Rate if you are a passable entity and giving half your money back it is hard to grow your business, and equipment, grow jobs when you are giving half of it away. My. Is, your thoughts in terms of if we lower the rates and terms of pastors as well as my. Is your thoughts in seek secor what difference would that have in terms of growing the economy and creating jobs. Professor holtzeakin, could you expand on that . It is a bad tax policy that treats the same Business Activity differently. And that would drive you to organize your business on the basis of tax considerations, not business decisions. That is the hallmark of interference with the economy. In the work i have done on Sole Proprietorships partnerships, relatively small they are disproportionately sensitive to tax considerations, heavily reliant upon tax flow. Lowering taxes gives them greater cash flow. They can invest invest and hire more and so you see strong linkages between tax load toward those entities and capacity to grow invest. I am happy to get the research and citations to you. But they look much more in terms of just pure rate sensitivity. My senses you see a lot of people moving from passthroughs, scorp and back to ccorp. As you said it is an option that companies have. They can always go back to the ccorp. The reason that most corporations prefer to be a scorp as another form of passthrough is they avoid the 2nd round of taxation on distribution of corporate profits. I think it is a complicated a complicated issue and there is no simple solution but i think the basic principle ought to be to take taxes out of the choice between whether you are a scorp or ccorp. Thank you. I would add in the late 80s there was a change. Now were going back. I think it would hurt businesses especially Small Businesses and startups if we do not address ccorp as well as the pastors as well. Thank you and i yield back. Thank you. Mr. Pass well. Thank you, mr. Chairman. Good luck. Thank you. Youre welcome. I have noticed that we have lowered the duck troubles but still have an ironclad position here and there. It will take a lot more than talk to get us out of the logjam. Just one example i hear from your side all the time about discussing and debating the business tax expenditures. I hear nothing about personal tax expenditures. I think that it has become quite obvious if we are going to come to any agreements there need to be both in consideration, and i ask ask that you do that and i sincerely wish you the best of luck. You are going to need it. The questions at hand, i think and 1 i would like to ask mr. Johnson on trade he wrote an article in 2013 about what we needed to avoid in trade deals which look lovely from the outside you talked about trade expanding unfairly at times without a level Playing Field that projects are workers, protection of workers who benefit from free trade. Is it the workers in the factories . Is it the shareholders and executives at the top that you are talking about . As you know and as we have been discussing all morning most of the gains in terms of income have been realized at the top of the Income Distribution. Much of much of that is for management and ceos. There is an important. About tpp which is an issue before this committee. On the Auto Industry appointments, japan has had a closed market for cars and auto parts. Are they offering to open that up to us exports . That would seem like an appealing opportunity. To what extent will they be held responsible . This is a link you can chalk draw to jobs. You will not be engaged in that discussion. I think i have Heard Committee members say that they want to think about all of these pieces and how they can be helpful. That engaged with tpp, not teeeight, that tpa, that is where we have the conversation. You wrote a column for the Financial Times with the headline inflation is looming on americas rising. I think maybe you can recall that. And almost six years since you wrote that piece inflation has been consistently below the Federal Reserves 2 percent target while the Unemployment Rate continues to elevate causing real world pain and hardship for a lot of americans. Recently with the economy improving thanks largely to some specific policies that were passed between 2006 and 2010 the Unemployment Rate has been dropping but we are still a a long way away from a healthy economy. We all agree on that. Yet you continue to call for the Federal Reserve to act aggressively your words despite the fact that our recovery is nowhere near complete and there are few signs that inflation will soon exceed the Federal Reserve. Why do you think your prediction in april of 2009 did not materialize . Thank you for that question. I think Federal Reserve policy changed after that. We got the socalled unconventional Monetary Policy where the fed because they are authorized to pay interest excess reserves induced the commercial banks to deposit the extra funds that they got from the quantitative easing policy to deposit that back at the Federal Reserve. So we never saw the increase in the money supply that looked like it was going to happen back in 2009, so i think the fed handled it well. Ultimately, as i said earlier in my comment i think i think it was fed policy that gave us the strong recovery rather than the fiscal policies in 2009 and 2010. Thank you. Ten. Thank you. The time for the gentleman has expired. Mr. Paulson is recognized. Thank you for calling this hearing. Rvco the recent improvements we have seen is certainly welcome news but it is the worst economic recovery since the Great Depression the slowest economic recovery ever. We cannot we cannot even get to an average. Wages are flat people are taking notice. The numbers doubling every 32 years or so. Now it we will double every 90, tab 60 years onto the standard of living for an american family, it is probably no surprise a lot of folks think this is the new normal. The public is accepting it and we can do better. 72 of americans a few weeks ago think the economy is still in recession when we have been out for five and a half five and a half years is pretty alarming. Two thirds of americans if you ask them, will your children be better off than you two thirds say no. The new congress can make a difference in tax policy trade policy 750,000 jobs in my state art tied to trade. Obviously it is key to that. There is no doubt about that, that but i want to talk about regulation. Maybe mr. Abcaeight, is it it possible to measure how much expansion of regulation is costing her workers, the economy and slow growth growth, and if so how much if it can be measured . Thank you for the question. We have an ongoing attempt to measure Regulatory Burden in the United States where we track all regulations and look at a couple of different measures of burden, all burden all which are incomplete but give you some sense. Agencies say how much it we will cost to comply and we can totally costs. There is the paperwork burden. In my written testimony there is some paperwork. You can look at that comprehensively. I would be happy to you the give you the totals, but if you look at 2014 final regulation added just in terms of compliance cost about 20 billion in 2014 alone. Thats 200 billion of tax increase. The growth and packs how we want to think about that that debate does not go on. If you look back it has been an extraordinary time for regulation, and these costs display that. The only comparable time in recent memory was posted september 11, 2001 when there one when there was a lot of Anti Terrorism legislation. We will be looking at that in the coming months. In the 1990s i i understand that we were successful as a country and boosting Labor Force Participation rate increasing takehome pay and reducing poverty, all which has gone the opposite way in these last six years through welfare reform. Could another do the same . As i said, we need to look at the work incentives. The 1990s have lessons and some things that are different. The economy grew. That is the number one priority that makes the welfare reform easier to interact and participants to be successful. I successful. I do not think that you want to replicate the. Com bubble which led to an anonymous and flow. You want want to do it the oldfashioned way. And the kind of spending restraint that was successful in the 90s is no longer available. It got us to a balanced budget. A spending problem problem now is in the mandatory programs. It is a different world. Thank you. Mr. Davis, you are recognized. I thank you for calling this hearing and certainly thank our witnesses for participating. I i want to add my congratulations to you, my friend from the midwest, for your ascendance to the chairmanship of this committee. I was having dinner with two of my grandsons the other day and asked them, when you pass me a glass of water. Once said, do you mean the one that is half empty and the other said do you mean the one that is half full. Of course, their there was only one glass. But they saw it differently. Like all of the members of this committee i am i am indeed pleased that our economy has made tremendous progress in the last several years. More people are working. Unemployment numbers are down. The economy the economy is moving forward, and so there is reason for what i call joy but not jubilation. Not jubilation because their are still too many people left behind too many people unemployed or underemployed people even during this frigid climate throughout many areas of the country who do not have heating their homes and others who do not have homes to eat. Doctor johnson, could you share what you would recommend in terms of policies that could keep our economy moving forward and could reach back and include in it some of those millions of people who are being left behind. Congressman, i congressman, i think that is the right way to think about the issue. I try to lay out a range of ideas. Often