tv Unveiling of Fiscal Year 2017 Budget Proposal CSPAN February 10, 2016 1:31am-2:45am EST
in a timely fashion. all right? thank you, everybody. thank you, guys. on the next washington journal, the results of the new hampshire primary. then we look ahead to the south carolina republican primary on february 20th and the nevada democratic caucuses the same day. you can join the conversation with your calls and comments on
facebook and twitter. road to the white house began in iowa. the caucuses which date back to 1972. then we move to new hampshire, that first in the nation primary which has a long and rich history. now we begin to test the candidates and their message. we move south to south carolina, the first southern primary. then to the party caucuses in nevada for the democrats and republicans. more than likely we will see a number of candidates probably drop out of the race. the field will then narrow. and then we move into early march. super tuesday, the start of winner take all primaries which means the delegate count is critical. as we watch that continue, we will get a better sense of whose message is resonating and who is on the path to the nomination. every election cycle we are
reminded how important it is for citizens to be informed. >> to me, c-span is a home for political junkies and a way to track the government. >> i think it's a great way for us to stay informed. >> there are a lot of c-span fans on the hill. my colleagues, they will say i saw you on c-span. >> there's so much more that c-span does to make sure people outside the beltway know what's going on inside it. president obama released his 2017 budget request today. the 165-page budget includes a plan for a new transportation system, a plan to increase clean energy and investments to cure cancer. the budget director and other administration officials outlined the proposal at a press conference earlier today. this is about an hour and 15 minutes. >> good afternoon, everybody. nice to see you.
in a totally different environment than we are used to. obviously, today is the day that many of you have been waiting for for a long, long time. the president has released his fiscal year 2017 budget. we're going to have some presentations at the start before we get to your questions. there's one point that i wanted to make before i turn it over. it's simply this, budgets are important because they enumerate priorities. when you have something this detailed, there's no fudging. it becomes quite clear when you look at the numbers what you believe rates. and that's the importance of this exercise. i acknowledge as i have on many occasions that there are some priorities that we have that are deeply held that republicans in congress do not share. and there will be differences of opinion about the priorities that are laid out in here. however, there are a number of
areas where there should be bipartisan agreement. there are a number of priorities that are held by republicans according to what they say. one good example of that is cyber security. there is a robust proposal in here that many of you have reported on that includes a stepped up investment in protecting the country, protecting government systems from cyberattacks and cyber intrui intrusi intrusions. it's critical to national security and to our economy. that's all the more reason it's unfortunate that republicans in the budget committee won't even have a conversation with us about it. here is the thing i guarantee you. i guarantee you that at some point over the next year, we're all going to file into the briefing room and i will walk in and find many of you on the edge of your seats eager to ask the white house about the latest cyber intrusion. it may be the government agency. it may be at a private sector
company. that is well-known. it may even be a media organization. when you do, i will discuss the efforts that we have made over the first seven years of this president -- of the presidency to strengthen our cyber defenses. i will certainly make detailed note of the significant investments we are proposing to enhance our nation's cyber security. you can be certain that i will point out that when we put forth this proposal, republicans on the budget committee refused to even discuss it. and i think you rightfully and the american people rightfully will have lots of questions about republicans' commitment to confronting this issue, that is critical to both our nation's economy and our national security. with that, let me turn it over for a more details overview of what is included in the budget and then we will start taking
some questions from all of you. >> thank you, josh. also thank you to jason, cecelia and jeff for today. i think as we begin the discussion of the budget, it's useful to take a moment and take stock of our progress. under the president's leadership, we have turned our economy around and created 14 million jobs. our unemployment rate is below 5% for the first time in almost eight years. nearly 18 million people have gained health coverage as the affordable care act has taken affect. we have sddramatically cut our deficits by almost three-quarters and set our nation on a more sustainable fiscal path. it's important to take stock of our progress. but this budget is not about looking back. it is about looking forward. it's about choosing investments as josh said that not only make us stronger today but enable us to make progress towards the kind of country that we aspire to be. the president is absolutely
committed to using every minute of this last year to make such progress. to deliver for the american people and in particular to address many of the challenges he highlighted in the state of the union. the budget is a path toward meeting those challenges. it accelerates the pace of innovation to tacking climate change, find new treatments and cures for cancer, transfer our infrastructure and grow our economy. it makes investment to give everyone a fair shot at opportunity and economic security, including investment in job training, support for working families and modernization of our benefits structure to reflect our evolving economy. others will talk about that in a moment. it advances our national security and global leadership with funding for our effort to destroy isil. as you heard, more than one-third increase in cyber security across the federal government. a range of other investments to protect the american people and
advance development and democracy around the world. the budget shows that these investments in growth, opportunity and security are compatible with putting the nation's finances on a strong and sustainable path. it makes critical investments in our domestic and national security priorities while adhering to the bipartisan budget agreement that was signed into law last fall. as you may recall, that fully paid for agreement allowed us to avoid harmful sequestration cuts the second time congress came together on a bipartisan basis and provided dollar for dollar funding increases for defense and non-defense priorities for 2016 and 2017. the budget also puts forward paid for mandatory investments that are critical to building durable economic growth and maintaining america's edge as the leader in innovation and cutting edge science, support jobs in economic growth and expand opportunity. the budget finishes the jobs started by the past two
