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senator simpson:good morning. thank you. well, we'll proceed. several members yet to come. i shall not transgress too muchon your time o... Februari 15, 2017

senator simpson:good morning. thank you. well, we'll proceed. several members yet to come. i shall not transgress too muchon your time or your patience, but first a word about this verygood and great man beside me, even though we areof the other faith. he's a person i trustimplicitly, a man of his word, a friend, and a patriot. when my old pal joe bidencalled in january and said, "al,

i've got a real deal for you,"i said -- i chuckled and i said, "forget it." and he called back, because ifeel when the president of the united states asks a citizento lend their services, you step up, in theoverused term of the day, especially in athletics. and then when i askedwho would be my co-chair, they said erskinebowles, and i signed on. and let me just sayit's been a great treat.

but let me say this to my12 legislative colleagues, a cautionary tale, ihave been where you are. i feel your pain, in thewords of a former president, and the heat -- (laughter) the heat is on you. this one is on you. and poised outside of thischamber are the denizens of darkness, i think theworkers of the dark,

in the words of harry potter. those are the groups waiting outthere in temples around the city to shred this baby to bits. and they're ready. they've been waiting for a longtime to chew this one to pieces. to tell you to do this or don'tdo this or there may be less cash in your christmasstocking at your next election, or a black lump of coal,and they're geared up to destroy this work.

that's how the city works. it works on negativesand not positives. so, that i share with you. and i know about thisbecause i've been there. i know the feeling. and in the role ofleadership that i held, i had to hold my nose andvoted a damn bad one or two a time or two. unfortunately, my friend richarddurbin holds the role i had,

assistant majorityleader, then slipping, of course to assistantminority leader, which of course he's hopingdoes not occur, i know. nevertheless, these groupsconsist often of zealots. a zealot is one who, havingforgotten his purpose, redoubles his efforts. there are many of them here. now, these groups have hauledup their artillery and fired some heavy shells at thisold infantryman here and

my colleague, and they willpull out all of the stops with massive expendituresof media and advertising, and these ads will be dramatic,powerful, and heart wrenching. but try to pay them no heed,because these purveyors of doom have been lurkinghere for many years. they're like the man behind thecurtain in the wizard of oz. but they get paid big money tolobby and get you all worked up. and so they will have alist, and you can pick one. just run through a few:shredding the safety net,

disarming america, hurtingthe poor, helping the poor, punishing seniors, coddlingseniors, helping the rich, hurting the rich, stuntinggrowth, cheating veterans, killing jobs. no cutting enough or too much. raising taxes or notraising taxes enough. or cutting taxes orcutting too much. and the list goeson and on and on. these are tough timesrequiring tough decisions.

and indeed, tough votes. it took us many weeks hereto establish trust in this commission, among ourselves,and i trust you all, each and every one of you. i don't agree withyou, for sure, but trust is the shimmering coinof the realm in legislating, and it's been very tarnishedin recent years in this place. erskine and i will not andhave not pleaded with you to support this plan.

we sincerely hope you will,but that is solely your choice. i have been and i have seen onso many of these commissions in the past who come up withdecisions and directives and solutions that are absolutelytoothless exercises, that are pure mushor watery gruel. not for us. not this time. whether we get two votes or18, this baby ain't going away. oh, sure, it may be buriedin an unmarked grave soon, but when the votes for thebudget and to extend the debt

limit, and the debate onthat comes up in the spring, this cadaver willrise from the crypt. and you or some of yourcolleagues will say in the face of the new faces who willbe saying i'm not voting to increase the debt limit unless iget some spending cuts and a lot more, and the leadershipof both parties will say, but we have to do this or thefull faith and credit of the u.s. will be imperiled. well, we may even have toclose down the government.

and some sincere newmember, honestly, will say, that's why i came here. that's what's out there. and the spending cuts will bepresented by them and they will be ones that have been selectedat random that have no basis in debate or discussion whatwe may have discussed here in these past months. and the members will be goadedto support those, not ones, as i say have been workedthrough the process here and

thoughtfully debated, whetheryou agreed with them or not, and i think that willbe a chaotic time, and even a bloodbath. and i think americansdeserve better, and this plan is a better way. it's an amalgam, a partialconsensus in some ways, at least a plan, atleast it's a start, and so you may have notedthat jan schakowsky and i have not always concurred.

we haven't. she is the canary in thecoalmine for my activities, and let me tellyou, i admire her. she had the courage to layout an alternate plan of how to get there. so did andy. i don't agree with it all, butshe laid it out, and so did he. if we can come to the fact,don't reject, reflect, would be a goodthing in this town.

don't reject, reflect. then we'll have a place for itin the appendix of this report. just relax, just threemore handwritten pages, you're looking, infact, jabbed my arm. now, the final note. things in this world havedramatically shifted, shifted on this planetthat we all survive on. things are very differentthan they were two to three years ago.

we all know the figuresand we all know the math. and the fact reallyis, this is it. no more fun and games, smokeand mirrors, alchemy, trickery, cunning, cya, demagoguery,and making promises we can't possibly keep. and as erskine often said,debt denial has gone the way of the dodo bird. now these are not normaltimes for normal non-solutions. that's what they dohere, non-solutions.

so i remember so well when i wasanguishing over a tough senate vote i had to cast and theywouldn't let me vote maybe, so i would pick out a piece ortwo of the bill and say, with, of course, an accompanyingcya press release, of course, that if only section 2b orparagraph 4 had been left out of this marvelous billi would have voted for it. but because, and it was becauseit was a very good bill, i just couldn't dothat to my constituents on paragraph whatever.

now i don't think myconstituents or yours will let me or you getaway with that any more. they've wised up, they're mad. they're tired of the bluster andthe blather and the ego and the bs that has worked so oftenfor all of us, including me, a master at it. so yes, the times have changedand we will never be the same. the tectonic plates of theold politics have shifted. they know what debt anddeficit is and interest.

they have done intheir own homes, as they ponder their plightaround their own kitchen table, often with head in theirhands, and they say everyone has taken a hit. no, wait a minute. all of us took a hit but one. the federal government. and all of its massiveminions have been spared in this recession.

and we have seen the figures,and we don't know a lot about greece and ireland and spainand portugal and italy, but we do know something,that if you stay this way, something bad will happen. and these deeply concernedstraight thinking and straight talking folks, they knowtheir country is on the same trajectory. and so do we. and they know, too, that itwon't be bowles or simpson who

will dig them out of thisblack pit, it will be, it will be your colleagues,your legislative colleagues. only you, no one else. not the president,or my pal joe biden, or anyone else canright this listing ship. only you 12 and your successorsand 523 of your other colleagues in both parties will haveto do this herculean task. nobody else. do what you need to do,do what you must do,

guided by your own conscienceand principles and a shred of patriotism, andwhichever way you go, share it with us in thereport on the appendix. tell us why you don'tlike it and voted no, and tell us why you don'tlike it and voted yes. because that's, that'sa wonderful alternative. those are the only ways out. those are honest ways. so i admire and respect youall, and you need not explain

or comment on your final vote,whichever way, come this friday. we have listened, visited,negotiated, debated, and discussed all ofthese issues for us, and i think we've done, allof us have done our level best, and then some. and i want to render deepestthanks for your energy, your time and your talent,and those same attributes of your fine staffs. and so god bless you, and ithen yield to the numbers guy.

fog them up, will you? senator bowles:i love being the numbers guy. senator simpson:i do, too. senator bowles:is this on? senator simpson:yes. senator bowles:i think it's on now.thank you. thank you, al. my daddy used to say thattrue friends are hard to find, they're even harder to make,and if i've gotten nothing else out of this last eight months,i've gotten a real friend in

al simpson, and that's a rarity. and i'm grateful. as you all know, we put ourchairman's mark out a couple of weeks ago, seemslike years ago now, may have got a little moreattention than i thought it might, but itprobably deserved it. you know, we, in that chairman'smark we take $4 billion out of the deficit overthe next nine years. we cut the deficitin half by 2015,

and by three-quarters in 2020. we take the deficit to gdp downto about 2.2% of gdp in 2015. the president askedus to get to 3%, and we get it downto 1.2% in 2020. and i think we canall be proud of that. i can tell you, al said thatas he travels through airports he gets more thumbs upthan he does other digits. i can tell youfrom my viewpoint, i usually go to the liquorstore when i leave here.

but i'm going, when igo to the grocery store, here's what people in northcarolina tell me, 100%, i don't care who theyare, they say stay strong. don't wimp out on this,erskine, stay at it, get that deficit down. and i think that's what we willdo, regardless of the vote. you all have been great, i havenever been involved in a more nonpartisan -- thisis not bipartisan, this has been nonpartisan.

i've spent more time in tomcoburn's conference room than i have my own house, i think,in the last eight months. and he has become my friend andmy doctor in this time period. all of you have been as politeabout this document as you can. there are some thingsyou like, there are some things you dislike. i think senatordurbin said it best, he said there were some thingsin this original draft that the devil would hatemore than holy water.

and you know, that's probably asmuch as somebody can dislike something. but everybody has said,including the folks at the white house, thisis a serious proposal. it was a good starting point,and i want to thank you all for treating it as such. no matter what happens, i thinkthis little commission of 18 people that have been meetingfor the last eight to nine months has succeeded.

we have fundamentally changedthe debate in america, all you've got to do islook around this room and you can see that. we put the debtissue on the map, and i think we owe an enormousdebt of gratitude to senators gregg and conrad. we would not be herewithout those two. they have been phenomenal. they wanted this to bea legislative process,

we couldn't get alegislative process, they got this commission, andthis commission has brought this enormous issue to theattention of america. so i thank the two ofyou, you are the captains. (applause) now, i don't know ifwe can agree on a plan. i'm an optimist, i always havebeen, maybe we'll get two votes, i know we're goingto get two votes. senator simpson:i know for sure.

senator bowles:maybe we'll get five,maybe we'll get 14. nothing wouldsurprise me in this. but i know the world is movingin our direction for better or for worse, because of what yousee going on around the world just today, if you readtoday's newspapers. but i do know there'sno turning back now. the era of debt denialand the denial of its consequences are over. each of you, i think, cantake enormous pride in that.

together i think we have startedan adult conversation that will dominate the debate until theelected leadership here in washington does something real. and i can tell you,as a state employee, the states have beendoing something real. we've had to balance ourbudgets, and it has meant very, very painful cuts forus at the university. municipalities all over thecountry have, businesses are, and every family does it sittingaround their kitchen table.

so i think washington isgoing to get on board. i think it's impossible to sweepour country's vast debt problem under the carpet any more,and i'm glad of that. now, you know, we've gotten somenice editorials about this from organizations as diverse as "thewall street journal" and "new york times," "the new republic"and "the national review," and as wide reaching as myhometown "charlotte observer," to "the kansas city star,"to "the louisville journal," to "the tacoma daily tribune."

and i could go on and on. but my point is, al and ididn't get in this to get nice editorials, we got in it todo something real and to do something that would really makea difference for this country, and would make uscompetitive again. i think the american peoplewant us to do something real. i think they want us tomake the tough decisions, and none of thesedecisions are easy. the problem is real, thesolutions are all painful,

and there's no easy way out. i think for many years electedofficials have been worried they would be punished if theymade the tough decisions. i think for all of us, we'regoing to be penalized if we play politics, which none ofyou have, not one of you, if we duck the tough calls or ifwe take a walk on this enormous problem we face. al and i are notgoing to wimp out, i think you can see from our2.0 presentation you have today.

for us it's go big or go home. we're going home anyway, right? senator simpson:you bet. that's right. senator bowles:yeah. we want a seriousproposal we can be proud of. we're not interested in14 votes for a whitewash. this problem is just tooplain big and too important for our country. the plan that you now have infront of you is one that al and i are proud of.

