[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                    ADDRESSING THE ECONOMIC IMPACTS
                        OF COVID-19: VIEWS FROM
                        TWO FORMER CBO DIRECTORS

=======================================================================

                                HEARING

                               BEFORE THE

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

             HEARING HELD IN WASHINGTON, D.C., JUNE 3, 2020

                               __________

                           Serial No. 116-26

                               __________

           Printed for the use of the Committee on the Budget
           
           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]           


                       Available on the Internet:
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                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
42-126                      WASHINGTON : 2020                     
          
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                        COMMITTEE ON THE BUDGET

                  JOHN A. YARMUTH, Kentucky, Chairman
SETH MOULTON, Massachusetts,         STEVE WOMACK, Arkansas,
  Vice Chairman                        Ranking Member
HAKEEM S. JEFFRIES, New York         ROB WOODALL, Georgia
BRIAN HIGGINS, New York              BILL JOHNSON, Ohio,
BRENDAN F. BOYLE, Pennsylvania         Vice Ranking Member
ROSA L. DELAURO, Connecticut         JASON SMITH, Missouri
LLOYD DOGGETT, Texas                 BILL FLORES, Texas
DAVID E. PRICE, North Carolina       GEORGE HOLDING, North Carolina
JANICE D. SCHAKOWSKY, Illinois       CHRIS STEWART, Utah
DANIEL T. KILDEE, Michigan           RALPH NORMAN, South Carolina
JIMMY PANETTA, California            KEVIN HERN, Oklahoma
JOSEPH D. MORELLE, New York          CHIP ROY, Texas
STEVEN HORSFORD, Nevada              DANIEL MEUSER, Pennsylvania
ROBERT C. ``BOBBY'' SCOTT, Virginia  DAN CRENSHAW, Texas
SHEILA JACKSON LEE, Texas            TIM BURCHETT, Tennessee
BARBARA LEE, California
PRAMILA JAYAPAL, Washington
ILHAN OMAR, Minnesota
ALBIO SIRES, New Jersey
SCOTT H. PETERS, California
JIM COOPER, Tennessee
RO KHANNA, California

                           Professional Staff

                      Ellen Balis, Staff Director
                  Becky Relic, Minority Staff Director
                                
                                
                                CONTENTS

                                                                   Page
Hearing held in Washington, D.C., June 3, 2020...................     1

    Hon. John A. Yarmuth, Chairman, Committee on the Budget......     1
        Prepared statement of....................................     4
    Hon. Steve Womack, Ranking Member, Committee on the Budget...     6
        Prepared statement of....................................     8
    Douglas W. Elmendorf, Ph.D., Dean, Harvard Kennedy School....    14
        Prepared statement of....................................    16
    Douglas Holtz-Eakin, Ph.D., President, American Action Forum.    21
        Prepared statement of....................................    23
    Hon. Sheila Jackson Lee, Member, Committee on the Budget, 
      statement submitted for the record.........................    86
    Hon. George Holding, Member, Committee on the Budget, 
      questions submitted for the record.........................    90
    Hon. Joseph D. Morelle, Member, Committee on the Budget, 
      questions submitted for the record.........................    91
    Hon. Jason Smith, Member, Committee on the Budget, questions 
      submitted for the record...................................    93
    Hon. Barbara Lee, Member, Committee on the Budget, questions 
      submitted for the record...................................    94
    Answers to questions submitted for the record................    95

 
                        ADDRESSING THE ECONOMIC
                       IMPACTS OF COVID-19: VIEWS
                     FROM TWO FORMER CBO DIRECTORS

                              ----------                              


                        WEDNESDAY, JUNE 3, 2020

                          House of Representatives,
                                   Committee on the Budget,
                                                   Washington, D.C.
    The Committee met, pursuant to notice, at 1:07 p.m., via 
video teleconference, Hon. John A. Yarmuth [Chairman of the 
Committee] presiding.
    Present: Representatives Yarmuth, Moulton, Higgins, Boyle, 
Doggett, Price, Schakowsky, Kildee, Panetta, Morelle, Horsford, 
Scott, Jackson Lee, Lee, Jayapal, Sires, Peters, Khanna; 
Womack, Woodall, Johnson, Smith, Flores, Hern, Crenshaw, and 
Burchett.
    Chairman Yarmuth. This hearing will come to order. Good 
afternoon, and welcome to the Budget Committee's hearing on 
Addressing the Economic Impacts of COVID-19, Views from Two 
Former CBO Directors. I want to welcome our witnesses here with 
us today.
    At the outset, due to the new virtual hearing world that we 
are in, I ask unanimous consent that the Chair be authorized to 
declare a recess at any time to address technical difficulties 
that may arise with such remote proceedings.
    Without objection, so ordered.
    Before I start our proceedings this morning, I want to 
pause and reflect for a moment. This is a very difficult time 
for our country, but it is critical that Congress continue its 
work. Our hearing is on the economic impacts of the 
coronavirus, and we will discuss to some extent the inequities 
that have led so many Americans to take to the streets in 
protest.
    I know everyone on this Committee wants the best for our 
constituents and the American people. How we reach that point, 
particularly when it comes to their economic future, is where 
the hard work comes into play. I hope to take that up further 
today and in upcoming hearings.
    And before we start our proceedings, I have a few matters 
to take care of.
    We are holding this hearing virtually, in compliance with 
the regulations for committee proceedings pursuant to House 
Resolution 965.
    First, consistent with regulations, the Chair or staff 
designated by the Chair may mute participants' microphones when 
they are not under recognition, for the purposes of eliminating 
inadvertent background noise. Members are responsible for 
muting/unmuting themselves when they seek recognition, or when 
they are recognized for their five minutes. We are not 
permitted to unmute Members unless they explicitly request 
assistance. If I notice that you have not unmuted yourself, I 
will ask you if you would like the staff to unmute you. If you 
indicate approval by nodding, staff will mute your microphone. 
They will not unmute you under any other conditions.
    Thank you for your patience as we navigate this new 
technology and platform.
    Now I will introduce our witnesses. This morning--or this 
afternoon--we will be hearing from Dr. Douglas Elmendorf, dean 
of Harvard Kennedy School, and Dr. Douglas Holtz-Eakin, 
president of the American Action Forum. Both of them have been 
with us many times, and we welcome them back today.
    I will now yield myself five minutes for an opening 
statement.
    Today, in America, if you look out your window or turn on 
the news you will see a nation in pain. We are mourning the 
loss of more than 100,000 Americans to the coronavirus. We are 
mourning--we are again mourning the deaths of Black Americans 
and victims of ugly and violent manifestations of racism as 
poisonous to our society as COVID-19.
    The American people are facing unprecedented and deeply 
challenging times. This once-in-a-generation pandemic has 
exposed weaknesses in our public health system and upended our 
economy. The unemployment rate has spiked to levels not seen 
since the Great Depression, and one in four members of the 
American work force have filed for unemployment. Working 
parents are trying to fill the roles of teacher, provider, and 
employee, all while striving to make ends meet. And while the 
American people are resilient, it is our responsibility, as 
their representatives in Congress, to not only ensure our 
nation has the resources and opportunity to heal from the 
trauma that has rocked our nation, but to also enact proactive 
policies that will mitigate the damage, bolster our recovery 
efforts, and bring our nation together in strength.
    Today, the House Budget Committee is joined by two expert 
witnesses, Dr. Douglas Elmendorf and Dr. Douglas Holtz-Eakin, 
who have a combined decade of experience leading the 
Congressional Budget Office. They will help us examine how, on 
a broader scale, the COVID-19 pandemic has impacted our 
economy, and what Congress must do to lessen the fallout.
    While the support Congress has provided to date has helped 
to alleviate hardship for millions of Americans and avert an 
even worse economic collapse, there is still much more that 
needs to be done. COVID-19 still poses a severe risk to 
workers, communities, and our economy. There is no definitive 
treatment, no vaccine, and the United States is still 
considered the global hotspot.
    The White House is continually derelict in its duty to lead 
or implement a national strategy on the PPE supply chain, and 
now on testing and tracing. The economic impact has been 
brutal, and it has discriminated against our most vulnerable 
communities.
    Nearly 40 percent of households earning less than $40,000 a 
year experienced a job loss in March, compared to 13 percent of 
households earning more than $100,000. One-third of America's 
parents expressed concern that their children would be forced 
to go to bed hungry if they exhausted their food supply before 
they could afford to buy more.
    The number of working Black business owners has fallen by 
40 percent, nearly double the national decline. Coronavirus has 
caused a lot of uncertainty, but this much is clear: Congress 
must develop a plan so Americans are never forced to choose 
between paying their rent or putting food on the table, filling 
their child's prescription or paying their utility bill, 
exposing their loved ones to a deadly virus, or losing their 
job. And contrary to what some of my Republican colleagues 
might say, there is no time to ``wait and see.''
    At the end of this month, small businesses across America 
will lose PPP coverage, which could lead to permanent closures 
that will shutter Main Streets and decimate local communities. 
At the end of July, more than 40 million unemployed Americans 
will lose emergency benefits that have kept them afloat. State 
and local governments will continue to shed jobs and cut 
critical resources as they strain to balance their budgets. 
Absent further action, CBO estimates that unemployment would 
average 9 percent next year, and would not fall below 6 percent 
until 2026.
    Over the next decade, we will face a nearly $16 trillion 
cumulative loss in nominal GDP. The United States cannot afford 
to wait for this Administration or Leader McConnell to grasp 
the severity of this crisis. The American people need us to 
push the recovery along and keep support flowing.
    And we are well positioned to provide this necessary aid. 
We have the fiscal space to implement an aggressive and 
sustained fiscal response that prioritizes the urgent needs of 
our constituents and protects the economy in both the near and 
long term. We can, as Fed Chair Jay Powell says, make people 
``whole.''
    In fact, many experts caution that failing to support our 
economy and promoting a strong recovery poses a greater threat 
to our economic and budget outlook than deficits today. 
Mitigating real pain and suffering in the economy and in homes 
and communities across America should not be a partisan issue. 
Abandoning the American people is not an option. Congress must 
see this recovery through.
    I look forward to hearing from our witnesses and my 
colleagues on this critical and urgent effort.
    [The prepared statement of Chairman Yarmuth follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. With that I yield five minutes to the 
Ranking Member, Mr. Womack, for his opening statement.
    Mr. Womack. I thank the Chairman for holding the hearing. 
And thank you, Dr. Holtz-Eakin and Dr. Elmendorf, for being 
with us today.
    Obviously, these are unprecedented times in our nation, as 
evidenced by the fact that we are conducting this hearing from 
various parts of our country. The coronavirus is the worst 
public health crisis Americans have experienced in decades. It 
has led to challenges at all levels, including a sharp 
deterioration in our economy. The unemployment rate, for 
example, has quadrupled since February. But as Americans, I 
have no doubt we will not only defeat the virus, but we will 
return our economy to the boom we were experiencing earlier 
this year.
    Everyone here agrees that when a crisis occurs the federal 
government has to act. And the federal government has acted. 
Since the pandemic attacked our nation, Congress has enacted a 
staggering $2.4 trillion in coronavirus relief funding. The 
Federal Reserve has protected the financial system and lowered 
rates. The Administration is rolling back burdensome 
regulations that impede efforts to combat the coronavirus.
    Today we are here to discuss the economic impacts of the 
pandemic, and the steps we must take to ensure our nation is 
fiscally solvent. There are several things going through my 
mind on how to move forward.
    First, how do we make sure that the policies we enact are 
doing everything possible to defeat the virus, to boost the 
economy, and to get Americans back to work?
    Second, how do we make sure that we avoid adopting policies 
that do more harm than good? For example, although well 
intentioned, I have heard firsthand small businesses--about how 
additional unemployment benefits have kept people home, instead 
of on the payroll. As we work to reopen the economy, we should 
re-analyze policies with these types of unintended consequences 
in mind.
    Third, how do we balance the responsible use of taxpayer 
dollars with addressing the challenges we face? The $2.4 
trillion in financial relief is not free money. These are 
taxpayer dollars that will, at the end of the day, ultimately 
need to be paid back to the U.S. Treasury. Future generations 
will bear that burden.
    What is particularly frustrating to me is that during 
normal times we fail to do our job. We fail to put a--to pass a 
budget, to put our country on a fiscally sustainable path, or 
even do a budget at all. That is right. We, as the Budget 
Committee, didn't do our job before the pandemic. We will--will 
we rise to the occasion and make the tough, critical choices 
that our constituents send us to Washington to make? I believe 
now is the time for us to actually do our work.
    After incorporating the effects of the coronavirus and 
associated legislation, CBO is now projecting a deficit of $3.7 
trillion for Fiscal Year 2020, which would be, by far, the 
highest deficit recorded in U.S. history. It is imperative that 
policymakers establish and enforce policies guiding fiscal 
responsibility as subsequent COVID-19 relief bills are 
considered.
    If we had been doing our job all along, funding the crisis 
would not have been as daunting to our fiscal future. We cannot 
keep getting away from doing our job, especially when we are in 
normal times.
    Today, I look forward to hearing from both of our esteemed 
witnesses. Tomorrow, I look forward to beginning the task at 
hand as we, as Members of the Budget Committee, address the 
deficit and debt faced by our nation.
    [The prepared statement of Steve Womack follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Womack. Thank you, Mr. Chairman, and I am glad to yield 
back the balance of my time.
    Chairman Yarmuth. I thank the Ranking Member for his 
opening statement. And if any other Members have opening 
statements, you may submit those statements electronically to 
the Clerk for the record.
    Before I introduce our witnesses, I ask unanimous consent 
that--to insert a letter from the National Association of 
Counties into the record.
    Without objection, so ordered.
    [The NACo letter follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. Once again I would like to thank our 
witnesses for being here this morning. The Committee has 
received your written testimony, and they will be made part of 
the formal hearing record. You will each have five minutes to 
give your oral remarks.
    And as a reminder, please unmute your microphone before 
speaking.
    Dr. Elmendorf, please unmute your microphone. You may begin 
when you are ready.

STATEMENT OF DOUGLAS W. ELMENDORF, PH.D., DEAN, HARVARD KENNEDY 
  SCHOOL; AND DOUGLAS HOLTZ-EAKIN, PH.D., PRESIDENT, AMERICAN 
                          ACTION FORUM

            STATEMENT OF DOUGLAS W. ELMENDORF, PH.D.

    Dr. Elmendorf. Thank you, Mr. Chairman. I am pleased to be 
back with the Budget Committee and with my friend, Doug Holtz-
Eakin.
    I offer my deepest sympathy to all who are suffering from 
the pandemic, and my deepest gratitude to everyone who is 
helping others through this crisis and keeping our society 
going.
    I also want to offer my heartfelt condolences to the family 
of George Floyd and to all who suffer from the scourge of 
racism. We can and must create a more just society.
    In my testimony today I would like to make four points.
    First, although the country is beginning to reopen 
following widespread shutdowns, a great deal of economic 
suffering still lies ahead of us. The number of people with 
jobs relative to the total number of adults is now the lowest 
since at least the 1940's. This unprecedented loss of jobs 
cannot be reversed simply by declarations that people are 
allowed to go back to work and commerce. Instead, people need 
to become confident that they can go back while remaining 
mostly safe from COVID-19. This will take time, money, and hard 
work. CBO projects that, of all the jobs lost so far, only 30 
percent will be restored by the fourth quarter of this year, 
and only 60 percent by the fourth quarter of next year.
    Second, although more economic suffering will inevitably 
occur, and the extent of that suffering is not preordained, but 
depends crucially on economic policies, a premature tightening 
of federal fiscal policy in 2011 was a significant mistake of 
economic policy. I hope that policymakers do not make the same 
mistake again. The economy has fallen so far in the past few 
months that we might see exceptionally rapid growth during the 
third and fourth quarters. But even rapid growth will still 
leave the number of unemployed Americans unacceptably high, and 
the American economy operating way below its productive 
capacity.
    Fiscal policy cannot fully offset people's hesitation to 
come into close contact with each other, but it can sustain 
household incomes and business operations until health 
conditions improve, which will not only improve people's well-
being in the short run, but increase the pace of economic 
recovery and put us in a better position in the long run.
    Third, more than $1 trillion of additional fiscal support 
is warranted, with a focus on supporting unemployed households, 
business operations, and state and local government budgets. 
Economic policymakers have responded aggressively to the 
pandemic, to your credit. But given the scale of the shock we 
are experiencing, more fiscal support for the economy is 
warranted until at least 2022.
    The expansion of unemployment insurance benefits in the 
CARES Act should be continued beyond the scheduled expiration 
at the end of July. Allowing those expanded benefits to expire 
would hurt families who cannot find jobs. However, I recommend 
that the extra weekly payment be reduced from the current $600, 
and that expanded benefits remain in place until the 
unemployment rate falls below 6 percent.
    State and local governments are being hit by two large 
financial shocks. They need to spend more to provide health 
care, testing, contact tracing, and so on, and they are losing 
tax revenue because of the recession. These shocks will soon 
force state and local governments to cut workers and public 
services, which would endanger health and further weaken the 
economy. Instead, the federal government should provide 
substantial grants to states based on population, COVID-19 
hospitalizations, or other factors.
    Businesses also need more support to sustain their 
operations. Keeping businesses afloat during this period, when 
potential customers are unable or unwilling to turn up is 
crucial, both for reducing suffering today and for enabling a 
more rapid economic recovery when health conditions improve.
    Fourth, despite the very large amount of outstanding 
treasury debt, the U.S. Government has sufficient fiscal 
capacity to provide trillions of dollars of further stimulus. 
Interest rates on Treasury debt are now exceptionally low, not 
just because of the pandemic and recession, but because of 
shifts in private saving and investment that have unfolded over 
decades. With much lower interest rates, outstanding debt can 
be much larger, and interest payments will still be manageable. 
And with lower interest rates, the optimal amount of 
outstanding debt is larger. The federal government should 
borrow more than it would otherwise.
    We will ultimately need to raise taxes and reduce spending 
substantially. But we can and should wait to do that until we 
have rebuilt a vibrant economy with full employment.
    Thank you very much.
    [The prepared statement of Douglas W. Elmendorf follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. Thank you, Dr. Elmendorf, for your 
statement. I now yield five minutes to Dr. Holtz-Eakin.
    You may unmute and begin when you are ready.

