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Transcripts For CSPAN2 Key Capitol Hill Hearings 20140226

it does come down in the short run, come out and the long run, that will be declining his share of the economy for the next several years, but after 2018 net debt will start rising is a share of the economy which is are we will be putting forward more balanced measures on both the revenue side and the expenditure side to assure that that debt is continuing to decline as a share gdp. a lot of you are focused on, understandably, on agriculture growth which is what i have been focusing on so far. it does matter as well have echoed the shared. matters. you work for companies the sold to consumers and the income matters. matters for the short run recovery. matters for the sustainability of our economy over the long run and for the political support of the type of market oriented growth in hansen policies. that's why they guy room like that is a -- is important to reflect on just how large income inequality has bell of the last several decades and why is important to take steps to make sure that this growth the we have been talking about a share. one of the steps is raising the minimum wage bill which has declined more than one-third from its peak in the 1960's. in addition to that, the president has proposed other measures to help us join the middle-class including expansion of the air and income tax credit for workers without children and in addition to the immediate steps the president has set out of range of ideas to invest in education and quick workers for the skills they will need for years to come, measures that help us grow and help ensure that that growth is widely shared. so in conclusion, i would say that the challenges we face are substantial. we continue to have some of the short run challenges, but the bigger ones are the ones that have been building up over the last decade, the slower productivity growth in the postwar years and the increase in inequality. a lot is in place to have more stability and certainty. i think that by itself will be a major help to the economy, but they're is a lot more the weekend should do. i would describe some of that ambitious agenda in my remarks here today and would be happy to discuss more of it in answer to any questions you may have. [applause] >> ken simonson. one of the most unborn things that its share of economic advisers can do is educate an advocate for good, federal statistics. we have seen in the last year that bls nba have both had to discontinue important programs. we hear that the export price index may be next on the chopping block or other important series. hope he will appeal to stick up within the white house and to the extent that europe probably the charter of the importance of finding those properly and maintain the independence of this bill is a cease. >> i take it there is not a lot of debate over that topic in this room. you're not going to get in the debate from the either. i would just say that it is generally -- we like to think of ourselves as focusing on the national interest. but to the degree we have a constituency in a pro way is federal data and it is important deal with in l.a. say is our put it in the context of a broader budget. will the buyoff 60 percent of the sequestered which means of we will have 40 percent of a sequester this year. that is on top of already tough spending in the budget control act. with that we are on track to having discretionary spending the lowest as a share of the economy since we started recording discretionary spending in 1962. and with that comes a lot of choices that we would rather not be making. this -- there are certainly going to be difficult choices, the budget when it comes to the potential difficult choices and just about every area of the budget. so part of it is figuring at how to do the best the probably can't with your limited resources and with the even worse choices might have been. part of that is seeing what we can do to expand those resources and in particular if the sequester continued been bought of a fraction. they have not dead yet done that. if you have the full sequester it would force even more painful choices potentially. but thank you for your point. >> financial. can still alive the memories i was going to make the same point in to appreciate. on a broader and for search for question, and the president's proposal image and corporate tax reform which has bipartisan support and immigration reform are which is critical for many companies in the trade talks. what are the chances of any of that getting done this year before this present lease? >> we're going to do everything we can to push him toward. i think there's certainly a reduced legislative appetite in this particular year, but the look of something like business tax reform. over time you have seen an increase convergence in terms of what the rate is, broadly how you would pay for that rate. and even a certain commonality in idea when it comes to more controversial areas like have to deal with overseas earnings and taxation they pass that on a strong basis. and the camino, the strong constituency for it in the house , also a deep set of obstacles in the house. finally, i think the last one that was talked about was trade. we are working very hard to negotiate those agreements. tipis be is far along and will be continuing. >> fantastically comprehensive presentation. an important piece that was not included in and out was the discussion of the collapse and labour force, which, as you know, we have lost essentially three full percentage point since 2007. and it strikes me that this is one of the most important economic developments in the united states in recent years. what set of policies in action or contemplation could help try to minimize the degree to which the extents of that chance out to be permanent. roughly half of it is demographics. the other half since to be behavioral of various kinds. obviously some of the infrastructure to proposals by create demand from some of these back into the market. in utah and a larger sense? it can't just be about infrastructure with the labour market policy. >> i think that is a great question and certainly is one of the important things going on. i would divide the decline in the participation rate into three general areas. the first area which as you yourself just said is aging. that is it possible for about half. you can do a mechanical calculation of taking labor force participation rates in 2007 by age and gender groups. aging and the keeping of participation rates the same and you would have about the participation rate would fall by about one percentage point over this time. you get the same results of the use the refresh but dissipation rates this year. so it is not. to which of those you are doing. that is about half of it. that was predictable a predicted a quarter of it is. something like it normally would be. this is the part that we expect that the employer rate comes down, the participation rate will go out. and anything that gives that the unemployment rate gets it done. the last quarter seems to be something a little bit to and from the normal cyclical pattern and if you look historically the thing that is different from the normal cyclical pattern seems to correlate very well with long-term unemployment. so whenever is causing total compensation of unemployment to be tilted toward long-term unemployment relative to what it has been his starkly also seems to be contributing to that last quarter on the participation rate. and that is the one that we are, frankly, a little bit less certain about what will happen to it the one for. terms of the policy implications , i think these three parts of the participation rate all have different answers. to the degree they're is a demographic trend that does create challenges our economy in terms of growth, in terms of public finances, and one of the most powerful tools we have there is immigration reform. in addition, anything else all the people who wanted to need to work continue to work with up in that regard as well. the cyclical does not have any policy implication that is any different than the observation that at six and a half% the upon the rate is unacceptably high. so investments in infrastructure , the additional i read it demand to get extended an insurance benefits to many of those are part of it. the last quarter we don't, as i said, understand as well. to the degree and is related to long-term unemployment anything until the of long-term unemployment is going to help respond to it. and in that regard we have been trying to use -- the president talked about his pen in his own for your action. he has been using his fallen that, being a lot of major companies and, having them about best practices for hiring long-term employed, and that should help with the last part of the participation rate, but we certainly need to continue to understand it better as well. >> thank you. >> david pritchard, purchase associates. thank you for your analysis and know what. and also want to say that of all the things a you cover comprehensively, the two things missing in my mind by the lack of national savings, which has been zero for the last five years, the very weak investment and these two together are responsible, in my mind at least, for a major part of the subpar growth rate of a lousy real person up 2%. obviously we have population growth. some small productivity growth, but without more investment which can only result in a sustainable way with higher savings rates, i want to know why there is no more of a focus on savings rates. terms of policy we know that congress will do almost nothing because of extremists. both sides of the aisle are going to keep small baldy evanesces year. after that my question concerns will we're going to do sustainably to increase things with some kind of grand bargain for next year in terms of the things that affect the participation rate. for example, can we raise the retirement age, reduce the entitlements, make sure that the low income worker after tax and after entitlement is much better off than the guy who does not work? until those things happen all of them together, sometimes hopefully next year, i don't see any possibility. i appreciate your response. >> in terms of investment, think of it, it had to choose i would think of it as following and being a function of the overall economy right now rather than being a driver of it. we have done some statistical analysis that looked at what some have said as a puzzle which is you have high profitability, high equity market valuation, a low-cost capitol, and yet investment growth has not been as fast as you might. and what we have found is there is a simple explanation for that which is investment growth is a function to a large part of sales growth in aggregate demand and if we can get aggregate demand increasing in an investment should follow. and you know, as i was saying before, and reid demand last year faced a challenge in terms of the apparel tax cut coming awake, the sequestered going into affect, and other sharp sources of deficit-reduction. we don't have any of that in 2014. consumers are more be leveraged, have been by some measure on record since 1980. and as a result, i think we are in a stronger position for consumer spending this year. what we would like to see is investment following that. national savings is an important issue in its own right. i don't think it is an important determinant of investment in the short run. i think it is an important determinant of the sustainability of our overall economy of the medium and long run. net national savings including the federal sector of the corporate sector and the individual sector which has actually risen a lot and lost couple of years. as a result we have seen our current account deficit as share of the economy fall to lost his been since the 1990's. i think that is the direction and the movement you would want to see for sustainability. terms of the of the policy issues you raised we're looking at a wide range of basic health, you know, continue to strengthen what we have. >> thank you. a quick follow-up. it is not on their trenary it demand killed but things other going to be sustainable to really be increasing. >> okay. my question concerns immigration. the argument the economic argument that she mentioned with increased up to the inertia and patents seem to apply more to age one be expanding h1 be green cards for engineers and so forth, but the majority or a major focus of the legislation is the 11 million undocumented workers. i would like to ask about policies to move to a path to legal status, what you see as the economic benefits of that policy. >> i think the economic benefits of that policy very much centered around certainty. my guess is everyone in this firm has talked about howland certainly affects investment by businesses. the same thing is true for individuals. if you're not sure if you're going to be deported from this country you're not going to invest as much education. you're not going to invest as much training. you're not trying to invest as much in the business. these are people who have been here. these are people who are going to continue to be year. maloof like to do is give them a pass the that they can have greater certainty. we are collecting taxes, but we are also in a position to, you know, invest more and make greater contributions to our economy. >> thank you. >> thank you. >> thank you very much. >> thank you very much. >> this week congress is considering several proposals to reform the irs and the tax code. meanwhile, the chairman of the ways and means committee in the house is set to unveil his proposals for tax reform on wednesday. the tax reporter for politico joins us from capitol hill. what are some of the things we know already about the proposal that chairman campbell announced >> it appears that dave camp is able to fulfil his goal of reducing the income tax rate for individuals to about 25%. we are hearing a lot of discussion about a big tax on big financial institutions and banks that could raise about $50 billion. we are also hearing different -- right now is rumor mill appear. k street is exploding with different rumors, will be on the base tax and rates you're hearing capital gain tax is -- about 40 percent of those will be exempted. lowering rates. there will be a surtax on the nation's wealthiest turner's to raise some revenue. so a lot of different -- different proposals coming of ways and means today and coming out of k-treat them those the scene analysis are seen the draft. >> what i you hearing from rank-and-file members, democrats and republicans, how are they greeting the news of a potential tax reform package? >> well, jake sherman then i reported this morning and last night. republicans are actually really fretting this discussion draft coming out because of the election. they're supportive and general in theory of tax reform the man republican ideal : it comes to being a few months out from the midterm election they're not necessarily pleased. it will be asked to take a stand on a bill a potentially has a lot of democratic ideals or even if it does, you know, bring those individuals and corporate rates down low enough. it might take a lack of mortgage infrastructure, things that are popular with taxpayers and our bipartisan the popular. that is not really acting date -- helping dave can that he as rank-and-file republicans fretting. eric cantor and the leaders of the house republican caucus told him last december to put the brakes on it. there was not democratic support that has been lifted a little bit allowing him to move forward with the draft, but there is still not support from what we understand. and democrats are lethal. this will give them an amazing opporunity, what they think at least is an amazing opportunity to walk republicans ahead of the midterm recollections are being anti middle-class or being in the park and a big business. of course it will be harder to make that argument when there is that the levy on banks as well as the surtax on the wealthy. our democratic ideals, but there will be given their rigidity in the future negotiations over the budget of the scope of to point to anyone who would be included in the cancer program and say, hey, you know, we can raise money by taxing big finance of institutions because that is a bipartisan proposal. so democrats by and large are pretty grateful that this is happening. >> the process starts with ways and means on the house side, but are ready we're hearing now republican leaders saying that this package has no chance in the senate. >> that is exactly what mitch mcconnell and his senators are saying. but always much more rocky. former senate finance chairman max baucus, dave kansas partner in