Fiscal Commission Public Forum 4 of 7

Uploaded by whitehouse on 01.07.2010

Chairman Simpson: It seems a little cool in here.
I think, I was just reflecting, I think you could hang meat in
this room.
It's rather cold.
It's just perhaps, perhaps just me.
Anyway, please proceed.
(Inaudible) (laughter)
Chairman Simpson: No, I feel very warm toward you, and I don't even know you.
Bob McIntyre: Hi, I'm Bob McIntyre, and I'm Director of
Citizens for Tax Justice.
I've been doing this business for 34, 35 years now.
I mention that not so much to explain why I'm so old and gray
and decrepit, but just to let you know that I came in to this
before President Reagan allegedly taught some people
that deficits don't matter.
We always thought they did, because tax fairness does, also
means that you don't borrow the money from the future and put it
on the next generation, but that you pay for it now.
So we've been long-time deficit hawks, and we're glad to see
that this Commission is working on it, too.
Now, I assume when all the dust clears that the results from the
Commission will include both revenue increases and tax
reductions, and I'm only going to talk about the -- excuse me,
tax increases, and I'm only going to talk about taxes
because that's the only damn thing I know about.
What you do on the spending side is up to you.
And here's what we think you ought to do on the tax side.
Income taxes.
The tax that we know and love, sort of, is the part of the tax
system that we need to fix.
It's a mess.
We haven't had a real reform of it since 1986, the barnacles
have gotten very deep, and it doesn't raise enough revenues to
pay for the government.
In general we think you need to get the personal income tax back
up to about 10% of the economy, and the corporate tax back up to
about 3 or 4% of the economy as compared to the 7 or so percent
that the personal income tax is now and the 2% that the
corporate income tax is now.
Now how do you do that?
Well, part of it would be to get rid of more of the Bush tax cuts
than President Obama has been willing to address.
He's suggested keeping 80% of those Bush tax cuts, which are a
big part of our deficit problem, and it's going to cost three and
a half trillion dollars over the next decade if he does keep them all.
He's got a rule that says nobody under $250,000 should ever pay a
nickel more in tax.
I think that's way too high a level and we've got to get
people like me involved in helping pay for this government
a little more, too.
The second and more important part or as important is we need
to close the loopholes that have grown into the tax code over the last 25 years.
And you need to focus on what I think is the gross undertaxation
of capital income.
Now I say that and you're going to be shocked to hear it, I don't know.
A friend of mine who used to run the Joint Tax Committee said to
me recently, he said, you know, the economists all seem to think
that we way overtax capital income, the tax lawyers know
that we hardly tax it at all.
Well, I'm a lawyer, and, you know, if you look at what's
going on with profits, U.S.
profits being shifted offshore, a depreciation system that in
conjunction with the interest deductions produces negative tax
rates on virtually every real capital investment in this
country, what we have left in the corporate income tax right
now is mostly just the government's return on the tax
subsidies that are provided to these investments.
There's really hardly anything left because the rates are
generally negative on most investments.
The offshore situation is a mess.
I've been mentioning going to territorial would make it even
more of a mess, as President Bush's Tax Commission, which
endorsed territorial, admitted.
We get a bonus out of the loophole closing reform besides
raising revenue, it will probably help the economy
because you won't have the government telling businesses
what to invest in.
We'll have markets and consumer demand deciding those things,
and that's the way it ought to be.
That's the way we did it in 1986 under President Reagan and
Bob Packwood and Dan Rostenkowski.
See what a bipartisan guy I am?
And finally one thing, the value-added tax.
Don't do it.
It's incredibly complicated, it's incredibly regressive, and
it does nothing for us on trade, and if you wanted to read my
story about why that's true, that and other things you can
find on our web page at
Thanks a lot.
Chairman Simpson: I see you're still disarming people with your humor,
hanging around --
Bob McIntyre: I got that from you.
Chairman Simpson: Yeah.
No, you're better at it, you always were.
Julio Abreu: Good afternoon, Chairman Simpson and members of
the Fiscal Commission.
My name is Julio, I'm the President of the Coalition for
Health Funding and Senior Director of Government Affairs
of Mental Health America.
I'm pleased to offer this statement on behalf of the
Coalition to inform your policy recommendations on reducing the
federal deficit.
Since 1970, the Coalition has advocated for sufficient and
sustained discretionary funding for the U.S.
Public Health Service, including NIH, CDC, HRSA, SAMHSA, ARC,
FDA, and the Indian Health Service.
That's quite a public health team.
Our diverse membership of over 60 national organizations
represents the funding priorities of over 100 million
patients, health care providers, public health professionals and
scientists, nearly a third of our population.
We support the belief that funding for the Public Health
Service is essential for improving health and health care
through greater access, higher quality, lower costs, improved
safety, faster cures, and ultimately healthier people.