there are very specific measures that can be taken up raising the minimum wage is highly relevant. Support for education is available. Post high school education. There is a long list of specifics, and if youre looking at the tax code and considering tax reform is important to do that in a way that is revenue neutral. We have an aging ref rev five aging population, continuing pressures. The Affordable Care act has done a remarkable job in terms of slowing down health care inflation. We must have the revenue base. All of the proposals i have heard so far are cutting taxes and giving away revenue. Thank you. Let me just ask if each one of the witnesses would reply to this comment. The United States has the highest share of income going to the top 1 percent of earners compared to the other g7 countries. Does this policy and the trend does this seemingly help expand our economy . Does it have any impact on it . Is it intended to . What would your response simply be . It is a reflection of Global Trends and the return to skills which is not unique to our economy. We have seen the top rising. I i would. Out that all of the evidence out of a harvard study, mobility says that it is unchanged over the past 50 years. For me that says people still have a chance to get ahead. The rich can be rich but we are not growing fast enough that we are happy. Our focus on anti poverty the ability to have the low levels of income be better that is the focus. The bottom, not the top. Thank you. The time of the gentleman has expired. Rep. Kenny marchant. Thank you, mr. Chairman. I would like to ask the panel about the recent phenomenon that has taken place in texas. It is arguable over the last five years at least the exploration discovery transmission of oil and gas in the United States has been a major factor in the economy picking up and probably the most robust part of the economy. Now now that we have seen a significant price decrease in oil we are seeing t5 hi drive every week to the ranch on the weekend and gauge what prices are by a certain gas station on the highway. 1. 64 for regular gas this weekend does this offset the boom in the oil patch . If we reach some stabilized level of oil price will this have a longterm effect on the economy . I would like each of your opinion. I i think the decline in oil prices we have experienced recently has been a very big plus for the us economy. I think that that is a view shared by the Federal Reserve and others. We will w will see stronger growth because consumer income has gone up. In part we benefit the cost of other countries from which we benefit import oil. Most of it is internal. Oil companies are taking a hit at the same time that consumers are better off but there is no question that the combination leads to higher growth more real income, better job creation in the nearterm. The Energy Explosion the us has had a dramatic impact of the past five or six years, years and i have never seen anyone do a full accounting of the stimulus from the decline in net import. The ability of Chemical Manufacturers and factories in the United States states, the cost in natural gas, very important. Certainly it changed. A more nuanced position. I so still think the bottom line is what doctor feldstein said. If if you look forward some of it is just global weakness. As as economies grow more rapidly we will see oil prices go back up. They appear to be stabilizing. I do not see any longterm problem. At the moment i would not be surprised if we saw a downturn. On balance i think this is good for the United States and has made this a different world. Congressman, on balance i i agree it is a good thing oil prices go up and down. It is a a remarkable amount of technological innovation that we have seen. Secondly,. Secondly, job mobility. One thing the Affordable Care act did is reduced job block, the tendency for people to stick with an employer even if there was a Good Opportunity elsewhere. Whatever you do do not return us to a a situation where we have greater job block. Right now we are pretty good at it. Oil and natural gas are not identical. If you see gas prices go down you will see a bigger drop off. If Oil Producers have to drill a well and count on getting sustained relatively high prices, they are the tougher call. I yield back. The time of the gentleman has expired. Rep. Lynn black, you are recognized. Thank you, mr. Chairman. I i want to go to the issue of capitol. There was an interesting chamber talk given, and i was struck by what he said there. It was so simple. Maybe it is because i am so simple it made so much sense to me. We have talked about sustained Economic Growth, good paying jobs. He he said in his talk, it is about capitol if if you do not have an inflection capitol you we will not create a job or a business which creates a job. By that their are taxes that are paid as well as the income of those workers. So as we look at capitol and how we see the influx of capital is not occurring i want you, mr. Holtzeakin just art us off with what someone who would essentially be putting capitol in the market because they would be seeing a return is it taxes, regulation, the issue the issue of trade or all of those things combined . I think you have impacts from all of those things, quite frankly. If you look at the things that the government can do to affect the incentive to save and invest at the highest level the federal government is very anti growth. When we give people healthcare and subsidies we want them to live better. As a nation it is anti saving. That piece with the private sector. Within the budgetary framework large spending programs are crowding out genuine investment in research and infrastructure. We have a budget that is very anti accumulation of capitol. The tax code can be the same way. One reason i am a big fan of the kind of tax code is it allows for rapid capitol recovery. A powerful incentive and something that we need to get into the tax code as much as possible and treats all capitol the same. You buy a a piece of machinery, you expensive. You put a worker into r d you expensive. We do not say very much. Doctor feldstein has done more on this than anybody. Why would you save for a College Education and the rules say we we will not give scholarships to you if you do. Saving for retirement and the incentives, all of those things are important. It all comes back to whether we we will save and invest. And mr. Holtzeakin you keep talking about incentives. That is one of the things we ought to be thinking about. Is it incentivizing what we want . Unfortunately i think as you have already indicated there are many policies we have that are not incentivizing what we want. That is what i hope we we will continue to do as we talk about policies in this committee. Mr. Feldstein, would you like to weigh in on this issue . The key is saving. If we do not save we do not have capitol. The household saving rate is half, close to a 3rd of of what it was in 1960. Why . Partly because of the incentives to this save your mortgage deductions partly because of other policies which substitute. We should be examining what kind of policies we have that drive savings down. Mr. Johnson, i have 30 seconds left if you would like to weigh in. I would say when we we discuss capitol, please do not forget human capitol. One thing one thing we learned from 200 years of Human Experience is the prosperity of any country depends 1st and foremost on the prosperity and skills and health of its inhabitants. Please, when you are considering with the federal government does and does not do it was introduced to encourage people. It was a great success. Reclaiming my time i know i am out of time. Remembering it is the private sector that makes these possible. I yield back that makes these possible. I yield back. Thank you. I will not rehash the area. There are huge opportunities not only in energy but in us manufacturing. I want to focus on one thing the chairman said in his introductory remarks about the countrys debt crisis that potentially is the dark cloud that hangs over us. Mr. Johnson, i read your testimony and you reference the fact that we should not threaten the ability of the us to pay its debt or the threat of not paying its debt causing destabilizing impacts. The debacles in fights we have had. Would you all agree that there is a. In time with our debt load in america that it is just not going to be sustainable if we continue on the path we are on. We have lowered the deficit. Great. I all in. It is not getting to the root problem. At what. In time because you have two pieces of that debt. When does the principal become unsustainable. At at what. In time can you continue policy from the Federal Reserve that keeps an Interest Rate at zero . As an economist i cannot imagine any of you would agree that that is possible. As a non economist i would say that is an impossible. As sometimes inflation will come back. Does anyone on this panel think that we have tamed inflation and it will never be an issue to face america in the future . Correct . If you raise Interest Rates can anyone give me any numbers . The Congressional Budget Office reminds us that Interest Rates if we dont have increase in inflation will rise to four four and a half percent. It will be a substantial increase in our annual deficits and the growth. That is why the cbo tells us if they are not changes in entitlement programs revenue, or some combination of the two we are heading from debt to gdp ratio. And that gets us into serious trouble. More than half of that debt is held by people outside the United States. At some time they may say, this is not a good a good idea. If that happens Interest Rates rise further. It is important for this committee and this congress to find ways to slow the growth and spending and to use tax or form limiting tax expenditures to raise revenue. Mr. Holtzeakin. I would add to that this