Transcripts For CSPAN Washington This Week 20111030

herself because there is no other member. i would ask you to clarify the comments you made that the u.s. has met with the haqqanis network and urging pakistan to get tough with the haqqani network that has killed troops. one of your senior official said that, we were asked by isi to give this a try. which is it? crackdown or negotiate with the haqqanis network or a little bit of both? >> it is both. >> if you could elaborates. >> we want to buy it, talk, and build all at the same time. parts of the reason is to ask what could these organizations have willingness to negotiate in good faith. there is evidence going both ways. sometimes we hear that they well, that there are elements that wish to pursue that -- that they will, that there are elements that wish to pursue that. sometimes it is top of the table. with respect to the haqqani network, it illustrates -- sometimes it is off of the table. with respect to the haqqani network, it illustrates the point. they rounded up and eliminated more than 100 haqqani network operatives. we are taking steps to isolate the haqqanis leadership. we are increasing our efforts to squeeze them operationally and financially. we are working with the pakistanis to target those who are behind the attacks against afghans and americans. i made it clear to the pakistanis that the attack on our embassy was an outrage. and the attack on our " operating base that injured 77 -- on our operating base that injured 77 soldiers was an outrage. the fact is, we avoided having dozens and dozens of wounded and killed. >> thank you. can i ask you a statement related to the comments that president karzai held. 48 hours after you and he held a press conference, he said, if there ever is a war between pakistan and america, we will side with pakistan. is this something he told you in your meeting? how do you interpret his comments and the broader questions? how are afghanistan and pakistan reliable allies? >> president karzai and i had a productive meeting when i was in afghanistan. we are coordinating closely on both fighting the insurgents and try to test this afghan-led reconciliation. when i heard about the comments, we ask the ambassador to go in and figure out what it meant, what the point of it was. the ambassador, who is one of our most experienced diplomats, reported back that he believes what karzai was talking about was the long history of cooperation between afghanistan and pakistan, in particular the refuge pakistan provided to millions of afghans who were crossing the border seeking safety during the soviet invasion, during the taliban. period. it was not about a war people were predicting. it was taken out of context and misunderstood. the ambassador is a good diet to that. >> -- good guide to that. >> he sure is. thank you. >> i wasn't clear when the former chief of the joint chiefs of staff talked to secretary panetta. they were scathing to say that our partnership with pakistan is something that has a lot to be set in terms of what happened with haqqani. -- said in terms of what happened with haqqani. where are we now with the charges made by mr. mullen and secretary panetta in that regard? >> i think everyone agrees that the haqqani network has safe havens inside pakistan. those safe havens give them a place to plant and direct operations that kill afghans and americans. we also agree with what admiral mullen said, which is there is no solution in the region without pakistan. and no stable future in the region without a partnership. if you look at everything admiral mullen said in his testimony, he raised serious questions, which our government has repeatedly raised publicly and privately about the safe haven. he also said that the bilateral we -- bilateral relationship was critical and we have a lot of shared interests, particularly in fighting terrorism. it is important to recognize that we are balancing these two realities. it would be great if we could get rid of one, the state havens or the difficulties the pakistanis feel they have a -- safe havens and the difficulties the pakistanis feel they have in the i.t. terrorism. they worry that they can -- in fighting terrorism. >> for a good part of over 10 years now, it seems that our country seemed to be bogged down. our whole foreign policy seems to be centralized in these three countries. secretary panetta has visited asia. does there seem to be a shift in the paradigm on what exactly is the situation? why are we so bogged down when we have the rest of the world to deal with? am i wrong in looking at the recent statements that secretary panetta has made that our interests in asia is just as important as the other regions in the world? >> i have made a number of trips to asia. i just recently wrote an article for foreign policy pointing out that we are making a pivot toward asia. it is important that we began to focus on the challenges that asia presents. a wonderful visit to what our favorite pacific islands. this administration is certainly focused on asia. we are looking at how we maintain our vigilance about terrorism. we cannot forget that it is from the border region in afghanistan and pakistan that we were attacked. that was an immensely costly events in our history in terms of lives lost and dollars spent to recover from. we did not choose where we had to focus in the last 10 years. we are in a position to begin to make that pivot. much of the future of the 21st century is going to be written in asia. the united states must be a resident power militarily, politically, and economically if we expect to maintain our global leadership. this is an important commitment that i hope this a bipartisan commitment. we feel strongly that it is in america's best interest. >> the gang is back. we no longer have for all to ourselves. is recognized for 5 minutes. >> my terrorism subcommittee recently held a hearing on counterterrorism cooperation. a recommendation that came out of that hearing was that we recondition our assistance to pakistan on their inclusion of l.a.t. in terms of their attempts to shut down this organization. it has a campus that continues to recruit. originally, it was an organization focused on kashmir. now it has global aspirations. we have made arrests here in the united states. i was going to ask you, when you consider making that a condition in terms of that score card that we keep with pakistan? >> congressman, as you referenced in the beginning of your remarks, we have had intensive discussions with our indian counterparts. on my last trip to india, dni director clapper went with me and had many and that cooperation -- in-depth conversations. i think it is important that there be further consideration of all of the implications. every time we meet with the pakistanis, we pressed them on l.a.t., about the continuing failure to fulfil all of the requirements necessary for prosecution related to the mumbai attacks and we will continue to do so. >> if we do not elevate this issue, if we do not try at this point home now, it seems to me that some in the isi, in their assistance to the l.a.t. in orchestrating these attacks, are setting in motion the types of policies that lead to conflict between india and pakistan. when you look at the attacks in new delhi and the officials and about in the operation and when you look at some of the other operations and you find out that isi was involved in the training, it leads you to question, what is the intention of sending in a course, allowing them sanctuary, -- a force, allowing them sanctuary and allowing them to carry out civilian attacks on a neighboring country. it would seem to me that the potential for conflict created by this type of trip wire is great. that is why i think this has to be elevated in the terms of the discussion with pakistan. it has to be conditional. it cannot be the case where pakistan says, we are helping with any terrorist organization that is targeting the leadership in the pakistan. but we will allow isi to assist other terrorist organizations that are targeting the united states or u.s. troops, that they get this kind of cooperation. it has to be broadened to include the l.a.t. do you think there is a potential for this spending -- spinning out-of-control by the l.a.t.? >> of course we worry about that and discuss it in great depth with our indian counterparts. it is a concern of theirs. it is also concerning to us. we have designated them. we are raising their continuing presence and activities on a regular basis. our policy has to be carefully coordinated with the indian concerns. india is trying to improve relations with pakistan right now. there are some productive discussions going on. >> perhaps admiral mike mullen also words will allow us to carry this, station on with that is that rather than india. >> the chair will recognize the ranking member on the committee or atmosphere. >> madam secretary, i want to wish you a happy birthday. i should ask you for your comments on this wonderful magazine," :tim"time "hillary rodham clinton and the rise of smart power. >> i am speechless. >> we are talking about pakistan and afghanistan and we are focused on the middle east. i want you to throw in something you and i have spoken about. that is the conflict between israel and the palestinians. it does impact on other countries in the middle east. the israeli prime minister has just said he will negotiate with the palestinians anyplace, anytime, anywhere. he is even talking about the potential freezes on the expansion of neighbor of goods and things like that. the palestinians refused to speed- -- he is even talking about the potential freezes on the expansion of neighbor hoods and things like that. we are even talking about cutting off aid to the palestinians if they are not serious about this. i was wondering if he could speak about that. >> we are focused on trying to move the party and the direction of -- in the direction of the resolution of issues. we have a quartet process that is currently operating. there were meetings held yesterday. now the quartet envoys have met with the israeli and palestinian representatives. there has been and if this is to get specific proposals made by both sides -- there has been an effort to get specific proposals made by both sides. we are pushing hard for that to occur. dairy difficulties to get the parties to sit down with each other. -- there remains difficulties to get the parties to sit down together. we think that keeping this moving, keeping it alive as a possibility is in the interest of both. one thing we have learned in 20 or 30 years of these negotiations is that a vacuum is not good for israel and is not good for the region. we want to keep some momentum going. with respect to aid to the palestinians, i will underscore our strong preference that aid not be cut, particularly aid for the security forces and the maintenance of security in the palestinian area. a general in charge of west bank security publicly said, do not cut resources to palestinian security. as the congress considers these issues, i hope we consult closely and that there be a real recognition that we do not want unintened consequences -- unintended consequences. we do not want there to be a collapse of the security cooperation between palestine and israel. >> i know there has been some criticism about withdrawing from iraq at the end of the year. i think the president thought that one right. the president is concerned that we do not remain bogged down in a ground war in afghanistan. we have been successful using drones. there can be more efficiently means been keeping us in afghanistan forever. thathould speak of our- -- can be more efficient means than keeping us in afghanistan forever. >> madam secretary, in a recent interview when asked about relations with insurgents, you spoke about a universal redline, specifically renouncing ties to al qaeda and committing to abide by the afghan constitution. are these red lines preconditions to talks? how is this a coherent strategy when they reject out a red light in principle? it meant it in your opening statement -- how is this a coherent strategy when they reject our redlines in principle? can these rights be reconciled with the potential implementation of sharia-based law, which is the objective of the insurgents, who you are offering a place in the afghan government? >> there are outcomes that would have to be satisfied. you do not make peace with your friends. you rarely sit down to negotiate peace with someone who has already agreed with you. it is through the process of negotiations that you can determine that the outcome you see can be satisfied. that is our intention. it is certainly part of a long line of how one negotiates to end conflicts like this. with respect to the constitution and the loss of afghanistan, which to protect a -- laws of afghanistan, which to protect the rights of minorities and women, the outcome must be to meet those. there is a lot of discussion about sharia law. there is a lot of information about it and what it means and how it is applied that is difficult to assume. there are different countries with different kinds of applications of what they consider to be sharia, which is the law that rises out of the koran in their interpretation. i do not want pre-judge. the rule of law is our guide. the constitution of afghanistan which gives respect to islamic principles, is what we are demanding be respected. it might be useful to take a look at the different meanings of that phrase and how it is applied. from time to time, it is not clear on what the implication would be. >> i encourage the administration to take particular care. the presence of sharia law in any government could have potentially devastating attacks on the rights of women. recent comments by the haqqani network leaders suggest that we have been attempting bilateral negotiations with them to split them off from the taliban. the haqqani network has said it will only negotiate with their approval and participation. are we prepared to negotiate with mullah omar? what would our conditions be? what is your assessment of the haqqani network? what role might have in the future of afghanistan? >> the negotiations that would be part of any afghan-led peace process would have to include them. it would have to include some recognition by them, which is still led by mullah omar, that they must participate in such a process. you do not make peace with your friends. we are pursuing every thread of any kind of interest expressed. you might have been voting when i said the isi asked us to meet with the haqqani network. there was such a meeting. it was not a negotiation. there was no follow-up meeting. this was done because the pakistanis hope to be able to move the haqqani network toward some kind of peace negotiations. the answer was an attack on our embassy. >> mr. meeks is recognized. >> that you, madam chairwoman. let me congratulate you and the obama administration for the working have been doing. the article talked about how you are doing things differently. when i talk to other nations, other countries, they feel included. that is leadership. not leadership where it is my way or the highway. the ship where we are bringing the world closed to get- -- leadership where we are bringing the world closer together. we had civilian lives at risk. that is what libya was all about. the president kept his word and we saved hundreds of thousands of lives. we did it not just by ourselves. we did it in a multilateral way. that is a positive thing in my estimation. that is what smart power is all about. talking about afghanistan and pakistan. a first question is, turkey seems to be a little bit to remove geographically. i know you are going to turkey next week. turkey has asserted itself as keepers of the peace. they will be hosting this conference about the building blocks of the afghan reconstruction process. as turkey been engaged in the region? have they been helpful or not helpful? that could be another partner that we could have in helping us in this crucial area of the world? >> they have been involved and helpful. turkish troops served in nato isaf. on my first trip to afghanistan, turkish troops were responsible for the airport in kabul. i remember meeting the turkish general that was in charge. turkey also has a great ability to communicate with a lot of being -- lot of the leaders in pakistan, afghanistan and elsewhere. it is a muslim majority country. it has a history of democracy. and now an islamic based party is leading the country. turkey has a great deal of credibility with a number of the countries. its involvement is a helpful assistance to us. >> the think we need to move into a post-cold war compensation and dialogue with other countries. we had a reset agreement with russia. i was wondering if russia had been involved in the afghanistan-pakistan issues in that region? >> for a long time, russia was not involved or welcomes because of the invasion by the soviet union and the many years of the brutal conflict. because of our reset, russia has been helpful. they cooperated with us on the distribution network, which is our alternative route to get it put into afghanistan when the pakistani route is under pressure. russia is participating in many discussions about the path forward. russia has been the center of conflict between all of its neighbors. russia wants to see a stable afghanistan. it wonders about the heroin trade coming out of afghanistan. that is a big domestic problem for russia. we are appreciative for the role they are playing. >> as we pull out of iraq -- i know the agreement about 2014 -- nil soy wondering what is the response of -- i am wondering what is the response of nato and isaf. do these nations remain as a cohesive partner? >> the commitment that was made last year or earlier this year at the lisbon-nato summit was a strong signal that nato countries understand that the stability of afghanistan and becks their national security as well. >> mr. wilson is recognized. >> thank you, madam chairman. madam secretary, thank you for being here today. i was impressed by your visit to pakistan. i have had the privilege of visiting there. i was so impressed by their military. we will get to encourage the pakistani military and the u.s. marines were there earthquake recovery several years ago. the organization was professional. the military was positive. in particular, i was pleased with a young u.s. marine who was of pakistani-american heritage. he had been trained in south carolina. to see how we were working together because we can and should. with at in mind, the foreign assistance programs you have helped