[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
THE PRESIDENT'S FISCAL YEAR 2023 BUDGET
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HEARING
before the
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, D.C., MARCH 29, 2022
__________
Serial No. 117-8
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Printed for the use of the Committee on the Budget
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available on the Internet:
www.govinfo.gov
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U.S. GOVERNMENT PUBLISHING OFFICE
47-496 WASHINGTON : 2022
COMMITTEE ON THE BUDGET
JOHN A. YARMUTH, Kentucky, Chairman
HAKEEM S. JEFFRIES, New York JASON SMITH, Missouri,
BRIAN HIGGINS, New York Ranking Member
BRENDAN F. BOYLE, Pennsylvania, TRENT KELLY, Mississippi
Vice Chairman TOM McCLINTOCK, California
LLOYD DOGGETT, Texas GLENN GROTHMAN, Wisconsin
DAVID E. PRICE, North Carolina LLOYD SMUCKER, Pennsylvania
JANICE D. SCHAKOWSKY, Illinois CHRIS JACOBS, New York
DANIEL T. KILDEE, Michigan MICHAEL BURGESS, Texas
JOSEPH D. MORELLE, New York BUDDY CARTER, Georgia
STEVEN HORSFORD, Nevada BEN CLINE, Virginia
BARBARA LEE, California LAUREN BOEBERT, Colorado
JUDY CHU, California BYRON DONALDS, Florida
STACEY E. PLASKETT, Virgin Islands RANDY FEENSTRA, Iowa
JENNIFER WEXTON, Virginia BOB GOOD, Virginia
ROBERT C. ``BOBBY'' SCOTT, Virginia ASHLEY HINSON, Iowa
SHEILA JACKSON LEE, Texas JAY OBERNOLTE, California
JIM COOPER, Tennessee MIKE CAREY, Ohio
ALBIO SIRES, New Jersey
SCOTT H. PETERS, California
SETH MOULTON, Massachusetts
PRAMILA JAYAPAL, Washington
Professional Staff
Diana Meredith, Staff Director
Mark Roman, Minority Staff Director
CONTENTS
Page
Hearing held in Washington, D.C., March 29, 2022................. 1
Hon. John A. Yarmuth, Chairman, Committee on the Budget...... 1
Prepared statement of.................................... 4
Hon. Jason Smith, Ranking Member, Committee on the Budget.... 6
Prepared statement of.................................... 8
Hon. Shalanda Young, Director, Office of Management and
Budget (OMB)............................................... 11
Prepared statement of.................................... 13
Hon. Sheila Jackson Lee, Member, Committee on the Budget,
report submitted for the record............................ 58
Questions submitted for the record........................... 70
Answers submitted for the record............................. 75
THE PRESIDENT'S FISCAL YEAR 2023 BUDGET
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TUESDAY, MARCH 29, 2022
House of Representatives
Committee on the Budget
Washington, DC.
The Committee met, pursuant to notice, at 10:06 a.m., at
210 Cannon Building, Hon. John A. Yarmuth [Chairman of the
Committee] presiding.
Present: Representatives Yarmuth, Jeffries, Higgins, Boyle,
Price, Schakowsky, Kildee, Morelle, Horsford, Wexton, Scott,
Jackson Lee, Cooper, Sires, Moulton, Jayapal; Smith, Kelly,
McClintock, Grothman, Smucker, Burgess, Carter, Cline, Boebert,
Donalds, Feenstra, Good, Hinson, Obernolte, and Carey.
Chairman Yarmuth. This hearing will come to order.
Good morning and welcome to the Budget Committee's hearing
on ``The President's Fiscal Year 2023 Budget''. At the outset,
I ask unanimous consent that the Chair be authorized to declare
a recess at any time.
Without objection, so ordered.
I will start by going over a few housekeeping matters.
Today the Committee is holding a hybrid hearing. Members may
participate remotely or in person. For individuals
participating remotely, the chair or staff designated by the
chair may mute a participant's microphone when the participant
is not under recognition for the purpose of eliminating
inadvertent background noise. If you are participating remotely
and are experiencing connectivity issues, please contact staff
immediately so those issues can be resolved.
Members participating in the hearing room or on the remote
platform are responsible for unmuting themselves when they seek
recognition. We are not permitted to unmute Members unless they
explicitly request assistance. If you are participating
remotely and I notice that you have not unmuted yourself, I
will ask if you would like staff to unmute you. If you indicate
approval by nodding, staff will unmute your microphone. They
will not unmute your microphone under any other conditions.
I would like to remind Members participating remotely in
this proceeding to keep your camera on at all times, even if
you are not under recognition by the Chair. Members may not
participate in more than one committee proceeding
simultaneously. If you are on the remote platform and choose to
participate in a different proceeding, please turn your camera
off.
Finally, we have established an email inbox for submitting
documents before and during Committee proceedings and we have
distributed that email address to your staff.
Now, I will introduce our witness.
This morning we will be hearing from the Honorable Shalanda
Young, Director of the Office of Management and Budget. And per
our agreement with Director Young, the Committee will recess
briefly around noon and reconvene around 12:30 p.m.
I now yield myself five minutes for an opening statement.
Good morning, Director Young. I want to thank you for
appearing before our Committee today to testify on the
President's Fiscal Year 2023 Budget. I also want to
congratulate you on your historic confirmation. We are honored
to have you with us here today, and OMB is very lucky to have
you at the helm.
This month marked two years since the World Health
Organization declared COVID-19 a pandemic. Since then, our
nation experienced the worst economic downturn since the Great
Depression. Families have lost their homes, their savings,
their livelihoods, and their loved ones.