bipartisan agreements and prevents the return of harmful sequestration funding levels in 2018 and beyond. it replaces those savings by closing tax loopholes and with smart spending reforms. and it also drives down deficits keeping them below 3% of gdp through the entire ten-year period and it maintains our fiscal progress through $2.9 trillion in smart savings from healthcare, immigration, tax reforms and other proposals. $375 billion in health savings grow over time and build on the affordable care act with further incentives to improve quality and control healthcare cost growth. and critically important, those proposals in the budget would exten the life of medicare for more than 15 years. it also contains $955 billion of revenue from curbing inefficient
tax breaks for the wealthy and closing loopholes for high income households. it includes immigration reforms along the lines of the 2013 bill which the administration supported which would reduce the deficit by about $170 billion over the first ten years and by almost $1 trillion over two decades. as a result of all these changes, the budget stabilizes federal debt as a share of the economy and then puts it on a declining path through 2025. a key measure of fiscal progress. lastly, let me just build on something that josh said before i turn it over to jason. i want to take a moment to talk about the importance of this budget as we move forward with the debate this year. it's tempting to adopt the wisdom that a president's final budget isn't relevant. but i think the conventional wisdom is wrong. with many final year budgets you see an administration trim its
sales and dial back on ambition or you see a budget that's a vision document with little that's relevant to the debate. this budget falls in neither of those camps. the budget offers a range of proposals where there is bipartisan support for taking action. josh talked about cyber security. to name a few others, there's a significant bipartisan interest in investing in cancer research, ensuring everyone struggling with opioid addiction can get help and reduce poverty to workers without kids. in other cases, we may not get bipartisan support. the president isn't going to shy away from proposing solutions that are both good for our economy and address major challenges that we face. those proposals may not be enacted this year, but they lay the groundwork for reaching solutions in the long-run. the bottom line is that in the final year in a season full of political distractions, the president and the administration remain focused on meeting our greatest challenges and
delivering for the american people. we will spend every day of this last year doing just that. with this budget as our road map. with that, i will turn it over to jason. >> thank you to all of you. the u.s. economy continued to strengthen in the last year as the unemployment rate fell below 5% in the face of significant global headwinds that have weighed on the economy. looking ahead, the administration expects that the economy will grow at a rate of 2 2.5% over the next three years. this finalized this past november to give agencies time to prepare their budget forecasts is in line with contemporaneous forecasts from the congressional budget office, the blue chip consensus of private sector economists and the international monetary fund. starting in 2019, the budget assumes a gdp growth rate of
2.3% annually. the gdp forecast reflects growth in consumer spending which grew over the last year reflecting savings from the recent drop of energy prices, the ongoing improvement in household finances and increased consumer sentiment. more over, both residential investment and r and d grew in 2015 with it reaching its highest level of the share of the economy on record. both have continued room for growth in 2016. thanks to the budget agreement at the end of last year, fiscal policy has shifted to a moder e moderately accommodating stance as compared to the fiscal drag that had been faced in previous years. the same time our economy will continue to face significant headwinds on a number of dimensions as foreign demand continues to slow, the oil industry continues to adjust to lower prices and the associated transmission of the events
through recent financial market developments. the other notable change in the forecast is a reduction in projected interest rates with the ten-year treasury note expected to eventually settle at 4.2%. this projection is slightly more conservative than the blue chip interest rate projections. these lower expected interest rates also have important implications for broader macro economic and fiscal questions. overall, some of our assumptions are more conservative than the assumptions made bit the cbo. they average out for a similar outlook for the deficit. with that, let me turn it over to jeff. >> i want to do a minute or two on innovation, which is a cornerstone of the president's budget. innovation has been at the center of the job recovery. you see this in manufacturing, for example, where there's been a revitalization in advanced
manufacturing and investment in manufacturing have created 900,000 manufacturing jobs over the last six years. you also see it in clean energy. we have kick started a transformation in how the u.s. produces energy with solar energy production up 30 fold since the 2008. this has supported good job growth of good jobs in the solar industry. in fact, solar jobs are growing at 12 times faster than the economy. all of this is consistent with u.s. as number one in the world in innovation. but it's a hypercompetitive marketplace. the competition is intense. china and other countries are investing in research and development. they're doing everything they can to eat into our lead. so we need to accelerate the pace of innovation to build the economy of the future and continue to create high quality jobs. that's exactly what the president's budget does. it proposed investments that
will ensure the u.s. continues to set pace in technology and innovation. let me highlight three areas very quickly. the first is a 21st century clean transportation system. it's a bold plan that's proposed to increase investment in surface transportation by 50%, including transformative investments in rail and transit. also supports importantly supports the development of break through technologies like autonomous vehicles. upgrading our infrastructure helps businesses move goods faster to market. this proposal is fully paid for by $10 a barrel fee on oil paid for by oil companies. it would support hundreds of thousands of good american jobs and helps the environment by reducing carbon pollution. more broadly, the president's budget doubles clean energy research and development. it calls for a $7.7 billion
investment in early stage r and d on clean energy. that's a 20% increase. this will keep us at the vanguard of the clean energy revolution. final innovation initiative is cancer. the president's budget invests more than $750 million in the vice president's cancer shot. this builds on progress we made in last year's budget or the current year's budget to invest about $200 million new money in cancer research. to bring together the private sector and the federal government to push the frontier of data and technologies with the goal of doubling the rate of progress in cancer treatment and research. so the president's budget sets out a clear plan to enhance america's position as the number one country in the world in innovation. by investing in what we do best, building the next must-have made