is not years and years and years into the future. This is imminent. The debt to gdp it to start the debt to gdp ratio we will rise. We are perilously close to borrowing into a death spiral. That is where i wholeheartedly agree. Does that that not put the whole thing at risk . All of our concern that we share. I do not question that they care for american lives. I do. If we get we get into that death spiral does it not jeopardize it all . There are three implications. First, implications. First, do not give up on dodd frank. Do not allow the Financial Sector to do that again. Second, the revenue neutral. We must keep a robust revenue. Third, 3rd, control costs. Healthcare, not just medicare. The Affordable Care act has tilted the curb on that. Costs keep going up. Demographics and technology. Reclaiming my time i think we can all agree we have to do something on the debt issue. With that, i yield back. Mr. Thompson, you are recognized. My congratulations to chairman ryan as well. A number a number of the witnesses talked about tax expenditures. Yes yes or no, should tax expenditures be revenue neutral . I think tax expenditure reform should they be revenue neutral . No, both raise revenue and be used to lower tax. Have them be revenue neutral. Mr. Johnson. The entire package of tax reform should be revenue neutral but i think you must also recognize the trajectory of healthcare cost. You need a revenue base that we will grow to support whatever levels of healthcare the government will be buying. A number a number of folks mentioned the fact that our recovery notwithstanding the fact that it is remarkable is taking too long. Under the last last administration our economy was not just run into the ditch it ditch, it was run over a cliff. I want to reiterate there were some impediments. Government shutdown certainly did not help. Near default certainly did not help. Repeated that ceiling price certainly did not help. Given where we were and where we are today it has been a pretty remarkable recovery. No one thinks this is where we need to stay but we have done quite a bit. Mr. Johnson, mr. Johnson, i would like to here from you do whats to you a tribute our growth in the economy and the progress we have made . Well, congressman, the recovery is due in part to the fact that it is a strong, vibrant nation that took an enormous punch in the face and managed to get themselves back up. They needed assistance. The central bank absolutely assisted and i think they should get kudos. This is out of the textbook. My colleagues has spoken in favor about stimulus of some kind. The disappointment to me is that we did not all work together. It is rather sad and unfortunate and had a negative consequence that we have so much confrontation. Massive ground for agreement thank you. I also want to pick up where mr. Blumenthal left off. I agree it is the most direct and immediate way to help our economy. There is not one of us to would not have a district that would benefit greatly from an adequate level of investment in infrastructure mr. Johnson, you started to Say Something about infrastructure. I would like to hear your thoughts. I think it was rep. Earl blumenauer. I was going to suggest it be more broadly. It is about about how people move to and from nor should it be limited to just roads, roads bridges, transportation, broadband. Addressing congestion. In some situations and those parts of the country it makes sense to add alternatives to cars and use Revenue Sources such as gasoline tax and to consider increasing it. While we are on that, mr. Johnson, what impact the cuts have on job creation in our economy . If you look in comparative perspective look relative to the countries with which we compete including those who are already prosperous and countries who are already up and coming. A private sector absolutely needs a supportive sector. One of the things i hear from entrepreneurs is the weakness of our infrastructure the lack of investment is a big issue. Thank you very much. Thank you. The time of the gentleman has expired. Thank you, mr. Chairman. I i want to join my colleagues and offering my thing graduations to chairman ryan. I thank you for being here for this conversation. Specifically focusing on tax reform for Small Businesses, younger firms. Analysis indicated that were that draft implemented albeit imperfect and requiring further iteration and elaboration hopefully this congress we would increase the rate of gdp by up to 3. 4 trillion and increasing employment by 1. 8 million. I do have concerns back to the small and younger firms about some intimation about the president and by others that we may only consider corporate reform as opposed to the individual codes pastor entities like scorp get the benefit of simplification and marginal rate reduction. You combine the taxes at Different Levels of government. It bears reminding perhaps not you, but many of your constituents, constituents over the last decade more than six out of ten new jobs created have been through smaller firms which is where over half of jobs currently exist in this country. My question for all of you is do you agree, a i will start with doctor holtzeakin we should be focusing on not just corporate code but the individual code and what would be the implication of only focusing on corporate as opposed to the entire Internal Revenue code . You limit your ability to improve taxation income and hiring investment expansion. I think everyone who wants to broaden bases lower rates would do both the individual and corporate simultaneously for the reasons we discussed earlier. There are some particularly vexing issues in the tax treatment of business income and Investment Income not the least of which is we now have three different tax codes. It does not exist anywhere. It would help the smaller guys trying to deal with the business of passthrough and a big way. We have done a lot of backsliding. Individual plus corporate, the unwilling was done in the 86 reform. Mr. Feldstein, if you could offer me 30 or 45 seconds on your perspective. 28 was the rate we had after the 1986 tax reform. It is now up in the 40s. That is a big difference for anyone contemplating a small business. Mr. Johnson. Dont forget there was an equalization of tax base. What you get you considered the distortion and disincentive and comprehensive tax reform and you should think comprehensively given the challenges of the country faces, the differential taxation introduces a lot of distortions. In my remaining time should we coordinate reform between as we reform the tax system should we also consider coordinating those reforms with reform of the welfare system. The welfare system has become a disincentive for working for lower income people. We really ought to be looking at food stamps particularly for 2nd earners. Are there provisions that we ought to consider taking a look at . Yes. What might they be . I would not draw the distinction between the tax code and the safety net provisions, but almost 50 million individuals are now receiving food stamps which creates good incentives for 2nd earners and creates high effective marginal tax rates for that group. The gentlemans time gentlemans time has expired. Thank you, mr. Chairman. One thing that has bothered me since i got here i come from the private sector and have never understood how you continuously spend more than you taken a a look to the future and say, we we will be okay. That is like telling somebody who makes 25 or 26,000 in year that it is okay to go out and spend 34,000 a year, and dont year, and dont worry because you can borrow whatever you need. We are bragging about the fact that we are reducing deficit spending but we dont talk about the effect it has on longterm debt. Longterm debt we will affect our ability to recover. The numbers that i understand, last year tax preparation took 167 billion and it took about three and a half billion dollars to do it. That money and time could have been used more effectively. I have listened to you many times. My concern quite frankly is we are not addressing the real problem. Anyone that has a charge account the worst thing you can do is continually ask for a greater spending limit. We have an opportunity to get this country back on track. The growth rate is pathetic and in a country that is blessed with so many assets. That does not make sense to me. We have an next line opportunity. Our ability to compete in the Global Market i think i think the geopolitical consequences of not being in the strongest position creates a greater danger for us. That is laughable. They are in a position where we are in trouble. As i said i dont think anyone has done a comprehensive account of the benefit to the us economy of the rapid expansion in the oil and natural gas industry, but we no from the postwar history of us Economic Growth that a standard problem has been sharp spikes in Global Oil Prices the Federal Reserve concern over inflation the hiking of Monetary Policy worsening budgetary outcomes in the process. We have seen that again and again and again. It is different, and we we will not see it to the extent we have in the past. We should continue to let the private sector pursue Energy Development based upon market incentive. I think we should interfere less. It is an anachronism and should be lifted as quickly as possible. We have a lot of benefits. I dont think we need to think about the energy sector. That market drive it. The effect on businesses, the private sector especially the way you are regulated and taxed by the country you live and work in. I think we need to look at that as how to make those people stronger. People get confused about this. In the early 70s at that time it was 1 percent over prime. You quit ordering cars. It has an effect that is overwhelming. We have an excellent opportunity to lift this country to a level it has not seen in quite some time if we look