initiate -- do you believe they are making sufficient progress? by what metrics are you getting the level of progress? >> thank you for traveling there. i share your strong endorsement of the positive work that was done between the pakistani military and the that the states military in earthquake relief. -- and the united states military in earthquake relief. we believe we are making a difference. it sometimes gets overwhelmed by the other activity going on in our relationship. we will be sending you the latest status report on what we have done next week. we have built roads. we have increased their energy production. we have been world's largest fulbright exchange. i did a town hall meeting in an islamabad. several people, publicly and privately, thank me for the programs that made a difference in their understanding of how to engage with their government. none of this is easy. none of it is without challenge. i believe we have to stay the course. >> i have been impressed with india. pakistan is developing a most favored nation trade status with india. i have been big coal chairman twice on the end -- co. co-chairman twice. what can be done to promote a level of positive contact between demands pakistan? >> the real danger in the region is not our bilateral relationship. is the relationship between pakistan and india. the more that there can be progress, the more likely there can be even more progress. we have in pakistan a leadership that wants to see progress with india. we have the same on the indian side. there have been successful visits in the last several months. announcement have been made -- announcements have been made to streamline visas to accelerate movement across borders. the most favored nation status is a really important development. we encourage it. we tried to tell both sides how much it will change their relationship. when i was there last summer, i spoke about a new road where goods could go up to cause expand. -- or but could the up to afghanistan. it could revolutionize the economy in pakistan. india is a huge market. pakistan produces things that india needs. they do not get into india in any direct or cost effective way. the more we do that, the better. >> all of central asia could benefit, even the west of siberia. i appreciate your enthusiasm for that and the recognition and promotion of it. every effort to eliminate cross border terrorism -- it has been a tragedy for the people of india. time.d back my >> i would like to get one comment and a couple of questions in. first, with chris smith, i am taking 8 -- taking an opportunity to make an off topic comment. as we all know, reforms are stalled. progress is in question. increasing risk to the region comes from inaction, . we all agree we need a solution. vehicle. need a u.s. leadership is essential. i hope we can work with you and the appropriate folks in the department to look for such a be a call -- a vehicle so it does not create a big problem. back on topic here. i have long supported active u.s. engagement around the world. i believe the obama to anistration's shift policy of smart power has been in our great interest, our security interests, our economic interests, and out of that use -- and our values of around the world -- values around the world. my question is, to assure that they are prepared to take on a bigger role as the united states prepares to draw down its , what and deep cuts the effect will they have -- what affect will the cuts have on them pursuing their work? >> their activities in afghanistan are a central to the safety and security of our troops, our civilian employees and the success of the transition. i wrote to the chair earlier this month. i am deeply concerned that the proposal would mandate actions that would severely limit u.s. participation in the u.n. put aside anybody else's interests. the u.s. must hold 50% of its funds. it would undermine our leadership when we have to be at the forefront. we are being asked to do more with less. we get a lot for our investment. as you say, the bulk of the funding is carried by others. they are a critical partner in monitoring human rights, supporting afghan elections. everything we have talked about today, we partner closely with them. if we cannot depend on them, we will have to pay for our and did something else. we do not have another partner that has the credibility would be reached that they have. >> thank you. i want to get your brief comment. you have been a great champion for women being in half and control -- for women in the afghan. >> you have been a champion for the women of that can as well -- women of afghanistan as well. i met with a group of women leaders when i was there. we expect there to be a process where women are about in all levels in the peace and reconciliation efforts where they can speak for themselves and have their own say about their own rights. we have made specific requests to the government of afghanistan that they be included. >> thank you so much. thank you. i would like to tell the members of our committee that mr.mberman and i agree that she would depart after questions. >> it is great to see you again, secretary clinton. i will switch gears. i serve as the chair of the western hemisphere committee. there is a lot to talk about. i wanted to talk about fast and furious. specifically, at what point did the state department learned of operation fast and furious? -- learn of fast and furious? >> i do not know the exact time. based on our information from the parts of the state department that would deal with this kind of issue, we have no record for any request of coordination. we have no record of any kind of notice our heads up. my recollection is that i learned about it from the press. >> i know the answer to this question, but i will answer -- will ask it anyway. was there a written waiver to allow for the transfer of weapons across the border? >> this is the first time i have been asked this. based on the record of any activity by the bureau that would have been irresponsible, we see no evidence. let me do a thorough request to make sure what i am telling you reflex everything we know. >> that would be greatly appreciated. i wrote a letter to you yesterday. i am sure you got it and you read it. >> i thought it was for my birthday. [laughter] >> happy birthday. the justice department was required to receive a written waiver from the state department to account for their intent to cause arms to be exported to drug cartels in mexico. if no such waiver was receipt, officials have violated the -- was received, officials would have violated the law? know.on't i cannot offer you any opinion on that. i do not have any information or analysis. i can only tell you the facts as we know that in the state department. >> if the law says they have to get a written -- it's the state department is required to get aid -- if waiver the state department -- if the state department is required to get a waiver, and they did not do that, they are in violation of the law. when we hear themexico and president called ar-- president calderone complaining about what is going across the border and we find out our government was responsible, we are concerned. we want to know who knew what, when and why, and how this happened. if you would get back to me and the committee about the waiver and whether or not the state department issued backed labor -- waiver.that do you agree that there is an insurgency using terrorist tactics in mexico? >> i have expressed my concern about that in the past. we are sensitive to the characteristics that some of these drug traffickers have adopted that resembled terrorist activities. we are also aware of the concern by the mexican government that we not mix apples and oranges. this is an ongoing discussion we have with our friends in mexico. we are tough on this, and you know. >> you have identified it as an insurgency? >> i have said it has characteristics of an insurgency. is unsolicited to be legitimate questions that the next -- government -- i am sensitive to the legitimate questions from the mexican government. >> preparations for this oversight hearing was done by our afghan war vets and our wonderful defense department fellow. thank you so much. a pleasure having you here. the committee is now adjourned. >> thank you for allowing me to sit on the panel. thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] every story to be 1800 words. >> she began the first women to hold the post of executive editor at "the new york times." three quotes making the same point. >> she will talk about the future of the "times" tonight on "q & a." >> david cameron discusses the euro zone crisis and tougher sentencing laws for those driving under the influence of drugs. tonight at 9:00 p.m. eastern and pacific on c-span. >> the joint deficit reduction committee met wednesday to discuss discretionary federal spending. that includes money for most federal programs outside of defense. douglas elmendorf discussed how discretionary spending its into total spending. the joint deficit reduction committee's the final proposal december 23.eis dues >> we have heard from 185,000 members from the public through our web site. we continue our work now today with a hearing on discretionary outlays, dirty and non-security. it is important to understand how these policies fit into our overall deficit and debt. they represent less than 1/5 of our total federal spending. you would think this small piece of pie was a lot bigger. we will hear more about that from dr. elmendorf today. congress has gone to this small pot with cuts again and again while leading many other pieces of the budget untouched, including the law that created this joint committee, which cut $800 billion in tdiscretionary spending. we are spending the same on non- defense spending. as this committee works on a bipartisan plan, we need to keep in mind the cuts that have already been made, the role discretionary spending place in our deficit and debt problems and the effect irresponsible cuts can have on our economy. these are not just numbers on a page. they affect real people in real ways. when food assistance is cut, that means greater challenges were struggling families. when infrastructure investments are shelved, that means fewer jobs and crumbling bridges and roads. this is no savings at all because we end up paying for it in the future. we should examine every piece of the budget to see where we can this possibly make additional cuts, it does not make sense to keep going after one small part of the budget that disproportionately affects middle class families and the most vulnerable americans. it has to be balanced. today, douglas elmendorf will be discussing discretionary spending which has grown significantly since 9/11. we have got to get this right. as my colleagues have noted over the past few weeks, it is an area that will be hit hard if this committee does not come to seeal and we wilmove to questration. this committee has been working hard to find common ground and a path toward a bipartisan plan that can be passed by this committee and congress. we are not there yet, but i am confident that we are making progress. we are moving quickly enough to meet our rapidly approaching deadline. is this committee is going to work, we all need to be willing to make some tough decisions and real compromises. i am willing to do that. i know many of my colleagues i as well. every day, we hear more and more about the effects failure would have on our long-term fiscal health and credit worthiness. it will be up to allow us to demonstrate to the american people that we can deliver the kind of results that they expect and deserve. with that, i would like to represent -- introduce michael cheered for his opening statement. -- introduce my co-chair or his opening statement. >> i would like to thank my co- chair for yielding and her leadership on this committee and the spirit of negotiation she brings. there is no such thing as an unimportant hearing when it comes to dealing with our nation's structural crisis. there are many challenges and many important priorities that have to be debated and negotiated. not the least of which is what many of us view as the number one function of our federal government, which is to protect us from all enemies, foreign and domestic. we continue to live in a dangerous world. when i look at the totality of our discretionary budget, i find some common ground with my cochair. although there is no such thing as an unimportant hearing or and an important section of the budget,-- an unimportant section of the budget, we may be debating pennies and dimes. there happen -- have been huge run ups in our discretionary spending since the president came to office. the numbers speak for themselves. without the stimulus program,epa has increased 35 1/7%. subtracting the stimulus, housing and urban development increased 22.2%. the list goes on. it is not in this forum to debate these particular policies. it is important to know the numbers. when these numbers are growing, -- the familydget' budget has been contracting. our entitlement spending is 60% of the budget and growing. interest payments on our national debt is driven by our health care and retirement programs, which are starting to drive the nation broke as they grow at 7% a year. our nation has seen negative economic growth. to put this in a larger context. and did the budget control act, we collectively have a goal, a goal of $1.50 trillion in deficit reduction. we have a duty to provide deficit-reduction and legislative language that will improve the short-term and long- term fiscal imbalance of the federal government. the challenge before us remains. we must find quality health care solutions, quality retirement solutions for our nation at a time that does not compromise our national security, does not compromise job growth and does not mortgage our children's future. everything else we do believe with the discretionary budget will be helpful. nothing will solve the debt crisis or allow this committee to meet its statutory duty. proving stewardship of our discretionary budget will be helpful and alone cannot solve the crisis. it continues to be an important matter. i look forward to hearing>> witt over to the director for your opening statement. we appreciate you taking your time out of a very busy life to take time to come today and answer our questions. >> thank you if. -- thank you. this is a very challenging task. to all members of my committee, my comments will focus on four questions addressed in the written testimony. first, what does discretionary spending comprise? second, what has been the historical trend in discretionary spending? third, how will discretionary spending of all over the next decade under current laws? fourth, high map -- how might the past be altered? before digging into that, let me clarify some of the terms i will use. when i talk about discretionary funding, i am adding together the budget authority appropriate for those programs and the so- called obligation limitations that govern spending for certain transportation programs. those two types of funding and provide agencies with the authority to spend money. when the funds are disbursed, the become outlays. through the testimony, i will focus on defense and non-defense discretionary spending rather than security and non-security spending. defense is a traditional categories that includes spending on military activities plus spending for the department of energy, atomic energy defense activities, and some defense- related activities of other agencies. non-this bet -- non-defense spending is a reading else. it sets caps on 2012 and 2013 using different categories, security and non-security. for security includes most but not all of the defense and includes appropriations for the department of home insecurity, the department of veterans affairs, and international affairs budget category. however, in 2014 and beyond, the act specifies a single cap on discretionary funding. there is an entirely different set of caps that would come into play if legislation from this committee does not generate significant deficit-reduction. in that case, the further cuts required are based on the traditional defense and non- defense categories. all the to make the situation truly confusing, act labels those security and non-security as well. we thought it would be most useful to focus on the familiar defense and non-defense categories. let me turn to the first substantive question, which is what discretionary spending comprises. in fiscal year 2011, total funding was 1.3 -- $1.3 trillion, more than half went to defense and the rest went to non-defense programs. if you turn to the page in front of you, you'll see a big debt not labeled defense discretionary funding for 2011. of total offense of funding, 43% went into operation and maintenance which pays for the day to day activity, training of military units, a majority of costs for the other programs and compensation for most of the department of defense civilian police. it went to military personnel, housing and pay allowances. procurement car representing 18%, funds the upgrade of weapons systems. appropriations for the war in afghanistan and iraq account for a quarter of defense funding. if you turn to the next page, as a comparable picture for non- defense funding for 2011. seven broad categories accounted for 80% of the total. education, training, social services programs together claim 16%. transportation programs received 16% of the total, with half going to highlight programs. income security programs, mostly for housing and security represents 11%. that does not include unemployment compensation, food stamps or temporary aid to needy families. they are all part of mandatory spending. health was another 10%, with most of that devoted to the national center for health. justice was 9% in the collection of smaller categories from breaks up the remaining 20%. looking at non-defense discretionary spending as a whole, about one-third is dispersed in grands to state and local governments. of those grants, a third are devoted to educational and training programs and a quarter to transportation. the remainder goes to environmental protection, law- enforcement, economic development and other purposes. let me turn to the second question -- the historical trends in discretionary spending. this is depicted in the next page of the handout. discretionary spending declined noticeably as a share of gdp from the early 1970's it to 2000, mostly because defense spending declined relative to gdp from 8% in 1970 to 3% between 1999 and 2001. defense spending than climb began. outlays for non-defense