly in the services, agriculture, manufacturing, and height-tech sectors. these include deductions for college tuition and for state and local sales taxes. they include a tax credit for research and development to encourage innovation. we also need to end the cycle of extension and uncertainty for families and businesses. we should work together on to a comprehensive tax reform which makes the tax code more predictable. this budget takes a step in this direction by making the 2001 and 2003 tax cuts for middle-class americans permanent, providing permanent state tax relief and solving the problem of the alternative minimum tax. it cannot stop there. uncertainty is not the only problem with the system. regulations are now as the as a stack as of a dozen bibles. i look forward to working with colleagues and the administration to create a better tax system that meets at 21st century needs. the budget makes much needed investment in america plus infrastructure, which is sorely needed at a time when unemployment in the construction industry is 15%. the highway bill has pass out of several committees. it will provide $110 billion over two years to provide interstate commerce and jobs. it is time to enact this. the president's budget takes steps to bring the deficit and the federal debt held by the public under control. we have reduced federal deficits significantly. earlier this year we enacted the budget control act of 2011 which reduced spending by $900 billion. the health reform law provided the biggest deficit reduction in more than a decade. fellow budget deficits and debt are still too large, and we must adopt policies that will stabilize debt as a percentage of gdp. this budget means that task. i look forward to continuing our work on deficit reduction and job creation in the coming year. there's another reason we must focus on this, along with job creation. a perfect fiscal storm is waiting at the end of this year. first the 2001, 2003, and 2010 tax cuts expire. two days later a sequester of federal programs takes place. the debt limit will need to be raised at about the same time. this is what we will face if we do nothing to reduce deficits and control federal debt in the coming year. any reduction we develop must be balanced. it must be fair. everyone must contribute. no one should have to make undue sacrifices. one area of the budget that falls short under this standard, the cuts to rural assistance programs which i believe our t.d.. we must achieve meaningful production and cannot do this at the expense of job creation. deep cuts agriculture programs will pull the rug out from our hard-working producers and unjustly tarred it rolls in states like montana. we need to enact deficit reduction in a smart way. i look forward to working with my colleagues and the administration to do so. let's work together to enact significant current deductions -- significant reductions and. i will turn to my good friend, senator hatch. >> thank you, senator baucus. thank you for holding today's hearing and we welcome you, secretary geithner mayor, to the committee. let's know the total public debt outstanding is over $50.30 trillion. larger than the size of our gross domestic product. the ratio of of 100% is clearly unsustainable and puts us in the ranks of the many european countries currently in a separate debt crisis and unable to borrow is a stable interest rate. the nation deserves a budget that responsibly addresses this crisis. last year the president delivered a budget that was it rejected on the senate floor. it did not receive a single yes vote. even from senate democrats. i will be interested to see if my colleagues are going to vote for this one. mr. de the president laid out his most recent plan. it fails to address the fiscal crisis and it will probably never be brought to a vote. we have not seen errorless it -- a resolution from that committee in years despite it being legally required. last year the budget got a vote and there's only room for improvement on that resolve. the majority leader seems to have no inclination to debate a budget on the senate floor having stated that the budget control act means we do not have to debate fiscal year 2013 spending totals since they have already been determined. if so, we do not need to discuss a large part of what the president unveiled yesterday, which should make for a very quick hearing today. we have to do our due diligence and reviewing the budget yesterday, it is clear that his plan would only make our fiscal problems worse and harm the economy by imposing $1.90 trillion in tax hikes. earlier this month the president suggested that these tax hikes were divinely inspired. that was an ancient take on the bible, as far as i'm concerned. who knew that cosmic justice would be rendered by the department of education and hud. he knew that the separation of the we from the chaff would be performed by the obama administration. church going citizens should cut to the president's chase and should send their money to the treasury. the fact is this budget is politically not divinely inspired. this budget is a plan for a permanently larger european- style government. it is not set our country down a sustainable path. it does nothing to change the unwavering devotion to tax and spend policies and failed stimulus games that will continue to generate historic deficits. it does nothing to wind down the mortgage giants fannie and freddie to restore private flows of capital or remove the government's effective takeover of our housing markets. the president presents his budget with an accelerated spending as one of fairness and compassion. is it fair to workers to jeopardize growth to higher taxes? is it fair to taxpayers to ignore the mortgage giants which continue to drain their wallets? is it fair to the disabled to pretend the looming bankruptcy of the disability trust fund will not happen in 2016? it is going to if we do not do something about it. is it fair to look at social security and turn the other way in the interest of avoiding hard choices that might make a reelection campaign uncomfortable? i look forward to your testimony today on the plan and what it might do to the economy. i have to say that i wish you would be careful in your public economic pronouncements. it is disturbing and unwarranted when you claim the republicans resist' to stimulus proposals means that republicans did not want to do anything to help the economy or that republicans 'resistance increases the risk of recession. these are simply not true. they're not productive. putting aside these discouraging statements, we could be given an explanation of why the administration appears to believe that the economic recovery is ok to be hit with more taxes despite clear warnings of significant negative attacks on both. at the same time, it is not vibrant enough to stop the runaway spending. it seems for president obama, the recipe calls for more taxes. the result is this budget which ignores the fiscal challenges of spending problems that are only getting worse no matter what budget baseline need to spirited the cbo projects and that federal revenue will rise above the average as the economy recovers even with a continuation of current tax rates. the spending as a share of gdp will stay above historic norms, pushing our economy further and further down the path of several major european companies. we also note that our fiscal outlook is sensitive to fiscal developments including what might happen to interest rates or others. interest allies of the next 10 years will increase by over $1 trillion. that is for just a one some increase. it will spike up precipitously with the unwillingness to chart a sustainable course. we could easily face painful adjustment like those currently being experienced in europe. to according to the cbo, if it turns out to be one percentage point higher each year, the deficit would fall over the next 10 years. the government would benefit from higher inflation and it would be up to the fed to avoid temptation to inflate for budgetary game. i hope they reach an appetite for missed the monetary and fiscal policy and that we did not have to worry about the temptation. there is great recipe economy. the budget does nothing to diminish these risks. given the risks and the temptation to inflate away our debts, warren buffett way in with investors do steer clear of investments like u.s. treasury securities. it may be imprinted on our currency. this has been all too human. they say is to come with a warning label. secretary geithner is inviting investors to shy away from investments such as treasury security. it to be interesting to note if you agree. my hope is that the me mentions have that for them not to become investors. i am worried it will materialize with the low-cost that the u.s. temporarily in joyce. we need to resist the siren song of financing. the administration remains called in by the siren song and it is a reason to pile up more debt. i look forward to your testimony on the budget which i received just today after the deadline you're supposed to honor. i want to thank you for holding the hearing. i am really concerned. i do not see any real resolution to the problems. >> thank you. >> thank you. i am pleased to welcome timothy geithner. i urge you to summarize and take your time. >> chairman baucus, ranking member hatch, and members of the committee, thank you for giving me the opportunity to appear before you today to discuss the president's fiscal year 2013 budget. we have tough work ahead of us. over the last 2.5 years, despite the financial headwinds from the crisis and the cutbacks by government and the crisis in europe, the increase in oil prices we saw last spring and the tragedy in japan, the economy has grown an average rate of 2.5%. employers have added 3.7 million jobs. private investments it's up more than 30%. export and manufacturing is expanding. the financial sector is in a much shorter shape helping meeting the growing needs for capital and credit. these improvements are the underlying resilience of our economy. it is the importance of the swift and forceful action six to pull the economy out of the worst economic crisis since the great depression. we still face cigna began economic challenges, particularly with households across the family. americans are living with the acute damage. millions of americans are living in poverty. they're shuttling to save for retirement are pay for college. we face unsustainable fiscal deficits. the budget calls for substantial additional support for economic growth and job creation alongside longer-term reforms to improve economic opportunity and to restore fiscal responsibility. congress must extend the payroll tax cut and unemployment insurance by the end of this month. if they fail to act, 160 million americans will immediately pay more. 5 million people will lose or be denied unemployment insurance. we will continue to encourage congress to preserve the jobs and help more americans to finance their mortgages. beyond these immediate steps, it outlined a longer-term strategy to strengthen economic growth and improve economic opportunity while reducing our physical deficits. the conventional wisdom is that this debate does not matter. congress is too divided. this debate is very important. in matters because this is a fundamental debate about how to increase growth and opportunity and how to strengthen security and reform our tax system. it is important because of the array of choices we face. we govern with limited resources. we have to make choices about how to use them more widely. any strategy to address these challenges have to answer a few key questions. how much do we have to cut backs which programs should be cut? how should we share the burdens of deficit reduction stacks it reduces the deficit by $4 trillion. the president's plan would lower the deficit from just under nine% of gdp to around three% in 2018. the deficit will stabilize the overall debt to gdp in the second half of the decade, but king is back on the path of fiscal sustainability -- putting us back on the path of fiscal sustainability. it comes from the rise in medicare, medicaid and social security costs as more americans retire. under the present budget, it is projected to fall to its lowest level as a share of the economy since dried eisenhower was president. the plan was to the get only slowed the rate of growth in spending in medicaid and medicare. as we reduce spending, we also have to protect investments that are critical to expanding economic growth. did that is what they propose a series of targeted investments in education, innovation and manufacturing. in order to achieve this balance, there are some for some investments response to raise the tax reform. we proposed tax reforms to raise revenues because to do not believe it is possible to meet our national security need to preserve the basic level of health care and retirement security or to compete effectively in the global economy without some increase in revenue. the plan includes $2.50 for every dollar of spending cuts. these increases are focused on the top to% -- 2% of taxpayers. although we illustrate specific tax changes that could be added onto the tax system, we think the best approach to get there is other comprehensive tax reform. we have outlined a broad set of principles to make the system more sensible and fair and do a better job of encouraging. 