When President Biden took office, the pace of vaccine
distribution was dismal. There was no comprehensive plan to get
shots into arms, there was an enormous gulf between what
families and our economy needed and how the federal government
was responding.
That changed with the American Rescue Plan, which this
Committee was proud to lead. It kick-started a mass vaccination
campaign, reinvigorated our economy, and lifted millions of
Americans out of poverty. Since the passage of the American
Rescue Plan, the speed and strength of our recovery has blown
past economists' expectations. 2021 was the greatest year of
job growth in American history. During President Biden's first
year in office, GDP grew at the fastest rate in nearly four
decades. Unemployment has fallen to 3.8 percent, the fastest
decline in recorded history. And the resurgence in worker power
has led to wage increases across the board, with wages for low-
income workers up the most.
The President's budget request for 2023 takes the next
steps toward achieving our shared goals. It provides a
discretionary top line of nearly $1.6 trillion for annually
funded programs, building on the enacted 2022 appropriations
and continuing to reverse years of chronic underfunding. Its
fiscally responsible and pro-growth investments in education,
affordable housing, research and development, healthcare, and
other vital priorities will not only better the lives of
Americans today but strengthen our long-term economic outlook
as well.
This budget will expand the productive capacity of our
economy and put money back in the pockets of the working
Americans who power it.
It will lower costs by fixing supply chains and increasing
the amount of goods made here in America. It will cut energy
costs for families while investing in climate science and
innovation so we can tackle the climate crisis and lead in the
clean energy economy. It will increase Pell Grants and provide
more training and apprenticeships, so all Americans have the
opportunity to succeed in a 21st century economy.
The President's Budget is also a call to action on key
areas of bipartisan consensus: tackling the mental health
crisis, upholding our sacred obligation to our veterans,
fighting the opioid epidemic, and investing in cutting edge
research to end cancer as we know it.
We can afford to invest in the American people. Rather than
handing out tax cuts to millionaires and billionaires, the
Biden Administration has outlined a new economic vision for
America: invest in America, educate the next generation of
Americans, grow our work force, and build the economy from the
bottom up and middle out.
This is how we meet the needs of families and communities.
This is how we strengthen our recovery and grow our economy so
that we build a better, stronger, more secure, and more
inclusive nation for generations to come.
And we pay for this new economic vision with long-overdue
reforms to make our tax code more equitable. This starts with
making sure corporations and the richest Americans pay their
fair share in taxes. The Biden budget raises the corporate tax
rate to 28 percent, which, by the way, is still much lower than
the 35 percent tax rate we had up until 2017. It is completely
unacceptable that hard-working families often pay a higher tax
rate than the wealthiest Americans. The President's budget
fixes this by proposing a 20 percent minimum income tax on the
very wealthiest households worth more than $100 million.
Together, these proposals will help re-balance our tax code to
ensure it rewards work, not wealth.
I am optimistic that we can get this done. As we continue
to work with our colleagues in the Senate to deliver a
reconciliation bill to the President's desk, I am eager to get
to work on a 2023 budget and appropriations process that will
deliver for the American people.
Director Young, I look forward to your testimony today and
hearing more from other Administration officials in the coming
weeks.
Now I yield five minutes to the Ranking Member, Mr. Smith,
for his opening statement.
[The prepared statement of Chairman Yarmuth follows:]
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Mr. Smith. Thank you, Mr. Chairman.
Director Young, welcome back in person to the House Budget
Committee, and congratulations on your confirmation. It was way
overdue. And congratulations on your new child. A lot has
happened in a year. So, we are grateful you are here.
When you testified last year on President Biden's Fiscal
Year 1922 budget, alarm bells were already going off about the
impact that the President's agenda would have on the economy,
what it would have on the inflation, and the security of our
southern border.
At that time, the crises created by President Biden and the
House and Senate Democrats' agenda were already piling up. That
list has only grown since--including an energy crisis, with
folks paying over $4.00 a gallon at the pump. In fact, since
President Biden has been in office gas prices has went up 79
percent. That is tough for the folks back home. Then there is a
crime crisis in communities across this country, and an
education crisis that has perpetuated the mistreatment of kids
in our schools under the guise of COVID-19.
So now we have President Biden's Fiscal Year 1923 budget, a
proposal that deliberately makes every crisis American families
are facing because of President Biden and the one party
Democrat rule in Congress that much worse. American families
are facing a spike in prices not seen in this country in over
40 years. A $3,500 inflation tax on every family in America
just last year alone. The President's budget keeps--keeps the
reckless spending going on, doubling down on the delusion that
the answer out of inflation is to spend more money. This
proposal spends $73 trillion dollars over the next 10 years.
And also it provides the Build Back Broke agenda which this
budget tries to cover up using a deficit neutral reserve fund.
The Congressional Budget Office though has confirmed there is
nothing--nothing deficit neutral about the agenda. CBO
confirmed it adds $3 trillion to our nation's debt.
As gas prices have skyrocketed, the President's budget
surrenders American energy independence and attacks American
energy companies so that we are more reliant on foreign nations
for our energy needs--more dependent on countries like Russia,
China, and Venezuela, Iran, at a time when the world seems to
be even more of a hostile place.
This budget also includes potentially up to $4 trillion in
tax increases, more than $1.5 trillion of that falling on
American families. $2,000 for every average American tax
increase is in this proposal. That--that is absolutely
terrible.
