Interrelated integrated economy, a Global Economy here in the u. S. On weve done well. Ic,cn think its been testified to today. Weve madepy Great Strides in our recovery, but theres so much more upside potential. Dr. Hall, the governors right that . A;u it is a complicatedekm7n,n8 i think tax reform for sure. I think that theres a lot ofen improvements that, in our economic performance6 l q we rationalizing the tax system and53k0q eliminating double taxationcitjso we have closer to uniform of tax rates, for instance entrepreneurial income. And then taxed again as a capital gain or dividend mostly Capital Gains. I think thats definitely Holding Things back. I think that we wouldf in see, we would, could restore earlier rates ofca before would be a huge factor in improvingc÷er paychecks. Xps think certainly 3an part of it. Senator coates and i, and we were pleased that forfb bp chairman camp picked up on thise2slz in our bipartisan tax reform bill what we do is rn triplesca the standard deduction for midd class6 x people. Dr. nass wolfers . Talked about the importance of the increase in size of paychecks. Most families, its about getting people back to work. 1ozp r t hahp hc you get a second in a family, that will double theird income. Whereas if we noncustodial there are broad sways to the population that i think would have a huge effect in increasingoc6n takehome pay. Dr. R gh wolfers and just for you, dr. Hall, and also a b you may not know, my mother ;r,m a Research Associate at Hoover Institute when glen campbetaxoy was president. What i remember most isu k8i they would always tease that they liked mrs. Wyden so much they chose to ignore she was democrat. There was a lot of c heres my question. Im the same way about him. [ laughter ] this e7an is on Infrastructure Investment which is something you have been interested in. We are clearly falling behind the American Society of civil engineers, giving us a deep plus. You cannot havebn . Big League Economic growth with Little League infrastructure. You recently there was a forum in u hicago, a forum on global markets. You said the United States needs7u45uju chargmnzln for roads and e3 bridges. When you said that i pickedjo up on it at the uaime. Whau8w do you mean by the kind of user charges that you would be interested in funding cm8÷ infrastructure . Well senator wyden, in california, and other parts of the country weve adopted rational pricing7 of infrastructure of highways. uo thats socalled realtime pricing. So there are lanes in san diego and one near where i live where its guaranteed that you can go 60 miles because theres a knob that gets turned automatically that raisesy good thing, because] pure xhimxc economic waste,]j generates income. I would like to see better pricing of our infrastructure of all types, especially congestion pricing of highways. It would give a signal about where additional infrastructure is needed. That would be ones where the price is always high relative to how much it would cost to expand. Relative to where we are today. Where thereib expansion of infrastructure highways in particular, highways that are not heavily rw relieve congestion. We could relieve theu[e by pricing it. In the long run we use the pricing signal to decide where to expand the infrastructure. It would be a whole new ball game. Were seeing that all over the economy. Realtimet0qc pricing omab private n areas, like airlinesslax; particular,n increase in Airline Efficiency because all airplanes fly 17÷ full now. And that itself is;6cc÷ a 10 productioy improvement in the Airline Business and its all from woh hahp hc realtime prices. Thank you mr. Chairman. Thank you, mr. Chairman. Sno wyden, im still thinking about Glen Campbell, di 0jk you say . Its not a Rhinestone Cowboy . Different Glen Campbell . Ij4uthought i was7 kuzlcn beginning to see a theme develop here. Dr. Wolfers talking aboutezqpm orangew k r t hahp hc paisley coming back. Serious topics. Thank you to each of theqce÷ witnesses for being here. And thanks to the chairman for having this hearing. I really have two items i want to touch on. One is since thevpen recession in december of 2007 o and we grow a lot of stuff that gets soldal n to markets all aroundm the world. And so2i7c im taxpayer pays for, via their federal tax dollar, that were going to spend more and more money servicingjn c÷ that federal debt, and crowding out other important priorities from national security, to safety net programs. But id be interested in hearing from each of you briefly what your what you see in the futureyfb[n in terms of the]bsd prospect of this9 qu looming debt challenge and Rising Interest Rates if the Federal Reserve does what i think we all expect them to ay do and begins to obviously tus reduce the pace at which theyre buying u. S. Bonds, but also begins toxbx unwind that program. To tackle that . And pb real n4ewnquickly. Thank you, senator cornyn. Vnjxae r t hahp hc thats not an easy question. Im not sure my crystalfjsen ball7 . any better than anybody b maybe not as good as some on this committee. Looking ahead, i guess it is of the fundamental principles that . W w at the roundtable,4vdx it comes back to the idea of growth. Because i use the just. 10 increase in 61;ygdp is about 3 trillion tg 5 the treasury. Looking ahead at the 1 , then to have a growing economy in order to generate the kind of revenue that the government neslce by prudent decisions relative to spending. And ultimately entitlement reform has to be addressed, because so much of the spending is nondiscretionary. And youre exactly right i mean, au rising 3vn ncen i dont know that were close to a rising meu Interest Rate environment, or rapidly rising, given whats going on around the 5 ixworld what on the other hand, the numbers ;tc it did go. Were a very liquid market. Its the time to oinvest. I certainly want to support the notion thats in thisqrd also an optimal way to be thinking about leveraging this low Interest Rate environment that were w5ezin. Weve got a lot of rebuilding that needs to be done in the country. And there are some creative ways. There are publish private partnerships out there. . zd some of the very Transportation Systems that dr. Di hall talked about. We see it in senator warners statement. Those arev privately. So there are mechanisms, but there are still big public decisions that need to be made. Inland waterways of am electric grid. Needs to be done. That also would be accompanied by a tremendous skilled workers to do that. I hear withuiu i hear a lot ofkn1l ideas about how we can spend money but i dont hear a lot of greate ideas about opposed to pass it on to the future generations. Dr. Hall and dr. Wolfers i know my time is limited. 