Costly and often preventable chronic conditions like asthma,
diabetes, heart disease and obesity, particularly among our
young people, are on the rise and threaten our military
readiness, our academic achievement, and our social --
societal productivity.
And we are just one flu pandemic or biological attack away from a
disaster of monumental proportions.
The Coalition's pressing and immediate goals are to build the
capacity of our public health system to address these and
other health needs and to support the implementation of
the Affordable Care Act.
In this regard we urge you to consider opportunities to both
reduce federal spending and also raise federal revenue.
In particular, we should look beyond nondefense discretionary
spending which represents less than half of all discretionary
spending as the principal vehicle for deficit reduction.
We believe recent efforts in Congress and the Administration
to cut nondiscretion -- nonsecurity discretionary
spending are short sighted, they just won't reach our goal.
Such efforts disproportionately restrict funding for critical
public health programs, weaken our ability to respond to a
health crisis, and immeasurably harm America's most vulnerable,
who rely on the federal government to provide basic and
necessary services, particularly in these times of economic hardship.
Furthermore, such efforts will not substantially reduce the
deficit, nor make a dent in the national deficit.
Nondefense discretionary programs comprise only 20% of
all federal spending.
Indeed, the real costs of these cuts far outweigh the perceived
fiscal benefits.
The public health infrastructure is continually asked to do more
with less.
On average federal investment in the agencies of Public Health
Service has increased by only 2.5% per year over the last five
years, and many agencies' budgets have increased at a much
slower rate, well below the rates of inflation and
population growth.
The erosion of the public health continuum is felt in communities
across America, with states eliminating hundreds of millions
of dollars in public health programs and reducing their
workforces by 15%.
These cuts have left communities around the country struggling to
deliver basic prevention and emergency help preparedness
services at a time when the public health infrastructure is
already buckling under the weight of ongoing recession and
aging population -- no one here in this room is included in that
-- raising rates of chronic disease, and behavioral health
conditions, and a health workforce shortage.
A nondefense discretionary spending freeze would have a
devastating effect on the health of our nation and seriously
hinder the impact of the Affordable Care Act.
Only with increased investment in public health can we build
capacity to transform our health system from one that reacts when
people are sick to one that proactively keeps people healthy.
That's the best way to truly bend the cost curve and reduce
the federal deficit.
We hope you will consider the social cost of discretionary
spending cuts and the value of public health programs in
reducing health care costs and improving the lives of American families.
We look forward to working with you.
Thank you.
And I apologize to you and to my fellow panel members, but I have
an airplane to catch that I'm perilously close to missing, so
I want to excuse myself.
Chairman Bowles: I'm only hoping to make a 9:00 flight tonight.
Julio Abreu: Good luck, Mr. Chairman.
Deborah Weinstein: Good afternoon, Chairman Simpson and Bowles, members of
the Committee and staff, thank you for your patient attention
and thank you for the opportunity to share the views
of member organizations of the Coalition on Human Needs.
My name is Deborah Weinstein, I'm Executive Director of the
Coalition on Human Needs.
I have peppered you in the middle of the night with copies
of a letter signed by 119 national organizations which I
am submitting as part of this testimony.
Speaker: And thank you for it.
Deborah Weinstein: Thank you for noticing it.
The letter asks you to make the commitment that your
recommendations to reduce the deficit will not make low and
moderate income people worse off.
We ask this out of an urgent concern about our nation's future.
The service providers, faith groups and others who signed
this letter all report the painful impact of the recession.
Economists tell us that if we had the official poverty
statistics for this year, they would show that more than one in
four of our children is living in poverty.
There is ample research to show that children growing up in
poverty are more likely to have poor nutrition, become sick, be
hospitalized, move frequently, fall behind in school, and drop
out of school, than children who are not poor.
In multiple ways, poverty places roadblocks to opportunity.
We cannot afford to close doors to millions of our children and
youth and expect our future security and prosperity to be assured.
Neither can we afford to deepen poverty for the unemployed,
people with disabilities or retirees.
That will increase government costs and shrink consumer spending.
Your Commission, your Commission's mission is not
concerned with today's crisis, but you must determine whether
your recommendations will set in stone policies that deny
opportunities to those currently left out of whatever glimmerings
of recovery we are now experiencing.
If your recommendations prevent adequate investments in
nutrition, public health, education, youth employment, and
rebuilding low income communities, today's children
and young workers will be more likely to drop out of school
with reduced job prospects and productivity.
Today 25% of our youth drop out of school.
We should be investing to reduce that number and to increase the
number of students who complete post secondary programs.
We do not dispute that there are serious choices ahead of us, but
we do dispute that the choices inevitably must hurt the poor
and vulnerable.
In an analysis by the Center on Budget and Policy Priorities,
the Bush era tax cuts and spending on the wars in Iraq and
Afghanistan alone will add $17 trillion in deficit spending
from 2009 through 2019.