this. they want to get online and on ford. in the senate is much more disagreement over how much present -- revenue should be raised. u.s. senators ipad and mary in harry reid saying the trillion dollar should be raised. among republicans. so there's really no path for right now for tax reform in either the house or the senate because it would hit such an immediate roadblock. >> also, leaders give any helpful floor vote? >> it appears that they did not. like us said, they did tell him to put the brakes on and last december. they seemed to really v-8 that hard-line a little bit to allow him to put out a draft, but this is a draft. this is not even a real bill. it might be written in legislative language but it would have to introduce it as legislation to give it to go forward as a markup or even a vote on the house floor. what we're hearing from both conservative members of the republican caucus and moderates is that it is morally not going to do anywhere past of the debate and discussion. the markup is unlikely. it is most likely not at least until after the midterm elections going to get to the house floor. >> there are bills and the house floor this week. the tweeted about some of this this morning saying in the morning tax the cut back on american future funds, the ira's treasurer for overstepping. lastly, these bills the house is considering in terms of virus regulation. >> so there will be much more success with this. more than likely going to pass with a sweeping measure -- sweeping republican majority to of the irs regulations which would change the way firewall wednesday for, those groups started by the arabs also, you know, play into reactions a lot. how much they can engage in and keep their tax exemption. those regulations should not be able to go forward until congress can complete its four different probes. that is by mostly every republican on board. that will come to a vote this week. tonight the house expected to vote on to a taxpayer bill of rights style of or style legislation. one would ban al right the irs from asking about religious, political, or social beliefs and the other within sure that if the irish shares your tax pair formation with another government entity they would have to tell you in writing about it. >> you can follow her reporting on twitter. thank you for the update. >> thank you for having me. >> coming up on c-span2 attorney general eric holder took civil rights. >> i think there are some myths out there. some miraculously preserved product. it is no different than a pickle cherry. the burning process is no different than the types of, you know, sulfates used in making wine. really it is -- i would not call it a healthy product, but i would call it something that is a tasty treat. >> there will go through an extensive washing to get the brine, sulfur back out of the brew. the process of making maraschino is really basically you're taking that and sucking it in a progressively stronger shares and color solution. so over the course of that schedule you will see the colored pickup as a sugar content picks up. you can see, very rarely. the process. it is likely -- lightly colored. you can see a much darker it is. much farther along giving you an idea. on a normal day it is deep red. it is that cycle of the infusion and where it is that in the process. >> this weekend book tv and american history to be left behind the history and literary life of salem, oregon saturday at noon on c-span2 and sunday at 2:00. >> u.s. attorney general eric caller spoke today at a meeting of the national association of attorneys general on the topic of civil-rights. the disgust of the offensive and the justice department decision not to defend it in court. >> obviously our next guest is a very special guest to we appreciate having year as we always have. recommended general holder or his willingness to attend this meeting in to speak to us candidly and openly every year. the fact that our parting gift for general holder when he is here today is going to be a baseball cap i think speaks to how many times you have been here because all of the guess we usually give out we already given to you. [laughter] we are going to actually give you something you might be able to use. but obviously we are all familiar with general holder. sworn in as the 802nd attorney general of the united states does a nine by the vice-president joe biden. in 1997 he was named by president lyndon b. that be the attorney general. prior to that he served as u.s. attorney for the district of columbia. in 1988 he was nominated by president reagan to become an associate judge of the superior court where the district of columbia. prior to becoming attorney general was a litigation partner at covington and growing. truly a pleasure and privilege to have the year to address this here today. [applause] >> well, good morning. thank you mr. attorney general. i usually come man just that my little speech. wanted thank you for your dedicated service. we're wondering what is next. we were wondering as they were walking through. it is a privilege for me to take part in this important meeting. i would like to think the team and professional staff for bringing us together. as the journey general said i had the privilege to work closely with many of the attorney general some this warm. solace of collaborative and cutting needs safety and financial crevices kelso as a working give it to strengthen our court and correction systems and to share resources. some of us occasionally found ourselves on opposite sides of an issue. despite the differences that we have encountered from time to time we all share the same set some goals. we're striving to a share the same set of responsibilities protecting the safety of those citizens and the security of our nation by safeguarding civil rights. thus vulnerable members of our society and improving the effectiveness of our criminal justice system and by strengthening collaboration among government, law enforcement, and community partners and every level. now for more than a century the national association of attorneys general has brought america's leading legal minds yet discussed and advances toward. especially in recent years through sequestration, federal government shut down and then president budgetary difficulties your life shown remarkable leaders. at every stage of my career it is a prosecutor and judge him, u.s. attorney here in d.c. in deputy attorney-general of i have seen a profound posit differences estate leaders like you can make. the growth the play as the chief law enforcement officers at your respective jurisdictions. your pioneering broadbased efforts to reach elbert and reform america's processes system, 21st century challenges to of the 21st century solutions. the federal level while working to break the vicious cycle of poverty criminality in incarceration. this amendment has given way the principle that sent to expand the federal estate partnerships. in recent years nephew than 17 states and led by state officials as directed significant funding away. they're proven to reduce recidivism well improving public safety. now, rather than increasing costs and new report funded by the bureau of justice assistance projects a lease 17 states will save over $4 billion. the full impact of largess is reinvest and policies will remain to be seen in this did these efforts are bearing fruit from georgia, north carolina, texas, ohio and far beyond all we've invested in serious reform including public safety, improving public safety and saving public resources. i believe that the changes that have led to these remarkable results if it should be carefully studied and they should be emulated which is why last august in a speech before the american bar association in san francisco i it announced a news marron crime initiative that is allowing the disbarment to expend any innovations that so many states have led. smarter and more efficient in battling crime. the conditions and choices that breed crime and to develop and implement common-sense reforms of the federal criminal justice system. now, under this initiative we are ensuring that stringent, mandatory minimum sentences for certain federal related crimes when now be reserved for the most serious criminals. rear taking steps to advance the diversion programs that can serve as alternatives to incarceration in some cases. and as we look for the future of this work to continue to rely on your and clothes in basement to keep advancing the dated driven public safety solutions that many of you have championed for decades. this also means making good on a commitment to provide 4 million incarcerated people with terror virginity to rejoin the community and to become productive law-abiding citizens once they are involved with the criminal-justice system is that an end. we have done important work in this regard cataloging tens of thousands of statutes and regulations that impose on wise collateral consequences related to things such as housing, employment, and voting which prevent individuals with past convictions for a fully reintegrate into society. as you know, i ask the state attorneys generals to undertake similar using your own jurisdictions and apostle to mitigate or eliminate unnecessary collateral consequences without decreasing public safety. i've made this same request of high-ranking officials across the federal government as well. moving forward and directed every component of the justice department to lead by example on this issue by infering whether any proposed rule, regulation, or guidance may present unnecessary barriers to successful reentry. two weeks ago at george sterne university law center here in d.c. i call upon state leaders and other elected officials to take this even further bypassing clear and consistent reforms to restore voting rights to those who have served there terms in prison rjo, completed their parole or probation and pay their fines. i will renew his call today because like so many other collateral consequences we have seen a permanent disenfranchisement of those who pay their debts to society serve no legitimate public safety purpose it is purely punitive in nature, counterproductive to efforts to improve reentry into reduced recidivism and is well past time that we affirm as a nation the free exercise our citizens most fundamental rights and should never be subject to politics of geography or the lingering effects of flawed and unjust policy. i applaud those like senator rand paul of kentucky who have shown in helping to address this issue and encourage each of you to consider and take up this fight in your home state. of course i recognize that this reform and the other changes that we seek will not be easy to achieve. none of them will take hold overnight. i know that as law enforcement leaders your work as in many ways ever been more complex and challenging and particularly in this time of budgetary uncertainty when otherwise across-the-board cuts have been packaged, federal, state, and local programs that we depend on you and your colleagues they all support and resources the you can get which is why i am never knowing the stop fighting to provide the tools and assistance that state and local law enforcement leaders desperately need. i am pleased to report that the bipartisan funding agreement that was recently signed into law by president obama will restore essential funding. the frustration levels. already this legislation as an analyst to invest it apartment wide hiring freeze that had been in place for just over three long years so that we can begin to bring on additional federal agents, prosecutors, and other staff to bolster ongoing investigative and enforcement efforts across america. we anticipate that this will also allow us to further invest in the kinds of plays-based intelligence test driven strategies than many of the have proven effective. people offering assistance, states and the cut is suffering it, yeah -- acute crime challenges and to continue building of the work that attorneys and others have made possible against victimization and three core rights and justice. this is essential since we have been sworn not just to win cases but to see that justice is done. this is a cause that brings us together in washington working to confront the threat sent to seize the opportunities that are before us. this is the extraordinary task with which the american people have adjusted the leaders in this rented challah set of justice professionals are called to address to use of the old system to address disputes but to answer the kind of fundamental questions about fairness and about equality that have always determined to we are and do we aspire to be built as a nation and as a people. these other questions that drove president obama and the to decide in early 2011 that the probative a jury's manila in the fed section three of the defense of marriage act. this decision was not taken lightly. our actions were motivated by the strong belief that all measures that distinguish among people based upon their sexual orientation must be subjected to a heightened standard of scrutiny and therefore that this measure was unconstitutional discrimination. last summer the supreme court issued a decision in the united states forces windsor striking down the federal government ban on recognizing gay and lesbian couples who are legally married off. this marked a step forward and a resounding victory for equal treatment and equal protection under love. recently and partly in response to the decision a number of state attorneys general familiar command oregon every similar determinations after applying heightened scrutiny to laws in their states know when must never extend from policy or political disagreement standing only on from constitutional ground, but i believe we must be suspicious of legal classifications based solely on sexual orientation and we must endeavor in all of our efforts of topol some the value that once lit our forebears' to decide that all i created equal ended to of equal opportunity. this bedrock principle is immutable, timeless, and goes to the very heart of what this country is still for white even as they have shown our understanding of it evolves over time. as i suggested to the administration's decision was announced, america's most treasured deals will not put into action or given a full force of law in a single instance. on the contrary, our ideals are continually advance as our justice systems and unions are strengthen us in the social science, human experience, legislation, and judicial decisions expand the circumstances of those who are entitled to the protections and rights enumerated by the constitution's. as we gather i believe that our highest ideals of realized in the landmark supreme core rulings, a clear path toward whom they have an bell less in some instances to truly extraordinary action. the progress that we have seen has been consistent with the finest traditions of our legal system, the essential tenets of our constitution and the fundamental truth that as president obama once said, all americans are treated as equal, we are all more free. as we come together this week to renew our commitment to the rectory share to steal a result to combat crime and pledge their continued fidelity to the values that guided us in the constitution where sworn to uphold the must drive to move our country forward, keep fighting the violence, safeguarding civil rights and working to bring our justice system in line with the highest ideals that keep refusing to except the status quo that falls short of that which our constitution demands of the american people. we must keep standing at been speaking in a matter the challenges that we face to eradicate victimization of injustice and all its forms. this will not always be easy. occasionally would inevitably our paths will emerge, but as long as we're dedicated to working in a common cause, determined to disagree with me to respect and devoted to our share percent of the more just and perfect union, i am confident in our collective efforts and your steadfast will take us, i know, as this organization approves every day, a vigorous debate need not be consumed by partisanship. attorneys general are called to serve and also expected to lead. i wanted thank you once again for your work, for your partnership, and for their progeny to take part in this important dialogue. like ford although we will do know that we will achieve and the critical days ahead. thank you very much. [applause] >> if everybody could kind of stay in their positions we are going to just pause briefly to allow the media to get their things together. [inaudible conversations] [inaudible conversations] [inaudible conversations] >> thrown ln broke. year in and year out, uncomplaining, choked to death on the barren land, the swirling dust, night