            STATEMENT OF DOUGLAS HOLTZ-EAKIN, PH.D.

    Dr. Holtz-Eakin. Thank you, Mr. Chairman, Ranking Member 
Womack, and Members of the Committee it is a pleasure to be in 
front of you once again.
    Let me associate myself with the remarks of Doug Elmendorf 
about the search for justice in the United States. And to prove 
that all Dougs really are alike, I have four points to make.
    Point number one, while we hear about how bad that it is 
out there, it is often hard to put in perspective the magnitude 
of what has happened to the U.S. economy. We entered 2020 
growing solidly, and in January and February we did quite well. 
We had record low unemployment, rising wages among the least 
skilled and lowest income workers. Labor markets were strong. 
And when the pandemic hit in the middle of March, households 
became so frightened that, in the course of two weeks, the 
first quarter turned into negative growth at an annual rate of 
5 percent, the--contracted by 1.25 percent. We had a record 
decline in household confidence. We had a record decline in 
retail sales. Two out of the 5-percentage points declined in 
GDP were accounted for by reduced use of health services. 
People simply stopped going out and going to the doctor. And we 
began a succession of numbers that staggered the mind.
    We saw six million individuals apply for unemployment 
insurance in one week, 10 times larger than any previous week 
in history. We saw 20 million jobs lost in April--again, 10 
times larger than any previous monthly loss that came with the 
demobilization after World War II. We saw the unemployment rate 
climb by more than 10 percentage points--again, 10 times larger 
than anything we have seen before. And then, once again this 
morning, we saw in the ADP report a loss of 2.7 million jobs. 
We usually talk about hundreds of thousands of jobs. We are 
talking about millions of jobs, 10 times the scale of normal 
events.
    The CBO estimates that, in the second quarter alone, the 
U.S. economy will contract by 11 percent. In the worst entire 
year of the Great Depression, 1932, the economy contracted by 
12 percent. We are experiencing this enormous downdraft in the 
U.S. economy.
    To their credit, policymakers--yourselves included--have 
moved quickly and dramatically to counter this downfall. The 
Federal Reserve quickly cut rates to zero. It pledged open-
ended, unlimited amounts of liquidity, cash in the financial 
markets to stabilize them. It set up special lending facilities 
to primary dealers in commercial paper and others, money 
markets, and it did a tremendous job in keeping a real crisis 
in the economy from migrating into a financial sector crisis 
like we saw in 2008. They deserve tremendous credit for 
insulating financial markets, which have continued to work 
remarkably well.
    The Congress passed the CARES Act, along with the Family 
First Act, and the Paycheck Protection Increase Act, all of 
which were valuable steps in supporting the economy.
    The combination of checks sent to households and Pandemic 
Unemployment Insurance has supported households dramatically. 
In last week's information we got on personal income and 
outlays, personal disposable income grew at an annual rate of 
2.1 percent in April. That is a remarkable thing, but only 
because government transfers increased at an annual rate of $3 
trillion, and households saved a third of what they got. So 
Congress has done a great job of insulating the household 
sector from the downdraft. And for the moment they remain in 
pretty good shape.
    The Paycheck Protection Program has received a lot of 
complaints about its design, about the execution. But all of 
those flaws notwithstanding, in the worst month in the history 
of the U.S. economy, in April, it got over $500 billion into 
the hands of small businesses to preserve their function and to 
keep their employees at work. I think it is a tremendous 
accomplishment.
    In fact, the missing link in the CARES Act is the half-a-
trillion dollars that Congress gave the Treasury to support 
lending to states and localities through a municipal liquidity 
facility, and to mid-size and larger businesses through the 
Main Street lending program. To this date, not a single dollar 
has flowed out of those facilities. That is something that 
needs to be rectified quickly, and that would be a tremendous 
assistance. That $500 billion could turn into $3, $4, $5 
trillion in additional support the U.S. economy. It is a major 
part of what Congress should do.
    So, as a big downturn, it necessitated a very big response, 
and we have seen, as a result, large increases in the deficit. 
I want to just emphasize that they were necessary, they were 
appropriate, and that, going forward, more may yet be needed.
    The third point is that we are not done. We now have to 
find a way to operate this economy in the presence of a virus 
that remains active, for which there is no vaccine, for which 
we are searching for adequate therapeutics and where contact 
testing and contact tracing is not yet sufficient. So we have a 
challenge in operating the economy, going forward. That is the 
main challenge facing Congress right now. That is a very 
different challenge than what it faced in the past.
    The last thing--and I know I am out of time--there is now a 
large amount of debt. And the minimum thing that a country has 
to do is to stabilize its debt relative to GDP. This country 
has not done that in the 21st century. It now is faced with 
doing that in the aftermath of this crisis with a much higher 
level of debt. I encourage the Members to focus on that task in 
the years to come.
    [The prepared statement of Douglas Holtz-Eakin follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. Thank you, Dr. Holtz-Eakin, for your 
testimony. And we will now begin our question-and-answer 
period.
    As a reminder, Members can submit written questions to be 
answered later in writing. Those questions and the witnesses' 
answers will be made part of the formal hearing record.
    Any Members who wish to submit questions for the record may 
do so by sending them to the Clerk electronically within seven 
days.
    As is our custom, the Ranking Member and I will defer our 
questions until the end.
    So I now recognize the gentleman from Massachusetts, Mr. 
Moulton, for five minutes.
    Mr. Moulton. Thank you, Mr. Chairman. And thank you both 
for coming here to testify before us today.
    I want to start, as everyone has started so far, by 
acknowledging everyone who is suffering from the direct or 
indirect effects of the coronavirus. Also, by expressing my 
sympathies for George Floyd, his family, and all the people in 
America who face the scourge of continued racism today, and 
also to offer my praise and support for those great, patriotic 
Americans who today march in peaceful protest, engaging in that 
historically American practice of free speech and dissent in 
order to uphold our founding principles, our American values, 
and our sacred Constitution.
    Dr. Holtz-Eakin, I would like to start with you. Early on, 
the coronavirus pandemic was characterized as the great 
equalizer by some, and I think many of us are disturbed by just 
how wrong that has become. Others were not surprised to learn 
that the same communities, communities of color and low-income 
communities that face discrimination in access to opportunity, 
from education to employment to health care, are the same 
communities most greatly impacted by the coronavirus. All those 
workers that we once thought were expendable are now the ones 
who are essential, and they are on the front lines of this, and 
suffering the effects.
    You testified before the Committee on Ways and Means 
recently about the disproportionate impact of COVID-19. Can you 
share some recommendations for how we should address that, and 
specifically how we should think about it here on the Budget 
Committee?
    Dr. Holtz-Eakin. Well, certainly the impacts have been 
highly disproportionate. We have seen rising unemployment, but 
much larger increases among Asians, Hispanics than among 
whites. Among African-Americans, the rise hasn't been that much 
greater, largely because they have stayed at work in the front 
lines across the economy.
    Going forward, I would emphasize something that Doug 
Elmendorf said. If we get a good recovery with very good 
policies, when you reach the end of 2021 there will be a large 
number of Americans--8 percent, 9 percent--who will still be 
unemployed, and will have been unemployed for a long time. My 
expectation is that will be disproportionately borne by these 
same minorities. There needs to be not just a hope, but a 
strategy and an effort to provide them the skills and 
opportunities to get back to work as quickly as possible, 
because it is simply--historically, has not happened fast if 
left up to its own devices. And at this moment, the suffering 
is too great to sit idly by.
    Mr. Moulton. Thank you very much.
    Dr. Elmendorf, good to see you, as always. I want to first 
say how much I agree with my friend, the Ranking Member from 
Arkansas, who said that we failed to do our job to balance the 
budget when we could in order to prepare for a moment like 
this.
    Now, in 2017 President Trump, with help from Republicans in 
Congress, added $1.9 trillion to the debt with a massive tax 
cut for wealthy and--the wealthy and large corporations while 
the economy was booming, and we could have reduced the debt. 
The CARES Act had a similar cost, coming in at $1.8 trillion 
over 10 years, with benefits to working Americans in this time 
of significant need.
    Dr. Elmendorf, which was the moment for reining in the 
deficit? Between 2017 and 2020, when we had a strong and 
expanding economy, or today, when we face a pandemic and the 
most severe economic conditions since the Great Depression?
    Dr. Elmendorf. It makes much more sense, Congressman, as 
you know, to reduce budget deficits when the economy is strong 
than when the economy is weak. Doug Holtz-Eakin and I have 
agreed this is not the time to do that. It was appropriate for 
the Congress to provide very substantial fiscal support. And, 
as I said in my testimony, I encourage you to provide more, 
because our people and our economy need it.
    Mr. Moulton. So if we spend and do too little this time, 
what risks does this present for long-term growth, interest 
rates, and the actual cost of our debt payments in the long 
run?
    Dr. Elmendorf. If businesses fold and their workers are 
laid off, then the recovery will be much more retractive, much 
more painful for people. And the tax revenue that the federal 
government takes in will be lessened. Whereas, if we can build 
a strong recovery that will be good for individuals and 
households, it will be good for the economy, and it will be 
good for federal revenue.
    Mr. Moulton. Nobody looks back at the Great Depression and 
says that the problem was that Congress did too much.
    Dr. Elmendorf. Well, in fact----
    Mr. Moulton. Thank you both. I appreciate your testimony. I 
yield back.
    Dr. Elmendorf. President Roosevelt pushed to tighten the 
budget in the late 1930's, and that caused a further setback in 
the U.S. economy at a time when it was otherwise growing.
    Mr. Moulton. Right. Thank you both very much.
    Mr. Chairman, I yield back.
    Chairman Yarmuth. The gentleman yields back. I now 
recognize the gentleman from Georgia, Mr. Woodall, for five 
minutes.
    Mr. Woodall. Thank you, Mr. Chairman. I want to pick up 
where Mr. Moulton left off. No one did accuse Congress of doing 
too much, but they did accuse some policymakers in trade 
sections of doing too much.
    We want to do a lot. And my concern is we--is whether we 
are going to borrow it all, or whether we are going to collect 
it in tax revenues, we can only spend each dollar once.
    You all have both expressed a desire that we move quickly. 
You have both expressed a desire that we move forcefully. What 
I want to understand is the disconnect between moving quickly 
and moving efficiently. We pushed those dollars out as fast as 
we could in March, but no one would say we put every dollar in 
the right place. Help me to understand the risks and the 
benefits of moving too quickly and putting dollars in places 
where they are not fully utilized, or moving too slowly and 
making opportunities to use those dollars more--later.
    Dr. Holtz-Eakin. Who would you like to answer, sir?
    Mr. Woodall. I need the correct answer. Which one of you 
has it?
    Dr. Holtz-Eakin. Let me start, and then I will yield to 
Doug Elmendorf.
    I think, looking back, the--in the sort of types of 
mistakes you want to make (sic), the emphasis should have been 
on speed in getting money out the door, and less emphasis on 
targeting and worrying about who, ``deserved it.'' The 
character of the crisis was different than anything we had 
before. It was a rolling cascade of cash-flow crises in the 
economy. Customers disappeared. People had no cash. They 
stopped paying their suppliers. They sold everything they owned 
in the stock market. And so getting cash out there into the 
business world to maintain the contact with their employees was 
at a premium.
    It will be different, going forward. I think, going 
forward, you should think hard about ways in which you can 
allow workers and businesses to conduct their trades in the 
presence of the virus.
    This reminds me of the period after September 11, 2001, 
where we had to learn how to operate the economy in the threat 
of terrorism, and we had to do things differently. We had to 
inspect a cargo container. We set up the TSA.
    We are going to have to find a way to have people be 
confident they can go to work safely, confident they can go to 
a business safely. We are going to have to physically change 
some workplaces. Most businesses are not going to spend their 
initial time back worrying about expanding. They are going to 
worry about how can we operate safely. And there should be a 
premium on making sure that can be done: testing therapies, 
vaccines, but also workplace modifications that allow everyone 
to feel safe in the conduct of their enterprise. That will 
allow us to recover more quickly to the extent we can. That is 
an efficiency.
    Dr. Elmendorf, I saw heads nodding there. Any disagreement 
there, or anything to add?
    Dr. Elmendorf. So I agree with what Doug said, but let me 
add. I think there is still considerable urgency around certain 
aspects of fiscal interventions.
    One trigger very important is the expiration of expanded 
unemployment insurance benefits at the end of next month. It 
would be a terrible thing with an unemployment rate that, at 
that point, will probably be between 15 and 20 percent, the 
highest we have seen in this country since the Depression--and 
to let these expanded benefits expire would do terrible harm to 
people and hinder our ability to recover.
    I am also quite concerned about businesses that have not 
been able to access support. As Doug Holtz-Eakin said, there 
has been--for all the concerns about the Paycheck Protection 
Program, a lot has actually happened. There are businesses that 
have not been able to access funds because of their size, or 
because of the amount of debt they had outstanding. And I think 
this is a problem we should be very concerned about.
    It is much, much easier to rebuild an economy when people 
are still employed at the businesses they were employed at 
before--with some exceptions. There will be some structural 
changes in the economy, but for the most part people can be at 
the places they were at three or four months ago. And if we can 
keep them there while the health conditions improve, then we 
are set for a much stronger recovery than if they lose those 
jobs and are out in the economy trying to find new employers to 
go to work for.
    Dr. Holtz-Eakin. Can I offer----
    Mr. Woodall. I thank you----
    Dr. Holtz-Eakin [continuing]. to that?
    Mr. Woodall. Please, Dr. Holtz-Eakin.
    Dr. Holtz-Eakin. I think the failure of the Treasury and 
the Fed to get the money out to these lending facilities, the 
Main Street program, and the--is a huge policy error, and looks 
like--exact thing you don't want to do: be careful with the 
money at the expense of the economy. So I am worried about 
that.
    In the design we left out an important piece, not-for-
profits who have more than 500 employees. They are eligible for 
nothing. And there are a lot of people out there who work in 
just that setting. I would think about it.
    Mr. Woodall. Yes, I thank you both very much for being 
here. Mr. Chairman, I yield back.
    Chairman Yarmuth. The gentleman yields back. I now 
recognize the gentleman from New York, Mr. Higgins, for five 
minutes. Unmute, please.
    Mr. Higgins, please unmute.
    Well, we may have technical difficulties with Mr. Higgins, 
so now--I now recognize the gentleman from Ohio, Mr. Johnson, 
for five minutes.
    Please unmute, Mr. Johnson.
    Mr. Johnson. Thank you----
    Mr. Higgins. John, I am actually here.
    Chairman Yarmuth. Mr. Higgins, then.
    Sorry, Mr. Johnson.
    Mr. Higgins?
    Mr. Higgins. OK.
    Chairman Yarmuth. You are recognized for five minutes.
    Mr. Higgins. Mr. Johnson, I apologize.
    Mr. Johnson. No problem.
    Mr. Higgins. Technical difficulty here.
    Mr. Chairman, thank you very, very much. And I just want to 
emphasize, first and foremost, obviously, our nation was not 
prepared for this.
    You know, the coronavirus has been with us for 20 years, 
starting with SARS, MERS. And we should have been investing in 
a vaccine and treatments that--what this crisis has done is 
revealed the fragility of the American health care system. The 
best thing that we can do for those who are stuck with COVID-19 
is to provide support care. The best treatment we can give them 
right now is Tylenol to help them break a fever. This is the 
richest country in the history of the world, and we spend more 
on health care, and we have nothing to provide relief to the 
people who are afflicted with this coronavirus today.
    Unfortunately, we don't even have the luxury of being in an 
economic rebuilding mode because we are still in an economic 
health care disaster relief mode. But when we do get to that 
period when we can rebuild the economy with government 
spending--I want to recall the New Deal, which was done over a 
6-year period, from 1933 to 1939. It was done in three 
iterations: $41 billion and $675 billion in today's dollars. In 
1934 that government spending produced an economy that grew by 
11 percent. In 1935 that government spending produced an 
economy that grew by 9 percent. That government spending in 
1936 produced an economy that grew by 13 percent. And then the 
President and Congress began to raise concerns about the 
deficit, and they pulled back in 1937, and the economy 
contracted by nearly 3.5 percent.
    I think what we have to be focused on, post-disaster, is an 
economic program that is strong and robust. The American 
economy, despite having grown before February for 10 
consecutive years, hasn't exceeded 3 percent economic growth 
since 2005. And it is important that we remember that, if we 
need the kind of growth in a $22 trillion--$22.5 trillion 
economy, it is 70 percent consumption. So you can open up the 
economy all you want, but if people don't have confidence that 
there is a health care system that can, either through a 
vaccine, keep them from getting COVID-19 or COVID-20, whatever 
it may be later on, they are not going to go out and spend.
    So, Dr. Elmendorf, I just would ask you just to reiterate 
the importance of that government spending sustained over a 
long period of time before we get through this.