Since 2001, tax cuts account for almost half of deficit growth,
military spending is responsible for another 35%.
The Commission should direct much of its attention to fair
and adequate revenues and wasteful military spending.
When faced as we are with a prolonged period of unemployment
and rising poverty, it is vital that we know whether proposals
will make conditions worse.
We urge you to find out whether the proposals you make will make
conditions worse.
It will be tempting for you to simply call for percentage cuts
in certain types of spending, but if you recommend spending
cuts without coming to grips with what those cuts will mean,
it will almost certainly result in a further reduction in
support for education, for job training, work supports like
child care and public transit.
These cuts will assuredly make low and moderate income people
worse off.
The Commission ought to play a leadership role in turning away
from these grave missteps.
As the letter states, an explicit goal to protect the
most vulnerable in our nation, together with the impact
analyses to ensure the goal is being met will assist the
Commission in producing recommendations that can put the
nation on a sustainable fiscal course without harm to those who
have no margin to sacrifice more.
Thank you.
Joel Packer: Mr. Chairman, thank you for the opportunity to present the
views of the Committee for Education Funding or CEF.
I'm Joel Packer, Executive Director of CEF, which is the
nation's oldest and largest --
(audio cuts out)
We come before you today with one simple message
(audio cuts out)
long-term economic growth and our global competitiveness.
Increased investments in education are also a moral imperative.
Our nation continues to face unacceptable gaps in educational
achievement and attainment at all levels, student academic
achievement, high school graduation, college attendance
and college completion.
African Americans and Hispanics lag behind their white peers in
all of these categories, as do low-income students and students
with disabilities.
As an example, looking at fourth grade reading, in 2009 only 15%
of African-American students scored at the proficient or
higher level, as did only 16% of Hispanic students, compared to
41% of white students.
While about 70% of students earn their high school diploma, among
minority students only 58% of Hispanic, 53% of
African-American, and 49% of American Indian and Alaskan
native students do so.
Lower levels of educational attainment directly translate
into lower levels of earnings, lower levels of tax payments,
and increased levels of government spending on social
service programs.
Looking at the impact of education on unemployment,
individuals with less than a high school diploma had an
unemployment rate three times that of those with a bachelor's
or higher degree, yet the fastest growing segments of our
population are from these very racial and ethnic groups who are
still being left behind.
Between 2006 and 2020, the white population's projected to
decline by 6%, while African Americans will increase by 10%,
and Hispanics by 33%.
Our failure to close these educational gaps threatens not
only the future of tens of millions of children from these
groups, but also threatens our long-term economic outlook and
our global competitiveness.
At the same time that we must address these achievement gaps,
our schools and colleges also face record levels of
enrollments with increases projected throughout the decade.
Making matters even more challenging, the educational
attainment level required for jobs continues to rise.
Estimates are that by 2018 nearly two-thirds of all jobs in
the United States will require some form of post secondary
education or training.
We are also losing our edge in the global knowledge economy.
America's high school graduation rate, once the best in the
world, now ranks 18th among industrialized countries.
And our share of the world's college students has dropped
from 30% in 1970 to less than half that today.
Investments in education directly increase earnings and
thus revenues.
It's estimated that over the course of their working life, a
bachelor's degree recipient will earn nearly $1 million more than
an individual who only has a high school diploma.
Research has also demonstrated that if we close achievement
gaps, revenues and GDP will significantly increase.
If the number of high school dropouts was cut in half, the
government could reap $45 billion via extra tax revenues
and reduced costs of social service program spending.
If we had closed the gap between our educational achievement
levels and those of better-performing nations, GDP
in 2008 could have been between $1.3 trillion to $2.3 trillion higher.
However, despite -- in spite of these facts, the share of the
federal budget devoted to education is less than 3% of all
federal outlays.
CEF supports increasing this share of federal spending to 5%
of outlays.
Solving our nation's fiscal situation and reducing the debt
can't and won't happen simply by cutting federal spending,
capping discretionary spending, and freezing education.
Investments in education are investments in our fiscal
future, and our societal well-being.
When what one earns is increasingly linked to what one
learns, when the global leadership of the U.S.
is threatened by other countries outperforming us on education
and when the need to close our education gaps is greater than
ever, education deserves to and indeed must become a larger
share of the federal budget.
Thank you.
Chairman Bowles: It's kind of interesting, in this year if you look at
the NAEP scores, and take a little city-state like
Singapore, 44% of their eighth graders scored at the most
advanced level in math and science.
In North Carolina, less than 34% of our kids were even
proficient, must less at the most advanced level, and less
than 14% of our low income kids were.
Joel Packer: Right.
Chairman Bowles: And if you think about what happens to those
eighth graders, for every 100 eighth graders 58 graduate from
high school, 38 go to college, 28 come back for the second
year, and 18 graduate.