and day. many went ahead. many stayed. holmes, credit, food, and even hope was gone. >> this week in american history tv real america the 1936 u.s. resettlement administration documentary the plow that broke the plains, a history of the great plains region sunday at 4:00 p.m. eastern on c-span2. >> than 83 website makes it easier than ever for you to keep tabs on washington d.c. and share your finds via facebook, twitter, and other social networks. easy search functions the u.s. access our daily coverage of events, new tools make it simple to create short video clips and share them with your friends via facebook, twitter command of a social networks. you can send links to your video clips the e-mail. just find the share tools on our video player or look for the green icon links to our site. watch washington on the new c-span.org. and if you see something of interest clip it and share it with your friends. >> the u.s. country leads the world and the use of solitary confinement where a prisoner can be kept isolated in a cell for 23 hours a day. the director of the federal bureau of prisons testified about the practice that the seizure sherry many hearing in one year from former inmate and author of orange is the new black and from nl exonerating death row inmate who spent 15 years in solitary confinement. this is an hour and 20 minutes. canada. >> this hearing begins. today's hearing is entitled reasing soly human-rights cruz for his opening statement. thank you for those in person person & those falling online. there was so much interest we moved to this larger room. and we have an overflow room as well. you will see a number of pictures of children during the course of the hearing who are being held in solitary confinement. i want to thank richard ross, the photographer, for allowing us to use these. we have worked on programs around the world and we have an obligation to consider our rates at home. 5 percent of the world's populatipo population gives us 20 percent of the incarcerated prisoners. african-americans and mexicans are incarcerated at a higher rate and we hold more prisoners in solitary confinement than any other nation. thesis we cannot ignore these human right issues. criminal justice reform is one area where the government is still functioning. we have made progress. in 2010, congress uninanimouuna passed the act that stops make a difference between crack cocaine and cocaine. and another bill that will focus on the most serious offenders. i want to thank my ranking member for co-sponsoring that. and i want to thank senator cruz for putting this hearing together. two years ago, we heard the first meeting on solitary confinement and heard on the increase of the use in the 1980s. immigrants, children, sex a abusers and people with mental illness are held in solitary confinement. it also cost almost three times as much to them in confinement than in the general population. we learned about the human impact of putting people in windowless cells for 23 hours-a-day for months, days and years with little contact to the world. this causes psychological impacts on an inmate. at least half of all prison suicides occur in solitary confinement. and i will never forget anthony graves who was held in solitary confine for 23 years and he said quote you cannot imagine what this does to another human being. it does one thing: breaks man's will to live. i have been here for seven years and i cannot remember more compelling testimony. at the last hearing he heard from the director of the bureau charles samuals and he is here. i wasn't happy with his first message but did agree to the assessment of solitary confinement and it is underway and i look forward to the update. in the 2012 hearing, we found overuse increases public safety and the reality is the vast majority of prisoners held in isolation will be released and this damaging impact or being released from solitary makes them a danger to their neighbors. eric williams was killed a year ago who was killed by an inmate released from a prison in pennsylvania. we owe it to correctional officers who put their lives on the line every day to do everything we can to protect their safety. make no mistake, that means that some dangerous inmates must be held in separate housing. but we learned from states like maine and mississippi that released violence in prison by reducing the overuse of solitary. i went to a prison in illinois that was the state maximum prison. i asked them to take me to the worst of the worst. they took me to an area of five prisoners. each of the them was in a separate fiber class unit protected from one another and the teacher. i went to each one, talked to each one and they perceived the situation different. there was one in particular i remembered. he looked to be a community college professor. i asked him how long are you sentence to prison and he said originally 20 years. and he said they added another 50 and he said why? and i said because if they put anybody in a cell fee with me i would hurt them and i did. we want to make certain those who work in prison are safe and we have to balance that against solitary confinement. we must address the overcrowding that is making them more dangerous and increase the officer-inmate ratio. that is why i want to pass the smarter act that will reduce crowding by inmates who created non-violence drug offenses. i am looking to opening a thomas thompson center in my state to a help with crowding. let me talk about children. 45 percent of juveniles report being held in solitary confine. -- 35 percent -- the mental health effects of short isolation including depression and risk of suicide are heightened among youth. there is a ban called for isolation for children. the case state governments continue to lead the way. let's take a few examples. my own state of illinois closed the tams correction scenter. in texas, the state legislator passed legislation to review solitary confinement in jails. and new york city is has reforms to limit solitary confine for juveniles and pregnant women. guidance is being issued for immigration detainies. this is a big step for these vulnerable people. and the american psycho called for the end of this to end for mental illnes except in rare circumstances. the united states can protect human rights, improve safety, and be fiscally responsible. senator cruz isn't here so i will turn to our first witness. i want to note i invented the justice department to participate but unfortunately they declined. we will be following up with them to make sure they are enforcing the civil rights law in solitary confine. and i ask consent to enter the custom immigration and enforcement. our first witness is charles samuals. you will have five minutes for the oral statement and your complete written statement is in the record. if you would stand and raise your right hand to be sworn in. [swearing in] >> let the record reflect you have answered in the afirmmative. good morning, chairman durbin, ranking member cruz, and members of the subcommittee. thank you for the opportunity to appear before you today to discuss the use of restrictive housing within the bureau of prisons (bureau). chairman durbin, i appreciate you and other members of the judiciary committee for your support of the bureau over the years, and i look forward to continuing our work together. wharf i cannot start without honoring officer williams who was stabbed in pennsylvania. we will always honor his memory and all of the staff who lost lives in the line of duty. these underscore the dangerous that staff face on a daily bases. our staff faces the dangers of other law enforcement agencies. we house the worst of the offenders and do so with fiercer staff than other correctional systems. the federal prison system is operating at 32 percent over capacity and 51 percent over capacity at high institutions. 120 staff members were assaulted by inmates in the high security institutions police year. and 200 were seriously assaulted by other inmates. our staff interacts with a lot of them in an open setting without weapons and physical barriers. it isn't uncommon for one staff member to be on the floor with hundreds of inmates. the staff encourages them to improve their lives with cognitive therapy, job training, drug program, and other programs. i have focused attention and resources on restrictive housing. we have olympiaccomplished a gr deal with our approach to restrictive housing. it can interfere with interaction with family. please note the majority of them remain in this situation their entire time. we have a number of regulation we will enter to make sure this is being used appropriately. we have put a variety of in initiati initiatives in place over the 18 months. we have had discussions about wardens and other managers about the restrictive housing. we respect to specialize in mental health treatment and actiivated a stepdown unit that is providing treatment for inmates with serious mental illness and we have plans for high security inmates suffering from severe personality disorders that make it difficult to function. we have a reintegration unit to help inmates adapt after an extended stay in restrictive houses. in addition, we implements a gang renunciation and disassociation program gang to alow them to use their gang and work toward reentry. we are reviewing restrictive housing and we expect the report to be issued by the end of 2014 and look forward to making additi additional changes. i promise you i share the commitment to proceed save housing that supports physical and mental health. through the continuous efforts of the staff who work 24 hours each day, 365 day as year, we protect the american public and we reduce crime. again, i thank you chairman durbin and mr. cruz and the subcommittee for your support of the committee. >> thank you. let me try to zero in on two or three specifics. the law recognizes that children are to be treated differently than adults. that is why facilities for juveniles are different than prison. we know children are vulnerable to solitary confinement. we heard from a man name john stewart about his short time in solitary confinement. nowhere is the damaging impact of incarceration on vulnerable children more obvious than when it involves solitary confinement. i don't believe juveniles should be in solitary confinement. i know the federal prison has a limit number of juveniles, but what policy and guidance does bop have to ensure the juveniles are not placed in solitary confinement except situations where there are no alternatives to protect staff? >> i recognize the unique need to protect juveniles. we have 62 juveniles in contract facilities. and they have to provide 50 hours of various programs to ensure that individualized training is also provided for these individuals under our care. out of 62 inmates in our system, in thes contract facilities, we only have one individual in restrictive housing. any individual in restrictive housing, there should be 50-minute checks done. we're ensuring they are working with a committee to ensure a lot of issues are addressed and we are moving them at the earliest day possible. >> are there limits to how long-they can be housed? >> if they are going beyond five days there has to be a meeting to justify why there is a continued need. we only have one individual being used under the rarest circumstances when there is the belief of potential harm to the individual and/or to others. we don't support long-term juveniles in restrictive housing >> i would like to ask you about mental health when i cthink it s linked. senator lindsay grahm asked about how this affected prisoners and you responded there was no study conducted and that frightened me. i am pleased that one of the five key areas for the independent assessment of health. and i would like to ask you if you anticipate the assessment will help provide the mental health effects of segeraration do you agree that people that exhibit this behavior need more mental health treatment and not just a lockdown? >> yes, sir, to your first question. i do believe the assessment being conducted will provide us a road map to look at the internal operation relative to treatment that is provided to the inmate population when placed in restrictive housing. as i have indicated, since the hearing that was conducted in june of 2012, this assessment has been put in place with our audit. we are very much in agreement with the number of mental health staff being provided to look at the specific population when individu individuals are placed in respect -- restrictive housing -- with mental illness. we asked staff for scanning -- psychology care -- >> has that changed? >> yes, sir, we have five individuals devoted to that population. we are in the process of hiring a full-time doctors and there are a lot of things we can do remotely but we're increasing the staff and staying on top of it. >> has there ever been a time when you have been in charge with a person is released from retrictive housing directly to the general public? >> yes. and that is something from it discussion that we had in june of 2012, we have discussed extensi extensively throughout the agency with leadership and i don't believe it is appropriate. it is something to address. no one should be released based on the concern that was raised directly from restrictive housing to the general population and we will do everything possible to ensure we have things in place. we have implemented a step down unit for those suffering from a significant illness so we don't have them going out without a form of treatment. >> the last question relates to testimony. we have witnesses coming in. testimony about women, particularly pregnant women placed in restrictive housing. what have you found? >> out of 14, 008 female offenders we have in the system, only 197 with in restrictive housing. in an individual requires placement to ensure no threat to themselves or others, we are not looking to put people in restrictive housing. the majority of the time it is temporary. these are not individuals who are placed in for long period of time. >> could you define temporary and long period from your point of view. >> if an individual, right now out of the entire population, for individuals in restrictive housing and i will start with the special housing unit, we have 9, 400 individuals in there. only 15 percent are in there for periods longer than 90 days and that is sanctions relative to discipline or administration detention. displain and sanctions are for violating a rule and we need to maintain order within the facility if individuals do thank think things that require short-term. and long-term housing like due to threats to the facility or harm to others and ensuring we're keeping them safe, requires longer periods. when you look at the control element, we have 47 percent of those individuals and 13 inmates at the adx. 47% have killed other individuals and that is a combination of murdering before they come in or murdered other inmates or staff within the system. those individuals require longer periods of placement in restrifkt -- restrictive housing -- i am not saying, however, that we given on them. we are doing what we deem is appropriate and assessments by staff for consideration. i am hundred percent behind ensuring that we're not causing damage to an individual placed in that setting. but to ensure the safety of inmate and staff, the individuals that only represent, sir, a small number within our entire population, it is less than 1/5 of a percent when you look at the 215 in the agency, the number is small. even when you look at the displain -- discipline -- you are talking about 1500 inmates from a 250,000 population. we will continue to reduce the number, as best as we can, and i am committed that in our population, it is better manage inmates in general population. they need to have to opportunity to participate in programming. and when we are looking at recidivism reduction, we want them receiving a lot of intensive programs we can provide. when they are not given those opportunities, you are looking at the issue and concern relative to threat to public safety. and we do not want to be a part of anything that causes us not being able to bring about the mission. >> senator chris? >> thank you, mr. chairman and thank you for holding this hearing. everyone here shares a number of objectives and wants to make sure federal prisoners are held in a humane manner that respect their dignitity and also allows rehabilitation when possible and ensuring the safety of other inmate and of prison guards trust today guard some of the most dangerous people in the country, if not the world. mr. samuals, i appreciate your service and being here today and engaging in this discussion. i mind like to ask questions to further understand and