and of course we welcome our distinguished secretary of treasury hank paulson we have had meetings where we all have agreed that you have made an outstanding contribution to attempting to bring a sense of bipartisanship into at least the house and the and the administration the president that we're a little disappointed at least the majority side that this budget has come to us without some type of an attempt to see what we could have worked out in the last year of this administration as opposed to a budget that really politically doesn't make any sense most of all of the revenue saving proof provisions especially as relates to health been rejected by the congress and the the idea that we would have in this budget an extension of the president's tax cuts of two thousand and one and three and the underfunding at least the reporting of the underfunding of the war provisions not being there is so the war's going to stop the whole idea that for seven years  we have not discussed tax reform at all even though in my projected tax bill which is merely a talking point for the administration we bent over backwards to bring corporate relief because we know that any loopholes closings we have without bipartisan support they going to be listed as as tax government's fault that twenty three twenty four million people will have this burden moved off every year temporarily at continued additional expenses of billions of dollars without just getting rid of the done thing expressionlessly after eight years that you include the revenues in the future in the budget and so you never intend to get rid of it and yet because that is just unfair for it to be here and so i don't mean to be offensive but i kind of think that this budget is a political statement and the congress is going to work its will and try desperately hard to see how we raise the money to pay for the provisions the need that republicans or democrats are prepared to accept as relates to cuts in programs that we think are  sential to our constituents and therefore the country i suspect that the die is cast and there's very little wiggle room for us to move away from your so called balanced budget but i like to believe that to the best we can and in this election year that we continue to enjoy your cooperation and to avoid confrontation where it does not help us as a congress it does not help this committee and quite frankly i don't think it helps out candidates republicans democrats for president when this is the president's last year and and i know the dedication that you've given to the administration and what you've given up as a sacrifice that we do hope that after we get past this that we can this working relationship but with you office mr mcqueary thank you mr chairman welcome mr secretary it's nice to have you with us today i look forward to your remarks are particularly look forward to hearing your comments on the state of the economy and how congress can respond in the short term to the real challenges facing our economy tuesday's sharp drop in the answer to supply management and suggest real challenges in the months to come and thank you mr secretary for economy and the other provisions i believe will also leave the helpful are short term economic challenges shouldn't completely obscure the need though to pursue pro growth policies that will pay dividends for our economy in the  future therefore applaud you and the president for your long term for focus on economic growth and job creation and your recognition that preventing a looming tax increase is critical to that effort if we learn anything in two thousand and seven it was that the majority's allegiance to pay go as it's currently constructed demonstrated in their budget proposals and and the chairman's own tax reform proposal and in the december debate over the a m t patch has unfortunately set the cruise control for three point six trillion dollars tax increase over the next decade unless we tap the brakes and short the yoke of this particular paygo the issue for congress next year won't be whether revenues as a share of the p will climb the issue will be whether the revenues will come from higher marginal rates they were tired of the marriage penalty higher taxes on capital gains and dividends smaller child tax credits or whether the congress will find some other taxes to raise instead it is true that we could avoid those tax increases by passing spending cuts and i would encourage my colleagues on this committee to begin thinking seriously about using our jurisdiction to start the ball rolling on meaningful entitle not reform which will create savings to that point i applaud the president for highlighting the fact that our entitlement system is an desperate need of reform only an ostrich with a long as neck could continue to ignore the fact that medicare medicaid and social security if left unchecked will impose massive costs on future generations of americans congress must make some difficult choices on entitlement programs and this budget ask us to begin to meet those challenges i hope the congress takes the gravity of this situation to heart as chairman and i thank you for your continued cooperation and working with me on the members of the minority on this committee to develop discuss the president's budget for fiscal year two thousand and nine my highest priority is a strong us economy that will benefit our workers our families and our businesses through a measured approach that balances our nation our nation's resources the president's budget support sent priority this is especially important as after years of unsustainable home price appreciation the u s economy undergoes a significant necessary housing correction this correction combined with high energy prices and capital market turmoil caused economic growth to slow rather markedly at the end of two thousand and seven the us economy is diverse and resilient long term fundamentals are healthy i believe that our economy will continue to grow although a lesser pace than we have seen in recent years yet the risks are clearly to the downside and president bush knows  economic security is of the utmost importance to the american people in recent weeks the potential benefits of quick action to support our economy became clear and the potential costs of doing nothing to great so we are gratified that congress is advancing your growth package to support our economy as we weather the housing correction we believe that our growth package must be enacted quickly it must be rob temporary and broad based and i must get money into our economy quickly the house has passed legislation that meets these principles if we keep moving along a fast track and congress sends a president a bill that meets our shared principles rebate payments can start in may and be completed this summer together the payments to individuals and investment incentives for businesses will help create more than a half million jobs by the end of this year in addition to an economic growth plan to help us weather this housing correction the administration will continue to focus on aggressive action to try to provide alternative options to foreclosures this includes encouraging the hope now alliance is outreach to struggling homeowners congress can do its part by finalizing the f h a modernization and g s c regulatory reform bills and by passing legislation that will allow states to issue tax exempt bonds for innovative or refinancing programs and we continue to monitor capital markets closely and to advocate strong market discipline and robust risk management working through the current stress is our first concern through the president's working group on financial markets we are also reviewing underlying policy issues because it is just as important to get to get the long term policy response while we are in a difficult transition period as markets reassess and reprice risk i have great confidence in our markets they have recovered from similar stressful periods in the past and they will do so again the also continue to press for a long term economic policies that are in our nation's best interest a program of tax system entitlement reform and a balanced budget to that end the president's budget makes the two thousand and one and two thousand and three tax relief permanent and keeps the fed federal budget on track for surplus in two thousand and twelve in the future as in the past our long term economic growth will also be enhanced by supporting international trade by operating world markets to u s goods and services and by keeping our markets open congress can help create jobs and economic opportunities by passing the pending free trade agreements with colombia panama and south korea i appreciate the cooperative and bipartisan spirit that has brought the congress and the administration together to support our economy and look forward to that spirit continuing as we work through this period mr chairman thank you very much you secretary i think the record should be made perfectly clear that as your latest of panama the problem doesn't exist in this committee or in this house i also  been under the impression that the administration is trying to improve the agreement with korea so those issues are not in front of us legislatively politically at this time even though climate s represent a problem a sense you are not a politician maybe you can tell politicians so we can explain some of the president extend it in whole or in pause that they could legitimately be perceived as a tax increase should be made clear it wasn't the intention of the congress to have them expire but the president had them to expire and while we talk about extending this there's no talk about removing the alternative minimum tax there's no talk about tax reform it seems to me as a business timely targeted and temporary having said that it seems to me that when we talk about the stimulus program that once again we're talking about helping business because no one talks about the compassion of the hundreds of millions of people they can't afford to put food on the table clothes on their kids back go get them an education upgrade rent we're talking about finding hundreds of millions of american most of whom work hard every day on day some under the poverty line but at the end of the day we have designated them republican democrat as people that are in dire need and if we give them some money they going to spend it i don't know what there is in the budget mr secretary but it seems to me that there's something bad with that picture to believe that the only time we can find some equity in a tax system or equity in the support system is that we need these poor people out there to spend money to buy goods and services and to spur the economy i'm not asking for a do good statement because it's too late for compassion we have to get something out fast but i do hope that you can point out someplace and your budget  saying and