That is a formula for failure in a knowledge-based global economy.
Joel Packer: You said it better than I did.
(laughter) (inaudible)
Chairman Simpson: Anyway, thank you very much.
Very helpful for us.
I mean that.
We learn.
Go forth and multiply.
Joel Packer: Thank you.
Chairman Simpson: Yes, now the next group, if you'll come forward
and as I say, get comfortable and then tell us your name and
the group you represent, and we're probably about at the
halfway mark here.
He thinks he's going to get out of here at 9:00, he's crazy as hell.
No, I didn't mean that.
Well, thank you.
And thank you to the Commission members who have stayed.
David Cote has just left, Ann Fudge, you're very -- and Kent
Conrad was here and Andy Stern, we appreciate that very much.
You're very helpful.
So, go right ahead, please.
Rob Nichols: Thank you, Chairman Simpson, Chairman Bowles,
members of the Commission, thank you very much
for the opportunity to participate in today's hearing
and to share our perspective regarding our national's fiscal
My name's Rob Nichols, I'm the President of the Financial
Services Forum, it's a nonpartisan financial and
economic policy organization comprised of the chief executive
officers of 19 of the largest and most diversified financial
institutions that have business operations here in the
United States.
Our nation's fiscal condition, which as you know has
deteriorated appreciably since the onset of the recent
financial crisis, represents perhaps the single greatest
threat to financial stability, our nation's standard of living,
and the productive vitality of the U.S.
economy over the long term, longer term.
With that in mind, the importance of your charge to
identify and recommend policies to improve our nation's fiscal
situation in the medium term and achieve fiscal sustainability
over the long term cannot be overstated.
We thank each and every one of you for your service to this
critically important effort.
Given the large volume of speakers today, I'm sure others
will ably outline different proposals to fix the situation
and the deterioration of our fiscal situation.
Instead I thought I would very briefly touch on the risks of
inaction to our financial markets.
Failure to meaningfully address the nation's fiscal
circumstances entails a number of financial dangers that could
significantly impact the productive vitality and job
creating capacity of the U.S. economy.
Principal among these is the risk that global investors could
become increasingly worried about America's debt position
and begin demanding higher risk premia to continue purchasing
U.S. government debt.
At current elevated levels of debt, rising interest rates
could quickly compound an already challenging debt
situation, adding further to the nation's debt burden, increasing
investor anxiety, leading to even higher interest rates, and
touching off a vicious circle of deterioration, often referred to
as the debt trap.
Moreover, given that Treasury bills and bonds are the basis
for borrowing structures in private credit markets, the
impact of rising government debt rates on the cost of capital,
economic growth and job creation would be far-reaching and
decidedly negative.
Given the likely impact of higher rates on U.S.
economic prospects, another risk associated with further
deterioration in the nation's debt position is that investors
may become increasingly reluctant to hold dollar
denominated assets.
As investors increasingly choose foreign investment
opportunities, the relative value of the dollar would fall,
undermining America's purchasing power and our standard of living.
The falling dollar, of course, also has dangerous implications
for inflation.
Finally, given the likely impact of higher interest rates, slower
growth and a falling dollar on asset prices and market
confidence, further deterioration in the nation's
debt position would likely be associated with greater
financial market instability.
History teaches us that sharp reversals in market confidence
occur abruptly, often with little if any advanced warning.
Greece is but the most recent example of this historical pattern.
Because broader circumstances, not to mention global markets'
reaction to them cannot be predicted or anticipated with
any kind of certainty, prudence strongly suggests that the U.S.
act decisively long before crisis becomes a realistic possibility.
Thanks very much for the opportunity to participate
before the Commission, and more importantly, thank you very much
for your service to our nation.
We're extremely fortunate to have your leadership.
Thank you.
Donna Meltzer: Chairman Simpson, Chairman Bowles and
distinguished members of the Commission, my name is Donna
Meltzer and I currently serve as the Chair of the Consortium for
Citizens with Disabilities, or CCD.
CCD's members are organizations that represent the needs of
people living with disabilities and their families.
We conduct our work through a variety of task forces, banding
together to advocate for public policy that will positively
affect people with disabilities.
I appreciate the opportunity today to share some of our
collective thoughts with you, and have submitted a longer
version in writing.
Sound federal fiscal policy is critical to ensuring adequate
resources to support programs that promote the independence
and productivity of children and adults with disabilities in the
United States.
Unfortunately, federal resources for these vital programs has
been eroding over the past decade.
The result of this lack of investment is that more, not
fewer children are deprived of all of the best in a free,
appropriate public education.
More, not fewer people with disabilities find it hard to get
and keep gainful employment.
More, not fewer families are financially devastated by the
lack of assistance with excessive health care expenses
for their family member with a disability, and more, not fewer
communities are diminished by the lack of inclusion of and
participation from some of their most valuable citizens, those
with disabilities.