    Dr. Elmendorf. Thank you, Congressman. I think you hit a 
number of important issues. One of them is that when economies 
are suffering from a lack of demand for goods and services, 
government spending and tax reductions can spur economic 
activity and keep people at work and put people back to work. 
That is the lesson that was forgotten in 1937. As you said, it 
was forgotten in 2011. It is crucially important that Congress 
not forget it now.
    You also highlighted the value of certain forms of 
government spending in building economic growth over long 
periods of time. The federal government can now borrow at 
interest rates that are around 1 percent or less in nominal 
terms. When adjusted for inflation, these are negative ``real 
interest rates.'' Economists say this is an ideal time to be 
doing investments in our economy. And some investments, of 
course, have begun in the private sector. And maintaining 
strong demand in the economy will encourage private businesses 
to invest.
    But some very important investments need to occur in the 
public sector, and some of those investments will enhance the 
efficiency of the economy, more research and development 
spending, more infrastructure spending. But also, some of those 
investments will spread the benefits of a growing economy 
across our population, will lead to more coming together rather 
than being pushed apart. Those investments in education, but 
also in certain forms of infrastructure that can help build a 
stronger society.
    So for both the short term and the long term, government 
spending can play an absolutely critical role.
    Mr. Higgins. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Chairman Yarmuth. The gentleman yields back. And now, once 
again, coming live from the actual hearing room of the Budget 
Committee, I think our only resident there today, Mr. Johnson 
now is recognized for five minutes.
    Mr. Johnson. Well, thank you, Mr. Chairman. And it is good 
to see all of my colleagues here today, all of you. And I trust 
all of you are staying safe and healthy.
    You know, without question, these are indeed difficult and 
challenging times. But our history tells us that it is through 
great challenges that America's exceptionalism shines the 
brightest. I have no doubts that our great nation will do what 
we have done every time we have faced seemingly insurmountable 
odds, and that is to emerge stronger and more united in our 
commitment to our values than ever before. We are problem 
solvers; we will get through this.
    So I appreciate, Mr. Chairman, you convening this hearing 
to discuss the economic impacts of COVID-19. I hope it is one 
of many discussions yet to come.
    There is no question that COVID-19 has negatively impacted 
our constituents, businesses, schools, communities, and our 
economy since the outbreak was declared a national emergency on 
March 13. In February our economy was strong, and our national 
unemployment rate was at 3.5 percent, a 50-year low. And in 
April, as a result of COVID-19 and the efforts to stop the 
spread of the disease, the national unemployment rate rose to 
14.7 percent.
    The economic impacts of COVID-19 have been especially 
difficult for Ohioans and my constituents in eastern and 
southeastern Ohio, who largely depend on work from small 
businesses. In April 823,700 Ohioans lost their jobs, and the 
unemployment rate, which was 4.1 percent last year, rose to 
16.8 percent. People are hurting, and businesses are suffering. 
It is time to reopen America, and get Americans back to work, 
and bring our economy back to the pre-COVID-19 levels.
    Congress has an important role in helping our communities 
and our economy recover from this pandemic as quickly as 
possible. And we must act responsibly to address the fiscal 
problems facing our nation. This is not the time to play 
politics. We cannot let this pandemic be a justification for 
massive government spending and policies that will continue to 
drive up our national debt and deficits.
    We cannot and must not let the pandemic be an argument for 
Medicare for All. We have a responsibility to strengthen and 
preserve vital safety net programs like Medicare, Medicaid, and 
Social Security. And more importantly, we have a responsibility 
to reform them, to make them better for everyone.
    Congress must act to remove barriers to employment and 
economic activity, increase access to rural broadband, review 
regulations that have been waived or modified during the COVID-
19 pandemic, and consider if these regulatory changes should be 
made permanent. And, of course, Congress must address the 
unsustainable growth of our federal spending and its impact on 
our national debt.
    You know, at the end of April, the trustees of the Social 
Security and Medicare trust funds issued their 2020 annual 
reports, which did not reflect the effects of the COVID-19 
pandemic. I am very concerned as to what the pandemic and the 
resulting economic contraction will do to the finances of 
Social Security and Medicare.
    So, Dr. Holtz-Eakin, given the possibility that the 
Medicare Hospital Insurance Trust Fund and the Social Security 
Disability Insurance Trust Fund could be facing depletion 
within the next Presidential term, do you believe Congress 
should make it a priority to reform these programs?
    Dr. Holtz-Eakin. I believe Congress is past due making it a 
priority to reform these programs. I have been saying for years 
that it is embarrassing that our approach to a retirement 
program is to promise to cut retirees' benefits 25 percent 
across the board in retirement. That is a national disgrace. 
That is the current plan for Social Security. Congress should 
move quickly to remove that uncertainty. A program that is 
supposed to alleviate income uncertainty should not be such a 
great source of income uncertainty for our seniors. So, please, 
that would be an outstanding priority for the Congress, moving 
forward.
    Mr. Johnson. OK. Well, over the past few months, federal, 
state, and local governments have waived or reformed many 
regulatory rules during the COVID-19 pandemic, including the 
easing of tele-health restrictions. Patients and healthcare 
providers in my district have told me that expanded tele-health 
has improved access to care, especially for those in under-
served areas.
    So very quickly--and I know I am out of time--Dr. Holtz-
Eakin, in your view, how beneficial have these de-regulatory 
actions been?
    And do you think there are additional de-regulatory actions 
that Congress should consider?
    Dr. Holtz-Eakin. I think there have been some very 
important emergency waivers that HHS has provided. Tele-health, 
in particular, stands out, the things that they did to make 
that accessible. Going forward, however, that will not be 
something the Administration can do. It will require 
legislation. So that should be on your list.
    Mr. Johnson. OK, thank you.
    I yield back, Mr. Chairman.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize the gentleman from Pennsylvania, Mr. Boyle, for five 
minutes.
    Mr. Boyle. Thank you, Mr. Chairman, and I am glad that we 
can--if not in person, we can still conduct the important work 
we have using modern technology. Even with all of its stumbles 
and having to log in several times, it is certainly better than 
not being able to do this work at all.
    I want to thank both witnesses. I want to especially thank 
Dr. Elmendorf.
    It is good to see you again, as dean of my alma mater, and 
I have an--as an alum from the MPP program, an opportunity to 
put the degree to some use.
    Coming in to state legislative office right in the midst of 
the Great Recession, as I did in 2008, beginning in January 
2009, my whole experience as a state legislator was attempting 
to deal with always passing a budget on time and with no debt 
spending, while at the same time recognizing that our tax 
revenues had fallen off a cliff, and were very slow to return. 
I never thought that so early I would have the unfortunate 
opportunity to apply those lessons learned to a similar--
indeed, actually worse--situation.
    You have already covered--and a few other people have 
covered--some of the, I think, lessons learned.
    Number one, go big and go robust early. You saw that with 
the $787 billion stimulus in the spring of 2009.
    A number-two lesson is, beginning in 2011, federal 
government made a great mistake. Congressionally mandated 
deficit cutting and debt--if not debt reduction, debt 
containment--was a real mistake. And while it didn't end the 
recovery, it certainly slowed it. And while it is good that we 
can look back that we had the longest economic expansion in 
American history coming out of that great recession, we all 
know now--and I think economists across the board, regardless 
of ideology, are in agreement--that it could have been more 
robust on an annual growth basis than it ended up being because 
of that focus. And I urge all of my colleagues and all of us to 
apply those lessons, and while we do need to focus eventually 
on deficit and debt, to make sure we don't do so prematurely.
    So exploring this idea in terms of when the appropriate 
moment would be to pivot, I am curious for either of you what 
your thoughts would be in terms of benchmarks. Would it be an 
unemployment rate sub 5 percent?
    Would it be an annual growth rate of at least, you know, 
2\1/2\ or 2\3/4\ percent?
    What would be the sort of benchmark or benchmarks that we 
could point toward now to give people confidence, yes, we will 
focus on deficit and debt, but when it is appropriate, and not 
prematurely, like we did in 2011, when the unemployment rate 
was still 7.5 percent at that time?
    Dr. Elmendorf. So thank you, Congressman. I would--one is 
the unemployment rate would have to be back down close to where 
it was before we entered this severe recession. I said in my 
remarks we could think about extending unemployment insurance 
benefits, the expanded benefits,--the unemployment rate was 
back below 6 percent. There is no magic to that particular 
number, but it is a long way down from where we are now.
    Mr. Boyle. Right.
    Dr. Elmendorf. A place that CBO does not expect us to get 
to for quite a while under current policies. And so, at least 
there should be that level of robust demand for workers in our 
economy.
    I think another important indicator might be whether the 
Federal Reserve has been able to bring interest rates back up 
off the zero floor, where they sit today. In normal times the 
Federal Reserve moves the interest rates around in the short 
term to try to ensure the economy is at full employment, and 
also inflation is close to the target. When that rate is down 
to zero, it hampers the Fed's ability to react. And so it would 
be good to have the interest--the federal funds rate back above 
zero again, before the federal--before the government tightened 
fiscal policy, because you want to start slowing the economy--
the fiscal tightening--before the Federal Reserve can respond.
    Mr. Boyle. Let me just--since I have 22 seconds here, 
quickly reclaiming my time for my last question--could you talk 
about what the consequences would be if the federal government 
did not provide some sort of aid or further aid to state 
governments, what the consequences would be if suddenly you had 
a ton of state government workers laid off in the midst of an 
economy with an unemployment rate of almost 20 percent?
    Dr. Elmendorf. That would accentuate a downward cycle, 
Congressman, rather than helping to put us--keep us on an 
upward trajectory. It would be very bad for the economy and for 
the workers directly involved, and also for all of 
restauranteurs and shop owners who would be serving those 
people if they had income to spend.
    Mr. Boyle. Thank you.
    Chairman Yarmuth. Exercising the prerogative of the Chair, 
Dr. Holtz-Eakin, would you like to respond to the first part of 
that question about benchmarks that we might use?
    Dr. Holtz-Eakin. Let me say three things.
    First, I would hope that this Congress and future 
congresses would not make a particular error that past 
congresses did, and focus exclusively on discretionary 
spending, which is now a tiny part of the budget. It is 
inevitable and essential that the mandatories be addressed as 
part of this effort. As a result, point two, you can legislate 
now to implement the slowing in the growth of those mandatories 
well in the future. And you do want the actual slowdown in 
growth to occur past any economic distress, but that you don't 
need to wait until then to do it. In fact, it is undesirable to 
wait. You want to give people lead time for changes to Social 
Security, lead time for changes in Medicare. So think about 
that as part of it. I think that is very important.
    Chairman Yarmuth. Great. Thank you very much. I now 
recognize the gentleman from Missouri, Mr. Smith, for five 
minutes.
    Please unmute.
    Mr. Smith. Can you hear me now?
    Chairman Yarmuth. We can hear you.
    Mr. Smith. All right. Thank you, Mr. Chairman.
    You know, that--I wish that we were all in the committee 
room with one another and in person, and we should be. The U.S. 
Senate, in fact, has been doing in-person hearings for nearly a 
month. And if you look at the average age of the U.S. Senate 
compared to the average age of the U.S. House of 
Representatives, we are a much younger chamber.
    And I think that the American people--you see local cities, 
counties, and states beyond the beginning stages of reopening 
their governments. You see Americans trying to get back to 
normal. And I think that the U.S. House should help lead that 
way to make sure that we get back to normal. And the best way 
to do that is to have in-person hearings, instead of these 
virtual hearings, and definitely no proxy voting, which is 
unconstitutional.
    We were able to operate in the House of Representatives 
during the yellow fever pandemic. We were able to operate in 
the House of Representatives during the War of 1812, during the 
Civil War, during the burning of the United States Capitol. We 
can operate in in-person hearings in Washington, DC. during the 
coronavirus. So I hope that we will be doing there (sic).
    It is unfortunate that this is even our first virtual 
committee hearing that we have had, or any type of hearing that 
we have had since March 11th, nearly three months.
    But guess what has happened during that time? It has been 
over 49 days, 49 days since we passed the deadline to pass a 
budget. We never passed a budget last year. Actually, a budget 
was never presented by the House Democrats this year or last 
year. Spending numbers is not a budget. And some of you will 
say that spending numbers is a budget. We need to pass a budget 
resolution. It is one of the few responsibilities of this 
Committee. I think we could do that. And I hope that we decide 
to actually try to work in doing that.
    There is essential workers all over the country working, 
whether it is the health care industry, whether it is the truck 
drivers, whether it is the folks that--stocking the shelves at 
the grocery stores. I think that the House of Representatives 
should be essential, as well. I believe it is. But 
unfortunately, the House Democrats do not, because we are not 
in person working, trying to pass a budget, trying to pass a 
budget resolution. And our country is facing a lot of different 
issues at this time.
    Our spending is clearly out of hand, and uncontrollable 
deficits puts the liability on taxpayers and future generations 
to pay the bill. I know we are all well aware of this problem, 
because we have held hearings on it. It is time for this 
Committee to act, rather than just talk about our nation's 
budget problems. This Committee's consistent failure to put 
together a budget has put us behind the eight ball. As we 
reopen the country and get the economy back up and running, we 
must keep in mind the budgetary effects of such policies.
    Going forward, we need to utilize pro-growth policies like 
those that delivered record low unemployment and got folks back 
to work. We should not be considering costly policies designed 
to keep Americans on government assistance. This Committee 
needs to do its job, get to work, and set our country and 
future generations up for success. And that starts with a 
budget resolution.
    This Committee must come together and take a hard look at 
our spending habits and set our country on a successful path 
for the future. As states across the country begin to safely 
reopen and Americans return to work, Members of Congress should 
do the same so we can confront the problem head on.
    The Speaker has said before that Members of Congress, ``are 
the captains of this ship. We are the last to leave.'' What she 
failed to mention is that she thinks we should be the last ones 
to come back. These are difficult times for our nation. Now, 
more than ever, we cannot turn our backs on the job we were 
elected to do. It is time for Congress to lead by example and 
get back to work for the American people.
    I yield back, Mr. Chairman.
    Chairman Yarmuth. The gentleman yields back. I now 
recognize the gentleman from North Carolina, Mr. Price, for 
five minutes.
    Please unmute.
    Mr. Price. Am I unmuted? Alright.
    Chairman Yarmuth. Yes, you are.
    Mr. Price. Thank you, Mr. Chairman. And I, for one, want to 
express my gratitude to you for scheduling this hearing, and in 
whatever way we can hold it. We are going to have some mix of 
in-person and remote hearings over the next weeks. We are going 
to make good use of that. We could use the flexibility, and I 
appreciate, for one, the ability to do this, even though we are 
not physically this week in Washington.
    I appreciate our witnesses, and want to--I want to pose a 
general question, but I want to get to the particulars pretty 
quickly. I am--it seems to me a consensus that in 2011 we 
missed a bet in terms of stopping too soon with the economic 
recovery. I would be interested in not just the aggregate 
amount of money that we appropriated at that time, but also the 
way it was distributed, and the targets of that aid, and 
whether that also should be rethought, and I am revealing my 
bias that it should. I am the Transportation Housing 
Appropriations Subcommittee Chairman, and I do think the 
lowballing of infrastructure, both transportation and housing 
infrastructure, is a notable feature of that Recovery Act, and 
one that probably missed a bet in terms of economic impact.
    But let me ask about housing insecurity in particular, and 
ask our panelists to comment on this. We are told that 25 
percent of adults either missed last month's rent or mortgage 
payments, or are likely to miss this month's. It is a 
substantial portion of the rental and the homeowner market. In 
the CARES Act we addressed this with regard to government-
connected housing. Both tenant-based and project-based Section 
8 got around $3 billion, which can be used to backfill rental 
payments missed. It is flexible money. It goes out basically on 
a formula basis, but some also for hardship situations. As you 
know, in the Heroes Act, we have much more generous assistance, 
both for renters and for homeowners, and it is not solely 
related to some kind of governmental connection. It is more 
broadly available.
    But I would like to ask you to comment on housing 
insecurity as a--as an important part of the challenge we are 
facing, and what are the optimal ways for addressing it.
    Dr. Elmendorf. So Congressman, it is very good to see you 
again.
    Mr. Price. Yes, thank you.
    Dr. Elmendorf. I share your concern about housing and 
security. A huge number of Americans have been able to 
accumulate very little financial buffer, and so they are 