discretionary programs have averaged about 4% of gdp during the past 40 years with considerable variation but no evidence trend. thus, such outlays increased roughly in line with the size and income of the population. non-defense discretionary outlays were allocated in the past few years because of funding from the 2009 recovery act. altogether, discretionary spending amounted to 9% of gdp, higher than the 6% in 2000 but lower than 11% to 12% in the 1970's. the third question is how discretionary spending will fall of the next decade under current law. to illustrate the potential impact of the caps set in the budget control act and the automatic enforcement procedures in that act, we project appropriations under several different assumptions, including those projected on the handout. i apologize for those who don't have the handout. i think members of the committee should have that in front of them. i am referring to the written testimony. there are a couple of slides, but nothing i'm saying is new and not in the testimony. the largest number we looked at, $12 trillion over the next decade, would come from 2011 adjusted for inflation. the next numbers i will talk about assumes the funding is equal to the new path set in law, about $11.3 trillion over the next decade. we want to focus on recaps are meant in defense or non-defense spending. the smallest numbers total $10.4 trillion and incorporates the sequestration and reduction in caps we estimate would occur if no savings resulted from the committee. the next page is table 3 on the written testimony and deals with defense spending. i will focus on the numbers near the bottom highlighted in blue. the caps on defense spending did not constrain appropriations for the war in afghanistan or similar activities. the automatic enforcement procedures would not affect the such items. the upper of the two blue rose shows the defense spending moving from the path where the amount of funding in 2011 has grown with the rate of inflation. to our of non-defense spending. between 2012 and 2021, such reductions would show the number at the blue end of the bar. the lower of the two shows of the larger reductions in defense funding in moving from the path where funding it jumps off 2011 and grows from the rate of inflation to the path that would occur if this committee resulted in no savings. between 2012 and 2021, the cumulative production would total $882 billion or 14%. in 2021, it would be $110 billion, or 16% lower than if such appropriations kept pace with inflation. if you skip the next page, the figure beyond that shows defense spending as a share of gdp. the light blue side shows the history of funding for the base defense budget. the middle line on the right shows the projection assuming proportional cuts in spending to meet the caps. the lowest shows the maximum automatic reductions. under those assumptions, funding excluding war funding would represent 2.5% of gdp compared with an average of 3.4% during the past decade. the next page is a table for from the written testimony and deals with non-defense spending. i will focus on two rows of numbers highlighted in blue. the upper shows the non-defense funding, moving from the path where 2011 funding grew at the rate of inflation and would result if the caps for bets on defense and non-defense sides. between 2012 and 2021, such would total $418 billion. the lower shows the larger reductions in non-defense funding moving from the inflation-adjusted path to the path toward a savings results from the committee. the cumulative productions -- the non-defense budget authority would be 15%, lower than it would be if such appropriations kept pace with inflation. the next page shows non-defense spending as a share of gdp. the line on the left side shows the history of such funding. you can see non-defense funding spiked upward in 2009 but then fell back in the past couple of years to its average share of gdp during the proceeding decade. the upper line assumes proportionate cuts in defense and non-defense funding to meet the caps. the lower line shows projection of the automatic cuts are triggered. but under those assumptions, and 2021, it will represent 2.6% of gdp. the fourth and last question is how the path of discretionary spending might be altered. two quick points are summarized on the last page. reductions may be particularly challenging because funding increases and greater than the rate of inflation would be necessary. for example, administering the plan would require $500 billion war defense funding of the coming decade. other examples where an extrapolation of current funding would be insufficient to fund current policies include veterans' health care and telegrams for higher education. some observers believe current policies are insufficient to meet the nation's future needs. many analysts believe spending on infrastructure is inadequate to provide enough roads and bridges. to find all of the projects for which benefits exceed costs. spending on certain programs is allowed to grow faster and even less room would be available for other activities. cbo assumes that funding subject to the caps would be equal to the about currently specified in law for those caps. that means legislation that reduces the funds available for a specific activity or achieve savings would only repeat produced total appropriations if the legislation lower the caps without a reduction in the caps funding would probably fill the gaps created by any specific reduction in savings. i hope the importation is helpful happy to answer any questions you have. >> thank you very much and thank you for being here today taking our questions. this committee is working very hard to try to find a balanced plan to reduce our deficit and rein in the debt. it is not an easy task. we all believe is necessary. over the past 10 years, domestic discretionary spending has remained essentially flat after adjusting for inflation and this spending has remained stagnant despite the growing need to have investments to spur job creation and assistance for those in our country who have been hit hardest because of the recession. in your testimony, you mentioned discretionary outlays during the past decade increased primarily due to the increase in security spending after 9/11. let me start by asking questions about the impact of past and potential cuts to discretionary spending on our overall budget picture. would you agree that with negotiations on a 20 levin bills and a disgrace spending cap and the recent budget control act that congress has already made significant efforts to reduce discretionary spending? >> yes. the current path of spending under existing law is a good deal lower than it would have been without the actions you describe. >> isn't the case that even if we completely eliminated discretionary spending, everything from nih to elementary and secondary at education, parks, processing social security checks, all that, we would still faced deficits of hundreds of billions of dollars because we have not addressed entitlements and revenues? >> i have not done the calculations, but your most definitely write the discretionary spending is a shrinking share of federal outlays over time. entitlement programs, mandatory spending is a growing share of federal outlays, in some cases growing rather rapidly. without addressing that pass, it would be extremely difficult to the budget on a sustainable path. >> given the spending cuts congress has already made, can you talk about what the economic impact effective for their efforts to cut discretionary spending both in the 2012 process and in the committee's final product? >> over time, cuts in discretionary spending reduce the services the american public receives, services in protection against foreign enemies, services in the highway's they can use or the national parks they can visit, those have a variety of cutbacks and human costs and can have economic costs, depending on the nature of the cutback. even in infrastructure programs for most think the country should spend more. some did have a very high economic returns, the nature of the affect depends on the particular changes in policy. in the short term, given the large gap between our economy's potential to produce output and the level of goods and services being produced, cutbacks in government spending or increases in taxes in the near term would reduce the level of economic activity and employment and the that as a separate affect from the longer-term effects wear they vary a good deal of depending on the nature of the program being cut. >> all of us on the committee know we need to address the long-term drivers of the federal budget. but i believe we have to take steps to strengthen the economic recovery. according to the cbo and its relationship to the budget, cbs states stronger economic growth improves the budget bottom-line. weaker growth worsens it. projections are now weaker for 2011 and 2012 and cbo -- >> without formal projections, but if we get a projection today, yes. >> nearly all economists tell us growth continues to suffer from a significant weakness in demand. many are worrying against pursuing overly aggressive measures of hostility -- of austerity in the short term. do you agree a lack of demand is there? >> i think it is a widespread view that widespread lack of demand is the key factor holding back the recovery. further is the source of the lack of demand. >> how does a reduction in government spending generally affect demand on the economy during an economic downturn? >> government spending will generally reduce because the government is buying more itself or it is providing lower transfers to individuals. >> does tax increases or spending cuts have a larger increase in reducing the demand for economic growth quest for >> it depends on the tax you have in mind. certain forms of government spending have a large bang for the buck. others have lower affects. certain kinds of tax increases would -- it depends on the nature of the tax change, often on the recipient or pair of the tax. >> thank you very much. >> thank you. on behalf of the entirety of this committee, thank you. we know you are sorting through a number of homework assignments from various and sundry members here. we want to thank you with the diligence and professionalism you bring to the task. >> thank you. >> when i look at the statutory duty as opposed to the statutory goal of this committee, our duty is to offer recommendations to address both the short and long term in balance. with respect to the short term in balance, is it not true that this stimulus bill with interest amounts to over a trillion dollars of spending which accounts for a large temporary growth and our budget? >> yes. only a part of the recovery act was about discretionary spending. there were increases and reductions in taxes. we put it a little over $800 billion. it did lead to a bulge in discretionary funding and an attenuated bulge in outlays because the money spent right away. ati don't know if you have your fingertips numbers with respect to agency growth. now that i looked down, apparently the source is your office, so i hope this is correct. >> i -- if they are numbers from us, you can trust them. >> then i trust when you add those stimulus, the commerce department has grown to hundred 19% from 2008 through 2010. with this stimulus, the epa has been grown 130%. the energy department has grown 170%. education has grown 180.6% at a time when the economy has seen negative economic growth and family paychecks have shrunk. unfortunately, this is not the forum in which to debate the stimulus, but i get has to be noted when we're talking of areas of the budget where savings could be had, the american people deserve the facts. i want to follow up on a point my co-chairman was making. i believe i have this right. under your alternative fiscal scenario which is the current policy baseline, i believe it is at 2024 that all federal revenues will be used to find the mandatory portion of the budget. is that correct? >> i am sorry. you have a better hand around the facts that i have. the qualitative point you are making is right. mandatory spending dominates the budget in and increasing way overtime. >> this came up in an earlier hearing and i think i have is correct. under your alternative fiscal scenario, you assume a growing revenue base. do you not assume revenues increasing? >> that is right. >> don't you also assume in your alternative scenario tax increases contained within the patient protection affordable care act? do you recall? >> what we do in our extended baseline scenario, we try to follow current law. the current scenario is meant to track current policy. we try to hold them at a historical average share beyond 2021 without trying to specify what combination of specific tax policy congress might enact. there is no specific answer to any other given taxes would be out of 2021. just said it to provide information for congress on what might happen if that sort of policy were continued. >> i have a question about the overseas contingency operation funding. i believe you have recently readjusted your baseline. we all know the president announced our military engagement in iraq will and this year. the president plans to completely reverse the surge in afghanistan by this time next year. i still think you are showing a hefty sum in the of overseas contingency operation line items. can you explain the assumptions underlying this number? >> yes. for any part of discretionary spending that is not capped under law, the cdo takes the latest funding that has been provided by congress and extrapolates that over the decade to grow with inflation. when we estimated the effects of the caps on the budget control act, we compared those caps, not with the latest baseline projections, but was a later level of funding and acted as part of the deal to get through the rest of the fiscal year. our latest projection was published in august. we would estimate any caps one might impose on overseas contingency operations of the difference between those caps and the level that is the latest level that has been appropriated by congress. the latest level is about $190 million on an annual basis. if one extrapolates that with growth of inflation, one ends up with about three trillion dollars over the coming decade. as for other components of discretionary spending, we did not make an evaluation of how that compares with the likely demand for funds or with any particular evaluation of the appropriateness of the spending. it is a mechanical extrapolation. >> i see i am already over my time. under your protocols and rules, the president's recent announcement that this money is not going to be spent does not come into your calculation? >> not until congress enacts the appropriation. >> can i just ask our closely as that tracked over the coming years? >> the present testimony shows the pattern of funding provided for the past several years. the annual funding was on the order of $160 billion. this new level is about $40 billion below the level and 2011. >> we will now move to each of our committee members. >> thank you for being here. thank you for the work your helping us do and hopefully of the next few weeks as well. let me try to dispose of one question quickly. one of the major problems as is drop in revenues we of scene. we are trying to tackle the issue of how to best increase those revenues. one way to do that is through economic growth. if folks are back at work, of plymouth rates go down and york paying less believe benefits. the are increasing revenues because people are paying taxes again. my understanding is if you increase the level of a compliment by certain amount, you will see a commensurate decrease and a level of deficits and a commensurate increase in gdp. could you give a synopsis of what happens if we put people back to work? >> the stronger the economy, the more federal government is collecting revenue and the less it pays out in benefits. the biggest response is on the revenue side. if one is looking for a rule of thumb, people often say the federal government effective tax rate for an extra dollar earned is collecting 25 cents of that in federal revenue. an extra dollar of gdp might induce another 25 cents of extra revenue. that is a very rough rule of thumb. the actual number would depend on the way in which the economy improved and who received it and how much it was taxed. >> so the more you put those 15 million americans back to work, even of the the lan average salary, as thousands of dollars a worker the affect a quarter of the dollar, each could be revenue to the government which would help decrease deficits. >> it depends on the policies and vote to move the economy back toward full employment. >> that is where we invite you to be part of this panel to help put the answers. let me help with regard to discretionary spending. my understanding is -- what do you think might happen if the reductions in some of these ballets and the investments would occur in defense and non- defense of the next 10 years as a result of the caps and if we are not able to come to some agreement as a result of the triggers in sequestration, my understanding is there are fire walls that separate the savings we would extract from defense from non-defense, but those firewalls exist for only two years. are you saying the savings you show in defense are guaranteed or is that what we presume? half of the savings will come from defense and half comes from non-defense? >> the budget control act's establishes control on the security and fiscal year 2013. that is defense funding and other pieces of funding as well. but beyond those first two years, the on the capital funding, we looked at three alternatives, one in which the alternative from the former base line with an inflated amount, one in which it was taken out entirely through defense spending and what was absorber in non-defense spending and other better a combination. i presented the medal for simplicity, but we looked at a range because it would be up to future congresses. >> that is the point i was hoping you'd make. depends on what congress does where we will see savings occur? >> absolutely. >> total all the pressure is spending, whether for pentagon, education, environmental protection, clean water and air, food safety, total that up and how does it compare to the amount we spend to the tax code to tax expenditures and earmarks? >> we have not published an estimate. i have seen estimates the some -- the sum is about a trillion dollars a year. total funding for discretionary purposes is about 1.3 trillion dollars. >> we spent almost as much through the