as soon as we get this economy back on its feet and we will that we'll never be put into a position that we go into recession not because we're not productive  competitive but because of american hardworking people can't afford to buy i think that would be a republican or democrat that should be a painful experience that we're going through and so if you can find any compassion along the line the response of anyone's question it would help us a great deal to be able to say why this document is before us which deals with tax cuts and raise taxes on the people trying to get health care at the most and so i'm not here to embarrass you but i do actually help in trying to explain to me and others the questions that i have raised and i do hope there's flexibility to see what we can do before the here and to work some of these major differences out to see them well what the president's if you're talking about health insurance the president's budget proposes that we reallocate the tax expenditures far spending it on the wealthy people like you and me to people who don't have insurance through their place of employment we will give them a tax expenditure for going out in the marketplace and purchasing insurance which they can't get today so i think that's compassionate i think it's forward looking i think it's a very vital part of meaningful health care reform in this country if you want to make the government's expenditures more rational and more compassionate so i would hope you would look at that part of the budget as well and commend the president for bringing forward some progressive reform in the area of health care  incentives for employers to provide health care was taken away well as i said mr chairman those tax expenditures through health insurance provided in the workplace go to people who are relatively well off the president's proposal more evenly distributes those tax expenditures throughout the income brackets and give that to people who don't get insurance through their place of employment it gives them a chance to go out in the marketplace and get some health care for health insurance for their families it's a very progressive reform i would prefer tax credits frankly but you would think the majority and their sense of compassion for people who need help would be supporting a reallocation of those tax expenditures from the way they are today which is very to toward upper income  think it was a good compromise that your staff worked on and my staff worked on the speaker staff and leader man or staff and secretary paulson and his staff so i thought i think the house compromise is pretty good along those lines you all got a lot of what you wanted and we got some of what we wanted so that's what this is all about i was very pleased with the bipartisan cooperation that led to to that agreement on the very quick passage of the stimulus bill here in the house we  course are waiting to see what the senate does with that but i think our package was very good and represented the hallmark and the cooperation between the majority of the minority in this house  chairman i am having copies made of a chart graph and having it distributed because i think it's instructive on the issue of tax reform tax revenues place currently i don't know if we can put it on the screen did we ever get capability to put it on the screen ok well if you just take a look at your graph the top dotted line is the line that represents the percent of g d p of revenues to the federal government under the pay go system and as you can see the line rather quickly gets up to right at twenty percent of p for revenues and mr chairman it doesn't matter how you get there whether you let the old one and zero three tax cuts expire or whether you continue to let the i'm taking a can whether you raise taxes on upper income people or whatever else the fact is under your pay go rules you're going to get us to over twenty percent of g d p and revenues that's a tax increase no matter how you construct it it's a tax increase compared to where we are today the red line is basically what's in the president's budget now it is true that in the president's budget he doesn't describe what he would do to reform the tax code and eventually some president is going to have to work with the members of this committee i think to reform the tax code but what the president does i think wisely in his budget by saying was to expand the oh i want to know three tax cuts but count the revenues from the a m t in the out years or at least past this year you get the red line which keeps revenues that spike in the first year up to nineteen percent of g d p but then it comes back down in levels off and it ever in every year for the next ten years it's above the historical average of revenues to the federal government the the dotted line with the dash and dotted line represents the historical average which is about eighteen point three percent of g d p in revenues so you can see in the president's budget with his construct he keeps revenues as a percent of g d p above the historical average and then you can see the green line and block  ph represents current law so if we just extended current law which is to say mr chairman if we extended all the tax cuts that are in place from zero one and zero three weeks then and all the expiring provisions and  we kept the patch on the a m t you'd get that line and yes mr chairman i think that one may be too low in terms of producing revenues to the federal government so does the president evidently because he keeps revenues above the historic average so i just thought the members ought to see this very clear representation of the various views on revenues to the federal government and the pay go rules would produce mr chairman and frankly your bill would produce that dotted line that's way way up above everything else and certainly way above the historic average so sort of play that groundwork before we get into listening to the secretary thank you the response to a position ok let me you've covered a lot of ground and in the interest of time i'll just go over some of the points you made quickly first of all i know a m t is on everyone's mind here and i just make the point  that i think the budget is quite transparent we would we would this year we would patch it and i think we're all in agreement least i sure hope we are that we don't need to raise taxes we shouldn't raise taxes it's year and let's not subject you know so many americans to to add uncertainty let's not wait any longer than we need to let's patch it now in the out years here right those revenues are in the budget and what i think needs to be done and i think congressman mccurry really got to the point i think that he's going to need to be addressed and i need to be addressed in the context of several questions first of all and the context of what we do with the major budget issues this country's facing over the immediate term which are entitlements really look at the question of our entitlements and look at all of these things it didn't work out but i'm so i'm just understand the frustration i feel the same as is going to have to be worked out at some time but again i  looked at the tax code and looked at tax preferences as the biggest tax preference i could find which is three point three billion dollars or whatever over a ten year period really was a preference that  employees of companies that provided health insurance received and so this this privileged a group got this big preference it didn't go to all of the people that don't have health got the greatest amount of benefits now when we put this idea out here and it wasn't that this was a be all of the and all and this was a solution to all of the health care problems or the solution to getting more people to give more insurance to those are uninsured but it was a step on the right direction and so i was hopeful that that people on both sides of the aisle would say this is something we can work with this is a  benefit that's really quite regressive and is unfair in many ways and we could we could we could work with this and it would make could make a difference if we work together toward getting more people insurance to more people who need it it didn't work that way but i just just make the point that it in this year and in the years ahead that when you grapple with this issue there's a there's a significant pot of money there that's being allocated in a way which i think is not optimal i think it's being misallocated and that's we look at the revenues and and so on this is this is something to work with your last point on stimulus let me just say something there because i too think the agreement with the bipartisan agreement with the house was a very important step i think it does a lot for for individuals consumers there's a big portion of that and just remember where we've come from the starting point and i also need to say making the tax cuts permanent as important as that is to this approach president in our administration and all of us was never part ever at any time part of any proposal on the stimulus package from the day i first had conversations with the president that was never never there that was on a separate track but the starting point was where what you did in two thousand and one was to make payments to the rebates have those go to those who pay federal income taxes this was quickly broadened and i think wisely so but it stimulus it's broad based and i think when you say where is the compassion i will tell you that the that that working mother who's got three thousand dollars ever an income and is got several children can be proud of now on to whatever you're doing something on a bipartisan basis and where there's compromises there's going to be people on each side that are entirely entirely happy but again i would s a spokesman spokesperson for the administration as an individual so let me just say a few things that relate to the budget and discuss a few issues by the way i think we should be careful in saying that those who have employer health coverage have privileged they worked hard to get that coverage and if there hadn't been an employer a deduction said there would be health insurance today as extensive as it is so i don't think there are privileged in these policies aren't gold plated in most cases i'm glad i read your testimony that you don't use the words that were in the state of the union that the economic picture is uncertain term which was used by the president uncertain because i think there are certain things that are very certain there are problems that are real also i want to ask you about some of the budget cuts because they're not really in your domain cutting out the manufacturing extension program i don't know how that fits in the economic growth and women aiding the cops grants cutting cd b g by over thirty percent cutting the water in the state water revolving fund by twenty