1% ofncreases in revenue, gdp would not have the adverse impact. they should be judged against the alternatives. there's some suggesting we should cut deeper and faster. that approach would reverse it. it to push more americans into poverty. some have suggested we restore fiscal balance. to do so would entail deep cuts in benefits for retirees. it would hurt us the economic ingenuity and cut defense spending that would damage our national security interests. we will not support those alternative strategies. the plan include some very tough reforms with a balanced mix of spending cuts and tax reforms. it preserves some room for us to make investments for americans and help me grow stronger in the future. it attacks the basic retirement security. it provide substantial and immediate help for the average american. this plan will not solve all the nations challenges. it will put us in a much stronger position. thank you. i will be happy to answer your questions. >> thank you. i would like to focus a little bit on infrastructure. i believe this country is behind in building roads and streets and highways and bridges. it all cost money. if you could address that trade- off and what is spending in what is investment. >> if you look at the state of highways and airports, by any measure you would require investments over long. of time -- lot about the time to get them up to shape. it acts like a tax on business. it makes business more expensive. there is good fiscal policy to recognize that imperative. it is a relatively small portion of the savings we get from winding down the costs of the wars in iraq and afghanistan. we laid down the program for doing that. there are some people who think we can afford to do more than that. it is tough because you have to find the resources to do it. theou're just adding to deficit by allocating money to spend on infrastructure. >> in this case as well as all of the additional investments, in basic science and research, we are meeting the basic fiscal responsibility. we are showing how not to just pay for them but to pay for them in the context of a plan that brings our deficit down over sustained time. we need that basic responsibility. these investments will give high economic returns. i think most economists would agree. they do not just the people back to work very quickly and help bring unemployment down. they hire long-term returns as far as efficiency. it is like a tax on business. >> is the administration going to send up a fairly specific set of proposals tax will it send to focus on this? >> we laid out some general principles. we think that it will take some time. in the past it has taken years. we want to lay the foundation. we are going to lay out a framework of elements that we think should guide it. they do a better job of building things in the united states. >> and a little bit more to come. it cannot be a comprehensive language. we will lay out elements. it is a proposal on individuals. it is something we have to have for a country. we do a better job of growth in a way that is more simple. >> the next couple of weeks we will do a frame warm -- framework. we will not go beyond what we are individually. on the individual side we have been on this. as you know, there is a lot of opposition. it was suggested it should fall on the most fortunate to% of americans to increase this on those individuals. >> if you're not going to as was the case in 1986? >> we are going to try. on the corporate side we will be more specific. where one to take that approach. we actually think -- we are going to take that approach. we actually think there is a lot of common ground and the elements. we heard from the hill on the corporate side. you want to maximize the chance. we are going to start in a different place than when the house started. we will start a little tougher. there will be a fair amount of common elements. they're both guided by the objectives. what will make it more likely that we will see things more built? >> thank you. i would ask if the minister consent. they stated that his proposal would reduce revenues to less than 18.2% of gdp. the 2013 budget has gone up to 21% of gdp. that average 17.9 cent over the last 40 years. there projected to rise to 18% by 2017. even if we extend the bipartisan tax relief, revenues are already headed higher than their historical average according to cbo. they will push revenues even higher as a share of gdp. i have three questions. considering that taxes are already heading higher than where they have been historically, should we really be raising them even more as the president proposes in his budget? has the president abandoned his position the revenue should be less than 18.2% of g.d.p.? is he committed to keeping the size of government higher given that spending has averaged over 24% in during the term, led the share of which side to have not seen since 1946 and is projected 2%?remain above 20 to serv >> let me start by noting the comparison. i think people what people refer to as the right and budget, revenues are projected to average 19% over the budget window. it is not clear how they get there. it deserves the recognition that revenues need to be higher. that is because of the costs produced by the fact that more americans are retiring, you are right. we believe the only way to get a more sustainable position is to raise revenues through tax reform. we have proposed raising about one% of gdp in additional revenues. iwe do not do that because we want to do it. we sedo it because receive no other way. and it is about one seventh of gdp. if you do not do that and you cannot are the money, -- and if you cannot borrow the money, we have looked very hard. we do not see the basics. that is why the bipartisan senate group and others looked at these basic challenges think we do not see how you get fiscal responsibility without the balance plan. you can answer some questions which is what is the best way for that to happen. we all want to make sure it is fair and does not affect economic growth. we believe the modest increases that would come from these reforms would only fall on the of americans. this is the judgment we are making. we think the economics are quite good. it is a more responsible approach. >> ordinary income dividends will face a tough tax rate of 39.6%. did the capital interest-rate would rise. if congress does not act, the tax rate would rise to 68.6%. the dividend rate would be the highest among major a economies. the capital exchange rate would be the second highest. with the scheduled increases, and with the congressional budget office telling us that it will prove to be a significant drag on growth, could you explain what they believe the tax rates are good for the economy and our international competitiveness? can you explain how the present budget proposal is consistent with his objective of not returning the economy to one overleap financed debt -- overly thfinance debt? >> let me try to respond. the immediate choice we face is can we restore fiscal responsibility without raising revenue stacks the statistics are good arguments for tax reform. he had proposed more. we think the better way to get there is fear a point that would lower rates and broaden the base. we think he can do that in a way that would be balanced well. they have a good argument for doing this. the basic divide was not relayed this. can you restore fiscal responsibility and still meet our commitments to retirees and seniors tax bill reaser some capacity -- they will meet some capacity. we do not think he can do that. this is why we are giving this position reluctantly. it can be borne by the most fortunate 2% of americans. you can say you will spread it. the average american will bear most of it. it will come from spending this. we are in -- we face constraints that we have not faced in generations. i do not see how you get there if you are unable to counter and embrace modest increases in revenues for tax reform. and not think it is possible. >> thank you very much. thank you for being here. i'm trying to get my mind around the various things that or areticipates happening ar proposing will happen over the next year or two. the president's budget calls for a portion of the tax cut being allowed to expire. that is the expiration of high income tax cuts. that raises $1.433 trillion over the 10-year timeframe. in addition, you are proposing about one term of the deficit reduction. it is for every 2.5 of spending cuts. the spending cuts you are proposing, how much of that is contemplated and the sequester that has already been enacted? >> congress put in place very tight caps on discretionary spending. it produce savings roughly of $1 trillion. it it also put in place a sequester the has automatic cuts. it was a device to encourage congress. if congress does not act to put it in place, then that sequestered will force cuts in defense in the rest of the government. it is very deep cuts in damaging cuts. there's a reason why we should face that. it is designed to encourage congress to replace those automatic cuts with a more carefully designed downpayment on deficit reduction. >> the budget has put forward a way to an alternative to allowing the sequestering to take place. >> that is right. we propose a $4 trillion plan 1 trillion dollars is already in place -- we proposed a $4 trillion plan. when others trillion is already in place. -- $1 trillion is already in place. >> see say we will need to raise revenue as part of tax reform. tax reform is not going to happen by the end of this year. it will happen in the next congress or a future congress. you are saying that even after congress does what you're suggesting on the revenue side, it should then contemplate a tax reform package that will raise revenue of about one% of gdp. glaxo had to find a way to generate it in a way that is there. we are letting the bush tax cuts go back to where they were. they are limiting the value of the top two% of americans. it would generate the base. if he made the other ones, you could generate a reasonable ravana direction plan and meet yourself with a better and more efficient tax system. he can do it either of those two ways. we have a bit of a problem. this is what you have to do. >> these are the free markets that we all seem to have bought into. it is the notion that at the end of this year we ought to have the payroll tax go back to where it used to be. it seems to me that if we are concerns about reforming the tax code it would make a lot of sense to find a way to continue in the future with a lower payroll tax as an incentive for more people to be hired in jobs. i know we got ourselves into this by saying we would fund social security there a payroll tax. if we had another way to fund a social security that would allow us to cut it permanently, they said it is not a permanent cut. >> he could find a different mix of payroll taxes. it is possible. >> i want you to respond in writing. i wanted to be longer or what ever it takes for you to answer. it comes from the proposal for a responsibility fee. did the president has been asking this for three straight years. they are proposing a fee to help them recoup the costs. when the president first proposed this in 2010 for fiscal year 2011, i asked them to analyze who would bear the brunt of this. cbo responded "the costs of the fee would be born to varying degrees by employees and investors. he is proposing the same thing this year. ibid like to include in the record the questions i asked cbo and their responses. what i like to have you do is read that and indicate if you agree or disagree with the cbo analysis. if you disagree with any of the responses, i ask that you provide a detailed explanation of why you disagree. that was for him. >> thank you. i would like to ask you my first question about the economic impact. when the tax decreases were the sunset, the cbo estimated the economic effect of this estimate that the unemployment rate could be as much as two. higher and that the growth of gdp would be 3% slower. mr. bernanke came before the committee last week. i asked him about this. ando action is taken january 1, 2013, there will be a very sharp change in the fiscal stance of the federal government which by its self would indeed slow the recovery. the cbo predicts a 1 and 1/10 growth. this is based entirely on their current lot of assumptions. they are assuming that contraction will take place. do you agreed with chairman bernanke's assessment? there is the failure to increase this and would have serious negative impact on our economy in terms of gdp growth and unemployment. >> absolutely. what the president is proposing is to extend the bulk of the tax cuts that go to 98% of tax payers. and to let that expire and limit the value and exclusions. the impact of that mix of tax reforms would be very modest on growth. you are right to point out if you let all of it expire and add-on said that the sequester, that would be a very damaging growth. >> you are right to say that a modified version of the sun set would may be help to some extent. he had to take into consideration this is my rebuttal. where most of those tax increases would take an impact, it creates 70%. my last question, at the present budget includes a number of tax increases which are being labeled as tax reforms. however, the president's budget does not include a comprehensive tax reform proposal. it seems the tax increases included in the budget are being used to pay for more of the president's spending priorities. can you explain how it can also be used to offset comprehensive tax reform. >> i am happy to do that. the tax proposals letter in the budget would affect the top two% of american tax payers in effect only a very small portion as small businesses. >> 3%. >> of those small businesses that are affected, most of them earn more than $1 million in basic income. we are not talking about tax changes that we think would have a material affect on what most people would judge a small businesses. under question about the spending plans, let me put this in a broader complex. they propose to save substantial amounts of money across the government. this'll be quite substantial. it proposes hundreds of billions of dollars of cuts in medicare and medicaid. it proposes to shrink what people call the discretionary part of the government. it is not about national security. to cut that to the smallest one since president eisenhower. because you want to get this down, we are proposing some tax reforms. if you do not embrace those tax reforms, then you have to find another $1.50 trillion in cuts. it's you are not going to be able to find them without going right to medicare, medicaid, our national security. we do not do that are