the scope of solitary confinement within the federal prison system. you testified there is 250,000 inmates to about 1.2 million incarcerated in various state systems. and the majority are in the general population at any given time in the federal prison? >> yes, sir. the majority are in general population. also, the majority of the inmates in the system spend the entire period in general population. this is a small percentage. right now 6.5 percent is in some form of restrictive housing and when you break that down with temporary, they are given a set number of days and/or months they have to serve. in a prison environment, and i would hope that everyone understand that it is all about order. and if we don't have order, we cannot provide programs. we're constantly looking down institutions. since the hearing in 2012, we have restricted housing population reduction by 25 perce percent. we have gone from 13.5 percent to 6.5 percent. so reductions are occurring. we are only interested in placing people in restrictive housing when there is justification. we have 20,000 gang members in our system. they are watching this hearing. they are watching our testimony very, very closely for the reason being if they see we will lower standards and not hold the individuals accountable, it puts the staff and inmates at risk. and this is why i mentioned in my oral statement, we are looking at staff being injured and harmed but our staff is putting their lives on the line to protect the american public. and we have inmates within the population who are being harmed by these individuals who have no respect, i mean no respect for other's when it comes to their safety. we cannot afford, at any time, to say that for those individual whose assault staff, assault inmates don't have accountability. this is no different than in society. if individuals violate the law, hurt citizens, they are removed from society and placed in a jail or prison. if these individuals attack police officers, they are not given second chances where we say don't do it again. my staff, as i have indicated who are putting their lives on the line, have to know there is accou accountability for others. with treatment and working with the individuals, we will tine continue to that. 95 percent of the people will be released at some point and we have an obligation to do everything for that captured population, we are working to change their behaviors. many come in with significant issues. we have to address those issues. and this is very important for the subcommittee to know that when you look at secure levels for mental health, we have approximately 94 percent of the inmates within our system who have no mental illness. 94 percent. that is 187, 264 inmates. we have 1-4 care levels. when you go to level two, your talking about 10, 809 individuals who have been diagnosed with mental illness that would require the mental health staff to engage with these individuals once a month. care level three. we have 500, 055 inmates that require intensive treatment and we need to make sure they are receiving access and there is quality time with mental professionals. and 286,000 individuals are acute individuals. the majority of the inmates don't suffer from significant ment mental illness. it is a very small number who will do anything to hurt others. i have been in the prisons 26 years. i have talked to inmates and had inmates tell me if you release me to the general population or take me out, i will kill someone. i have a duty and obligation to protect the staff and inmates and when someone is willing to tell you if you do this, this is what i am going to do, there are issues with that. >> i appreciate your decades of service. as someone who spent a significant portion of my adult life in law enforcement, i am grateful to the many employees of prison, many who risk their live toes protect citizens every day. it isn't an easy job you are doing. i would be interested what is the value of solitary confinement and what circumstances should it be employed and what are the risks? what are the downsides to using it as tool? >> the value of restrictive housing should only be used with slight necessary for those individuals who pose a threat to other and the safety and security of the facility. that is to make sure we are protecting staff, inmate and the general public. it should never be used as being viewed as retaliating against individuals. we are trying to correct behavior. i strongly ensure that we use it for the sake of we can. it is no different than the state systems who are looking at this issue as well. and the one thing i do appreciate is this is a national discussion. the association of state correctional administrators, which i am a member of, immediately after the hearing, we all met. we talked about the best practices what we should be doing. when you look at state systems, federal systems and even toe -- at the -- alexandlocal level, y different ideas on what restrictive housing is. and we are reaching out to the jurisdictions to provide their best practices and it will be posted on the website. ... >> to look at what they are attempting to do and what they are doing, and i'm very, very mindful the concern, and i am the direct in treating inmates respectfully, ensuring they are living in a humane environment because our actions will dictate to these individuals what our country's all about, and we are not there to judge these individuals. we are there to ensure that they serve their time, cater to society, and hopefully put them in a better situation so when they are released, they are productive citizens. the goal of them never returning so that i don't see a downside with individuals who are not abiding by the rules because if they are not abiding by the rules within the prison, i mean, at some point when they are released, there's no accountability. we have to hold them accountable because if they go out and continue with that behavior, guess what? they are coming back. we will do everything possible to try to get them to turn and move from the negative behavior, but that requires intensive treatment. i'm also looking at ensuring that we are developing a therapy program for those individuals who are within our restrictive housing unit we want there to be an active engagement of showing, hey, we can be willing to accept the olive branch. we just don't want to leave individuals sitting there. >> very good, thank you, mr. sanders. >> senator cruz. senator franken. >> thank you, i want to welcome a minnesotan testifying later today. you terned your story from tragedy to hope, and thank you for holding the hearing and all the work you've done over the years. this practice, solitary confinement, restrictive housing is troubling for a number of reasons, moral reasons, economic reasons as the chairman said in the opening statement, public safety reasons, and one of the aspects of this that concerns me is mental health aspect of the problem. we've been discussing over the years we've seen the corrections and law enforcement system take on more and more responsibility for responding to menial illnesses, and our communities. last winter, i hosted a series round table discussions with law enforcement, personnel, mental health advocate, and my state of mips. the the sheriff who runs the jails in minnesota told me about a third of the inmates in his jails really belong in mental health treatment programs and not behind bars. you've been talking about treating people behind bars. maybe that's not where they should be treated. if it's possible. there are people with illness who committed some crimes that they need to be behind bars, but there are a lot who should be elsewhere. i have a bill called the justin's mental health collaboration agent to improve access to mental health treatment for those who need it, and i think we're leaving -- the purpose is to relieve burden on law enforcement personnel and on correctional personnel. the bill also funds flex the in creating alternatives to solitary confinement in our jails and prisons. i'd like to thank senators durbin, leahy and others for cosponsoring the bill, and i want to ask others to join that effort. i want to ask you a couple things. one about crisis intervention training. director, last march, i visited the federal medical center in rochester, minnesota. they have -- they are kind of a psychiatric unit and also behind bars, and they said they benefit tremendously from crv, crisis intervention training, and they avoided serious incidents that may lead to inmates going in the solitary confinement when they act out, become violence, and we see these on the weekend shows, show people behind bars, and the guards have to strap op all kind of protective wear. they can avoid that by understanding when some -- and talking someone double instead of in a way not provoking terrible conflict, but also not stopping it. can you talk a bit about the role that cit, crisis intervention training, plays in federal prison system? >> thank you, senator franken, and i'm glad you raised this question. the national institute of correctness, part of the bureau prison, actually provides the training for crisis intervention, and it is based on a request of the state system. we ensured that our staff, and as a result of what they have seen, we implemented our own protocols, related to the youth various element, and we have bill tested this training in one of our institutions, and as a result of it, we are obtaining the feedback with something that we are considering to look at actually adopting within the bureau based on the federal system in our unique needs, so to your point, it does serve value, and we're looking to explore doing more with it within the federal system. i kind of want to, you know, you provided a lot of status statistics about solitary or restrictive housing. i just want to get more into the human aspect of this. i kind of want to, crisis intervention training, but how big is a cell? how big is the average cell in solitary? >> average size? >> cell, yeah, the size of the cell, how big is it? i'm trying to get this -- is the human thing we're talking about. how big is the cell? >> the average cell is -- i guess -- you're looking for the space of what -- >> yes. the dimensions in feet, in inches. the size of the cell that a person is kept in. i want to get some idea of -- i don't know -- am i asking this wrong? [laughter] is there -- i mean, is what you're saying is that there is no such thing as app average cell for solitary? typically, in the bureau of prisons, the cells in solitary confinement, how big is the cell typically? >> the average size should be equivalent to six by four. >> okay. that's an answer. six by four. does a person in the cell during months and months say of this, they have ability to talk to families? >> yes. >> they always do? >> it's not op a frequent basis, but we provide individual to restrictive housing op average. i mean, they are receiving one phone call per month, and this is something that we are looking at when i talk about reforms for our disciplinary process for those placedded in restrictive housing that we need to change, that is something we are willing to continue to look at to ensure we provide more access for frequency for the phone calls as well as visits. >> well, i've run out of of time. we'll have some witnesses who may be more descriptive. >> and it's ten by seven for the cell size. >> okay, thank you. thank you, mr. chairman. >> thank you, senator franken. >> thank you, mr. chairman. thank you for your service and all that you're doing to address what is really a troubling situation. we do have someone on the second panel who will testify or talk about women being con finded in solitary for reporting abuse including sexual abuse by their bureau of prisons staff. i have a series of questions regarding this situation. are you aware of this happening in the system? rare as it may be, we hope? >> yes. >> same question. then what do you have in place to prevent this kind of abuse from happening? >> well, what we have in place is our staff being active in ensuring rounds are made. we have also addressed concerns with ensuring the inmates are able to reach out and let us know and being comfortable with that. we have zero tolerance. >> so you have zero tolerance, so does that mean that that inmates that this is happening to feel free to come forward and report? who would they report this too? certainly, it shouldn't be the person that, you know, has power over them and who is actually the abuser, alleged abuser. >> they're able to report any allegations to staff, and we also have a hot line number that the inmates are given, and they can also report it in that manner. >> in terms of getting the information out to inmates, do you do this in written form? how do your inmates know, regardless if they are in solitary or in the general population that if they are faced with this kind of abuse, that they no what to do, where to go. >> it's provided to the inmates' population verbally during discussions as well as in writing. >> mr. chairman, i would -- would be good to provide with a sample or, in fact, a directive regarding what they tell the inmates, this is the situation, so we can -- >> we can provide that for the record. >> so in terms of the enforcement of this policy or this directive, how do you go about in making sure that this is being followed by your staff? >> well, a number of thing, the local level is something that the leadership concludes that staff are focused on ensuring we do call control review. we utilize our national office when we go out and conduct audits of the facilities. we look at the operation practices and procedures to ensure that we are following policies. >> how long have they been in place? >> for decades. we've always have zero tolerance for any type of activity and given the staff to carry it out. for the individuals who do this, we quickly take all allegations seriously, and those individuals are removed from general populations as well as the individuals who have been victimized to make sure we're looking at the security issues on both sides, and we ensure that the investigation relative to the allegation that we're doing it in a timely manner, and holding those individuals accountable because as i mentioned, senator, we do not support nor do we want anyone victimizing others. not being held accountable for their actions. >> and is this kind of behavior considered a crime for which the perpetrator can be prosecuted? >> yes, and if the investigation's leaked to individuals charge, which we refer all issues to the fbi and then they move in, and they did their investigation and, ultimately, this determines whether or not a crime is committed, and we believe ensuring those individuals are held accountable to the fullest extent of the law. >> do you have the numbers how many are prosecuted in a way and then discipline and then prosecution. >> i don't have that information with me currently, but i can provide that for the record. >> do you have that? >> yes. >> thank you. any studies on the effects of solitary confinement on recidivism and early entry? >> there's been no stoids as a result of the hearing conducted in 2012 when that was presented to me, and we have not participated in any type of study. we dprea to undergo the analysis that's take b place right now with cna, and hopefully from that review, we'll have some insight, but, senator, i have to add, when you are looking at recidivism, that will require a long period of time to assess when you're looking at the number of individuals who have since been released and impact on recidivism, and, also, they have resources for ensuring if we undertake something like that, there's substantial costs, but currently, we do not have anything like that in place other than what we're being looked at. >> i recognize that it's not that easy to determine cause and effect in these situations. are you aware of situations that show differences in the effects of solitary confinement on men and women? >> no. >> is this an aspect going to be addressed in some ways in the studies you refer to? >> the competence of the study we're undergoing now, that's not part of the assessment, but i agree with you. it's something that we should continue to look at, but also, as i stated, when you look at the gender issues for restrictive housing, the number for us is very, very, very low for the female population, and they are not as likely as the male population to be engaged in behavior that requires them to have restribtive houses for long period of time. >> you have 198 women in restrictive housing. how many of them are in the adx facility? >> we do not house any females nor do we require for the record to have that type of housing for female inmates, only for males. >> thank you, thank