we believe it will keep ournation from falling into the abyss created by promises thatare greater than our nation can keep, and created by way,way, way too much leverage. i have lived in a worldwhere there's such a thing as reverse leverage. i have lived in a world ofcompound interest rates, and i can tell you,you can't beat it. it is really tough, andit will bring you down, it will bring you down fast.

i want to go through the plan. since we haven'tdone that publicly, i'll do it in about ten minutes,so i apologize for having you all sit through that. then we want to hearwhat each of you think. none of you got the plan'til late yesterday or early this morning. i didn't get it anysooner than you have. i, while i have helpedwrite the final plan,

i haven't read through thefinal plan myself even yet. so we're not going to ask youto vote today on something you haven't thoroughly reviewed. i think a couple of membersstayed up and have thoroughly reviewed it, andi'm glad they have, and they may want toexpress their opinion. but we want to haveyour response by friday, and hear where each ofyou stand on the plan. rest assured, i don't expectany of you to like every aspect

of this plan. i don't like everyaspect of this plan, and each of you know it, whetheryou're democrats or republicans. to vote for this plan, eachof us will have to tolerate revisions we opposed orpreviously opposed in order to reach a principled compromise. we will have to put ourdifferences aside to forge a plan because our nationwill certainly be lost if we don't have one.

we do not pretend inthis exercise to have all the answers. we have tried to offer anaggressive, fair, balanced, and bipartisan proposal thatis assuredly as serious as the problems we facein this nation today. the plan is built aroundsome basic principles, and i'll take maybe ten minutesto describe the plan and then we'll hear from each of you. this has not been abean-counting exercise for us,

this is about americabeing competitive in this global economy. it's about pullingtogether, not pulling apart, and the principles are prettysimple: we don't want to do anything that disrupts a reallyfragile economic recovery. we want to protect thetruly disadvantaged. we want to keep americasafe and secure, while acknowledgingthat may require us to change our missions.

we don't want to hollow outthis country while we fix our balance sheet. therefore, if we're going tobe competitive in what is a knowledge-based global economy,we're going to have to make sure we continue to make smartinvestments in education, infrastructure, andhigh-value-added research. we've got to reformthe tax code. there are $1.1 trillion worth oftax earmarks in this tax code. we'd argue about $16billion worth of earmarks

in the spending bills. these tax earmarks are justspending by another name, and basically, theybenefit people like me. if we eliminate these taxearmarks, 1.1 trillion a year, we can bring the rates way,way down, to areas like 8%, 14%, and 23%. we can reduce thecorporate rate, and make america one of thebest places to start and grow a business, and we can broadenthe base, simplify the code,

and we can do a lot to getamerica moving forward again. we think there should be aceiling on revenues of 21%. we think we ought to cutspending wherever it is, whether it's in the defensebudget, non-defense, or if you want to call itsecurity and non-security, entitlements, or in thetax code, and believe me, there is spendingin the tax code. and lastly, separatefrom deficit reduction, we want to keep social securitysolvent for the next 75 years,

and today it is not. our plan reduces the deficit by$4 trillion over the next nine years, approximately. it cuts the deficitin half in 2015, and by three-quarters in 2020,taking the deficit to gdp ratio down to 2.3% in 2015, which ismore than the president asked us to do, and it takesit down to 1.2% in 2020. our discretionary budgetover the next nine years takes $1.7 trillion out ofthe discretionary budget.

in the year 2015, whichwe've been asked to focus on, it reduces the discretionarybudget by $172 billion. we put forward over $200billion in specific cuts, paid for this $172 billionworth of spending cuts, so if anybody wants to knowwhere the specifics are, we've got them. we divide the budget betweensecurity and non-security, and we put a firewallbetween them. there's only onereason we do that.

we want to make sure thespending cuts are on both sides of the ledger. we budget for the first time$11 billion a year for disaster spending because we're gonnahave disasters in this country. and where did we comeup with the $11 billion? we came up from it becausethat's the average of the last ten years, takingout the high and low. we tightened the provisions, thedefinition of what can be called a disaster, so everythingdoesn't get glumped in there.

we tightened the provisions forwhat can be called an emergency. we do the samething for the oco, which is the warsthat we're fighting. we tightened the provisionssignificantly for what can go into that budget, and we requirea 60 vote point of order in order to make sure that allof these recommendations we make will be verydifficult not to occur. on the tax side, we did, weare recommending the zero plan, which i think we've gottengood response from both

democrats and republicans. we're not the ways and meanscommittee, we're not finance, our plan says to develop a planthat meets several principles. those principles are to broadenthe base, lower the rates, simplify the code, andreduce the deficit. we eliminate alltax expenditures, we take the rates to 8, 14 and23 with the breakpoints being $70,000 and $210,000, and in nocase do we want to see the rate go above 29%.

we reduce the deficitby $80 billion in 2015, and by $180 billion in 2020. and congress can choose toadd back key provisions as it relates to the earned income taxcredit, the child tax credit, the home mortgage deduction,retirement, health, charitable deductions,recognizing that each add back raises rates. they're not for free. we ask the tax policy centerto develop a distributional

analysis of an illustrated --illustrative tax plan that adds back a 12% credit on homemortgages up to $500,000, a 12% credit on charitablecontributions above 2% of adjusted gross income, thatcaps the employee health care exclusion in 2014, and phases itout by 2038, and a few others. the rates under that scenario,as an example, go from 8, 14 and 23 to 12, 22, and28, and it maintains or improves progressivity. i'm not asking you toapprove the addbacks,

i'm just asking you to recognizethat they do have a cost. health care. we take two positionson health care. we look at it in the shortterm and the long term. in the short term we wantto make sure that we raise the funds to pay for whatyou all call the doc fix, which now amounts to $267billion and is financed through the deficit, and to repeal theclass act which will cost us about $76 billion to do, becauseyou have pay -- people paying in

over the first five years andthen benefits dwarfing what is paid in in a very big, unfundedmandate in the out years. we pay for those with$400 billion or more than $400 billion worth of cuts. in medicare, we make somecuts as it relates to fraud. we do have more cost sharing,we do restrict first dollar coverage, so everybody'sgot some skin in the game. we extend the medicaid drugpayment to dual eligibles and we reduce the excess payment tohospitals for medical education.

those add up toabout $298 billion. we also cut the payments forbad debt and accelerate the home health savings provision. in medicaid, we eliminate stategaming of medicaid tax gimmicks, which we see done in my stateand about every other state. we also take the dual eligiblesgo to medicaid managed care and we reduce theadministrative costs. those save us about $78 billion. other savings that we havecome from malpractice reform.

we pilot a premiumsupport plan in the fehb, and the doctors actuallypay a little bit more. and those saveabout $47 billion. i'm almost through. other long-term health carechanges that we propose: the new affordable care plansays that it will control the growth of health care atthe rate of gdp plus one. we hope that's true. if it doesn't, we put in aglobal cap at gdp plus 1% to

include all federal health carespending, medicare, medicaid, chips, the exclusions, thefehb, tricare for life, the exchange subsidiary, allfederal health care spending. and we say, look, if what youhave out there doesn't work, america must take more drasticsteps because we have to control the rate of increase and in thecost of health care and get it down to gdp plus 1. therefore, we would recommendthat if that happens, that the congress look atthe premium support plan

like the ryan-rivlin plan formedicare, that we consider block granting medicaid. we have a robust public optionwhere we have more cost sharing and sharing of benefit design,strengthening the i-pad where we give cms the authority tobe more active purchasers of health care using coverageand reimbursement policy to encourage higher value services. in other words, boy, you'regonna have to do something really tough if what wesay works doesn't work.

other mandatory changes wehave put forth in our plan that reduce the deficit relate tothe federal workforce retirement plans, where we do such thingsas use the high 5 rather than the high 3. we reduce ag subsidies,we eliminate in-school subsidies in the federalstudent loan program. we give the pension benefitguarantee board authority to increase premiums so we can getthat darn thing out of deficit. we eliminate paymentsfor abandoned mines.

that made al particularly happy. we extend the fccspectrum authority. we index mandatoryuser fees to inflation. we reinstate, or excuse me, werestructure the power marketing administration tocharge market rates. we require tva to improvetransmission surcharges, and we give the post officegreater management authority so that we don't have thesedeficits of about $8.5 billion off budget, and that wouldinclude considering doing such

things as eliminatingsaturday delivery, and closing post offices inthis time of electronic mail. on social security, andthen i will be done, and we'll open it up to you all. we do two things that make ourjob more difficult in meeting the requirement to reducethe, to bring the thing, bring social securityinto 75 year solvency. we raise the minimum paymentthat someone can get to $125% of poverty, and we wantto take care of, again,

our principal of taking careof the truly disadvantaged, and we were also told by everyexpert that you have to take care of the older, oldpeople between 82 and 86. and so between 82 and 86,everybody gets a 1% bump up per year. obviously, that makes ourjob more difficult because that adds cost. to meet that cost we put inprogressivity payments that hit the upper 50%, and the currentbreakpoints are at 90% of wages,

32% at 15, we changedthose breakpoints to 90, 30%, 10, and 5. and again, protectthe bottom 50%. we do have longevityin our report. as you all know, currentlythe social security age goes to 67 in 2027. we take it to 6840 years from now, and to 69 65 years from now. i hope that gives peopletime to get prepared for it.

we do put in a hardshipexemption because we also take up the earlyretirement age to 63 and 64, 40 and 65 years from now. and because we do that, somepeople are in really tough back-breaking physicallydemanding jobs and have to retire at 62, and we acknowledgethat, and so we pay for this. we have a hardship exemptionthat takes care of the 20% of people who have thosekind of jobs in the u.s. we go to the chain cpifrom the regular cpi,

because it more accuratelyreflects inflation. we bring in new stateand local workers, and instead of taxing somewherebetween 83 and 86% of wages and capping it there, we go backto the original 90% of wages. what does that mean? today the cap is $106,800;in 2020 it goes to $168,000, and our plan takes it to$190,000 from $168,000 in 2020. that is our plan. i thank you for indulgingmy going through it,

and i'll now openit for comments, and we'll startwith senator conrad. senator conrad:first of all, i want tothank you our co-chairs. you've done your duty,you've been brave, you've shown courage,and most of all, you've put before us a plan thati think is critically important for the nation. i also want to thank mypartner senator judd gregg, who is ranking republicanon the budget committee,

and he and i several years agocame up with the notion that we absolutely needed a commissionto come forward with a plan, and senator gregg is going to bevery much missed in the united states senate, certainlygoing to be missed by me. and i thank himfor his leadership. i thank every memberof this commission, whether you decide to supportthis effort or oppose it. i think every member hasdemonstrated a real commitment to the work of this commission,and has brought a perspective

that was important, and ideeply appreciate that as well. and certainly the staff, who hasworked so extraordinarily hard, led by bruce reed, but i want tothank every member of the staff, because i know youhave worked weekends, you have worked nights,you have worked long hours, and i think you havedemonstrated real commitment to the country that shouldbe recognized and applauded. to me, this is adefining moment. i have had a chanceto read the plan,

in fact i've nowread it three times, late last night andtwice more this morning. i really believe we areat a critical juncture. we are borrowing 40 cents ofevery dollar that we spend in this country. our revenue as a share of ournational income is the lowest it's been in 60 years. our spending is the highestit's been in 60 years, as a share of ournational income.

that is not sustainable. we are headed fora fiscal cliff. america is in danger. and we can eitherlook the other way, hope somebody else doessomething, or we can act. this commission has been givena very serious responsibility. and our obligation was towork, to come together, to produce a plan thatwould bring america back from the brink.

and while there are things inthis plan i dislike intensely, and i do, there are also thingsin this plan i think are grand slam home runs for the americaneconomy and for the future competitive positionof our country. so, we're now at a timewhen we have to decide. i understand not necessarilyat this moment or today, because other members havenot yet had a chance to fully review the plan. i must say i believe ihave, and i am prepared

to make a decision. and i am prepared to supportthis plan, and to support it strongly, because i don'tsee another alternative. i just don't. this is the work ofdemocrats and republicans, people appointed by theleadership of the house and the senate, republican anddemocrat, people appointed by the president of the unitedstates, 18 americans who have been given a heavy responsibility.