proposed with anything but a basic view of the nationature of the constraints we face. we do not do it because we think revenue increases are terrific. we do not see how you get the economy to work on this. >> thank you. welcome. i think one of the critical issues facing this economy is the lack of confidence about the future and the lack of direction and certainty about various policies that are emanating from government. they're not emanating from congress and the administration. we have not created an environment of confidence. by all accounts, this is the worst post recession recovery in the history of the country. it is the longest term of unemployment. we have already increased the national budget by 44.5%. the it is going on for the fourth consecutive year. we have seen this on the spending side. we still have a weak recovery. if you look to the future, there is to the economic growth projection. it is not just the concerns of this today that is eroding the confidence of future businesses. they had this poor recovery. it is also about the future. i do not see any certainty in the president's budget. there is no certainty on the tax reform side. there is no sustainable debt reduction plan. that also affects the confidence of the private sector. small businesses have indicated the size of the national debt has the confidence of their own business. we know what this current tax code is doing to affect the ability to create jobs. we are listed in this budget that you suggested creates features that the private sector be able to take the risk that the american people deserve. there is a study that was issued by three academics last fall. he talked about this point. there is the climate of economic uncertainty. it is at historically high levels. if we have the 2006 levels, it would yield 2.5 million jobs over 18 months. there are new policy prescriptions here. if anything is uncertain about the budget, it is that there will be more uncertainty. >> thank you. you would not be surprised if i disagree -- surprised that they disagree with their diagnosis. let me explain a few things in support of the contrary argument. i know people say that what is hurting the american economy now is a set of policies from washington that is hurting business. that is the centerpiece of concerns we hear about the challenges facing the american economy. and yet profits are above the levels they were before the crisis. the profitability of industries like energy and health care are very high. levels of productivity growth have been improving through the recovery. if you look at any measure of basic help of the business sector outside of construction, the basic balance sheets, the economy is still struggling badly from all of the aftereffects. we can see it in high levels of poverty. the taxy's not like said. we have laid out tough reform plans. if their land out tomorrow, there would be substantially more confidence it would be embraced and confident. if we sit here and do nothing about the fiscal problems, even though it is to% today, over time that will hurt us. it it will start things we have to do. it'll hurt confidence in the country. that is the party will have to deal with. we cannot ignore its. that is why we want to start to the debate now. i do not believe there is a credible argument to make that uncertainty about our fiscal deficits it's having a material adverse affect on this. they're suffering from a lot of things. they're not suffering from that spirit if it worked comment that is the case. he would see very different numbers. profitability we would measure. ecb prices. it to be better for the country for congress to provide some certainty. we should begin that sooner and not later. >> thank you for your service to our country. does anyone believe that the budget would be different if we were not facing a decade of tax cuts largely unpaid for comment two wars raging abroad, totally and paid for. a new entitlement program. the reality of sensitive a free market in which the excess became the collective. with the budget be different if that had not been the practice? >> of course. clinton leftdent office, at a projected 10 years of trillions of dollars of surpluses. when president bush left office, a cbo projected trillions and trillions of dollars of deficits. there the results of two factors. the first were the ones he referred to, a decision by the president and congress not to pay for two wars. the deficits are also the product of two recessions. it is a terribly severe recession that began in 2007. and modest -- a modest portion are the results of the fact that the proposals we made. you are right that will be in a much stronger position today are faced anything like this if we had not made those choices as a country under the previous administration. we took a remarkably strong fiscal position. we jeopardize future generations of americans by eroding those huge gains on fiscal discipline. >> one of the concerns i have is listening to the state of the union speech. i see some r&d efforts to in source. out like to bring your attention to something that i and members of this committee have a. we believe it can be helpful. a critical element of our economy is the downturn of the real-estate market that our country faces. studies have shown that more than $1 trillion of commercial real-estate loans will be maturing in the next few years. there is the equity to replace debt. it could be in serious trouble. none could 2007, they issued a ruling -- in 2007, and they issued a ruling. this is why he introduced a jobs at. it is a approach that takes some modest steps to inform that we can no longer afford them. i do not think in the global economy this makes sense. can we work with you to ensure that our tax laws are not imposing on necessary to investors. does treasury have any thoughts on whether it may cause them to go to similar investment stack? >> i'll be happy to respond with more detail. we had two objectives. we want to make sure that foreign investors are really on an even playing field and are treated equally. we do not want the system to favor foreign investors. we have to be careful. it is going to cost money, we have to figure out how to pay for it. we will look at any proposal. >> thank you. >> thank you. >> thank you. because time is short, let me do what many call a lightning round. at least some of these can be answered yes or no. the first is fairness that the budget talks about. do you think it is fair that the top one sermon of earners pay just about 40% of the income taxes? >> i do. i do not see how the alternatives are more fair. >> this was the wall street journal figure. the top three% pay as much as the other 97 southern of taxpayers in income tax. if they are not going to pay, you have to find the resources elsewhere in as the middle-class families to pay more or cutting the benefits. >> that brings me to the third one. is it fair that the bottom 50% pay no federal income tax? >> i do not think it is a fair description. but those millions of americans pay payroll taxes. >> they are supposed to pay for social security, are they not? there is a benefit resulting in the payment. the president proposes that we reduce the amount of payroll tax. is that not correct? >> only temporarily. it is made up by this. >> 50% of the people are not contributing to the general revenues that are making up for lost payroll taxes. >> another way to think about this is some people say we are a large insurance company. the biggest drivers of spending are medicare, social security, medicaid. >> that is true. i'm talking about fairness. let's see if you will get off on medicare and medicaid. maybe could help persuade someone that interesting that would be a good way to help us with their budget deficit. >> we have made unsustainable commitment. we're going to have to slow the rate of growth. >> one of the proposals was that there be somewhat of a premium increase being tested for medic medicare part b. >> you have changes that would increase the share of those benefits paid for by the most fortunate americans. >> you talked about lowering rates. the president had a good state. everyone plays by the same set of rules. how does the proposal meet this test when it eliminates the manufacturing deduction for certain taxpayers and then double it for certain other taxpayers and not for other manufacturing? >> not everybody will be playing by the same set of rules. >> we are going to propose this in late it out. while preserving a very limited number that are targeted against one core objective, to make sure that we are improving incentives for trading that in the united states. >> we're talking up picking winners and users. you create tax incentives for building technology vehicles. and is not for other kinds of vehicles. >> it is a difficult position. i know of a chance to debate them. we proposing to observe a very limited number of core incentives to invest in the united states. we feel there is a compelling economic case. we will eliminate dozens of tax preferences. >> i does have five seconds left. the treasury department is where i get the citation for the proposition that people that would be hit, 80% our business owners. is that a correct statement? >> i will have to go back and look. it is roughly 2% a taxpaying individuals and a slightly higher portion of those who are you going to ask to share the burden? >> they will apply to a small one. is it a sure that the majority of businesses are created by small businesses ta? >> we are proposing a tiny fraction and looking at the record of job creation by small businesses. they face similar ones. the record was very good. >> you talked about productivity gains and savings. the most recent data shows the gains are declining. we actually went- negative. >> you are right about the last few months. if you look at the broad pattern since the recovery began, all the statements are true. this has really been pretty strong. >> the other thing is the assumption he made a couple of times. if we were to not get the revenue from not getting the revenue rights. that we had no other option but to cut those programs that benefit the safety net programs. i want to challenging for a minute. but steady rate bay outlined duplications -- last time they outlined duplications on the second birds. according to my calculations, we could save by hundred billion dollars a year. year, eliminating duplication. there is no proposal in this budget to do that. i am complementary of what the director designate has done, but there is also $100 billion in fraud in medicare and medicaid. that is $200 billion a year. it is not right to assume we could not run the federal government more efficiently and the only option is to raise revenues. the size of the government is twice the size it was 10 years ago. the question that i would have for you, does the administration not truly think that in all areas operating the federal government that would become much more efficient, especially in a fraud and duplication, that we could not achieve savings that would go a long way toward eliminating or lessening our budget deficit and eliminating the amount of money we need to borrow? >> i agree with you, there is substantial and exploited room across the government to use taxpayer dollars more wisely. we are happy and would like nothing better than to find better ways to achieve those savings. the reason i said i did -- what i did is because the choices we saw made and what we call the ryan budget, the budget republicans embraced, because that showed you what you have to do if you're not want to raise revenues and taxes. what that budget showed is if you're going to reduce deficit levels without raising revenue is then you have to do the very deep cuts in benefits in those programs. you're right, there may be more savings, the point i made is correct, if you are not on to find this 1% in gdp in revenues, you will need to find it in cuts across national security, medicaid benefits, and infrastructure education type things, and that will force us to contemplate cuts that go beyond what makes sense for the country. >> you talk $150 billion a year. i am telling you if you and i sat down we could find $150 billion a year that do not produce an economic multiplier greater than one, that we could find efficiencies that would not require us to do that. i am on record to say we need to have tax reform, so my next and final question to you, is, most people agree if we were to lower the rates and broaden the base and eliminate the $30 billion a year that the very wealthy in this country get through tax credits and breaks, that we could in fact markedly improve our economy. why -- you say you want to build the base. why don't you say here is what we did. since thmpson-t' -- bowles did that. let's make it more effective. >> may be the most commonly -- honest way to say it is we took a run at trying to negotiate a framework like that. this was at substantial political costs, and we found no basis for agreement on even the broad framework use it was in braced by this and that -- by the senate, and without that indication by republican leadership, we were trying to be realistic. we're trying to help make the case by reforms are important, but realistically given the experience we had over the last year we do not see the basis yet. maybe it will come. without it, we're not want to get the changes in health care spending that we know is necessary, because we do not see how we are going to get progress without the balance we need on the revenue side. >> me start off, senator coburn -- let me start off, senator coburn raise the idea of a grand compromise. i thought that is what we ought to do. there are a number of us here who believe that is the right path to take, and i hope we can get back on that path later this year. thank you for your service and what you're doing, not just here, but also abroad. the administration had a chance to chat a little bit before the hearing began, and i mentioned the president under law as rescissions powers. he signs a bill into