you, mr. chairman. >> [inaudible] >> thank you very much for your testimony. we appreciate it. we're going to follow-up with the questions raisedded here earlier. we invite the second panel to come before us and ask the witnesses to take a place at the witness table. i'll read background on them before they are called on. rick is here, the executive director of the colorado department of corrections, three decades of law enforcement experience for this position. he was secretary of wisconsin department of corrections, and he also received at deputy secretary. previously, he was a sheriff at bane county, wisconsin, served as u.s. assistant attorney and assistant attorney and undercover and narcotics executive and deputy sheriff, and i thank him for joining us today. thank you for being here. piper carmen is with us, author of the "new york times" best selling memoir "orange is the new black: my year in a women's prison," it was recently adapted into a netflix original series. she works at the communications consul at that particular time for nonprofit organizations and serves on the board of women prisons association, spoke and written about prison issues in media outlets and received a 2014 justice trail blazer award from john j. college center for media crime in justice. thank you for being here. president of the justice fellowship, public policy affiliate at prison affiliate advocate principles for restorative justice found in the bible. he served as haven't and director of external affairs, and he served in the mission house of representatives elected speaker, lives in michigan with his wife, stacy, and three young daughters, and i thank you and justice fellowship for your appearance here today. mark levin, at the texas public policy foundation, playing an important role in adult and justice reforms, and the state, the leader of the public policy foundation, right on crime initiative, led conservative efforts to reform the criminal justice system. he was law clerk to judge will garwood on the fifth circuit and staff attorney at the texas supreme court. thanks to the texas public policy foundation's work led to reforms of the drug sentencing law and in particular, i thank you for your support for the sentencing act, which all members here today have cosponsored. damon, a witness before us, in late september, he was mission's 141st death row inmate to be exonerated on actual innocence grounds since the spring court reinstated capital punishment since 1976. he was released from the louisiana state pent ri after 15 years in solitary con findment. his release supported by the district attorney's office, responsible for the original prosecution. following release, he relocated to minneapolis working, obtained a ged, got a commercial driver's license, and then began truck driving career with the truck company, and i'm sorry what you've been through, sir, commending you for what you did to rebuild your life. amazing story. thank you for the courage to appear here today, and we'll hear testimony here in a couple moments. you have five minutes, and i read the written staples, and i commend them. they are extraordinary statements. five minutes to summarize, if you would, and then we'll ask a few questions after the whole panel. >> thank you, mr. chairman, ranking member cruz, and distinguishing members of the committee. it's an absolute honor for me to be here. i'm rick, the executive director of the colorado department of corrections. i was appointed by governor john to fill the vacancy left by the former executive director who was assassinated in march of last year. in a horrific irony, he was assassinated by an individual who had spent simple years in administrative segregation and was released directly from segregation into the community which is an absolute recipe for disaster. the other irony involvedded here is that he had dedicated his short time as the colorado department of corrections on reducing the large number of individuals in the system that were in segregation. in fact, colorado, was one of the leaders, unfortunately, of incarcerating people in administrative segregation. i was picked because i had the same vision in wisconsin, was able to do things there, this gives me the opportunity to continue that vision. having spent some time in administrative segregation myself recently, it just reenforces feeling about it, and these are my feelings. thirty years in the criminal justice system that segregation is overused, misused, and abused, and what i feel is that we are failing in this particular area in our missions, and in our mission really is not about running more efficient institutions, although that's certainly something we want to do. that's something we need to do, but that's not our primary mission. 97% of all of our inmates return back to the community, and out of those 9 p 7%, some have been in administrative segregation, and our duty and primary mission is very simple. make a sacred community, and the way we make a safer community is by having no new victims, and the way we have no new victims is by ensuring the people we send back into the community are prepared and dedicated to being law-abiding citizens rather than returning in worse condition than they came in, and that's where i feel we're failing. some of the things we've done in colorado, i was charged by the governor with three tasks. eliminate or reduce the number of major mentally ill in the segregation area, and what we did last spring, for example, 50 were in seg, and this january, there were four. the second challenge was to eliminate or drastically reduce those released directly from segregation into the streets. i might ask anyone in the audience to stand up if they want to live next to someone released in direct segregation into the street, and i'm pretty sure people stay in the chairs. what we were able to do in 2012, we released 140 directly into the streets and in 2014, we released two so far. in the other area challenged by the governor is look at everyone else in administrative segregation and see if you determine the numbers of of those released, and we've done that. that was started by executive director which was continued by me. in january of 2011 #, we had 1451, and in january of 2014, we have 597. in a sense, i don't feel i'm replacing him. i feel i'm fulfilling his vision. that's what we're doing in colorado. i believe that nobody should be release the directly into the community, and what we are doing all can be doing. i don't disagree with thinking said, i knew him for quite some time, and working with the association and state correctional add strags correction association, we've done a lot of work with best practices. throwing a few things out there as i run out of time. for some reason, we think for this, they are in a cell 23 hours a day. who defines that? there's probably some of your court cases that mandates that's what happened. why suspect it 22 hours a day, what about 20 or 18 hours a day? start at 23 and work down to ten, that's what we're going to be doing. it's been automatic for the most part if someone on death row stays in segregation physical they are put to death, and as we know, a person spends many years, and some are found innocent and released. we'll change policy on that giving them the opportunity to get out of the cells. where reare in colorado, only extreme violence, a small handful, all we talk about, are those who remain in administrative segregation, but we don't give up on them. we have to continue to find a solution for the problems because as i sat in the cell for 20 hours, my response was this is not a way to treat an american. it's not a way the state should be treating someone, and it's not a way the nation should be treating someone, and intergnarlly, it's not a way to treat someone. this is receiving the right amount of attention now at the right time, and i think it's time we move this forward. thank you. >> thank you. i might say to those gathered here, roll call vote started so colleagues will leave to vote. there could be interruption for recess because of role call, but we'll be back shortly to resume. >> chairman durbin, ranking member cr cruz z, distinguished members of the committee, thank you for having me here to address this important issue. i spent 13 months as a prison in the federal system. if you're flail with the back, i was never held in isolation unit. the longest amount of time i was placed alone in a holding cell was four hours, and i was ready to climb the walls of that small room by the end of that. i am here today to talk specifically about the impact of solitary confinement of women on women's jails and detention centers. they are the fastest growing segment, and their families and communities are affected by what happens behind bars. at least 63 #% of women in prison are there for a nonviolence offense; however, some of the factors that contribute to these women's incarceration end up landing them in solitary confinement. during my first hours of incarceration, warnings about solitary or the shoe came from both prisoners and staff very quickly, and very minor infractions could send you to the shoot. they can then keep you there as long as they want under whatever conditions they choose. unlike the normal community of prison, 24 #-hour lock dop leaves you in a six by eight cell for weeks or months or years, and this is unproductive for individuals, for prison institution, and the outside communities to which 97% of all prisoners return. several factors make women's experience in incarceration and solitary different from men. women in prison are much more likely than men to suffer from mental illness making being put into solitary confinement much more likely and damaging. the majority of women prisoners have a history of mental illness, and 97% do. she spends the first year of the six year sentence in solitary confinement. you have her full written statement. i'll share a few words of hers with you. i spent three quarters of the time on a bunk with a blanket over my head in the fetal position rocking back and forth for comfort. i can separate mind from body. i cried a lot, not for me, but for my kids. i laughed inappropriately. i got angry at myself. angry at those who abused me and led me to the life of addiction. i felt ashame because i let others abuse my body because i felt i deserved it, felt sorry i was born. felt sorry for all the hurt i caused, but most of all, i felt sorry there was not a rope to kill myself because every day was worse than the last. they are sexually abused by staff. .. a muffled will mark the next up and evidently needed long-term oversight and reform. >> thank you. as i said to my review the testimony of all the members of this panel. it is extraordinary, and i don't want to miss it. if you could hang around for a few more minutes we will be back. this committee will stand in recess for tenants. [inaudible conversations] [inaudible conversations]

Transcripts For CSPAN2 Key Capitol Hill Hearings 20140226

out there is no question a great deal of progress. adding 2.4 million jobs marks the third consecutive year of job growth from february 2010 private employment has risen in 47 consecutive months for a total of 8.5 million jobs. we think of the ups and downs with the employment data. you can see steady consistent job growth at a pace of about 190,000 private sector jobs didn't november december the resawed job growth faster than that pays. december and january it did not come up to that average for a variety of things whether the whether seasonal factors or normal boy is sid measurements that bounces around from month to month with that moving average has barely changed. with that volatility of jobs numbers is very much in line with the magnitude of that probability prior to the recession. the progress the last year was notable in part be coz of the steep decline in the federal budget deficit was the major had planned. the next figure shows the largest for your reduction of the deficit mobilization of world war ii. ended fiscal year 2009 has fallen by 5.seven percentage points cheapie and nearly half of that happened of the last fiscal year alone. the private sector continued to power through the spending caps of 2011 of the payroll tax holiday is indicative of the economy. of those such help to bring about the deficit reduction as a balanced approach to making progress to sustainability there were necessarily compounded by the sequestration in march and with the shutdown in october it took a large bite out of fourth quarter gdp growth as well. i will say more about fiscal policy and a moment but that it would be considerably less of a head wind in the years to come. before i move on to the more forward part of my talk i want to make one last point about the economy's progress to put it in a context of what we have seen at around the world with recovery from financial crisis. we know it is longer, harder, the more difficult and with that regard to prepare the united states to compare to the 11 other countries that winters systemic financial crisis as identified and what you see with the working age population and.it within four years which is considerably faster than the normal ted years verses' historic data. is a major -- the measure of the important ones not just the recovery act with the jobs measures that followed including the payroll tax cut a and additional investment. this was fading with the additional measures getting cumulative lead nine-point 5% gdp growth so those numbers are very consistent with the cbo has estimated. with all other additional measures showed in the red. and to complement the broader policy with the rescue of housing. and the efforts of the federal reserve. they have made substantial gains in the last five years. while many challenges remain including recent weather disruption and some turbulence there is a number of reasons to be optimistic about the economy. cyclical development like headwinds isn't finances are likely to contribute to a recovery in the near term at the same time be emerging trends declined with the rates of health cost growth with the technological progress was sustained growth into the future. >> the most predictable of reason for optimism in 2014 is the drag from fiscal policy of. >> a bipartisan budget agreement of the discretionary sequester in january then will live to a portion of the cuts during the preceding year. while congress could do substantially board -- more i will outline some of what that is the economy is unlikely to say anything that is that the federal level 2013 the deficit continues to cut down the economy considerably was. in addition fiscal headwinds appear to be easing well. the second cyclical factor is household finance seeing wealth wipe down as result a large degree of progress has been made in 2013 real per-capita household wealth was a percent of the decline reflecting gains of housing starts prices one is a striking statistic is the debt service ratio the estimate required payments on mortgage and consumer debt as a sheriff disposable oh come -- in combat fell nine-point 9% to the lowest since the day it began in 1980 down 13% since 2007. further improvements of household finances have expanded access due credit to contribute to a strengthening of consumer spending. to take a vintage of the fact we're continuing to build houses and the auto stock is on average as old as it has been. the aggregate statistics on household wealth paid to pitcher too many have not shared. they have a larger fraction of wealth in their home relative to equities but they have not recovered as sharply from a larger fraction of the wealth and i will talk more about that issue. three trends helping the economy today the first that has gotten significant and deserved attention is a dramatic increase of energy production but it is important to understand with the shift of energy that represents not just for our economy before america's security as well. current projections became the world's largest producer of oil and gas 2013 of saudi arabia in russia. domestic production from crude oil rose for the first time since 1995 and further increases of domestic production over the coming years. natural gas production and continue to rise in 2012 of more than 20% over the last five years. but the progress is not limited to oil and gas. great strides have also been made with energy efficiency. wind and solar power have doubled since the president took office while consumption has fallen over this time in stronger fuel economy standards with cutting edge technologies have led to the latest vehicle fleet ever. but it directly to make united states more attractive for multinational firms industries like manufacturing. the president recently announced of the energy sector to reduce its dependence on foreign oil sources. the "state of the union" address the president announced his intention with the new executive action to improve the fuel efficiency to help localities attract investment covered by natural gas. the second structural trend i want to talk about is a slowdown in the energy boom is just as important to our overall economy. bennett it is in part to get over the affordable care attacked it is understandable to the cyclical state of the economy to reverse itself set clear it has become that this is a structural future of the economy. but the next figure shows just how striking for the development is that the real per-capita health care expenditures 2010 through 2012 lovely this year we have data shows the slowest growth they have on record the wingback to 1960 in the preliminary data 2013 shows the slowdown continues that year as well. the council of economic advisers wrote an incentive report about the explanation for this trend. one of the points is merely a and after a fact there are three reasons for that. first the slowdown is persistent even though the economy has recovered. we see a larger slowdown of medicare them private health insurance. that is notable because as others have stressed medicare is not very cyclical and the fact it slows down is not related to the economy. finally to put into quantities and prices that tends to be cyclical or to raise cost sharing prices historically have been much less cyclical and much of the slowdown has been in prices measured in the pce or the spread of consumer price inflation. it is increasingly clear at least an important part of a structural phenomenon. that slowdown started before the affordable care act was passed and factors like a long-term trend of higher cost sharing with blockbuster drugs played a role. there is no question some of the already implemented features include the reduction and private insurers as well as payment reforms incentivize better patient outcome contribute to this trend. a look at the cbo estimates the hca would save $70 billion of medicare but spread out over the years from 2010 through 2013 that alone accounts 0.two percentage point reduction with the growth of the health expenditure over this period. if you add to that spillover that follows the medicare payment model of the total contribution is 0.5%. because of this that deficit dialect over medium and long term has improved. employers are likely to see significant benefits as there is less pressure on compensation cost and at least in part be passed on to workers. with higher wages. the third emerging trend presents a major opportunity for long-term growth with it technology particularly the it is widely available to the broad band network and a capacity to allow mobile devices to take advantage. 2009 through 2012 in new investment grew more than 40% of 21 billion through 30 billion now with the availability of fraud period. the infrastructure is that the center of a vibrant ecosystem that has more fun design mobile app development with the technologies and sectors and public safety and entertainment and more. of of with the slowdown of health care cost growth in of the rise of domestic energy production are major reasons to be upbeat about the prospects in the coming years. now with these opportunities still facing a several decades along challenges our growth. to put this into context the next chart shows the history of of our total productivity for the last 60 years. growing at 1.8% per year in the wake of world war ii. says pent-up military part public investment like the interstate highway system. a dramatic slowdown of productivity growth on a worldwide basis after 1973. subsequently started with the new economy in 1990 productivity growth increased substantially 1.2 percentage but not rising at the pace we had seen in the years after world war ii. while the growth rate of total factor productivity is critical to the central the projected slowdown in the growth of the america's workforce due to the aging of the population gives a greater emphasis on the productivity growth going forward. productivity growth slows 1974 through 1992 the overall was partly masked with what the working age population of women into the work force. we look forward for such favorable demographic trends for whatever shortfalls' we have that is why productivity investment is likely to be as critical. let me turn to the agenda to strengthen economic growth than the goal is to fold to continue to return the economy to its potential to appear getting closer and closer to the unemployed rate unacceptably high but much lower than anyone would have forecasted and jericho. at the same time we also need to see increase of long-term growth. fortunately many policies of the president's agenda would return the economy to its potential. let me talk about some of the major elements of the proposal. first the president is right thing to the discretionary level what was agreed upon with the right and maria agreement. just juicy how hard one dash just to see how hard it is to right at that level the president also is opposing on top of that the opportunity of growth to make additional investments split between defense and nondefense priorities focusing on early childhood education and national security head of financing with of balanced package of tax loophole closers and spending reform over the next 10 years. the president continues to look for ways to make a more sustained investment and one of the highest priorities in that regard is infrastructure. the president will once again propose a reauthorization plan. at the same time we are not waiting for congress to act. in 2011 the president issued an executive order for more transparency and accountability in did the greeks and months ahead -- ahead building on that to make sure they're getting started as quickly as possible. at this saves time to push that infrastructure package to reform the business tax system that will also benefit the economy. business tax reform cuts the top rate at 20% and broaden the base in the process excipient the economy potential that would skew investment decisions. that tax reform would be revenue neutral transitioning to the new system raises the one time revenue and that is what we would use to finance the one time investment with infrastructure. in addition to physical capital to re-education and training. to give incentives to improve cater 12 curriculum to make college more affordable the president has repeated the call for every child with the opportunity to attend high quality preschool. but it could make a profound difference in decades to come at the same time to focus on every aspect from preschool all the way through job training programs to apprenticeships is. among the most enhance productivity is immigration reform added basic level it would help to counteract that slower growth of the of labor force from a planet based green card for four board individuals earning advanced degrees to stay here after they graduate. what is exciting not that it just expand the work force but also the per-capita gdp by expanding total factor productivity growth. research has found happening twice the rate of the citizen even after the representation immigration from native his ventures defied the variations is tied to changes. more over immigrants are more likely to start a business. the cbo affirmed this view would it pass the immigration bill with total factor productivity would be a full percentage point higher in 2033 under the legislation. these could translate into significant economic outcomes 40 percent of the fortune 500 companies started there. borrow they tried to attract on to procurers and entrepreneur to the united states which right to sell in the other direction with the free trade agreement with europe and the trans-pacific partnership said gdp has the most significant trade negotiation in one generation because it has 12 countries hatter home to a combined 793 billion yen to account for 40 percent of global gdp. . . it does come down in the short run, come out and the long run, that will be declining his share of the economy for the next several years, but after 2018 net debt will start rising is a share of the economy which is are we will be putting forward more balanced measures on both the revenue side and the expenditure side to assure that that debt is continuing to decline as a share gdp. a lot of you are focused on, understandably, on agriculture growth which is what i have been focusing on so far. it does matter as well have echoed the shared. matters. you work for companies the sold to consumers and the income matters. matters for the short run recovery. matters for the sustainability of our economy over the long run and for the political support of the type of market oriented growth in hansen policies. that's why they guy room like that is a -- is important to reflect on just how large income inequality has bell of the last several decades and why is important to take steps to make sure that this growth the we have been talking about a share. one of the steps is raising the minimum wage bill which has declined more than one-third from its peak in the 1960's. in addition to that, the president has proposed other measures to help us join the middle-class including expansion of the air and income tax credit for workers without children and in addition to the immediate steps the president has set out of range of ideas to invest in education and quick workers for the skills they will need for years to come, measures that help us grow and help ensure that that growth is widely shared. so in conclusion, i would say that the challenges we face are substantial. we continue to have some of the short run challenges, but the bigger ones are the ones that have been building up over the last decade, the slower productivity growth in the postwar years and the increase in inequality. a lot is in place to have more stability and certainty. i think that by itself will be a major help to the economy, but they're is a lot more the weekend should do. i would describe some of that ambitious agenda in my remarks here today and would be happy to discuss more of it in answer to any questions you may have. [applause] >> ken simonson. one of the most unborn things that its share of economic advisers can do is educate an advocate for good, federal statistics. we have seen in the last year that bls nba have both had to discontinue important programs. we hear that the export price index may be next on the chopping block or other important series. hope he will appeal to stick up within the white house and to the extent that europe probably the charter of the importance of finding those properly and maintain the independence of this bill is a cease. >> i take it there is not a lot of debate over that topic in this room. you're not going to get in the debate from the either. i would just say that it is generally -- we like to think of ourselves as focusing on the national interest. but to the degree we have a constituency in a pro way is federal data and it is important deal with in l.a. say is our put it in the context of a broader budget. will the buyoff 60 percent of the sequestered which means of we will have 40 percent of a sequester this year. that is on top of already tough spending in the budget control act. with that we are on track to having discretionary spending the lowest as a share of the economy since we started recording discretionary spending in 1962. and with that comes a lot of choices that we would rather not be making. this -- there are certainly going to be difficult choices, the budget when it comes to the potential difficult choices and just about every area of the budget. so part of it is figuring at how to do the best the probably can't with your limited resources and with the even worse choices might have been. part of that is seeing what we can do to expand those resources and in particular if the sequester continued been bought of a fraction. they have not dead yet done that. if you have the full sequester it would force even more painful choices potentially. but thank you for your point. >> financial. can still alive the memories i was going to make the same point in to appreciate. on a broader and for search for question, and the president's proposal image and corporate tax reform which has bipartisan support and immigration reform are which is critical for many companies in the trade talks. what are the chances of any of that getting done this year before this present lease? >> we're going to do everything we can to push him toward. i think there's certainly a reduced legislative appetite in this particular year, but the look of something like business tax reform. over time you have seen an increase convergence in terms of what the rate is, broadly how you would pay for that rate. and even a certain commonality in idea when it comes to more controversial areas like have to deal with overseas earnings and taxation they pass that on a strong basis. and the camino, the strong constituency for it in the house , also a deep set of obstacles in the house. finally, i think the last one that was talked about was trade. we are working very hard to negotiate those agreements. tipis be is far along and will be continuing. >> fantastically comprehensive presentation. an important piece that was not included in and out was the discussion of the collapse and labour force, which, as you know, we have lost essentially three full percentage point since 2007. and it strikes me that this is one of the most important economic developments in the united states in recent years. what set of policies in action or contemplation could help try to minimize the degree to which the extents of that chance out to be permanent. roughly half of it is demographics. the other half since to be behavioral of various kinds. obviously some of the infrastructure to proposals by create demand from some of these back into the market. in utah and a larger sense? it can't just be about infrastructure with the labour market policy. >> i think that is a great question and certainly is one of the important things going on. i would divide the decline in the participation rate into three general areas. the first area which as you yourself just said is aging. that is it possible for about half. you can do a mechanical calculation of taking labor force participation rates in 2007 by age and gender groups. aging and the keeping of participation rates the same and you would have about the participation rate would fall by about one percentage point over this time. you get the same results of the use the refresh but dissipation rates this year. so it is not. to which of those you are doing. that is about half of it. that was predictable a predicted a quarter of it is. something like it normally would be. this is the part that we expect that the employer rate comes down, the participation rate will go out. and anything that gives that the unemployment rate gets it done. the last quarter seems to be something a little bit to and from the normal cyclical pattern and if you look historically the thing that is different from the normal cyclical pattern seems to correlate very well with long-term unemployment. so whenever is causing total compensation of unemployment to be tilted toward long-term unemployment relative to what it has been his starkly also seems to be contributing to that last quarter on the participation rate. and that is the one that we are, frankly, a little bit less certain about what will happen to it the one for. terms of the policy implications , i think these three parts of the participation rate all have different answers. to the degree they're is a demographic trend that does create challenges our economy in terms of growth, in terms of public finances, and one of the most powerful tools we have there is immigration reform. in addition, anything else all the people who wanted to need to work continue to work with up in that regard as well. the cyclical does not have any policy implication that is any different than the observation that at six and a half% the upon the rate is unacceptably high. so investments in infrastructure , the additional i read it demand to get extended an insurance benefits to many of those are part of it. the last quarter we don't, as i said, understand as well. to the degree and is related to long-term unemployment anything until the of long-term unemployment is going to help respond to it. and in that regard we have been trying to use -- the president talked about his pen in his own for your action. he has been using his fallen that, being a lot of major companies and, having them about best practices for hiring long-term employed, and that should help with the last part of the participation rate, but we certainly need to continue to understand it better as well. >> thank