CCD supports working toward a strong economy.
This can be accomplished if federal funding decisions and
tax policy do not result in a federal budget that is crafted
at the expense of people with disabilities.
Services, supports and benefits critical to the well-being of
people with disabilities and their families are protected,
improved and expanded, and when needed the federal government
leads or assists states in being fair and efficient in carrying
out their responsibilities to people with disabilities and
their families.
Reductions in entitlement and discretionary spending threaten
health care and quality of life for people with disabilities.
Medicaid policy changes as well as changes at the state level
could adversely affect our constituents, eliminating
critically-needed services and supports.
Since our most vulnerable constituencies who receive
supports, their futures are inextricably linked to any shift
in Medicaid policy.
Certain changes to our Social Security system also could have
a devastating impact on beneficiaries and on human
services funding.
There are three areas in which the disability community is most
focused right now: Employment, health, and long-term services
and supports.
By addressing the need to employ people with disabilities,
providing health care and addressing the fact that people
with disabilities may need long-term care for many years,
we can begin to eliminate some of the fiscal burden we
currently know.
Recent enactment of the Affordable Care Act puts into
place a number of health and long-term care programs that we
believe will, over time, yield significant positive results and
reduce the current burden on the Medicaid program.
We strongly caution that these programs be allowed to
materialize before considering any further cuts to critical
health and long-term care programs.
Subsequently, there are many discretionary programs in
addition to entitlement programs that result in helping people
with disabilities find employment, and equally if not
more importantly, keep their employment.
Incentives to work and an eventual end to poverty or
underemployment should be encouraged.
CCD urges the Commission to consider some of the following:
The failure of our nation, states and communities to honor
the civil rights of individuals of all ages with disabilities is
a cost we cannot afford.
We need to address the significant unmet needs of
people with disabilities and their families by increasing
existing federal funding and expanding the federal
government's investment in people with disabilities to
enable them to live and work as independently as possible in the
community with appropriate flexible long-term individual
and family supports.
This will result in creating taxpayers and fewer who are
needing help.
Most importantly, what I'd like to say today is that I'm a mom.
I'm the parent of a 13-year-old son who lives with three
different diagnoses that he battles with each day.
I hope that together on behalf of my son and the millions like
him, we are able to create a country with a sound fiscal
situation that provides supports in school, supports at work,
good health care, and a community that is caring and
supportive of all of our people.
On behalf of CCD we look forward to working with all of you as
you continue to do your very difficult task.
Thank you for what you're doing.
Joe Guggenheim: Good afternoon, members of the Commission.
My name is Joe Guggenheim, from Bethesda, Maryland.
I'm just an individual citizen.
I'm now a mostly retired -- oh, is that on?
I'm sorry.
I'm Joe Guggenheim, Bethesda, Maryland.
I'm now mostly a retired business person and publisher.
In the interest of full disclosure I have to admit that
in fact in my earlier years I was once an economist.
Thank you so very much for giving individuals like myself a
chance to talk to you on these critical issues that you're facing.
I urge the Commission to help to achieve long-term fiscal balance
primarily by emphasizing a vigorous policy of promoting
economic growth and full employment.
Moving toward balanced budgets in the short term or medium term
is not nearly as important as full employment and the economic
well-being of all Americans.
To increase our anemic current rate of economic growth we need
targeted public investment that should probably include major
spending on critically needed infrastructure, education at all
levels in Job training, and helping to revitalize distressed
communities by providing training and jobs for the
unemployed residents of these areas.
The Commission should also play a critical role in dampening the
outcry against any more fiscal stimulus now which we need to
bring down excessive unemployment.
In the long run, a high-growth economy can produce enough tax
revenue to meet our national needs when combined with prudent
measures to raise revenues and reduce questionable spending.
As a society, I believe we can sustain national debt as a
higher percentage of our total economic output.
I believe we really do not know the difference between the
potential impact of a national debt of 50% of GDP as opposed to
the impact of a national debt of 100% of GDP.
For more than 50 years I have read the predictions of the
forthcoming ruination of our nation because we were not
balancing the federal budget.
I am still waiting to hear exactly how the economic and
social well-being of our citizens has suffered over these
50 years of budget deficits because of the budget deficits.
As a prosperous society, there is no reason that we cannot
sustain current benefit levels of Social Security, Medicare,
and other entitlement and needed social spending.
The focus of budget policies in these areas should be on cutting
costs, rather than reducing benefit levels.
Better balancing of our budgets can also be achieved through
substantial reductions in military spending, ending our
two wars, eliminating tax loopholes and unnecessary tax
expenditures, taxing capital gains at the same rate as
regular income, substantially increasing IRS efforts to audit
tax returns, and if necessary, increases in income tax rates
for upper middle income and wealthy individuals.