law, and he can propose to rescind or reduce spending in certain line items. under current law that congress can or cannot vote on that. if they ignore it it goes away. what we have historically done is to ignore it. in 1996, the congress pass and clinton signed legislation that said the president could not only line item veto appropriations, but also entitlements, and also tax measures. those would become effective unless 2/3 of the house and to slash city of the senate were to override that. that power is made permanent to the president in the 1996 legislation. what others and i have offered and co-sponsored this legislation to say let's try for a four-year test drive that is the president the authority to give -- to go through an ominous -- an omnibus bill and go through line items. we can vote it down with a simple majority in the senate. we have to vote on it. if it is defeated, then it goes away. we think it provides accountability for the president and for congress. if it helps, good, maybe we can make it better. i appreciate the administration's support. i do not know if there has been any discussion on clean energy tax policy, but i want to mention a lot of other countries in the world to arrive a considerable amount of electricity from the wind. some of that is on land, some of it is off the shores. we do not derive any of electricity from the wind off of our shores. there is an opportunity to do that. some people think we need to extend the wind production tax credit and that would help incentivize when the forms of maryland or delaware, new jersey, north carolina, all the way up to the state of maine. if the credit does not get the job done, nobody will build a windmill farm off the coast until there is a tax credit that will help out. senator snowe and i have offered legislation that will provide a credit to whoever deploys the first 2,000 megawatts of electricity that are generated off our shores. it would basically be first come first serve. you get your windmill farm out there and producing electricity. who ever comes up with the first 3,000 megawatts you get that tax credit. give us reaction to that in terms of whether that seems to make any sense. as it turns out, the cost of that is a couple billion dollars of year. it is not a heck of a lot of money. >> i would be happy to talk in more detail about that. there are different ways to do these things, but we agreed we want to make sure that we are preserving, after a comprehensive tax reform, a set of well-designed special incentives for improving our use of renewable energy resources. we support that and i will be happy to work with you on the most effective way to do that. >> could you give a quick update on tarp. >> we're doing exceptionally well by any measure. the cbo estimate of the total cost of tarp are in the $25 billion range, and my suspicion is that will prove high. i think the bank part of the program, banks have already yielded a $20 billion positive tax return, and we have a lot of risk, still, a lot of losses for the investment we make in the automobile industry, and other pockets of the programs, but the costs are lower than what people thought, hundreds and hundreds of billions of dollars lower than what people thought. we got most of the money back already, and we are on a good path to show a high return. if you look at the cost of all the programs, the fed, the fdic, alongside tarp, most independent forecasters think the overall cost of this will be tiny fraction of what the country paid to result in much smaller crisis, the s&l crisis, which cost up 3.5% of gdp. >> senator cardin. >> thank you, mr. chairman. first, secretary geithner are, let me thank you and thank you for your presentation. thank you for your service. we need to have a balanced approach, dealing with budget deficits as the administration's budgets, deals with revenues, and spending, which we will be happy to do both. it also deals with deficit reduction, recognizing we are in a recovery and we need to make investments in education, job training, and infrastructure. i want to concentrate on the middle class, how important it is to grow the middle class. i looked at the numbers and see eighth shrinking middle class. i look at the budget and on the revenue side everyone talks about the revenues that it generates. that is using a base line that is current policy rather than current law. if we use current law, the revenues would be different. with current law, if we did not change it, the middle-class will get socked. tax rates will go up and. part of the budget is to concentrate on helping the middle-class grow by using the tax code to provide some basically additional revenues in the hands of the consumers of america. we mentioned education. education is that ticket for being able to participate in the opportunities of america. colleges are becoming out of reach, and the standards design in this budget are not only designed to protect pell grants but also do with the cost of education. could you comment for a moment from the administration's point of view how important it is to help middle-class and to grow the middle class. >> absolutely, and you said it very well. basic tax frame work we have laid out is a ferry from work for the middle class. it protects the incentives they enjoy and expands some for higher education to make it easier to afford a college education. the budget for tax and preserves basic health care retirement security for middle- class americans. that is critically important. we're asking americans to bear much more risk and uncertainty living in this global economy in providing that degree of protection. the budget proposes a series of important investments with reforms to improve the quality of education, access to training opportunities, so americans coming out of college or community college with better skills. there are millions of jobs that go on filled today because employers cannot find americans with those skills and. very important for us to fix that. the infrastructure investment the president proposes are good economic strategies because they improve the competitiveness of american business, but have the benefit of creating employment opportunities for americans in construction who are still bearing most of the burden for the cost of the crisis. those are some examples, and that is a good prism through which you should view all these proposals. this package of things is a very good strong framework of programs to help improve not just retirement security and health care security, but opportunity for middle-class americans. >> if we do not help the middle class families, the recovery is going to be much longer. we look at the current housing issues which are still burns to middle-class families. a lot of them have not been able to get under -- they have negative value in their homes, and look at gasoline prices which are increases, which is having a major impact on confidence every time we go to the gasoline station. we pay another couple dollars to fill up. that is putting pressure, and i would hope as we evaluate the budget that we use the prism of middle income families -- families to judge, and if we do nothing, it will be bad. we need to get together and come forward with the type of framework that the president has laid out. so thank you very much. >> thank you, mr. chairman. mr. secretary, thank you for the terrific job your doing. an important job, and particularly with respect to some of our interests in other markets, europe, china, elsewhere senator kyle was questioning you going after the question of the impact of the tax increase on the upper-income people and small business, and i would like to give you an opportunity to be able to speak to that for a minute. what is that downstream impact on small business, and what would be the impact of small business of getting a deficit deal of reducing the cost of capital and putting america on a stronger economic track? >> in the framework of corporate tax reform proposals that we will out late next week, we will be specific of what we can do to protect businesses as we go forward. the tax changes we is it proposed, we believe would fall appropriately and overwhelmingly on those limited number of americans who are in the best position to bear that burden. senator grassley use this number, it is true it would affect a small portion of business, but a very small portion of small businesses, up to 3%, and many of those businesses are not small businesses in any way most humans would think about. included in that definition, partners in a lawful, or principles in a private equity or hedge fund business. many of those businesses may be small by some definition, but turned in a pretty substantial amount of money. we designed this to make sure the burden falls on those few people in the american economy that are in the best position to bear that burden, have benefited most from the boom in the financial sector, and we think you have to judge this by the alternative. if you do not do those proposals, did not embrace those proposals, he will have to find some way to raise resources are cut benefits or spending on the rest of the american people, and we did not see a need to do that. >> mr. secretary, the sides of our budget choices, and the payroll tax is in the next days, the next largest muni impact apart from our -- lou ?ming on our economy may be europe and other people. i would like to ask you to speak to it that, and it is my understanding there something like $760 trillion worth of derivatives in the market, and what kind of risk does that post us in terms of lack of knowledge of what is in fear, given what is happening in europe and greece, italy, so forth? >> that we start with this. senator snowe refer to the fact of the recovery has been marked -- moderate. growth has been slower of the post-war recession. it is important to understand why that is the case. growth has averaged 2.5% since growth began. growth following a financial crisis produced by too much debt, too much building of houses, will always be weaker than following a typical recovery. there was no possibility of an economy digging out of the depression was going to grow like we did in the average of past recoveries, because as individuals bring down their debt burdens and as you work through this in balance as we saw in construction, growth is going to be slower than anybody would like. on top of this head winds, we have had a combined effect on growth of hair oil prices -- higher oil prices, the catastrophe in japan, and the crisis in europe. the crisis has had a pretty substantial negative impact on growth here and around the world. european leaders are making progress. they got a ways to go, but they are starting to build more confidence around the world that they have got a plan in place that will avoid the process of financial catastrophe in europe, even though growth may be weaker and they face years of difficult reforms. they seemed more committed now to avoiding a catastrophe, and implosion that would have adverse effects to the united states. that is a good thing because even if weaker -- europe is weaker, we are less likely to face the after shocks of a sustained period of europe living in a crisis. the derivatives markets are still a substantial source of risk, even with the benefits they bring to people. they come with significant risk. because we have forced u.s. financial institutions to hold much more capital against those risks, we think the american financial institutions are in a much better positioned to withstand pressures we have seen in europe, but from other shocks down the road. the risk out there still in derivatives is one reason why we want to see the reforms that congress enacted in the wall street reform to take effect, and we're working very closely with regulators to bring much more transparency to those markets, much more transparency to force more of those markets on to standardize exchanges, and we are making progress in that direction, but we have some work to do. >> thank you very much, sir. >> senator cantwell. >> secretary, i appreciate the budget as a tax provision in it for the new market tax credit and the energy tax credit and no income tax credit, all things that are stimulus to the economy and important for economic development. i'm curious about two aspects of that. one of the things that need to be done now, and i am assuming you are still a new york filer, but states that had income-tax, the ability to deduct their sales tax, their income tax from their federal liability. states that rely primarily on a sales tax. do you believe they should have the same benefit and should they have certainty to that benefit? >> understand your concern about that question, fully understand it, and it is possible when congress gets around to thinking about comprehensive tax reform we have to look carefully at that, but we do not have plans to change that now. i will be happy to work with you on that. >> washington and florida and cetexas, do they deserve that certainty now? >> it would be good for congress across the board to give not just aids but individuals more certainty about their tax treatment. >> right now we do not have that certainty, and the fact that these states basically watch other states get a deduction that is about $236 billion on the tax rolls as far as deductions, and we're talking about 16 billion here and economic uncertainty. it is eight fairness issue, and the fact that every year we have to go through this, states like florida and washington and nevada and many others -- this is about tax fairness and when you do not give the certainty as we do now, the people are not buying automobiles, not making those -- we have thousands and tens of thousands of people who itemize on our tax returns in the state. >> you make your case very well. i will be happy to spend time it with you into thinking through those. >> if the administration would advocate with certainty on those not, that would be a big help. >> i am a big fan of certainty. >> other at standards, they have lapsed, so we are