you. >> david pritchard, purchase associates. thank you for your analysis and know what. and also want to say that of all the things a you cover comprehensively, the two things missing in my mind by the lack of national savings, which has been zero for the last five years, the very weak investment and these two together are responsible, in my mind at least, for a major part of the subpar growth rate of a lousy real person up 2%. obviously we have population growth. some small productivity growth, but without more investment which can only result in a sustainable way with higher savings rates, i want to know why there is no more of a focus on savings rates. terms of policy we know that congress will do almost nothing because of extremists. both sides of the aisle are going to keep small baldy evanesces year. after that my question concerns will we're going to do sustainably to increase things with some kind of grand bargain for next year in terms of the things that affect the participation rate. for example, can we raise the retirement age, reduce the entitlements, make sure that the low income worker after tax and after entitlement is much better off than the guy who does not work? until those things happen all of them together, sometimes hopefully next year, i don't see any possibility. i appreciate your response. >> in terms of investment, think of it, it had to choose i would think of it as following and being a function of the overall economy right now rather than being a driver of it. we have done some statistical analysis that looked at what some have said as a puzzle which is you have high profitability, high equity market valuation, a low-cost capitol, and yet investment growth has not been as fast as you might. and what we have found is there is a simple explanation for that which is investment growth is a function to a large part of sales growth in aggregate demand and if we can get aggregate demand increasing in an investment should follow. and you know, as i was saying before, and reid demand last year faced a challenge in terms of the apparel tax cut coming awake, the sequestered going into affect, and other sharp sources of deficit-reduction. we don't have any of that in 2014. consumers are more be leveraged, have been by some measure on record since 1980. and as a result, i think we are in a stronger position for consumer spending this year. what we would like to see is investment following that. national savings is an important issue in its own right. i don't think it is an important determinant of investment in the short run. i think it is an important determinant of the sustainability of our overall economy of the medium and long run. net national savings including the federal sector of the corporate sector and the individual sector which has actually risen a lot and lost couple of years. as a result we have seen our current account deficit as share of the economy fall to lost his been since the 1990's. i think that is the direction and the movement you would want to see for sustainability. terms of the of the policy issues you raised we're looking at a wide range of basic health, you know, continue to strengthen what we have. >> thank you. a quick follow-up. it is not on their trenary it demand killed but things other going to be sustainable to really be increasing. >> okay. my question concerns immigration. the argument the economic argument that she mentioned with increased up to the inertia and patents seem to apply more to age one be expanding h1 be green cards for engineers and so forth, but the majority or a major focus of the legislation is the 11 million undocumented workers. i would like to ask about policies to move to a path to legal status, what you see as the economic benefits of that policy. >> i think the economic benefits of that policy very much centered around certainty. my guess is everyone in this firm has talked about howland certainly affects investment by businesses. the same thing is true for individuals. if you're not sure if you're going to be deported from this country you're not going to invest as much education. you're not going to invest as much training. you're not trying to invest as much in the business. these are people who have been here. these are people who are going to continue to be year. maloof like to do is give them a pass the that they can have greater certainty. we are collecting taxes, but we are also in a position to, you know, invest more and make greater contributions to our economy. time. so at this time i'd like to invite the presentation and we'll take some q&a hopefully right after he presents. thank you. >> thank you. it's great to be back at nabe. i'm afraid that i'm going to mostly stand here while i talk. rather than just focusing on the budget this morning i thought it would be useful to spend most of my time talking about cbo's perspective on the u.s. economic outlook and then i will wrap up by talking about the budget. i know your next session will go in to budget issues in greater detail. i want to try to address five questions. first, most importantly, how will the labor market evolve? together with our budget and economic outlook released a few weeks ago, we released a separate report on the slow recovery of the labor market. so we'll start with that. then, i'll talk briefly about how rapidly we think potential output will grow, how rapidly we think actual output will grow. what the paths will be for inflation, interest rates, and the labor share of income. and i will wrap up by talking about the resulting projections for the budget. about the labor market. in our view, the slow recovery of the labor market largely reflects slow growth in the demand for goods and services. with a smaller role for structural factors. we think there is considerable slack remaining in the labor market, and specifically, we think the economy is about 6 million jobs short of where it would be if the unemployment rate was backed down to its prerecession level, and the labor force participation rate was back up to where it would be without the current cyclical weakness. so here's the unemployment rate. graph through late last year. obviously it went up very sharply and has reversed a little more than half of its increase since before the recession. the net increase in the unemployment rate from the end of 2007 to the end of last year was about two percentage points. we think that of that roughly two percentage point net increase about one percentage point can be attributed to cyclical weakness in the demand for goods and services and thus in business' demand for workers. we think the other percentage point roughly can be attributed to struck oural factors of which about half we attribute to stigma and erosion of skills, arising from long-term unemployment, and the other half, to a decrease in the efficiency of matching workers and jobs at least partly from a mismatch in skills and locations. these are, of course, estimates, and rely heavily on our judgment, and on the empirical work we've been able to draw. but we try to quantify these concepts, and i'll give you another several sets of quantifications as we go along to be concrete about what we think is happening. so with that -- with those structural factors we think that the natural rate of unemployment, the rate that would arise apart from the weakness in demand for goods and services, has gone up from about 5% before the recession to about 6% now. and as we look ahead, we see a natural rate declining, to about 5.25% by the end of the coming decade. which is our normal horizon for budget and economic projections. and we expect the natural rate to decline as those structural factors wane. we think the actual rate of unemployment will fall back down close to but not quite to the natural rate of unemployment. and i will explain that gap in just a moment. so by 2024 we think the unemployment rate will be 5.5%. and that difference of half a percentage point relative to what was the case before the recession, comes in two pieces in our analysis. the first piece is about a quarter point remaining extra unemployment, remaining at higher natural rate of unemployment, because of the stigma and emotion of skills from long-term unemployment. so we think the natural rate will be about 5.25%. rather than the 5% it was before the recession. and this shows, i think, the very long shadow of having so many people out of work for such a long period of time. we also think there will be about a quarter percentage point gap between the natural rate of unemployment and the actual rate of unemployment. and that reflects what we expect to be a shortfall of output relative to its potential. let me explain that, that's a difference in our projection this year from our projections in past years. if you look back at the gap between actual and potential gdp that we estimate over the last several decades you can see that there is a lot more of that mass below the water line than above it. in other words, the shortfalls in output relative to its potential have been more frequent and larger than the excesses of output over its potential during economic booms. on that picture is even more striking if one adds, of course, the last set of years of this -- of very long and sustained weakness in the economy. our projection going forward is that the output gap will narrow but will not entirely dissipate and we are simply taking our cue from the historical average. on average, over the past several decades, and indeed overall since the second world war, actual output has been a little below our estimate of potential output on balance. so we're not predicting any particularly cyclical events in the second half of our coming projection. but we're trying to allow for this average gap. okay. the other crucial and at least to us surprising feature of the -- aspect of the labor market over the past few years has been the participation rate in the labor force which as you know has fallen quite distinctly, and fallen more rapidly since the recession started than the years before that. of the -- there's now been about a 3 percentage point decline in the unemployment rate from before the recession until the end of last year. and of that roughly three percentage point net decline, we attribute about half or 1.5 percentage points to long-term trends, primarily the aging of the population, and the move in the baby boomers in to retirement. another percentage point we attribute to the cyclical weakness in the demand for goods and services and people's choosing to stay out of the labor force, to leave the labor force, because they can't find jobs. because the job prospects are so poor. and we attribute about half a percentage point to discouraged workers who have dropped out of the labor force permanently. some of these folks have gone in to social security's disability insurance program, which a number of people going in has moved up very noticeably in the last few years. others have simply left the labor force to do other things with their time. but we think that about half a percentage point on the participation rate of the decline can be explained by those folks who we think will not come back in to the labor force. in contrast the people who are out because of the cyclical weakness are people we expect will come back as job prospects improve. so our forecast for the labor force participation rate shows just a gradual downward trend over the next several years. that's the net result of two factors. the cyclical recovery that we expect in the demand for goods and services and thus the demand for workers will pull people back into the labor force, tend to pull up participation rate. but the demographic factors will continue to pull down the participation rate. so over the next fuhr years we think demographic factors will win that battle slightly and the participation will come down a little bit. beyond that point, once the cyclical recovery will be complete in our view, then the demographic factors are the crucial factors, and they push down the participation rate a little more sharply. another piece of this story, though, that we also talked about in our report, which is the effects of federal fiscal policy. i'll come to that in a moment. so between 2007 and 2024 in our projection, the participation rate in the labor force will have fallen by five percentage points, and of that five percentage point decline, we expect about 3.5 percentage points to owe to the demographic factors. again, primarily the aging of the population, and the retirement of baby boomers. this is just the other side of the story i talk a lot about in terms of the pressures on the federal budget. as people move in to ages where federal benefits are much more generous. we think about a little under half our percentage point of that total five percentage point decline in the participation rate comes from discouraged workers who've left the labor force permanently. and the last about a percentage point we think owes to federal fiscal policy, the larger share of that stems from the affordable care act and the reduced incentives to work that arise when people with lower income receive a benefit, which is then withdrawn as their income rises. the other part of this is the bracket, real bracket creep in individual income tax, as you know that individual income tax brackets are indexed for inflation, but we expect that real income growth will outpace inflation, and thus people will move gradually into higher tax brackets and thus face higher effective tax rates on their work. so if you put together the unemployment rate and the participation rate you can look at the share of the population that is employed. as you know this fell very markedly during the recession, and has essentially moved sideways since the end of the recession. as we look forward for the next four years, we expect that rate to edge up a little bit. this is, again, the cyclical recovery. in the increase in participation rate and decline in the unemployment rate, they tend to pull up the share of the population that's employed. but meanwhile, the demographic factors are continuing to weigh on this share of the population. and after the cyclical recovery is complete, as we project, in about four years, then the demographic factors show through and we think the employment population ratio will tend to fall gradually. so that was a quick review of the labor market. let me off on to the other questions i raised. one is how rapidly will potential output grow? and the main point that i'd like to make sheer is to compare the history of the last 60 or so years with our projections for the coming decade. potential gdp grew we estimate by 3.25% over the last 60 years on annual average basis. we think we'll grow only a little over 2% over the coming decade. and nearly all of that slowdown can be explained directly by slower growth of the potential labor force. in the period of historical average, we did not have the retirement that the baby boomer generation very much and moreover we had a very sharp run-up in women's participation in the labor force. from the '50s really into the late '90s. but that has now crested. and women between the ages of 25 and 54 now participation rate that is gradually falling, much like what the male participation rate of people that age has been doing for a number of decades. so with the waning of that big run-up in the participation rate among women and with the retirement of the baby boom generation we think the potential labor force will grow much more slowly, that also has consequences for the rate of capital accumulation in our view, and leads to much slower growth of potential output. actual output, we think, will catch up almost to potential over the next four years. we think the output gap will be down to just a quarter percent by the end of 2017, but actual output doesn't catch entirely up to potential in our projections for the reasons i mentioned earlier, which is that over a long, historical period, actual output has averaged a little bit below potential output. so we're looking for, as i said, the output gap to close from about 4% at the end of last year, to about half a percent at the end of 2017 and in subsequent years, gdp growth averages 2.5% a year over the next decade under our projections a little above the rate of growth but potential gdp over that decade because of this period of catch-up. and you can see the catching up here. i should note this line separating the actual and projected falls after 2012 and before 2013 because this figure was taken from our outlook and we completed our economic projections before the bea released its estimate for the fourth quarter so that 2014 is the continuation of that flat segment. we look for gdp growth this year, next year and the year after to be a little above 3%. in each of those