Then, under the Build Back Better agenda you have covered
up in a deficit neutral reserve fund. Over the next 10 years
Biden's budget calls for $58 trillion in total taxes--the
highest sustained tax burden in American history. And while
folks see their taxes go up and the value of their paychecks go
down, Biden's budget gives a 12 percent raise to the IRS to
target hard-working Americans.
We already know where this type of tax and spending agenda
is going. Look at the past year after the Democrats $2 trillion
Biden Bailout Bill was signed into law. Jobs in 2021 grew less
than CBO said they would before that $2 trillion spending bill
came on the scene.
After over 2.9 million border encounters occurred since
Biden took office, the President's budget continues the same
catch and release policies that have resulted in the worst
border crisis in over 20 years. There is no commitment to
border security in this budget, no using the $1.9 billion in
border wall funding that was just renewed as part of the most
recent omnibus spending bill. The budget allows $350 million in
border wall still to continue rusting away while contractors
are paid billions to babysit unused material. It cuts funding
for Immigration and Customs Enforcement by $150 million. All of
it is a slap in the face to the men and women dealing with a
security and humanitarian crisis at the southern border. The
President says show me your budget and I will tell you what you
value. For the second straight year we see the President values
a government that tells its citizens how to live their lives,
he values an economy where everything from the clothes you put
on your back to the food you put on your table to the gas in
your car is more expensive. He values open borders and energy
dependence. He values debt--a lot of it--$16 trillion to be
exact.
The American people are not going to buy this budget--
because frankly we can't afford it.
I yield back, Mr. Chairman.
[The prepared statement of Jason Smith follows:]
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Chairman Yarmuth. I thank the Ranking Member for his
opening statement.
In the interest of time I ask that any other Members who
wish to make a statement submit their written statements for
the record to the email inbox we established for receiving
documents before and during Committee proceedings. We have
distributed that email address to your staff. I will hold the
record open until the end of the day to accommodate those
Members who may not yet have prepared written statements.
Once again, I want to thank Director Young for being here
this morning. The Committee has received your written statement
and it will be made part of the formal hearing record.
You will have five minutes to give your oral remarks and
you may begin when you are ready.
STATEMENT OF THE HONORABLE SHALANDA YOUNG, DIRECTOR, OFFICE OF
MANAGEMENT AND BUDGET (OMB)
Ms. Young. Thank you so much, Chairman Yarmuth, Ranking
Member Smith, Members of the Committee. It is so nice to be
back to my old place of employment. Thank you for the
opportunity to present the President's Fiscal Year 2023 budget.
Under the President's leadership our country has made
historic progress in the face of unprecedented challenges. We
created more than 6.5 million jobs in 2021, the most our
country has recorded in a single year ever. Our economy grew at
5.7 percent, the strongest growth in nearly 40 years. The
unemployment rate has fallen to 3.8 percent, the fastest
decline in recorded history. And the deficit is on track to
drop by more than $1.3 trillion, the largest ever 1-year
decline.
This progress was not on accident. It is a direct result of
this President's strategy to combat the pandemic and grow our
economy from the bottom up and the middle out. The President's
2023 budget details his vision to expand on that progress and
deliver the agenda he laid out in his State of the Union, to
build a better America, reduce the deficit, reduce costs for
families, and grow the economy from the bottom up and the
middle out.
Since taking office the President has put forth proposals
to Congress that would lower healthcare, child care, energy
costs, and other costs for families, reduce the deficit, and
expand our economy's productive capacity. The budget reflects
his commitment to working with Congress to pass legislation
that achieves those goals. This budget advances a bipartisan
unity agenda, including proposals to combat the opioid
epidemic, tackle the mental health crisis, support our
veterans, and accelerate progress against cancer. It builds on
the bipartisan funding bill Congress passed earlier this month,
it makes key investments in the American people. From expanding
economic capacity and improving our public health
infrastructure to combatting the climate crisis and advancing
equity, dignity, and security for all Americans.
And during what will be a decisive decade for the world,
the budget strengthens our military and leverages America's
renewed strength at home so our nation is prepared to meet
pressing global challenges and manage crises as they arise.
With robust investments in our diplomatic and development
agencies, the national security budget as a whole will deepen
partnerships and alliances and position the United States to
compete with China and any other nation from a position of
strength. As we have seen over the past month, our renewed
partnerships and alliances have been vital to countering
Russian aggression in Europe. And I would like to thank
Congress for the supplemental funding to support Ukraine and
our regional partners.
The budget makes these investments in a fiscally
responsible way, reducing deficits by more than $1 trillion and
improving our country's long-term outlook. That is because the
budget's investments are more than fully paid for through tax
reforms that corporations and the wealthiest Americans pay
their fair share. That includes a new proposal requiring the
richest Americans, billionaires and those worth more than $100
million, to pay a tax rate of at least 20 percent on all their
income, including investment income that currently goes
untaxed. The budget also fulfills the President's promise that
no one earning less than $400,000 will see a penny of new taxes
and it will reduce the deficits to less than half of last
year's levels as a share of economy while keeping the economic
burden of debt low.
Overall, the budget puts forward an economically and
fiscally responsible path forward, addressing our country's
long-term fiscal challenges while making smart investments that
will produce stronger growth and broadly share prosperity for
generations to come.
Thank you for the opportunity to appear today and I look
forward to your questions.
[The prepared statement of Shalanda Young follows:]
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Chairman Yarmuth. Thank you very much, Director Young, for
your opening remarks.
We will now begin our question and answer session.
As a reminder, Members can submit written questions to be
answered later in writing. Those questions and responses 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
electronically to the email inbox we have established within
seven days of the hearing.