dependent for their rent, or their food, for clothing, and 
other basics, on their current income. And when a quarter of 
the work force is out of work, that poses a tremendous 
challenge, challenges that you and your colleagues have met in 
some ways, partly by providing payments to households, partly 
trying to keep people at work, partly through the specific 
provisions you mentioned. Nonetheless, I think that financial 
stresses are building, and will build much further in the 
coming months, as this return to work happens slowly. So I 
share your concern.
    But I confess, Congressman, I have not studied particular 
ways for you to be helpful in housing. Perhaps the other Doug 
on the call has more specific help to offer.
    Dr. Holtz-Eakin. I think the first priority is, in fact, to 
maintain the spending capability of the American household on 
whatever, and the CARES Act did that quite successfully in the 
near term, monitoring that I think is the next step on the 
path.
    I want to agree with Doug Elmendorf, that the $600 federal 
bonus has been an important part of that support. I want to 
disagree with him in one way, in that it cannot be maintained 
in its current form.
    Our estimates are that 63 percent of workers would make 
more on unemployment insurance than going back to their 
previous job. If you want to maintain that income support, 
don't tie it to being out of work. Allow there to be some work 
incentive associated with the programs, going forward. That is 
the most important thing. But the first thing is to maintain 
the purchasing power of these households. Then, as you find 
targeted areas where they are not able to make rent and 
mortgage, I think some assistance is important.
    I think it is better to provide cash assistance than 
forbearance. One of the unfortunate things that I am worried 
about is that, between restaurants and other retailers, 
commercial real eState mortgages are going to be deep trouble 
soon. A lot of the mortgage servicers are not receiving 
payments, but are obligated to make their payments. They are 
facing stresses. And if we let the banking and financial sector 
get in trouble because we didn't take care of the rental and 
mortgage problems, that will be a big misstep. And we have 
avoided that so far, but that is worth watching, going forward.
    Mr. Price. Thank you.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize the gentleman from Texas, Mr. Flores, for five 
minutes.
    Mr. Flores. Thank you, Chairman. I want to echo what Mr. 
Smith said a few minutes ago about meeting in person, and it 
seems to me like we in Congress should consider ourselves 
essential workers. I think the American people would.
    I want to start my comments also by expressing my 
condolences to the family of George Floyd.
    Our country is suffering three big setbacks right now: one 
is the death of George Floyd and others like him because of 
their skin color; we are also dealing with the SARS-CoV-2 
virus; and then also the attempts of some to try to take 
advantage of Mr. Floyd's death for anarchal purposes versus 
peaceful protest to try to make a positive change.
    We have got some options we could look at, in terms of 
things to do to continue trying to get the economy back on 
track, to get people back to work, and to start a robust 
recovery. And I would like each of our witnesses to comment on 
those. One of those is to modify the current expanded 
unemployment benefits so that they are not a disincentive to 
work. Right now I am hearing many complaints from small 
businesses that they can't give their employees back to work, 
and they would love to have them back on their payrolls. So 
that is depressing our economic activity. If you hurt those 
small businesses, you are hurting our economic activity.
    The second one is a payroll tax rollback until the economy 
improves. When I talk about payroll tax rollback, that would be 
both Social Security and Medicare taxes rollback to zero on 
both the employee and employer until the economy is better.
    And then also an infrastructure bill to actually do what we 
talked about doing, which is something that could be done on a 
bipartisan basis.
    So, Dr. Holtz-Eakin, let's start with you. Talk about the, 
you know, the impact and efficiency of each of those three 
options. And if you can do that in about a minute and a half, 
then we will ask Dr. Elmendorf to do the same.
    Dr. Holtz-Eakin. Yes. So I think there will be a place for 
near-term fiscal--conventional fiscal stimulus of the type of 
writing checks or other things. But it would be a big mistake 
to think that is the solution. You know, I think we face a deep 
supply challenge. We have to make workers to feel safe to go 
back to work.
    Mr. Flores. Right.
    Dr. Holtz-Eakin. Businesses should be confident they can 
open their business. And we are going to face supply 
disruptions from the virus itself, going forward. It still will 
be present. We will still be getting headwinds from it. So 
bolstering the supply side, not just in the near term, but over 
the long term, is very important. And infrastructure can be 
part of that. Don't pretend you are going to rush it out in 
2020. Do it right. Have it help the economy in 2021, 2022, and 
beyond.
    I am less enthusiastic about the payroll tax cut for that 
reason. It is a temporary policy. Temporary policies inevitably 
are not as powerful as permanent ones. I prefer to see 
something that took on the challenge of taking that 8 percent 
unemployment in 2021 and making it lower, and something durable 
over the long term. And so I would focus on those things.
    If we do what we did in, you know, 2002, 2003, 2005, 2008, 
which is rely on fiscal stimulus to get the economy to grow--if 
you look back, it didn't. It is because we had supply problems 
that we didn't address.
    Mr. Flores. Right.
    Dr. Holtz-Eakin. That is where I think we can do better.
    Mr. Flores. Dr. Elmendorf?
    Dr. Elmendorf. Thank you, Congressman. So, actually on 
unemployment insurance benefits, I am not sure that the other 
Doug and I disagree. I say in my written testimony and tried to 
say quickly in my oral remarks that I actually would cut the 
$600 figure going forward, but I wouldn't cut it to zero. But I 
would reduce it, because I am concerned that as people--as jobs 
reopen, we want people to receive a reward for going back to 
work, not a monetary penalty.
    Dr. Holtz-Eakin. I agree.
    Dr. Elmendorf. I think, very importantly----
    Dr. Holtz-Eakin [continuing]. for example, said that if you 
make less than $300 a week, when you go back to work you get to 
keep getting your UI. That is my point, so that you get the 
income support, but you don't get the work disincentive.
    Mr. Flores. Thank you.
    Dr. Elmendorf. So I am--and I would be OK with that.
    But I think extending benefits in a way that does not 
discourage people going back to work is crucially important 
because of the fact that the second half of the year into next 
year there are still going to be millions and millions of 
people who can't find jobs, and they need and deserve support 
for their own sake and for the sake of the economy.
    I am a little bigger than Doug Holtz-Eakin is, I think, on 
temporary fiscal support. It is not a substitute for the very 
important things he is highlighting about trying to build an 
economy that works with the coronavirus out there. But I do 
think that now, relative to where we were, say, after the real 
eState housing bust of a dozen years ago, we don't need as much 
structural change now. We need some structural changes. But we 
have not overbuilt an entire sector of the economy in a way 
that proves so hard to recover from.
    On infrastructure I think that is a wonderful, wonderful 
approach, and I agree with Doug this is something we should 
view mostly as a long-term building strategy, not as something 
that can be--that can really be shovel-ready on the sorts of--
on the scale that one would need.
    Mr. Flores. Thank you, Mr. Chairman. I yield back.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize the gentlelady from Illinois, Ms. Schakowsky, for 
five minutes.
    Ms. Schakowsky. Thank you. Thank you, Mr. Chairman. Thank 
you, Ranking Member. It is really important that we have 
hearings like this, even at this really difficult and painful 
moment in our country. So I thank you for that, and I thank our 
witnesses.
    I think it has become clear at this point that no single 
policy is going to get us out of this crisis. And we need to 
provide a broad array of relief programs.
    Last week some of us had the opportunity to be at a 
briefing with Claudia Sahm about how direct cash payments to 
households can help stimulate the economy during this 
recession. And I wanted to ask you, Dr. Elmendorf, what is the 
role for direct cash payments to households in this recovery, 
especially given that we have all these other programs that we 
have that aren't reaching everybody? Cash payments.
    Dr. Elmendorf. Thank you, Congresswoman. I think cash 
payments can play an important role. My own view is that it is 
best to focus them, at least a little bit. So I prefer payments 
to people who have lost jobs through unemployment insurance.
    I think, one--I think it was useful for the Congress to 
enact the payments that went out to many, many households 
through the CARES Act. But looking ahead, I would focus more of 
the energy on the households that have lost jobs and have 
particular shortfalls in income. And I would also work, of 
course, to try to make sure people don't lose so many jobs, and 
stay at work. So I think cash payments are a piece of the 
puzzle, but not by any means the only piece, or even the most 
important piece, looking forward.
    Ms. Schakowsky. So let me ask you this, Dr. Elmendorf. You 
know, you have seen and talked about the unemployment 
insurance, the Paycheck Protection Program, and noted that they 
are all set to expire. Are you thinking that we need to extend 
these programs?
    Are there different programs that we need to do?
    Is there some other remedy that we should be thinking about 
as we move forward?
    Dr. Elmendorf. So I would extend the expanded unemployment 
insurance benefits, although, as I mentioned, I would cut back 
that $600 figure, because I think it is high enough that, as 
jobs return in the economy, it would hinder some return to work 
by people. So I would extend, I think it is very, very 
important, but I would do it with a somewhat smaller number.
    I think it is also important to provide support for our 
state and local governments. The Federal Reserve facility that 
is being set up that will improve the functioning of the bond 
market for state and local governments is important, but it is 
not enough. These governments don't have huge capacity to repay 
those debts. They are suffering from very large hits, and need 
to spend more to preserve our health and the reduction in tax 
revenues. I think it is entirely appropriate and very useful 
for strengthening the economic recovery for the Congress to 
provide support, direct grants to state and local governments.
    And then also, I would do more for businesses, for those 
that have not been able to receive support through the Paycheck 
Protection Program, and through other facilities that have been 
set up by the Federal Reserve.
    Ms. Schakowsky. Thank you. I am sure that every one of my 
colleagues has heard from local municipalities, as well as from 
their states, because it is loss of revenue. It is not just the 
cost. And, you know, the money we have given them so far is 
limited to the COVID virus, and not useful in a broad way. So I 
hope we do that.
    Let me ask you one more thing. There is this impetus to 
open, open, open, open. And I want you--you keep talking about 
moving the economy forward, but also addressing the health of 
the nation. Is there a way to really separate that now? Because 
I am seeing people who are tired of waiting, they are going 
out, they are mingling, they are having parties. What do you 
think?
    Dr. Elmendorf. Congresswoman, the most important part of 
economic policy now is health policy. And I have heard that 
again and again in presentations by economists trying to offer 
advice and forecasts for our path ahead. The most important 
thing we can do for a strong economic recovery is to find ways 
to corral the health risks from COVID-19, and that is testing 
and contact tracing, quarantining procedures. That is what we 
need to be--to have to make people comfortable going back out 
of their houses and engaging with others more widely.
    There are some people who--everybody wants to get back out. 
Some people are doing it anyway, but they are going to 
encounter bigger health risks. And to get everybody back out, 
including especially older people and others who are 
particularly vulnerable, we have to improve the ability to stop 
transmission of this disease.
    Ms. Schakowsky. Thank you so much. I yield back.
    Chairman Yarmuth. The gentlelady yields back. I now 
recognize the gentleman from Oklahoma, Mr. Hern, for five 
minutes.
    Please unmute.
    Mr. Hern. Thanks. Thank you, Mr. Chairman, it is really 
good to see everyone. And Ranking Member Womack, thanks to both 
of you for holding this important hearing today. And I would 
also like to thank our witnesses for being with us, as they 
have been so many times before.
    I, too, would like to also acknowledge the stress that our 
citizens are experiencing brought on by the COVID-19 outbreak, 
and also to recognize those who are peacefully exercising their 
First Amendment rights as they express their frustrations with 
the George Floyd incident. And I think we will all agree on 
that, as well.
    You know, even during these difficult times I am glad that 
we can all sit here and discuss these issues. And we have heard 
a lot. You know, being down the dais in questioning, you get to 
hear a lot of dittos. And I want to associate my words and 
thoughts with that. But I think it is important that we 
continue to state this, that we had a growing economy that was 
incredible prior to the COVID-19 outbreak, and we talked 
about--you know, there has been a lot of talk about the Tax Cut 
and Jobs Act, and money that has gone back out, but we have 
also seen record GDP, and then 50-year unemployment.
    So, you know, we can talk about not associating with that, 
and there is some kind of parallel past, but I think that 
putting money back in the economy and creating jobs has helped 
in getting Americans to work, and it has really helped in doing 
some amazing things that we have never seen in the history of 
our country.
    You know, as we look at what is going on, and we continue 
to see how quickly our economy can be changed just in the short 
12 weeks now--and we saw it really happen and accelerate in an 
8-week period--we saw, you know, unemployment skyrocket to 
almost 15 percent, as has been talked about. Many people in my 
home state are receiving unemployment for the very first time 
in their lives, didn't think they would ever see it, based on 
what happened just earlier in the year. And it has been very 
tough. And I am very proud of our Oklahomans and the way they 
have been wanting to go to work. But unfortunately, there is 
just--the jobs right now are--have been set aside.
    And, you know, being a person who, prior to coming to 
Congress myself, spent 35 years in a restaurant business and in 
the banking business, so I am seeing this kind of from both 
fronts. And I think what Treasury did in allowing our community 
bankers to be the points--the tips of the spear to get 
businesses saved and Americans kept in their jobs was--was a 
great feat. And we still have--it was clunky. We have pushed, 
you know, over $2 trillion out into the economy, and we are 
seeing--you know, trying to hang on for dear lives.
    Mr. Holtz-Eakin, Dr. Holtz-Eakin, I would like to ask you, 
you know, something I don't think has been asked yet. But we 
are right now--this will be the eighth week of PPP. So the 
money, the proverbial money, has run out on those early 
appliers and funded businesses. If demand has not been picked 
back up for their particular widget that they are producing, 
what do you see happening now with unemployment?
    It has been talked about that PPP has, you know, protected 
about 50--upwards of 50 million jobs in America, while we have 
got 40 million on unemployment. Now that we start rolling off 
the PPP money, I don't think that there is any question that it 
has been--you know, business has been reluctant to hire 
anybody, keep people in work. Now that it is gone, what do you 
think is going to happen with unemployment?
    Dr. Holtz-Eakin. I would expect that we will continue to 
lose some small businesses, and we will see increases in the 
ranks of the unemployed. On net we may see, you know, 
employment growth turnaround to be positive in June--July, most 
likely. But that will reflect the difference between what is 
going on in the larger companies who have been traditionally 
able to manage a temporary layoff, bring their people back. Of 
the 20 million, for example, in April, they--18 were ostensibly 
temporary layoffs. That is largely associated with bigger 
companies.
    I am very worried about our small to mid-sized businesses 
in the United States, between the failure of the Treasury to 
get any money out through the Fed and the PPP's design flaws. 
Despite the fact they got a lot of money out, it really could 
have been designed better. I think there is going to be some 
real distress in that area, and we should continue to find ways 
to support it.
    Mr. Hern. If I may, Dr. Holtz-Eakin, in the last 39 seconds 
we have here, what do you think the most immediate priority 
should be to ensure that we don't see those layoffs now that 
PPP is starting to roll off, and we are not going to be in 
Congress for another 30 days? So what do you think we should be 
doing immediately?
    Dr. Holtz-Eakin. I think you have done something very 
important in passing some flexibility down to 60 percent 
required for payroll, 24 weeks. That is--those are important. 
And there is still money. So, you know, that program can run 
for a couple of weeks.
    But when you come back it is worth checking in to see if 
additional flexibilities--particularly on the lender side, to 
get them to participate more fully. Especially with smaller 
businesses, less typically served businesses, I think there is 
some real liability issues that the Treasury has never fully 
addressed that are holding the program back. And those are 
reforms that you might want to consider to make.
    Mr. Hern. Thank you, Mr. Chairman. I yield back.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize the gentleman from Michigan, Mr. Kildee, for five 
minutes.
    Mr. Kildee. Thank you. Thank you, Mr. Chairman. And it is 
good to see everybody. I look forward to the time when we can 
get back into our committee room and be in the same space 
together. And it is good to have both of our witnesses back in 
front of us.
    I know we have spent a bit of time already talking about 
this issue of unemployment. I would just like to maybe get your 
reaction to a couple of my thoughts.
    First, I do think it is important that we not let anecdote 
be some sort of a substitute for data. I am really afraid that 
this narrative that people are willing to sit at home and 
collect unemployment is some sort of choice they are making 
because they don't want to work, they would rather do that than 
work. The people I talk to who are unemployed, sitting at home, 
are grateful that they are able to make the decision to protect 
themselves and protect their family from this virus by staying 
at home.