years and then the catch-up period actual output growth proceeds to be in line with the growth of potential gdp. i don't want to skip these other important variables so let me talk a lit about each of them. the inflation rate, as you know, this is pce prices, pce inflation rate has fallen since the recession, has remained the core inflation rate has remained below the federal reserve's objective. we think looking ahead, inflation rate will gradually come back up. towards that objective, and will stay there for the rest of the decade. interest rates, as you know, the ten-year note rate has been moving up on average, since last year. we think it will continue to rise, and we look for the federal reserve to begin raising the funds rate in the second half of next year, second half of 2015. and those rates level out at about 5% for the ten-year rate, and 3.7% for the three-month treasury bill rate. labor compensation growth has slowed very distinctly since the beginning of the recession. we think this is confirming evidence that substantial slack remains in the labor market. and as a result of that, the labor share of income has fallen, continuing downward trend that we've seen for a number of decades. as we look ahead, we think as the labor market strengthens, the compensation growth will pick up. and the labor share of income will rise. but it will, in this projection, still a decade from now, be a little below its average over the past 30 years. so we think part of what we've seen in the labor share over the last few years is a cyclical phenomenon that will be reversed. but we think the downward trend over the past several decades is a persistent matter that will not go away just when this downturn ends. so, these economic projections, of course, are the base on which we build our projections of the budget. this picture shows federal deficits, and the few years of surpluses, the deficit has come down very markedly over the past several years. from about $1.4 trillion or nearly 10% of gdp in 2009, to an estimated roughly $500 billion, or about 3% of gdp in 2014 under current law. we think deficit will fall again a bit next year but will then rise. you can see, though, the deficits over the next decade stay close to 3% of gdp. which is essentially their average share of gdp over the past 40 years. but that similarity to the past is worth noting, but also in some ways, masks two important aspects of the budget that will be very different than they've been in the past. so one of those aspects is the composition of federal spending. in this picture, these bars show social security spending as a share of gdp, 40 years ago, and our estimate for this year under current law, and then our projection for ten years from now. and you can see growth in social security exceeding growth in the economy. so a rising share of gdp being devoted to social security benefits. and that arises, of course, over the next decade from the aging of the population. we project it will be more than one-third more beneficiaries of old age and survivors insurance, ten years from now, than there are today. the major health care programs are raising even more dramatically. that stems from three sources. the first is the aging of the population. which will push up costs in medica medicare, of course, but also in medicaid. second source is rising health care costs per person. that has been under way for a number of decades. that has slowed recently and our projections take on board that slowdown. but nonetheless we expect health care costs per person in the federal programs and the economy more generally will continue to rise faster than gdp per person. and the third factor here, of course, is the significant expansion of federal subsidies for health insurance under the affordable care act. in sharp contrast with the growth of spending for those programs, all other mandatory spending which basically refers to other benefit programs, we think will be smaller share of gdp over the next decade. than it has -- than it is now, or has -- was 40 years ago. defense spending is shrinking s relative to the size of the economy, given the caps on defense funding that are in current law. and nondefense discretionary spending. everything else the government does except for making interest payments is also falling as a share of gdp under the caps on funding. if you take three right sets of bars here. everything the government does apart from social security, major health care programs and interest, the entire set of spending will a decade from now be a smaller share of the economy under our projections for current law than any point since at least 1940. so the growth of government spending, as you can see in the last set of bars i put up, stems from the growth in a handful of very large programs. while the rest of the t government's funding is a smaller share of the economy. the other way the future is different from the past is the level of the debt as a share from gdp. as you know, debt has surged upwards over the past half dozen years. we project the debt will be as plat as a share of gdp for the next three years but then will begin to rise again, and in our longer term projections which we last updated last fall, that increasing debt as a share of the economy continues beyond the decade into future decades. so let me stop right there and see if you have any questions i can answer. >> thanks a lot. >> whatever you're more comfortable with. yes. as we know, we have cards in the audience. we can start with a question that this morning larry made the comment that it has casted a long shadow on the future. my guess is in your projections, it will be interesting to hear your assumptions of our potential and how it's being estimated in your forecast. >> so relative to the projections of output that we had made in 2007. i wasn't at cbo at the time. but the projections the cbo had in 2007, we have now marked down our projection of outputs by a little more than 7%. this is a point that larry and others have noted. of that reduction of more than 7%, we attribute a little less than 2% directly to the deep recession and slowry coverry. so we think there's a one and three quarter percentage point reduction in output coming from the persistent effects on the lay bar market, particularly the effects of elevated levels of long-term unemployment in pushing people out of work and discouraging them from looking for work have from the procession and also on productivity. that's 1.75 percentage points. the remainder, more than five percentage points of output comes in our assessment from a reconsideration of various trends that were under way, up to 2007. so it is not directly related to the recession and weak recovery, but it is a reassessment of -- from our perspective, in what the underlying growth rates of key variables in the economy are, and we actually have a report, which i hope will be out by next week, that explains and documents testimony other sources of revision. so we do think there is a long shadow from the recession and the weak recovery. but we also over this period have made a set of other changes in how we view the economy that are not so directly related. they're still, of course, relevant to how much the economy will grow. so i don't want top minimize them. i want to distinguish them a little bit. >> we have a question. the ratio is down. does this indicate we are back at full employment and why not? >> so, i do not think it indicates we are back at full employment. the number of people looking for jobs real i have to the number of job openings is down from where it was a few years ago but still elevated to where it was in 2007. there are a lot of people who are measured as being unemploymented, seeking work, and we think many others who have left the labor force out of discouragement. but we can and projection will be back in the labor force by improving job prospects. and as i mentioned before, one confirmed piece of evidence, the view of the labor market, is the behavior of compensation which has increased very slowly over the past several years. justing for inflation, hourly compensation is barely up now from what it was four years ago. and that is, in our judgment, strong sign of the labor market in which weakness of ghademand an important factor. >> how much of the slowdown in health care cost is durable? is that correct? durable? >> so the slowdown in health care costs in the past several years has been very pervasive. it has been in medicare and medicaid and in the private health insurance arena. we were at a long report last year documenting that within medicare it's pervasive. you can see this in payments for hospital services, in payment for prescription services, in payments for prescription drugs. you can see it in regions of the country that have high health care costs and regions that have low health care costs. you can see it in the cost of patients who have high costs and patient who is have low costs. so it's a thorough going phenomenon. there's been some work outside of cbo on how much of the slowdown in national health care spending can be attributed to the weak economy and how much is left for other factors. and the range of estimated, and in our own analysis of medicare, we could not find a role for the weakness in the academy, although asset value by older americans. in our report, we quantity fy a number that we can do either to the weak economy or to other factors with we quantify. so we think and we talk at some length in this report of the qualitative sense about structural changes in health care in the country. we think we have seen significant structural changes in the ways i think it's driven partly by realization on the part of health care providers. and to some extent patients that some health care does not necessarily very helpful in prove improving people's health. i think it also comes from a realization in the part of providers and beneficiaries that the cost, the amount of health care spending in the economy is really putting an incredible pressure on other goods and services that we would like to enjoy. and the realization on the part of people, as i said, in the system, that with those pressures of high health care spending they need to look for ways to provide health care more efficiently. so what we have done is to take them down considerably. so relative to our protections four years ago, around 2020, it's down between 10% and 15%. and we lowered the rate of health care growth a little bit beyond this decade. however, we have not marked down the rate of growth indefinitely to match the slow rate of growth we've seen over the past several years. and when you look back at past experience with health care cost slowdowns, they have in many cases been followed by pickups in health care cost growth. so we think and moreover i would say that for all of the changes that are under way in the health insurance system, both the federal health insurance system and private health insurance, there's still a lot of parts of the system which payments are significantly on a fee for service basis. so the incentive remains in many cases to do more services, to build more facilities. and in addition there is substantial amount of ongoing work and developing new drugs, new medical procedures, new treatments. so we think some of the underlying drivers of high health care spending will persist. so we've taken, as i said, am substantial signal and marked down our spending with pretty low growth rates over the next several years and then some return to somewhat higher growth rates again, maintaining a lower level of projected health care spending, but not expecting that the very slow growth of the past several years will continue np just that way going forward. in our view, that balances the risks. we look for our projections to be in the middle distribution of possible outcomes. if the slowdown we have seen the past several years really lasts indefinitely, there has been a larger structural change than we realized, then our projections will have turned out to be too high. if there's a faster rebound because of lickly call factors or because of a stepup in the medical innovation and the desemination of new health care treatments and procedures, thean our forecast may look too low. we think we blangsed those risks. >> we have a couple of questions on employment. measuring structural unemployment. it's a gray area among economist ls. and how do you think youth employment and underemployment will affect economic growth? >> so those are good and hard questions. we've estimated the roles for cyclical and structural employment, looking at a variety of indicators and applying our judgment to that. the relationship between unemployed workers and job vacancies, one can see a very pronounced shift. that says to us that there are important structural factors. at the same time as i mentioned, we see very weak growth of labor compensation. we see a lot of people looking for work who cannot find jobs. that says to us there are important cyclical factors as well. so by structural factors what we mean is just the people who are out of work for reasons not directly resolved by having stronger demand. stronger aggregate demand. so monetary policy and fiscal policy were more expansionary in some way, that could in principle take away the cyclical unemployment. it would not directly take away the structural unemployment. that's how we think about the differences and it's a term we use to refer to unemployment for structural reasons. so we are seeing the natural wait ruz about six is the same thing as say ing half the unemployment is structural and half is sicyclical. the elevated rates of unemployment among young people are a very big concern. and we think that a number of people have been discouraged from working enough that they will not come back to the labor force. even as the labor market improves. so some of these are older people who decided to retire earlier than they would have otherwise. and their loss from the labor force is an economic loss for the labor market as a hole. and potentially a very serious social loss. we have other work under way. it's something that we're looking at more closely. >> here's another one on unemployment. you elevate the unemployment rate based on historical observation. but isn't that because of the historical emphasis -- the historical emphasis on disinflation? does that make sense? okay. >> if you -- so the pattern that i showed, the pattern of output tending to fall short of potential on average, and it's a sloort of picture i could have shown of the actual unemployment rate relative to the natural rate. it tends to be above the natural rate. you can see the pattern if you slice the data a number of different ways. you can see it oefrz each of the past four or five bids cycles. going back 40, 50 years. you can also see it with the post war period. so the way we calibrated the gap was to look at the actual output and the actual rates of unemployment se from the end of the second world war until today. on average over that period, the actual gdp has been half a percentage point below gdp on average. i don't -- not sure that's the right way to calibrate the gap. it looks over the last 40 years, you would find a gap. that's partly because the last dozen years. in the few business cycles proceeding that, output had fallen short of potential than it had in the first several post world war ii business cycles. so the calibration is unsirn but the pattern is clear enough we need to take it on board. we did this last fall and now in our ten-year projections. >> we have a question on the probability that you use, does cbo attach a probability to the u.s. recession in the next ten years and what might be the impact on long term assumptions? >> so we do not have an estimated probability of recession at any point in time. the shortfall of actual relative potential could be an economy that does not have a recession. it never quite gets itself to full unemployment. or it could be the outcome that reflects a boom in the recession or various combinations. we're not trying beyond the next few years to project the particular cyclical pattern of the economy. we've never done that before. we're not trying to do that now. there are a lot of combinations of booms and busts that could get us there. we took this phenomenon on board in our budget last fall. over a long period of time we have output below our potential. that reduces the tax revenue a little bit. so it is a factor making deficits and debt larger than the otherwise would be. >> well, doug, thank you so much for your time and your presentation. i would like to have everybody certainly give a great round of applause for his efforts. >> thank you. thank you. very nice to be here.

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