percent by twenty percent safe and drug free schools by two thirds the president's budget is going to lead to a surplus in the year two thousand and twelve let me ask you about an item that's very much within your jurisdiction or mention we've talked about china i've read the latest report from the treasury department and it says that the appreciation on a trade weighted basis the one has been five point six eight percent trade weighted which i think is the accurate way to look at it and so there is a long long ways to go and i think you should expect this committee to continue working on this and working on this this year let me spend a couple minutes because you said in your testimony that the the rebates can be started in may and be completed this summer if unemployment conversely standard payments would go out in february or march and you said before the senate finance committee i think that there hasn't been an extension when unemployment has been lower than five percent mr secretary the number of people who have exhausted their benefits is twice what it was in the first month of the last recession and i read this just in rate for regular employee benefits today is higher than it at the beginning of any of the last five recessions going back to one nine hundred seventy three so i don't know how you defend simply by saying the unemployment rate is only five percent when you have a basically historic level of excess of exhaustion of benefits a million and a half or a million four hundred thousand people it's projected that another million for five hundred thousand will exhaust their benefits in the six months so how is a spokes person for the ministration defend your your adamant resistance to extending unemployment compensation benefits when the sauce generated is at a historic high at least in the last decades with the last five or sessions as a spokesperson for the administration i don't want to ask you how you feel personally and a lot of us who come to know you and i want to resist that because you not hear that in that capacity but how do you defend it how do you defend that can you go to any state where fifty or a quarter or a third of the people unemployed have exhausted their benefits and say we're not going to extend your benefits but what would you say to them unemployed for an extended period of time i understand their point but again it's very simple when you look at a situation not five percent before point nine percent unemployment we have a situation unemployment in this country is a lot by any historical standard so that's and i looked at was it just five point seven five point seven percent with unemployment five point seven percent that's the lowest it's ever been when we have extended the better look at it what do you say to these million and a half people now in a million have people who have exhausted their benefits what do you say to them when when you strongly oppose the extension of you say to them the national rate is five percent cited i understand they're different there are different levels of unemployment and different states this is we have a system in our country where there are people who have various programs aimed at dealing with their specific situation i just think the signal we send to the whole world saying what we're dealing with with unemployment of four point one percent extending it i think that's a wrong signal end of the world where to just as it is it's rather unusual isn't it to have unemployment at four point nine percent i think what we're doing one way i look at it congressman is i talking to a fair number of economists who are giving me a hard time and saying how is it we're moving so quickly with the stimulus package to throw money into the economy and support the economy at a time when it is not at all clear that we're going into a recession and you yourself the secretary of said you think the economy is going to continue to grow and so my answer is we're on this week we're going to have any aggressive stimulus plan that's going to give give money to a lot of people that it'll help and again in terms of the stimulus i think rather than a few dollars a week we're talking about is getting people big checks and giving it to them unemployment check my time's up the unemployment check in most states could be considerably larger and in many states per month so you can't guess the only thing i the other thing i will say to you is when when this package was crafted it was put together it didn't have things that people on both sides wanted but it came together was something that worked and would be we would be stimulus and we wanted unemployment and i'm saying but i'm saying here that that if the situation continues to deteriorate as i hope it won't and i don't expect us to get much worse but if it does then this will be a matter you will be discussing right here and we'll be discussing it with you advocacy of free trade and as you know we are the world's number one trading nation but some four out of tehran american employees americans are affected are involved in trade some forty two percent and again i thank you for for your work and in this area proposals that are before congress last week that fed stated that our financial markets remain under considerable stress credit is tight and inflation has been rising would it be in the u s interest to further upset that apple cart by applying anti dumping your countervailing duty laws to industrial agricultural or consumer goods from china to address any of our undervaluation a chinese currency we're all aware that the r and b needs to appreciate but given our economic uncertainty would piling on additional economic shocks by raising tariffs on imports through dumping and countervailing duty laws be helpful or harmful to our economic interests all realize that that we'd like the chinese to move quicker and appreciating their currency we've been working hard to that and they've recently begun to appreciate it much more quickly over the last year the last three months it's appreciated four percent so there is movement there and important movement and again i think although our objective is the same i think the idea of of for putting tariffs on to deal with another country's currency a sovereign nations i think would not be a wise thing to do given what's going on in the markets and i just think it's it's it's it is it's a dangerous course you've raised concerns about the unintended consequences of legit lation that proposes significant changes to our trade remedy laws particularly to address currency concerns as you pointed out such bills could lead to w t o problems and retaliations by our trading partners against u s exports i'm also concerned about copycat legislation that targets the recent weakness in the u s dollar given that our continued and strong export growth is crucially important to our economic growth what kind of threat does retaliation and copycat legislation important to us to keep markets open and so i again am a big proponent of trade and again when we look at how to deal with with trade differences i'd say one  i am concerned that that it's very hard and i don't think i think would be counterproductive for one nation to try to legislate another's macroeconomic policies or currency policies we are making think there is there will be more productive ways of moving ahead but i do say we all i think just about everybody shares a common objective so what we're just talking about what's what's the right means and i would agree with you that  justification for the iraq war this this budget i look at it and i try and figure out where is the war in all this and i see very little so i went to back in the little historical research and you look on the monitors you'll see what revenue did during the civil war it went up to almost fourteen percent of gross domestic product then you look at the first world war and the revenue went up to almost twenty four percent of gross domestic product and then in the second world war we went up almost to forty five percent of gross domestic product so we were in wars we taxed but then if you look at the line for iraq all you see is it's going down and i don't understand how you can come up here with a budget i mean i try to imagine if you were goldman sachs and a company came in with their budget and they left out a huge element of their operation how you would how you could evaluate them when leave out the war in the budget here what what is the reason i mean give us the explanation for the thinking that's going on in the white house that says we can leave the budget out of the war just do that on this side and not have the revenue i explain it to i give you a couple of explanations first of all those who say there's no transparency i disagree with it because the the number you see in two thousand the seventy billion is a placeholder that's all it has been very transparent and say that that number is yet to be determined and we're going to wait to hear what general petraeus says what what the other advisors are going to recommend everyone knows that number is going to be substantially bigger i read where secretary gates gave a very very rough estimate yesterday and  testimony so i was a republican candidate leading for president says we're going to be in iraq for one hundred years so you're telling me about one year there's a placeholder for two thousand and nine what about the long term layout of the well i think that is something we all have to expect that there will be a number there for a while and that is that's an uncertainty but it is there's no there's no mystery there's i mean there's no hiding the ball it's just that there's a number that hasn't been determined yet and so again here's how i think about the budget question because the one thing we can all take some comfort in as that despite the cost of this war and despite some of the other unforeseen costs like hurricanes and so on people on both sides of the aisle all of us have been surprised and surprised on the upside with the rate at which revenues have been coming in even last year where i thought maybe for the first time i won't beat our estimate revenues of and corker so the short term deficit the deficit we closed the year with was as a percentage of g d p it was a very small number it was one point two percent and so the questions we're dealing with are really the longer term questions of the and the entitlement questions which are very serious questions and i appreciate your frustration at not being able to pin down the cost of the war but you know what it is this year what a let me just my time's escape here i want to say one other thing wh i don't understand about republican fiscal policy is i arrived in congress in one thousand nine hundred eighty eight at the end of the glory years of reagan and i sat through the mess on the banking committee of a savings and loan crisis now twenty years later we