in america product, making the next clean energy breakthrough and finding the next life saving cure. >> thank you. so as you heard the president express in the state of the union address last month, one of our key challenges as a nation is to make sure that we're finding a way to give everyone a fair shot at opportunity and economic security. our competitiveness depends on tapping the full potential of all americans. so this budget makes very particular investments in accomplishing those goals. in particular by supporting education and training opportunities, supporting workers and their families, providing access to healthcare and other investments to ensure that we're all able to contribute to our maximum capacity in our country's economic growth. so this includes continuing investments in the educational system from the earliest years all the way through higher education. expansions in high quality early childhood education, cutting taxes for families that are paying for childcare, building
out the most effective head start programs, including very importantly making sure that students in head start can attend for a full day and for a full year. and investing in pre-k for all 4-year-olds in the country. the president's budget also includes funding for his new computer science for all initiative which is a $4 billion investment to states and another $100 million that couwould go t districts to create access to computer science education from pre-k through high school. in addition to that, the budget includes significant new investments in the pell grant program. these are aimed at helping students in the pell program complete their education so there are incentives to help students t s taking a full cred load and students doing that incentives to allow them to use pell grants for an additional semester. it would allow them to use the pell program year round. what this does is help folks in
the program complete on time, which is important to reducing the overall cost of a college education. the president's budget also calls for $2.5 billion in new tax incentives to encourage employers to play a more active role in the educational and training process. this is a proposed community college partnership tax credit which builds on our work to increase access to skills and to make sure that the skills education that's happening at our community colleges and technical schools is aimed at the kinds of jobs which are becoming available in this growing economy. as you heard jeff and josh say, very important investments in health. you heard jeff talk about cancer. investments in mental health and opioids and combating the zika virus. in child nutrition and electronic benefits to kids in the school meal program so that they -- we can continue their access to food and meals over the summer as well as using medicaid data to help with the
enrollment process for kids in the school breakfast and lunch program to help facilitate their enrollment and make sure we're feeding kids adequately. what this adds up to is a focus on opportunity, on economic security and really making sure that we're investing in the full potential of all americans. with that, let me turn it back to josh. >> okay. let's open it for questions. who wants to go first? yeah. right in the front. if you will wait for the mike there. do you mind introducing yo yourself? >> sure. you mentioned a couple areas where you see opportunity for bipartisan agreement. the eitc, cyber security. i'm wondering if based on the reactions you heard this morning from the republicans and based on the fact that we're in an election year, what gives the president hope that there's going to be any movement on these priorities and not simply a cr pushing it to who is
inaugurated next january? >> i will take a stab at this. if anybody wants to weigh in, they can. i think there are two things that come to mind. the first is there a lot of pessimism at the beginning last year about whether this administration would make progress on a range of priorities that we identified. considering that republicans had just enjoyed a significant victory in the elections that increased their majority in the house and gave them a majority in the senate, that was well founded. through perseverance and a willing to to find common ground, we made progress on things that nobody would have previously considered possible. we got a five-year transportation deal. we reformed the no child left behind bill to make sure we're not overtesting our students. we got a budget agreement that was thanks to the good work of a lot of people on the stage right now, not me, that allowed us to ensure we would not abide by
sequester caps that would undermine our ability to invest in economic and national security priorities. we got the debt limit extended without significant drama or delay. we got imf reforms, something we had long sought. we got a reauthorization of the export import bank. most of those were things that republicans were strongly opposed to. at least they said they were strongly opposed to them. yet, we were able to work aggressively and find common ground with republicans. none of the bills were perfect. but they did all reflect compromises. republicans who were part of the compromises deserve credit for trying to find that common ground that's in the best interest of the country. our experience last year gives us some optimism about what is possible this year, particularly when you consider that there are so many opportunities that are ripe for bipartisan agreement. the kinds of things that sean
laid out that represent bipartisan potential are not things that we -- these are not positions that we're ascribing to republicans. if you called republicans' offices, they will tell you that they are interested in things like expanding the eitc program to promote work and give an incentive to workers who don't have children. obviously, cancer research. there's a lot of talk on the campaign trail both among republicans and democrats in new hampshire right now about doing more to fight opioid addiction and heroin abuse. we often talk about cyber security. that's actually a bipartisan compromise that was achieved at the end of last year i failed to mention. there was legislation that this administration put forward and urged congress to pass. took them the year to do it but they did it. that's a good thing for the country. there's more they should do. they did it not because we talked them into it but because we are put forward a good proposal that would actually
strength the country's cyber defenses. i think the experience of last year informs our relatively optimistic view about this year. and the fact that we have some legitimately bipartisan proposals that both democrats and republicans acknowledge will be good for the country that we can put forward and hopefully work on together. >> let me pile on a little bit. it will be interesting to go back and look at the presidens releases they put out last year. i think the words dead on arr e arrival was heard. relevance was questioned. not only did we get a lot of wins. the budget agreement that was struck in october and then the omnibus in december follows the structure that the president laid out. we got 90% of the increased investment that the president called for. it was dollar for dollar on the
defense and non-defense side. those were the two bright lines the president laid out at the beginning on funding. he said, we have to end sequester. we have to do it dollar for dollar, defense non-defense. the third thing was, we have to do it without poison pill riders. that's exactly what happened is we defeated the poison pill riders in the deal. there were many, many things, whether it's the types of things that josh talked about, we made a down payment on the opioid epidemic last year. our investments in head start. we made a big start towards over $400 million of increase in head start toward full day full year, a plan which the president laid out. state grants to expand universal pre-k. i could go on and on. there's a broad range of things that we got done last year that were bipartisan. we got things done like the green climate fund.