and i think they'veresponded in a serious way. as i look at thisplan just briefly, i think one of the mostimportant things it does is restore the solvencyof social security, 75 year solvencyof social security, and it does not take the savingsand apply them to the deficit. the deficit reduction, some$4 trillion over the next ten years, is done separately. this plan also, i believe, oneof the most important things

calls for fundamentalthoroughgoing tax reform. lower the rates, wipe out someof the tax expenditures that have been, really haverun out of control. to help make americamore competitive, to make the taxsystem more fair. i think those are criticallyimportant components, and it will alsogenerate more revenue. in fact, i believeit will generate more revenue than any forecast.

because when you reduce theoption and the opportunity to game the tax system, and iused to be a tax commissioner, you're going togenerate more revenue. i believe that. so, i said earlier thereare things i don't like. i'll withhold talking aboutthose because every one of us could go through page afterpage and find things we really don't like. let me just conclude by sayingi think this is a critically

important moment, and whetheror not we get 14 votes -- and i very much hope we do -- i thinkthis is going to provide a guidepost for decisionsthat must be made. and the sooner they're made,the better for this country. i've followed events as i knowall the commissioners have over the last weeks in europe. if that doesn't sober usall, seeing first greece, then ireland, nowportugal, possibly spain. if we fail to act now, ourcountry could find itself in

a circumstance in which we haveto take draconian action at the worst possible time, inthe midst of a crisis. i pray to god that we have thewisdom to act before that point. and i thank the chairs andi thank the commissioners. senator bowles:thank you, sir. senator gregg. senator gregg:well, let me join with everyoneelse in this commission thanking you, the chairmen, and yourextraordinary staff for what you've done. first in the way you'vemanaged these meetings.

it has been intense,and constant, and it's been thorough,informative, and substantive. and i congratulate youfor your leadership. it's been a tremendousbenefit for this nation. i also want to thank the folkswho have been on the commission. i mean, this is a prettytalented group of people. i mean, i don't want tosay that about myself, but excepting myself,and maybe ken. it's a pretty talented --

the time and commitmenthas been extraordinary, and the thought process and theideas brought to the table have been exceptional. as i look at this, this isabout america's greatness. we are the mostexceptional nation, and the world's looking at us,and they're saying how could such an exceptional nationhave gotten in such trouble? how could we be on a path whichis essentially going to drive us into some form of bankruptcy?

it will be an unusualform of bankruptcy, but it will be a form ofbankruptcy because our debt will be unsustainable and ourcapacity to pay the interest on that debt will threaten thevalue of our currency and the lifestyle of every american. this is about main street. but it's about wherewe go as a country. we as the people who are chargedwith the governance have a responsibility tonot let that happen.

and you can't deny the facts. we are on a course which becauseof the demographic shift in this culture, where we go from 35million retired people to 70 million retired people overthe next five to seven years, and for other reasons whichwill generate a little bit of a debate around this table, ourgovernment is growing at a rate that is simply unaffordableand unsustainable, and the inevitable fact is thatif it continues on this course, prosperity for americans will bejeopardized and we will be the

first generation in the historyof this country to pass a less prosperous and securenation on to our children. and that is antitheticalto the american culture. the american culture demandsthat the next generation have more opportunity andbe more secure than the prior generation. that's just the essenceof what america is about. and so this really isabout america's greatness. now, this product is notperfect, nor is it global.

it doesn't evensolve the problem. it just allows us to putin place a glide path, and not a glide path, buta pathway that says to the american -- says toamericans and the world, we are serious about doingsomething about the problem. the problem will still be thereeven if everything in this proposal were adopted becausewe'd still have a debt to gdp ratio of between60 and 70% by 2020, which is way above ourhistorical position, which was,

which should be no morethan 40% if we're going to be really solvent. but it is a package which doesmake a definitive step in the right direction, because it doessignificantly reduce the deficit and the debt, and it does bendthe increase in debt in the out years, and it doesbring down the deficit. and it addresses glaringproblems with our fiscal policy. now, on the spendingside of the ledger, on the discretionary side, ithink republicans are going to

be pretty comfortablewith this, i hope. i mean, it goes down to2008 baseline by 2013. that's rather dramatic action,and there's going to be a lot of folks who are going tobe upset about programmatic cuts and changes. the tax policy becomes, i think,the big issue for those of us on our side of the aisle, becausethere is a lot of tax policy in this bill thatgenerates revenue, and how the revenueis used is the issue.

i have always found thatunconscionable that we debate constantly about raising rates. why do we debateabout raising rates? that's not theissue in tax policy. what we should be debating aboutis reducing rates and how you reduce rates in a way thatgenerates economic growth. and so this proposal in thisbill, the essence of it, the core of it, almost allthe revenues in this bill, with the exception ofthe social security,

which is held in aseparate account, is driven by a tax policy whichtake us out of this box of debating whether or not we'regoing to raise rates and into what i think is theproper playing field, which is how you get rates downdramatically and allow money to be invested for the purposes ofcreating prosperity and economic activity rather than to beinvested for the purposes of avoiding taxes. and the zero plan isthe ultimate on steroids

reagan-bradley tax reform. i was on the ways and meanscommittee in '86 when we did reagan-bradley, and it tooka lot of heavy lifting to eliminate that stuff andget those rates down to 28, top rate down to 28%. this takes that approachand puts it in overdrive. i happen to think ifwe did the zero plan, the explosion in economicactivity in this country would be extraordinary.

and the tax numbers in thisbill would be almost irrelevant. and that's why senatorcrapo has insisted, because i thinkhe sees that also, that to the extent that happens,rates continue to go down. but the fact is this iswhere the debate should be, in my opinion. it shouldn't be on whether wetake the rates from 35% to 39% or 39% to 42%. it should be on whether we takethe rates from 35% to 21% and

get in the process of bettertax law that delivers a more effective use of dollarsfor capital formation in so i think as republicans,even though there's going to be heartburn aboutwhere these proceeds go, because they are goingto be a lot of proceeds, it is the right debate. social security, assenator conrad says, and it has been an honorand privilege to work with senator conrad.

as chairman of thebudget committee, it was even a bigger honor towork with him when he was the ranking member onthe budget committee. as he has driven, really, theeffort here to try to recognize the regular order can't handlethis issue and that we have to step outside, which is whythis commission was created. but, social security has beenset off here and made solvent for 75 years, and you can tinkerwith the ways it was done, but there are only four or fivemoving parts in social security,

and everybody knowswe got to address it. but the issue ofspending, restraint, and tax policy inthis bill, i think, is moving dramaticallyin the right direction. the only issueremains healthcare. there is healthcareinitiative in here, but we've been throughthe healthcare debate, we're going to have torevisit it at some point. this commission, i think, madethe right decision in not going

to the core of thehealthcare debate, but doing some substantivethings which will significantly impact healthcare. in the end, whether thiscommission gets 14, 10, or 16 votes, i think thisdocument becomes the memo that controls the meeting, touse henry kissinger's words. and in the end, today, we'vereached the point where it's time to govern. it's that simple.

we either as a nation govern orwe risk losing our greatness. and this is a template forbeginning that governance, and i congratulate you for it,and i intend to support it. thank you. speaker:thank you, sir. we'll go to the order of senatordurbin, mr. cote, miss rivlin, and congresswoman schakowsky,and then we'll go to mr. hensarling, and mr.ryan, and mr. becerra. speaker:i apologize for maybestepping out of line.

i have to run to a senatejudiciary committee to make a quorum, and theyjust gave me a note on it. so, thank you for givingme a chance to say a word. first, thanks to you, erskineand alan, as well as bruce, for the extraordinaryjob that you did. i made this point atan earlier meeting. i can't think of a major efforton capitol hill that has been so thinly but so well staffed, andi congratulate you for gathering together some of the mostextraordinary minds in our

country to produce this product,which is honest and addresses the challenge you were givenas chairs of this commission. we talked a little bit thismorning that your entire effort could have gone unnoticed, andthis report could have gathered dust somewhere andnever been referred to, but the opposite occurredbecause of your hard work and because of the factthat you put us to work. i want to thank my colleagues. judd gregg, i'mgoing to miss you.

i got to say it publicly. even though we'vedebated a lot of issues, you're a greatleader in the senate, and i'm glad that you inspiredus to sit together at this table, even though many of usquestioning why we volunteered for this root canal,we need to be here. and kent conrad, iwant to say the same. the two of you together, i knowi was kind of sitting by the side lines in a plane as youwere hatching this idea during a

trip that we took together, andi thank you both for bringing us to this moment. to the public membershere, thank you for being part of this. we all go to work atthis zip code everyday, but you've come in hereand really added to this conversation and this dialogue. and i want to just saya few general things. i saw this firsttime this morning,

and clearly am not going to makea commitment at this moment, but want to studyit very carefully, because there are so many movingparts and important decisions. we often draw the analogy of ourresponsibility to an american family facing aneconomic crisis. what would they do? well, we talked about sittingdown at the kitchen table, and i think people still dothat -- i hope they do -- and making hard choices.

but, clearly, when they'remaking hard budget choices for their family, they usuallydon't include cutting off the insulin for grandma. they usually don'tinclude cutting off medicine for a child. there are certain things whicha family will go to the absolute furthest lengthspossible to protect, and many of us feel that'swhat we need to do here. we believe that any crisisamerica faces will require

shared sacrifice, but the mostvulnerable in our country cannot sacrifice the same as thoseof us who are physically and economically fitter andin better shape to do so, and that is the standardi use as a progressive. i believe that we have to lookat the bottom line and see where the most vulnerable inamerica, the elderly, the poor, our children, howthey fair under this. and we have to do everything inour power to protect them at the expense of the rest of us, andthat's why some of the debates

over taxes leave mestruggling to understand. i understand, judd gregg,when you talk about lower tax rates and the economicengine they can create, but we've had times of greateconomic expansion in this country when our tax rateswere substantially higher than they are today. so, i'm not sure thati buy the premise. i know you believe itand most republicans do, but when it comesto shared sacrifice,

i believe those who have beenblessed in our society should pay more and expect to sacrificemore than those who have not. as i look through this plan,there are several things that concern me. first let me saythe good things. thank you for what you didon these tax expenditures. i've been in congress andaround congress for 29 years. we've never hadthis conversation. we have never put everythingon the table and said, now,

what's important? we just incrementally year afteryear made modifications in tax code that most people never reador understand and think that it really doesn't have any impact. it does. it's $1.1 trillion a year comingout of the treasury because of deductions and credits. and it is fair for usto step back and say, if you eliminated all ofthem and reduced rates,

would america be better off,would families be better off? i think that's a fair question,and i'm glad you raised it. and i think you didit in a honest way. give us choices. and we have to make the choices. and we need to savemoney in the process. i think that's fair. secondly, i was around when wereformed social security in 1983 or 84, whichever year it was,and bought dramatically years

ahead, 20, 30, 40, 50 years,of solvency for social security with some painful choices. i'm going to say something nowthat is heretical on the left, and they won't likeme for saying it, but what you have suggested inincreasing the social security retirement age isacceptable to me. to raise it one year over40 years is hardly radical. to raise it two years over65 years is not radical. and providing, as youhave, for two things,

those in manual labor who needto retire at an earlier age because they're warn out andcan't continue working and to provide extra help for thoseolder people on social security who need a helpinghand more than others. these things are sensible, andwe've got to accept sensible alternatives to move forwardon the left and on the right. let me say there are two orthree things in here that i think you've missed the markon, and i'll just lay them out on the table.

speaker:your time has expired. speaker:i expected that. first, let me say this: i happento believe as an appropriation subcommittee chair that what iswritten in here is not correct. you argue that eliminatingearmarks saves $16 billion. that reflects a fundamentalmisunderstanding of how the appropriations process works. as a subcommittee chair,i am given a mark, a 302b mark, x dollars.