at the tax opportunity and programs. I will simply say yes. I am 66. I am hoping i have more than one 2nd left. You know what, there is a great market out there right now. We will get you there. Thank you. Thank you, mr. Chairman. I want to followup little bit on what my colleague was talking about. We are talking about National Debt and growth of the National Debt. I always get concerned. I am a big believer that you have to look at the full picture before you can move forward. I am always somewhat concerned that we zero in on the National Debt without also zeroing in on the unfunded liabilities. When you add them to the National Debt i i believe you make different policy decisions that you may just zeroing in but i would like like to hear your thoughts. Why do we not look at the total picture . I think a number of economists, studies all do look at these unfunded liabilities. The danger is that the numbers turn out to be so bad that people just throw up their hands and say that it is hopeless. If we slow the growth of some of these entitlement programs then we can bend the curb and avoid this explosion of unfunded liability. That is the challenge. I spoke about increasing the retirement age. That would make a big difference. I am a big believer you see the liability curve has changed, you made a good decision. We do not do enough of that. Two things get left out of the discussion. Number one i personally dislike the term unfunded liability in this context because they are policy decisions and promises made. They can and should be modified. To call them unfunded banks to fund them to read please do not. I do not like the term. This discussion is often posed by the green eyeshade types. These programs are important parts that are falling apart. A terrible way to run our pension system. Medicare, payroll taxes 300 billion every year. That will fall apart. Please fix it. Medicaid. People go to the hospital. It is not just unfunded liabilities. They are not doing their job either. But they are a liability. I agree that we should look forward and understand what drives those costs, and it is healthcare cost. We should be considering and trying to apply policies that bend that curve. The Affordable Care act in that. We will see if it lasts. That is what we should be looking for. A big issue for me we make decisions that eliminate that. Government is good at doing that. I would like to hear your thoughts. We have expiring tax provisions. Talked about uncertainty and unpredictability. I want to no what your thoughts are. Should these be permanent . Certainly many of them get renewed every time. There is an uncertainty about that. Making them permanent would be sensible. There is no virtue to an annual tax incentive package. Package. Uncertainty discourages investment, the hiring. Please do not have a confrontation of the debt ceiling or threaten more government shutdowns. Thank the gentleman. I yield back. Thank you, mr. Chairman. Let me thank the panel. You have been around so long having said that, i am optimistic as to what we can accomplish in the next two years. The president has two years left. We have a new chairman of this committee. We have a lot of things that we have a priority to actually form infrastructure education disparity in income but one opportunity that i would confine my inquiries today we will be on trade. We have a new chairman i look forward to working with certainly our Ranking Member has dedicated a lot of his life to improving trade and creating jobs. A lot of things that you said could go unchallenged. I hope that even after this hearing you and i can get together to see just what parts in your professional opinion we all agree on so that we can keep out the rhetoric and start concentrating on things we can cooperate on. This should not just fail because we are not talking to each other. There there is lot of thought the president should have trade authority because they cannot negotiate a trade agreement and a lot of our foreign partners want to make certain that the congress will not tear it apart. Of course, the congress is caught in the position that we have to vote yes or no. How are we prepared to deal with it. Other people say we are talking about millions of jobs that are going to be created. Why is it so difficult to determine where these jobs will be lost and where they we will be gained . The fact remains that if you have a progressive trade agreement whether because of cheap labor loss of Productivity Technology there are a lot of americans who are just out of it for whatever reason. Now comes an opportunity for new jobs to be created. If we had any idea that include women in this agreement, intellectual property, the standards for health these people are going to respect there Work Environment will be protected. How do you expect that we should give the president the authority when we have not the transparency to educate the Congress Republican and democrat when tpp comes to the floor . At the same time the congress has its oversight capabilities and the trade ambassador should be sitting at this table and you should be weighing in on the negotiations were the provisions i care about are you doing a good job . Theres no reason why they get to negotiate with no oversight to the congress in a vacuum. The oversight . We dont have oversight for 485 members. Its either yes or its no. During the negotiations thats why its important out at the table. That is what i would say is the right, nation. The gentlemans time has expired. Mr. Smith you are recognized. Thank you mr. Chairman and thank you for the panel for your participation here today. Obviously america is a big place. The world is even bigger and i think the discussions about trade and the economy in general are very important. You know its been interesting that the representative from nebraska one of a number of plains states others being south dakota wyoming and utah. Other notable stains have fallen far below average unemployment and lower cost of living throughout a lot of the economic downturn and what has been interesting obviously is the states that dont experience these substantial economic ties nor those lows that perhaps some other states have and so i was wondering if you could reflect a little bit on the observations you may have made throughout the last few years about the differences between regions of the country more specifically even states because obviously we had our share of challenges in nebraska amidst the economic downturn but certainly we did not see that high Unemployment Rate that other states saw. Could any of you reflect on that perhaps starting with dr. Holtzeakin . The number one thing that differs going into the crisis is the state of the housing markets. Housing markets were an integral part of the great recession. We had two different kinds of bad housing markets. We have the one that everyone hears about which is the california nevada arizona florida style big housing bubble collapse and everything related to housing. The midwest had a housing bubble. They know never saw the bad housing bubble. People turn their houses and a second mortgages and third mortgages to get cash out of them because they were struggling. When the recession hit it was a very different style of housing problem. The state experiences start with those differences. They differ greatly depending on their oil and natural gas. The Energy States did better than the rest for reasons we have discussed already and i think the third third thing is you now State Government matters. In terms of the quality of the policymaking. Some States States won and in terrible financial shape and were unable to help in the private sector and others like indian open in two it with great shape. I look at those factors as well. Thank you. Mr. Feldstein. Theres a danger we will create the same films again. As i understand the new rules fannie and freddie will take mortgages with 3 down payment 97 loantovalue ratio. That doesnt sound like a good idea. The notion was Mortgage Originator should have an incentive to be careful by keeping some skin in the game. 5 has been scrubbed. Thats not part of the new rules so i think we are creating a possibility that we are going to see different parts of the country Serious Problems if housing prices dont continue to rise at a uniform rate. Right in looking back over there in the observations you made in terms of states that had relatively low unemployment . I think what dr. Holtzeakin said is quite right. There were big differences and what preceded in the housing area and therefore the downturn was much more serious in some areas where house prices have gotten way out of line. If i can buy a house with only 3 down theres going to be a temptation to start running up house prices again in those markets. Thank you. Mr. Doggett. One point picked up ice mr. Holtzeakin many states dont have a fiscal capacity to do deal with crisis. They arent able to borrow or they run a little too close to the attorney have balanced budget legislation and thats why the federal government does in terms of fiscal policy is important and thats why i think we should on a forwardlooking basis before it gets to a situation where theres a lot of rhetoric and application think about what is the right way for fiscal policy to involve any difficulty at the state level the regional level at the national level. As i recall at the end of 2008 when we had a republican president there were republican voices in favor of the fiscal stimulus at that time and i had a big impact. We should think about that. Thank you and one additional question professor holtzeakin. You believe the trade Promotion Authority helps american agriculture . Yes. We have the most productive and efficient Agriculture Sector on the planet and opening up the Japanese Agriculture markets is a big opportunity and i think it can be done. I yield back. Thank you. Your