I defer my questioning to the end, so I now recognize the
gentleman from North Carolina, Mr. Price, for five minutes.
Mr. Price. Thank you, Mr. Chairman, and welcome to our
Director, Shalanda Young. We are very proud of the work you are
doing, very impressed by your presentation here. Those of us
who worked with you on the Appropriations Committee have a
special pride and satisfaction in the job you are doing. So
congratulations. We are glad to see you and we are also glad to
see the President's budget.
As the Chairman of the Transportation-HUD Subcommittee, we
will look forward to early hearings with Secretaries Fudge and
Buttigieg and we will, of course, as usual, look at every line
of this budget proposal with care. We like what see so far
though, I must say. The Department of Housing and Urban
Development has a 9.5 percent increase, much needed. We can use
it very wisely I think to address homelessness and housing
costs, to expand and improve the housing stock. And we intend,
as you do, to focus throughout on safety, on equity, on climate
resiliency, and energy efficiency.
The transportation side of the budget, also looks good.
That is a 2 percent increase. It is building in good ways on
the Infrastructure Investment and Jobs Act with a particular
emphasis on transit and passenger rail.
And so we look forward to scrutinizing this budget and
moving forward to put it before the House at an early point.
This morning I want to concentrate on another hat I wear
and a program that I have been concerned about for my entire
career and that I think is very important for us to focus on at
this juncture, and that is national service, AmeriCorps--senior
AmeriCorps and regular AmeriCorps. The budget has a $1.34
billion item for AmeriCorps. That is an increase over $1.15
billion in the current year. It also follows a historic $1
billion investment in the American Rescue Plan, which as you
know helped AmeriCorps respond to the pandemic, diversify its
work force. There was a lot that we were able to achieve there
with that additional funding. We increased AmeriCorps'
diversity and its equity efforts, we increased the living
allowances of Members, and we enabled some redeployment to go
on with respect to pandemic needs.
Now, what is the Administration's plan going forward? That
is my question. We of course want to sustain these roles that
have been taken on during the pandemic. Is this money
sufficient to do that to sustain the increases that we have had
during the pandemic period? And what is your vision for
national service moving forward? The other element in this of
course is the proposed Civilian Climate Corps, which has yet to
be enacted by us. It was enacted by the House, has yet to be
enacted by the full Congress. But I am interested in what you
envision here. What role the Civilian Climate Corps plays in
the budget, and what kind of potential this has to not just
augment AmeriCorps, but give it a stronger focus on
conservation and on community resilience?
So what is the future of AmeriCorps in the Administration's
view and how is it reflected in this budget?
Ms. Young. Mr. Price--I would like to call you Chairman
Price. He was my first Chairman. I worked for him on the
Appropriations Committee.
One, I want to thank you for your work on AmeriCorps, also
National HDP, the House Democracy Partnership. Mr. Price likes
to focus his attention on programs that bring out the best
value of Americans. And I want to thank you for your focus. I
did a service project with the new head of AmeriCorps on Martin
Luther King Day. I want you to know our commitment to
AmeriCorps is strong. And I think one of the things budgets of
past administrations would do, look at past legislation that
was passed, like the billion in ARP and reduce the budgeted
amount, ensure retraction. We are not doing that. We are
building on top of the Rescue Plan funding that was provided.
As you mentioned, we are providing $1.3 billion here, $189
million increase compared to the enacted level--so an
expansion. It would allow AmeriCorps increase the member living
allowance and volunteer stipends. It would also support
increases in higher education awards for AmeriCorps volunteers.
That aligns with the President's Pell Grant increase. The
budget also includes $20 million for staffing at AmeriCorps to
implement the Civilian Climate Corps that you mentioned. And
that would be in partnership with the Department of Labor and
Department of Interior in USDA.
Mr. Price. Thank you. I do think the Civilian Climate Corps
is a powerful idea and I am glad you are assuming that it is
fully enacted and that you will have these costs accounted for
in this budget.
And I also think as we deliberate on this budget, and this
bridges two or three subcommittees, we do need to pay attention
not just to the full strength of AmeriCorps, but also how it is
organized, and particularly how this Climate Corps is fully
integrated into AmeriCorps operations.
So thank you for that and we will look forward to working
with you on that.
Chairman Yarmuth. The gentleman's time has expired.
I now yield 10 minutes to the Ranking Member.
Mr. Smith. Thank you, Mr. Chairman.
Director, inflation is at a 40-year high--7.9 percent in
the year-to-year report from February. Fed Chairman Powell has
now said that when it comes to calling the inflation crisis
transitory, which the Administration has done repeatedly, he
says ``I think it's probably a good time to retire that word''.
I could not agree more.
Have you spoken with the President about what can be done
to solve the inflation crisis?
Ms. Young. Ranking Member Smith, we absolutely talk about
inflation along with economic growth, wage growth. We have to
make sure that as we grow the economy. As you heard talked
about we grew the economy the largest rate in 40 years. We also
have to take in account with that came higher levels of
inflation.
Mr. Smith. So, it is very concerning. I am glad that you
have spoken to the President about inflation. What is
concerning is this budget proposal projects starting today that
inflation will be at 2 percent for the next 10 years. Because
the first year you say 4.7 percent, but already for the year it
is over 8 percent. So, it would have to be 2 percent every
month for the rest of the year to meet those averages, plus 2
percent for the next nine years. Completely unrealistic when we
are probably going to hit double digits inflation.
So, to hit the inflation projections in this budget, it is
just--it is madness. What policies in this budget brings it
down were inflation will be at 2 percent?