they say you can appropriate upto that mark and not beyond it. within that mark, i takeliterally one half of 1% and have congressionallydirected spending, but it's within the mark. so if you're putting a capon the overall spending, the mark in the appropriationsubcommittee will receive is already established. and if within that mark theirearmarks are not earmarks, they're still going toappropriate to the mark.

so there's no $16 billion ofsavings by eliminating earmarks. that, to me, is part of themythology which is going on in the country. and i've been through thosechapters of mythology that involved term limits,and no tax pledges, and balance budgetamendments, and all the rest, and this is the issue du jour,and i'm sorry that you included it, because i don't think thatit really reflects honestly what earmarks are all about.

secondly, medical malpractice. and i'll say a word about itbecause it's something i did for a living before icame to this place. i am glad that you eliminated caps. i was prepared to makean impassion plea to eliminate them. but the changesthat you made here, for example on joint severalliability are esoteric to most of the people following this,but your changes have been

analyzed to increase thecost of medical care. i know you didn't want to. you wanted to dojust the opposite. but they increased thecost of medical care, and there are studiesto establish that. the third point i want tomake is the fehbp change, the federal employees healthbenefit program change, which allows congressman ryan,i believe is the one who came up with the proposal,of a voucher system,

or at least capping theamount that the government pays for health insurancefor federal employees. we discussed this morningwhy they have been selected. i don't think it isa fair selection. i will just say this: as i lookat the proposals on healthcare here, we are hastening the daywhen the only option left will be a public option, becausewe are saying we are going to limit the deductions forhealth insurance premiums, and we are going to limit theamount of money the federal

government pays forfederal employees, and the question is whetherthe private sector will then reduce costs. i don't believe they will,and we will find ourselves at a point where wehave no alternative. i happen to embrace apublic option as an option. others don't. but i think this calls for achange in the private sector, which they have not demonstrated at any point they're willing to make.

i am going to study thiscarefully and closely. i know the decision timewill be very shortly. but i thank you for yourhonest and good effort. speaker:thank you, dick. thanks very much. speaker:we'll go now to mr. cote,then director rivlin, and then miss schakowsky,then ryan, hensarling, becerra, spratt and fudge. speaker:in our first meetingabout seven months ago, i mentioned that in mytravels around the world,

and i travel a fairamount, as you know, my observation has been thatsuccessful countries were able to act with collective purposeand with a political will to get things done. we have a seriousnational debt problem, and it has global implications. we're being watched by countrieswith similar problems looking for a model, and more importantly, we're being watched by countries whoconsider us passed our prime,

because we can no longerrally as americans to accomplish the tough things. we've come to a point where we'drather revel in our discordant pluralism than act withcollective purpose as americans. as a country, we need to stopthe demagoguing where everyone just runs to their neutralcorner and yells and screams at the other guys. american public issmarter than that. yet, i don't believe anybody isreally giving them the facts.

and we need to be capableas a government of having a more nuanced, thoughtfulconversation amongst ourselves and with the public. the facts are that we had anet national debt before the recession of $6 trillion,and today it's 9 trillion. 45% of our debt is heldoutside the united states, with about 1 trillion of thatmoney loaned to us by china. over the next 10 years, evenwith optimistic economic and cost assumptions, that debtgrows to 20 trillion in 2020.

ten years from now, our interestbill alone will be a trillion dollars a year. now, we believe that generallythat millions are a lot and some of us deal with billionsin our work lives, but a trillion isdifficult to grasp. so, to put it into perspective,if you had spent a million dollars a day since jesuschrist was born 2,010 years ago, you would still not havespent a trillion dollars, and that will be ourannual interest bill.

the american public is on tothe right issue but for some of the wrong reasons. many want to point to the"bush tax cuts" or the stimulus or earmarks as "the" issue. now, while important,these are all side shows, as we accumulate $20 trillionin debt over the next 10 years. the big issue isthat my generation, the baby boomergeneration, is retiring. and as we move throughsocial security, medicare,

and medicaid, we willcrush the system. the commission has proposedabout $2-1/2 trillion in spending cuts and a trillionin tax increases cumulatively over the next 10 years. on spending, that's about a5% reduction over what was planned to be spent. it still increases about4% a year for 10 years. similarly, on taxes, the$1 trillion is about 3% more than what was planned.

that is hardly revolutionary. yet, i've never seen suchhyperbole as that which accompanies every pieceof taxes or spending. and for the 12 politicianson this commission, i honestly don't know howyou get your jobs done with the kind of yelling and screaming that goes on about these things. but this is a job thatneeds to get done. these difficult politicaldecisions will get made one of two ways: the first is we can doit thoughtfully and proactively.

the second is we can waitfor the bond market to force it upon us. and that will bedecidedly harder, more abrupt and unpleasant. we can ask greece andireland what that's like, and soon italy,spain and portugal. now, many people have a hardtime relating to what the bond market is or why theyshould be concerned. so think about it this way:about 4 trillion of our debt

today, about 45%, ismoney loaned to us by foreign countries witha trillion dollars of it loaned to us by china. what happens when they don'twant to loan us any more money? where do we go? what do we do? what happens when the bank, inthis case foreign countries like china, doesn't want toloan you any more money? we've benefited a lot in thistime from being viewed as the world's reserve currency,the safe haven, if you will.

what happens when we're notviewed that way anymore? when we have to raise theprice we pay -- in other words, interest -- to attract the loanswe need from foreign countries? when the interest ratesamericans have to pay for homes, schooling, and car loansgo up for the same reasons, thereby hurting the very peoplethat we think we're protecting. finance is not anexciting subject, but this goes to thecore of our own economic and homeland security.

and when that decline doescome, it doesn't come in small, monthly doses givingus 20 months to adjust. it happens overnight when theherd runs against you and fear grips the market. the american publicdeserves better. i don't like everythingthat's in this proposal, and in reality, i don'tthink it's big enough. and it goes nowhere near farenough to sort out our most pressing spending issue,medicare and medicaid.

but i do know we needto start somewhere. there's plenty of blame togo around on how we got here. there's also plenty ofopportunity to work together and demonstrate the politicalwill some countries in the world believe we no longer have. there does come a time whenwe have to act with collective purpose to do with what'sright for the country. we have to come together,democrats and republicans, old and young,business and labor,

stop arguing and start agreeing. this is one of those issues. we can't let the perfectbe the enemy of the good. this is a time for us to pulltogether, not pull apart. while i'm not enamored ofeverything in the co-chair's proposal, and i dowish it went further, i do believe this isa time for us to pull together as a country. erskine and alan, i do thinkyou guys have done one hell

of a job working with bruceand his team and all of us as commissioned members to developa realistic and doable plan. i also know we don'tofficially vote until friday, but i wanted to let you knowtoday that i'm with you. speaker:thank you. speaker:i'm your third vote! so, thanks foreverything you've done. speaker:i've gotten five now.thank you very much. i'm thrilled to hear that.

director rivlin? director rivlin:i, too, want to commend ourco-chairs and this fabulous staff for having done allthis work and put together a really serious plan. serious is a word that we'veheard a lot this morning, but that's what it is. and i think it's a serious planto address what i regard as a clear and urgent threat tothe prosperity of the u.s. economy going forward.

if we have a debt crisis, andwe could have fairly quickly, and as dave cote has said,when these things happen, they happen fast, andyou can't stop it. we don't want to put ourselves in the position where this could happen. we need to take action. and i share with my fellowdemocrats and republicans that the feeling that we have toprotect low income people and low wage earnersand the vulnerable, but we also have to think,what happens to them if we have

another economic catastrophe. the best thing we can do forthe most vulnerable people in america in is to have aprosperous high growth economy and not another crisis. those i believe are thechoices that we face. now, everybody has saidthere's a lot of pain here. there is, but there isa lot of opportunity. i really think the questionis not, can we bear the pain, but can we seizethe opportunity,

the opportunity to reform thetax system in a way that would give us a fairer, more progrowth and more progressive tax system, the opportunity to takesome steps and not complete ones toward a more efficienthealthcare system, and the opportunityto direct spending, both domestic and defense,into higher priorities. can we seize those opportunities,and i think this plan moves us in that direction. we could have a higher growth,more efficient economy,

and a more efficient, fairerpublic sector if we do many of these things. that said, like everybody,this wasn't my favorite set of options. i've tweaked it here,tweaked it there. so i am going to vote for it,but i'm also going to give you a little list of things i wouldhave liked to have seen in it. i would have like to haveseen some up front stimulus, because i think we really needto get out -- be sure we're

getting out of this recession. i would have shifted thebalance away from so many spending cuts and towarda little more revenue. i'm a little nervousabout the timing of this large discretionaryspending cut in 2013. but, that said, this is a veryserious plan for dealing with an eminent catastrophe, and i hopeit starts the congress on a path toward a solutionbefore it's too late. speaker:thank you, ma'am, andthank you for your plan too.

it was very helpful to us. congresswomen schakowsky? congresswoman schakowsky:i want to tell you what an honorit's been for me to be on this commission and tothank the co-chairs. and while we have disagreedon a number of things, there certainly are a number ofthings in this plan with which i do agree that i hope despitethe fact that i can't support it will be voting no that canpoint us in the right direction. the fact that we have examinedfor perhaps the first time,

as senator durbin said,the tax expenditures, the fact that -- and i wasactually somewhat surprised that defense cuts were on the table. i think there was pretty muchof a consensus around that. and so i think that there isenough that all do agree on, despite what the vote will be,that makes what we have done very constructivein moving forward. i agree with the principlesthat were laid out, and i do agree that we are onan unsustainable fiscal path.

and that can be definedthough in a couple of ways. one, of course, is thedeficit and the debt. i laid out a plan myself wherewe can reach primary budget balance by 2015, but the otherway i think that we can measure unsustainability is thegrowing disparity in income in the united states ofamerica, which i think is equally a problem that we face,a problem for our democracy, as well as our economy. and i don't feel that thisproposal addresses these dual

problems of debt and inequality in the proper way. i agree with alice rivlinthat we need to have much more significantinvestment right now. when we get our economy moving, we are also decreasing the deficit. there will be morepeople working. there will be morepeople buying. and i think there is somewhat ofa different perception of what really does spureconomic growth.

to me, it is thequestion of demand. having money inpeople's pockets, jobs that they have andunemployment insurance benefits that will make sure thatthey can go out and actually be customers, spend money,that that's what will drive expansion of business and smallbusiness and large, as well. but the top 1% of americansowns 34% of america's private net worth right now. and the bottom90% owns just 29%.

that means that the top 1%controlled 24% of america's income in 2007. it was 34% now and 24% in 2007. so we are seeing a rapidexpansion of growth among the wealthy, a transfer ofwealth to those at the top. the top 10% controls more than70% of america's total net worth in this country. only one in five workingamericans enjoy guaranteed pension benefits.

those young people who areworried about social security being there shouldn't, but theyshould worry that they're going to have some sort of pension. those are rapidly disappearing,meaning there will be more focus, more need forrobust social security, social securitysecurity in the future. we talk about shared sacrifice. i think these numbers indicatethat sacrifice, in fact, has not been shared.