tax code for certain constituencies as we spent through the entire allocations process through the regular budgetary process. that's the type of spending we are not talking about -- tax expenditures. but you did discuss that the last time you were here. >> yes. >> i want to thank you for the report you issued on the this region of in come in america and comparison over the years. you highlighted some startling numbers about the disparity in income and wealth in america today where the top 10%, the top 1% of america has reconcentration of wealth as opposed to the very middle of america. can you give us a quick synopsis of what you found? >> we have found very pronounced widening of the income distribution in this country, with reductions in their share of the national in come going to the bottom four quintiles. a very large increase, a doubling going to the top 1% of the population. >> thank you. i see my time is about to expire. thank you for your existence. -- for your assistance. >> let me read an e-mail sent to interested hill staff by the associate of affairs at the congressional budget office. this test -- a subject is the hhs announcement on the cbo baseline. the secretary of health and human services announced the department doesn't plan to implement the class act, the long-term care insurance program under current law. therefore, and the next base line, budget projections, the cdo will assume the program will not be implemented unless there are changes or other actions by the administration's that would supersede the announcement. furthermore, following a longstanding procedures, the cdo takes new administrative actions into account when analyzing actions even what it has not published new baseline projections. beginning immediately, legislation would be estimated as having no budgetary impact. this says the longstanding policy is to take new actions into account. as you testified in response to the question, this would suggest you would not necessarily wait for congress to act. the president as commander-in- chief. his trip announcement is tantamount to congressional action. he has the ability to draw the troops down. what is the difference between his announcement that we will have no presence in iraq after christmas and his previous decision and announcement that we would withdraw in stages the troupe from -- troops from afghanistan over the ensuing years. what is the difference between that announcement and a class act announcement in terms of the cbo baseline decisions? >> i think it is the difference between the mandatory spending and spending late out in the emergency control act, followed by cdo in conjunction with the budget committee. a program where congress establishes certain rules and parameters within which administrative action can be taken. we are trying to ride the latest estimate of the affects of that set of authorizations on the federal budget. if there is news of a form of a distinct announcement that some program has been abandoned, we adjust the scoring base for those mandatory programs. but for discretionary spending, our projections don't respond to particular sets of programs or objectives because congress can shoes every year how much to provide. >> but this is a distinction without a difference. the president is the commander- in-chief. he deploys troops, not congress. do you say that different -- that difference provided to wait even though the commander-in- chief has made his announcement had begun a program for withdrawals? they are making plans as we speak of how we're going to withdraw. >> but it is a distinction within a difference. we are not equipped to project what the defense funding the president will request in the future or what the congress will enact in the future. this is a factor that will prevent the funding they request but not in a one to one way that we could analyze. >> this memorandum should have distinguished between mandatory and discretionary spending when it talked about the cdo policy, they will assume the program and not be implemented -- and less there are changes that would supersede the announcement following a longstanding procedures? fed they should have a distinguished -- >> i should have put that in. but just to emphasize, the things i am describing the are procedures that go back at least a quarter-century. >> with regard to the savings they president included in his a legend budgetary savings, it all depends upon whether the defense appropriations legislation is passed? when the legislation is passed as opposed to whether you'd change your baseline? >> yes. congress enacts the for levels of appropriations. at any point, anything after that would respond to that level. >> if we are able to get the bills completed before the deadline for the committee to act, much of the alleged savings would no longer be available because of the adjustments? >> it depends on what you enacted. >> to the extent they are lower than the previous years, would not cut that amount? >> to the extent they're lower than the $119 billion, that's a good deal lower than the last fiscal year. if the congress decides to enact appropriations below $119 billion, that would bring down our projection against those and the base against which we would estimate further reductions. >> thank you. >> thank you, madam cochair. i would like to focus a little on defense spending. is it true that at current level, defense spending, war funding -- it is higher now in historic terms compared with any other time in american history except world war two? that is the current level of defense spending, including war funding, greater now than during the korean war? >> i believe that is true, senator. as i showed, as a share of gdp -- >> dollars adjusted for inflation. >> yes. in dollars adjusted for inflation, it is about $240 billion. during the korean war, in 2011, -- >> the same is true for the vietnam war? we're spending more dollars than we did adjusted for inflation? >> yes. >> and more than we did during the reagan administration adjusted for inflation? >> yes. >> and more than the cold war average? >> yes. which is the highest since world war two. is that correct? >> during the of reagan administration, it was higher than the korean war and vietnam war. >> the budget control act at two separate acts for -- but no separate caps for security thereafter? >> yes. >> that means the appropriations committee could decide to spend more on security than is allowed under the caps in the first two years? >> yes. if this committee doesn't achieve additional savings, then enforcement procedures established separate caps for defense and non-defense discretionary spending. >> so there based caps camarena there any for spending? >> they do not constrain more spending. >> technically, they would be adjusted upward by any amount designated by congress. >> that is a technical point. there are specific caps for security and non-security for two years? no caps whatsoever? >> nothing. >> yes. >> has the appropriations committee sometimes it gaunt to spend dollars that are arguably not or funding because that is an extra pot of money to use if there are no caps on it, has that happened question are >> i cannot speak to the motivations or thought process of the committee, but there will be some ambiguity in any effort to allocate costs and what costs are truly attributable to the wars and what costs are not will be a matter of judgment. >> the committee proposed be based to be account customer >> the base has been some not of money designated today's budget and some movement the other direction as well. i am afraid i don't have an overall assessment of the numbers involved. >> $100 million was taken out for migration and refugee assistance for places like kenya and pakistan? >> i do not know. >> but we do know there is no limit on the account -- let me ask how it is defined. what are the definitions that constitute an does not constitute appropriate spending out of the war account? >> in our presentations, we follow the labeling provided by congress. is that to you and your colleagues to decide what you support under various categories. >> this sounds like what congress wants to do. >> yes, senator. >> you are saying there are no rules under the budget control act that would restrict the migration of defense spending in the future? >> i think that is up to the congress to designate what it views as related to those operations and what it views as part of spending that would happen anyway. >> is this committee were to say dollars cannot be spent by certain program, my understanding is that would not be scored by your office. >> a certain discretionary program -- changes in mandatory programs, we would do, but certain others would not take account of because we are look relying on the cash. the squeezing of one with a change in the cash level -- a >> what if this committee were to establish caps? what if there is a cap -- >> if the committee established caps below the level of funding based on the as track appellation with the increases for inflation from the latest enacted appropriations, we would estimate savings from that. >> you are suggesting -- >> $1.3 trillion. that is extrapolated -- >> with no caps. but if we were to set a cap, that would be scored? >> yes. >> thank you. >> thank you. >> thank you. we appreciate you participating today. i want to take as back to a question from earlier today. if this committee works to try to get an agreement, a solution, what is the real day you want to give us the information to turn out a reasonable number for us? >> as you know, are legions of skilled analysts are working very hard for this committee already. >> have they had time off until now? >> i'm afraid not. we have a terrifically hard working group as you know. last time i was here, if you have a set of proposals that would make changes across a range of mandatory spending programs, that would require some weeks to work with legislative council and the staff of this committee in refining language to accomplish the objectives you're sitting out to accomplish and for us to produce a cost estimate. backing off from thanksgiving that left us looking at the beginning of november, which we are very aware is not very far away. >> thank you. what is the deficit as a share of gdp to a question are >> it was about 8.5% of gdp. >> if this committee fails and we end up with a sequester, and we do the numbers you suggested in your testimony in defense and non defense -- we would end up with a sequester of $882 billion in savings over 10 years and a number almost same -- $794 billion in those tenures and nothing on the entitlements side or the mandatory aside. just those two, where would we go in terms of the debt as a percentage to gdp 10 years down the road? >> these numbers are comparisons to the sequestered to inflated extrapolation, not the amount of the sequester or enforcement -- the enforcement itself. our baseline projection inc. the one. true -- $1.2 billion to be achieved either to the actions of this committee or the enforcement procedures. whether that committee hits $1.2 trillion, as long as you don't save more than that, you're putting yourself back to the baseline projection from the summer. under that protection, allowing for the -- under the projection calling for that to expire in medicare to be cut sharply and other features of current law, deficits by the end of the decade are 1.5% of gdp is declining, but that hinges critically on revenues rising above the historic average as it would under current law and current spending falling below -- falling below gdp to make room for they increase in social security and health care programs. >> i don't know if you saw a dead gao report released this week related to if this committee fails, but -- i want to say the trillion dollars in savings is not sufficient. that is the word they used. they predicted a credit downgrade. have you had a chance to look at the report quest are >> i have glanced at it. >> i know it just came out this week. >> 1 technical point -- the offer to scenarios. one is close to our alternative scenario. the other is close to current law. nonetheless, what they do is a limit the increase that would currently happen. our current baseline scenario incorporates rising revenues relative to gdp that would go beyond this decade. both of those scenarios look worse than our better scenario, but it's a different in policy assumption. we certainly agree very much with the underlying point of the analysis that under current policies, the u.s. government is on an unsustainable fiscal path. the magnitude of changes that will be needed from current policies is a very large. if one wanted to consider if these provisions and limiting the alternative minimum tax, the deficit over the coming decade becomes $8.5 trillion rather than the $3.5 trillion under current law. that would be levels we have never seen in this country. >> thank you. >> thank you, madame chair. thank you, dr. for being here again today. as you may recall at the first hearing, i discussed below bet of the growing wealth gap that exists. i did that with reference to unemployment numbers. your recent report indicates that over the last 20 years, and my estimation, that is a generation, over the last generation, we have seen an increase in late incumbent of the upper 1% household the america of 275%. during that same time, we've seen an increase in the top 20% of 65%. but of the bottom 20%, only 18%. over that same time, for the 60% in the middle, we have seen in come has grown only 40%. that indicates to me the middle and come is shrinking relative to the rest of the country. if we were to extrapolate that out, as you talked about, i would assume we are where we are because -- let me put it this wave -- to the extent of government policy has allowed this gap to exist, if we continue current policy, then it is fair to say we're going to experience that kind of continued widening of the wealth gap in america in the united states. >> one of the issues we wrestle with in our projections as the evolution of the income distributions. the study we did and the with data in 2007. what has happened in the past few years of the recession and financial crisis is not clear. though if you look at our study, past recessions have shown narrowing of the income gap, particularly because higher income people collect a relatively larger share from capital income which tends to be cyclical. our projections to incorporate lenglen widening of income distribution, whether it will continue at that case, i don't think our projections comes at the expense. either do ec court -- neither do we see courses that would cause that to reverse. except for the affect of this recession, which we don't have data for. we do not see those underlying factors reversing. >> i have seen a lot in the media in recent days about who is in fact paying the taxes. i am assuming, as my dad used to tell me, don't argue about taxes because if you owe them, that means you made something. i am assuming these people are not pay because they don't owe anything and they don't owe anything because they haven't made anything. that's just an assumption on my part, but let me the economic ladder we talk about a lot. if we are going to see a shrinkage in that gap, it would seem to me we need to start looking at how do you prepare people to assume tax paying responsibilities in our society? we do that by investing in their education to the extent things like holograms, headstart, title want all of these things are designed to prepare people to earn income and therefore pay taxes and not be on the government bill, as we like to say down south. am i to believe if we dramatically reduce that investment, then we will dramatically reduce people's abilities to assume these responsibilities and become taxpayers? >> year raise an important but difficult question. people's ability to earn income comes from a variety of forces on their life. federal government policy is one of those forces. if federal policy or changed in a way that provided significantly less support for people in obtaining education or getting skills, that could well affect their income in the future. but we don't have a way of quantifying that. it depends and the specific programs. there's a very large research literature and experimentation -- experimentation about training programs. some seem to work well and some seem to work badly. just what role particular government programs play is a much studied question. but there is not a good general answer to how important that is. the facts are relative to other factors influencing other people's this time goes real fast. my time has expired. >> -- >> thank you, co-chair, and thank you, director elmendorf. >> we prioritize everyone first. >> thank you. we have a lot of work yet to do. you talked a bit about jobs and the economy, and my colleague, congressman c;l -- clyburn, just talked about this. you said that demand was the key issue, and the source of the lack of demand is a key issue. i was wondering if you would discuss the path you've outlined repeatedly, including today. we're increasing the debt to $9 trillion over the coming decades, depending on whether you use the carte blanche or policy base line. our effort is to reach 1.5 and 1.2. this is not even close to the increase we are likely to feed from the current $14.50 trillion debt. what impact does that have on you, the study, and others who have commented on this unsustainable fiscal situation on our current economy? >> the unsustainable path matters in a short run for various ways. partly, the borrowing the government has done, and identification of government borrowing can crowd out private investment to some extent. at the moment, with private investment being weak anyway, it is less clear. in fact, we see interest rates being quite low at the moment, but there can be crowding out of investment. i think beyond that, the uncertainty about this policy is probably weighing on households and businesses. they can recognize that there will have to be, as a matter of of arithmetic, changes. but they do not know what this changes will be, and i think that kind of uncertainty is inhibiting, particularly to commitments of money over time, to invest in factories and the equipment, to invest by hiring people, for households to invest in housing and durable goods. that uncertainty is a piece, i think, a broader uncertainty of government policies. there are a lot of policies that are up in the air, and that uncertainty is part of a broader uncertainty about the economy and the income households will think they will have in the future and the demand for businesses and services they will have in the future. >> i appreciate that. as an economist, i appreciate your giving us really a sense of the importance of our task, because it is not just cutting spending. it is about jobs. even though we are not jobs committee, what we do will affect what will happen going forward, and not in the substantial ways we would hope, but it will take in the other direction, and the alternative is if we do not do our work, what impact that would have, making our prospects for economic growth more negative. let me give you some figures here, which may not trust because they are from the office of management and budget. you said earlier you did not trust the cbo figures, but they are consistent with yours. mandatory spending dominates the federal spending. been and, that was your quote a few minutes ago. the co-chair have made that similar koran from a different perspective, and i totally agree with that. the issue, the biggest part of our budget, over 50% of the budget, 60% of our debt, it has gone from 25% of our budget in the 1960's. if we do not get that largest and fastest-growing part of the budget, we will not accomplish our goal. but having said that, let me give you some statistics on the discretionary side at this hearing today. i will give you some numbers from 1990 until today. non-defense discretionary has risen during that time by 95%, which, by the way, is nearly double the 52% growth in defense spending. 