Because our nation is facing stagnation and low growth in the
size of the labor force, a long-term solution might also
include substantially revised immigration policies to attract
skilled and/or motivated immigrant workers who would
reduce the ratio of retired persons to active workers, would
contribute to economic growth, and would produce substantial
increases in Social Security and Medicare tax receipts to help
pay for entitlement programs.
Highly developed European nations have used immigration to
counter the impact of a stagnant population and labor force.
Our own cities with large numbers of immigrants such as
Miami, New York, and Los Angeles have prospered in recent years.
For over 100 years, this nation has prospered mightily as
millions of hard working immigrants looking for a better
life flocked to our shores.
We can learn something from our past history in this area.
In the year 2001, the ten-year budget outlook by the
Congressional Budget Office envisioned substantial budget
surpluses and a total elimination of our national debt.
What's happened in the interim?
That outlook in 2001 envisioned a higher rate of economic growth.
Unfortunately, our situation is totally different today because
of the two wars, the Bush era tax cuts, anemic economic
growth, and a major recession.
If this Commission, because of time and personal constraints is
unable to fully investigate what policies are needed to promote
full employment and rapid economic growth, you might
recommend that another Presidential Commission be
appointed to make recommendations on these vital issues.
Thanks so much for listening to my ideas.
Chairman Bowles: May we have the next group, please.
If you'll just introduce yourself and start.
Dan Siciliano: Mr. Chairman, Commissioners, thank you for having me.
Thank you for this opportunity.
My name is Dan Siciliano, and I am a senior fellow with the
Immigration Policy Center, part of the nonpartisan American
Immigration Council.
I am perhaps as importantly the Faculty Director of the Arthur
and Toni Rembe Rock Center for Corporate Governance at Stanford
University, and a member of the Law School faculty, where I
teach venture capital finance and corporate finance.
I think today you've received a lot of technical information,
we've also entered several technical reports into the
record and some other testimony, and it seems like you are
bombarded with a lot of data which I'll try not to add too
much to, but rather perhaps provide in this limited amount
of time some logical information that ties some of these pieces
together with a focus particularly on immigration reform.
And so the prior witness was a good segue to what I hope to
bring up.
I'm hoping to land in the sweet spot where intellect I hope
meets up with intuition.
I'm going to suggest that comprehensive immigration reform
must be a part of any sophisticated analysis or
recommendation that comes from the Commission, in part because
we know that immigration has a lot to do with innovation,
business formation, and over time, industrial and job formation.
First, I think it's the easiest case to make the connection
between innovation, economic growth, and skilled immigration.
Andy Grove, cofounder of Intel, put it best when he suggests
that each time one of the best and brightest from the globe
arrives in the United States, is kind enough to typically pay
full tuition at a university, a university like Stanford,
oftentimes subsidized by their government, and then graduates
with a technical or highly skilled degree that we seek,
perhaps we should simply staple a green card to their diploma
and hope that they stay and return the favor of having
already paid our universities but also form companies that are
great and prosperous and employ many people.
This analysis comes from the Congressional Budget Office,
from the Kauffman Foundation, the connection between
highly-skilled immigrants and innovation and job growth is
fairly clear, but let me tie that in a way which is a little
bit harder to articulate and sometimes not obvious to
comprehensive immigration reform and the 10.8 million people who
are here in an undocumented fashion.
So first it's worth noting that the economic consensus has
emerged fairly strongly in the last several years, led by work
done by a labor economist named Giovanni Perri at UC Davis, and
some of his work is entered into your record, that shows that the
aggregate income of U.S. born workers nine out of ten times
is enhanced by the presence of all types of immigrants.
And this has a lot to do with the fact that we know that the
U.S. sensitivity and positive signaling to the world about
immigration causes those who have choices as skilled
immigrants to decide to come to the United States and our
graduate programs versus the other choices which they
increasingly have in places like Singapore, Dubai, UK, and other places.
And so how we treat and how we provide communities of all
immigrants, including undocumented immigrants, impacts
their selection and their contribution to our economy in
the future.
But as importantly, perhaps the nontechnical innovation and the
small business formation and the general labor market dynamism
that results from entrepreneurs generally which are drawn from
both the documented and undocumented population is an
important point for you.
We know that significant components of our economic
growth in the '90s came in part from a surge of legalized
individuals who had been otherwise well disposed to
entrepreneurialism and good at aggregating capital, but had not
felt it easy to emerge fully into the integrated economy.
We have that same scenario now, and so in turn, it turns out
that immigrants of all types, skilled and unskilled, have a
propensity for strategic and effective risk taking, have a
profile which is amenable both to aspirations for themselves
and their children that leads to job formation, and then in the
end, perhaps as demonstrated in the '90s, are good at forming
companies which generate jobs and in turn generate revenue.
Comprehensive immigration reform would jump start that capital
formation and would allow that pent up capital in part to be unleashed.