got the great bush administration practically out the door with the housing crisis and if i if you can believe these business magazines this is business week it says there's a meltdown worse to come a twenty five percent drop in housing prices what is it about a republican to ability to manage the economy that they always leave a problem on the doorstep when they leave what is that i don't know if that's a rhetorical question if you want an answer i like going to and i was i was essentially say that what we see going on here in my judgment has been building for a long time because what you've seen is for years we've seen how housing prices appreciate at levels that are unsustainable so we're getting unnecessary correction now i read very carefully i got that magazine i read it read the article there are all kinds of projections in terms of what may or may not happen but no doubt that this housing correction is the biggest risk to our economy right now is something we're very much focused on mr chairman and i want to thank you mr secretary for being here to talk about the revenue proposals in the president's budget and i just want to get back to that for a minute as one who supported the stimulus bill i want to commend you for working with us in the house in a bipartisan way and this bill received the support of virtually everybody on this committee and nearly everyone but i i think it will quickly deliver relief to american families and job providers and i just want to wish you good luck with the senate on that as one who supported the stimulus i i worry though that if we only focus on the next quarter and risk ignoring economic trends for the next decade how we continue to get the s economy to grow and to be competitive and create jobs i think we need to examine the tax code fundamental flaws in one thousand nine hundred sixty america was home to twenty of the largest corporations in the world thirty years later we were only eight of those companies and i think reason being partly that virtually every industrialized nation has reduced tax rates leaving the united states with the second highest corporate rate in the world and i commend the president for calling on congress to make permanent the two thousand and one in two thousand and three tax cuts those reduced rates provided marriage penalty relief relief relieve some of the death tax lower taxes on savings and investment and  then the u s can really compete for jobs and with that increase investment we would see job growth since it's been twenty years since congress really looked at comprehensive tax reform really a comprehensive plan to lower taxes and streamline the code and lower the tax burden i wish that i had seen the administration take a chance to really push for fundamental reform but i have two questions for you one what are the administration's views for achieving long term economic growth and to using the power of the tax code to increase the number of people with health insurance is critically important and i i think those ideas are essential that not just for those that already have employer provided insurance so under the under the president's plan how many more americans do you estimate would have insurance congressman we estimated eight million americans would have insurance under the president's plan and i would also say because you know congressman levin said that all of those who have health insurance at the working for corporations they're not just a privilege they've earned this and i couldn't agree more and i'm i'm all for employer health insurance plans i think they're good things and they're important i'm just  just saying i think that this is a big part of revenues we have to work with and we think about doing things more equitably and getting some of the things that we would all like to achieve and yes you're right this would we think at least eight million people who are uninsured to the insured rolls and then what do you think about economic growth in the long term i appreciate the short term work on the study elicit a long term is what is important and i'm going to just build off what what you said because we treasury have done and are doing a lot of work to document something which i think this committee has to increasingly be focused on and that is economic growth and corporate taxation because it is my view that the all the revenue we raise and of course we raise we need we need taxes in the tax dollars everybody knows we need revenues so the questions really with taxes are what percentage of taxes be as a percentage of our overall economy and then what form of taxes will give us the most growth will give us the most jobs and the corporate taxes i believe are among the most expensive revenues we raise in terms of what they do to jobs and growth and to inhibit that and what we're finding is other countries are reducing their rates below ours we're becoming a relatively high tax or but even more important to me their form of taxation is changing in ways in which more conducive to growth and ours is antiquated and the trend is going in the way others are continuing to reduce their taxes so how we think about this i don't think it although i do believe that reducing the headline rate for corporates will make a difference i don't believe it's as simple as just reducing it by a few percentage points i think someone we need to take a really fundamental look at all of us all right thank you thank you mr chairman john lewis of georgia thank you very much and one and a two thousand and three tax cuts kept a thousand of our citizens in a city like atlanta that are losing jobs just a few days ago the company open the door in atlanta for four jobs and more than seventy five hundred people showed up another major company headquarters in atlanta laid all five hundred individuals out of its headquarters  when do we go i do not see the sense of urgency congressman and another thing mr secretary you know and the budget should be a reflection of our values i just don't see it i don't feel it here i would like for you to sort of ok give me some sense that i can feel a little bit better ok well well first of all congressman let me say that you're right that the economy is slowing i'll be in a recession and i don't believe we are no sir i think we are slowing and i think we're and i would say the sens again your view on that i would say there are plenty of people on the other side that says boy this is sort of unprecedented getting here as soon as it slows down and where that where there were still growing and to move tax relief permanent as i look at it and again i i wasn't here to participate in that i think those were those were great actions but as you look at this as you look at lower income people i see right to a family of four making i'm not making up to forty two thousand dollars not paying federal income taxes i look at what's happened with the child credit earned income tax credit and so in terms of relief at the low end i see that is being very meaningful five or six million people who aren't paying federal income taxes right now as a result of what's been done which i think is a is something that we can all be pleased about and be proud of but also secretary something their previous administration created more than twenty three million new jobs people were doing very well and now people are losing their jobs people not doing very well people only buying homes especially minority hispanic and african americans and others something went wrong with the ministration and with the previous budget and with this budget  again i ask you is this a good medicine is this a good prescription why economy i would so i think i think the best thing we can do for our economy is everything we can to keep it growing because those people who are struggling and struggling to make ends meet the their situation becomes worse if our economy isn't growing and we're not creating jobs and we've created jobs for fifty two straight we in fifty two straight months and last month for the first time we had a slight decrease in jobs who knows whether that will be restated or not december and its numbers were restated up so we're we're increasing jobs we need to keep the economy growing and i think that is very important to the economy and again i'm hoping that the stimulus package will help i'm working very hard on this  prevent avoidable foreclosures and working very hard with our hope now alliance to help all those homeowners who many of them in inner cities who bought bought were taken advantage of put in the mortgages th word explained properly and where those in danger of not being able to to keep their mortgage if their rates move up i think we have a program that's going to be to be more effective than many people do in dealing with that in fast hundred eighty nine a section of the law was written to require cell phones to be used more than fifty percent for business purposes if you remember in one thousand nine hundred eighty nine cell phones that a battery the size of a car battery and a phone itself was about as big as thing here and airtime was expensive clearly time and technology have marched on companies have given employees cell phones and blackberries with unlimited minutes and these communication devices are really just an extension of the business day and placed anywhere anytime because their time minutes are often unlimited and are free after certain hours and free sometimes during the day employers generally have no interest in keeping track of employee cell phone or blackberry is yet the i r s is that again they're after us the dadgum auditors are questioning employers normal in ordinary business deductions for cell phones and blackberries because employers have not been keeping records own employees cellphone or blackberry use the i r s wants employers to track employees or be forced to give up the normal deduction right now the law does not require employers to track use of the phone at an employee's desk or the use of e mail or computers for personal purposes and i think the law needs to be changed to bring it up to date with the fact that their office cell and black  is just an extension of their desk phone and computer secretary paulson don't you think it's time to modernize our tax laws so that employers are not required for tax purposes to track personal cellphone use of their employees want to share in any charge involved any way generally speaking and i be introducing a bill on this point on the next couple of days and i would appreciate help from you guys on the committee if you want to join with me would you comment on it  e say very simply congressman johnson that sounds like the right idea to me and i appreciate your leadership on that well you know we've been after the i r s for as long as i've been up here they keep harassing people that's their only job it seems like we need to stop them if we can i would like to ask you also