that some people have lost andothers have significantly gained over the last several years. so we're not starting at thesame point when we say we need to share the sacrifice. among those who are -- we haveright now more than 37 million americans, including 13 millionchildren, living in poverty, and most of thosepoor people have jobs. so these are working poor inthe united states of america. the elderly, who i have saidbefore have an average income,

including everything, privatepensions, and investments, and savings of $18,000 a year,to say that we're going to reduce our deficit and our debtby asking medicare beneficiaries to pay more for theirhealthcare, i think, is absolutely unconscionable, tohave more money come out of the already 30% of their outof pocket income going to healthcare costs i think isabsolutely the wrong way to go when we do have other options. i put on the table not as a "ifall else fails" but a public

option to reducehealthcare costs. i said medicare should negotiatefor lower prescription drug prices, just as the veteransadministration does, meaning that drugs are afraction of the cost over what medicare beneficiaries pay. there is very little controlhere of these expanding costs, i think as senatordurbin pointed out, in the private sector. social security, let'sunderscore that you agree,

the co-chairsagree, and i agree, are not part of the deficitproblem and are not being considered for paying downthe long-term debt that we're looking for solvency. but the chief actuary of socialsecurity has pointed out that the combination of the proposalsthat you've made mean that someone who makes $43,000 overtheir lifetime depending on when they retire can lose more than20% of the benefits that they would get under the currentsocial security formulas.

the changing, the cost of livingadjustment for the elderly, recalculating the cola, meansa significant cut in benefits, because the elderly's expensesare skewed in a different way than the rest of the population,more toward healthcare. so i proposed a different wayof achieving 75 year solvency that doesn't hurt the elderly. when we talk about cutsin discretionary funding, although you don'ttotally spell them out, and also cap how muchcomes from revenue,

which i think is an arbitraryand i really don't understand why we do that asthe debt commission, as a fiscal responsibilitycommission, means, i think, inevitably that we're going tosee programs cut that help to address the problem of thosepeople who have not been part of the party that the wealthiestamericans have benefited from over the years. and so i cannot for the reasonsof equity, of our democracy, of our fiscal path interms of real live people

support this proposal. speaker:thank you, ma'am. again, i want to thank you forpresenting an alternative plan, which you do support, which doesaddress this, you know, crisis, because you realize it's acrisis we have to address. so thank you very much foryour constructive approach. speaker:indeed. speaker:congressman ryan? can i add before you start forreason that congressman camp and

senator baucus are not hereis they are discussing taxes as we speak. congressman ryan:well, first off, i wantto thank alan and erskine. you guys have done a tremendousjob with a very difficult challenge, and you got alot thrown in your lap. and bruce, you and yourstaff, skeleton staff, some of us have been inbudgets for a long time, you guys have done a great job. i want to just take adigression for a second.

i think this is the last timei'll be sitting at a table with my friend john spratt, andyou're a great guy, john, and it's been a real privilegeto serve in congress with you. we haven't agreed on everything,but you had my respect, and i just want to saythank you for what you've done for our country. i believe this commissionhas been a success. those who refuse to confrontthe challenges facing us, they have nowhere else to hide.

if they labeled variousproposals as too draconian or austere, well, they're goingto have to come up with their own right now. so, if anything, thishas been successful, because it has helped us movethis conversation to more toward the adult level thatit needed to go to. so regardless of what happens,regardless of whether you get these 14 votes or not, youshould go home proud of what you've done to advancethis debate and put ideas

we have a choice, which is,are we going to confront this and leave the nextgeneration better off or not? we're going to have differentopinions about how to do that, but you've done a lotto advance that debate. let me go -- andi'll try to be brief. let me go through whati do like about this, because i think it's importantto say some positive things. i do like the fact that we'reseeming to get some consensus on taxes, on not revenuelevels, but on rates.

lower rates with a broadertax base leads to economic growth and job creation ininternational competitiveness. if anything, i think that theconcept that tax reform ought to be merged with budgetreform is something that is incredibly important. the best way to deal withthis problem, in my opinion, is spending control andreform and economic growth. and economic growth comes froma more competitive tax system, a broader tax baseand lower rates,

and to that you havedone a great job in advancing this debate. i like the budgetprocess reforms. there are some really goodbudget process reforms in this bill, not as many as jeb and iand others have put out there, but some great budgetprocess reforms, particularly what we call ourbelts and suspenders approach to discretionary caps. i think that's pretty good.

social security, i don't likeevery single idea in the social security reform, but youhave really advanced the ball and gotten us toward abetter conversation on making social security solvent. and jan is right, this doesnot contribute toward deficit reduction, but solvencyto social security, which is really important. if we don't do anything,when we run out of iou's, everybody gets a 22% acrossthe board benefit cut.

that ought to be avoided. there is discretionarysavings in here. albeit, it's not asmany as i would like, not occurring assoon as i would like, but you're moving the ballforward on the fact that we can't keep growing discretionaryspending like we have under both parties leadership around here. so what i want to basically sayis there are some ideas in here that i think are worthcopying, and borrowing,

and putting into thisnext year's budget, which i fully intended to do. what are my concerns? my primary concern withthis plan is healthcare. i do not believe thatthis sufficiently fixes the healthcare problem. and guess what? our debt problem isthe healthcare problem. gao just gave us a new numbera week or two ago that says we

have a $88.6 trillion unfundedliability primarily stemming from our federalhealthcare programs. this doesn't sufficientlyaddress that, in my opinion. i think senator durbinprobably said it right. we are hastening the daywhen the only option is the public option. i think you're right, andi think this advances that possibility and likelihood. that's one of the reasonswhy i have a problem with it.

let me go to taxes or, moreimportantly, baselines. as you know, when we look atspending cutting and revenue increases from anyreform in washington, you have to do sorelative to a baseline. now, baseline conversationscan get really esoteric, they can get very confusing,but it really actually kind of matters. it's important to understandwhat baseline is being used. and so we stayed up prettylate last night going through

these numbers. it's my understanding thebaseline you're using in rough terms follows the president'sbudget both in revenues and in spending. the president's budgetincreases revenues by not extending all tax relief. i think that's somethingeverybody knows about. we think that leads to a taxincrease of about $983 billion. he also increases base defenseand non-defense spending and

does not propose tooffset the dock fix, which leads to anincrease in spending. now, to be clear, this isanother way of looking at these issues, but using this baselineand excluding debt service, this proposal cuts spending byabout $2 for every $1 in revenue increases under a baseline thati would consider more plausible, a cbo based currentpolicy baseline, these numbers wouldroughly be reversed. about $2 in tax increases for$1 in spending cuts is how we

look at these numbers. i would like to sharethis with your staff, and maybe we can go throughthese before friday, but it's importantto note, i think, that we've got togrow this economy, and we've got to get a good downpayment on taxes and spending, on spending, excuse me,now, and you really can't fix this problem. you're just delaying if youdon't really tackle healthcare.

and i understand theposition you all were put in. you're the president'sappointees to create this commission, and he just passedthrough a healthcare law that i'm sure you weren'tgoing to want to undo. and i understand that. but that doesn't mean that thoseof us who have a problem with that law want to sign upfor something that we think advances that law,and that's why some of us has some concerns.

but let me finishon a positive note. you are to be commended.this is a serious effort. it's a serious proposal.it has advanced the debate. and i really appreciate you forthe contributions that you and all my (inaudible) made. speaker:thank you. thank you, paul. speaker:thank you. you have beenextremely constructive, and i've become a realadmirer, as i think you know. so thank you for all your help.

i think, if i turn back my page,it's congressman hensarling, and then congressman becerra,and then congressman spratt, and then miss fudge. congressman hensarling:well, thank you, erskine,by placing me after paul. i suppose you could haveeffectively hit the replay button, but having said that,i'm going to nonetheless take the privilege of sayingmuch of what he said. first i want to add my voiceof praise to our two co-chairs. i think that this effort in somerespects has been challenged by

the design of this commission. i think juxtaposed against therecent debate over national healthcare, it has beenchallenged by timing. it has certainly not beenchallenged by leadership. we have had exceptionalleadership at this effort. both of you are to be commended. the thing i like the most aboutyour plan is it is a plan. and frankly, they're nota lot of them out there to address the crisis.

as we continue to use the wordunsustainable in describing our nation's fiscal path,unsustainable is understated, and i think we all know that. when the chairman of the jointchiefs of staff says that our greatest threat to ournational security is our debt, it should be a soberingwakeup call to every american. and so, again, i applaudyou for simply putting a plan on the table. and frankly, i think anyamerican who understands the

crisis has a responsibilityto sign up for some plan, to be in favor of something. i have come to this table beingone of the few and proud to support paul's roadmapfor america's future. i have supported a spendinglimit amendment to the constitution and anumber of proposals, some of which actually endedup in your proposal from the spending deficit and debtcontrol act that paul and i have worked on.

so, again, i think therehas been challenges to the commission and, i think,erskine, if i recall right, you said that this was partof an adult conversation, and i do agree it is one of thefew adult conversations about this crisis i have beenable to participate in. i would like to say, and againi didn't meet to echo paul in all regards, i had thiscomment already in my notes, but the other adultconversations about this national crisis that i haveparticipated in have been

led by chairman johnspratt of south carolina. chairman spratt is aman who has rarely, rarely have i acquiesced, he hasnot commanded my acquiescence, but he has always, alwayscommanded my respect. now, he has been a veryimportant voice in this national debate. and as he exits congress,i hope and pray he does not exit the national debate onour nation's fiscal future. i believe that ultimately as welook at our nation's deficit,

the deficit is the symptom,spending is the disease. as i look at the plan, andi will try to be brief, i'll talk a little bitabout what i see is the good, what i see about as the bad. i believe an important part ofthis debate is the recognition that by broadening the taxbase and lowering rates, we can promote economicgrowth, we can promote jobs. bringing down the corporatetax rate to something i believe close to the median of theeu is a very important part

of this debate. i know we don't employdynamic scoring, and i know we cannot growour way out of this crisis, but i believe if we didemploy dynamic scoring, this alone would be a notinsignificant part ultimately of the solution. and i want toapplaud you for that. now, with respect to socialsecurity, personally, i believe in personalcarve-out accounts.

i want to use the power ofcompound interest to grow our way out of this. that is not in this plan,but having said that, i would be more than satisfiedto at least save social security for the next coupleof generations, including myeight-year-old-daughter, my seven-year-old son, andsupport the proposals that you have included in this plan. and so i have been picketedbefore for my views on trying

to save current entitlementprograms for future generations. i won't say i'm happy to doif again, but i'm prepared to, certainly, do it again. i continue to have concernabout the tax portion of this, concern in a coupleof different ways. number one, clearly, i don'tfavor any tax increase. i don't think we havea taxing problem. and, in fact, as weall know under cbo's, either their baseline ortheir alternative scenario,

taxes will increase asa percentage of gdp. that's given. number one, taxesare already going up. that's number one. number two, ultimately, eventhough you put a revenue cap, we don't have a globalexpense cap here, and the cost of governmentis what it spends, not what it taxes. and i would say that is one ofmy greatest reservations of the

plan something that i'dhope we could have achieved. and so, you know, ultimatelyi'm not sure that we're going to solve the problem that way. and the third challenge i thinkyou have on the tax increases is history is my guide. you know, if i believe that theincreased revenue would actually be used for deficitreduction, you know, i might reluctantly come to thetable in a global agreement. but when i lookat teffer in '82,

when i look at andrewsair force base in '90, it just seems to me that somehowthe spending restraint never quite materializes and yetthe increased revenues do and it seems like theincreased revenues simply chase more spending. so personally i believe toeither quote or paraphrase winston churchill who saidamericans can usually be counted on to do the rightthing once they've exhausted every other possibility.