7, r i appre noin your thoughts. Sure. Well, senator, first of all, i strongly share wcn youra concern about the balance between revenue and spending. Ace i run a spread sheet that looks 100 years into the future. Obviously not accurately. One of the assumptie cbo that does the same thing on a shorter 3 factored in the growth of Interest Rates. And that, of course, feeds back into furthercu requirement for revenue to pay that. And its scary. Qg q6hm the trend is slic adverse. The trend is for revenues of the fraction of gdp to rise substantially more slowly than spendin hahp hc and thats a longterm, and it its just remarkably stable. According to thislc spread sheet, say, by b the end of this8jy century we would be just immersed in wed have wayuz n more4÷ debt than we possibly could pay. Something has to,[frgive. Aqn it has to give in the senseai hn of more revenue or less spending. I think our democratic system sitting here needs to take very seriously concerned about that. I share your concerns. If the chairman will permit expired, butmv÷ please go aheaddzwk[5 x q if the chairman agrees. First, the budget deficit is roughly back to normalp j pnow. Were around the 40year average as of last year. The deficit or debt . G the flow of new debt. The deficit. Second, if you look at theent projections and the sorts of spreadsheets, the qcy debttogdpu ahs ratio, which iijsmy think is the right way[ s c thinkq this, is roughly going to be stable over the next 10 to 15 years. Its only beyond that that stuff starts to explode. The truth is, we dontl en actually know whats going to happenyq wx to the economy 204 yn 30÷o5 out. Theialmt point estimates might be right, but the range of uncertainty we might findvq;iz ourselves in two decades finding it rather toow÷jju than too high. Should we be worried about the sustainability ofe the pa÷pinstriped folks on wall street seem to think itso4 n not. The q suggests theres a risk behind this, but also it looksbm7 Interest Rates arenj going to stay low for a generation. And finally whats the role of tvx3 er s of this. Your concern which3n thinkd n is an important one is that we dont saddle future generations with debt. Its equallytj important we dont saddle future generations with ahnsn crumbling infrastructure. Not how much spending to do, but when to do it. The important issue is try to do the spending when its cheap. W its most important, and its going to do cheapest to do Infrastructure Spending when Interest Rates are low. I think thats the cacef r t hahp hc Infrastructure Spending today. The most interesting piece of Economic Research in recent years is the imf has actually done some calculations in which they suggested. that government Infrastructure Spending,3e in an environment like this with low Interest Rates, can actually end up lowering the debt. Itog[ Economic Activity that it can ;5mp im not quite sure im going go so far as to suggest well lower the debt. That the longrun costs, when you think about how the groethd benefits come back in tax revenues, the longrun cost of this could bev j fairlydicux small. Thank you very much, mr. Chairman. Ajre x÷ congratulations on holding the gavel. I wann two out of your firstsnw three witnesses are from michigan. Your good judgment. Witnesses like this every time, this is going to be in play. Thank you. E incxlw you know let me start by saying ive always been taught that if something works, we should do more of it, and if it doesnt work, we should do less of it. When we look at them9n economy, we can see clinton years focused on education innovation,imi booming times,57 u lots of reasons, but booming timesom 22 million jobs added. We go to the nextsqqq;qgsz administration, Bush Administration focused on tax cut ic7cpvpredominantly from the top, it will trickle down. Z[yg funding wars without paying for it, and creating massive debt lack of oversight, financial institutions. And we ended up with60 what we now call the great recession. And so im concerned that we dobo what works. And now what were seeing by ; were not out of it by any means, but we helped save american jobs in theu 6 x . Rue auto withi5u home equity and 401 k s and losing jobs, everything happening in the great÷ recession, its beginning to come back. Fewer young people are working. Ii au want to say, the first thought that came to my mind is thats because the folks in theaf taking the jobs now attanc fastfood restaurants. Weve go that are seniors that are having to come back into q the work force to supplement their income, or folks that lost their job manufacturing coming back and doing jobs thavm 2 ]8n used to be done by young people. But we are x9t turning things around. Jobs are ocuup 11 million jobs up. G x wall street doubled. Deficit down by twothirdsr la yearly deficit. And it seems to me the challenge really is for us to make sure now that everybody who wants and1itzi hahp hc needs a job that pays well to have one job to raise their family, so two or three has f that. Im pretty proud that henry ford