Ms. Young. Mr. Smith, I am happy to walk you through how we
do calculation for the budget. These numbers were locked in
early November. At the time we were in line with blue chip
private forecasters. But inflation is clearly at a level----
Mr. Smith. So, five months--Director, five months ago you
locked in these inflation numbers. So, you did 4.7 percent five
months ago and two weeks ago it came out at 7.9 percent. You
guys were off by almost double in that 5-month span. I just
want to know what policies do you all have in this proposal,
because spending $73 trillion just seems like it is only going
to fuel the inflation fire.
So, I would like to know how you are going to help the
people of Southern Missouri to be able to afford food on their
table, clothes on their backs, and gasoline in their cars.
Ms. Young. Yes, I am sure you have paid close attention to
the President's plan on dealing with competition in the private
sector and also improving supply chain challenges, which are
global in nature. I would also point out that inflation is a
global trend. Almost every developed country is seeing
inflationary growth. What that tells us is that we have a
global issue. It is not one bill, one country, specific
policies. This is something all major countries are facing
coming out of the pandemic.
Mr. Smith. So, I would be curious, does the President
believe spending $73 trillion over the next 10 years will
reduce inflation or increase inflation?
Ms. Young. The President believes the fiscally responsible
thing to do is to pay for our proposals. That is why you see
this budget bring down deficits over the 10-year period by over
a trillion dollars.
Mr. Smith. Well, Director, this proposal over the next 10
years actually increases the national debt by $16 trillion,
which is going to have more than a trillion dollar deficit
every year for the next 10 years, which is the highest
sustained amount of deficit in the history of our nation. And
you are saying that this proposal is bringing down the
deficits?
Ms. Young. Ranking Member, I know we all know that deficits
and debt are two different things. We are bringing the deficit
by a trillion dollars. The debt rises, as many of you know,
because of entitlements. What this President is not going to do
is put forth proposals to cut benefits for our seniors in this
country.
Mr. Smith. You know, I think that we all care about our
seniors. Social and Medicare. That is why this proposal,
Director, is very alarming to me, that by the year 2032--by the
year 2032, thanks to this $73 trillion worth of spending and
the more than trillion dollar deficits every year by the
proposal of this budget, that we are going to be at $45
trillion of our national debt. But just paying interest on that
national debt is going to cost us $1.1 trillion just on
interest, which means that will now be the third largest
program that we have to pay for in our entire government behind
Medicare and Social Security.
So, this reckless spending is actually devastating our
seniors, because now it is competing with them as being one of
the most costly programs.
Let us go onto the tax increases. Analysis of the tax
increases in the President's budget shows they will lead to
fewer jobs in the country and a reduction in wages. What is the
President's rational for imposing tax increases that will harm
jobs, particularly when the country is trying to emerge from a
pandemic?
Ms. Young. I would be interested in seeing your analysis.
The President has been very clear, he will not subscribe to
trickledown economics. He believes that we should invest in the
middle class, those working to get to the middle class. And he
has a policy, and this budget follows it, not to raise taxes
for anyone making less than $400,000.
Mr. Smith. In this proposal you allow expiration of the Tax
Cut and Jobs Act, correct?
Ms. Young. Yes.
Mr. Smith. And so, by expiration of the Tax Cut and Jobs
Act, that is going to raise taxes on every average day American
by $2,000 a year. And those are people making less than
$100,000. So, in fact this budget does that.
It also increases taxes on gasoline and fossil fuels by $45
billion over the next 10 years. And like I said, the people of
Southern Missouri, they are struggling to put gas in their car
when gasoline has gone up 79 percent since Joe Biden took the
oath of office here. And what his solution in this budget, to
only increase taxes more on their gasoline, driving up $4.50 a
gallon per gas to $5-6 bucks. How do you respond to that?
Ms. Young. Easily. I think it was a bipartisan interest
here to ensure that we counter Russian aggression as strongly
as possible. And the President reminded the American people
with that would come possibly higher gas prices and that has
happened. He has been very clear with the American people that
a strong response could possibly cause this to happen. Since
Russian aggression gas has gone up about $1. It is unfortunate
that Russia has chosen to bring the global economy down this
path, but it was appropriate for all developing countries to
stand together and push back on this tyrant and his actions.
Mr. Smith. Director, I appreciate your comments and you are
doing a great job for the President but let us get the facts
out to the American people. On his first week in office
President Biden did Executive Orders to eliminate the Keystone
XL Pipeline that allowed us to purchase energy from our
neighbors in Canada, also freezing new oil and drilling on
federal lands. And let's put it this way, on April 24, 2020 at
a Casey's in Southeast, Missouri you could buy gasoline at $.97
a gallon. That was under a Trump Presidency. You can't find gas
at $.97 a gallon. In 2020 we were energy independent. We were
exporting energy in this country. But under the direct policies
of President Biden and the Democrat controlled Congress, they
reversed those policies to make us energy dependent on Russia,
on Venezuela, on people who love to burn our flag. And it so
unfortunate this budget proposal only wants to tax the energy
industry more to make it harder on everyday Americans. And the
Americans are going to see it.
I am interested, there was $1.9 billion that was in this
most recent omnibus bill that has been carried over to finish
the border wall. Is this Administration going to finish the
border wall?
Ms. Young. Just so we are clear, the $1.9 billion wasn't
rescinded. New money was not provided. The Administration had a
policy asking Congress to rescind that funding. In 2021
Congress did not. But Congress did not provide additional
money. And we are spending, as GAO has told this Committee and
others, that OMB, the President, the Administration is acting
within the bounds of the Impoundment Control Act and we are
spending obligating prudently.