we got funding to um mremeimple president's clean power plan. we got new investment at the irs which republicans said there was no way would happen. both on bipartisan things and things that were priorities of the president but not shared, we got a lot done last year. the only other thing i would just say on this -- not -- there are many of those same priorities that are in this bill that i think have real bipartisan support and others that i think we have a lot of leverage to get. the question here is not for the administration. we took a very clear position we were going to live by our word. we were going to right our budget to the deal last year. even if that meant we were going to make tough choices. and we made those tough choices. as josh said, a budget is very specific. you have to show your priorities. the question here isn't a fight between the administration and republicans. it's a fight within the republican party. we are seeing despite some people saying on the republican side we should live by the deal, we're seeing others that say we
ought to cut below the deal. we are seeing others that say we ought to raise defense spending. so i think the question for the republican party is, where do they stand on this? are they going to be able to function in congress? that's really the question. it's going to be up to them whether this is -- we have done our part. it's up to them to see whether they can deliver on their promises to get back to regular order this year. >> angela? wait for the mike so everybody -- the dozens of people watching on camera here can hear you. >> we have dozens watching. question on the revenue projections for the u international tax reform proposals. they have more than doubled since last year. we're trying to figure out where that doubling comes from. it goes to $484 billion from
283 -- $238.3 billion last year, which is a sizable difference. one other question along the same lines. the per barrel oil tax was billed at $10. today it's $10.25. what accounts for the difference? >> why don't i take both of those? i will have to check the numbers. the proposals for business tax are very similar to last year. i thought the scores were largely similar to last year. there's a difference in the budgetary treatment of the whole package that stems from the extenders package that had passed at the end of last year. why don't i explain that to you? last year we treated business tax reform as revenue neutral, didn't have any of those policies adding into the budget totals. because it was assumed they were paying for business tax reform. this year we continue to be committed to business tax reform. we're committed to it on the same basis that we were last
year, which is to say, we think it should pay for tax extenders. we had proposed to pay for tax extenders last year. in a compromise with congress in order to get things done, we agreed to do last year without paying for them. if we come back and reform the business tax system, we would want to make up for that revenue this year. so the current budget treatment flows through all the different tax loophole closers and structural changes to the business tax system toward the overall budget number with that goal of being revenue neutral relative to the baseline established last year, paying for tax extenders. i will take a look -- you can talk to treasury about how any particular item changed in terms of scoring. often there's technical changes from year to year in the scores. there were no major policy changes. in answer to your second question, we described the oil tax as about $10 per barrel. it phase in over five years and indexed to inflation. it's literally a different
number in each year. we were giving you the rounded number. >> let me add one thing. on the international tax side, i think we have seen that there are an increasing number of companies that have -- are proposing or have actually been carrying out inversions. so one of the things that is contributing -- there are other technical issues. one of the things that's contributing to that change in score is treasury observing a larger number of companies that are taking advantage of what we think are loopholes that need to be closed. we have taken significant actions with our existing authority. but we're also calling on congress to move changes to stop inversions as well. that's something that is highlighted by the change in numbers that you point to. >> mary.
>> mary bruce with abc news. wondering on the $10 a barrel oil tax, how much do you anticipate will be passed on to consumer? any concern that could hinder broad eer economic growth you he been discussing? on the timing, can you explain why the decision was made to release today what is one of the biggest political days of the year, and if the super bowl was a factor, why not hold it for later in the week? >> i think we all see it on our way to work in terms of roads or airports or transit or rail. businesses, ace sas i said, are losing lots of money. paying lots of money and are undermining their position in the global economy because the infrastructure is not longer competitive. in fact, it's a vulnerability. it's really a hidden tax on consumers or commuters. some estimates say that's over
$900 per year in lost hours in fuel costs. it hits our businesses. there's urgency to build on what congress did at the end of last year and invest significantly in our infrastructure. in terms of the fee itself, it is paid by oil companies. we anticipate that oil companies will pass some of that on to the consumer of various oil products. that's important in that this is not just about automobiles. it's about airplanes and rail and other forms of transit that consume oil. oil as i said earlier is responsible for 30% of carbon pollution. this is a strong plan that addresses the fact that we have this hidden tax on consumers and businesses because of the inadequacy of our infrastructure across all modes. we think it's an important
proposal that will save commuters and consumers time and energy costs. >> just on the question about timing. obviously, february in general is crowded this year. and so i'm not sure given both the february statutory release date and frankly the fact that congress was so late in getting the budget done that we were going to be able to find a day that was sort of free from other distractions. i think the important point here is based on the president's absolutely determined focus on using every day of his last year to deliver for the american people, we had a state of the union that was one of the earliest on record. we have already, before today, rolled out more than 20 specific proposals that are in the budget. and actually, we think given the
distractions that we have more broadly from candidates that are talking down the country and frankly presenting a dark picture of where the u.s. is headed, we have been able to capture i think a remarkable amount of attention to a broad set of budget proposals that really are about the future and about the hopefulness that the president has about the country. so i think despite the timing of the day today, this has been a budget release that's really been ongoing for a number of weeks now. i think certainly my sense -- i give a lot of credit to our press team and others that have worked on it -- that this is something where we have captured imagination of the american people in a lot of ways. >> the last thing i would say about that is i think republicans cancelling the budget hearing is the claire cl evidence that they don't want a
discussion. maybe we will get them to change their mind. kevin. >> thanks. about that, does the lack of an invitation resonate with you in a way that makes you understand that there's not going to be a lot of bipartisanship, maybe not a lot of cooperation coming up in this year? or am i overreading that? the second question, you can weigh in on that if you would, josh, second question i would have it, is, is there a tax increase in this budget? if so, what's that level? last, i notice that there's a specific read on immigration reform as a means for saving money within the budget. i'm curious how that plays out when you consider the lack of the likelihood immigration reform will take place even in fiscal '17.