That and a normalization perhaps going from in 2003 to now, nine
to more than $17 billion of enforcement, a normalization of
that enforcement would also help equalize budget allocation.
I'm happy to answer any questions.
Chairman Bowles: Thank you.
Dan Siciliano: Thank you.
Katie Robbins: Good afternoon, Chairman Bowles, Chairman Simpson,
and members of the Committee and staff.
Thank you for this opportunity to testify.
My name is Katie Robbins, I'm the national organization -- I'm
the national organizer of Healthcare Now, an organization
founded in 2004 to support Bill H.R. 676,
the National Health Care Act for expanded and improved
Medicare for all.
With membership in 50 states, Healthcare Now has broad support
for single-payer health care.
Healthcare Now opposes any consideration of cutting,
privatizing or raising age eligibility for Social Security,
Medicare and Medicaid.
We seek to strengthen, not weaken our social safety net.
If passed, H.R. 676 would establish a national
single- payer Medicare for all system, granting everyone in the United States access to
comprehensive high-quality health care using our existing
privately run infrastructure and a progressive financing to
guarantee coverage for all necessary medical care without
financial or other barriers.
According to Harvard University studies, eliminating the waste
of the multipayer private insurance industry in our health
care system and moving to a single-payer system will save
$400 billion a year.
More savings are found in cost controls that only a
single-payer system can provide, such as negotiating drug costs
and medical equipment and global budgeting for hospitals.
Since H.R. 676 was introduced in 2003, it has received tremendous support,
including endorsements by 582 union organizations in 49 states,
the U.S.Conference of Mayors, 63 local governments, including ten
of the nation's 30 largest cities.
The Episcopal Church, the United Methodist Church, the
Presbyterian Church, the Unitarian Universalist Church,
the United Church of Christ, and the majority of nurses, patients
and physicians support this.
Broad support for single-payer Medicare for all continues even
after the new health law has passed.
For example, this past Saturday, June 26th, America Speaks, a
privately-run company, organized town hall meetings in 20 cities
across the country to discuss the nation's deficit.
America Speaks received funding from the Peter Peterson
Foundation, the same foundation which I understand is funding
staff to this Fiscal Commission.
Peterson is known to be vocally in support of cutting and
privatizing Social Security and Medicare.
America Speaks claim that all options would be considered, yet
the materials distributed by the events did not include an option
to support single-payer health care as a means of controlling
health care costs.
Despite efforts to silence support for single payer, many
participants at these meetings demanded the option to vote on a
single-payer type health care system which would ultimately
reduce costs by making health care more efficient rather than
just cutting services in Medicare and other public sector programs.
Participants also voted overwhelmingly for defense cuts
and for progressive taxation.
Because cost controls are notably absent from the new
health law, the National Commission of Fiscal
Responsibility should listen to what the public is urging them
to do and address meaningful cost control in our health care
system, which only a single-payer system can provide
as a means to control the nation's deficit.
We urge you to address cost controls immediately, Healthcare
Now and our network of supporters urge Congress to work
to defeat any bill to cut, privatize, or dismantle our
social safety net, Social Security, Medicare, and
We continue to demand the enactment of an expanded and
improved Medicare for all system to fix our economy and still
broken health care system.
Thank you.
Rob Dugger: Good afternoon, I'm Rob Dugger, I'm speaking as an individual.
I feel actually quite disconnected from the other
witnesses, but I draw kinship from a lot that others have said
about the importance of human capital in getting this economy
going again.
I especially, Chairman Bowles, your comments earlier about
Singapore versus the United States and the NAEP scores.
It may be that it's Davidson and Chapel Hill and Duke and the
School of Life at Lumberton, Fort Bragg in North Carolina
that sort of teaches me these lessons.
Could have learned them in Wyoming, Co-Chairman Simpson,
with wonderful Augusts spent every year for the past 15 years
in Jackson Hole.
I'm Rob Dugger, I'm founder and managing partner of Hanover
Investment Group.
We're a consulting firm that advises businesses, asset
managers on how to navigate fiscal crises.
I'm also the Vice Chairman of the Governing Board of Inet
Economics, and I'm a co-founder of the Partnership for America's
Economic Success.
Obviously, my testimony is my own, I don't represent the views
of any of the entities I'm affiliated with.
The essence of what I have to say today is this: The
experiences of the last year, fiscal crises of the last year
have taught investors something extremely important.
What they thought of as something that could be put off
or not worried about for many years actually affects asset
prices today.
The process is explained in my testimony, but let me tell you
in brief.
When assess managers begin to calculate the present value of
the tax increases and spending cuts necessary to bring about
fiscal sustainability, they realize that these have an
impact on company profits.
When they calculate this present value and put it into company
profits it changes their valuation of a company's bonds
and its stocks.
Right now, as a consequence of the size of the U.S.
deficit, stocks and corporate bonds are weakening faster than
Treasury bonds.