Mr. Smith. So, this Administration just continues to
withhold the $1.9 billion that was appropriated several
Congresses ago that has stayed in the account?
Ms. Young. Thankfully GAO has agreed that we are obligating
prudently under the law.
Mr. Smith. And what are you obligating it to? Because you
are not doing any construction, so are you just paying people
to hold the rusting materials?
Ms. Young. No, we are actually doing environmental
restoration, something that was woefully lacking. We are also
doing community consultation. I think that is important to many
of you who represent constituents.
Mr. Smith. I have 25 seconds, Director. I would like to
know how did this Administration transfer almost $2 billion of
COVID money to house illegals at the Southern Border when it
was supposed to go toward replacing the national stockpile and
for COVID tests?
Ms. Young. It was supposed to go for COVID and it went to
COVID issues at the Southern Border. COVID for COVID----
Mr. Smith. So, housing illegals was issues for COVID?
Ms. Young. We had to test people immigrating into this
country and we also had to socially distance children who could
not be close to each other due to COVID.
Mr. Smith. Would love that documentation, Director, along
with answers----
Ms. Young. There is a binder we have provided to Congress
full of COVID information.
Mr. Smith. And answer to our 40 letters that are hanging
out there to the Administration.
Ms. Young. Including--yes, before budget day asking what
was in the budget. But, thank you so much.
Mr. Smith. Thank you.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from Pennsylvania, Mr. Boyle,
for five minutes.
Mr. Boyle. Well, thank you, Mr. Chairman. And it is
wonderful, Director Young--now I can say Director Young. And I
would always forget to add the acting anyway, so I am glad it
is now official. And thank you for the wonderful job you do
serving the American people.
I wanted to use this as an opportunity just to focus on the
major facts. Both you and Chairman Yarmuth talked about this
before, but I think that a lot of times in these hearings the
most important facts can sometimes be obscured by all the
rhetoric that we hear. So can you remind us again, this past
year it was the fastest economic growth in America in how many
years?
Ms. Young. 40.
Mr. Boyle. And how many new jobs were created?
Ms. Young. Over 6 million, the most in recorded history.
Mr. Boyle. The most in American history. And by what amount
is the deficit projected to fall?
Mr. Young. $1.3 trillion, the largest decline year over
year.
Mr. Boyle. Greatest economic growth in American history,
jobs added, largest deficit reduction. I don't remember many
economists credibly predicting that this time a year ago. It is
certainly a record to be very proud of, those in the
Administration and, frankly, those of us who fought for fought
for and voted for the American Rescue Plan.
Now, I want to shift to the topic of raising taxes. Because
we have two very interesting proposals that are out there.
There is the one new proposal from this Administration that
just came out, the billionaire minimum tax. I happen to be the
lead co-author of the House version--or one version of what
essentially is attempting to achieve the same thing, ensure
that billionaires who are avoiding paying either their fair
share or any taxes at all, make sure that they begin paying.
But then there is this other interesting proposal from the
Republicans. The Senate Republican leader of their Senate
campaign committee has a proposal that as he was confirming
yesterday on Fox News would raise taxes on more than 50 million
Americans. In fact, more than half of those who are under the
poverty line would pay higher taxes. Even further, his proposal
and their proposal would sunset Social Security and Medicare
after five years. And, again, this is not just an accusation.
To his credit, he has openly admitted it and Fox News has
confirmed it.
So could you describe why the Administration believes it is
more fair to go after billionaires who are currently paying
lower taxes than middle class people in my district in
Philadelphia as opposed to going after the poor and the working
class?
Ms. Young. Look, the budgets are value statements. The
President has been clear about that. What he believes is fair
is to ask billionaires and those worth over $100 million to pay
about the same tax rates as teachers, nurses, and firefighters.
That is all he is asking. They are supposed to pay taxes on
this unrealized income. They often use loopholes, deferments,
not to do that. So this President has been very clear, what we
are not going to do is send forward a budget that cuts benefits
to our seniors, but he will ask those worth--the 400 wealthiest
people in this country are worth more than 150 million other
Americans. He does not believe that is right and he is calling
on them to pay their fair share.
Mr. Boyle. And I am correct that the average effective rate
among those 400 that you mentioned is currently 8 percent?
Ms. Young. Research tells us it is about 8 percent.
Mr. Boyle. Yes. I certainly know that the firefighters and
teachers who live in my neighborhood in Northeast Philadelphia,
they would love to pay an 18 percent--or, excuse me, an 8
percent tax rate. They pay far higher than 8 or 18 percent.
And just to be clear, this Administration is not supportive
of the Senate Republican campaign committee chief's plan to
raise taxes on more than 50 percent of the American people and
sunset Social Security and Medicare, correct?
Ms. Young. Not to comment on an individual proposal, but
this President will not, has not--will not be submitting a
budget that cuts benefits for our seniors.
Mr. Boyle. Well, thank you. And I join with the
Administration certainly in that and I thank you for your time.
I yield back.
Chairman Yarmuth. The gentleman yields back.
I now recognize the gentleman from Mississippi, Mr. Kelly,
for five minutes.
Mr. Kelly. Thank you, Director, for being here.
I just want to say I think the budget does show the values,
and there is a 525 percent in the EPA while there is a decrease
in defense spending. There is taxes that go higher for 700
billionaires, but for $700 billion tax cut for millionaires. I
don't know, I mean from where I am from millionaires are rich
people too. So we are doing a tax cut to millionaires while
increasing on billionaires.