thank you. >> let me take the last question first. just to step back for a minute. i talked about the broad fiscal progress that we have made under the president's leadership. this budget would continue that progress. one of the key areas where we have made enormous progress is on healthcare costs. the president came in and identified healthcare costs as the -- one of the single most important drivers of our long run fiscal challenges. and through the aca and a range of other steps we have taken, we have made enormous progress. to give one example, the budget makes clear just in the year 2020, we now believe that we will save about $185 billion, just in that one year, because of the slow growth of healthcare costs and better projections since the affordable care act
was passed. so enormous progress on what is among the biggest drivers of a long-run. the second thing we have to realize is that a big fiscal challenge we have is keeping our promises to the baby boom generation. the budget goes through and i won't get into all the details, but we're moving from where just a few years ago we had 3.2 workers per retiree to a place that we can see in the next decade where we will have 2.4 workers per retiree. one of the most important things about immigration reform is that it brings in more workers. those workers contribute to society. they pay taxes. they boost our economy. these are not just our numbers. the congressional budget office says the same thing. their projections are that we would save $170 billion in this decade. we have adopted those numbers in the budget. and that savings grows.
it becomes almost a trillion dollars when you add in the second decade. immigration reform is not just the right thing to do for families and our economy. it's the right thing to do for our fiscal future. on the point about bipartisanship, josh was very clear up front that we're going to keep putting out what we think is right. independent of whether we think it's something that will be adopted by republicans. we should remind you that there was bipartisan support for exactly the bill that we are adopting in our budget. it passed in the senate with bipartisan support. our hope would be that after we get through the distractions and the bombast of this political season, that we could return to doing the right thing for the country. we think immigration reform is part of that. >> in answer to your question on taxes, the budget proposed $277
billion of tax cuts for middle class families that helps everything from childcare with tripling the child tax credit for people with younger children, pro work by having a tax credit for secondary earnings. it simplifies and expands tax credits for college. it expands a tax break to encourage both the small businesses to offer savings plans and people to take them up. and also expands the eitc for people without qualifying children either because they don't have children or they are non-custodial parents. take those together and the main experience that most americans would get in terms of their taxes as a result of this budget would be a tax cut for things like childcare, college, retirement savings, work and low income households. as part of the deficit plan, the budget does as a whole curb tax
breaks for high-income households. one of those, for example, limits the tax deduction and tax deduction and exclusions to 28%. that won't affect households making above $250,000 a year. it's something that my predecessors have all described as more akin to a spending cut. because that's spending that takes place through the tax code for high-income households that's being cut. another example of that is a loophole for high-income households on their net investment income, which we would propose to close here. the revenue is coming from high-income households. it'sexpenditures. >> can i add to that? you asked about the tax side. this is a balanced proposal in
our budget. ace sa we decided to live by the greement that w agreement that was reached last year. we have 117 different cuts, consolidations or savings proposals in the budget. we talked about healthcare savi savings, about $375 billion there. but we have 15 different proposals that save over $100 billion on program integrity, for example. we have smart savings proposals on everything from crop insurance to a range of other things. and i think it's important to step back. since the president came into office, we have had deficit reduction of about $4.5 trillion. this budget adds $2.9 trillion additional dollars of deficit reduction. if you put those all together, we are still getting more than 50% -- even if we adopted every one of the proposals in the
president's budget that jason talked about, we're getting more than 50% of that $7.4 trillion in deficit reduction from spending reductions, not from revenue increases. we believe that this is a balanced proposal both on the spending side and on the tax revenue side. we stand by that. deficits to gdp are under 3% every year of the budget window. debt to gdp we take from under current law, if we did nothing, would be increasing substantially over the window. we stabilize that to gdp and start bringing it down through 2025. >> i want to go back quickly not bipartisan thing. we have observed that with republicans in control of congress and democrats in charge of the white house, anything that gets done is going to have to be bipartisan. the question for republicans is, are they going to do anything? are they going to use their
majority to strengthen cyber security, to fight opioid addiction, to cure cancer? are they not? the question really is left for them. we put forward specific proposals for how to do that. right here. >> charlie clark. the republicans seem to want to have a reduction in number of workers in the federal work force and maybe even abolish some agencies. i'm wondering is the upshot that was budget a net increase in the size of the federal work force or -- >> we do have particular places within the federal government where we think there needs to be increased investment in the number of people as well as the skills of those people. cyber security is a very good example where that's a place
that's a critical national need where we do propose both increasing number of personnel as well as raising their skills. we have $62 million investment in -- as part of the cyber plan that the president announced today that really goes to this work force piece of the issue. but we have other place places, example. the veterans administration where we continue to enhance the number of people we have there to respond to what is really a wave of veterans that we are bringing back from overseas. and that's a sacred promise that the president has made. i would also point to another example of a place like irs where the cuts from the republican congress had been so deep that we got to a place last year where we were only answering 40% of taxpayers'
phone calls, 40%. we had a win in the budget last year where we got almost $300 million of increase. we're now up to answering 60% of taxpayers' phone calls. obviously, that's not acceptable. by the way, we are losing billions of dollars of revenue from taxes that should be paid that are due to the federal government because we don't have the personnel. there are clearly places where we need more workers. but there are other places where we are making smart changes and finding efficiencies and overall what we see is just a small proposed increase in the federal work force overall when you balance those together. >> yes, ma'am, right here in the front. >> hi. julie davidson. to build on that, can you talk about how the budget supports