    And most of the anxiety that I hear from people about 
whether they should stay on unemployment or go back to work has 
to do with fear of being exposed to the virus, not some sort of 
calculation that if they stay on unemployment for the 
additional 13 weeks until July 31 they would be willing to risk 
the job that they could have for years in exchange for that 
return.
    Now I get it that, for those people--small numbers so far--
who are having to make the choice about accepting a call back 
to work or remain on unemployment, there may be some small 
percentage of them that would make the decision to stay in 
unemployment because of the financial incentives involved. I 
think that problem is being overblown, relative to the more 
central issue, and that is that people are afraid to go back if 
they don't believe they are going to be protected in the 
workplace.
    Having said that, I support extension of the unemployment 
benefit for two reasons, two really important reasons.
    One, it puts money in demand in the economy in a really 
robust way. I think that is critical.
    Second, we are going to hit a cliff for a lot of these 
people at the end of July if we don't do something to extend 
it.
    Now, I guess I intended to ask your support, but I can get 
each of you just to opine more specifically on what 
modifications you think makes sense--because I heard each of 
you say that we need to do more, and each of you express 
concern about us hitting this cliff. But it is one thing to say 
that, in the abstract, we ought to make some modification. It 
is something else to say, ``What do we think we should actually 
do?''
    For example, should we allow people to keep some of their 
benefit if they return to work? If we step down to, say, like, 
a $450 benefit, is that enough? What I don't want to do is just 
throw the baby out with the bath water.
    You each have a minute to try to respond. Thank you.
    Dr. Holtz-Eakin. Really, really fast, point one, safety in 
the workplace has to be taken care of independently for 
everybody. That shouldn't be a concern. That is a different 
issue.
    Step two--here is your menu. It is a temporary policy.
    When do you want it to end? If not July, December. Pick a 
date.
    Step two, do you like cliffs? Probably not. So phase it out 
to the date when we want to get rid of it.
    Step three, how big do you want it to be when you jump off? 
Six hundred, four-fifty, whatever.
    Step four, what do you want the work incentives to be? Do 
you get it whether you go to work or not? Do you get it only if 
you go to work? Or do you get it only if you don't go to work?
    That is--those are all different than the purchasing power 
that it provides. That is the work incentivepiece.
    So you have got a menu of things you can do. And at the end 
of the menu you say, ``How do I target it? Everybody, or low-
income workers, low-wage workers?''
    So, you know, some--the only thing not to do is to extend 
what we have right now. That is the mistake. It needs to get 
fixed.
    Mr. Kildee. Mr. Elmendorf?
    Dr. Elmendorf. So, Congressman, I do agree with what you 
said. I will offer a few thoughts of my own. I said in my 
written testimony two specific things.
    One is that I would reduce the $600 figure to--maybe $300 
would be a reasonable number. I don't think this is the 
principal reason people have not gone back to work yet, but I 
do think it can become an issue as the economy recovers and 
more jobs become available.
    The second thing I said in my testimony, written testimony, 
is I would not pick a date, actually. I would pick a triggering 
level of the unemployment rate. I think it can restore--can 
give people confidence that the benefits will be there as long 
as they are needed.
    The third thing I would add, which actually is a point that 
Doug Holtz-Eakin has mentioned, is that I would provide some 
reward for people who return to work. That can be in the form 
of a few weeks of unemployment insurance benefits after you are 
off unemployment. Are there other ways to structure that? I 
think that would be a useful part of an extension, as well.
    I think the worst thing you could do is to let these 
benefits expire at the end of next month.
    Mr. Kildee. Great. I thank you all very much. Thank you 
both, the witnesses, and I yield back.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize the gentleman from Texas, the bestselling author, Mr. 
Crenshaw, for five minutes.
    Mr. Crenshaw. Thank you, Mr. Chairman. And listen, I want 
to start off by saying that this is a good hearing to have, and 
I appreciate you having it, Mr. Chairman. I appreciate our 
witnesses for being here.
    I feel a degree of shame for not being there in person. I 
hope we all do. This isn't Democrat or Republican. This is a 
leadership issue. Congress needs to be there. The country is in 
crisis. It is going through a pandemic. There are cities 
burning. We should be there, and we should feel horrible about 
this.
    And we can change that. We can all collectively say, ``We 
want to be there and show the American people that we, Members 
of Congress, are willing to take a minimal amount of risk--and 
it is a minimal amount of risk, let's just all be honest--and 
go and do our jobs.''
    This is a leadership issue. We have to show the American 
people that--I am sure we are all very happy that Capitol 
Police are there guarding our offices right now. They are at 
work. I am sure we are all very happy that we can order takeout 
right now because people are willing to cook that. I am sure we 
are all very happy that we can go grocery store shopping right 
now, because people are willing to do that.
    I disagree with this notion that Americans are so scared to 
go back to work. That is not what I am seeing anywhere in the 
country. Americans are very happy to go back to work, and they 
are very quick to understand that they are in control of their 
lives and they can choose how to mitigate risk. It is amazing 
what we can do when we just trust the American people.
    This is a really important committee hearing, and we have 
to make difficult decisions about how--to make sure that our 
economy recovers. But we also have to agree on something really 
important. When we look back on what we have done as a 
horizontal lockdown, basically choosing the costliest possible 
option for a--for some hoped benefit, we chose the wrong one. 
And we know that in hindsight.
    Again, this isn't blaming anybody, this is a human race 
problem. The entire human race did this. We said early on that 
we would lock down in order to save our hospital systems. Well, 
we saved our hospital systems. They weren't even close to being 
overwhelmed. We wrongfully thought what was happening in New 
York City could happen across the country. We engaged in a lack 
of critical thinking, unable to differentiate between the 
population density of New York City, the high international 
travel throughput of New York City and Italy, and we applied 
that to the entire country and told people they couldn't leave 
their homes.
    Again, a lot of this is in hindsight. You know, it is. It 
is hindsight. I just hope that if a second wave hits, like we 
all agree might happen, what we have learned--these lessons, 
that we do not choose the most costliest possible option to 
keep our people safe, there are other ways to do it. We know 
who this virus hits the worst. We know how to engage in micro 
interactions to keep ourselves safe. We can trust people to do 
that.
    I am watching businesses all over the country open their 
doors back up and establish common-sense policy. You know who 
hasn't established a lot of common-sense policy? A lot of our 
local and state leaders across the country, telling people that 
they should be arrested because they are walking alone on the 
beach. This is not based on science, this is based on nonsense 
and fear. And as Members of Congress, we should be there to 
demonstrate to the American people that we are not fearful, 
that we are willing to engage in the minimal amount of risk 
just to show the American people that we are leaders.
    Mr.--Dr. Elmendorf, good to see you again. You have 
actually already answered this question from your last 
comments, but I really want to talk to you about the 
unemployment insurance issues we face.
    I disagree with my colleague who just spoke, saying that it 
is only anecdotes that people don't want to go back to work. 
That is nonsense. It is true across the country that people are 
not going back to work because they are faced with a very 
difficult financial situation. Why on earth would they make an 
irrational decision to go back to work when they are making 
more money off of work?
    I proposed something called the Jumpstart Act, which 
allows--which basically says what you just said, allows workers 
to keep that weekly extra benefit, even if they go back to 
work, give states the options to do that through July 31st. It 
sounds like you agree with something like that, is that 
correct?
    Dr. Elmendorf. I haven't read the details, Congressman. But 
as you have described it, yes, I agree with that.
    Mr. Crenshaw. I appreciate that.
    And Dr. Holtz-Eakin, I have heard this notion that it seems 
that just because some extra spending was appropriate--and we 
all agree that it was--that more must be appropriate. And I 
have heard this supposed economic consensus that in 2011--that 
the Budget Control Act was a terrible idea.
    So do you agree with this notion that, since some extra 
spending was appropriate, that more must always be better?
    What is our limit? How do we ascertain that correctly?
    Dr. Holtz-Eakin. I am--as I have said, I hope quite 
clearly, think that Congress acted appropriately against a 
large problem with a large response. But it should in the 
future do only what is necessary. You cannot lose focus and 
start doing everything under the sun under the guise of--to the 
pandemic. We simply don't have that luxury because there is 
going to be a moment when we have to begin to stabilize the 
debt. And that is going to be a difficult thing to do. There is 
no reason to make that unnecessarily hard. It is already hard 
enough.
    Mr. Crenshaw. Thank you. I am out of time.
    I yield back, Mr. Chairman.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize the gentleman from California, Mr. Panetta, for five 
minutes.
    Mr. Panetta. Thank you, Mr. Chairman, I appreciate having 
this hearing. I also appreciate these two objective witnesses, 
Mr. Holtz-Eakin and--I usually see you in the Ways and Means 
Committee--and Mr. Elmendorf. Good to see you again. I--once 
again, I really appreciate your straightforwardness and your 
objectiveness when you come to such a--to talk about and have 
testimony about such an important and serious issue like this. 
So thank you very much.
    Look, I too would love to see you there in person, be in 
the committee room. I think all of us, every single person on 
this call wants to be in that committee room in--interacting 
face to face and doing our job. We understand that. But we also 
understand certain limitations that need to be put in place, as 
well.
    And also, I got to admit, I am looking out my window right 
here, and I get to enjoy the beauty of where I live on the 
central coast of California. So that is nice, too.
    But that being said, there is an issue in the sense that 
there are a lot of people who come here to the central coast of 
California in normal times to experience this beauty, a lot of 
tourism, a lot of hospitality. Unfortunately, that is not 
happening. Unfortunately, our local counties, our local cities 
that rely on that hospitality are taking a big hit right now 
because people aren't coming. And unfortunately, in regards to 
the CARES Act, there wasn't the direct funding for the small 
towns and counties like we have here on the central coast to 
provide them the relief that is necessary, at least directly, 
like I said.
    Now, obviously, we changed that in the Heroes Act, and we 
put a certain formula in to take into account those small 
cities, those small counties. But there are still--we haven't 
agreed to that at this point. Hopefully it comes back, and 
hopefully we prioritize direct funding to state and local 
counties, especially smaller ones, when it comes to any sort of 
a next stimulus package for--the relief package for this 
pandemic.
    Now, Dr. Elmendorf, obviously, you know a lot about the 
great recession and the Recovery Act, and in regards to the 
funding for state and local governments. Do you have any sort 
of insight as to why it was important to provide that type of 
funding to state and local governments?
    Dr. Elmendorf. I think there are two crucial reasons, 
Congressman. One is about the provision of public services, and 
the other is about maintaining and building a strong economic 
recovery.
    So we know the state and local governments are restrained 
in many ways by balanced budget provisions when they face the 
sort of need to spend more and a sharp drop in revenue they are 
experiencing now. They will have to come back and reduce the 
services they provide. That is dangerous for our health and 
risky for education and so on.
    But also, laying off governmental workers means more people 
who can't go out and buy the things from small businesses, not 
people who can go out and buy things from small businesses. And 
so we want to keep people at work in state and local 
governments, as well as the businesses now, so that, as the 
health conditions improve, we can have people spending money to 
create a strong recovery.
    Mr. Panetta. Are there any other efficient--any other 
effective ways that we can provide that type of funding to 
states and localities?
    Dr. Elmendorf. Well, there are ways to maintain the working 
of the municipal bond market. And this is a facility that the 
Federal Reserve is establishing that helps maintain the ability 
of state and local governments to borrow. My concern is that 
that is not enough, because they are not just suffering from a 
temporary shortfall that we made up somehow next year. They are 
losing a lot of money that is not going to be made up in the 
future. I think we need some direct aid along with the--along 
with this work to keep the financial markets--our state and 
local governments functioning well.
    Mr. Panetta. Great, OK, thank you.
    Moving on to another topic, Dr. Holtz-Eakin, talk to me. 
Give me your opinion about tying economic relief to economic 
indicators by using automatic stabilizers, if you could.
    Dr. Holtz-Eakin. This is one where I am less enthusiastic 
than Doug Elmendorf. We actually had a hearing on this in the 
Budget Committee, and it is one of the--I think--the notable 
cases where we disagree.
    I have a great faith in the capacity of you to do your job. 
And you will do your job when you respond to the needs of your 
constituencies. That is the indicator you should care about. 
You go town halls and find out how people are doing, what they 
are concerned about. When you can go to a town hall and 
people's first question isn't, ``Where is a job going to come 
from,'' and ``How the heck am I going to pay my rent,'' you 
will now have the luxury to say, ``OK, how should we be 
planning to bring the national debt into line with the growth 
in GDP so that we are not a future threat to the children of 
this generation?'' That will be the moment. And that is when 
you start doing it.
    Mr. Panetta. OK. Dr. Elmendorf, in 16 seconds, your 
rebuttal.
    Dr. Holtz-Eakin. You are muted, Doug.
    Dr. Elmendorf. Thank you, Doug.
    I don't want it said that I lack confidence in you and your 
colleagues' ability to do the right thing.
    [Laughter.]
    Dr. Elmendorf. Your colleagues have a lot of things to do, 
and I think there is a great, great efficiency, and the ability 
to enhance confidence if you set in place now a set of policies 
to last as long as unemployment remains high.
    Mr. Panetta. Thanks to both you.
    Mr. Chairman, I yield back and thank you again.
    Chairman Yarmuth. Thank--the gentleman's time has expired. 
I now recognize the gentleman from Tennessee, Mr. Burchett, for 
five minutes.
    Mr. Burchett. Thank you.
    Chairman Yarmuth. Please unmute.
    Mr. Burchett. Am I muted? Can you hear me?
    Chairman Yarmuth. You are.
    Mr. Burchett. Great. I don't even have my 12-year-old 
daughter here, and I did it myself. I am impressed.
    It is good seeing you, Mr. Chairman, Ranking Member, and 
all the other Members. And I echo all the accolades everybody 
is throwing out, and the disgust, too. So I will just leave all 
that off. But it is a pleasure being here with you all.
    I recently introduced some legislation dealing with 
liability of small businesses, and we know that getting our 
businesses back open is going to be vital for our economy. It 
is called the Coronavirus Public Safety and Economic Recovery 
Act. And it--of course, it protects businesses to--that follow 
public health guidance from--upon reopening from some lawsuits. 
And it is sort of a hand-in-glove kind of thing.
    I come from local government, as the Ranking Member knows, 
and some of you all do. And I was in the state legislature. And 
it allows for all those to kind of work together, instead of us 
cramming stuff down, which we tend to do at the federal level 
sometimes. And I thank Representative Cole for his recent 
support of the bill, actually.
    And I want to ask Mr. Holtz-Eakin a question. How can we 
use legislation like this that is--with--in conjunction with 
employment benefit reform to get the American people back to 
work?
    Dr. Holtz-Eakin. I think the most important thing is the 
safety issue. There--you know, Americans will reopen the 
economy more and more as they feel confident to do so. It has 
never been fully shut, and we suffered a lot of loss, even with 
what we have had operating. So people want to do more. They 
need to feel confident in doing it. People differ in their 
confidence, and so some people require a lot more effort to 
sort of be confident in doing it.
    But on the employee side, I think we are going to have to 
have aggressive use of testing, tracing, therapeutics, 
vaccines, PPE, reconfiguring the workplace. There will be a set 
of things that businesses, along with their workers, are going 
to have to do on that front. And on the business side, I think 
there is a sensible piece of rifle shot liability protection 
that you can provide businesses when their workers come back.
    You know, I think about this a lot. I have 23 employees. I 
want them on this floor. I don't know what is being asked of me 
to do that safely. And I--and, as a result, I don't know if 
someone--we came back and someone got sick, what my exposure 
is. I think resolving that uncertainty would be a real benefit 
for the economy.
    Mr. Burchett. All right. That is the only question I have. 
It is always good seeing my buddy, Jimmy Panetta, right down 
there, looking like he is going for a fraternity rush. He has 
got khakis and boat docker shoes on.
    But I too issue my disgust with the murder of Mr. Floyd. 
That made me, literally, physically sick, all the videos of 
that, and, of course, in the destruction and violence that has 
followed. But I am very proud of the Americans that are out 
protesting peacefully. I think that is a wonderful, wonderful 
thing that we only share, probably like that, in this great 
country of ours.
    So, Mr. Chairman, I yield back the remainder of my time. 
And I miss seeing you in public, brother.
    Chairman Yarmuth. Thank you very much. I miss you, too.
    The gentlemen has yielded back. I now recognize the 
gentleman from New York, Mr. Morelle, for five minutes.