95% on non-defense. admittedly, the defense spending is not high because the increases we have seen have been more recent from 2001, reflecting an increase of the cuts in the 1990's on defense, so if you used just the last decade, the defense would be higher. but let's look to 2011. on the education side, discretionary spending up over 100%. international spending up 102%. community and regional development spending up. help research and regulation spending up 56% from, and so on, so i think we need to keep both of these things in mind. one, if we do not work on these issues to get the economy going, that is tough. understanding that spending levels have been put under more constraints, if you agree with those numbers. >> senator, i would not argue with your numbers. >> again, thank you for all of your help to achieve the goal we have all talked about today, and we look forward to working with you. >> thank you, senator. >> senator kerrey. >> thank you for being here and for the working martine is doing. we appreciate it. we understand that they keep an idea of the jobs created by the american recovery investment act. is that correct? >> yes. >> is not correct that without the policies of the american recovery in investment act that gdp would be lower and unemployment would be higher? >> yes, senator. >> so it has had a positive impact on gdp and has reduced unemployment could >> those are our estimates, yes. >> i talked to you the last time you were here about going big, about a $4 trillion total project, $3 trillion if you do not. it is my understanding that you already have in your baseline and accounting for $1.20 trillion in debt as a production by this committee. is that accurate? >> yes. >> sell if all we do is $1.20 trillion, we are not reducing the deficit below the current rate. >> that is right. unless you take explicit action, there is a backup plan. >> now, with respect to the bigger deal, so to speak, would you tell the committee or share with the committee, assuming you have a $3 trillion reduction, which included something along the ratios we have all heard -bowleseither in simpson's or in other places, assuming the revenue would come exclusively from the highest-and people, -- the highest-end people, the job growth that will come from the $3 trillion versus just achieving the 14 $2 trillion goal. >> so just looking at the aggregate deficit reduction, i think it is clear that a greater reduction would have a positive effect on current spending and on current output and employment, and conversely, the failure of the committee to not do this would have a negative effect on confidence and thus on spending. >> and if we do simply the targeted goal, and that is all we do, is it not the fact that we would be back here in a year or two, dealing with the same issues that are on the plate now, about the and sustainability of our budget? >> yes, senator, i think that is right. >> so in terms of the duty that the co-chair as mentioned about providing language to significantly produce, the most in koran message to the marketplace i am told, if you achieve a $4 trillion total, which is the only way to begin to stabilize the debt. and that's not accurate? >> yes, the amount that is needed depends on how you view the expiring tax provisions and some other provisions of current law that would take us away from court policies to which people have become accustomed. if one extends all or a large share of the expiring tax provisions over the next few years, then the gap between spending and revenues over the coming decades becomes much larger, he and other action is needed to achieve a given objective for the path of the debt relative and sides. >> can you share with the committee what would have a greater negative impact on growth? failure to come up with 1.2 or 1.5, and the marketplace signals combat about the continuing fiscal plight of the country, or it the ability to come up with a $3 trillion or $4 trillion level that had the three to one, 2 to 1 ratio that i talked about, revenue coming from closing tax loopholes or the higher income earner, which would have the greater negative impact on the economy? finding some revenue from those folks and getting a deal, or not getting that revenue? >> centre, i cannot analyze the sort of policies you are describing in my head. >> but you can analyze -- you have told us that if we fail to come up with something that fails to deal with the unsustainably, we are sending that message to the marketplace, are we not could >> yes. in terms of the amount of deficit-reduction, the more this committee can achieve over some period of time, the better that would be on confidence, but i cannot wait that with a hypothetical. >> leave a hypothetical out. can you tell us what, for instance, the expiration of the top end of the bush tax cut, if it went from 35 to 39.6, and it was part of a $4 trillion deal, would that have a negative impact on growth in our economy? >> we actually did last fall, the senate budget committee, provide an estimate of different ways of extending the expiring tax provisions, and extending them had the negative effect of reducing deficits and a positive effect of keeping marginal tax rate lower, and that is encouraging work and saving. the negative effects of the extra-were larger than the possible backs of lowering marginal tax rates for those policies we looked like over the medium to larger term. that is what the answer depends on the specifics. >> is there anything in the budget control act that would prevent congress from changing how the sequester would affect the defense spending could >> congress could enact a change in the law. >> there is nothing in the budget control law that would prevent that? >> no, and the congress can reverse the actions of the previous congress. >> i appreciate your response to a question to senator murray that you believe your projections on gdp growth are too generous and that you believe that should be lower, which would mean actually there are deposits is worse than you have projected in the past, but under your projections, you are assuming a 30% cut physicians' and medicare, are you not, and you are sitting taxes go up, that everybody's taxes go up, that would certainly have a detrimental effect on the economy, and you are assuming there is a cut in discretionary spending, sell and to project, in answer to mr. upton's question, it is based on all of these assumptions which, frankly, what impact that number particularly in one way. >> these are not our assumptions, these are current law. >> these are proposals that you have in your testimony today. i am just trying to point that out. spending on entitlements or mandatory health programs, social security, etc., it will increase between 15% and 17% of gdp of the gross domestic product, and that would increase before -- before four to 9%. this crowd out discretionary spending, even assuming the highest levels of spending this country has ever seen it. so i guess my question is, even under the rosiest of assumptions, the best assumptions, total discretionary spending under that sort of long-term spending is about 1% of gdp, versus the 9.3% it is today, and i guess i would say to you, your response, your response to that suggestion or those calculations, do they sound correct to you? >> i do not have our long term numbers at hand. we extrapolate for our projections. according to some simple rule of thumb. what they did when it reached an unsustainable point, we cannot predict. >> assuming my question that under the rosiest of assumptions giving -- given those cbo projections, has that ever occurred? i do not know about this century. >> in relative recent history? >> no. >> have we ever been at that level? >> no. >> my question is can we operate a functional government at that percentage of gdp? >> nothing like what we are accustomed to, with defense or non-defense programs. >> your testimony that this dominates the government budget, and you said it was a growing share of spending. it is growing rapidly. does this not illustrate as part of what we need to do the need to rein in mandatory spending is one of the primary things we need to address >> it is up to the committee to determine what changes in policy it once, but particularly for health care and also social security, this is a feature of the budget that makes the past unrepeatable. it is the change under current policies because of the aging of the population and the rising cost of health care that push up that spending in a substantial way, that require the country and you as our elected leaders to make choices to make the future different than in the past. whether it is changes in those programs or tax revenues or other programs is up to you. >> i know. >> i yield back. >> fix the deficit, and all of this obfuscation with percentages and the gdp -- >> the chair wishes to recommend -- remind all of our guests -- >> we spend more -- the committee shall reassess until order. >> housing and health care and everything that we want. it is very obvious. >> thank you very much. representative, you can continue. >> no, i yield back, madam chair. >> ok, we will turn to another representative. >> >> microphone? >> thank you, doctor, for your testimony. just to be cleared. if the congress were to take action to repeal the defense portion of the sequester, all things being equal, that would make the deficit worse, correct? >> yes. >> let me go back to an overall theme, which as a share of gdp, under current law, non-defense discretionary spending is shrinking dramatically over the next 10 years. is that not the case? >> yes. that is correct. >> and it goes below 3% in your chart, at about the lowest level since the eisenhower administration. there have been many things as relates to the non-defense portion of discretionary spending during the 2008 period, which was a component of the recovery act. just to be clear, in response to senator kerry's question, but was to actually help prevent the economy from getting worse, correct? >> in 2009 and 2010 and this year, and we believe that cuts in taxes and increases in government spending increased output and employment relative to what would have occurred otherwise. >> as we look forward in this committee, and i think i received a letter from you, about one-third of the current deficit we face is the result of a fact that the economy is not at full informant. >> -- full employment. >> yes. >> clearly, we have a long way to go. and i want to follow-up on a remark he made with respect to infrastructure spending, where you said many analysts think the country should spend more in the area of infrastructure. the cbo, i know, has looked at infrastructure estimates. do you believe that is an effective way to try to boost job growth, especially say we of over 14% unemployment in the construction sector could >> yes, we think the variety of government programs or tax revenues would spur economic activity in the next few years. >> yes, and i know cbo has analyzed different forms of investment to see which would be more effective. there are a lot of folks out there who are unemployed through no fault of their own and are continuing to look for work. as i looked at one of your analysis is, one of the biggest ways to increase consumer demand, which is a big support group, is to expand help for those who are out of work through no fault of their own. is that correct? >> yes. >> another issue moving on the horizon is that beginning next year, the current payroll tax holiday, which is in effect for all working americans, that will lapse. if that were to lapse, and that would mean that working people have less disposable income, especially at this point in time, that would also dampen demand in the economy. >> yes, congressman. >> and that all mean less economic growth and fewer jobs, would it not? >> yes. >> a lot of the ground has obviously been covered here. i would just like to pick up on the question, the comic relief that congressman a upton made, and i think we are all very aware of the fact that the clock is ticking, and in my view, we have to accomplish an awful lot in a very short period of time, especially given your constraints, and i really hope that this committee is able to complete its mission and come up with a package that supports two purposes. one is to try to get the economy moving again and put people back to work, and you described some ways that can be done in response to questions. you have also indicated that can help reduce the deficit over a period of time because the sooner you get people back to work, the more the economy get back into gear, the more revenue that will come in. secondly, we need to act to put in place a long-term credible that as a production plant that does that in a steady wave without harming current jobs and economic growth, and we need to do it, i believe, in a balanced way. so i hope we can complete this mission. as you indicated in your testimony today and before, and that long-term picture, there are two big components. one is that we know that have to get a grip on the increasing costs as a result of the baby boom retirement. no doubt about it. there are ways that could impose a lot of unnecessary pain on americans, but we need to reform the health-care system to focus more on the quality of care than quantity, and then we have to deal with the revenue issue, and we all know that in the past decade, when folks at the very top were paying a little bit more, the economy paid just fine. over 20 million jobs were created. the economy was booming. it seems to me that this is a time for a shared responsibility to address our country's needs, and i think your testimony made that very clear, so thank you, doctor, and think he madam chairman and mr. chair. >> thank you, madam chair and dr. a couple of follow-ups. first, i know it is your view that the recent huge increase in spending and the corresponding big deficits have generated more economic growth and job creation that we would have had in the absence of those things, but surely would agree that essentially looks or a comparison, and as such, it is completely impossible to prove. >> yes. >> i would just urge us to consider that, and that is that the government cannot really create demand on balance. it can substitute public demand for prime rate -- for private demand, but it is illusory to think that the government can step in and make up for what is perceived to be a shortfall in private-sector demand. by the way, i would suggest there other governments, such as greece and italy and portugal who have created a lot of demand, and it is not working so well for them. i want to be clear. non-defense discretionary spending has grown dramatically. in 2000, we spent about 2 flandres $84 billion in non- defense discretionary spending. we have had a slight reduction in 2011, but this is obviously growing in nominal terms, in inflation-adjusted terms, faster than inflation plus population growth. it is growing faster than gdp, in fact, is it true? >> that is correct about outlays, and i do show that in one of the figures. funding, meaning the new budget authority that congress has provided for non-defense discretionary purposes is actually now back down, as a share of gdp to roughly what it was over the preceding few decades, and you can see that in figures six of the testimony. now, you are right in terms of nominal dollars or inflation- adjusted dollars. as a share of gdp, there is a change in the outlays and the level of funding in 2011, which is the jumping off point for future discussions. >> my point is over this 10-year period, we have seen huge growth in non different -- not discretionary spending. i think it is your view, but i would like to ask, is it your view that if we were to pursue revenue neutral tax reform that would have the effect of broadening the base on which taxes are applied an alarming lot -- law ring the rates, this one of the pro-growth effect on the economy which, in turn, generates more income for the government? >> yes, that is right. the amount would depend on the specifics of the proposal. >> absolutely, but the extent that we pursue that, we would be creating jobs and revenue. >> yes, senator. >> thanks a very much. >> doctor, thank you very much for coming to testify today, and i want to thank all of our members for being short and concise. we have a lot of work to do and a shrinking amount of time to do it with. doctor, thank you, and to the team. we appreciate all of that. i do want members to know that they have three business days to submit questions for the record, and i hope the witnesses can respond very quickly to that, some members should submit their questions by friday october 28. i would also like to inform everyone that we're going to have another hearing on november 1. the topic will be an overview of previous debt proposals. we will be hearing from former senator simpson, and others. without objection, this stands adjourned. >> thank you, senator. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> the heat is on. this is the first time-seen in my long tenure in politics where the seats is real heat, because if these guys cannot come up with something, i can tell you, they will not want to go home. >> on tuesday, former senators, and a former clinton administration official. all have participated in passed a deficit-reduction talks, and you can watch videos of those meetings online at the c-span the library. everything is archived and searchable. watch what you want, when you want. on thursday, european leaders agreed on a plan to resolve the debt crisis, which includes a package or greece. it also includes european banks taking a loss on the value of greek debt. after the agreement was announced, george papandreou said it would give his country more time to rebuild. his comments are just over five minutes. >> my fellow citizens. it the agreement we just achieved opens up a new process for our country. it gives as the opportunity to determine our own future. the effort of the good people is producing results. step-by-step, the result did not come by chance. this is not only for the dead and funding but also for our very future. yesterday's decision gives us time. it gives us the opportunity to plot out and follow our own course. i want to assure you that this decision in no way is the problem for our banking system or the pensions. there are opportunities for the real economy, to the organization of our system. it gives us also the courage to move forward, forward into a better position. we negotiated and managed to write off a substantial amount of our debt. tens of billions of euros were lifted from the backs of the greek people. the banks and not the citizens will pay these costs. and more fair allocation of the debt. additionally, we managed to work on our credit for the next year. the results of yesterday's negotiations is of great importance to our country. we want the next year to be the first year that no additional burdens are going to be added on the back of the greek people. yesterday's decisions signal something also of equal importance. the way we work together, when we show our persistence, our dedication, when we take physical steps. we finally achieve our goals. a battle never fought is a battle lost. it also signals something else, that our partners in the european union recognize these efforts. they want to greece to succeed. they do not want greece to fail. they shouldered some of the burden. there is the ability of our debt for many, many more years. we can dedicate ourselves to the things that we need even more and which will bear the real results for our lives and the lives of our children, but more importantly, we will need to work together. on this course, we have to all be together. we are going to fix breeze, and nobody else is going to do it for us. let us not expect magicians or the gods to come to this job. for those who worry, i want to reassure them that absolutely nothing in this agreement sacrifices our ability to decide for ourselves. on the contrary, it opens up a way for us to rid ourselves of dependency. we have determined the path we are going to follow, and we are responsible for it. of course, having good practices and expert advice in our country can only be of benefit. we all know that our land has unlimited capabilities as long as we make use of them. as long as they are not buried in a state that has long since functioned, a state that stifles every productive force available. a state that did not know or did not want to know how to collect, how to spend, how to invest for the common interest and not the special interests. a state that.-- did not even know how many civil servants it is deployed. as they that was not transparent. we are now the ones taking the big steps, but we need all of us to participate in this. each one of us has to make a resolution for a more fair greece. a law-abiding states that will contribute and develop and not stifle. a state that serve the citizens. but we have a long way to go. the work needs to continue intensively. day-by-day, we have to change what happens from one day to the next, and is now in our hands to change what is unjust and to invest in what makes this place special. the crisis gives us the opportunity, and this agreement gives us the time to choose what has value for us as greeks and what we want to keep and what it is we want to change without the yoke of the debt that would in mobilize our generation, our children. let's make together the big changes we all want, the big reforms in our political system, the economy, developmental standards for development, and already, some of these have been implemented. there are changes that will bear fruit in the near future and will make the country stronger and fairer and give its citizens the opportunity to utilize things and realize the big competitive advantage of our country. we still have lots of work to do. the optimistic that we can achieve our new target, to create together the productive brief -- productive greece. we have created an utterly, completely different country. now, we have to work on the responsibility in order to implement. now, we have work and responsibility in order to turn ourselves into a productive greece. >> i do not want every story to be 1800 words. >> last month, the first woman to hold the post as editor at "the new york times." she believes the new york times is more irreplaceable whenever but envisions changes. >> there is a certain lack of discipline. sometimes a point is repeated too many times in a story, or three " it's making the same point where one would do, and i would like to see a variety of story lines. >> i would like to see a new book and the future of "the times," tonight on c-span's "q&a." >> this week on prime minister's questions, david cameron discusses the euro zone crisis, affordable housing, and tougher sentencing laws for those driving under the influence of drugs. "prime minister's questions" tonight on c-span. on friday, republican presidential candidate rick perry spoke at an editorial board in manchester about his campaign for president. he discussed immigration, in war ii regulation, and health care during the interview. this is one hour 10 minutes. >> there you go. that was a good piece. >> of, yes. yes. the forgotten man. >> there is a piece on sunday about the taxes. governor cuomo in new york says you have to the taxes lowered to make them rich and productive. >> sure. >> i saw you on the o'reilly program, and you looked startled when he asked you what the effect on government revenues was going to be on your plan, and i do not know why you were startled, because the next morning in the papers, your advisers at least fly to specifics about how much revenue -- it would, in fact, be revenue neutral and eventually grow. >> by 2020 to balance the budget. your intuitive, i guess. i did not catch myself being startled. it may have just been the reason he asked that. >> o'reilly made a big deal about it afterwards. i was not intuitive. i agree with them that i would have thought you would have been like this now, saying, "i will have the -- my people give you the figures the next day." >> we were having an economic model done, and we did not have the hard numbers. i know you are making reference to, because he did ask a specific question about what is this going to do from government revenues. there are some people and said this would blow a hole in the debt in a couple of years, and i did not have those at that particular point in time because we were having an economic model finished actually that day, and i did not have that, but what i did know is that you put the fall into place, whether it is the 20% flat tax, 20% corporate tax rate, it is addressing social security, medicare, medicaid, non-defense discretionary spending cut, and by 2020, that budget will be balanced. now, i did not have, if that what he is asking, and i assume you are correct in that. let me give you a few examples. you take the department of education, and you take the secondary and elementary programs and cut them in half, and they will then be decided not to implement those programs. you say $25 billion in one year. i will be real honest with you. i am less worried about whether or not we have got somebody's always to fill in the early years than i am getting the confidence, the job to readers that they can actually go out and get their capital and have a return to a investment and create jobs. >> o'reilly give you credit for that, which is the thrust i think of your plan anyways, which is to get money into the hands of the people who can use it. explain the cut down to 5% and change in taxes for offshore revenues. >> we are somewhere around $1.50 trillion of companies that profit offshore, taxed at 35% if they bring it back in. your common sense tells you that that money is not going to come back in. it is sitting offshore, looking at ways to invest in here rather than bring it back for the privilege of giving 35 percent of it back to the federal government. a host of economists and others who are familiar with those dollars and what is a reasonable rate to tax that to bring it back, 5.25% seems to be the happy medium, if you will, to bring it back in. the chamber of commerce estimates there is about $360 billion worth of economic activity, bringing at-bat into the united states. again, i am all about creating jobs. i do not get into class warfare. i think the president or those on the left are frankly somewhat on our side of the aisle. the one to talk about class warfare and somehow know the wealthy are going to come out better. i do not have time for that. i am about getting americans to work. there are people sitting around their kitchen tables today we do not have a job, 14 plus million americans, and one out of six eligible workers cannot find a job. that is what i am worried about, and the country was built on the present -- the premise that you create an area where they can risk capital, and it is two things, it is taxes, but even more important, it is regulations, and it is regulations that are the real job killers. we have driven millions of jobs offshore because we have overtaxed. the overtaxing side is a symptom of the spending problem we have in washington, d.c.. i address that in this plan, as well. the cap as taxes, 20% for personal and 20% on the corporate side. 5.25% on that offshore money to repatriate it, and then you balance the budget through a number of issues, ways, one being a balanced budget amendment to the constitution. i then go on about my business. i plan on traveling to the state -- states it requires and plan on cajoling or some other way -- >> the constitutional amendment. it takes to along. the last couple did not take long at all, giving an 18-year- old a right to vote. it depends on what it is. >> when you have a president that is out every day talking about it, in a united states senator's state you is up for election in 2014, and asking them to support and asking of legislators to support, there has been no one who had that commitment to a balanced budget amendment in the united states. i do not think america has got a revenue problem. as a matter of fact, i would vote for ways to reduce revenue coming into the federal government, particularly if i think it is going to be spent on programs that are not helping create an environment for job creation. regulations -- i would move a substantial amounts of regulations back to the states. >> an example. >> i think the government of any state and their unborn and the protection agency has a better, vested interests -- as a more vested interest and has a better ability to address the issues on the environment in their state and the epa, and i will give you, at an example, in the decade of 2000, texas had a process for our clean air. i think the clean air act and clean water act were good pieces of legislation. do not pay me with a brush that is so broad that says i do not care about the environment. yes, i care about the environment, and we did something about it in texas. we clean our air more than any other state. if there are eight smokestacks in a plant, we had a total amount of emissions at that plant that the plant could emit rather than checking each smokestack, each source, if you able tod we weren't lower our ozone levels by over 20%, and our nitrogen oxide levels by 58% during that time period. this administration wants to come in and take that process over and put their oversight in place. through our comptroller's study, we know what that will do. it will cost a huge number of jobs. 365 to be exact. it is no different than the response we have seen to the deepwater horizon tragedy. we know now that the private sector has the ability to address an event like that and actually cap a well that have an event like that in one day because that technology has been developed. they have developed the technology to be able to protect our environment. yet, this administration, rather an and allowing for regulators that actually do their job, they just basically put a slowdown on permitting. 400% longer to get a permit today, 80% fewer permits for drilling in the gulf. those are just two examples of the knee-jerk reaction is the administration has had dealing with regulations that when you bought them for their beneficial impact on whether it is the air, the water, or the safety of the people, it is minuscule at best, but the costs are monstrous. dodd-frank banking regulation is another example of a knee jerk reaction by this administration and congress to put into place another layer of regulation that is not going to -- in fact, it puts it into law, it codifies too big to fail, and it makes community banks and endangered species. it makes capital very hard to come by. i know i am kind of all over the board on this regulatory role, but that is an example. taxes are too high, but i will suggest it is not the tax structure that is killing the jobs that is impacting the confidence of the investor, whether it is big business or a mom and pop. it is the regulations that are out there on both the environmental side, the department of interior, the banking regulations, some two weeks ago, as i've laid out, phase 1 of this economic plan, i talked about the energy side. 1.2 million jobs could be created if we opened up our federal lands for exploration, land and waters. 300 years of energy american has access to. we have proven reserves of 300 million years. i am kind of an all of the above fellow. texas is now the no. 1 wind energy producing states. it is easy to be governor of texas. you have will and gas. we have only had a 2% increase in our oil and gas production in the last decade. >> how come you could not say all of this in a one-minute debate answer? >> because how long have i been talking here? >> that is my point. you said something or your campaign did yesterday about the number of debates and whether or not you would continue. >> i will be a good debater by the time it is all over with. >> -- >> i do not know. 18 debates, i would just ask you, as more than just a passing observer of this process for a long time, 18 seems like an incredible amount. >> as of today, i think there were 34 candidates that registered for the new hampshire primary, and if we put them all in one debate, the debate would last until january 10. >> right. >> but you have been exposed to this process now, and do you have some specifics that you were trying to get across in the debate format, how would you suggest -- the news media have to be careful in going behind the screen and deciding who gets to be in the debate, or they are going to get sued. how do you improve the level of discourse and a presidential campaign could >> well, being here is one of the ways, and choosing the forearms where i can go and actually lay out or other people in new hampshire and in the surrounding states -- obviously, c-span's, a national audience, here is the plan that i am lainer to get americans working, and it is not just rhetoric. if you want to know how fromong will perform in the future, look to their past. for almost 11 years, this is what i have been doing in the state of texas, creating an environment without a legislature so that they had confidence that they could risk capital and have a return on investment. we have done that. 1 million jobs have been created in texas while the rest of the country lost. and allowing those states to take over the environmental regulation, allowing the states to deliver health care, medicaid. allowing the states to be making the decisions for their young people on education policy. it makes abundant good sense to me, because what we will do, bobby jindal is a brilliant governor. he is also a technocrat when it comes to health and human services issues. he has been in congress. he has run a university system, and he hath also what health and human services. he is a uniquely qualified individual. bobby will come up with ways to deliver medicate, whether optional programs or insurance co-payments. he will come up with a lot of ideas. and i will go across the border and pick and choose which one of those are the best for my home state. that is what the founders sought in this country when it was growing. i do not know if they realize there would be 50, but they realize the federal government needed to do a few things and do it well. the military, secure our border, look after the general welfare of our country, and then the states, this is what the 10th amendment says. >> the 10th amendment, the states. that is a good segue. we had governor romney in year while back, and we asked him the same question i am asking you. you can point to ronny care and stated that is wrong, and he said that was a state's rights issue. -- you can point to mitt romney care. you say that if a state's rights issue. can you see the other guys position on this? >> i can tell you here is the difference. i never wrote in a book that i thought what we did in texas was good for the nation, which is what he did in the first rendition of his book. he said mitt romney care is what would be the cure for america. >> ditties suggest -- >> he wrote it in his book. it was in his book, and then he took it out in paperback. that is my point. i am consistent if nothing else. i have stayed true -- unless i have been wrong, and i admit being wrong. on the issue of the human papillomavirus, i stood up in front of my country first and the nation. i said i was wrong. i still hate cancer. is built -- i still think this vaccine should still be done, but i do not think kitchen have gone to the legislature. >> given for boys, too. >> yes. at the end of the day, i was right on the issue, i was wrong on the delivery model. the difference between romney -- i have never said. in fact, i have said multiple times this truly was an issue for texas to decide. i would never go to oklahoma or new mexico