the people and cultural pillar of the president's management agenda and how you decided on a 1.6% increase for federal employees? >> well, just to take the second question first, obviously, particularly with the second year of the budget deal being less than the president had called for in his budget, we had difficult choices to make in a number of areas. and one of those is the tough choice about how much we should be increasing pay for federal workers. we worked closely with the military, with dod to see their results of their review of compensation and ultimately we settled on a 1.6% increase both for military and for civilian workers. that is something that obviously builds on the progress that we
have made, the progress on our deficit and our progress more broadly economically and allows us as opposed to in past years where we had a freeze and then a 1% increase and then for 2016 a 1.3% increase, we're obviously making progress here. i think it also is important to recognize that inflation overall has remained very, very low. in fact, to the point where we are starting to see significant wage growth. the best -- the best six months of wage growth that we have seen of the recovery over the last few months. i think this represents progress in terms of paying government workers what they deserve. but also one where we did have some tough choices to make. the only other thing i would say in terms of other critical investments that we are making,
our people are one of the single most important assets that we have in the federal government. we do have major investments in training, in employee engagement. we have been encouraged that the viewpoint showed real progress. every single question in that survey showed a positive movement. there wasn't a single question where results went down. we think that that is a measure of the progress we're making in addition to the work that we're doing to upgrade and improve our recruiting, moving our systems into the 21st century and i think [ inaudible ] ought to get confirmed swiftly by the senate is doing a terrific job moving us forward. >> ron? >> ron allen from nbc.
josh, you said early in your opening that this is all about priorities and you can tell what's most important to the administration. is there anywhere in the budget that takes account of the plan to close guantanamo bay and why not and what's there and if not, how do you -- how is that going to happen now, or is it something you've given up on or the president's given up on? >> we have always envisioned putting forward a separate plan for congress' consideration that would factor in some of the financial impacts of actually moving forward with closing the prison at guantanamo bay. one of the chief reasons that we have advocated for closing the prison is that the individuals who are detained there need to remain detained, can be more cost effectively detained in the united states. and that's what our proposal will underscore. there are a number of them that would be transferred, a number of others that are going through
a criminal justice process either through military commission or article 3 court, but you know, cost effectiveness is one of the reasons that we are looking to close the prison. the other reason obviously is we know that extremist organizations use the continued operation of the prison at guantanamo bay as a recruiting tool. and so that's why you have seen democratic and republican national security experts come forward and advocate for the closure of the prison. we will put forward a plan to congress at some point. i don't have an update for you in terms of timing but when we do, it will include some information at least about the budgetary impact and that's information we won't just present to congress, we will also present it to all of you. >> but why not put this in your budget which as you say is your statement of your most cherished priorities and that as i understand it is one of the president's -- >> it is a priority. the plan's just not done yet. when it is, we will have some more information about it. you want to add to that? >> i was just going to say there
was a specific provision in the defense authorization bill that set up a process to do this separately and with a time line and everything that didn't match up with the budget. so it is a very high priority. just for reasons that there was already a process in a subpoese piece of legislation it didn't make sense to marry it up with the budget given what josh said about our ongoing work on that. >> -- there have been reports suggesting the plan is in fact done and you were waiting for the opportunity to move it forward. is it not done or is it? >> the latest update i have received is that the president has not signed off on a final plan at this point. >> i can confirm that. >> aiesha? >> so is there a concern in the budget there's a plan for medicare savings, is there concern that those measures could be perceived as cuts and that could be used against
democrats on the campaign trail, and then also on a separate issue, there also seem to be proposals to cut spending on refugees but yet the administration has called to ramp up asylum and ramp up the asylum program, so how do you reconcile that or is that a misinterpretation? >> i will take the first one on health which is the administration's approach from the beginning has been if you can lower national health expenditures, you can reduce premium growth, save money for the budget and extend the life of medicare so it's win, win, win. that's what we did in the affordable care act and you see the benefits now with health cost growth being the lowest in 50 years. the affordable care act added 13 years to the life of medicare and the affordable care act helped put us in a better
position for our budget. the types of savings we're proposing now are very much in that spirit as well. so if you reduce overpayments to drug companies for dual eligibles in medicare and medicaid, you can save over $100 billion and that's not something that is coming at the expense of people, it's actually part of a plan to help. if you can have medicare advantage you can squeeze out some of the extra margins that some of the insurance companies are getting within that system. all of this would both continue to help slow growth of health costs, but it would also together with the tax loop hole that's being closed related to a tax that's related to medicare, add more than 15 years to the life of the medicare trust fund. so this plan as a whole is going to help strengthen and sustain
medicare and help slow the cost growth of health care. >> i'll just add to that by saying that republicans in 2012 thought this would be a really effective argument and i'll just point out that neither president romney nor vice president ryan could be here to defend the effectiveness of that argument. >> on your question about refugees, i'm not sure where those reports come from. in fact, the budget meets our commitment that the president's made to increase the number of refugees that we would be able to welcome to the u.s. and so we're happy to work with you, show you the details of that but it meets our commitments. >> this gentleman right here in the front. >> dylan matthews at fox. traditionally, the itc proposal from the administration for single adults has been financed through closing the current interest loophole and some other
revenue raisers. given that speaker ryan has expressed a lot of interest in a very similar plan but has offered to pay for it with spending cuts, i was wondering what the administration's thinking is on sort of the parameters of that and what would be an acceptable pay for there? >> we would be happy to work together with congress on an acceptable pay for. we have an awful lot of pay fors to choose from in our budget and i suspect you would see a lot of flexibility about which of those. what you wouldn't see flexibility on is the principle that this proposal is meant to reduce poverty. so if you cut one thing that's helping to reduce poverty and use it to expand something else that would reduce poverty, you haven't made the type of improvements that we envision. i think there's a lot of ability to work together. we would love to work together with congress as long as we're not doing this at the expense of the poor. >> thanks for the question. kevin?