time has expired. I want to recognize mr. Schock. Thank you mr. Chairman and i wish to congratulate our new chairman of the committee. Ive been baffled by the question from both sides about Economic Growth, static scoring or accurate scoring as chairman price called it and particularly because i think the debate oftentimes on this committee and even in the broader context in the political realm between the left and right on Economic Growth and the disparity between haves and havenots, the middle class, the wealthy, the poor is really a question of whether or not you believe our economy is dynamic and whether or not you believe the best way to create wealth, the best way for those is to whether to take from those that have and redistribute or to incentivize those who do not have two work work, 10 of eight to create and for those that have, to invest. And so specifically there has been a lot written about this over the last couple of years and i know one book thats been getting a lot of play right now particularly on the left that book written by a french economist. Capital in the 21st century. One of the most interesting assumptions he made was basically throughout the last 100 years he look at the bottom 5 , the bottom 10 all the way up to the top 1 and is making the assumption that those in those percentiles pretty much remained remain the same and there hasnt been a type of mobility and the type of upward mobility up the economic ladder that many of us on the right side of a the aisle at least believe in what america is all about. Specifically mr. Feldstein i know you have taken on the assumption and i wish he would speak a little bit about what you think this committee ought to be focused on in terms of the income disparities that occur that are present in our economy and the best way to raise those who have without and those that are struggling in the middle class and those in on the middle class can go even higher. Professor piketty was really not concerned with that problem. He was concerned with high income so i think thats the wrong place to focus. I think the right place to focus is concerned about Income Distribution is to focus on the question of poverty and what we are dealing that they are. Part of that is a question of education. Part of it is Labor Force Participation. Part of visit measurement problem. Its not as bad as it looks so i think all of those things that this committee might spend some time focusing on drilling down and trying to understand what the actual nature is of the bottom 10 of the measured Income Distribution. Speak mr. Holtzeakin would you like to comment . I think there are a couple of responses to this whole session. One is mr. Pikettys research has been questioned on a number of friends and i think its worth looking at the statistical fight about whether its measuring Something Real or not they for example tax reform because a lot of people to report income after 86 that previously the world hadnt changed because the reported role was very different. I would be nervous about that whats going on to the second is sometimes the wealth of the upper class destroys the wealth of the middle class. As with the housing bubble did. Dont do it again. Thats the lesson of that. Its about housing policies and the mobility evidence that said that on the whole is the same as it was 50 years ago. People have a chance to get ahead. We just dont like how good getting ahead is. We dont like how good being at the bottom is focusing on Economic Growth in the poverty programs and that is where the focus should be. Mr. Johnson had 30 more seconds. Do you believe in the mobility . Of course. Im an immigrant and i came here for exactly that mobility but i think the way you frame the discussion in the beginning is appropriate. I think you summed up it up nicely and go back to the chart showing what happened since the 1980s. The big thing we have seen not one of but the big theme has been poured trickle down and saying this will benefit other people and it hasnt happened. I think we should in the basis of thinking about it consider that. You know what we got out of the 1980s and the 1990s and that was more for the top in the global competition for talent and what you said is absolutely right. You have to think about how you handle that going forward. Thank you. Dr. Mcdermott you are recognized. Thank you mr. Chairman. I want to congratulate you. I think i will wait until after next sunday in seattle before i congratulate you totally. We have been here three hours and you have been through the rack on everything under the sun but one interesting thing i see having sat through all of this very little is talking about the middle class and those people struggling to get on those ladders. One of them as students. There has been almost no discussion of the 1. 2 trillion in student debt which is hanging over our students and i look at that. I met doctor so i know what goes on in medicine where you come out three or 400,000 in debt that even if you are going to be a schoolteacher you are 60,000 in debt. But that does to your view of the economy and the society and how much you are going to invest and when you are basically trying to succeed in survival and pay your debt service there is nothing left to save. There is no savings in america. Of course there isnt. Every middle class family in this country has put all their savings into their Student Loans. They have signed their house notes. They signed all kinds of stuff to do this. One of the fascinating things about listening to this has been sometimes they get very centric about percapita in the United States but mr. I would like to hear your comments about the european attitude towards student debt and what that Investment Society is making in terms of their future because i have a university in my district for a long long time ever since i came into politics and i watched the National Institutes of health dropping their investments on higherlevel students. They used to do 19 and now they do 6 of the grants and there are people deciding do they want to go into that kind of the thing and whats the longterm effect of our keeping the debt for students . Thats what i want to hear you talk about and how did the europeans do otherwise . Congressman there other competitors around the world including issuer the attitude is exactly what you said which is we want a strong and expanding Higher Education sector and you want more people with posthigh school educations. You want more people with vocational skills and you dont want to overburden them with debt. I think theres a particular problem round the forprofit sector in Higher Education are competitors have to some degree avoided that. Higher education in this country has been the strength and i think it will be a strength going forward. I think we need to expand that Post High School Vocational Education but expand the supply. Dont subsidize people and encourage them to take on more debt. Expand the supply increase the skills that are out there have them come out with manageable lower debt levels to your point. I will give you a suggestion to comment on. Why should a student in this country pay more than 1 above prime on their Student Loans . Why dont we have our loans down at that level rather than these kids who have these 13. 6 loans from private banks and all the other craziness . If we brought it to every student to borrow for school at 1 above prime how would that change the future . I think we want to be careful not to encourage over borrowing that you are absolutely right. The interestrate on some of these loans is too high and these people are good credit risk depending on the exact conditions of the loans in the contracts you are signing. The default rate is relatively low and many jurisdictions discharge these debts. We should look at this market understand the competitive practices and understand some of the companies that are inappropriately gouging students. But most of all expand the opportunity, expand the supply of Post High School vocational training. I have one more question. If the oil patch goes in the tank as it looks like its going to because of all this oil coming down so low and banks all over the southwest are starting with the housing loan. Should we bail them out . I will leave it at that. Ms. Noem. Thank you mr. Chairman and i appreciate you being here for so long. I wanted to talk about trade in the process and getting trade agreements accomplish but i wanted to reference a comment made earlier by a member of the committee that was interesting to me because he talked about republicans and people on our side of the aisle continuously running the same playbook, lower taxes not spending dollars and how thats not working. I represent the entire state of south dakota so we have made some tough decisions in that state. I served in a legislature from 2,062,010 so i was there during the crisis will me have such difficult times. We have become the number one state in the nation to do business and do business in and we have done it by keeping our tax burden. We have a Regulatory Burden that allows businesses to come to the state and thrive and survive and keep people in work. We have a low Unemployment Rate and in fact we even have a constitutional requirement to have a balanced budget every year which i believe mr. Johnson earlier was indicating might be a problem for state to have Something Like that when it comes to tough times. For us it works. We make tough decisions and literally within a year or two we can see her economy turn around and do well. Our number one industry is agriculture and i spent my life being a farmer and rancher and working very hard to increase not only my own businesses opportunities but also agriculture in south dakota across the nation and overseas. Im excited about the trade agreement we have coming and the opportunities that creates but im also kind of