I hear all this about how great the economy is going and
how many jobs, the unemployment rate is the lowest, and how
many jobs are created. But here is what my people see in
Mississippi, they go to a restaurant at lunch which is closed
because there is not enough workers to open that restaurant,
there is not enough workers to do the job. So if there is truly
job increases and more people working, then why don't we have
employees in restaurants and places where people go to eat?
The other thing I see is inflation. You talk about no tax
on people under $400,000. Well, I agree with Ranking Member
Smith that, first of all, the $2,000 in taxes that goes away
with the Tax Cut, that is a tax increase. It is $2,000 every
American, regardless of income, will pay next year. The other
is $3,500 annually in inflation last year--$3,500 more. What my
people see, they don't see a better world today than they did
last year, they see worse. When they go to the gas pump, when
it cost $40--I will talk--because I have to actually fill up my
car--instead of filling up and it costing $30 or $40, not it
costs $70 or $80 to fill up. And trying to blame Putin for the
gas rising prices is just not--is disingenuous. Prices were
high before he invaded Ukraine.
Here is what I will tell you, in last year's budget three
considerations were given the most thing, and No. 3 of those--
this is from the President and from the budget last year--not
funding work that directly subsidizes fossil fuels, including
work that lowers the cost of production, lowers the cost of
consumption--that means prices at the pump--cost of consumption
is what you pay for gas, or raises the revenues retained by
producers of fossil fuels. When you intentionally raise gas
prices you intentionally raise gas prices. And after you do
that, you don't get to blame it on something that happened
after the fact.
I want to talk just a little bit about the defense. This
budget proposes that we raise our defense a little bit, but we
went through this same thing, but a lot of that goes to
climate, to other things. What we need to do is make sure we
keep above--the House and the Senate Armed Services Committees
both sent to you that we needed a 5 percent increase over
inflation. Can you truthfully tell me at the current inflation
rate that the number given to defense is a 5 percent increase
over the rate of inflation this year?
Ms. Young. I will tell you our number is 9.8 percent over
the 2021 levels. We believe we sent up a budget that is
strategy based and we are not going to pick a budget out of
thin air for political purposes. The Secretary stands behind
this number and we believe when you see the National Defense
Strategy, hopefully this week, that this budget is aligned with
strategy.
Mr. Kelly. I agree that it does not--it does not meet the 5
percent increase over inflation, which means China and Russia
continue--and this is a dangerous time and we need to do--we
need to continue to raise that.
I got back to the budget show the President's value. He is
creating 87,000 new IRS employees to target folks making less
than $400,000 to see where they spend every one of their
dollars through monitoring their bank records so we can make
sure we get every single dime out of those making less than
$400,000 than we do. He is decreasing taxes on millionaires
while raising it on billionaires, but I would argue he is also
raising it on those people. And if you talk to the normal
person, they truly do not believe that the economy is better
off right now because their groceries go up, their milk costs
more per gallon, their meat costs more, they are having to
substitute things that they would rather not eat, they can't
afford to fill up their cars now. They put in $10, which barely
gets them any gas and the gas prices will continue to go up as
long as we continue to try to cause them to go up.
And going back to the President's words last year, he
intended to make the cost of consumption of fossil fuels go up
in his last year's budget. And I would say he succeeded in
that. I hope he doesn't succeed in raising taxes on lower--on
the IRS invading our homes and in continuing to not support the
American people.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from New York, Mr. Higgins,
for five minutes.
Mr. Higgins. Thank you, Mr. Chairman.
First, I just want to address the issue of energy
independence. You know, the United States in the previous four
years of the past Administration was importing about 22 million
barrels of Russian crude oil every single month, and other
petroleum products. And if we are really serious about energy
independence, the Build Back Better program should be advanced
so that we can make a transition, a real transition to electric
vehicles.
Today in the world there are 211 battery manufacturing
plants, 156 of them are in China, 12 of them are in the United
States. And we are engaged in a military activity in Eastern
Europe right now primarily because of oil and natural gas. 65
percent of all the natural gas that goes into Germany comes
from Russia, 40 percent of all the natural gas that goes to
each of the European Union countries comes from Russia. If that
is not an urgent reminder of the need to become energy
independent, the last 20 years in three Middle East wars and
spending $6 trillion is.
With respect to this budget, the American economy today is
about $25 trillion. The billionaire's minimum tax I presume is
a response to this whole concept of buy, borrow, die. In other
words, very wealthy people buy an asset, they build an asset,
they borrow against the asset, and they never sell the asset,
and therefore they don't pay taxes on it. Jeff Bezos from
Amazon, for example, is worth $200 billion. He pays himself a
salary of about $81,000 a year and pays very little taxes. So I
presume that the billionaire's minimum tax is intended to
address that, recognizing the fact that it is perfectly legal,
but I presume that is the purpose?
Ms. Young. Yes. I remind people when regular people need a
loan, you use your income to show the bank what you can borrow
and pay back. The income, the investment income that we are
taxing here often, as you pointed out, is never paid, taxes are
never paid on it, they are deferred. But they also get a lot of
benefits from carrying that investment income, including
getting to use that as leverage for loans. It is treated like
income for many actions that regular people only have work
income to do with, including making extraordinary loans against
their investment income. So we believe we believe we have to
find a way to deal with this disparity of people who go to work
every day, they are paying a higher tax rate on their work
income. We have to find an equivalent way to deal with those
who pay no income on taxes they are supposed to at some point,
but often defer.
Mr. Higgins. Well, interestingly enough, you know, Jeff
Bezos in 2011 was only work $18 billion and he qualified for
the child tax credit.