>> kevin franken with the a.p. the baseline deficit's worsened by $1.8 trillion over ten years. can you go into some of the factors about why that is? >> so we have as i think jason laid out at the beginning a few that are the most important changes between the baseline from last year's budget and this one. first, the deal that was completed at the end of last year did raise deficits by a few tenths of a percent alone, just that one package, and while we agreed with a number of the extenders that were made permanent and then they had been part of our business tax reform
plan, as jason said earlier, we were not in favor of doing that unpaid for. we felt that there should have sh a comprehensive plan on business tax reform. what we are doing in our budget this year and it's one of the reasons we are able to stabilize debt and bring it down over the ten year window is because we continue to propose comprehensive business tax reform that would offset the cost of the tax reform, the tax extenders that were done at the end of last year. that's the single most important change from last year. there are also changes in the economic assumptions that i think really point to the critical importance of many of the investments that we have talked about in terms of growing opportunity. one of the things we haven't talked about which the president really emphasized in his state of the union was that we have to
modernize our system of supports for workers and we are proposing an unemployment insurance package of changes that includes a wage insurance proposal that's proven to help workers get back in the work force more quickly, reconnect to the work force and ultimately be better off. that's another example of something that ought to be bipartisan if republicans are willing to work with us. >> one small point to add, the baseline deficit projection is worse as is the cbo and us and cbo are quite similar in that regard. we have also proposed more deficit reduction this year. so the deficit you get to under the president's policy is similar to what it was last year which is to say consistent with the below 3% of gdp and consistent with the debt on a stabilized on declining path through 2025 just like it was last year. >> you also spoke about the dwindling number of workers per
retiree which would seem to be an argument to deal with social security but there has been no mention during this session about dealing with the social security trust fund and its solvency. could you go into why we're not addressing that and why that's become less of a priority for the president during the tenure of his presidency? >> sure. first of all, i would point your attention to the budget includes a long run outlook, the deficit and debt over the next 25 years, the same window that cbo uses for its long run outlook. that shows that the deficit remains below 3% of gdp even in the out years and at the end of that 25 year window, the deficit is actually shrinking as a share of gdp. similarly, the debt is stable as a share of gdp over that longer run window and is declining as a share of gdp by the end of it.
so we have in the last seven years made a lot of progress in terms of our long run deficit that comes from steps like the affordable care act, the tax deals we have done and also the broader slowdown in health costs and when you take all those improvements in the long run outlook which doug elmendorf recently cited in the paper he put out last week, the improvements in the long run outlook together with the additional policies here really do put you on a stable basis for the long run. that being said, from the very beginning of this administration, the president's always said he was open to working together with congress on a bipartisan basis to deal with social security, put out a set of principles at the beginning of this administration in terms of not slashing benefits, not privatizing social security, not taking away a system that works for americans with disabilities and some other
associated principles, but the most important thing is looking at the budget as a whole and that's where we've made substantial progress. >> just add two other points to that. we did have an issue in social security that was critical to address last year and that in fact we did address. it's another example of something the president put forward in his budget of 2016 that republicans said oh, we're never going to fix the social security disability program without major cuts in entitlements and in fact, we were able to get an extension of the disability trust fund which would have run out of benefits in two years or the end of next year, and -- i'm sorry, the end of this year, and would have put us in a place where we would have had to cut benefits by about 20%. so that was the most urgent
issue in social security. it was resolved last year and it was done in a fiscally responsible way. but i would also say, and this builds on jason's point, if you look at the long run challenges that we have on the fiscal side, social security is not a major contributor to that challenge, but the other thing i think is important to recognize is immigration reform again, this issue of how many workers do we have paying into social security relative to the number of retirees, one of the most important things that we can do is increase the number of workers that we have in this country and also raise their wages, and all of that can help us stabilize and in fact, cbo says, the social security actuaries say immigration reform is an important contributor to strengthening social security. so i don't think it's right that we don't have policies in this budget on this issue. i didn't mention it specifically but it's one of the key things
that immigration reform would do would be to strengthen social security. >> probably time for a couple more. jordan? >> thanks. jordan fabian from the hill. i was wondering, democratic leaders are going to be here meeting with the president and vice president for the second time in three weeks and i know that there's been a lot of back and forth between you guys and republicans on the budget but i was wondering if there's any thought put to having a similar meeting with republican leaders to advance some of the proposals you say there's bipartisan support on like eitc and those other items. i know they were here last week. wonder if there was any thought to giving them a separate meeting to drill down on this. >> yeah. i think we stand ready to have additional conversations with them. the one that was scheduled has already been canceled by the republicans who chair the house and the senate budget committees. we have to sort of see a willingness on the part of republicans to discuss these issues but we obviously are eager to do so.