concerned about how the process goes down. Last year the United States reached a record high and 152 billion in exports when he came to that but also i see we have more opportunity especially when it comes to agriculture products and in history they have given us some sticking points with countries that we have negotiated with. Sometimes bang up to getting agreements done has been a product. We face barriers when it comes to sanitary issues and discussions that have gone on. I would like to ask you tpa when it comes to getting that historically when we look at previous trade agreements has it been bipartisan and i will reference mr. Holtzeakin. Has there have been a bipartisan agreement traditionally between republicans and democrats to give that authority to the president . But honestly it has also been in many cases tough. Not just on the left on the right of members have to work out their concerns. Its been a bipartisan power given to republican and democratic president s by republicans and democrats. What is the role of the president . Do they become a proponent of getting that type of negotiation power so they can create the trade agreement . The white house involvement in this is essential. White house leadership is essential. On any large white partisan initiative you have to have white house leadership to be successful. Tell me what the nearterm effects would it help of some of these trade agreements with tbp. The agreement we have the negotiations with european countries. What are some short term and medium affects the could see in the first five years for our country and perhaps down the road 10 years from now what would the benefits be that we would have in this country . As with almost any beneficial policy at a time when we are operating below your potential we still have people unemployed and factories on idol. You put those to use and thats a good thing it happens quickly. There are finite benefits to that. Eventually that impact goes away. Theres a larger impact i think in the ability to set standards and make sure the standards for example in the codes used to identify standards are accepted internationally and you are not missing in the negotiation. They are very durable then. You move the mix of your workforce into the attractive International Opportunities they can pay them better. That is why you have bonuses and export related pay. One of the comments that i saw circulating around trade agreements and what they mean for our economy is traditionally trade related jobs pay more than non trade related jobs. Would you care to comment on that and is it true . I believe its true. I think its very important as you move towards tpa. You cant do a trade agreement without it. You understand exactly what the other side is thinking about putting on the table. My sense is that we are not looking at it as a robust a set of agreements and agriculture with the japanese as you and i might like. Thank you. The gentlelady from california ms. Sanchez is recognized. Thank you mr. Chairman and thank you to our witnesses who have been here patiently answering our questions. I appreciate your willingness to join us and im a little bit confused about the purpose of this hearing. Or the information that has come out of the hearing because on the one hand i hear that our terrible precedent is sending our country down the drain with their terrible economic policies but on the other hand we are hearing our country has seen 58 months of it job growth so i guess it depends on money like a present or not. An effort to find Solutions Actual solutions to try to move the country forward and i feel like today has been a messaging piece and there is not really been a lot of serious discussion discussion. Is our economy perfect economy . No of course its not. Should paperworkers be higher . Absolutely other widely i dont see the Republicanled Congress stepping up anytime soon because a whopping zero members on that ill could bring themselves a bill to raise the federal minimum wage to 10. 10 in the last congress. In fact most of our economic recovery in the country has come despite strong Republican Opposition and brinksmanship. This is a party that threatened to default on our financial obligations other government down all at great cost to taxpayers. While they continue to advocate for more tax cuts for the very rich they seem to live in this bubble where they think history will somehow stop repeating itself and their socalled strategies of trickle down economics is going to magically benefit everybody including minimum wage workers. And lets talk about another piece which is health care which is probably one of the most important issues for Many American families. The Republican Leadership on health care has been nonexistent as well. Health care shouldnt be just a privilege entitled few to afford. Therefore the aca was enacted a woman was a pregnant woman was considered a preexisting condition and pregnancy were routinely treated as preexisting conditions but now thanks to the aca women cant be denied coverage or charge more simply because of our gender. We can now receive Preventive Services without outofpocket costs and health plans must cover Maternity Services all of which help many working women. Many women must work to help support their family yet despite the progress we have seen on Womens Health we have seen 54 different votes to repeal the Health Care Law but no coherent draft of an alternative republican plan and what they propose to replace it with. There have been in real dollars and sent many economic benefits from the Health Care Law and lets talk about the gains we have four more women staying in the workforce thanks to the Preventive Services and Family Planning counseling that they receive because of the aca. Im particularly sensitive to womens issues as it relates to the labor force in the workforce and i want to talk about their participation in the workforce because i think its critical for where our country does in the future. I want to address some testimony by mr. Feldstein and his claims that Social Security discriminates against women by not paying them the Social Security benefits they have earned. Coming to that conclusion i think requires completely incorrect assumptions and im going to talk about them because i think they are important. The first assumption is he believes that all women are married. Thats not the reality in my district. Second married women depend primarily on their husbands to support them and get the same benefit from Social Security if they didnt work and again thats not necessarily the case for many constituents that i represent and the third assumption that comes from that statement that only women and never men, only women would make a choice to earn less or work less for example by raising children while being supported by a spouse and yet we know the reality is there are many stayathome dads that work part time or choose not to work and stay at home and raise kids. In fact the truth is the vast majority of men and women get Social Security benefits based on earnings alone whether or not they are married to a smaller number get the full benefit that they are entitled to from their own work and if i could just finish my sentence mr. Chairman. An additional benefit because a much higher earning spouse earns a higher benefit and im going to close by saying some married women and men dont work at all but still rely in Social Security benefits for my spouses work. I felt the need to point that out because i dont know what reality you live in but the reality i live in is that most women must work to help support his family and economically its no longer the case that women depend on men for their support. I yield back and thank the chairman for his indulgence. Happy to indulge the gentlelady from california. All time has expired and i believe theyre another chairman and question time. We have been here since 10 00 a. M. This morning. This is the first hearing in the 114 congress and i very much thank you for taking time out of your busy schedules to indulge us today. Thank you very much for inviting us. The committee stands adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] i wrote these books on the wheeling family. There are two volumes. The reason i thought it was important to collect these histories is wheeling transformed into an Industrial City in the latter part of the 19th century and the early part of the 20th century and its kind of uncommon in West Virginia and that its true a lot of immigrants from various parts of europe here in search of jobs and opportunity. So that generation, that immigrant generation is pretty much gone. I thought it was important to record their stories and get the memories of immigrant generation and the ethnic neighborhoods they form. Its an important part of our history. Most people tend to focus on the frontier history, civil war history. Those periods are important but of equal importance to my mind is the industrial period and the immigration that wheeling had. Wheeling starts as an outpost on the frontier. That river was the western extent that the United States in the 1770s. The first project funded by the federal government for road production was the National Road that extend from cumberland maryland to wheeling virginia and when it comes here to wheeling that will give this community which about that time is about 50 years old, their real spurt that it needs for growth. And over the next 20 to 25 years the population of wheeling will almost triple. Kentucky senator rand paul recently spoke about the competing legal theories of judicial restraint and judicial activism arguing for a more active role for the courts. His remarks were at the conservative policy summit in washington d. C. Hosted by the heritage foundation. This is a half hour. Good morning. We have had a couple of good days. Some of you have been here