or any other state and say, "this is what you need to do." not on this issue. this is one the state needs to deal with. the bigger issue is we are forced to deal with this because we have a complete failure of the federal government to secure the border. i have been dealing with it for the better of 10 years. the border sheriffs to go to washington to meet with homeland security, to talk with people, in about the drug cartels, the violence, the moving of weapons, money, drugs, people across the border because the government has failed to secure it. i passed a voter identification bill and signed it into law. i vetoed a driver's license spending go from the standpoint of actually dealing with immigration issues, i have a very strong record, $400 million, that we have dedicated to border security of the taxpayers' money. we have done those things because we have been forced to deal with them because of the federal government's failure to act and secure the border. i know how to secure the border. >> how? >> strategic fencing in the obvious places and there are places where it works well, and boots on the ground, a spectrum of both military, law enforcement, state, federal, and local, but the real key was and is predator drones. there are a couple dedicated to the border, but that is nowhere near enough. we need to have enough of them on the border looking down real time giving that information's to those boots on the ground. then we will know when there is activity along the border and we can immediately respond. at that particular point in time, the individuals involved in illegal activities will soon know that the game has changed. we have the technology but we do not have a president for administration dedicated to securing the border. when the president comes to el paso, like he did earlier, and makes a statement that the border is safer than it has ever been, either he has some of the poorest intelligence or he is telling the american people alive. >> be nice. a falsity. >> some of your competitors [unintelligible] they're continuing to harp on the issue of [inaudible] you have a different view on whether it should be fencing or something else is even practical. how'd you do that as a legislator? >> before we get off of the illegal alien tuition issue, r texas had two tauruses because the government had failed to secure the border. the government also demands that we get health care and the education to these people. i do not have the privilege to stand on the sidelines and say, "here is what i would do." we have to deal with these issues in real time. we have two choices. we can kick these people to the curve and pick up the cost of being in our state or other sources, social programs up to including incarceration and what could occur with that scenario, or just like what we do with anyone else in taxes, if you have lived there for three years and have done your high school work, and in the case of those who have been brought here through no fault of their own require that a pursue citizenship in the united states, a painful in state tuition, no subsidy, then those individuals become a tax paying contributing members of society and the u.s. citizens. for us, do we want to create tax wasters or taxpayers? >> your in no position to show them the door to leave the country? >> you cannot. we have had that conversation in this country. the idea that we're going to round up 12 millino people? it's not going to happen. some people still say that. i will not pander. it's becoming president requires me to change a position of great import or to pander to a different group, then i will not be president. i know how to govern in the state of taxes. -- of texas. when 181 members vote on how to deal with these individuals and there are only four dissenting votes, that is the will of the people. that is a texan decision and i stand by it, but i'm not going to change my positions by virtue of going to new hampshire and saying let's build 2,000 miles of fence and it will take care of everything, because it will not. strategic defense and in some places works and it hopes to slow down in those higher traffic areas, but obstacles without observation is no obstacle of all. you have to have the observation, with boots on the ground, and more importantly these fascinating technologies. i visited in airforce base one week ago last monday, and my instinct is that there is a young american pilots watching gaddafi's compound from there in nevada waiting for the opportunity to impact that oppressive regime. the technology is there and available and we need to direct more of it with our border to fight these drug cartels. we know has block, -- hezbollah, hamas, and the iranians are using the porous border to do harm to the american citizens or even a saudi diplomat. >> what would you do or what would you advocate as president to turn these "tax wasters" into taxpayers? >> the issue is to secure the border. once to secure the border and you start alleviating a number of people, then we can have a conversation, a debate, a discussion with congress and with the american people about how we are going to bring the individuals who are here who may have been here for 20 or 30 years out of the shadow of illegality to deal with the issue. >> how would you start that conversation as president? >> immigration reform? i think you start looking at some type of a program where people come out of the shadows where they work for the program. from my perspective, amnesty is never on the table. i am not for the dream act or amnesty. i am for citizenship the old- fashioned way which is the reason why require them to work towards being a citizenship. >> and 2 tracks their progress? >> the universities do. that was the way that piece of legislation was written. then you do not have 50 different immigration policies, and that is the problem with what we have today. we have arizona commo which i did not necessarily agree, and i did join them with an amicus brief to support them and their right to pass that, as we did with alabama, but having 50 different immigration laws is not good public policy. america needs to have one immigration policy in place which is one of the things they should be doing. in lieu of them doing their jobs, the states do have the right, and i respect that right, of putting these issues in the play. not to put too fine a point on it, but the issue of creating a work visa program for individuals, here's where you pay your taxes, get a driver's license, become a cantor. member of society, because one of the knox about what is going on now is that they are not paying their fair share and are taking advantage of the social problems. again, the government is forcing the state's to deal with this. i think we can have a debate in this country and find a way for those individuals who are law- abiding, pay taxes, contribute to society to have the ability to move back and forth. i happen to think we need to get back to having immigration policy that actually looks at what the needs are of our work force in this country and to allow for individuals who can help create highly technical workforce in the different areas that we do not have, engineers, etc., and a federal government that is quite connect to add just getting paperwork done. >> you talk a lot about your record with the jobs in taxes and your points -- your opponents say the unemployment rate is getting higher in taxes. how do you explain it? >> we still keep growing jobs. as you would suspect, is no secret that texas has created jobs, so we have a huge influx of people coming in this state, but in this environment, as good a job creation kline as we have created, we cannot keep up with the influx of people. to allow one number and say that our unemployment rate went up to a 0.1%, or whenever it may be, yes, but we created 1 million jobs in that decade. >> has nasa been good for the united states -- has nafrta been good? >> yes, sir. we still have two free trade agreement is waiting for the president's signature, one with south korea, as well. and we have two that have not been signed. i have no idea why. if you will not overtax and overregulated americans, they can compete with anybody in the world. i truly believe that we can bring manufacturing jobs back from china, but when the chief executive officer of coca-cola says it is easier to do business in china than it is the united states, that says volumes about how difficult we have made it to do business in this country. we need to pull these regulations back. we need to audit every one of them since 2008 for their beneficial impact vs cost. this is not an instinctive. i know this. we will find the vast majority of them, the cost far out ways to benefit. >> what about the wage cost in mexico, china, and other car world countries we're trying to compete with? >> because the cost of doing business in the united states, particularly on the regulatory side is so onerous, we may never compete from the standpoint of an hour early rage,-- hourly wage, i would do away with the fact that you have to pay union wages. i am not anti-union but pro- jobs. if you create an environment for private sector entrepreneur is feeling comfortable they can risk their capital, it is good for the unions. i am a right to work state governor. the teamsters endorsed me every time and they understand the that i care about creating an environment for jobs because whether you are a non-union or union worker, more jobs out there is better for your rank- and-file. i happen to believe that america can compete against, but we have to continue to pass regulations that do not help safety, do not compare quality, do not help the water quality, do not improve the environment. all they do is create a cost of compliance. it drives jobs offshore. >> what do you do but the global situation where have now where multi-national companies have no allegiance to the u.s.? how do you get them to want it to rebuild american manufacturing? is there a component of their? in the old days, what was good for general motors was good for the country. now we have companies where it is the bottom line, where the taxes are least and the labor is the cheapest. is that figure in at all? >> short. that is the reason they left to begin with. we overtaxed and overregulated them. this is not rocket science. for a decade intexas we operated the four principals -- do not spend all the money. it is one reason that might cut, balance, and grow program i talk about cutting spending. there will be some hard decisions. there will be some pain to reduce spending. i just signed a budget that, for the first time since world war ii, we cut are spending more than the previous budget. hing and iteeth gnasin was the end of the world, but job creators understand that they get it and we will not raise taxes. they will not put burdens on months -- this for more taxes. >> you say they went overseas because we overregulated, but we also changed the trade laws to make it easier for them to go offshore. we lowered trade tariffs and barriers to international trade. free-market economists say that has lifted all boats, but in the meantime, the general electric of the world are doing more business over there because it is cheaper, not just because of regulation, but because the tariffs are no longer in place the protected building companies here. >> i happen to believe that when you look at this plan, part of the decision to leave had been tax loopholes and other beneficial treatments that corporate america has received. i am for removing all of them. i am for a level playing field. for instance, on energy, i do not think we ought to be paying any subsidies or tax credit to any energy source period. not wind, solar, oil, ethanol. they all need to participate on a level playing field. if a state wants to put into place an incentive to have a particular type of energy and developed in that state, i have no problem with it. the states are supposed to compete against each other. be a laboratory of innovation. we put an incentive in place for alternative energy. the wind energy people said they could go compete and now we are the no. 1 wind energy producing state in the nation. i think it is smart to have a very broad portfolio of energy whether it is coal, petroleum, natural gas, or whenever the alternative energy source maybe. the government, not the federal government, does not need to pick winners and losers. the states want to compete against each other, and i am completely in agreement with that. these companies that have gone offshore have gone offshore, i think, for two reasons. tax policy, regulatory, and loopholes. we need to remove all three of those, from my perspective. a flat 20% corporate income tax rate and have that regulatory climate reduced where they know there's going to be stability and predictability. have those tax loopholes gone. there is a reason that ge does not pay any taxes. they have really good lobbyists. they need to be removed. you need a president that will have the courage to do that. have the courage to veto spending bills that are spending more money than we have coming in. >> governor, who is marcus? the guy with the black bean -- >> marcus littrell. he is a former navy seal who wrote the book "one survivor." we each had a black bean or a white bean about whether or not i would be a candidate. we talked about all of the implications, that our lives would be changed forever and right out of college, 24 years old, on her like to be forever changed. griffin is just married and would probably have to change his company work because he could not help his dad. they all agreed that the country was worth making that sacrifice for. >> was he a navy seal and afghanistan? >> a lot of different places, but afghanistan was the place where the event occurred. where his four-man team -- he was the only one to come off the mountain. i hope you get a copy of it "lone survivor." it is a great tribute t american heroism. at he really did not want me to do this. from that standpoint. >> personal? namely your wife? >> right. >> i read this in a "parade" magazine. there was a big hullabaloo because you answered a question as regarding president obama and his birth certificate. i heard this on national sandinista radio and i went back to parade to find this and i could not. it is only in the online thing. what does that say about the parade editors? is the editor dumb, or maybe this is not a big issue? >> this was not a big issue. i think i had dinner with donald trump the '94. it was more of a humorous back- and-forth between donald and me. i cannot speak for him. he may think the birth certificate is a real issue. i think, frankly, is a humorous issue that the media would become so focused on it. i think it is a rather distractive issue. i am pretty sure people are a lot more interested in how are you going to get me the dignity of a job. >> they are interested and obama birth certificate and whether campaign manager was smoking. i have monopolized this. i have a last question. what are we doing in afghanistan? >> i think we are fighting the wrong kind of war at this particular point in time. having been there on multiple occasions, having had a numr of conversations with young men who are under my command until they are loaned to the federal government to go and sve, that the change of rules of engagement -- i think this is a special opetions type of war, particularly as our technology advances so quickly. ibeing able to find osama bin laden, to find gaddafi, to find all of these individuals, they were not found because we have huge massive numbers of troops on the ground. we need to be able to train the afghan forces so they have the ability to protect and defend their country, and there is some time line out there to bring our troops home and transition that country's protecti over to the afghan security forces. i don't know when that is. even if we did, we would not be having that conversation in public. i think the president has made a huge. -- think the president has made a huge error, plan to his base, saying that he would bring them home at this date, but we have the ability to impact the war on terror. in a substantially smaller footprint then what we are engaged in today. when we reduce that footprint and how we reduce that footprint needs to be coordinated with commanders on the ground. but, again, i would substantially increase the amount of funding for our technological research and development, that se of the military. i would never put the military budget on the chopping block from the standpoint of we're going to cut x % out of it. the question should never be how much will we cut. the question should always be, what is it going to cost us to keep this country secure? and that is not to say there are not places that we need to have good, solid discussions about reductions at places that may not be inappropriate expenditures of the military budget, research and development is not one of them. that is one way we stay hopefully ahead of the chinese. all of the foreign policy issues go back to one thing, which is if we do not have an economy that allows us the resources to pay down this debt and to create the wealth to drive this country, drive this country forward, then foreign policy really does not matter. >> you said you were not a great debater, and you may get better, but you get the nomination, you are going out against a really glib, slick, sharp guy. >> in the -- if the american people want a great debator a a glib and slick politician, i don't think the last three years is going to be very good proof of how thatas worked out for us. >> but support that how a lot of people make their judgment? >> i don't think so. i mean i truly don't think so. 2008 was a most intesting lexi cycle. when you're sitting at home, and your we and children are sitting around the kitchen table or in the living room together, and you don't have a job, i don't care how glib, slick or how smooth that politician is, when there is someone standing beside them that says i know how to get your family back to the dignity of having a job and this country back on track, and get america being america again, it is a message that penetrates very much to the heart of who this country is. >> we have covered a lot of issues. going back to the national media, i'm constantly being asked why it is not all over in new hampshire already based on polling, romney way out in front in poll, after poll, after poll? >> what is your approach? can you win this primary? >> yes. >> are you going to give it a go, or is it lip service? >> we are campaigning again. we know we got in late. we are just now layg out, after 