that we saw an increase in federal receipts six point nine increase the total of two and a half trillion and this is on top of the school year two thousand and six a level one point seven increase and over that two years man spending grew by five point two percent per year i'd like to know if we can  continue rapid spending increases given the future demands represented by the aging of the baby boomers into social security medicare eligibility and still expect our revenues to cover our costs i would say the answer to that is you know of course not and we've been i think we've been surprised for some time with the rate at which revenues have been growing and that's a that's a very good thing but when you look at what we've got staring us in the face you know there's a there's a huge issue coming and it's one that i know every member of this committee understands and i know the chairman of legislation he let me know this is a thank you very much mr chairman secretary i listen to secretary o'neill and secretary snow and secretary paulson tell this committee and tell the american people what a serious problem alternative minimum tax is and how we have to deal with it and we always get the same answer as the clock runs down let's borrow the money how much if we borrowed now to patch a m t since two thousand and one i don't have the numbers here in front of me and i know the cost this year is roughly sixty billion dollars and what was it last year it was it was very much the same as fifty six or whatever what's the interest on that over a ten year period think we've been pretty clear with you and saying it's been clear about the fact there's a problem that you haven't been clear about the fact that we need to get an answer why did we been clear about the answer and the answer was to pass it quickly don't raise taxes you alternately did it took you throughout the year to do it but it got done and there was a lot of uncertainty that was inflicted on the american people i think this year we should all get together and agree we were going to pass it quickly and and then deal with the bigger issue and i think the issue and i really do think the bigger issue is one you would agree with this needs to be looked in the context of the bigger question if i might interpret what you've said then you're suggesting that we all ought to get together early on and agree to borrow the money would have been surprised by that tax so i think we've been pretty transparent and congress and the administration together with have have passed it one year at a time mr secretary i have great personal regard for you right there are only two options here one to pay for it or two to borrow the money which one of you suggesting i don't think it's i don't think it's as simple to pick one area out of the project but there's there's no doubt that that we do not want to raise taxes to pay for it this year and we want to be very clear on that well you'll forgive me for suggesting that i don't think you were very clear on well now let me let me ask another question i don't think it's clearly in the budget i think it's clearly in the budget but you're suggesting we borrow the money mr secretary when we borrow the money to pay for a whole range of things and then we have and we have revenues coming in and all i need you to say is you're suggesting we borrow the money i'm suggesting that we're going to have a deficit this coming year and the deficit will be larger than the cost of the well my sense is that when you are running a major company in this country in the you are much more direct than you have been today now let me ask you this is secretary as a percentage of the four hundred ten billion dollars projected deficit this year could you inform the members of this committee what percentage of those deficits are due to the bush tax cuts i think that would be a very difficult thing to do and i'll tell you why that well one third is that's i tell you why i think it would be difficult as i think because i think all of that the tax cuts entirely pay for themselves but i would say to you that the economists i think struggle to understand why there's been so many why the revenue growth has been so significant economic adviser who was well regarded in this congress for his clarity and for his integrity has suggested that tax cuts don't pay for themselves in agreement with that i would say that they don't pay for themselves entirely that's  secretary mr secretary for the chairman greenspan said the only reason he's avoided the tax cuts is because he assumed that's what he said that we would  cut programs by the same amount do you agree with that statement that he has and i have no doubt no idea what he was assuming and what he supported or didn't support i would poured faster than either party faster than c the projected faster than democrats or republicans projected and they've come in and it is remarkable it is remarkable that we could be paying for the that but were you surprised are you surprised that the deficit is one point two percent of g d p if you consider how the american economy has grown for the last twenty years no i'm not what i'm arguing is that the theology that is frequently purported to be fact doesn't square with the numbers when we project a four hundred ten billion dollar deficit for next year when the administration came to authority in two thousand and one we were projecting trillions of dollars of surplus granted the events of nine one one set us back but the failure to acknowledge the role that the tax cuts have played with those deficits doesn't stand up under the magnifying glass mr secretary that's my point and to say that to say here that we're paying for the war when the truth is we're not paying for the war we're borrowing the money to pay for the war well i think you understand my point that despite the cost the deficit is a percentage of g d p is relatively low now i think the thing you're in agreement with everyone on this committee is in agreement that the big issue we have and we have a serious we have a serious budget issues during this in the face and i'm not making light of it but i think it's a very significant one and i think this year i have a fact it's very interesting it doesn't necessarily answer your question completely but it's relevant back in the year two thousand  january of two thousand this is before george w bush was president before the tax cuts cabo and there estimates said that in the year two thousand and seven revenues would be two point five seven two trillion dollars that was their projection before the tax cuts the actual revenues for two thousand and seven last year came in at two point five six eight trillion dollars that is a difference of four billion dollars so if you just look at the revenues that were projected and the revenues that actually came in only four billion dollars of last year's deficit was due to the tax cuts the fact i mean th thank you mr secretary mr secretary thank you so much for coming forward we appreciate the administration has put together a difficult budget it's one where i disagree with some of the particulars but i recognize that you've been attempting to deal with broad parameters including dealing with a broader fiscal situation tackling our deficit and at the same time providing the right fiscal mix to deal with our current economic circumstances now mr secretary you were instrumental in the development of a stimulus bill which has come through the premise of that stimulus bill which most of the house supported was that right now we need a fiscal stimulus to provide a tonic against a potential recession now one of the main features of your budget i think is a natural follow on of that stimulus policy which is to say you have made an effort to extend from the immediate future a massive tax increase that was accepted for the future as part of the budget that passed the house last year we have heard on the joint economic committee testimony to the effect that this looming large tax increase has played a significant role creating the environment where clearly there is a falling off of growth and a legitimate concern about a recession the looming tax increase has contributed to the environment that may be creating a recession you are a long time of server of the economy and of wall street can you comment on the importance of making it a priority in the budget to push into the future tax increases that were incorporated into the last budget as a consistent policy to provide confidence that we're not going to do the wrong thing and allow the last decade's tax rates to be imposed on an economy that may be softening your comment mr secretary congressman clearly i believe that the this certainty is  something that this valuable and certainty helps businesses plan and helps them make the decisions they need to make and i clearly believe that the and when you look at the you know immediate term the longer term the most important thing is one term tax policy making that relief permanent but we were able to separate you know they have tracked with us on a different track the stimulus which is very much focused on this year i understand that also as part of your budget the administration has made a concerted effort to identify programs that no longer represent the priorities or the function that they were originally designed for that the administration has done something unusual in washington and that is try to weed out some of the programs that may still have of prioritizing and cutting spending as part of our overall budget strategy well obviously i think that's a very very important point that the that spending and again their discretionary spending and not discretionary and one thing that hits any observer who looks at the budget for the first time is the you know increasingly smaller portion of the budget which is discretionary and how much of it is mandatory which again brings you to the need to deal with some of the entitlement outweigh that are baked into our fiscal picture  secretary i'm running out of time but again i want to thank you for the effort that you have made to bring a blueprint to the house that can form of lease the basis of our kickoff of deliberations of what i think things here a bit and we all have to make our choices delineate our priorities i know the president in his budget calls for the permanent extension of his two thousand and one and two thousand and three tax cuts my understanding is that if you were to calculate those into a ten year budget window we're looking at about two point two trillion dollars for the cost those tax cuts when you add in the debt service in other words the interest we've had to pay because we have to borrow the money to do those tax cuts that go mostly to wealthy folks would be about two point six trillion dollars over the next ten years if we did nothing to the a m t so in other words if we allowed twenty some odd