the whole time and a lot of media interest in the subject we are covering and i think the country is learning that conservatives do have some great ideas. They could make a better life for every american. Thats the whole point of all we are doing here today. Im excited to introduce our next speaker who is just as comfortable on the cover of the magazine as he is filibustering the senate. When he was running for office the washington establishment was afraid that when he got here he would cause trouble. Their fears have been wellfounded and im very proud that i supported him when it was uncool. I was told i was stupid, he couldnt get elected and im grateful that he has proved all of the critics wrong. Rand paul i think has been a fresh face on the political scene and i think very importantly the conservative movement. I have set a number of times that the only majority that has left for freedom minded americans as the majority that comes from welding a lot of the libertarian ideas with conservative ideas. I believe the libertarian concept of individualism and selfreliance, free markets are certainly consistent with the foundation of conservative thought and a beacon will put those libertarian foundations and the conservative values that formed society and the guarantees of a Strong Defense that we will have the majority of americans who understand how do we build a Brighter Future and more opportunity for every american . Rand paul represents that in many ways and he has shown as he goes around the country folks who are not traditionally interested in politics or interested in a lot of the things that he says and talks about which is very important to our movement. He has attracted milenials. He has spoken on college campuses. He has shown that our ideas are persuasive when presented in a persuasive way. We are honored and excited to have senator rand paul here at the heritage foundation. He has been here many times since ive been at heritage speaking on a number of issues and today i think he is here to probably stir you up just a little bit more than he has before. Please welcome senator rand paul. [applause] thank you. Thanks jim. I think you are doing a great job and heritage continues to grow. I think they say on line we have got maybe 25,000 people watching on line. I asked jim laughingly if this was off the record i could say anything i want. He said go ahead. You hear a lot of speeches and everybody will give you a lot of speeches are they like to make it more interactive so we are going to pull the crowd. Media and camera menu may participate also. I would like to know when the crowd thinks that j. J. Show were stained versus judicial restraint. When the crowd think youre legal would be judicial respect . This is going to be a tough sell. How many people think judicial activism as a way to go and that is what we should have as an activist court . This is really going to be a tough sell. Does anybody know why Justice Roberts did not strike down obamacare . Judicial restraint. I guess everybody here is for obamacare. They think the courts should stay the heck out of obamacare which is fine because the majority wanted it. In fact thats what Justice Roberts said. He said that we should not get in the way the majority. Do you know where that comes from . That comes from Oliver Wendell holmes the great progressive back in the lochner case when he defended the loughner case. Oliver Wendell Holmes says the court has no business getting in the way of what the majority will is. We should leave it up to the majority so if you are for judicial restraint i guess what happens when a legislature goes and does bad things . What happens when a legislature says we are going to pass jim crow laws to the 19th and 20th century collection we have an activist court that comes it overturns that . The first slide and the only slide. I wont bore you with that. We have one slide. Wheres it going to be . I cant see it. We have a timeline basically. We started in 1905 with loughner and goes all the way through obamacare. The question is in each of these cases what should consumers before, restraint or activism . We go back to loughner and in the loughner k state legislatures are becoming more progressive and they were restricting those rights for the liberty of contract. What happened is you had an activist court in the loughner case that ruled 54 that the state cant interfere with the right to contracts of the question is are you for activism or restraint when it is with regard to State Government interfering with the liberty to contract . We move on later and get into the new deal. If the federal government. The federal government is passing all kinds of laws assuming new powers that werent in the constitution. He once again have an activist court in the beginning. You have an activist conservative Court Overturns conservative until fun you have a majority of appointees who say judicial restraint is the way to go. Then you move on old but longer an issue come out to go into the time where we are looking a brown board and institutionalized racism or segregation. Whats the position of judicial restraint . The position of judicial restraint is that the states do whatever they want. Thats the conservative position. Its not my position. If the states do wrong we should overturn them. There is a role for the Supreme Court to mete out justice. The 14th amendment is a Supreme Court. It gives the federal government a role at saying the state can do certain things. Theres a book called the conscious of the constitution by timothy stand up for what i think it is a great book. He talks about it that if we were to say we believe in just states rights could you be basically in favor of what john calhoun said . John calhoun supported a tyranny of State Government he thought State Government could do anything it wants. Is that the conservative limited government position that we leave so much to the gut federal government that theres no rule nationally to the State Government. So when it comes to brown that i am a judicial activist. Im a traditional activist when it comes to the new deal but also when it comes to brown. I think the federal government was right to overturn State Governments that were saying separate but equal is fine. Plessy versus ferguson is judicial restraint. Then we go to the next bubba bear when we talk about activism versus restraint. Its griswold. You say why are we having this discussion . Does this have anything to do with politics or Current Events . Does anybody remember George Stephanopoulos question. He asked what do you think about griswold . A lot of people didnt know what griswold was. Griswold had to do with Birth Control. State governments they cant sell Birth Control to women so so if your states rights person you say hands off. If you believe in judicial restraint you say let the states do what they want. Or you might say individuals have rights also and you can tread on individual rights. Then you might say maybe i am for griswold for overturning the state law that says you cant have Birth Control. So theres the question are you an activist or restraint . I guess you are for roh also. In roe you have a competition of wrights preview of the competition of rights between a mother and a child so its a little bit different than whether or not you are restricted somebodys liberty. The other side would say theres not that i dont think roe is as clearcut as far as restraint or activism. Why is this pertinent . When we get to obamacare whether he believes it or not i dont know but Justice Roberts laid out the outline in saying the majority can do whatever they want basically. He basically said if there are two arguments, to equal arguments whether its constitutional or unconstitutional or a tax or penalty we have to accept that basically the presumption is of constitutionality. This gets back to the idea of restraint. They believe in judicial restraint read presumed the majority is correct and we presume laws are constitutional and so we can prove otherwise. Theres a school of thought that thinks differently. Randy barnett right about something talking about the presumption of liberty. Maybe we should start out with the presumption of liberty. I liken it to saying maybe we should be innocent until found guilty. Maybe we should presume to be free until we are restricted. [applause] i have got one convert, yes. My point is not to try to convert you from judicial restraint to judicial activism but to think about it. I think its not as simple as they make it sound. We dont want judges writing. I dont want judges writing was either but do i want judges to protect my freedom . Do i want judges to take an activist role in defense of liberty . Do you i want them to presume liberty and put the burden on the government to prove constitutionality . I think this is important and important in the case with regard to obamacare. In that basically what Justice Roberts said and its not his role to replace the majority will. Some of you might say im still for judicial restraint. I dont care about those cases. We just need a better majority. That is an argument that the question has to calm also if you dont have a better majority. If you have the jim crow majority in the south does the court have a role in overturning something where persons individual rights are at stake . I think they do. I think its an important debate because ultimately ideas are important. I think it was victor hugo who said ideas are more important sell ideas by the presupposition that empower all of us. I think as we look forward to what kind of government we want or role we think government has and the judiciary has its important to decide and examine ourselves with regard to the court. Another constitutional question we have is on the separation of powers. I think this is an equal important question. Its a legislative question and possibly a judicial