again, until we have thebackstop of constitutional amendment or somehow put anenforceable spending cap on, i'm not sure theright things get done. and if taxes are goingto be put on the table, i believe health care is goingto have to be put on the table. there's a lot ofexpertise at this table. i've studied these issuesas a member for eight years, i've studied it as a senatestaffer for seven years. i can't come to any otherconclusion that if health

care is not on the table,you're not fixing the problem. and i do not believehealth care is here. now, i understand againthe timing has been poor. there are those on the otherside of the aisle who feel very passionately that whatwe passed in congress is part there are those ofus who feel very, very strongly it ispart of the problem. and i believe that also whenyou juxtapose what you're doing on the tax expenditure side,which otherwise is very good,

i would agree with senatordurbin who is no longer here you are hastening more peopleinto the public option something that many of us on this sideof the aisle do not relish. so ultimately, i believe wemust reform current entitlement programs for future generations,grandfather the grandparents. i'm willing to putdefense on the table. but again, and i don't wantto see any tax increases, but if they're on the table,health care has got to be and i just, and you know, andi'll just end on this note,

and i think i am paraphrasingto some extent senator gregg, but we are on the verge ofbeing the first generation in america's history todestroy the american dream. i do not believe the americandream is a shiny new cadillac. i do not believe the americandream is homeownership. i believe the american dreamis leaving your children with greater freedom, greateropportunity and a higher standard of livingthan you enjoyed. and every generation in ourcountry has always kept faith

with the american dream. i don't know if this is thegrand bargain, but if it isn't, the grand bargainshould come soon. and i would remind all i don'tknow if this is going to get 16 votes, 14 votes, 12 votes, 10votes and i have lost count of how many votes youhave around the table, and i don't know you'regoing to get my vote, i would say this: nothingprevents our congressional leaders in this congress orthe next from bringing this

plan to the floor. there is nothing magicalabout the 14 votes. fine, you get a nice littlesill on the cover, i suppose. but nothing prevents them frombringing this plan to the floor. nothing prevents them frombringing revlin dominici to the floor, or roadmap to the floor. personally i would like to seethis plan come to the floor. it may come to the floor withoutmy vote but we must advance the debate and i hope thatwe seize the moment.

and i thank you. senator bowles:thank you, very much. you have been very thoughtfuland extraordinarily helpful and you have been positive andyou have been supportive and i deeply appreciate it. we'll go to congressman becerraand then congressman spratt, ms. fudge and mr. stern. congressman becerra:let me to begin by saying firstto alan and to erskine thank you for doing what many people betyou could not do and that is to

keep 18 commissioners with verydiverse views together to this point so that we would bediscussing a plan which although the two of you put it together,certainly a number of the members at this table may findthemselves prepared to vote for. and so i think that may be thisstory of this commission's life that somehow the two of youfound a way to keep all of us working together. and i applaud you for that. let me also thank each andevery one of our commission

colleagues who participated. this could have easilycollapsed immediately, before we got tothis point certainly, had we all decided to run tothe media and start talking about what we liked and didn'tlike or to undercut your efforts as chair. so i think to each of mycolleagues on this commission i say thank you for helpingmake this a constructive effort. perhaps the second bit of newsif i were writing the front page

of my newspaper after theheadline where erskine and alan kept us all together and workingand actually saw us to the point of having a plan presentedis that you were serious. you put taboos on the table. sacred cows are in your plan. and i think, if nothing else, wehave layed before the american public a template that givespeople an opportunity to start discussing what we have todo to try to get our fiscal house in order.

i started the first time wemet by saying that to me, we have to somehow get to thepoint of understanding how it is that we went from surplusesas far as the eye could see ten years ago to deficits as faras the eye could see today. something happened, dramaticallyhappened in these ten years that caused us to go from an economythat was just churning to an economy that's in the hospital. some of it we know is cyclical. it's part of the structuralprocess we go through in our

economy and so you have toacknowledge that a good portion of this is due to the factthat we have ups and downs. and right now we're in adown that's become very deep. but part of it's because as ithink you say in the beginning of your report, and ifi can just quote it, since the last time our budgetwas balanced in 2001 -- and i'm reading from page 10,the looming fiscal crisis, the second paragraph -- sincethe last time our budget was balanced in 2001, the federaldebt has increased dramatically,

rising from 33% of gdp,to 62% of gdp in 2010. the escalation was driven inlarge part by two wars -- which, by the way, i always emphasizewere never paid for and so we borrowed money to pay for thosetwo wars and continue to borrow for those two wars. but the sentence again reads,the escalation was driven in large part by two wars and aslew of fiscally irresponsible policies along with adeep economic downturn. to me the resolution of ourfiscal crisis into the future

depends on making sure thatwe no longer get involved in activities that we're notwilling to pay for and that we're not irresponsible. because we were hummingalong creating surpluses, creating millions of jobs foramericans and now we're not. and so to me i want toattack those problems. what caused, what were thesacred cows that had us partying for some, while others wereleft to clean up the mess. i believe this plan identifiedsome of those sacred cows.

and i believe that for thosereasons it's worth considering where this plan takes us. and so let me just briefly thentell you what i think are the absolute positives of this plan. as i said, you put thosetaboos on the table. you create firewalls. firewalls are critical becausewe know what happens in this place, everyone poachesand the best poachers are the most influential.

the special intereststhat have tons of money, know how to poach best andthey know how to succeed. so when it comes to makingcuts we may all have benevolent motives but at theend of the day, it's the strongest of thepoachers who prevails. and so invariably what getscut is not necessarily the most important place tostart creating responsibility. secondly, you did something thati think few people were willing to do and you identifiedthese tax earmarks.

if we want to talkabout spending, you can't just talk about it onthe appropriations side because quite honestly our spending onthe tax side dwarfs anything we do on the appropriations side. indeed, we hadthis conversation, we've heard this conversationabout spending earmarks, appropriations earmarks. $16 billion in a year. a tax earmark spending in ourbudget is 70 times greater than

it would take us 70 years ofhaving eliminated appropriations earmarks to equal one year ofspending through the tax code on just the earmarks. and so i applaud youfor having raised that. but let me tell you where ido have some concerns with the plan and i haveto think these through. while you took on theearmarks, i think you did it very anemically. if over the last ten years we'veaveraged some $11 trillion in

tax giveaways, tax earmarks,and if your plan over the next ten years takes careof a $4 trillion problem, we had almost three times theamount of money that you have in your plan in cuts availablethrough tax earmarks over the last ten years. to me, you punted. we punted. if you really want to takeon the special interests, the poachers, you would havetaken on the biggest poachers. there are no school kids that iknow of who forced us to spend

money on textbooks. we do it becauseit's an investment. but there are a whole bunch offolks who have tax breaks in the tax code because they spenttons of money to make sure they got to poach. the fact that this plan onlydedicates about 10% of those earmarks that you haveidentified in the tax code to help resolve the deficitis to me saying that for the last ten years where some$11 trillion went out through

tax earmarks that we'reonly going to ask for a small percentage of thatto help now deal with the deficits that we face. that to me is anemic and as isaid i think this commission would punt if it wouldallow that to occur. secondly, i think on the issueof the appropriations spending, as i said, the firewallsare so important, but if they're not real we'regoing to end up making cuts that are devastating to middle classamerica and once again the folks

who party for a decade will nothave to clean up their mess. and so i believe it's timethe department of defense was on the table. maybe perhaps for the firsttime we're going to ask the department of defense to beaudited and be able to account for itself as a result ofan audit so we can figure out where the waste and thefraud is, but we have to be serious about that. and finally i will say thatgiven the serious way that the

chair's addressed this problem,that i want to make sure that i give a serious response to yourefforts on social security. i have a father who workedall his live with his hands. he got about a 6th gradeeducation so he did everything from canning tomatoes to fixingthe brakes on railroad cars to cleaning the hulls of ships inthe la ports to picking every crop you can think of up anddown the states of california, oregon and washington. and then spending the bulk ofhis time doing road construction

during the heyday of ourfreeway construction. when he retired, and he retiredin his 50s because we forced him to, he already showedthe effects of all that physical labor. as mr. schakowski said, ifwe're going to make this a plan that works for america it'sbecause it invests in americans, those who work very hard. social security to me is not aproblem in terms of the fiscal crisis we face.

today social security hastrillions of dollars in surplus. trillions. there is no aspect ofthe federal government, the operating side ofthe federal budget, that has anything neara dollar in surplus. and so to say we must take onsocial security i think is a -- should be a dead herring. it doesn't really work here. absolutely we have to dealwith the long-term solvency,

but i guarantee you if wecould talk about the federal government's operating budgetbeing something we have to resolve because in 30 yearsthe federal government is going to have a deficit, wewouldn't be sitting here. social security is in surplusand it won't have a problem for at least 25 to 30 years. we have to resolve it so itdoesn't become a big problem in 25 or 30 years. but to say you have todo it now is, i think,

is to market disserviceto someone like my father who worked very hard andpayed in all this time to social security. so i will look very closelyat anything that's done on but i'm not interested incutting the benefits of a man who never made morethan about $22,000 in a year working with his handssimply because we have to take care of the fiscal messthat was caused by a lot of poachers in this economy.

and so i don't know if anyonecould have done a better job than erskine and alan inkeeping us at this table. as you can see ihave some concerns. but i don't want to leavethe table because i started off that very first day sayingeverything must be on the table. and i know one thing:alan and erskine, you left everything on the tableand for that i'm going to stay at the table. we'll see whathappens on friday,

but i intend to stay at thetable because you did me the valuable service of lettingmy father know that you left everything on the table. senator bowles:thank you. you and i worked on immigrationstuff together and you always kept your word with me. senator sampson:and you've been great. and i hope you end up beinga great leader of our party. so thank you, sir.

i now go to my congressman andmy friend, my lifelong friend, a person who i can tell 'yawhile lots of us in the clinton administration got credit forthe balanced budget in 1997, it would not have happenedwithout the leadership of chairman spratt. so chairman spratt, thankyou for all you have done. chairman spratt:thank you, mr. chairman. i don't believe that-- is it working? okay. first of all, to our co-chairs,i would like to echo what

everyone else has said. we wouldn't be here where weare about to do something of high significance but fortheir tremendous efforts. secondly, to the staffand their output, you made a hugecontribution to this. and to my two friends paulryan and jeb hensarling, i'll misdoing battle with youover the budget this year. i wish you had said thosethings before november the 1st. we showed that you can havecomity and you can have civility

and you have constructive debatewithout necessarily being coming to a conclusion onall the same points. we've proved it can be done. nevertheless, we never didsit down and make a search for common ground and come upwith a budget that was truly a deficit reduction budget. this is an opportunity thatmay not pass again soon. and indeed if it fails heretoday i'm not sure what its destiny is likely to be.

i would like to makeone thing clear. most of my points have alreadybeen made several times but i think it bears repeatingthat the illustrative, that the cuts that are outlinedin this proposal many million of expenditure in the area of taxexpenditures are illustrative. this committee, commission,call it what you will, has no authority topass any particular law. even to put it inprocess of being passed. but it does laydown an agreement.

it does lay down a proposal. and to those who wouldsay, well, let's great, but how would you do it, theycome forward with policy-based arguments, changes in law thatwould accomplish the bottom-line results that they claim. i've been concerned aboutcertain aspects of the budget but if it's to succeed, anderskine knows this from 1997, we worked together hand-in-gloveon that particular agreement, it has to be perceived and incongress and in the country as

balanced, fair and equitable. i had a problem withdiscretionary spending to start with. i think it's right toput multi-tier caps. i think it's rightto have firewalls. but if you ask anyone whoknows the subject well, he or she would likely say toyou the real source of this problem is two fold: oneis the revenues, tax cuts; and the other ismandatory spending.

yet the reduction indiscretionary spending, as i understand it, i'm notquite sure where it stands right now with the latest draft, butin previous drafts the reduction in discretionary spendingwas two times the reduction in mandatory spending eventhough mandatory is part of the problem. and revenues, i remarked beforethat it's a little odd that we're on the threshold ofpassing a renewal of the '01-'03 tax cuts whichhas an impact revenue,

impact i believeabout $4 trillion. and this package over whichwe're laboring to give birth to has about the same impact. if we did nothing on the taxcuts you'd have about the same bottom line effectas we've gotten, as we've achieved through allof the proposals that are made in this particular agreement andthat has to strike you as ironic. but i go back to my initialpoint which is to emphasize that this agreement doesn't go fromhere to the house or the floor,

floor of the house orthe floor of the senate. it goes through the committeesof jurisdiction and they will decide what policies areimplemented in order to achieve the bottom line results thatare essential to achieving the overall results of this package. if we only make hereillustrative ideas that are feasible, it can be done andthat have policy-based reasons for being changed,and given that, what we're looking at hereis a great opportunity.