    Mr. Morelle. Thank you, Mr. Chairman. Thank you all for all 
my colleagues (sic). And thank you to the two witnesses.
    I want to echo what my colleague, Mr. Panetta, said. I 
mean, it is great to have these two people, gentlemen, testify. 
And I think it is a great value to us. And I, frankly, am very 
pleased that the Committee is conducting this hearing. I know 
that there are challenges of getting people to Washington, and 
being safe, and being thoughtful about how we do it. But 
continuing to conduct the people's business is very, very 
important.
    I also want to express, too, my condolences to the Floyd 
family and what this country is going through. I was 11 years 
old when Martin Luther King and Bobby Kennedy were both 
murdered, and we were in the middle of protests around the 
Vietnam War, and I remember how frightening it was as a child. 
So I can only imagine the trauma that we are inflicting on 
young people and children across the country. And I am grateful 
for those members of law enforcement who have allowed peaceful 
protests to go on, and in some cases have joined with them. So 
I am, obviously, like everyone else, very, very concerned about 
that, and against the backdrop of the virus.
    I wanted to go back, if I could, to both witnesses, and 
circle back a little bit on state government issues. I, like my 
colleagues, many of whom have served in the state legislature, 
I served in the New York State Assembly for the better part of 
three decades. I served on the Ways and Means Committee, which 
is the Budget Committee in our state, and served as majority 
leader for six years. So I am very, very invested in state 
government.
    About two-thirds of New York's budget goes back to not only 
local governments, but what we call local assistance to not-
for-profit organizations, to those who care for the 
developmentally disabled. I note that--I saw Senator Rick Scott 
from Florida saying yesterday that, while he would support 
funds going to state governments, that he thought they ought to 
only go to those states that were impacted and had expenses 
directly related to the COVID virus.
    It seems to me that revenue declines are a direct 
consequence of the COVID virus. And I would just like for our 
two guests to just comment on revenue loss, specifically the 
impacts that that will have, and whether or not you can balance 
that against the Congress not doing anything to help shore up 
those revenue deficits.
    Dr. Holtz-Eakin. Well, Congressman, if I could, there are 
really three issues.
    Issue number one is one I think both--all parties agree, 
that there are states that have structural budget problems that 
have nothing to do with the pandemic, and those are the state's 
or locality's responsibility. That is off the table.
    There are also a lot of additional expenditures that states 
and localities have undertaken to combat the virus and the 
effects of the pandemic. That is in the national interest, and 
I think it is appropriate that the taxpayer pick up that tab in 
whole or in part. So, you know, that is--Senator Scott is 
worried about those. I think that is important.
    The third piece is the one you have identified, which is 
the fact that when the customers went away and the businesses' 
revenues went away, so did the sales taxes. And when the 
layoffs started, the income taxes and payroll taxes. And so 
there is no question there has been a big decline in the 
revenues.
    And the issue I think that is presented to you is do you 
think of states and localities as like big businesses, in which 
case the response in the CARES Act was, ``Go borrow the money 
at the Federal Reserve?'' And I just want to stipulate I don't 
think that is working well. But that was the answer in the 
CARES Act. Or do you think they are like small businesses, in 
which case the answer in the CARES Act was, ``We are going to 
give you a disguised grant called a PPP loan, which we will 
forgive,'' and that will be the equivalent of a direct 
appropriation.
    So they are going to need a bridge. There is no question 
about it. The only issue is what is the mix of municipal 
liquidity usage versus direct appropriations by the Congress. 
And that is what it comes down to.
    Mr. Morelle. And if I can, before we go to Doug No. 2, 
because I would like to ask him to respond to it, as well--and 
I only have 45 seconds--but some of that--I mean, obviously, 
the decline in revenue cannot be made up. It is not as though 
you have this built-up or pent-up demand for services, and in 
the interim many local not-for-profits and agencies will 
suffer. If we could just--I just want to make that observation. 
If we can, go to the other panelist, Dr. Elmendorf?
    Dr. Elmendorf. So, Congressman, I agree with the concerns 
that you have posed, and the importance of the Congress taking 
action to address those concerns.
    Mr. Morelle. Very good. Thank you, Mr. Chairman, I yield 
back.
    Chairman Yarmuth. Thank you. I now recognize the gentlelady 
from Texas, Ms. Jackson Lee, for five minutes.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman, and 
thank you for the kind words of the Chairman, and Ranking 
Member, and all the Members on the terrible tragedy and horror 
that we are now going through in this nation, along with, of 
course, COVID-19.
    I just want to hold up Houston's paper; 60,000 people came 
out peacefully yesterday to honor George Floyd's family. And 
so, not only are we dealing with the disparate impact of COVID-
19 on communities of color, specifically African-Americans, but 
it is compounded by the crisis that we face here on the 
questions of justice and peace.
    Let me go to Dr. Elmendorf and focus my questions. If I am 
able to have enough time, I will ask Dr. Holtz-Eakin. And I 
thank you both for being here.
    Dr. Elmendorf, I just want you to think about these 
constitutional issues right now. I am not asking you to answer 
them. If we have time, I will ask you to do that. But I want 
you to think about the question of impoundment in terms of the 
kind of notification that is statutorily required before the 
executive branch can withhold appropriated funds. I think that 
is crucial in the midst of COVID-19.
    And then the question of the power of the purse, what the 
framers were concerned about more, the Congress giving up its 
power of the purse or the president taking it.
    But my questions that I want you to answer now is Chairman 
Powell said we needed to go big. The Heroes Act was about three 
trillion plus. Forty million people are unemployed. What are 
your thoughts about the extending of the cash disbursement, 
which is included in the Heroes Act?
    And as well, the extending of unemployment beyond the 13 
weeks? If you are taking notes, I would appreciate it.
    And my big question is that, when the nation sneezes, the 
African-American community gets pneumonia. It is said that we 
will lose a third of our businesses, approximately, in terms of 
small businesses. We never had inherited wealth, and so our 
community is devastated with not only the disparate impact of 
the COVID virus, but the economic impact.
    I would appreciate your response to that, and any thoughts 
about the tax cut, and ensuring that we can really increase 
that corporate tax amount that we did not have in the tax cut.
    I am looking at the clock, two minutes and 30 seconds. I 
would appreciate it. I know you can do it, if I can get little, 
small answers on all of that. Thank you.
    Dr. Elmendorf. Thank you, Congresswoman. You raise a lot of 
issues.
    It is very, very important to provide income to households 
that have lost their jobs. And more will lose their jobs, and 
many will have difficulty finding jobs again. We are in for a 
long, hard period----
    Ms. Jackson Lee. Yes.
    Dr. Elmendorf [continuing]. and if we make progress on the 
health front.
    I think that you are right in your concern for households. 
My own preference would be to focus on those who have lost jobs 
as we go forward, and who are out of work----
    Ms. Jackson Lee. Yes.
    Dr. Elmendorf [continuing]. rather than the population more 
broadly.
    On the question about the power----
    Ms. Jackson Lee. Never----
    Dr. Elmendorf [continuing]. purse, I can't--I am not a 
lawyer, I can't speak to that.
    On the question about the African-American community in 
this country, yes, it is almost always the case that in 
economic downturns those who are hurting most before the 
downturn then take the biggest further hurt. In the current 
downturn, because many African-American workers have jobs in 
which they continue to go to work, income losses have not been 
as dramatic relative to the incomes of white workers in this 
country. But some of the health consequences have been 
particularly dramatic.
    And so there are different--it is very important, if we are 
going to regain ground, not just the economy as a whole, but 
for particular groups----
    Ms. Jackson Lee. Small business----
    Dr. Elmendorf [continuing]. go back to work.
    Ms. Jackson Lee. Can you speak to the small business loss? 
That is going to be devastating.
    Dr. Elmendorf. Yes----
    Ms. Jackson Lee. And some of these workers will lose their 
jobs.
    Dr. Elmendorf. Yes----
    Ms. Jackson Lee. Yes.
    Dr. Elmendorf. So the more that we--the more support we can 
provide for businesses to keep their employees on the payrolls, 
the better that is now, and the faster we will have a recovery 
in the months ahead.
    Ms. Jackson Lee. Thank you. And I support the--Pramila 
Jayapal's payroll protection act guarantee bill that can help 
us.
    The--any point on the corporate tax being raised in this 
last huge tax bill being modified to go up?
    Dr. Elmendorf. I think, as the Congress looks for ways to 
put revenue and spending on sustainable paths in the future, 
that we should take another hard look at raising corporate 
taxes. I think that is not the crucial issue of the day, which 
is to try to get this economy down a strong recovery path.
    Ms. Jackson Lee. Thank you very much. Thank you very much, 
Mr. Chair. Thank you, Dr. Elmendorf.
    Chairman Yarmuth. The gentlelady's time has expired. The 
gentlelady from Washington, Ms. Jayapal, for five minutes.
    Ms. Jayapal. Thank you so much, Mr. Chairman, and thank you 
to both of our witnesses today.
    The first coronavirus infection was actually diagnosed here 
in Washington state on January 21st. And thanks to quick action 
and strong physical distancing requirements, we have done a 
pretty good job on bringing down COVID infections and deaths, 
overall.
    But the economic pressures are enormous, with some people 
going on four and five months without a paycheck, too many 
people of all incomes that are reliant on food banks, too many 
people facing imminent eviction and homelessness, and Black 
workers experiencing record job losses and a massive wage and 
wealth gap. And then the businesses, small and medium-sized 
businesses, that are considering shuttering permanently at 
alarming rates. And as both of you know, the unemployment rate 
is continuing to rise now at almost 41 million people, with one 
in four working Americans without jobs.
    So I do believe that it is in our collective interest to 
protect, as you both have said, as many jobs as possible, keep 
people with the certainty of paychecks, and give businesses the 
support that they need to stay open, at least until they can 
make decisions about what comes next, to adjust to a new 
economy. And then we can target our safety net systems and our 
cash benefits to those who need it the most and can't benefit 
from a paycheck program.
    So, Professor Elmendorf, let me start with you. Today's ADP 
data for May shows that small companies of less than 500 
employees experienced job loss similar to larger companies, 
even though our intent with the PPP program was to provide a 
cushion for businesses to keep people in their jobs. But the 
data is not suggestive of a significant impact on jobs. Do you 
think that the PPP program is sufficient to mitigate job loss, 
and keep workers with paychecks and in jobs?
    And how important do you think it is that we utilize 
tactics like direct wage subsidies to keep paychecks coming and 
businesses in operation?
    Dr. Elmendorf. So thank you, Congresswoman. I had not seen 
that aspect of the ADP report. But if it is as you describe, I 
would still view it as a victory for your policies, because big 
businesses generally have some buffers to--bigger buffers to 
work with than small businesses do. And so I think the concern 
going--a couple months ago was that small businesses would be 
disproportionately hurt. And if they have not been 
disproportionately hurt, that may be, in part, because of 
paycheck protection programs.
    But I don't think that program is enough. It doesn't cover 
businesses above a certain size, doesn't cover businesses that 
have--with nothing in place to cover businesses with--that 
already have large amounts of debt. And so I think more is 
needed. And it is very important that you and your colleagues 
keep working to help businesses keep their employees at work 
until the business--until the demand from customers comes 
back--important, both for the people and for the economy.
    Ms. Jayapal. Thank you. Thank you so much.
    I have introduced a bipartisan bill, as my colleague, Ms. 
Jackson Lee, referenced. It is H.R. 6918, the Paycheck Recovery 
Act. And the basic premise of this is actually what other 
countries in Germany, South Korea, Singapore, many others have 
done to stem unemployment. It would put money directly into the 
workers of--pockets of workers by guaranteeing paychecks for 
salaries up to 90,000, businesses by giving them some overhead, 
and it would be applicable to businesses, non-profits, and 
local and state governments of all sizes that suffered revenue 
losses and face layoffs.
    We reached back in the legislation to March 1st, to try to 
pull people back into jobs who were already laid off or 
furloughed. And we have incorporated a re-hire bonus, as we 
have been talking about during this hearing, for those earning 
less than 40,000, so that we can account for the PUA that we 
included in the CARES Act.
    Do you think that this kind of a program would be effective 
to stave off an even deeper recession that we are looking at? 
Either one of you can respond to that.
    Maybe Dr. Elmendorf, maybe we can start with you. I have 
another question for Dr. Holtz-Eakin.
    Dr. Elmendorf. So I would say that, as you have described 
it, Congresswoman, that sounds like a very, very valuable 
policy. But, of course, I have not looked at the specifics, and 
those can be important. But I think the direction that you have 
described is very important.
    Ms. Jayapal. Thank you so much.
    Dr. Holtz-Eakin, you explained something very important to 
me before the hearing started about how CBO scores bills with a 
program like the Paycheck Recovery Act that has, you know--it 
would dramatically reduce or zero out, in some cases, some of 
the other provisions like UI or Medicaid and COBRA. Could you 
just explain for the whole committee how that works, and how we 
ensure that those savings are accounted for if we were to 
include something like this?
    Dr. Holtz-Eakin. So, briefly, CBO is very careful about 
keeping track of interactions between provisions in policies 
and bills, in particular. And so it will account for 
interactions as your bill would produce. It also takes care of 
those interactions in a very systematic fashion, so that it 
always does them the same for every bill.
    So, for example, if you first have your bill, and then you 
have a COBRA provision, your bill already takes care of the 
COBRA, so the COBRA would score zero. If, however, you do the 
COBRA first, it will cost money. And then your bill with the 
other action would save. And so that gives very different 
appearances. The bottom line is the same.
    They try to be very clear to the Congress, and always do it 
in the same order, so that they are conveying the information 
clearly.
    Ms. Jayapal. That is so helpful. And I want to thank you 
for that. That is, like, my best piece of information for the 
day.
    Thank you both so much, and I look forward to talking to 
you more as we go forward.
    Chairman Yarmuth. Great. The gentlelady's time has expired. 
Now I recognize the gentleman from New Jersey, Mr. Sires, for 
five minutes.
    Mr. Sires. Can you hear me, John?
    Chairman Yarmuth. We hear you.
    Mr. Sires. OK. Nice to see you. Thank you very much for 
being here, both of you. These are difficult times, and you 
guys are great.
    I have a couple of ideas. You know, I am from New Jersey. 
We have a big issue with pension funds. I was just wondering, 
what do you think of the idea of the federal government having 
a pot of money where states who have problems contributing to 
their pension plans borrow on a low percentage from this pot of 
money to make a contribution to the pension system?
    Because, obviously, if people don't have their pensions, 
you know, it has a trickled effect, just like you were talking 
about before in the real eState market. People who don't meet 
their mortgages, the mortgage company can't pay the 
municipalities the taxes that they owe, because most people go 
through their mortgage companies to pay the taxes.
    So I was just wondering if you thought that there is 
something to that, where a fund states could reach and borrow. 
The government doesn't have to give it to them, just borrow on 
a very low percentage to meet at least the first and second 
year of this, supposedly, comeback that we have been trying to 
do.
    Dr. Elmendorf. So, Congressman, I will offer some thoughts. 
And Doug Holtz-Eakin might want to add, as well.
    Mr. Sires. I can't hear you.
    Dr. Elmendorf. I am sorry, Congressman. Can you hear me 
now?
    Mr. Sires. I can hear you now.
    Dr. Elmendorf. I will offer some thoughts, and Doug Holtz-
Eakin may want to add.
    The challenge that most pension plans face is not an 
immediate cash-flow challenge. It is a problem that they made 
promises that will last for many decades, and don't have the 
funds to meet those promises. And that problem can only be 
addressed, really, by reducing benefits or putting more real 
money into the fund. Money doesn't have to be paid back to some 
other entity in the future.
    So the borrowing just helps people get through a temporary 
problem, in a sense. It can be very important if your problem 
is a temporary one. But the pension fund problem is not 
temporary, it is an enduring problem.
    Mr. Sires. Yes, but the problem that we have is really 
temporary now, in trying to deal with the contribution that 
these states have to make.
    I understand. Look, I was speaker, I understand--I did six 
years of budgets. I understand a little bit about the process, 
especially in New Jersey. But I am looking to--you know, 
looking to alleviate this immediate problem that we have now. 
And down the line they can address the bigger issue.
    The other thing is this. Municipalities and states can do 
revenue bonds. Can the federal government do revenue bonds for 
states?
    Either one of you. I don't know, I don't know the answer to 
that.
    Dr. Holtz-Eakin. I do not think there can be a treasury 
security issued with the funds earmarked to go to a state. 
Treasury securities provide funds to the U.S. treasury. You 
would need a second policy to send those moneys to the state.
    Mr. Sires. What do you mean, a second policy? Another 
vehicle?
    Dr. Holtz-Eakin. A law that says this much money needs to 
go to the state of New Jersey for this purpose. You can't 
direct it out of the treasury, you know, to meet the needs of 