i'm confident these are the kinds of things that are being discussed among democrats both in the current meeting but also all across capitol hill. so there really is a decision that republicans have to make about whether or not they want to make some progress this year. they were given by the voters a new majority in the senate and a stronger majority in the house, and i think a significant question they have to answer is are they going to use the majority over the course of this year to try to do something good for the country. there are certainly ample opportunities for them to do so but it will require them working in good faith to actually do that. okay? sarah? >> thanks. just one quick clarification. you said there was the director jonathan was scheduled to be on the hill to talk about the budget and it was canceled as opposed to just not getting scheduled at all? >> well i think the reason i say canceled is because it's been held around the same time every
year for 40 years so the fact that it's not being held this time i guess, if they didn't have the super bowl next year we would all say it was canceled. but i guess you could also say it wasn't scheduled. either way, it's a choice that's made by republicans in this case. >> thanks. and on the broader poverty agenda, these are things that paul ryan has backed in the past, now he's speaker. is that the main reason that there seems to be additional optimism that this can get through or are there new proposals on that end from the white house that you think will make it more enticing to republicans? >> i mean, we do -- there are new proposals in this budget and it is an issue that we very much hope to take up in a bipartisan way. you heard us talk about the proposal that the speaker has already put forward. there is another proposal here in the budget that focuses on providing flexibility to states,
in particularly with folks of highest need. there is a lot of research demonstrating, for example, that there is a significant number of families including as many as three million kids who live on less than $2 a day cash and so there's a proposal in this budget which we think is pretty innovative which is about working in a flexible way with states on pilot programs to help address these families with the sort of most urgent needs to make sure they have the support to get back in the work force. yes, this is a conversation we are interested in having. you heard jason say, we need to have it in a way which is really about creating opportunities for families that are in poverty. we think there's a lot of room for agreement and it's a conversation that's overdue. >> thanks. last question, president obama ran very hard against the ryan budget in his re-election. he said that it was -- it reflected vailed social darwinism. now that you are looking to work with speaker ryan and especially on issues like poverty, has there been any kind of
rethinking of the speaker's motivation? is this something that's come up, they have kind of always been coming to blows specifically around their respective budgets. >> i don't think anything we said today has tried to paper over the significant differences between the priorities that are identified by republicans and the priorities we have identified in this budget. i think our point is simply that given those significant differences, it's all the more important we should -- that we capitalize on those areas where common ground does obviously exist. cecelia was talking about the eitc. that's a good example of one. cybersecurity is another good example of that. investments in new research that would lead to a cure to cancer is another one. investments in helping fight the opioid epidemic across america is another good example. so given the significant differences, it's all the more important that we seize on the common ground when it materializes. >> can i just add this is less of a budget issue although there is a proposal on the budget
that's aimed at the work that we're trying to do with respect to the criminal justice system but that's another area where the president has in fact invited members of congress and from both sides of the aisle who are working together on legislation. it's another area you heard him single out as a place where there is commonality and agreement and where we think we ought to be able to get to a solution if people are prepared to roll up their sleeves and get the job done. >> very good example. this gentleman has been very patient. why don't i give you the last one, sir? >> thank you. nick penrose of the "wall street journal." in recent years, the administration has relied on projections of stronger economic growth to boost revenues to deal with some of the sfeng challenges we are going to face on the entitlement front. at the same time, economic growth forecasts are consistently being revised down which pushed the debt to gdp ratio higher. my question is if growth continues to disappoint relative to forecasts, does that leave the next president with less flexibility for new investments
without raising taxes and if the u.s. economy were to fall into recession, is fiscal policy tapped out? >> i think that's probably for me. >> my microphone was red for a reason. >> so if you look at how the economy has evolved relative to our forecasts, some things have come in more favorable than we forecast and some have come in less favorable. so gdp growth has, as you said, been below the forecast. the unemployment rate has also been below what we forecast and interest rates have been below what we forecast. if you look at that all in, more often than not, the deficit has actually come down relative to what was expected rather than gone up. that's certainly true i think for every single budget year or every year before the budget current year, but it's true if you look forward as well. so if you look at the thing that is the most important thing we
are trying to accomplish here which is to create a baseline for what the deficit is going to be over the next decade, those forecasts if anything have been on the conservative side over the course of this entire administration. so that would be the first point i would make. on the second point, consistent with that, the forecast, cbo in the tenth year has a deficit of 5% of gdp in their baseline. we have deficit of 4.9% in our baseline with some small differences in terms of comparing those. but they are generally quite similar. so we are in the same ballpark as them. we then propose a substantial amount of deficit reduction which is what gets under the president's policy the deficit to below 3% to gdp. next point i would make is that the long run fiscal outlook is better now than what it looked like six or seven years ago. it's better because of the steps we have taken and because of the slowdown on health costs.
you look at measures like the fiscal gap, a way of gauging what the deficit is over the long run, that's smaller today than it was before which brings me to the last point that i think our country does have the fiscal room if and when it is ever needed at some hypothetical future date to use fiscal policy as one of the tools to -- that we would deploy in those circumstances. if anything, the last seven years have taught us around the world there probably was more fiscal room in a lot of countries to begin with than people might have imagined seven years ago and we have even more today than we had then. >> just to add to that, you should be very clear that there is a fiscal choice in front of the republicans in congress right now, which is do they live up to the deal that we reached last year or do they put us