still in this period. what is the administration tried to do to get these done now as opposed to waiting for the land or next year? , we are consulting with your chairman, the ranking member, on how congress will deal with this. you are highlighting an important question, is -- which is we have a tax system where we have a tremendous number of temporary tax provisions. many of them have a lot of value. the value of all of them is undermined by the fact there is so much uncertainty, and it is no way to run a country to leave a country like the united states with this degree of uncertainty. it is already february 14, and this is another example of where it is a port for congress -- congress may not be able to solve all the problems facing the country now. this is a pretty easy problem to solve. >> thank you. thank you, mr. chairman. >> senator schumer. >> i agree with senator cantwell's is in. it means a lot of things will not happen. people will not invest in clean energy and windmills. they will say may be in a lame duck they will do it retroactively. i have something of great importance to new york, the mass-transit the session, which cannot do. people are losing out on the monthly deductions right now. they have lost them for january, they will lose them for february. i hope you will heed senator cantwell's advice on that. i think the budget the president propose is a very good budget on but that tax and spending sides. there are many who say cut everything. that is not going to make america number one. that is a -- deficit reduction is important, and the number one thing that will keep our economy number one is having the best schools in the world. if we do not have the best schools, we could have a zero deficit and we will not stay number one. more measureds approach by using the money returning because of iraq and afghanistan and putting them into the places where we need to bolster the country, infrastructure, research, education, makes eminent sense. many of our colleagues talk about let's cut everything, but when they are asked about a fresher, -- i have tea party people who say the infrastructure is not a government -- the government cannot do it did you think every highway and bridge and water project should be private? no, i do not mean that the pick it is a good thing. i would like to focus on the tax side. here again, imposing the buffett rule which is the president's moniker, he created the moniker, zinc revenue to repeal the amc, which is an existential threat to the middle class all very good things, and it allows warned buffet to pay more in taxes and allows his secretary to get a permanent tax cut. it is a good principle. you have to work the math out to see it has a degree of balance. there are a few misgivings i have, as you might imagine. i think you're being too patient. by that i mean the administration is characterizing many of the ideas as long-range principles for a tax code revamp that will not happen until the president's second term. my view is why wait? why should we not be debating these issues now? i want to tell my republican colleagues it is my view that the buffett rule does want to be on the floor of this senate and we will debate it this year. maybe the same thing will happen on buffet may be the same thing will happen as the payroll tax. there will be such public outcry that some of our colleagues will say maybe we should go along, as they just did, even on the payroll tax not being paid for parrot we should debate the issue of a surtax on the highest-income people this year. we're looking to put those on the floor and debate them. we will let our colleagues and the american people see where our colleagues are. i am not so sure that nothing happens. that is one. to cut your budget does not provide any specific -- do you agree it is a good idea to debate these earlier? >> i did. a lot of people these debates to the matter. we have to have this debate. we will not be able to delay these choices. we have a tough to assist in the lame-duck session. better to debate them now. >> i agree, and we must be surprised presley by progress we might make, and particularly when the primaries and and there is a nominee, instead of that nominate moving as far to the right as possible, they can move as far to the center as possible, a different political climate as well. the buffet role -- he did not mention anything specific in your budget, you did not mention any specific role you would like. thed you concernconsider that senate moved ahead with the buffet role? would you have any problems with us putting some specifics on the table? >> it depends, but we are broadly comfortable with the proposals that senator white house laid out. -- whitehouse laid out. >> my time is up. thank you. >> one final point. this is a place the administration and i have disagreed, and that is on 250,000 vs 8 million. the problem is in my state i imagine in other states, there are people who make above 250,000 who are not rich. property, much more expensive, taxes hire, etc., etc., etc. if the administration believes 250,000 is the right cut off for casting deductions, why is it also proposing a buffet rule hits on the same run of the ladder? why don't we move to that nice million dollar buffett rule? >> excellent question. i am familiar with your views. we're trying to balance competing considerations, and we're trying to figure out what is the most fair way given the fiscal realities we face to make sure we can support the types of investments, benefits we think we need. that is why we are making this charge, but we understand your proposal. >> thank you, mr. chairman. >> thank you, mr. chairman. it has been a long warning, and i tried to listen care so -- carefully on this comprehensive tax reform issue, and see if you can sort a little bit of this out for me, if you would pick you mentioned three times we ought to have comprehensive tax reform. that is a good thing. when you look at the budget, it is corporate reform is going to come out. that is what has been announced, and the individual or four will come sometime later. corporate reform is not comprehensive. it is in effect piecemeal, and if you would, start with me in terms of how your of you would get the country to comprehensive tax reform, because we both agree that is what is needed and there is bipartisan support for its. >> you are right to say why not do it all at once, and realistically that is how it is going to happen. what we are saying is we want to provide as little bit more detail for the elements of corporate at this stage ultimately. you have spoken a lot about that. part of what we are trying to do is to get people to think about a comprehensive approach to improving investment in united states, and one way to do that is to try to get discussions earlier on how to redesign a system to support that objective. i understand your point that these things have to go together. >> that me ask one other point and get a sense of what will come next. you also talked about foundational principles. the foundational principles in 1986 still have a lot of support. bipartisan support. the idea was to cut breaks and business and individuals, keep a simpler code for both individuals and business, and retain progressivity. what i am concerned about is if we are not careful we could end up with a different foundation, in effect, you would see changes on the business side. you have correctly described you are going to clean out these breaks in order to have the corporate -- help the corporate side. we could end up with more complexity as well. like the last question, how do you see us getting to the foundational principles as you have described that are so keep in keeping them within the 1986 approach with how we're going along the lines you have described? >> those are the bright principles and we would support those. you want to clean up and eliminate, reduce scale back of bunch of the special preferences across the tax code. use this to make affordable reduction in the overall marginal tax rates. preserve a basic level of progress of the four obvious reasons and leave yourself a system that is more simple, easy to comply with. those are constraints we should live with. i do not think we are going to put those at risk by showing a lot of elements of what we think should guide the individual discussion. we will provide a comparable level of an additional elements, but it will be guided by the nice we've framed that core objectives. >> the only part i would make -- a point and would make in terms of summing up, the key in 1986 was the presidential bully pulpit and that the executive branch every single time out talked about how you had to fit the pieces together. i am glad you said what you did that in the and it is probably aren't going to have to come together, but we are going to have to get that message about two hours earlier, because we have been sitting here for two hours and ash into all the specifics in terms of corporate reform and how you would clean them out and what would go first and the like. absent somebody particularly at 1600 pennsylvania with all of you that are out and about the country, it is on to be very hard to build it here. we have a lot to work with. the chairman wants to move in this direction. two hours in, we finally got to the key point, it which is we're on to have to bring this together around 86 -- 1986 principles, and i hope you and everyone in the administration would start to use the bully pulpit because that is the key in '86. -- in 1986. >> you are right. our challenge here is much greater than it was in in 1986. the scale of our fiscal problems are much greater we did not have the luxury of offering people a substantial tax cut to individuals or does something that does not raise revenues overall. we do not have the ability even with all the unpleasant features of our tax could today, it is in many ways a cleaner -- i do not want to go there. i was going to make a point that in the 1986 act, it was possible at that point to provide individuals at least at the first stage of that reform a very substantial net tax cut. president reagan to his credit two years later took back about 2/3 of that cut, and the country today, even though it there is a lot of support for the president's proposals, it is an much worth of " political and board. i completely support you on the principles. it happenave to happeve together, and the congress moves we will have to look at having a much more comprehensive framework of reform. >> thank you and mr. secretary for coming today, and i appreciate your statements about supporting tax reform. everybody here wants to get on with that issue and hopefully do something that will lower rates. i am still waiting for the white house to put forward a proposal on that. it has been said here earlier, the proposals in the budget this year take us backwards when it comes to the issue of tax reform. you have all kinds of new tax rates coming in, the proposed buffett rule, raising dividends and capital gains tax rates. if we're serious about tax reforms that the administration should put forward a plan that would actually accomplished tax reform, that would allow us to move forward. there is one thing that i wanted to ask about and that has to do with the proposal that qualified dividend's be taxed at the same lower rate as capital gains. in fact last year i think 2012 budget was the effect that it reduces the bias against investment. the budget this year, however, proposes that taxes dividends as ordinary income, which would be the top rate of 39.6%. the new surtax included in the health reform, that means the top rate would be over 43 presents i, -- 42%. the question is, isn't it true that at a high tax rate on dividends is an inefficient allocation of capital? >> i do not think so, but it helps explain why ultimately we need tax reform. we have done this -- if you try to do a reduction plan and do that with a mix of spending and tax reforms and you are raising revenue on top of the current tax system you have to embrace and mix of things like we have proposed. it is a good reason to think about what it is good to do it this reform, and we expect we will get an opportunity to work thetax reform, given ,loomin looming expiration of the tax rates at the end of this year. they're proposing this changes for the top 2% of americans. because we are also proposing substantial cuts in defense, non-defense discretionary, medicare and medicaid. to balance that out and make sure there is more shared sacrifice in this context, we felt in order to assist -- to achieve a more sustainable deficit, we needed to find additional revenue. it only affects the top 2% of taxpaying americans, and we think they can handle it, but you are right to point out the better break to get to a more sensible tax system as part of deficit reduction overall is through a reform process. >> are you going to propose a tax reform plan at some point, because when this was done last time in 1986, there was a proposal put forward by that reagan administration to reform the tax code, and it was the starting point. congress worked with that. we all say we are born to do that, but the clock is ticking, and if we put this down the road, who knows what the excuse will be next year for not moving forward. is there something that will be forthcoming? >> i agree with you, better sooner than later, and even if we did not have the incentive, it would be a good thing to try to do it now. we spent a substantial time this summer working with the republican leadership on how to set out parameters for tax reform, and we were unsuccessful. we feel we need to see a better, clearer recognition of the republican side and would be willing to consider tax reform to raise revenues as part of a plan before we think it will be the basis for a more serious negotiations. because of what we tried it the summer, it is that we have decided to do more conditions work for tax reform rather than putting out a tax reform plan now. >> the tax rates when they go up at the end of the year, if that