funding federal programs. If the money ultimately needs to go 
to a particular state, you need a federal program that would 
appropriate or provide mandatory spending to that state.
    Mr. Sires. And quite frankly, I do think that we have to do 
something with the unemployment. The complaints that I get is 
that people--three, four, five weeks, six weeks without getting 
an unemployment check. And we try to speed it up.
    You know, I had a woman the other day come to me, she said 
to me, ``Look, you know, I need this check because I am trying 
to keep the Internet.'' I know Internet is a luxury, but she 
was saying to me, ``I can't educate my child because my child 
is being educated now through the Internet, and I can't pay for 
it.'' So, I mean, these are real problems.
    Dr. Elmendorf. So, yes, Congressman, our unemployment 
insurance systems are not remotely capable of dealing with the 
volume that they have had to face. And that is partly because 
this volume is truly unprecedented, but also because we have 
not made the investments in those systems over the past years 
that we should have. And we ought to take that as a key lesson 
from this downturn, and build more robust systems for the 
future.
    Dr. Holtz-Eakin. And a small point on broadband and 
Internet in general. There is a lot of concern about rural 
broadband, access to broadband. We have done a lot of work over 
the years that suggested it is not price that is the problem. 
Many people didn't see the point of having it. And one of 
things I am very interested in is whether they will think very 
differently about it next year than they did at the beginning 
of this year, given the needs to educate students and conduct 
their lives online.
    Mr. Sires. I could guarantee you they are going to look at 
it differently from now on.
    [Laughter.]
    Mr. Sires. Thank you very much. Thank you, Chairman.
    Chairman Yarmuth. Time has expired, the gentleman's time 
has expired. I now recognize the gentleman from California, Mr. 
Peters, for five minutes.
    Mr. Peters. Thank you. This has been a fascinating hearing. 
I want to thank the witnesses for being here.
    I wanted to acknowledge both witnesses warning that, when 
we get out of this, not sooner, we will have to work to get our 
debt on a sustainable path in comparison to the economy. 
Representative Jodey Arrington and I have sent a bipartisan 
letter--we have got 30 Members on each side of the aisle--that 
would demand that we do just that without getting in the way of 
the near-term need to continue to borrow to support our efforts 
to fight the virus and to support the economic recovery.
    And Mr. Chairman, I would ask that a copy of that letter be 
added to the record of today's hearing.
    Chairman Yarmuth. Without objection, so ordered.
    [The information referred to follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Peters. And I did hear the back-and-forth about 
automatic stabilizers, and I wanted to address that a little 
bit further in response to Mr. Panetta. I think both gentlemen 
expressed different views. I just wanted to note that the New 
Dems have been calling for automatic stabilizers for 
unemployment insurance, FMAP, which is Medicaid support, and 
SNAP for the reasons mentioned by Dr. Elmendorf. That would 
ensure that these moneys would continue to flow without serial 
votes of Congress until the economy recovered. Then they would 
taper off or shut off automatically when they are no longer 
needed.
    We believe that provides certainty to consumers and to 
investors that they don't have to worry that Congress will take 
vote after vote during a pandemic in a Presidential election 
year. It is very difficult for us to physically get together. 
We know that in the last recovery--I think there were as many 
as 10 different votes to authorize money. We shouldn't put the 
economy through the uncertainty that that entails. And that is 
why I agree very much with the New Dems and with Dr. Elmendorf.
    I want to ask Dr. Elmendorf, with regard to that, about a 
dynamic scoring with respect to this. I think one of the things 
that scared folks off from a bigger package and from automatic 
stabilizers was that all the numbers were counted in this year.
    Do you think a dynamic score for enhancing core automatic 
stabilizer programs could be helpful to lawmakers? And how 
would that work? And what do you think the right way to analyze 
the cost of that would be?
    Dr. Elmendorf. Thank you, Congressman. I think dynamic 
scoring is very useful for Members of Congress when they are 
considering large changes in economic policy that can have 
important macroeconomic effects. And it does take more work by 
the Congressional Budget Office, and thus more time to do 
dynamic estimates, so it is simply not practical for the vast 
majority of bills that CBO evaluates--proposals for bills that 
CBO evaluates for the--for you and your colleagues.
    But for large changes in policy that would have 
macroeconomic effects, I think you should ask CBO to analyze 
those macroeconomic effects, and to include those estimates in 
their overall budget estimates when your time and their time 
allow.
    Mr. Peters. Did you have some experience with this, and--
with respect to the Recovery Act that shed some light on this?
    Dr. Elmendorf. So, in a way, yes. As a director, when we 
analyzed the Recovery Act, we did not include dynamic 
macroeconomic effects in the cost estimates, although we did 
macroeconomic estimates on the side. I later was--when I was--
later on we did an analysis of large-scale immigration reform 
bills, and for those bills we analyzed the macroeconomic 
effects and built those effects in to----
    Mr. Peters. Right.
    Dr. Elmendorf [continuing]. the estimates, which Doug 
Holtz-Eakin perhaps--or other directors--had done previously.
    Mr. Peters. Yes.
    Dr. Elmendorf. So this can work for select pieces of 
legislation for which it is especially----
    Mr. Peters. Can we ask Dr. Holtz-Eakin to comment on that, 
as well?
    Dr. Holtz-Eakin. I did the very first dynamic score at the 
Congressional Budget Office during my tenure. It was the 2003 
analysis of the President's budget. We looked at the 
macroeconomic impacts.
    And I want to just endorse everything Doug Elmendorf just 
said. It can be a very valuable tool for Congress, when looking 
at large, consequential pieces of legislation. It is not 
something that you should deploy every single day. There are a 
couple moments for these big things where it will matter, and 
where that is basically the point.
    You know, the point of the CARES Act is to change the 
trajectory of the economy. And so you might want to know how it 
does.
    Mr. Peters. Right. Thank you very much. And I want to just 
thank the Chairman and the Ranking Member for having the 
hearing.
    We are working. The notion that we are not working is 
incorrect. We are doing legislation. We are actually conducting 
a hearing in the way that we have asked other people to conduct 
their business if they don't have to go to a place to go to 
work. You know, in Congress we don't have to go to a hospital 
to work. We don't have to conduct deliveries. We don't have to 
go to a grocery store. Those people all have to go to those 
places. Unlike other people, we have figured out a way to do 
this remotely. It is a little bit clumsy, but it is completely 
effective, and I think entirely appropriate in the context of 
this pandemic that we not put ourselves and other people in the 
way of risk that we can avoid. That is what we have asked other 
people to do. We should live by the same rules.
    And I yield back.
    Chairman Yarmuth. The gentleman yields back. I now 
recognize the gentleman from Nevada, Mr. Horsford, for five 
minutes.
    Mr. Horsford. Thank you.
    Chairman Yarmuth. Please unmute. There you go.
    Mr. Horsford. Thank you, Mr. Chairman, for holding this 
hearing, and to our Ranking Member.
    Thank you also to our esteemed panel of former 
Congressional Budget Office directors from both the Obama and 
Bush Administrations. Your expertise and insights have been 
invaluable today's discussion.
    As many of you may be aware, Nevada, my home state, is 
among the hardest-hit states, economically, in our nation, and 
has the worst unemployment rate, 28.2 percent, as a result of 
the coronavirus pandemic. Our economy relies heavily on 
tourism, travel, and the service sector, and we are more 
dependent on tourism than almost any economy in--is on any 
single industry. We are more dependent on tourism than Detroit 
is on automakers--sorry, Mr. Kildee--or Seattle is on 
aerospace--sorry, Ms. Jayapal--or Nashville is on music and 
entertainment.
    As our economy and society reopen, many workers will not be 
called back immediately to work in our--with our major large 
employers or restaurants any time soon. So that means Nevada 
will have a longer path to recovery than almost any other 
state. And what I have been hearing from my constituents is 
they don't want to just go back to normal because, for them, 
normal wasn't all that great to begin with. They want to have 
leadership that is going to put us on a new path that addresses 
income inequalities, social disparities, health outcomes, and 
job and economic opportunity.
    So, Mr. Elmendorf, one of the starkest contrasts we have 
seen in this health and economic crisis is the disproportionate 
impact on low-income families, and especially communities of 
color. That is extremely apparent in my home state. So what do 
you think the long-term consequences of this crisis will be on 
income inequality and racial income gaps?
    And how would that impact our economic outlook?
    Dr. Elmendorf. Thank you, Congressman. And my heart goes 
out to the people in Nevada who are struggling under these 
conditions.
    The loss of jobs and loss of income can have very long-term 
effects on people. People lose jobs. It is--even when an 
economy is generally strong, it can be hard to find jobs again. 
And when an economy is suffering from almost unprecedentedly 
high unemployment, that will be particularly difficult. So a 
moment of job loss can lead to a lack of jobs for a long time. 
And income loss can force families to take children out of 
school, to disrupt their lives in other ways, to be unable to 
support businesses, and so on.
    And so, what makes it so crucial that you and your 
colleagues have already responded and that you continue to 
respond to this crisis is that a problem today can become a 
problem that lasts for a very long time. That will be 
particularly true for people who come into this cycle with less 
buffer against the vicissitudes of our very dynamic economy, 
and those people in particular--depending on you and your 
colleagues--to find ways through health policies, through 
macroeconomic policies, through more targeted policies, to 
sustain them, the places they work, get the health issues 
straightened out until we can get back on a stronger path 
again.
    Mr. Horsford. So we need a comprehensive approach. And one 
of the things that was included in the Heroes Act that was 
passed by the House just a couple of weeks ago would make the 
Child Tax Credit fully refundable for 2020, which would help 
ensure that all low-income families with qualifying children 
receive the increased benefit of $3,600 for children under six, 
and $3,000 for children older than six.
    So my question, Dr. Elmendorf, would making the CTC, which 
heavily targets benefits to low-income families, fully 
refundable lead to a greater boost in consumer spending than 
other tax benefits, like a capital gains tax cut, or a payroll 
tax cut?
    How would a greater boost in consumer spending help address 
our economic crisis? And in 30 seconds or less.
    Dr. Elmendorf. So yes, Congressman. Making the Child Tax 
Credit fully refundable would have a bigger effect on spending 
than the other two policies that you described. That stronger 
spending would be a benefit, of course, to those families, but 
it would also have positive macroeconomic effects because they 
spend the money at some business, and that business can then 
pay its workers and its rent, and so on.
    Mr. Horsford. Thank you. Mr. Chairman, I would like to just 
enter into the record an article from The Washington Post dated 
May 25th, 2020, entitled ``Black Minority Business Owners on 
Coronavirus,'' without objection.
    Chairman Yarmuth. Without objection, so ordered.
    [The information referred to follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Horsford. Thank you. I just wanted to mention 40 
percent of active African-American business owners have been 
affected. That is 450,000 Black businesses. Thirty-two percent 
of Latinx business owners have been closed, 25 percent of 
Asian-American business owners. So, in addition to addressing 
tax credits for children and families, helping workers, we also 
need to make sure that we help all small businesses, 
particularly our minority, women, and veteran-owned businesses. 
And I hope that my colleagues will work with me to address that 
legislation as we move forward.
    Thank you, Mr. Chairman, and I yield back.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize the gentleman from Virginia, Mr. Scott, for five 
minutes.
    Mr. Scott. Mr. Chairman, I am having trouble getting my 
video on, if I could delay for a minute.
    Chairman Yarmuth. Absolutely. We can recognize the Ranking 
Member, Mr. Womack, for 10 minutes.
    Mr. Womack. Thanks.
    Chairman Yarmuth. And we will get Mr. Scott afterwards.
    Mr. Womack. Thank you, and--thank you, Mr. Chairman, for 
the hearing today, and for all the Members that have taken time 
out of their schedules to participate. And my friend, Bill 
Johnson, who is in--all by himself in that big room, there in 
Washington. Bill, thank you for driving down and at least 
warming a chair there in the Budget hearing room.
    I am not going to take all of my time up, but to the----
    Mr. Johnson. I am not even sitting in the Chairman's seat. 
I am sitting where I am supposed to.
    Mr. Womack. There you go. There you go. Keep it warm.
    To the two Dougs, thank you for your testimony here today. 
It is always great to hear your points of view.
    When COVID-19 broke out, the one thing that we did not have 
an advantage of was time. We didn't have time to sit back and 
think about what is this going to do, so we had to kind of rush 
to the finish line to get money out the door, and we did it in 
different tranches. But the big one, of course, was the CARES 
Act.
    So, let me--Doug Holtz-Eakin and then Elmendorf, in that 
order, what did we do well? What did we miss in our rush to get 
money out the door?
    Dr. Holtz-Eakin. I think Congress did very well. The basic 
notion behind the CARES Act was that, by and large, we could 
flood the economy with cash, deal with the liquidity crunch, 
allow businesses to remain intact, pay their employees, and 
emerge from the other side of the peak of the pandemic with the 
chance to restart. So it really was a let's hide from the 
virus, swaddle the economy in cash, wait-it-out strategy.
    And, in terms of that strategy, you know, the lending 
provisions, the PPP, you know, I think could have been done 
better, but I don't really want to criticize too much, because 
it was done quickly, and it was the right strategy, and it was 
the right size. On the people who had already been badly hurt, 
UI, you know, checks to the household, I think that was exactly 
the right thing. So I don't have a lot of criticisms about the 
basic design.
    The important thing is to not believe that we can do it 
again and it will be fine. We tried that. We now have it--as I 
have said several times, we need to somehow figure out how to 
work and have commerce in the presence of the virus. That is a 
very different challenge from hiding from it, and will require 
very different policies.
    Mr. Womack. Dr. Elmendorf, criticisms?
    Dr. Elmendorf. So I agree with Doug Holtz-Eakin's 
assessment of the CARES Act as, actually, a good piece of 
legislation that you all should be pleased that you put through 
so quickly.
    As I look ahead, I see a few things. I think part of what 
wasn't in that Act was a recognition in the sense of how long 
this episode will go on for. I don't blame you for it at the 
time, but I do think it is a reason why things like 
unemployment insurance need to be revisited now. This is not 
just a 3-month crisis. This is a multi-year event.
    I think a second aspect that wasn't covered very much, I 
think, in the CARES Act and the other acts you have passed so 
far is support for state and local governments. And I think 
that actually is essential, both for economic purposes--those 
are important employers of people, and employers that don't 
have recourse in general to large amounts of borrowing because 
of their balanced budget rules. And so, supporting them, I 
think, is in many ways analogous to supporting businesses.
    Also, the important point is that those state and local 
governments are crucial for some of the testing and the 
tracing, the development of protocols that Doug and I have both 
been discussing.
    Mr. Womack. I want to--Dr. Elmendorf, I want to pick up on 
that for just a minute, because I--you know, I was a mayor for 
12 years, a strong mayor form of government, full-time job.
    So the problem that I see--and I have been outspoken on our 
conference calls about this with the members of my party--is 
that we--you know, we picked a 500,000 population threshold, 
and we kicked a lot of money out the door for political 
subdivisions of 500,000 and greater, whether it is a city, or a 
county, or a parish. But for those states--and Arkansas is one 
of them--that doesn't have a population center of 500,000 or 
more--we just pushed $1,250,000,000 to the state of Arkansas, 
and it landed in the Governor's lap. And that money has resided 
there every--ever since. The problem is that Treasury opined 
you could not use that money to do replacement revenue. 
Instead, the money had to be used for COVID-related expense.
    Now, let's just be honest. The COVID-related expense is one 
item, one number, and it is pretty easy to quantify: PPE, extra 
security, and so on and so forth. The number that is hard to 
quantify that is a much bigger number is how much money have 
you seen leave your coffers because we shut the government--
shut the economy down. And in a state like Arkansas, which is 
sales tax dependent, retail sales has taken a hit in many 
areas. But we haven't seen the full effect of it yet, because 
we haven't seen a full month of--because it runs about two 
months behind. So the most recent collections information we 
have is from sales that took place in March.
    Do you think that we should expect the Treasury to kind of 
revisit the issue of replacement revenue? Because it is, 
indeed, a COVID-19-related expense, in my opinion.
    Dr. Elmendorf. So, Congressman, my answer is that it would 
be useful to give Governors flexibility. But I can't speak to 
the specifics of how this legislation was written, and what you 
can expect Treasury to do, versus what you might have to do 
again yourselves. I just don't know.
    Mr. Womack. Mr. Holtz-Eakin?
    Dr. Holtz-Eakin. I would encourage you to legislate this 
and not leave it in the hands of the Treasury. Both in that 
instance and in the design of the municipal liquidity facility, 
they kept taking the smaller towns and counties off the table, 
there is no guarantee they are going to get access to funds 
raised from either source, and that doesn't make a lot of sense 
from the point of view of the economics of the problem.
    Mr. Womack. All right. Now I am going to look ahead. 
Assuming there is a resurgence of COVID-19, or a mutation 