million americans to get hit by the alternative minimum tax those would be the cost of the bush tax cuts to be extended now i think most of us believe and you just had a conversation with congressman neal about the president's proposal to provide a patch  safe harbor for tens of millions of americans from being hit by the alternative minimum tax so that if we were to continue to over the next ten years the cost of the bush tax cuts that go principally to wealthy folks would actually go beyond the two point two or two point six trillion dollars over ten years to actually over three and a half trillion dollars in cost to the treasury to extend the bush tax cuts that are princip towards the wealthy folks over the next ten years my question to you is in the president's budget which you're defending it seems you made a choice you provide for a permanent extension of the president's tax cuts that are aimed principally towards wealthy folks more than a third of those tax cuts for example will go to just the top one percent of american america's wealthy people  whereas in the president's budget the president over the next five or ten years doesn't call for a permanent fix to the alternative minimum tax that hits middle income families it calls for just a one year patch so a decision was made in the president budget i suspect with his advisors all talking about priorities and a priority i guess is made it was more important to provide tax relief to the wealthiest americans at that to the cause at the cost of two to have to three to have trillion dollars depending on how you calculate it as opposed to providing tax relief to the tens of millions of americans in the middle who will get hit by the alternative minimum tax so that relief for them would be provided for only one year but relief for our wealthiest citizens would be provided permanently did i misstate that yes sir i think you do so let me and it's quickly as you can't because i want to go on to something else ok well i will say pretty clearly that i think the when you look at what the tax relief that we would like to make permanent us that look at the tax code right now i don't think the tax code has ever been more progressive it was just a let me stop you tell me let me just because i know we could have a philosophical disagreement but let me ask this the budget the president's budget does call for the extension of the two thousand and one two thousand and three bush tax you bet it does and the president's budget only calls for a one year patch to the alternative minimum tax and that what the president's budget says is let's let's fix ok but let me permanently extended the relief for middle class families that are going to get hit by the alternative tax would be provided except extended for one year the relief in the president's budget it is for one year on the relief  so those facts are correct for how you characterize them could be differently by the two of us and so rather than get into that with you we can let others then decide what that means in terms of extending the bush tax cuts versus extending permanently relief under a and t let me go to another issue do you i know that this is it within your sphere as a secretary in treasury but do you believe that by the end of this year that the president will have removed all of our troops from iraq i'm not going to speculate on any troops of iraq but i think the president's been pretty clear and i think all knowledgeable observers are pretty clear that we're going to need a presence in iraq for some time was buy time is expired i won't ask a question but just make the final point we're spending about ten billion dollars a month right now in iraq afghanistan the president clearly says he's not going to try to remove the troops any time soon your budget calls or the president's budget provides seventy billion that's seven months of spending for iraq total for the all of fiscal two thousand and nine and does nothing over the next five or ten years to account for any cost for iraq afghanistan or anything else and so i was going to ask but i'll just make the point it seems to me that not only did you low ball the estimates but you're playing hide and seek with the american public on this because to not account for the cost of a war which the president doesn't seem to want to end it is to mask the out out your costs to the american people of the president's proposals so you can't there's no way you balance your budget in two thousand and twelve if you don't even account for the cost of the of the war in iraq afghanistan anywhere else we may go and so again rather than try to characterize politically and otherwise i thank you for your time as chairman i thank you for your d v d the time that the number next year is going to be greater than seventy billion so why is it in the budget and when that is because we don't know what the number is you know is going to be greater and so it's pretty clear that's that that is a challenge and the not necessarily the views but those of the administration i like to recognize we got to get back together you know thank mr chairman and the secretary welcome and good to have you for the committee again and i have a couple questions i want to ask you but before i ask my questions i do want to make a comment and i want to begin by commending you and the president and others administration for your leadership on moving forward the colombian free popular political figure in latin america i think any president that has approval ratings of sixty to seventy percent continuously demonstrates that the people appreciate the progress he's made on reducing violence and extending the presence of a democratically elected government to every municipality in the country you've led congressional delegations you've done a tremendous amount of work and i want to commend you for that and i also want to note that that agreement is good for ellen i manufacturers good for all my workers good for all  farmers and i believe that we should ratify that agreement so i want to urge you to continue your efforts all latin america is watching how this congress handles the colombian u s free trade agreement and i for one believe the consequences of failure to ratify this agreement will be a very long term consequence because of the perception and role at present rebate plays in relationship united states some energy to continue that effort my question here i'm a sectarian my friend mr levin talked about unemployment levels and you noted that our economy today is is not in a recession it's in a you know the economic growth is slowing you noted that unemployment this past month was four point nine percent which is less than the average rate of unemployment during the clinton ministration which i believe is like five point two percent and you noted that secretary do you believe that the existing extended benefits program that we have in place which triggered according to the unemployment situation in each state which existing program is adequate do you think that we should look at the existing extended benefits program and see what we can do to fine tune the existing extended benefits program rather than creating additional extended benefits program on top of the one we already have i would say if there were to be some action that would be the way to go at this time ok i wouldn't you know as with the role i play on the subcommittee of jurisdiction over on employment insurance i would welcome the ideas from the administration that you and i realize you're not secretary of labor but your compatriots within the ministrations they can share ideas of how we can fine tune the existing program to make it work better when there's an economic slowdown the lloyd doggett of texas like mr chairman thank you mr secretary for your testimony though i disagree with many aspects of the policy i do believe that this budget is an excellent reflection of the administration's true priorities  when it comes to energy policy while the president did discover that america was addicted to oil i think that this budget speech speaks much louder than any of his words the budget embraces every single tax subsidy tax preference tax benefit for fossil fuels currently in our tax code but it totally rejects even a one year extension of the tax credits for wind energy or for bio diesel or for solar energy and of course all of those would be in place in a lot today had it not been for the fact that with the determined opposition the administration you were able to hold this to fifty nine votes in the senate vote short of the supermajority necessary to move america in the direction of a sound new renewable energy policy and rejected all the work of this committee in that area i want to ask you first in contrast the position that you've taken on the initiative that mr mccurry applauded that you and i had a bit of a disagreement on last year when you testified in that your health insurance tax proposal if i understand that proposal and i disagree with it on its merits but one thing that i do applaud you on as proposed in this budget just as last year is that it is a revenue neutral proposal it does not add anything to the national debt does it if we adopted your proposal in full is a correct i think it sure is intended to right to be revenue and the way you achieve that revenue neutrality and this is what you and i got in a debate on last year and you finally conceded the point that in order to do what you think is a benefit a positive step for eighty percent of the people that have these health insurance policies and maintain revenue neutrality you as you as you said in your testimony twenty percent of the people about thirty or thirty eight million americans will have the opportunity to restructure their insurance and these are your words are they will pay more taxes and so in order to get this health insurance program that mr mccurry and you applaud and the administration have endorsed now two years in a role you raise taxes on thirty or thirty eight million people in order to maintain revenue neutrality you tell them that their tax bill will be higher if they if they want are they can restructure their policy they cannot follow that conduct and my question to you is is there any offset that the administration will accept for renewable energy so we can apply with our pay go rules and get renewable energy tax and if i understand you don't want to do anything to the fossil fuel industry are is the only  energy tax incentive policy that you will support as in a most rationed one that requires us to go out and borrow more money and incur more national debt congressman first of all thank you for your comments and there's no doubt that that energy security uses big issues we have in this country and ranks right up there with the in time wasting shoes we're talking about so that's number one number two i felt and i think a lot of people he just doesn't want to