10 weeks, which is actually a pretty good time table to lay out a rather in-depth economic plan. that is what this campaign is going to revolve around, to get america back working again. i tnk our 20% flat tax, how we are going to balancthis budget by 2020, gting americans back working. if you want to know how somebody is going to perform in the future, look at their past. i think people are just now starting to pay attention to the campaign. with all due respect, governor romney has been running for this for six yea. i have been at it now for 10 weeks. polls are going to gop, and polls are going to go down. i was 25 points down at the start of my last gubernatorial race. so there's plenty of time to be in new hampshire, to be in iowa, to be in south carolina, which will have been in. this is my 10th trip to new hampshire. so as the voters here look, probe, ask questions and peel back the skin of the onion, i think they will like what they see, and at the end of the day, they will see somebody who has a good track record. >> there has been so much press about your new organizational hierarchy. they say while you are obviously a gentleman and soft spoken here in this situation, these guys are apparently -- the way one person put it who is a supporter of yours, they are going to amp tate romney. how rough is this going to get as we two -- good forward, and him being way out in front, at least in this state if you believe the polling? is this a btleground for you, or is this a play to do just ok enough to keep moving on? >> well, we aren't in any state just for the exercise of it. we are in every state to win. i am always intrigued with folks who talk about negative campaigns. actually, i have never run a campaign that wasn't factual. somebody on the other side might not like the fact that they d x or y, or said x or y , but if they find some place where we are not telling the truth, please let me know, and i will be the fist to pull it down. but facts are facts. they may be consult for some folks to get their arms around, but we will be factual. if that is considered to be hard-hitting, then so be it. i think americans are ready for some just really straight, honest answers as to how to fix things in this country. whether it is dealing with the issue of social security, which we have clearly said that it is broken. those that are on it today, those that are aroaching the age to be on it, it's going to be there for them. but to use it as a political tool and say listen, they are going to take away your benefits, now that's dishonest, and i will come back pretty hard on that. do we need to give young people the options to have these personal accounts? do we need to raise the age for whic people become eligible because we are living so much longer? do we need the means tested? all of those are appropriate questions to ask, and i think there are a lot of positive aspects to those. but americans want to hear how we are going to get this country back working again. how are we going to get america back to being a powerful influence in this world? there are going to be hard decisions that need to be made, and people that are misleading americans i don't have a lot of time for. >> who is misleading americans? >> well, anybody that says it is going to be easy. the president of the united states stood up three years ago and said listen, you allow me to be the president of the united states and i will create 3.5 million jobs. that is misleading. we have lost two million. well wait until all the plans get laid out. >> drew, you have to ask the question about what department would he eliminate? >> cut, balance, growth. cut what? >> well, i laid out one earlier when i talked about in year one you could say save $25 billion by con dating the lament ear and secondary programs at the department of education. i would substantially reduce the impact of the p.e.a. from the standpoint of a federal agency. it ought to there as a place to conlidate best practices. it ought to be a place where it can work out any interstate issues. but from the standpoint of making one size fit all relations and having this -- i mean i want to say it is $12 billion worth of administrative costs. this is an agency that is out of control. so substantially reducing the p.e.a. the department of energy. i don't know what -- i'm not sure there is anything the department of energy doesn't do that couldn't be placed in another agency of government are- somewhere. there is a substantial amount of reduction. health and human services. again, the medicade portion of that could be sent back to the states. but you have to have agency administrators and those senior level people who are willing to go fight that fight. that is the kind of people i am going to be hiring. >> i'm not sure what you mean by substantially reduce, but you would favor the clean air and clean wear act. wh is going to enforce that without the e.p.a.? >> your local states would. let me share you the clean air act that was passed. texas implemented it in 1991. they went forward with their plan. interestingly -- excuse me, it was 1993. it was put together by anne richards, and it was approved by the clinton administtion. not exactly hardcore republicans. and for 17 years this plan was in place and worked well. as i shared with you, they were the numbers of the last decade. my point is the states have the incentive, they have the expertise to put these programs in place. we just have these multiple layers from the federal government. there is nothing wrong a all with the clean air and clean water act. bobby engine dall -- jindal, i have great faith if he were to allow things to happen in his state that would harm the air and water, the people of that state are going to become i rate. they are going to make the changes. and this a philosophical difference between myself and obviously this administration in particular. i trust the citizens of this country to me decisions that are in their best interests and not have it all consolidated in washington, d.c. with one-size-fits-all and spread out all across this country. i truly believe that the american people will make better decisions than some bureaucrat in washington, d.c., whether it is environmental, whether it is race to the top on education, or whether it is trsportation infrastructure. the idea earmarks are deciding where transportation projects go in a state, and they are not even working with the state's transportation department? that is insanity. >> here in the his east where the states are literally smaller, environmental issues in one state might be more apt to affect a neighbori state. so there has to be in some cases, some would argue -- >> and that is why i have said -- and as i have said, there can be some interstate issues where the e.p.a. could sit down and work out issues. it is le the ferc in dealing with electrical. i know you all have an issue with transportation lines through new hampshire. there is a roll. i am not anti-government. i'm just for a government that works and doesn't cost jobs. >> speaking of repealing regulations and federal law. repeal obama care. then what? >> again, when you look at -- there are two aspects of health care. medicare and medicade. medicade i would block grant. i would put back to the states and allow them to come up with the programs. i think paul ryan and some of the work that he is doing has some great examples. and we talk about it in our white paper here some of the ways to give options on medicare. maybe it is moving up the age of which people become eligible for it. maybe it is having insurance programs that they can access to give people the options of whether they want to have a private sector account. i mean there are a lot of different ways of wch we can deal with the medicare side of it. we have a system of sick care today. we don't have a system of health care. and to give those incentives to the physicians, to the hospitals, for outcomes that are healthy outcomes rather than the way we do it today where they get paid on the number of procedures they do -- and again, i happen to think paul ryans one of the most brightest, most capable individuals who has taken on this issue, and i would have him very close to my administtion on a regular basis. tom coburn on the spending side. tom has put a white paper out called "back in black." i want to say it is $9 trillion worth of reductions. the answers are all there. it is just going to take a courageous administration rking with some courageous members of the united states congress and senate to say you know what? we've got to do this. america's future is at stake from an economic standpoint. and if we don't stop the spending, if we don't get the reli from the tax side and reduce the regulatory burden, then this country is going to every day get closer and closer to becoming more like our friendsn europe where we have a sovereign debt crisis, a serious sovereign debt crisis. >> one of the goals of obama care, probably the main goal, was t broaden access to health insurance. so if you repeal obama care, then you take away its incentiv to do that. what would be a perry play for saying we want to make healt insurance more acceptable -- accessible to people? >> i saw an interesting sign today when we were signing paperwork, and it said keep your hands off my medicare. this administration took $500 billion away from medicare to help pay for obama care. they are talking to the wrong people. they need to be talking to that administration for taking $500 billion away from medicare. state by state we make decisions every day about how we are going to take care of our citizens. we get criticized in texas because we don't have everybody covered by surance. weade the decision that is how we wanted to operate our ste. if you come to texas, you will have access to some of the fine health care in the world. at the texas medical center every day there are more doctors, nurses, researchers that go to work there than any other place in the world. u.t. south western in dallas, we have some of the finest health care. we committed $3 billion over a 10-year period of time to find a cure for cancer in texas. i passed toward reform in 2003. there are over 20,000 more physicians practicing medicine in texas than there were six years ago. so the idea of somehow or other that texas has a large uninsured population, that doesn't mean anything to me. what means something to me is that people in texas have access to some of the finest health care that there is. how we choose to pay for it is actually our business. that is how we ve chosen to deal with it. that health care is available in the state of texas. now, could we take those medicade dollars and come up with programs that are affordable to people? they don't want to buy health insurance today because it is too expensive for them. arehere ways we could come walkup with? i think there are, rather than forcing us to deliver health care the way the federal government says. again, i go back to allowing the states to be the deciders instead of washington, d.c. i d't think texans want government-mandated health care. and i'm positive they don't want obama care. in ft, i don't think this country wants obama care after they have looked at the cost and looked at the accessability -- accessibility that will be negatively impacted if fully implemented. again, i just philosophically am in a different position than those that think that government-mandated hlth care is the correct answer for people's health care needs. i think we need to give folks a substantial menu of options from which they can pick and choose. there may be folks who say i am 25 years old, i am healthy as a rse, and i would rather spend my money on something else rather than health care. >> you have a chapter on judges. you use the phrase a lot unelected judges. we are talking about the federal government even though they are elected in some states. would you have the supreme court elected? >> no, i would hav a term for them. i would have a discussion with the country and say does it make sense to have an appointed for a lifetime united states supreme court justice? happen to think lifetime is generally a pretty long time, and particularly when you are talking about a court that has that big an impact, is it 12 years, 15 years? i don't know. but i would have aerm limit on all the federal government judges. i would have a limit on the number. why do we limit the president of the united states to eight years max, yet we put a person on the united states supreme court who may serve 50 years? >> well, you would have to ask the founding fathers why they did that. >> from time to time we decide as a country that the founding fathers -- >> well, the founding fathers had unlimited terms of president, and then f.d.r. came along, and the country said no. are not yes. >> and with the supreme court nominees, the way the battles are now, what is the realistic chance of anybody being term limited to 12 years, to get anybody in the next position? >> somebody would want it. >> you go to the state and cajole, and then you said threaten. >> right. >> threaten? >> yes. >> what does that mean? >> that means if your guy doesn't vote to get the spending until control, you unelect them. we do that all the time across this country. you basically say hey listen, here is what is going on in washington, d.c., and your guy or gal is part of the impediment. i don't oscar that to be gative. i just consider it to be factual. when the president of the united states, who generally has a pretty big megaphone stands up an ss senator smith, why are you not supporting a balanced budget amendment to the constitution? and then they can have that conversation with theirs folks back home? >> good answer. we have to cut it now so this guy can go write the story. >> i hos[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] host: any surprises in this survey? we have been at showing that mitt romney was showing strength in iowa, but herman cain won a straw poll. among those polled do, they were essentially about even. guest: some of the surprises were that michele bachmann had really taken a dive. as well as rick perry. they have invested quite a bit of attention, and his introduction to our state has been a total bust. those are some big surprises. the most obvious position the people have taken from the polling results and that the two candidates who have not spent as much in iowa during the week to. on the service, the message is the less you are here, the more we like you. we dove down deeper into the results, and i think there is something more there. they want someone to really fix the economy, so it makes sense to them that they would pick romney and cain because they have for trade and sent -- and portrayed themselves as having the most business sense. we asked them if they felt experience in business or an elected office was more important, and 71% said business experience is what they want to see. 22% said time in an elected office was more critical. they are going for those candidates who have expressed that business sense. host: the. through some other numbers. michele bachmann coming in course. ron paul coming in third with 12%. rick perry and newt gingrich at 7% and santorum with 5%. there is a story this morning inside "the washington examiner" talking about "the cain train." he was able to be the hillary clinton 10 weeks before the iowa caucus last time. is this is similar strategy that would work for herman cain? guest: it could. these voters are not decided yet. that is a pretty interesting thing. 59% said they are willing to take a different version choice. quite a few, 15%, have no clear first choice. the argument can be made that support for herman cain is pretty soft, but if a candidate comes to the stage and rarely lets them ask questions they tended to be willing to look them over and get behind them. but i do think for herman cain to pull off and obama-like strategy he would really have to invest time here. people are willing to look at herman cain, but they are not locked in behind him yet. he would really have to be here in order for people to rally behind him in a concrete way. host: we're talking with jenna firmjacobs. -- jennifer jacobs. another headline, this one from "the washington post." a resurging it gingrich marshaling gop support. it is stretching things to say he made a comeback. after a tough summer, the story says he is beginning to make a strong showing. do you see that in iowa? guest: he gets a lot of applause. when he talks to the iowans, they just read about him and i have seen that in several multi-candidate forums. a forum for christian conservatives. yeah absolutely adore him when he speaks and they like the details that he offers. they have confidence in him, but this is not a surge. when we pulled that june, he was at 7%, that is where he remains. host: the headline that herman cain and mitt romney leading the pack in iowa, ron paul in the third. the polling in permission is available on-line. thank you for being with us. >> tomorrow, grover norquist looking at the various tax policies of the gop candidates and what he thinks the deficit reduction commission recommend. "the new york times" correspond it is ericschmitt and thom shanker on the fight against al qaeda. and albert teich talking about a federally funded research and development programs. "washington journal" live at 7:00 a.m. eastern on c-span. >> the president and first lady handed out halloween treats at the white house yesterday. he has no public events scheduled today. he will be in meeting with the former british prime minister tony blair on monday. but a likely topic of discussion could be the stalled middle east peace process. he will continue interviews with local reporters. wednesday, meetings at the white house before leaving for france on thursday to attend the first day a theg-20 summit. >> happy halloween. >> wow. i love your costume. thank you. >> thank you for coming. >> i love the moustache. it's better than mine. >> have a great time. >> hello, everybody. are you guys having fun tonight? it is not ideal weather. >> oh, my goodness. you guys look great. >> hey. how are you? happy halloween. thank you for being here. hey, guys. where's your baskey? -- basket? there you go. happy halloween, guys. happy halloween. >> thank you. >> the trick or treat. >> bye. how are you? you want some? come on. >> happy halloween. >> happy halloween. look at this scary ghoul here. happy halloween. >> i do not want to every story to be 1800 words. >> last month, jill abramson became the first woman executive editorf

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