had the right idea when he,v[9u despite everybodys criticism atknxneat iri time, folks, business communities thought he was crazy when he actualn more than doubled wages and paid folkskna top dollar. And he created the middle class of this country. Im9j an pretty proud that happened in michigan. Id like to o÷ each of you, what i hear from our manufacturers in michigan right now iswf1nn just at a new announcement, mr. u7xcchairman, withzwqk c magna, a great companyiri into midmichigan hundreds of jobs. Andpoao what they said was, i needhixv skilled people to match the jobs. Number one issue is job our state is focused on that. The president talked about that. So if we talk about how do we capture this, andprdq middle income jobs, therej ,u arem< lotsxg of things. But i wonder if each of you might speak to the need for Skill Development matching that job. Not that people dont have skills, theyre just not pxo skills for the jobs being created. So job. Rc8c,qrntraining costs of college, the fact thatpe dtj are coming out of fouryear schools. Maybe they should be going to twoyear schools. But theyre goiyzx to fouryear schools, coming out with massive debt,zmf cant buy a house. I hear from realtors all the time, terrific concerns now about young people not being able to get credit, buy a house, because ofiq seems to me thats a huge issue that we can beh and working together on. The Business Community, publish private . H p sector and so on. Governor engler i wonder if you might speak from your perspective. Thank you, senator, id be happy to. I think this is a really important j there are 4 million jobs unfilled today in the american economy. It is because people dont have skills. They certainly dont have the right skills. And i think in someviii0u caseshr flatout dont have skills. For too long weve hadn,a÷ a dropout we invest as a nation 700 billion roughly on an annual basis in our k12 system. We have to have a system that can send people off toouwj College Without needing remediation when they zymthere. If theyre not going v to go to colleg6r9t uqn40 in thei country dont. Of those whoa ku u n dont, they need to have a skill that is hopefully i would say measured and certifiedvrir zt standards, so theyre work ready. The dropout rate has to be zero. Thats the biggest mistake that im an advocate that the roundu table strongly works op policies. One area wecpbn think is a mess is the labor Market Analysis. We dontswv actually know where the 4 million jobs are. We dont know enough about what the skills are that are needed to hold ; . Those jobs. Cf1 o industry has to do a[qe job of saying these are the competencies that we require. It needs to beia 0oe aligned with the training. [ the wasted senior year for a lot of the kids. This is. c an area where slu theres tremendous National Need and opportunity on a bipartisan basis. And i know that senator alexander and members of his committee are interested in this issue. Some of you on this very committee, i know senator wydens focused on some of this, giving young people the information they neine we nnjqz to do a much better job of labor Market Analysis in the country. Its a dismal status. Briefly, dr. 1u0 hall dr. Wolfers . Thank r;you, i love the idea that we should do morex4c n of what hj4wworks. I would call attention to the fact that what works on a global basis,uiw the u. S. Economy the u. S. Economy is 20 , 30 , 40 higher paychecks than anyi8cku other country in the world of any size. In particular its way ahead ofxx6x÷ europe. Especially southern europe. X ;b so what works is the u. S. System. And theres some tendency to move in the direction of european institutions which troubles me. If you look in europe,p n countries that specifically say lets free up the labor market lets let the market ilwdwork but not constrain the policies of employers, britain and germany, they had by far the best experieap after the financial p isis. So thats what c if you ask what doesnt work in the u. S. Today, which touches exactly on the themes you were secondary when kids get to college theyre at a . 1x big ÷ disadvantage, especially scandinavian s countries, to have a secondaryjr3 n education. We need a secondary edi njjjrj responsibility is the local government, not the federal government. Still, whatever the federal government can do to try toic w boost the quality and the appropriateness of whats done to kids in high school, that would make a huge difference in terms of all the things that you talked about. Senator boone . Thank you, mr. Chairman. P im sorry, mr. Chairman, if i couldxbx8 seconds fromj im sorry. That would be fine. I would caution pnz all of jbus, that weve got a fiveminute rule here. I appreciate its true wem6. Have three utilized asking each one. If we can try to keep it within five minutes. I appreciate that. z go ahead. Ill t try and show how3 wolverine i rz can dr. Hall was just talking about what works and using the u. S. As an example. If 1970s, and look at today and the medians, the american middle class isik ÷ not doing as well as our neighbors north of the border. Our median family earnings are not as high as they are elsewhere. The most important place to look at skills here is of course, education. There is a presumption and its widely understood in the United States that the government will Fund Education through to the 12th grade. And we now accept thaty at the time that was first put forth it was ridiculed that education. I think that history is possibly quite useful in framing and looking at arguments for either greater involvementrn in pushing postsecondary education, which should be the new middle class aspiration, or trying to remediate gaps before they ever gjiahp hc appear, which would be every childhood9ns÷ education. Thank you. Mr. Pm;p÷chairman, thank you. Congratulations on your chairmanship. We look forward to working with