i won't declare my colorsuntil i've read it all, but this is an opportunity,this is a process. if it fails i don't think we'llrevisit for some time to come. i think it's extremely importantthat we continue the process. i think they've given usa baseline upon which to build and build constructively. and i think we should keepthis process moving forward. thank you, mr. chairman. senator bowles:thank you, chairman spratt.

you're the greatest. we're going to ms.fudge, mr. stern, dr. coburn andthen senator crapo. ms. fudge:well, first of all, let me addmy thanks to erskine and alan and the staff forincredible leadership. and being the first time toserve on a commission and as probably the only one on thecommission with no political affiliation, it's been quitean interesting experience. i came to this with no ideology,no ideological perspective on

how to address the issue otherthan as a citizen with children and grandchildrenconcerned about the future. and it was clear to methat all of you have the same feelings as well. there are a couple ofthings that i would just like to highlight. as we've developed thisframework -- and i do believe it's a framework, whetherwe get 14 votes or not, i believe discussing with mycolleagues that many of the

things that have been listedhere will indeed be addressed, if not all of them -- but it'simportant as we chart a future of growth for our country thatwe put into perspective the importance of how much welook in the rearview mirror historically and how muchwe look to the future. and i think that's what we havetried to do with this document is to understand clearlythe demographic trends; to understand clearly theneed for greater global competitiveness becausewe are, indeed, slipping;

to understand the need forcontinued focus on education and the need to develop a talentbase here in this country that can compete globally;and more importantly, to get back to a positionof economic growth. and we can all differ on whetherwe think this is the right approach to get there, but letme say this: i deeply support what we're trying to doin terms of tax reform. from a business standpoint,we have been hamstrung by the tax laws that we currentlyhave in place relative to our

global competitors. i also think it is timeto look at social security, not just for thenext 20 or 30 years, but for where we'regoing to be longer term. and if we don'ttake the action now, then we don't put ourselvesin a position to address the issue longer term. which brings me tothe final point. i do believe the time is now.

i would hope that as we moveforward that we don't find ourselves caught up in aprocess which takes us years to implement many of these thingsthat if we take action now, and that's been reinforced bymany of the people who came before the commission duringthe course of our deliberations, the importance of taking actionnow can put us on a path for a more strong future over thelong-term than if we wait and discuss and the years go by andwe find ourselves in a place we don't want to be.

and i think several of mycolleagues have reinforced the point which i strongly believeand we've seen it play out that once the ball starts rollingin the wrong direction, it moves with rapid speedin a way that we can't then impact it. we have the opportunitynow to impact our future. and if we wait to acton certain things, we risk putting thatability to shape our future in great jeopardy.

so i for one support this. do i agree witheverything in it? no. but have i had a chance toread it and review it and say, you know, i'm about 80% there,and that to me is more than enough to agree that thisis the framework for us to move forward. and i thank you for your workand i would particularly like to thank senators conrad and greggbecause i think it really has

been your impetus and focusto making this commission in helping us come together thathas brought us to this point. senator bowles:thank you, ma'am, and ithink that's absolutely true. mr. stern. andrew stern:i said at the first meetingthat i do love this country and i happen to think, like thetwo congressmen man here said, that it really is a gift. and it's been a gift for me andmy grandfather louis the butcher if he were still alive toimagine me sitting at the

table with all of thesecongressmen and senators. it's been an enormoushonor and opportunity. and i just want to sayto people everywhere, including my own community, ifthis process did anything for me it made me appreciate whata dangerous and precarious situation we face as a nationand our inability to act and our waiting to act will onlymake the situation a lot worse. to this i just want to say thati don't normally get a chance to sit at a table withso many republicans,

and i acknowledge that jeband paul are appropriately on my right. but to them and to daveand to ann, i mean, i think this was a uniqueprocess where i really got to understand and learn that thepeople really are serious about getting something done anda lot of the caricatures and stereotypes and i appreciatethe environment you set, alan and erskine, that i thinkmade this a somewhat different process than most people havea chance to experience in

washington, d.c. i think paulryan said it right: no matter what happens the commissionhas been a success. we focused the viewsof the nation on a very serious problem. a very sobering problem. it actually got me as allensimpson said to actually have to write my own plan because iagree strongly with jeb that in the end this is about plans. it's not about ideas,it's not about what

your favorite things are. and i tried to write andi will soon let it out, but a plan that really fitswithin the framework of the co-chairs in terms ofthe $4 trillion cuts, the same kind ofdiscretionary spending, many of the same tax things. but i just want to end andpeople can read it and it will sort of give you asense of, you know, a lot of agreement i have and acouple of things that obviously

i think of differently. i just want to end by sayingthis: i think the problem in washington too often isthat we're historians and not futurists. and unfortunately as i said inthe first meeting we are at a very different momentof economic history. this is the thirdeconomic revolution. where the industrial took 300years and the agriculture took 3,000, it has only taken 30years and we are now witnessing

what a global economy is andhaving to act in ways that we're not familiar with in ourcountry to make strong, swift, decisive and fast decisions. and i just want to just put onthe table some things that i don't think arenecessarily part, all or part of this report butwhat i think really goes to the whole question of jobs, economicgrowth and competitiveness in the long run. one is the tax system and ithink you hit the sweet spot or

the right spot, you know, abouttax expenditures and about lowering rates and about sortof cleaning this mess up so that american people don't haveto hire tax accounts and dave doesn't have to sit with allkinds of experts every time he makes a business decision to tryto figure out how to arbitrage the taxes, that's now how weshould do business in america or what our ceo's should beneeding to spend time on. two, when it comes to healthcare i appreciate we want to go back and look at the obamaand the congress's decision

on health care. i think we have to go forwardbecause i think we now know a series of things. one, which i always like to saywe're the only nation on earth if we want to be competitivethat still puts the price of our health care on the cost of ourproducts and competes against nations around theworld that don't. that is a stupid economicand competitive plan. two, the problem we have inhealth care is not going to

be fixed, i believe, bypatching up a system we have. it needs fundamentalrestructuring. i know paul ryan hasone set of ideas. i think in germany andswitzerland and other countries around the worldthere are other sets of ideas. but we are at a momentof restructuring, not just trying to patch up aplan that now costs us 5% more of gdp than any othercountry on earth. we cannot afford 5% more gdpand compete in a global economy.

and how we deal with that, thatwill be a great debate but we need to deal with it and weneed to deal with it soon. fourth, i want to say thatfor all the discussion about competitiveness and aboutlowering corporate tax rates i do want to acknowledge that mostcountries around the world also have an additional way to helptheir competitiveness and that is to have some kindof consumption tax. and if you look throughouteurope and other places, they lower tax rates,and so could we.

if we did it -- michael grasstalks about eliminating a hundred million tax returns. but we need to think about taxesthat help our exports and defer or hurt our imports. and right now, we have a taxsystem that doesn't really help us, but a system around theworld that helps everyone else. and finally, i would saythat we don't have any pool of investment. and i really appreciate what theco-chairs have done as they cut

and invest, as they know that'snot my methodology of doing it. but i think in the end, thepaygo system never allows us to amass enough capital for the biginvestments this country needs to do because you have to goresomeone else to get your money. and if we can't figure out a wayto find the capital to invest in broadband and infrastructure andwater that we never get to or we have to push it into a stimulusbill or some other way, that is not a reasoned way for acountry to make decisions about it's long-term investments.

so i admire what you've done. i've written my own attempt totry to get to the same place. but i do think we need totackle some of the biggest issues facing ourselves. and my last challenge is this. there is no reason, i think ascongressman hensarling said, that the presidentof the united states, that the leaders of the houseand the senate cannot put a plan on the floor oftheir bodies this year.

and we should keep voting anddebating and amending until we have a plan, because itcan't wait any longer. speaker:thank you. i think if therewere two people who i came up here with a caricature of, itwas andy stern and dr. coburn. and i couldn't havebeen wronger on both. you couldn't have beenmore constructive. and i thank you for that. and dr. coburn has not onlybecome my doctor but he has become my friend.

and nobody's staff hasbeen more helpful to us than dr. coburn's staff. and he has pursued this withlogic each and every step. so thank you forall you've done. we'll go to you, dr. coburn. dr. coburn:alan and erskine, i'd like to thank you for your efforts. i'd also like to recognize joelle cannon on my staff who's spent a lot of sleepless nightsworking with your staff who've spent a lot of sleepless nightstrying to develop a product.

you know, as a physician,i'm trained to find the real problem, what'sthe real problem. not the symptoms, but what do the symptoms and science lead me to as, what is the real disease? and the real disease iswe've abandoned the concepts of our founders. we've created reliance insteadof depending on self-reliance. we've created governmentprograms that are unaffordable. we've abandonedlimited government.

we've abandoned theenumerated powers. and now we're in trouble,and nobody's looking at what the real problem is. and the real problem is us. alexander tyler saidall republics fail. the average age of the world'srepublics is 200 years. and they all fail becauseeventually the populous learns that they can vote on somethingfrom the public treasury. and they all failover fiscal issues.

they're not conqueredfrom without before they rot from within. and we're rotting. we're rotting as we sithere and speak today. in 2004, i had the privilegeof reading a book by peter peterson. i want to give him credit. he talked about where we aretoday long before anybody was talking about it. he wrote the book in 2002.

it's called "running on empty." and it wasn't a partisan book,but it raised the level of awareness of several ofus to what was happening. and if you don't thinkwe're in trouble, think about thefollowing numbers. next year, $36 trillion hasto be funded in the world. there's $23 trillionavailable to fund it. that's what the borrowing isgoing to be for governments all across this world.

what do you think is goingto happen to interest rates? what's going to happen to thecost of not living within your economic means? it's going to bedisastrous for us. and the threat isn't comingin four or five years. it's coming in one or two. we have a fed that'smonetizing our debt, and all of our trading partnersare reacting to it negatively in the hopes that we can stimulateour economy when the real

problem is, is we have way too much government and not enough of the thing that made americagreat, which is independence, personal responsibility,and self-reliance. and we've created dependency. and one great example is 1 in 19americans today get ssdi or ssi. that's 1 in 19americans are disabled. and when the law says you'reonly disabled if there's no job in the economy you can performand we don't address that issue in this plan, the ssdi is goingto be broke in eight years --

seven years. and we're adding more, andthey're getting ready to add two new categories todisability in the next month without congressionaloversight or anything else. we are out of controlas a government. we have abandoned the principlesthat made america exceptional, which wasn't the government. it was the people. it was us relying onourself; not saying,

i can take a pass anddepend on the government. and that says nothing about notwanting to make sure things are there for those whotruly need our help. a compassionate response tothose that cannot fix their situation any other way, weought to be there to help them. but that's not what we'vecreated in our country. and there are a lotof things that i think have been accomplishedthrough this commission. there's a lot of knowledgethat's been gained by a

lot of people. we've totally disregard thelong-term problems that we have with healthcare. i agree with paul and jeff. paul's road map is a wayto solve that problem. nobody -- nobody has comeforward with another solution, because nobody has the courageto come forward and say we can't have what we think we havetoday and still have a future. and paul has had the courage --and those that have supported

what he's done -- tocome forward and say, if in fact we want tosolve the problems, everybody has to sacrifice,which means you cannot be comfortable with the status quo. the real problems for ournation are going to come forward in two years. we have a treasury departmentthat's still borrowing short-term money with the falseidea that they're going to save interest costs ratherthan buying us some time

by extending our debt terms. because they're sacrificingthe good for the short term, what looks goodin the short term, for the very real problemsfor the long-term. so we have the administrationdoing the same thing the politicians do. don't do the tough right hardthing, do what looks good. this plan is a plan. the people have worked onit, have struggled to try

to build a consensus. i have heartacheswith tons of it. but i know we haveto go forward. this isn't the first. if we pass this plan by thecongress, two years from now, we're going to be coming backmaking a more difficult one. this is just the down paymenton what are some very real, difficult sacrifices thateverybody in this country is going to have to make.