thereof, and that sometime this fall we go back to revisit the 
issue, I think having some experience in it now is probably to 
our advantage. We know now how to mobilize, and how to do 
certain things, how to socially distance. And maybe we have 
been able to increase our stockpiles of PPE, which seemed to be 
a big problem on the front end of this thing.
    So I would assume that, based on our experience, that we 
could mitigate the damage of a future--of a resurgence of this 
particular virus. So is that an accurate assumption? Or are 
there some more lessons that we still have yet to learn on 
this?
    Doug Elmendorf first.
    Dr. Elmendorf. I think, Congressman, that we have seriously 
under-invested in public health measures in this country. And 
if you talk to--even before this crisis, if you talked to 
people who worry about the health of Americans, they generally 
say that what we need is not so much more doctors, or even more 
nurses. The first place they would start is trying to improve 
Americans' health. And the public health teams of states and 
localities are very important for that, and we have not put 
enough energy into that. And some of that is equipment, but a 
lot of that is just expertise.
    As we try to stand up tracing mechanisms now in various 
states--Massachusetts has been very active in this--we don't 
have the infrastructure, really, in the state government as it 
exists to do this. This is not the last virus, as you 
understand.
    Mr. Womack. Yes, exactly.
    Dr. Elmendorf. And so we need to build our public health 
capacity, which is both a matter of what is physically, you 
know, stockpiled, but also what we--who we have working on 
these issues on a day-to-day basis.
    Mr. Womack. Doug Holtz-Eakin, you would agree, I am sure.
    Dr. Holtz-Eakin. And the biggest lesson is, you know, the 
CARES Act was fantastic, but think how much better it would 
have been if it had been enacted in February, if we had 
actually gotten even further ahead.
    What you are saying is we have a chance to get ahead. And 
there is a lot of focus on testing, and that is important. And 
there is a lot of wishing for a vaccine. But there are also 
therapeutics. If you can test and not get it, you feel safe. If 
you get it and it can be treated quickly and easily, you feel 
safe. Or, if you can't get it from a vaccine--all three of 
those things to push hard on right now, so that you can have a 
much greater health mitigation come the next time, and 
economically put in place, you know, the capacity to target 
better.
    We missed large non-profits. We missed the state and local 
governments. You know, don't miss things the next time.
    Mr. Womack. All right, now this segues to my last question. 
And it is related to appropriations because, as you know, I am 
an appropriator, as well.
    I have been concerned for a long time about the pressure 
that entitlement spending is having on discretionary spending, 
and that is not going to get better. In fact, it is going to 
get worse under the situation that we are in right now.
    And as you both know, it is not that Congress does not want 
to add to the stockpiles, or have a really good system in place 
for pandemics of this nature. It comes down to can you pass an 
appropriation bill--and in this case, a Labor, Health and Human 
Services appropriation bill, which you both know is problematic 
in any Congress.
    So we still have, I think, a tremendous amount of work to 
do to--and Scott Peters talked about it a minute ago--a budget 
process reform, which I championed in 2018, just getting our--
and John Yarmuth was with me on that. So, in order to be able 
to get our house in order, we are going to have to get these 
systems in place, the processes in place that actually will 
work for the American people.
    Again, I want to thank both of you for your insights here 
today.
    Chairman, thanks again for your leadership, and for the 
opportunity to join you on this call today. Thank you so much. 
I yield back.
    Chairman Yarmuth. Absolutely. The gentleman's time has 
expired.
    Does Mr. Scott want to proceed with audio only, or----
    Mr. Scott. I think--can you see me now?
    Chairman Yarmuth. Now we can see you. Go--you are 
recognized for five minutes.
    Mr. Scott. I couldn't get it straight, so I just signed in 
on another computer. So I think I am in twice. So thank you, 
Mr. Chairman, for your--I had to join another meeting, and I 
appreciate your working with me.
    Chairman Yarmuth. Absolutely.
    Mr. Scott. I do want to join in the condolences to the 
George Floyd family, but also I want to remind people that we 
have an obligation to do something about the problem.
    I want to start by thanking Dr. Holtz-Eakin for putting the 
numbers into context, because we see all these big numbers, and 
they are just big numbers. But when he said 40 million in the 
last 10 weeks, it is over 4 million a week. And the previous 
record was 600,000. I think it is important that we put those 
kinds of numbers into perspective to know what kind of problem 
we are dealing with.
    We have talked about the unemployment compensation and 
extending it. In the past it has been kind of haphazard. Can 
either of the Dougs say something about the need to make this 
predictable, so people will know what they are going to get, 
and when they are going to get it?
    Dr. Elmendorf. So my own view, Congressman, is that it is 
useful, very useful, for your colleagues to extend the expanded 
benefits with some changes until a point at which unemployment 
falls below some level. And you might even do that on a state 
level, rather than on a national level, because different 
states can have very different experiences, and often do.
    I think there is value in that, in terms of the limited 
time that the Congress can spend on any given issue. Other 
things will arise, and can crowd out attention. And I also 
think it is useful for people to have the confidence those 
benefits will be there.
    Mr. Scott. Well, you have--both of you have mentioned a 
reduction. How does that work if people are losing their jobs, 
they are losing their health insurance? The $600, to a lot of 
people, is just the insurance premium under COBRA. What do you 
think about the proposal to subsidize COBRA payments for those 
who have lost their jobs and have--and want to maintain their 
insurance?
    Dr. Elmendorf. So, Congressman, I worry--I think it is very 
appropriate to help people who have lost their jobs. But I am 
concerned that, as the economy starts to recover and some jobs 
become available, that we need to be sure that people are not 
losing money when they go back to work. And so----
    Mr. Scott. Well, what----
    Dr. Elmendorf [continuing]. add benefits when you are not 
working, we need to do something, I think, to then provide the 
right sort of incentive for people to return to work.
    Mr. Scott. If you have COBRA payments, you are just 
subsidizing the health insurance. So there is no cash advantage 
for not working. What are you--people are losing their 
insurance. You got to have the COBRA subsidies.
    Dr. Holtz-Eakin. So I think it is important to make sure 
that we keep track of that potential loss of insurance.
    That is a big number now, and I endorse your attention on 
this problem. I don't think there has been enough attention.
    I would like to make sure that, when the opportunity arises 
to take a new job, people don't feel obligated to go back to 
their old employer.
    You know, we talk a lot about recovery as if this economy 
is going to look the same in 2021 as it did in January of this 
year. It is not. In no recovery do we avoid restructuring. Some 
industries expand, some contract. I have my suspicions in this 
case. And so it may be better to subsidize their insurance, but 
not do it through COBRA, do it through some other way. But it 
is a very important issue.
    Mr. Scott. We talked about what is going to happen when 
people aren't going back to their same jobs. Can you talk about 
the job training strategy where people could have the 
opportunity, since they are not going back to their old job, to 
get job training? And could education and training count as job 
search for the purpose of--so they can continue--so they can 
continue and complete their course?
    Dr. Holtz-Eakin. I think the right way to think about this 
question is to imagine you are standing in November 2021. And 
at that point I hope we don't think unemployment insurance is 
the right way to be taking care of people who are still out of 
work, that we instead will have a much more aggressive 
training, education, job placement strategy that will help them 
get back to work much more quickly.
    So I don't think it should be framed in terms of UI. It 
should be framed in terms of a very aggressive and perhaps new 
and creative way to deal with this problem. It is not something 
we have traditionally done very well.
    Mr. Scott. That is going to take some investment and some 
resources.
    Dr. Holtz-Eakin. Yes.
    Mr. Scott. Can you say a word about the crushing debt that 
student loans are having over people, and whether or not relief 
is appropriate there? They are not buying cars, they are not 
buying houses, they are not contributing to the economy because 
of the crushing debt.
    Dr. Holtz-Eakin. I will just provide a polite dissent. I 
don't think that was a fair characterization prior to the 
pandemic. All bets are off in the pandemic, so I don't want to 
speculate. I haven't seen the latest data. But I do think, 
going forward, we have to come up with a more rational way to 
finance higher education. This doesn't seem like a successful 
strategy to me.
    Mr. Scott. And thank you.
    Thank you, Mr. Chairman, for accommodating me going back 
and forth to meetings. Thank you very much.
    Chairman Yarmuth. That is OK. We definitely wanted to get 
you involved. And now your--your committee has that 
responsibility, our job training. You can provide the answers 
for that, or some of them.
    Mr. Scott. I have a plan for that.
    [Laughter.]
    Chairman Yarmuth. The gentleman's time has expired, and I 
now yield myself 10 minutes for questioning.
    First of all, let me thank you both for being so generous 
with your time, and being so forthright with your responses. I 
will say that I now am on my fourth CBO director, having served 
on the Committee--two of them being you two. And I have always 
had a great deal of respect for not just the directors of the 
CBO, but also the work that is being done.
    And so, to the extent that you were responsible for 
building the expertise that is in that organization right now, 
I totally appreciate that. And it has never been more important 
than it is right now, as we face multiple challenges and 
unprecedented challenges. And I am sure that their modeling is 
being--is the source of great agony right now, trying to figure 
out how to make sense of what is going on.
    One of the things that I think is clear--and most of the 
things I wanted to talk about have been discussed--but we 
clearly, when we passed the CARES Act, thought that this was 
something that most likely would abate in some way over two or 
three months, that there was going to be a demonstrated 
treatment and--or some kind of a way to control the disease 
much more quickly than it has. And that is why the PPP was 
eight weeks of payroll, that is why the UI was, you know, a few 
months.
    Clearly, that is not going to be adequate now, and we 
talked a little bit about--we have talked a lot about the 
unemployment insurance side of that. But PPP, eight weeks of 
payroll, is going to--turns out to be very inadequate. We tried 
to make an adjustment now, we passed that legislation last week 
to make--to allow that to be used in 24 weeks, as opposed to 
eight weeks, because some people borrowed the money and their 
business couldn't even open in the eight weeks that they were 
supposed to initially spend it.
    So--and we have talked about paycheck--government assuming 
paychecks, Ms. Jayapal's legislation. What do you think the 
best way to do this is, the best way to support our small 
businesses now as they face six, seven, maybe more months of 
depressed activity?
    Mr.--Dr. Elmendorf first, and then Dr. Holtz-Eakin?
    Dr. Elmendorf. So thank you, Mr. Chairman. I think there 
are a number of things that are important.
    One of them is the point that Doug Holtz-Eakin keeps 
emphasizing, is that we have to work on ways for people to feel 
comfortable going back out into the world, into the economy. 
And so it is testing and contact tracing. It is intensive 
efforts to find vaccines, and then to make them available, to 
develop better treatments. So health policy is the most 
important thing you can do for every person and business, and 
for the economy.
    I think, second, making the changes that you have--that you 
voted for, and others in the House have voted for, that extend 
and create some flexibility in the Paycheck Protection Program, 
I think that is very important.
    I think, beyond that, you should be trying to reach other 
businesses that have not been eligible yet. And there is a lot 
of money that was in the CARES Act that has not gone out the 
door. Part of that is waiting for the Federal Reserve to 
establish facilities. But what they can do depends on the 
Treasury's interpretation of the implementation of the CARES 
Act.
    And I think it is important that that the Treasury be 
willing to lose money, essentially. That is what you voted this 
amount in the CARES Act for, not to just give out money to 
everyone with no chance of ever getting it back, but to 
recognize that to really support the businesses, money needs to 
be lent to some businesses that will turn out at the end to not 
be able to pay it back.
    And so I think that that is--what I understand has happened 
so far is the Treasury has not really been willing to recognize 
the level of loss that might be needed. And that will hinder 
the Federal Reserve's abilities to lend to businesses that we 
all want to keep afloat for a longer period of time.
    Chairman Yarmuth. Dr. Holtz-Eakin?
    Dr. Holtz-Eakin. I agree with all of what Doug has said 
about the Federal Reserve Treasury facilities. I had some 
testimony on that. I think that is an important place where the 
CARES Act is simply just missing in action. There is a lot of 
potential there.
    Going forward, I think the strategy has to change. I--you 
know, the strategy in the CARES Act was to be quite 
indiscriminate. Just shovel the money out the door 
indiscriminately because time and speed are of the essence. 
Going forward, I think greater targeting is appropriate, 
targeting to those business that really do need it and don't 
have the wherewithal to go forward. Having people be able to 
demonstrate that they have a business plan that is going to be 
successful going forward, and we are not propping up something 
that really doesn't have a great future, you know, that--those 
are traditional elements of program design that I think will 
come back into importance as we go forward.
    And we just--and we need to make sure that we are thinking 
also about how to get people into business. The reality is we 
will have lost a great many businesses. You know, most 
businesses have one to two months' cash on hand. It is two 
months, and we haven't gotten there, and that is a reality I 
think about every day. But those are individuals who know how 
to run a business, who like to run a business, that chose to 
run a business. What are we going to have in terms of ``Let's 
start a business,'' because we are going to need them. How are 
we going to support that? I think that is worth thinking about.
    Chairman Yarmuth. That is exactly what my next question 
was. We are going to be losing tens of thousands of businesses, 
if not more.
    Dr. Holtz-Eakin. Yes.
    Chairman Yarmuth. Yes, and people did nothing wrong. I have 
a number of businesses that were very solid businesses going 
forward. They are probably not going to survive. What kind of 
an obligation do we have to them, as federal government? Do we 
have an obligation? Or is this just luck of the draw?
    Dr. Holtz-Eakin. I think we have an opportunity. You know, 
among the things that has concerned me most about the U.S. 
economy over the past decade has been the sort of indicators of 
diminishing dynamism and a growing concentration. And, you 
know, the way you solve that is you get a new business in that 
provides a good service, and competition, and gives people 
greater choices, and that has a benefit.
    So I don't think of it as just an obligation to those 
individuals. I think of it as an opportunity to benefit this 
economy greatly. And it should be viewed that way.
    Chairman Yarmuth. One final question, and this is 
probably--this is a big, big subject. And--but clearly, there 
is going to be some kind of restructuring of the economy. And--
as we come out of this there are industries that are going to 
be forever changed, and many things are going to change.
    What--considering the challenges or opportunities, what do 
you think that our best opportunity or our biggest challenge is 
going to be with an economy that is going to be restructuring?
    And can we shape it as we move forward?
    Dr. Elmendorf?
    Dr. Elmendorf. I think you are right, Mr. Chairman, to be 
concerned about this issue. In almost every business cycle 
there are certain sorts of restructurings that occur. As I 
mentioned before, I think that was particularly acute in the 
last recession because of overbuilding in housing. But it is 
true now today, as well.
    And we are--that is part of the dynamic economy, is that we 
change over time. And so one doesn't wish to stop it, exactly, 
but one does wish to provide the best means for people to get 
through that transition. And I think some of this is this 
matter of job training that we have not been good at, as a 
country. We just haven't shown a lot of success in doing this.
    But that is what is important. There are a lot of people 
who want to work who will find that the thing they used to do 
isn't actually needed in the post-coronavirus--in the new 
world. And so they need to be helped into some other line of 
work. And that is training, often in the middle of a career. It 
is job matching. And there are some examples of places in the 
country where we have found ways to do this successfully. I 
think we need to find those--work on those examples, and scale 
them up in a way that helps people make the changes that they 
want to make, and that we need them to make.
    Chairman Yarmuth. Thank you.
    Dr. Holtz-Eakin. I think that is the right answer. The 
economy will restructure. And I don't know what that structure 
is going to look like, and the other Doug doesn't know what 
that structure is going to look like. And the most important 
thing is to let the people who want it to look different, or 
entrepreneurs and aggressive efforts to meet what people 
value--let them do that.
    And our--the role of the federal government is to support 
the workers in the process of that restructuring, make sure we 
don't lose track of the people. The businesses will take care 
of that restructure. They know how to do that, and they have 
done it historically very well. It is the people that you need 
to focus on.
    Chairman Yarmuth. Right. Well, once again, I want to thank 
both of you for being so generous with your time. We will call 
on you again, I am sure. And we thank you for helping us on our 
maiden voyage hearing through this interesting time.
    So, with no further business, this hearing is adjourned.
    [Whereupon, at 3:43 p.m., the Committee was adjourned.]
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