pay the cost of getting well i guess the other thing i would say to you is that it's quite natural that people look to the tax code is a way to achieve certain objectives it's quite natural that runs counter to also some of the things we like to do to keep it you know paul i understand that and don't give a given that of course my five minutes is about to expire let me just rephrase the question again is there any way that this administration will embrace these were noble energy tax credits extending them without requiring us to go out and borrow the money to do it i don't think what we should be doing right now is looking to go out and and raise taxes right now do you think the answer is in fact that the only renewable energy tax credits this administration will support unlike your health insurance program or you pay for it the only ones you'll support is if we borrow the money to embraced the roll approach in your legislation of what secretary paulson has done in what i think was a remarkable palm prints about corporate tax changes and you said in your background paper that you came in brief committee on that the resources in terms of revenue foregone spent providing narrowly targeted tax provisions could be used instead to provide sector wide incentives for economic growth it's unfortunate that this budget that you have to defend today totally forgot and rejected your approach in fact they not only rejected it and ignored it they did just the opposite because they proposed to extend at least one of the tax credits permanently that you or you said you would rely on to lower corporate tax rates you are in favor of responsible pay go pay as you go but this administration has rejected it not only for energy tax incentives but for anything else the only kind of tax relief that will support is relief done on borrowed money and i suppose there's no limit to how much money this administration is willing to borrow and get the nation in hock for thank you very much to brady is very nice of five minutes thank you mr chairman good  secretary i'm not so sure we should be jumping on this administration about the alternative minimum tax and those serving here in one thousand nine hundred ninety republican congress repealed the alternative minimum tax unfortunately a president clinton vetoed that bill saying it was tax relief for the wealthy as we all know it's it's a real tax burden on more and more middle class america's we would not be in this mess today but for that veto and i also don't think we ought to be jumping about war cause i didn't teach if i recall this new congress came in do i need to feel the chairman if i recall this new congress came in to office promising to pay for the war yet last year i think we did eighty billion dollars or more to support our troops and not a dime was paid for and my guess is this year will do the same so we all probably be looking in the mirror on of those issues in dealing with it together both parties in this congress rather than blaming you here's my question what if i told you there was a sector of the american economy that's growing so fast that last year it represented th one quarter of all our growth in this year continues to grow so quickly that it will be almost forty percent of our economic growth here in america this sector is growing across the country that counts for one of every three acres that we grow the count's one of every manufacturing jobs we have in america two out of every five technology jobs what would you guess that sector of the economy is trade it is it is exports and mr secretary given the growing consensus that it's not enough to just buy american we have to sell american products and services all throughout the world and that when we have free trade agreements our sales to those countries are twice as fast and triste as large as they are for countries we don't have agreements with given the economy we have today in the fact that that is a sector that continues to create opportunity here in america how important is it for congress to pass this year the free trade agreements that are pending with colombia south korea which is a huge market in panama very important and i agree with the chairman we've got more work to do on to get korea in shape and but colombia we can we can get it done right away and of course korea is very very important  terms of the economic impact colombia is very important in terms of the economic impact and the geopolitical impacts you know again in spend one of my frustrations not just in congress but just looking at the perception that the american people have that we need to understand how important trade is to our economic wellbeing now and in the future well we're not the only ones out there doing trade agreements obviously our competitors are as well we find that when u s companies go out to compete around the world that almost three times as much of the world is tilted against  as our give us a level playing field so don't these free trade agreements not only create two way trade to these countries they give our u s companies in our states an equal chance to sell our products which is all we're asking to would call prior secretary snow coming before this committee having a discussion about the budget and early on nowhere in the budget was there any money included for the war and i asked him why there was no money in the budget for the war and his statement to me was that the president didn't want to go to war and so therefore there was no money in the budget yet he couldn't explain the number of tankers that were out there in the ocean the workers the veterans excuse me the soldiers that were on the tankers the cost of the military expenditure such as clothing eccentrics that's right tell me how long have you been the secretary now sir on a year and a half about a year and a half and in that year and a  half we've been doing supplementals on the war correct is correct and then so when you look at the budget a supplemental is not included in the budget so therefore there's no pay for for the cost of the war when it's not in the budget is that correct there is we've been you're right we've been using a supplemental which again i think is right there for everyone to say that the that's not my question i said no pay for required on a supplemental is that correct i'm  excusing is there a pay for required on the supplemental in terms of your in terms of your roles and how you apply them clearly everything is going to be everything that's done is go ultimately paid for by the american people mr secretary don't play words with me with regard to a supplemental there's no require pay for is there under your rules you're correct and so how much money is there not required to be paid for that been expended on the war since you've been secretary i don't have that number for you could you get it for me i can get it for half can you get it quickly so the american people know what that number is i think the american people  again the number is in the budget but it's not about you're trying to play words with me about transparency my question is if it's supplemental it's not in the budget so therefore it's not required to be paid for and there's a deficit operating out here on this  correct yes or no those are your words man i'm not i'm asking that question they should be my words what's your answer i will get your answer thank you now before you became secretary in fact there was some amount of money that was spent on the war as a supplemental that was not included in the budget is that correct sir apparently yes or no mr said i tell you i'd say every everything that's been spent on the war to date has been  budget and so it's been in the budget it's not been in the budget it's been athleta supplemental not required for pay for is that correct and spend spend is a supplemental of the and so therefore it's not required to be paid for like an  in a family budget where if you spend ten dollars and you have ten dollars it's accounted for but under the way we do it with the supplemental it's not accounted for that correct well i would say this to me whether it's a supplemental whether it's in the government or like you're on in the house ways and writing i mean the budget is a budget in business you've got all kinds of rules to pay for zin but i would say to you that when you say you've got all kinds of rules you mean the president has all kinds of rules and have to belittle to have a supplement i don't have that ability why mr secretary and pay for rules or congressional rules which make sense don't say they should be paid for what we spend should be paid for everything we do spend is paid for  m you know but this is secretary let's go on to something else because i don't want to plague words what you actually recognize the probably face as united states of america is the fact that the war is not pay for and you continue to have it offline and that creates some of the dilemma we're facing right now yes there are your words boy oh boy mr secretary i thought you'd be straight with me instead of playing games but rick let me go on to something else saying how i know the answer to those questions let's go to the housing problem that we're facing right now with the secretary and the budget there are several things that you or the president has put floor with regard to the housing problem they're really not going to fix the problem that generation after generation you know in minority families and working families houses usually the greatest that we pass from one generation to the next so in the fact the housing problem that we face right now is not only going to affect this generation it's going to affect generations movie for correct to housing is one of the most important assets that any family owned so it's very very important so the problem is not going to affect that generation it's going to affect generations moving for well it will certainly have a long term impact and as we go through this housing correction and we're very focused on this this is a serious issue and it's one that is all your focus is only on a certain year with a certain group of families not all of them well we need to deal here and i got a hint on the thank you for being here secretary paulson how much money does the budget contain to fund the wars in iraq and afghanistan how much does the budget contain that the president thinks that that's what it's going to cost seventy billion dollars to conclude our operation in iraq and to bring our troops home i think everyone's been pretty clear that that is what he thinks it's going to include and that's a placeholder and that number will be filled in later this year when we have a more precise as a placeholder tell me why it is that the the budget just came out and there are seventy billion dollars and yet the section of the army is saying that we're going to need approximately  put that out as a very rough estimate and said