and if you really think aboutwhat built our country and what's the heritage of ourcountry, it is sacrifice. what jeb talked about,creating the real freedom, the real opportunityas it goes forward. it's not about owning a house. it's about having thepotential to own a house. so my questions really come down is, will we come together and put something out, even thoughprobably 50% of it i'm not happy with as a down payment to make astatement that says this problem

is so real, tom coburncan't have what he wants. and i can't. and i'm going to have tosacrifice and my family's going to sacrifice. but i want to make sure my grandchildren have some of the same opportunities andfreedom that i've experienced. the potential for us tore-embrace the real character and success of america onlywill come if we embrace the principles that our foundersembraced when they started this.

when benjamin franklin was asked-- you've all heard this -- what did you do, he said, i gave youa republic if you can keep it. well, i think we oughtto be cheating history. history says we'renot going to make it. and the way we cheathistory is for all of us to give up something. everybody at this table,give up something, and then say the way forward foramerica is everybody to start sacrificing so we create afuture that is honoring the

tremendous sacrificesthat came before us. speaker:and i share the view. you've given me -- ididn't know who you were. all i know is that you were aman of integrity and honesty and directness and you're real. speaker:all i can tell you is ihope everybody sees that, because i couldn't have morerespect than i do for you. thank you for the guidance andthe wisdom you've given me. senator crapo.

senator crapo:thank you very much. ami the wrap-up speaker? speaker:(inaudible) senator crapo:don't you wish. i'm not going to tell youwhether that is the case today. i, as many others have said, amgoing to continue to study this for a day or so to be sure. but the fact that i'm not goingto give my decision today and the fact that i'm the wrap-upspeaker doesn't mean that i'm not going to tell you what i think of what i see here and of

the process. and i first want to go back tocomments that have been made by many with regard toerskine and alan. i didn't knoweither of you well. i had probably met youin social occasions, but really during thiscommission deliberation is where i came toknow both of you. and i have developed a greatrespect and friendship and admiration foryou, and, frankly,

for all of the othermembers of the commission. a number of the others ofyou, i did not know well. others i did know very wellbecause of the mechanicians of congress and howwe work together here. but i just have to make thefirst comment that i think i've heard from all of you, that therelationships that we've built on this commission havebeen a very big part of the success of it. and i personally have greatrespect and admiration for each

of the commission members. i also want to add to that, theother idahoan on the commission, our executivedirector, bruce reed, and he has been outstanding inhis efforts to help bring us together and to delivera work product for us as we've made demands. now, having said that, i doshare a lot of the opinions that have been expressed atthe table by other members of the commission.

and i won't goover all of those, but i want to just kindof, as many of have done, talk about the positivesand some of the concerns that i have. as with everybody here, i've gota lot of heartburn about this. there are also some thingsin here that are really, really important to me and that,i think, to the american people. and let me just go throughthose a little bit. at the outset of this process,i was very concerned that this

commission would take toosmall or too limited a view of our task. there has been plenty ofdiscussion here at the table that i won't go over aboutthe threat that we face and about how we are on anunsustainable course. and i will repeat whatsomeone else said, that we are understating it. if we do not clearly spellout, in our minds and for the american people, what thealternative of inaction is --

and in fact for those who alanmentioned who will be attacking whatever happens here from thiscommission or any other plans that are brought forward --i think it's important that america understands thoseattacks and understands the discourse and the debate thatwill take place on this issue in the context of what the statusquo is and whether the status quo is better or worst than whatis being proposed in this or other plans and proposals. and frankly, when a clearunderstanding of what we are

facing is achieved, i thinka better perspective on this proposal is achieved. that being said, i was concernedas this process started out, very concerned that we wouldhave too limited a view and that we would not really take theopportunity to make the bold steps that need to be madeand come forward with a bold comprehensive plan that willhelp get us on the pathway to achieving the american dream ashas been described here and to making it so that thisgeneration can pass on to the

next generation the opportunityfor a greater standard of living and for greater freedoms and forthe ability to live their lives in this country with thefreedom that they deserve. in terms of the strengthsof this proposal that i see, one of the key strengths isthat it does recognize that spending is the problem. it also, i thinkvery fortunately, recognizes that on the revenueside the issue is reform of our tax code. that is one of themost significant,

big parts of thisplan, as i see it. i've said to many of you inother meetings that if we as a country set out to create a taxcode that was more inefficient, more unfair, morecostly to comply with, or more anti-competitivein terms of making us less competitive with the rest ofthe economies of the world, we probably couldn't do muchworst a job than what we've got with our current tax code. and yet in congress, we continueto have the debates which we are

having right now in other roomsin the capitol building about whether to raiseor lower the rates. what we ought to be talkingabout is what kind of a tax code should we have. and this proposal puts that onthe table and moves the debate into the arena of how shouldwe structure our tax code, which is a key part of how dowe make our economy dynamic and strong and build back thestrength that we need to build, if we are going to deliverthat american dream option in

a strengthened positionto the next generation. i think that that'svery, very important. erskine, i think you said thatyou didn't think we should hallow out our country whilewe were fixing out our fiscal problems, and i agree with that. on the revenue sideof the picture, i think that is one of the keythings that we must focus on. we must reform the tax code. in addition, as i've thoughtabout the areas where i have

problems -- and,as you might guess, they are similar to the issuesthat jeb and paul and tom have raised -- it struck me as i wasthinking about it that in most of those areas my concerns arewith what is not in the plan as opposed to what is in the plan. not all of them but some ofthem, and in fact most of them. i agree -- i think it was davidthat said that he thought the plan ought to go further. and frankly, on the spendingside, i think it should.

it doesn't two far enough toget us where we need to go. and we need to have a morerobust effort to address the spending issues. but the plan does takevery strong steps on the spending side. as you know, erskine, i havecontinuously harped about the fact that process is critical. you can control theoutcome with process. or you can assure that you can'tachieve the outcome if you don't

have adequate processprotections in place. and although there are some goodprocess protections in here, i would like to see themstrengthened so that we can have even a strongerguarantee that the path that this plan sets outis one that is followed. i appreciate thoughthe fact that, added to the reform justrecently has been one of the requests that i made, that if wedo in fact see a dynamic impact on our economy as a result ofthe tax reform and the spending

reform and the otherefforts of this panel, then those increases in revenue,as they are plugged into the fiscal picture of ourcongress and our country, are to be used for deficitreduction or rate relief in our tax policy asopposed to more spending. and i appreciate that reformbeing put into this package. that's one of thosekinds of things that, just an example of one of thethings that was put in that i thought wasn't in there whenthe first proposal was put out.

i agree with the concerns aboutthe limited nature of reform in the healthcare arena, which isprobably the biggest arena on the spending side thatwe need to be reforming. and so i have concerns that wehave not achieved what we need to achieve there, andwe need to move forward. and where does allof this bring me? there are others. i want to mention oneother before i go on, and that is -- as i believe jebmentioned -- i've, from day one,

believed that we should havesome kind of an enforceable global spending cap. we've got a global revenuecap, and although it's a little higher than i think it shouldbe, it's at least a cap. right now the cap is 99 or 100%. this is at least movingit dramatically in the right direction. and if you put in there theprotections that if a dynamic economy does build out of whatwe were trying to do here,

that the revenue is pushedinto deficit reduction or rate relief, then that improvesthe circumstance there. but we need aglobal spending cap. so as i evaluate thisplan -- like i said, i'm not sure where i come downnow because there is a lot of heartburn in here with me andthere's a lot of very positive steps here that i thinkthis country needs to be engaging in quickly. but as i look at it, idon't see anything that

stops congress from engagingin more healthcare reform. i don't see anything in the planthat says that we can't add some stronger process protections. and i don't see anything in theplan that says that we can't engage in further reform of thespending and further control and further reduction of thespending excesses in congress. and so the questionthat i have is, are we putting into place asystem that will at least get us heavily down the road in theright direction and allow the

process in congress to fillit out and strengthen it as we move forward? or are we putting into placea system that really doesn't get there and sees the taxincreases occur but the spending reductions not occur or thekinds of problems that have been referenced with earlier reforms? and those are the kinds ofserious questions that i have. frankly, if we can get ratereduction out of dynamic growth in the economy, we may be able to dramatically change the ratio.

in fact, i think we will dramatically change the ratio of how much of the solution is coming from where it should be, which is the spending,versus revenue increases. and so i know that i'vejust sort of gone across the waterfront here onsome of the issues, but i believe that these kindsof issues and this kind of thought process is what we oughtto all go through as we evaluate whether we should vote to sendthis plan forward to congress. remember, i mean this planright now is a concept plan.

it's got some good detail, butcongress is going to have to put a lot of structure to thisas the proposals are termed from this stage intolegislative language. and my hope is that some of myheartburn can be addressed in that process. and it's a question. you know, i really do strugglewith whether we are going to give life to a process thatcan put us on the right path, moving in the right direction,and give us the opportunity to

strengthen it or whether it's aprocess that will end up putting into place the mechanisms forthe kind of failures that i think some of the otherefforts have faced in the past. and that will be my decision. that will be the basis on whichi make my decision as i further review all of the provisionsthat you've got in here. but again, i want tothank you for the effort. it has been an outstandingwork product to this point. and nobody couldhave done it better.

speaker:thank you so much, senator. senator conrad and i weredown here shaking our heads at everything you said. and we were noddingin agreement. we hope this is a start. it's not a final step by anystretch of the imagination. we've got some heavylifting ahead of us, especially you all who areelected representatives. and i hope, for one, that youare a leader in that process.

shoot, i've only beendown the snake river. i don't know a lot about idaho,but i know a leader when i see, and you are one. thank you all so muchfor being a part of this. al's got a few wordsthat he wants to say, but i just want to make surethat you know that we're going to try to get together friday. if that's notpossible with people, then we'll look for you all tolet us know by 11:00 on friday

where you stand on this. senator gregg? senator gregg:i just want to note thati have a long-standing family commitment. speaker:he does. senator gregg has along-standing family commitment where he can't,but he's always -- speaker:i wouldn't miss yourwife's 60th birthday. go ahead. no, you don't do that. speaker:her 39th birthday.

speaker:we wouldn't be here withoutyou and senator conrad, and i so thank you verymuch for your strong support and leadership. i also want to thank brucereed, as you all have done, and our team. last night, i got ane-mail from bruce at 3:38, the night before last at2:58, and the night before that at 2:38. bruce reed has beena great leader,

and anything smart i'vesaid came out of his brain. speaker:i don't believe all of that. let me tell you, the rosesare being thrown around, and it's nice. we don't want to whiff themuntil we see what happens or it won't matter. but you two, thankyou, both of you. you just stuck -- and itwas tough for you to face that defeat in the senate.

and you rose above that andgot down here and are mashing your teeth like -- i don'tknow if you guys can do it. we tried in thesenate, didn't work. but you stuck, and it worked. and bruce, you're just ahusk of your former self. you have walking pneumonia,but you can go sleep somewhere. but let me say to mike, i canassure you that this is a big un-digestible lump, and there'snothing in here that should cause you concern aboutbeing watered down.

this baby is stuck inthe craw of america, and it won't go away. it's indigestible,absolutely indigestible. so you should feel confident. it was crafted that way, becausei got as much pain as tom. i come from a state filledwith oil and gas and coal. i may have to divert my flight. i may have to creepthrough montana, through baucuscountry to get home.

when i get home, say, you messedwith the depletion allowance, you messed with tight gas. you messed with fossil fuel. you messed withenergy subsidies. what the hell were you doing? i'll say, loweringyour tax rate, jack, what's your next problem? i'll just stuff it right back inthem, which i've always enjoyed. speaker:on that, we will adjourn.thank you very much.