happens -- hopefully they will not -- what does that do to economic growth? >> one of your colleagues said if you were to allow all the bush tax cuts to expire and the that would behit, damaging to the economy. we're proposing to extend the bush tax cuts that could to 98% of americans, to let those expire the ones that affect the top 2 percent of americans, limit deductions for those americans. those are pretty modest in terms of the attack on the economy. it is because of that concern for the middle-class and the economy that we're not proposing to allow them to expire the middle class tax cuts. >> the singh discussion was held two years ago, -- the same discussion was held two years ago, raising taxes above $200,000 would be harmful to the economy, and that is why the extension was made at the time. we are facing the same circumstances now. >> thank you for asking the question that way. at that point, our view was we should protect the vast bulk of americans from any increase in the tax burden, but we could afford and the prudent thing was to allow the tax cuts for the top 2% to expire. as you know, your side of the aisle would not support that. you were not willing to allow the tax cuts for the top 2% to expire, and the only way we were able to prevent a tax increase on 98% of americans was agreed temporarily with position you took. the economy absolutely could have observed the impact of letting those tax cuts expire. it would have been a modest change, and we could have been afforded the impact than. >> i would in closing point out, however, that four out of five people that pay at a higher rate are small business owners. they have flow-through income and our people that create jobs, and those are the calculations that were made by those of us. >> we do it every time i am in this room, over and over again, and use a small business and we say up to 3%. we say it is only 2% to 3%. we can allow the independent arbiters to decide that. there's no credible argument that exist that allow those texts proposals we're making that would affect more than that very small fraction of small business, and a large number of those firms you call small businesses are lawyers, in law firms, partners in hedge funds, private equity. we have had this debate many times and should agree to -- >> probably a lot of people appeared that do not mind taxing lawyers predict that you can argue it is 3%, but there are people and who do all the businesses and the people who are creating the jobs trade right now it's checks me that we want to have policies that encourage job creation and economic growth, and it would be counterproductive to raise taxes on the people who are creating the jobs. >> we share that objective with you, and the only disagreement we have is we do not believe there is a feasible way or a fair way to restore fiscal sustainability without asking a very small fraction of the most fortunate americans to bear a en thely higher burd privilege of being americans. the alternative to that is we .5 chilean, is$1 poin to cut deeply into defense spending, medicare benefits, programs for the poor, or investments in education and infrastructure. if we thought we could way -- we thought we could have a way to avoid that, -- >> performing entitlement programs would be a way to do that. >> we could take a different approach to that, but i remind you the budget proposes $350 billion roughly of savings from medicare and medicaid over the budget window. >> out of providers? >> not to compare or go back to history, but he could ask your staff to make the following comparison. compare the level of savings from medicare, and you wanted before courage and entitlements of the president's budget of the next 10 years to those it from the republican alternative from last fall -- last spring. we're proposing tough, difficult reforms in medicare and medicaid in the hundreds of billions of dollars, alongside the cuts across government, and we think to go significantly deeper than that would be unfair to middle- class retirees. >> thank you, mr. secretary, very much. i very much hope and it will happen when you send up your corporate ideas that we had this debate they're all talking about during the year so we did not wait until the end of the year. if we have at now, the results can be a lot more conservative and make a lot more sense. take your for your testimony and thank you for being so helpful and constructive. senator hatch? >> i will not keep you much longer. you wanted to go when you first got here. i would not have blamed you. >> i will be happy to continue. >> on senator kyl's question, george committee on taxation said that the bottom 51% of all households to not pay any income taxes at all. you raised the issue they pay payroll taxes. yes, but that a social security. we all do that. about 22 million of them receive refundable tax credits that are more than they pay in payroll taxes. in essence they are not paying anything. another 15.5 million people get refundable tax credits that are more than both they and their employers pay in payroll taxes. i am not suggesting that we should tax -- not think anybody wants to do that. i have spent 36 years here try to help people. but i am suggesting that we have to lift people out of the current situation where they are not paying taxes, and that base is spread, and there is no way we will ever get there. you want to raise taxes on the upper 2%, but i did not see any of that money going to deficit reduction. maybe you think it is. i do not see us making real headway. i see 100% of gdp and national debt, i see our spending is now going up to 70.4% -- not be long until we are 100% spending of gdp. we all know that we're spending too much. these are some of the things that are driving me bats here, because, tell me how you are trying to get the deficit down when he comes up with all kinds of programs to spend money, and we're not lifting the economy all, where making a worse economy, and i have added to that it is based upon low interest rates that we know are trying to go up. i think it is a fair question. >> those are totally fair questions. let me go through those trees that we start with the magnitude of baghdad programs. >> tell me they are wrong. >> you are right we have unsustainable deficits -- >> where does this budget make a difference in terms of deficits? >> we use a neutral, independent arbiter of our policies and yours, and our policies which cbo will evaluate, will show if congress were to enact them they would bring our deficits down from the current unsustainable levels to a level that is sustainable, and we define sustainable as an level where the debt stops growing as a share of our economy. if the congress were to adopt these proposals, even under reasonably conservative assumptions, then our debt burden as a share of the economy -- this is debt held by the public and the appropriate way to measure it -- will stabilize in terms of gdp. >> you are telling me that deficit will go down? i do not believe that. >> absolutely. we can only propose, congress has to an act, but if congress were to enact the president's proposals, they will bring the deficit down from the current level -- >> i have a lot of respect for you, you have a very bright man, and you have one of the toughest jobs in history, and i acknowledge that. but i did not believe you can make that case. >> oh, absolutely. you do not to make that -- you think you're going to knock the deficit down? >> absolutely, it will come down dramatically over time, much faster you will think. what we just agree on really is whether we should cut much more quickly than we have proposed to cut. our judgment is that would hurt the economy. or how we would do it. >> i would like to lift our workers and economy by providing more opportunity. >> we shared that benefit. -- that objective. your right to say rates are lower today. >> they are almost nonexistent. yield is very low, and that is a reflection of a lot of things craig >> if they start going up to a lot of -- >> they are low in part because the concern in europe and in part because growth is not a strong anywhere, but they are also low because investors are around the world judge those securities, treasury securities, as a relatively safe bet, and they believe that the congress of the united states all ultimately will act to restore fiscal responsibility soon enough so we can avoid the risk which is if congress does not act that over time those rates would rise and hurt growth. there is no risk of that -- i do not see any risk of that, but we would be better to avoid that risk if congress were to enact a sensible set of doesn't reduction proposals over time. right now any measure -- a judge us as in a very strong position to meet our long-term challenges, because they have confidence that this congress will act and come together and do some sensible things in that context. that requires action by the congress. >> i have to ask a couple other question, because of what i heard today, i do not agree with your analysis. you have all kinds of economists working with you, and i cannot ignore the fact that you're in a position to make those statements. why does the president want to raise taxes in any way on small businesses, when unemployment is a 20%? don't small businesses with taxable income of over $200,000 help the unemployment its attrition by retaining jobs? we note that -- we know that businesses will get hit with the president's tax hikes even if the owners do not take one penny out of the business. the president says small business creates two-thirds of the jobs in this country. why does he want to take the money that can retain the workers that they have? i know you are aware that 50% of all flow-through business income is subject to the president's rate hikes. that is a fact. you seem to dismiss concerns about increasing taxes on businesses with incomes over $200,000 whether their owners take out any of their income at all. why you're not more concerned about increasing taxes on the small businesses with jobs as scarce as they are -- this president promised unemployment would not go over 8% if the stimulus was enacted. it has been that way all over 32 months now. let me make one last, and i will be glad to hear your response. i have been very fair to you over your tenure. you are a bright, and you're a very smart guy and a very hard worker. i think you are very wrong on a lot of things, to be honest with you. but we say this -- why hebert millionaires? small-business owners -- 75% of those making $1 million or more are small business owners. 75%. that group already placed plenty picked their effective tax rate is 29%. they are already paying the buffett rule. the role. no doubt about it. i just have a real rough time. we have to keep increasing taxes. if we cannot provide any incentives to the a economy. it would pull us out of it so it is more than 49% paying it. of talk have had a lot about that. >> will not had too many on this one. we have significantly reduced taxes on small businesses in the first three years of the president's first term. we propose additional reductions in taxes on small business. for example, a zero capital gains extending through the provisions. we think those are good economic policies. i am not a politician. i never met anybody in public policy that would be in favor of that. we face unsustainable deficits. we have to find a way to dig our way out of that and restore balance. we do not see a way to do that that is fair and significance without some modest increase in revenue. we want to make sure the revenues come from the people that in the best position to bear that burden. it will affect a very small and tiny fraction of small businesses. it does affect some. most of them are not small. i think more make more than $1 million. it we do not do this with any enthusiasm. we just do it as a recognition that we face a terribly difficult fiscal challenges. we are adding substantial burdens. we want to avoid pushing the additional ones on retirees. we have to find some ways to raise the revenue. that is why we are taking this approach. we get is better. >> i've only been here 36 years. need more that we taxes and then we will cut spending. we have given in the more taxes. spending has never been cut. >> this is a good debate to have. if you look at any independent evaluation of what we have proposed on the spending side, you will see that we are proposing to cut spending between 2.5 trillion dollars and $3 trillion over 10 years. spending across the government including defense with substantial savings. it is only in that context that we think a modest amount of revenue makes sense. we have to make choices. if we do not do that modest about revenues, where are we going to find savings that make sure we can live within our means? >> if you cannot find it, you're going to have to figure out a way to cut benefits and education, cut medicare and medicaid. that is not true. has restraint of growth in savings and reform. >> you're taking credit for the productions. you raised that question. we are treating the contingency operations that pays for foreign wars. we're treating it more carefully and irresponsibly even the budget of last year. we are treating it like the republican budgets. we are proposing to count the savings and allocate a substantial fraction. we are proposing to put most of it and to a substantial program. in general, it to be consistent with the way these things are being cheated in the past. >> you have a tough job. i do not want to make it any more talk than it is. i am really concerned. i do not think anybody up here wants to tout those programs if we can avoid it. that is also where we have to find savings. if they want to have a future. i do not see it in this particular budget. yet a very difficult job. -- you have a very difficult job. you were very hard. he did not get as much credit as you deserve. on the other hand, i do not agree with you. i think this administration is pushing us into a real jeopardy. i do not blame me for that. completely. -- i do not blame you for that completely. >> we recognize that we are going to have to have pretty cigna began changes. you can ask for more. then we have to decide how to get more. that is what we're talking about. >> as you know, we do not think it is realistic or fair to consider even those changes we proposed without changes to the tax system. >> i agree with that. i think we do need to modify our tax system. we ought to make it so we can create jobs and opportunities. >> we're going to have to raise revenues. >> would talk about entitlement reform, we are talking about it saving throw money. we think you need both of those things. >> i do not want to raise revenue. i want to see what we can do to get things under control. i know you want to get down to dinner. at some any more questions. very seldom am at all by myself. >> you have inherited a very tough job. i have respect for how hard you work. i know you're trying to do the best you can. unlike to see you convince this president of things we know he should be convinced of. i always respect people that work hard. you're one of the hardest workers i have seen. i wish to work a little less hard on some of these crazy ideas of this administration has. i really appreciate your testimony today. i appreciated the amounted tiny have given to this committee. i appreciate how hard you really worked. with that we will let you go. thank you for taking the time. >> you're going to convince me about some of these things. >> thank you so much. but that we will recess until further notice. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> mitch mcconnell says the proposed a budget is what he calls a threat to leadership. he spoke on the leadership floor in a 50 minute exchange with dick durbin. -- 50 minute exchange with dick durbin. believe that this is the president's considered response to the crisis that we face. president obama knows better than anyone in this country that government spending and debt is completely out of control and that america is headed down the same road as europe. this budget was his chance to show it. instead, he decided to basically pretend these problems don't even exist and to the extent that he does acknowledge them, to propose solutions that are ther gimmicks or that he knows will never come to pass. just to take two examples, he says he will bank savings by not fighting a war he already declared we wouldn't be fighting. take credit for saving money on a warhat he's already declared we're not going to be fighting. a gimmick. and he had raised -- raised money with tax hikes that had been rejected eight times by both parties. oh, and by the way, forget the fact that government spends a trillion dollars a year more than it takes in. the president says government spending should be even higher. he significantly increases government spending at a time when we have a $15 trillion debt that's as big as our economy. this is what passes for leadership down at the white house. the president looks at our fiscal crisis, throws together a plan that he knows is completely deceptive and then goes on the road to sell it to ctive audiences at high schools and colleges across the country. the failure of leadership here is truly breathtaking. the president knows how grave our nation's fiscal condition is when he thinks it helps him, he admits it. a year ago tomorrow when debt and spending were in the news, he used his budget announcement to reiterate a pledge to cut the deficit in half. here's what he said just a year ago tomorrow. quote, "the only way we can make these investments in our future is if our government starts living within its means. if we start taking responsibility for our deficits. that's why when i was sworn in as president i blend to cut the deficit in half by tend of my first term. the budget i'm proposing today meets that pledge. that was the president a year ago tomorrow. well, here we are a year ago -- a year later and he hasn't even come close. not even close. last month, the president said he wanted an economy that's built to last. what he's given us instead is a blueprint for deficits that are built to last. and he hasn't done a thoing live up to his pledge to get our nation's fiscal house in order. in fact, he's made it worse. last year's budget wasn't worth th paper it was printed on, and neither is this one. not worth the paper it was printed on. the president's job isn't to tell people what he thinks they want to hear, it's to explain the problems we have, unite people around a solution, and get the job done. this president is truly failing the american people. the only question is how long it will take for that failure to catch and the republicans controlling the final half. the senator from illinois. mr. durbin: i listened carefully to the statement made by the republican minority leader about deficits and i think it's worthy of note that history suggests an opposite conclusion from what he just said. remember this:he last time the federal government ever balanced its budget and generated a surplus was in the closing years of the presidency of william jefferson clinton, a democrat. when president clinton left office, the national debt accumulated over t history of the united states of america was $5 trillion. clinton left office, handed the keys to president george w. bush and said incidentally, next year, welcome to washington, another surplus. $120 billion surplus, the economy has created 23 million jobs in my eight years, and i wish you the best. he left, turned the keys over to president george w. bush, and gave him control for eight years. eight years later, another snapshot. the national debt was no longer $5 trillion, it was $11 trillion. more than doubled under president george w. bush. we had lost jobs, dramatically lost jobs in america, unlike president clinton, and when george w. bush handed the keys over to president barack obama and said welcome to washington, incidentally next year's budt deficit is $1.2 trillion. quite different story, isn't it? you wouldn't know that from the speech just given. the suggestion is that democrats just don't get it right when it cos to deficits, but republicans do. history tells us otherwise. so president barack obama inherited one of the weakest economies since the great depression, in fact we were teetering on another depression. the month that he took the oath of office putting his hand on abraham lincoln's bible, we lost over 750,000 jobs in america. that is what president obama inherited. we didn't hear that from the republican minority leader. mr. president, i want to show one chart that tells the story. tells it graphically and it's a chart which those who follow the floor debates will see over and over again. the red reflects job losses during president george w. bush. the blue lines reflect employment under president obama. this was the month that president obama was sworn into office. almost 800 million jobs were lost in america. that's what he saw as he came to the presidency. and then look what happened. the job losses started reducing, and finally turned the corner on the positive side. there you have a graphic presentation of two views of the economy. the views of the republicans and george w. bush with all of this job loss, and the views of president obama. and that, mr. president, is the debate we're currently engaged in. the republicans want to us return to these policies. policies which call for tax breaks and cuts for the wealthy in america -- wealthiest in america, and basically innor investments we need to p people back to work. i served on the bowles-simpson deficit commission. i understand this commission a little bit. maybe more than some. i don't profess to be an expert. the deficits have to be brought under control. you can't borrow 40 cents for every dollar you spend in washington and sustain economic growth in america. period. but i also know this: with ten million, 11 million ml, or 12 million americans out of work, you cannot balance this budget. we have to get america back to rk. the wkers have to start earning a good wage, paying their fair sha of taxes and creating gloat in this economy and growth in revenue which allows us to balance our budget. the president has two accelerators. he has to push them both at the same time. fiscal responsibility on one side, economic growth on the other, and we have to move forward in a straight path. that's what his budget does. there are those who say ignore economic growth, ignore creating jobs, just cut spending. just cut the deficit. if you did that, if you did that alone, i'm afraid the result would be disastrous. the president understands and we all should, there are three basic pillars to economic growth in america. and they're obvious. training and education. is there a single senator, congressman, or anyone here who doesn't understand they wouldn't be here without an education? we value education in america. it's the ladder of opportunity and president obama in his buet focuses on educating and training the next generation of skilled workers and leaders in the american economy. when we walk away from that commitment to education, we walk away from our future. the second thing the president's budget focuses on is innovation, finding those new technologies, those new discoveries which make our lives less burdensome and create more economic opportunity. it may be the next medical device, a diagnostic tool which saves a life, it may be the next pharmaceutical breakthrough at the national institutes of health, it may be a new process for developing clean energy in america that puts us back in the race to be the world leader in that field. those investments by our federal government pay off in good businesses, good jobs, and a better life for all of us. education, innovation, and the third piece is the one that's on the floor today, infrastructure. it's kind of a sterile word but what it gets down is it represents the highways, the bridges, the airports, the mass transit, the ports of america that are literally the arteries through which our economic blood will flow. and when they are not as good as they should be, as efficient as they should be, our economy struggles. let me give you one example. i live in illinois and am proud of it. my family came to that state, my mother as an immigrant to this country, my father off a farm in southern illinois to rk in east st. louis at a railroad. you almost equate illinois with railroads. we're in the center of america, and most railroads pass through the state. there are railroads in every direction. right now, it takes as long to take a freight shipment through the city of chicago as it does from the west coast of -- west coast to chicago or from chicago to the east coast. why? our railroad infrastructure hasn't kept up with the growing need forail freight transportation. we need to invest in that. we have an opportunity to invest in it. when we do, when goods move more quickly, there's more profitability. businesses do better. and they hire more people. the same thing is true with our highway system, with mass transit, with passenger rail. andook what the views -- how they view this issue. currently we're considering a bill coming over from the house of representatives which would be a disaster for america's infrastructure and for the state of illinois. an unqualified disaster. instd of investing and building the infrastructure so america's economy can grow, this bill sadly cuts the federal investment in transportation by 15% or 20% over the next five years. it cuts the investment in mass transit dramatically by eliminating the transfer of money from the highway trust fund to mass transit, something that's gone on for 30 years and it makes a 25% cut in amtrak. at a time when amtrak is growing and proving itself, they want to basally start shutting it down, closing it down, eliminating trains. that's no vision for the future. that's betting on failure. that's what the house republican transportation bill will do. we can do better. we have a bipartisan bill. it's a word you don't hear that often in this chamber, but a bipartisan bill with senator barbara boxer of california, senator inhofe of oklahoma. they have agreed on a transportation bill for two years which moves us forward. we need to make that investment. the president understands that in his budget. we should understand it in the senate, and we should make it happen. the last point i'll make is this: mr. president, there was a breakthrough yesterday. some people will be critical perhaps of the house speaker for reversing field and changing his position. it's not a question of whether or not -- it's a question of whether the payroll tax cut which president obama put in place will be continued beyond the end of this month. many may remember the flap that occurred in december when we were questioning whether to extendt for two additional months. i went back to my state and talked about it county by county as to how much it meant to working families and the republicans releapted in the house and agreed to extend it to the end of february. and, unfortunately, just a short time ago the speaker said, and i with quote, if we're going to extend the payroll tax credit, with reforms and take care of the so-called doc fix, we're going to have to offset the spending, is what the speaker said. that was just few days ago. yesterday there was a different announcement. the speaker of the house, mr. boehner of ohio, said we are prepared to act to protect small businesses and our economy from the consequences of washinon democrats'olitical games, close quote. in other words, now the publicans are prepared to extend the payroll tax cut without paying for it. it would be easy to take a shot at the speaker because he changed his position, but i won't. i remember this, the week of celebrating abraham lincoln's birth, 203rd anniversary of his birth. he was once criticized for changing his position on an issue. i ask consent for one additional minute. lincoln said i did change my position, but i'd rather be right some of the time than wrong all of the time. i think speaker boehner is right. the last point i will make, the extension of unemployment benefits, is of equal value to the economy and immeasurable value to those out of work who are struggling to find a job. make sure if we get this done on the payroll tax cut we don't give up on extending unemployment benefits, benefits that will allow people to get back to work. i want to see these blue lines growing, mr. president. i want to see us move in the right direction, creating jobs in america. president obama's payroll tax cut and the unemployment benefits which we have pushed for has pushed us over the line in creating jobs. let's not end this record of success. les build on it. >> and maybe a moment, some of our coverage of the chinese president's visit to washington. he met with president obama and secretary of state clinton and attended a u.s. chamber of commerce roundtable. later, held by the commission. >> tomorrow morning, we will focus on the chinese vice- president trip to washington. and the louisiana republican president. he will look at what is in the president's proposal for community colleges. you can call again for your questions about the pentagon's budget to anna mulrine. "washington journal" is like every day at 7:00 a.m. eastern. >> several live events to tell you about regarding president obama's new budget requests. the budget committee will hear from the budget director. that is at an o'clock a.m. eastern. also, the head of the department of common security will talk about her budget request before the house, and security committee. >> their life from the savannah but fesses arsavannah book fest. at 1:30 eastern, the changing israeli-palestinian conflict. they connect its debt to a cop 45 -- at 2:45. then the rise and fall of day through a present-day weekend on c-span. >> the man expected to be the china met withanne president obama on tuesday. he met with secretary of state clinton. this is 10 minutes. >> i want to welcome vice president xi to the oval office and welcome him to the united states. this is obviously a great opportunity for us to build on the u.s.