Investors are doubting or having increased questions about
whether this Commission or Congress will be able to deal
with deficits, and as a consequence they are discounting
the value of U.S. corporate and --
corporate bonds and stocks, selling them off and
rotating into Treasury bonds, and Treasury bonds are improving
in strength.
The second thing that they have learned is that as they have
seen strikes, demonstrations, significant cutbacks in spending
and stress within other countries that are going through
acute fiscal crises, they've realized that budget crises are
not about money.
They've realized that budget crises are civil.
A budget is an architecture or a fabric of all the civil
relationships, all the civil commitments we've made to each other.
When we say we have a civil, when we say we have a budget
crisis, what we're actually saying is that the fabric of
civil commitments is being ripped apart.
The most important thing that this Committee can do, this
Commission can do, and it begins literally today, and so far I
have to say my compliments to you on it, is to convey to
American voters and investors in American assets that this
Commission is committed to the idea that the civil fabric of
this country is going to be held together.
Investors need three things from you, and they need it literally
in every meeting.
They need to have a sense from you that there is a -- oops, I'm
at the end of my time.
They need to have from you a sense that there is a set of
principals that will guide budget decision making.
A set of principals that makes sense to families and businesses.
They need to understand -- they need to see in you the kinds of
actions that halt the deterioration in civil unity in
this country, and they need recommendations from you of year
by year targets.
This is particularly the investment community.
Year by year targets and a framework that guarantees this
time we will actually meet those commitments, and in this regard
a statutory commission is a very attractive option to investors.
As far as that set of principals, I recommend to you
the Partnership for America's Economic Success principles.
Put human capital first, invest in kids, transparency,
performance evaluation, and sustainability.
I'll stop there.
Chairman Bowles: Thank you very much.
Roger Hickey: Co-chairs and members of the Commission, thank you
for the opportunity to testify today.
I have to acknowledge some admiration for your stamina.
I know people who are coming in at 8:00 tonight to testify, so I
admire your stamina.
I'm Roger Hickey, I'm co-director of the Institute for
America's Future.
We support smart economic policies to reduce structural
deficits over time.
However, I want to share three major concerns.
One, we're in danger of killing or weakening needed growth in
the name of reducing deficits.
Our organization is a member of the Jobs for America Now
Coalition, and we and many Americans want to warn you that
we are very concerned that premature deficit reduction
could undermine not only the fragile economic recovery, but
the will to do additional stimulus, which is very, very
important right now as the economy teeters on the edge.
The focus on deficits is causing senators to fail to pass needed
jobs bills, for example.
Forecasters predict that official unemployment rates will
remain well above 9% for several years into the future.
This is simply unacceptable.
We need new efforts to create jobs, stimulate the economy, and
send aid to the states, and it's not happening.
Adopting spending cuts or tax increases prematurely will
simply slow the recovery and undermine the tax revenues that
we need to balance the budget.
Now, number two, while deficits should be reduced over time,
some deficit reduction strategies are misguided.
My organization was the leader of the Americans United for
Social Security and Health Care for America Now.
I helped pass the Health Care Reform Bill, and we know that
deficits were caused primarily by the tax cuts, by the
recession itself, by the military buildup, and most
importantly, the growing health care costs in the whole society.
Unfortunately, many deficit hawks are fixated on cutting
Social Security benefits and cutting Medicare and Medicaid
benefits or capping them.
We feel that those are mistaken.
Social Security has nothing to do with our deficit problems.
It is supported by its own dedicated payroll taxes.
I would also suggest that this Commission should really put
Social Security aside.
This is not the venue for discussing Social Security
solvency, since it does not contribute to the deficit and
will not for decades, if ever.
And I would suggest that comments so far from members of
the Commission have undermined the faith that this Commission
could treat Social Security effectively.
It's a matter of trust.
The growth in Medicare and Medicaid spending is a problem,
and one that is driven by rising health care costs.
We need structural reforms additionally, such as the public
option that can give competition to private health insurers and
requiring drug companies to compete for lower prices.
This kind of structural reform in the health care system, not
simply cutting Medicare costs, which are symptoms of that
larger health care problem.
Additional health care reform is the way to go.
And finally, to achieve fiscal balance, we should not simply
reduce the deficit, but also we need to invest in the future.
My organization is the founder of the Apollo Alliance for
green jobs and new energy.
We applauded President Barack Obama when he ran and won on a
program of investment, public investment that would stimulate
new, productive industries that would make our economy more
energy efficient and the private sector grow as a result.
We estimate that it's going to take billions and billions of
dollars, $400 billion annually over the next five years to
really do the job.
So my admonition to you, don't just cut the deficit.
We agree that once recovery comes the deficit needs to be reduced.
However, we need to grow the economy, reduce the deficit, and
invest in the future.
Thank you very much.
Chairman Bowles: Thank you very much.
Thank you.
Have the next group, please.