question as well. Theres a professor from tufts who wrote recently and he said basically theres an equilibrium is supposed to be there between the different branches but we are having a collapse. We are having a collapse of this equilibrium. Our Founding Fathers talked about there being an ambition that we pit one ambition against another and the legislature should should be pitted against the ambition of his presidency. Unfortunately i think now things are so partisan that all democrats will support them but if its a republican president usurping and taking on too much executive power all the republicans will support them instead of what our Founding Fathers intended was that congress would object to having its power taken by the executive branch in these ambersons would be pitted back and forth and those with pushes forward towards bourbon equilibrium. It is unjust, gration the president has usurped and created executive branch power thats not there. Its also an obamacare. We will have another ruling on the Supreme Court coming up. Its also on the power of the war. The power to declare war was absolutely without question given to the legislature. We have been a war now for five months and no vote in congress. Before christmas i decided i would declare war and i decided i would declare war on a water bill. People are like why is he trying to declare war on a water pill . I dont get to decide the agenda. They have been working on this water bill for six years and is jamell attest to sometimes they get annoyed if you amend something theyre trying to do. I amended it with a declaration of war for isis. I think they are a threat. Frankly there are threat to our embassy in baghdad and a threat to our consulate in erbil and the threat to america. And there should be a debate. The president shouldnt do this alone. These debates have to go on and to me i think whats more important whether you belong to one Political Party or or another its the ideas the constitution and how the whole goal of the constitution was in limiting power and trying to not let too much power gravitate to one body or to one person. While im here in washington in the future as long as im here that will be my overriding goal to try to limit power and keep too much power from gravitating to one person or body and i think this is above and beyond all partisan politics. Thank you very much. [applause] i would ask if i converted you from activism. We will take some questions. [inaudible] [inaudible] [inaudible] i guess the way it would look at it is i say this often because they think it bears repeating. I think theres a lot more going on. The long war in some ways his sunni versus shia but its also within the islamic faith. Its a war going on between what i call civilized islam and barbaric islam. Some conservatives like to criticize the president didnt say why is he being so nice to islam . I think sometimes what is trying to do is point out that theres a difference because you want to paint with a broadbrush that everyone in islam as an enemy of the United States were talking about a horrific terrible war with a billion people hating america. I dont think thats true. I think the vast majority of islam is peace libet peaceloving and civilized but if its five or 10 of islam thats a lot of people and its a big problem. The war is not only sunni versus shia but also a barbaric form of islam against mainstream islam and the west. I think no matter what we do we have to defend ourselves. Printing cartoons shouldnt engender people murdering you so we do have to defend ourselves. France has to defend themselves and went to defend ourselves. We also have to defend our Diplomatic Missions around the world. They put a lot of blame at the feet of Hillary Clinton for not defending the embassy or the consulate in benghazi. I think she did a terrible job. [applause] and i think its inexcusable when you asked for security and not be provided it. Thats the job of the commander in chief and executive branch. The same goes for erbil or baghdad. While i dont want to be in the middle of a long war because i dont think there is an answer and much of this war should be left to be fought by the middle east at the same time we cant leave our embassy and protected so we have a couple of choices. We either bring everything home are we defend our embassies in their interest. I think at this point but i would say is we defend our interests. But that doesnt mean we have to be involved in every war and skirmish and i began by saying one thing. Theres any one thing that i think is here if you double and the facts really support his every time we have got involved to topple a secular dictator its been replaced with chaos and the rise of radical islam. That would be an hillarys wine would be on this would be the republican war in iraq. I think what is over there now is less stable than before so i think there are more problems with the i rise of iran because theres no counterbalance in iraq anymore. Some of these problems are unsolvable. The only thing i think we have to know from our perspective is we have to defend our people. C senator paul makes an important distinction in a something we have looked a lot at an heritage. There is political islam perverting the basic religion itself and theres a civilized more religious islam. Making that distinction is very important i think in solving the problem itself. Some other questions for senator paul. Yes sir. To your point about the separation of powers and the Founding Fathers how do you get that into an every man definition that we can understand . [inaudible] some people dont understand that and we have ended up in this. I think one simple thing is unelected bureaucrats should not write laws. Who are they unelected bureaucrats working for . All of the bureaucracy of Government Works for the president and so we have abdicated our role is congress. People say obamacare was 2000 pages pages, that so long. Thats pretty long but the regulations or 20,000 pages. So much is being done without her knowledge with others doing what we need to do so theres a debate over defunding the immigration of the executive order. Im all for that but im for that and a thousand things on every bill. I want 1000 instructions were 1000 new instructions on every appropriations bill. You say whos trying to tie the hands of the president . Thats our job. I dont care if its a republican president. The power of the purse when people talk about the power of the purse does her instructions. We have been writing outlines a bill setting into the present and they do whatever they want. As a consequence they do many things that we didnt intend. I also think regulations that are written that are very expensive like 100 million ought to come back. Jim was the lead sponsor something called the rain tax was gaining that when he was in the senate. It says any revelation written by another branch of government that is expensive has to come back and be voted on to become law by congress. That would go a long way towards reasserting our authority in the balance of power. Other questions . Senator paul your father is a big founder of the Libertarian Party and the main thrust you are against regulation but im glad you are slowing down this president. Are you for regulation in a constitutional way rather than more red tape . Absolutely and i will give you an example of that. We passed a law the clean water act that says no one can discharge pollutants into a string. I voted for that. I think it be of a company and you have been seen in your dumping it in the river not only should he be punished if you are doing it purposely you should be imprisoned for doing up at him for that regulation. The federal government regulations however that was passed in the 1970s. Discharging pollutants into a navigable stream. Overtime they have defined dirt as a pollutant in your backyard is a string. We now spend 100 million policing private property and i think we do so much to harass private Property Owners we have forgotten about the stuff we are supposed to be doing which is the ohio river in the great lakes and the oceans. Theres a role for government in camino property but we have gone way too far with individuals. One quick example, ken lucas but clean dirt on his own land to raise the elevation to sell it to mississippi. He has been in prison for 10 years for u. S. 70 when he went to jail and hes now 79 and still in prison for putting clean dirt on his own land. That is a crime and whoever put them in jail really ought to be in jail. One more question and then we have to call it. American for government were making a for epa. Do you agree with that and what is your view . I have mixed feelings about that. You are talking about the Authority Given for trade agreements and what does the acronym stand for . Great Promotion Authority. Theres a argument to be made by some of the separation of powers by giving this authority to the president you are taking power that should be the congresses. Theres another argument that these are really treaties and should be done is treaties and they are done by simple majority. Im also a believer in big trade. I believe free trade is a good thing. There have been libertarians are libertarian conservatives my father included who voted against the trade deals because they felt they gave up sovereignty to International Bodies but i think its about valid point that i voted for the trade deals because like a lot of things in washington i have weighed the good and the bad and i think the good trade has caused me to vote for things that are perfect basically. I think the perfect way is we would do that to the sovereignty of the congress. Unfortunately i think the offer to vote on it is not than that. A proposal for addressing income inequality in the u. S. They up veiled the plan at an event hosted by the American Center for progress its just over an hour