-china relationship, but also an opportunity to return the extraordinary hospitality that vice president xi showed vice president biden during his recent visit to china. as i indicated during my recent visit to apec and the east asia summit, the united states is a pacific nation. and we are very interested and very focused on continuing to strengthen our relationships, to enhance our trade and our commerce, and make sure that we are a strong and effective partner with the asia pacific region. and obviously, in order to do that, it is absolutely vital that we have a strong relationship with china. over the last three years i've had a great opportunity to develop a strong working relationship with president hu. and we have continually tried to move forward on the basis of recognizing that a cooperative relationship based on mutual interest and mutual respect is not only in the interests of the united states and china, but is also in the interest of the region and in the interest of the united states -- in the interest of the world. on the basis of that understanding, we have established very extensive strategic and economic dialogues between our two countries. we have been able to pursue a significant consultation on opportunities for both countries to improve their economic relationship and their strategic relationship, and also manage areas of tension in a way that is constructive. that includes working together in the g20 to manage the world economic crisis that had such an impact not only on both our countries, but on the entire world. and because of u.s.-china cooperation, i think that we were able to help stabilize the situation at a very difficult time. it also includes the work that we've been able to do together in dealing with regional hotspot issues, like the korean peninsula, and issues like iran that obviously have an impact on everybody. throughout this process i have always emphasized that we welcome china's peaceful rise, that we believe that a strong and prosperous china is one that can help to bring stability at prosperity to the region and to the world. and we expect to be able to continue on the cooperative track that we've tried to establish over the last three years. we have tried to emphasize that because of china's extraordinary development over the last two decades, that with expanding power and prosperity also comes increased responsibilities. and so we want to work with china to make sure that everybody is working by the same rules of the road when it comes to the world economic system, and that includes ensuring that there is a balanced trade flow between not only the united states and china, but around world. it also means that on critical issues like human rights, we will continue to emphasize what we believe is the importance of recognizing the aspirations and rights of all people. and we expect that china will continue to take a growing role in world affairs. and we believe that it is critically important that the united states and china develop a strong working relationship to help to bring stability, order, and security that ultimately provides a better life for both the people of the united states and the people of china. >> [translating] >>so, mr. vice president, i hope you have a wonderful visit while you're here. i'm sure the american people welcome you. i'm glad that you're going to get an opportunity to get out of washington. iowa, you'll be visiting where you visited many years ago when you were governor. and i understand you're also going to be going to los angeles and maybe even taking in a lakers game. so i hope you enjoy that very much. but i want to extend my deepest welcome to you, and look forward to a future of improved dialogue and increased cooperation in the years to come. >> [translating] > honorable president obama, it's my great pleasure to meet you again. first of all, i'd like to convey the sincere greetings from president hu jintao, the national people's congress chairman wu banguo, and premier wen jaibao. >> [speaking chinese] >>i am paying an official visit to the united states at the kind invitation of vice president biden. and we have received the warm and extraordinary hospitality from our hosts. so here, i want to thank you for your personal attention and what you did to help prepare and make sure a successful visit for myself. >> [speaking chinese] >>the main purpose of my visit is to implement the important agreement you had reached with president hu jintao and to do some work to move forward the china-u.s. relationship along in the right direction, set by you and president hu -- that is for our two countries to work together to build a cooperative partnership based on mutual respect and mutual interests. and i hope to engage with a broad cross-section of american society during my current visit, so as to deepen mutual understanding, expand consensus, strengthen cooperation, and deepen the friendship between the chinese and american people. >> [speaking chinese] >> yesterday evening, soon after my arrival in washington, d.c., i met with a very distinguished group of veteran u.s. political leaders. i sought their advice on the future development of our relationship, and their wise and practical suggestions have provided me with much food for thought. >> [speaking chinese] >> just now i've had a set of large and small talks with vice president biden. he and i had an extensive, candid, and in-depth exchange of views on the bilateral relationship and international and regional issues of shared interest. building on our discussions last august in beijing and chengdu, the vice president and i reached some new consensus. >> [speaking chinese] >> i look forward to my in-depth discussion with you, president obama, in our meeting today. >> thank you, everybody. >> after meeting with prez what the white house, the chinese by as the president attended a luncheon attended by secretary clinton and vice president biden. this is 40 minutes. [applause] >> thank you. please, be seated. it is an honor to welcome all of you to the state department this afternoon. it is always good to have a vice president fight in the air. here.e president bybiden i would also like to recognize the chef who refused the flavors of chinese and american cuisine. -- who fused the flavors of chinese and american cuisine. >> [speaking chinese] >> this marks the historic trip to china. we are pleased that he is here with us a long with the instrumental transformation between our two countries. >> [tranlating tslating to chin] >> no. today cooperation between the united states and china is imperative to address the many vexing challenges we face from liberation to addressing climate change to promoting global economic security. developing a habit of cooperation is not easy. we have a lot of work to do. we are committed to the framework of trust that will have a cooperative partnership for the next 40 years and beyond. >> [translating to chinese] >> the vice president first came to the united states on an exchange program. he will travel there tomorrow to see some old friends. that business illustrates how important the bond between our people are. that is why we support programs like 100,000 strong for american students to study in china. there are many more people to people exchanges. >> [translating to chinese] >> it is a great pleasure to welcome the vice president and to celebrate the bonds of friendship between our nations government and people. it is now my great honor to introduce a vice president by biden. [applause] >> thank you for being here. it is an honor. i told him his visit to iowa will assure him more delegates than i thought the last time i was here. >> [translating to chinese] >> this is not part of the script. lindsey gramm was really did not show up in january. forte.ty is still miny >> this is a great start. i hope we can match the extraordinary hospitality that the vice president has shown me in my four day visit to china last. >> [translating to chinese] >> the highlight of that treats was the time spent in conversation together. i look forward to continuing the conversations we started over the next four days you are here. >> >> the vice president has already participated in three meetings. we have a very ambitious agenda in the coming days as well. i have discussed the united states and china have much to do together. our relationship was literally going to help shape the 20 per century. we are not only the world's two largest economies, we are both powers. every day our nations and the livelihood of our citizens grow more connected. the present and i came to office determined to rebalance toward those regions that are most critical. it is the most dynamic region. to state the obvious, u.s.-china relationship is a critical component of our broader asian strategy. our people both american and chinese are are all around the world. i first visited china in 1979. the prosperity achieved since then that i saw as recently as this past august is stunning. it is a great credit the thailantalents of the chinese p. i respectfully suggest that this remarkable growth and not occur in a vacuum. it was cultivated at every turn by an international system that enables rapid development grounded in a rules that apply with equal measure to all nations. >> even as our corp. gross, the united states and -- cooperation gross, the united states welcomes competition. it compels our citizens to drive from the challenge. cooperation can only be mutual beneficial if the game is fair. >> [translating to chinese] >> that's why the meetings were a continuation of the meetings we had in your countries in august. ofre discussing the areas our greatest concerns including the need to rebalance the global economy to protect international property rights and trade secrets. it is to level the competitive playing field and prevent the forced transfer of technology. >> [translating to chinese] >> the united states and china will not always see eye to eye. it is a sign of the maturity of our relationship that we can be candid about our differences as we have them. we saw this in the recent un debate about syria where we strongly disagreed with china and russia as a veto of a resolution against the unconscionable violence being perpetrated by be a sod -- the assad regime. >> it was brought up by the president and his meeting with you. we see our advocacy for human rights as a fundamental aspect of our foreign policy. we believe they he to the prosperity and stability of all science. >> of a racket translated into chinese] -- [translating to chinese] >> we have been clear about our concern over the areas in which from our conditions and china have deteriorated and about the plight of several very prominent individuals. we appreciate your response. china and the united states are working more closely together on a broader range of issues than ever before. these include pressing security challenges in north. and iran, cyprus security, and the important work of developing cooperation between our military is. is.

Related Keywords

Montana ,United States ,Louisiana ,Nevada ,Allegheny County ,Pennsylvania ,Delaware ,Beijing ,China ,California ,Whitehouse ,District Of Columbia ,Montgomery County ,New York ,Syria ,Russia ,Washington ,Sacramento Valley ,Iowa ,New Market ,North Carolina ,Sacramento ,Greece ,Chicago ,Illinois ,Chengdu ,Sichuan ,Japan ,Germany ,Texas ,Iran ,Afghanistan ,Florida ,Indiana ,Oklahoma ,Maine ,Iraq ,Erie Canal ,Baghdad ,Israel ,Town Hall ,Chile ,Ohio ,Capitol Hill ,Cyprus ,Italy ,Americans ,America ,Chinese ,Pennsylvanians ,German ,Israeli ,Chilean ,Palestinian ,American ,Timothy Geithner ,Dick Durbin ,Warren Buffett ,Kathleen Sebelius ,Bede Witt Clinton ,Nancy Pelosi ,William Jefferson Clinton ,Los Angeles ,Lindsey Gramm ,Tim Geithner ,Thomas Jefferson ,Barney Frank ,Michele Bachmann ,Abraham Lincoln ,Harry Reid ,Barack Obama ,Jeffrey Anderson ,George W Bush ,Steve Forbes ,King George ,Mitch Mcconnell ,Chris Dodd ,Sarbanes Oxley ,