it will become more precise more information if everybody recognizes going to cost more than seventy even you say it's a placeholder the secretary of defense said his best guesstimate would be one hundred seventy billion and with that kind of disparity how is it that the american people can believe that there's any credibility in this budget at all just on that point alone know that was a question or a statement it's a question how how do you expect the american people to believe that this is a credible document and so i said this is a complex document and to document i think it is just as credible to put o number as a placeholder and say it's going to be above that and as soon as we get a number that's that we will fill it in i guess it even is even less credibility when there's a statement by the administration that this budget is expected to be balanced i think by two thousand and twelve or something whatever that date was when there's not even an accurate number for the war funding and i find it i find a very troubling that the same document this is a this document not just a fiscal document but this is a this is the priorities as for this country in the people in this country as seen by the president the united states and his administration and to add insult to injury on the on the war funding  issue you're asking in this document to come back to veterans veterans who have sacrificed veterans who put their life on the line veterans who have been injured in this war and asking them to pay more for the medical services that they're going to receive and and i find that very very troubling and there's a substantial increase on the cost that veterans will pay for their medical benefits in your document let me ask also  shifting shifting gears there's no mention of extending the renewable energy incentives or the qualified to ition deduction in this document does that mean that the president's position on extending these  provisions is that he does not support that he wants to see these taxes increase it doesn't necessarily mean that some of the some of them are clearly extended and others were quite prepared to talk about but it's not in the document ask you also are a medicare trustee and i'd like to just quickly get your comment on how the forty five percent number was was selected in regard to the revenue limits for the trigger you know i don't know the history of that as to how it was selected but it's it's it's clearly something we're focused on and i just have a little bit of time left but you've been very helpful or you're shown a willingness to work with me not has not concluded their work it's a major threat to the industry not only in my district but in wine growing regions across the country and i've had a lot of trouble getting answers to specific questions and i have some questions here that i'd like to to you and ask you to answer me in writing and i ask that you do it within the next couple of weeks because this is been dragging on and it's hurting a pretty important topic you and i have talked about it several times we will keep working with you as you know we're still getting comment comments need in a very timely and targeted fashion just a couple of three quick questions for you or one of them has to deal with what this committee is taking up as relates to alternative energy and i notice that nowhere in the  bush budget are there provisions for alternative energy tax credits in light of my question is first one is in light of the incredible profits by exxon mobil and the fact that this committee last year suggested that we pay for these by and for the alternative energy tax credits by ending tax subsidies for oil and gas do you think that that's the right way to proceed and if so why wasn't included in the bush budget second one has to deal with and getting the stimulus package out a number of the volunteer income tax assistance clinic in hartford in my district that these clinics  crucial to the outreach program to make sure that the money gets into the hands of these hardworking people that of course will impact the stimulus yet the administration proposes cutting funding for taxpayer assistance centers is this this process so that we can in fact provide this stimulus that we're seeking to do within the process i would say let me start with the last question first because i do think that this is going to be a very high priority i've done a number of events done one recently do events the earned income tax credit is hugely important and i think we're doing a better job but there still may be up to a quarter of the people that   that's very important and in terms of your question about the about the different renewable energy tax credits and so on again i'd like to come back to something i tried just earlier to congressman doggett that there's a natural tendency to want to do everything now if you really think we do some things through the tax code i understand that that tends to make the tax code more complex and i think i think often we're better off just doing it rather measures other than the tax code one of the disadvantages we have in doing these things through is the  and treasury are not energy experts as opposed to do you know we as we minister some of these things so again i would just just just make that general comment although i think much has been done and will continue to be done through the tax code is not going to work so let's cut it quick and run through this given that you refer to the wars of the seventy billion dollars as a placeholder mr secretary somehow secretary gates the defense secretary knew it cost one hundred seventy billion dollars but somehow you and with the numbers a or b the right hand the left hand are not talking around the cabinet table when you draft budgets and i've been around a cabinet table drafting a budget somehow the defense secretary knows a number that neither you or the head of all and be no and i would i ask you to answer it because it's not a pleasant answer second you said that the two thousand and one and two thousand and three tax codes were unbelievably progressive i would like to borrow your glasses if i could thousand and one thirty six percent of the entire tax revenue went to people earning over two hundred thousand and two thousand thousand and three over sixty percent close to sixty three percent of the tax revenues went to people over and over earning over two hundred thousand there's no way by any estimation that could be called progressive and then lastly the tad's has a president the state union said the budget has to show constraints and you said don't use the tax code support support on energy we are supporting exxon mobil and other companies to the tune of fifteen billion dollars in tax subsidies and yet not providing that to wind solar power we're tying ourselves in a tax code to the energy sources of the twentieth century and strangling those that are going to be the energy sources of the twenty first century and i know enough about your record in the past in your commitment in environmental policy in energy policy that there's no way the hank paulson who was head of chairman of goldman sachs who's involved in n r d c and other in my one minute i'll just i'll just frame something that i will forward to you in writing and that's one of the areas that i'm deeply concerned about deals with the funding for infrastructure the highway trust fund on the first time in history it's going into deficit the administration proposes not to deal with it not to work with us to move it forward even the chamber of commerce agrees that we ought to raise the gas tax for the first time since one thousand nine hundred three i am i am concerned that instead of borrowing from mass transit which just shoves that into the red that there ought to be some way to work together to figure out as you're leaving office to help lay the foundation so we can deal with long term infrastructure needs of the country and with your permission i'll just submit something in writing your direction good also sure that we're thank you very much appreciate it mr secretary yes a couple of questions and then you can respond if you don't have time please get back to us in writing out appreciate that deficits matter in your view of congress and of course of course they do now i like to finish the questions i want to get these on the record but would you answer the first one if you and cisco as of course they do you know what are the long term consequences for our economy if we are maintained deficits for the foreseeable future it's unsustainable that's why we need to do so in title necessary question is what is the annual average income for people in the top one percent of the tax bracket and it's the t thousand and one and two thousand and three tax cuts college plus the ante really are permanently expended if that happens the top one percent of households would receive more than one point one trillion at tax benefits over the next decade why should congress provide one point one trillion to the wealthiest one percent said i'm using this one point one trillion to pay down the national debt the president's tax cuts you're talking about roughly two point trick ten two trillion dollars over ten years and an extension of the a m t if you do not provide a m t relief for that period of time we're talking roughly eight hundred billion dollars if you could get back to me on whether or not number one those figures are it consistent with yours as well i heard in response to mr englishes question that you said this kind of predictability is important kind of certainty for the taxpayer in the tax code and the question is doesn't that also apply to a m t tax payers and my question is this given that you were trying to hit a certain balance budget within a five year period why didn't you take some of the revenue that's lost f in standing the bush tax cuts just the portion that goes to the highest income earners and use some of that money in your budget to provide an to relief for more middle income americans why don't you make that choice jointly answer  i think a lot of thank you very much for staying here and it's just a question of time for the votes and i think we've got two minutes so the secretary thank you and i just tee up an issue i have yet to speak but it is it i have yet to speak in  secretary i'm very concerned about in this time of economic challenge we're going to have pension plans being cancelled mark to market accounting on long term liabilities is going to be extremely punishing relative to employers that want to keep their defined benefit pension plans in place the plan assets will reflect the downturn in the market the forward casting of assets will refer lower interest rates and so fully funded plans last year are going to look under funded this year simply by a feature of this mark to market accounting we need to enact the smoothing legislation to ease the