The previous Administration had average economic growth
each year of 2.5 percent. This is pre-pandemic. And then the
economy went deeply into recession for a short period of time.
Last year, the first year of the Biden Administration, economic
growth was 5.7 percent and is project to be 3.6 percent for
2022. Is that accurate?
Ms. Young. That is accurate.
Mr. Higgins. And you also, you know, have a situation where
in the Build Back Better program, although that is not part of
this budget, it is really an investment in American families,
because every single day 10,000 kids are born in America, every
single day 10,000 people in America turn 65. And we really
don't have an American family policy. And the intent is really
just to make our own people that much more economically
independent, self-sufficient, and productive to and through
adulthood. And, you know, all these concerns that I have heard
in published reports about, you know, inflation, yes, that is a
concern. We have hit 24 months of a highly distorted economy.
It is going to take time to recover and we are in fact
recovering. But, you know, the American economy will produce
$300 trillion in stuff in the next 10 years. That is goods and
services. Spending, investing, less than 1 percent of that in
American families and the productivity of the American economy
is not inflationary. In fact, it is an investment in future
growth that can be, you know--inflation can be handled.
But thank you very much.
Ms. Young. Thank you.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from California, Mr.
McClintock, for five minutes.
Mr. McClintock. Thank you, Mr. Chairman.
I think we need to get some fundamental facts straight
here. And let us begin with three numbers--27, 58, and 89. 27
percent is the growth in population and inflation combined over
this past decade--27 percent. 58 percent is the growth in
federal tax revenues in the same period--58 percent. That is
more than double inflation and population growth. And by the
way, that is after the Trump tax cuts produced one of the most
prosperous periods for working Americans in our history. 89
percent is the increase in federal spending. It is the spending
stupid. We have before us a budget that dramatically raises
taxes and claims that we are going to reduce the deficit. But
taxes and deficits are the same thing. They are the only two
ways to pay for spending. You either take it out of a family's
current earnings or you take it out of their future earnings by
borrowing it.
A deficit, a future tax, is paid for in two ways. We either
borrow it from capital markets that then reduces the amount
that is available to make consumer loans and have to be paid
back through future taxes, or we simply print that money, which
produces inflation. That is largely how this Administration has
financed its multi million dollar spending scheme. Results,
nearly 8 percent annual inflation, costing an average family
$3,500 in lost purchasing power, but it also means if a family
puts $100,000 toward their retirement, they have just seen
$7,900 taken from them. It turns out all that free money that
you folks sent out is very expensive and Americans are paying
it back at the gas station and the grocery store every day.
Now, this budget repeals the Trump tax cuts. Now, remember,
we took in more revenues after the tax cuts, so great was the
economic expansion that they produced. And they weren't tax
cuts for the rich. The wealthiest 1 percent saw their share of
income taxes actually grow. The average household saved between
$1,000 and $2,000. The Democrats would repeal these tax cuts.
The corporate tax goes to 28 percent, higher than communist
China. But corporations don't pay corporate taxes, people do.
They can only be paid in one of three ways, by consumer through
higher prices, by employees through lower wages, or by
investors through lower earnings. That is your 401K. Now, they
say they will make the wealthy pay their fair share. According
to the Tax Foundation the wealthiest 1 percent earn 20 percent
of all income and yet pay 39 percent of all income taxes. That
is double their fair share.
But put that aside for a second, you are proposing to tax
unrealized capital gains. What is an unrealized capital gain?
It is the paper increase in assets that you haven't cashed in
on. It is a tax on money that you haven't received. But don't
worry they say, that is just on those worth $100 billion or
more. But once they have introduced this concept into law, how
long will it take them to come after your pension funds earning
before you have received them? You know, this whole mess isn't
the fault of taxpayers for not paying enough taxes, it is the
spending that is robbing families of their disposable income,
their savings, and their future economic growth. And I think it
is disingenuous to compare this budget to last and saying,
well, the deficit is down and growth is up. Deficits are down
only compared to the most irresponsible spending spree in
American history that has produced the worst inflation rate in
40 years. Growth is up only compared to the lockdown left's
draconian COVID policies that took a wrecking ball to our
economy and utterly failed to slow the spread of the pandemic.
Americans are now getting a taste of what socialism
consistently produces. There are 2.1 million fewer Americans
working today than before the lockdowns. American family
purchasing power has declined since this Administration took
office. Inflation is at its highest rate in 40 years. Gas
prices were up 40 percent before Putin invaded Ukraine.
Now, the American people need to connect the dots between
budgets like this and the conditions that they are now
suffering before it is too late.
I have got just one question. This Administration has
admitted more than 1 million impoverished, illegal immigrants
into the interior so far, in addition to a half a million
gotaways. That is roughly the combined population of Montana
and Wyoming, just since you took office. I am wondering, how
much is this costing local, state, and federal taxpayers?
Ms. Young. One, thank you for the diatribe. I--you know, I
certainly----
Mr. McClintock. I beg your pardon?
Ms. Young. The--you know, which piece of what you put
forward can I respond to? You put a lot out there that we have
disagreements with the way it is framed. We have 700 people----
Mr. McClintock. It is your policies that have caused these
conditions. That is reality.
Ms. Young. We have 700 people who are billionaires, 100
millionaires that we are talking about, not regular Americans.
Mr. McClintock. How much of the 1.5 billion are illegal
immigrants that you have admitted into the country costing
taxpayers?
Ms. Young. This President will not raise taxes on anyone
making less than $400,000.
Mr. McClintock. That is the question.
Chairman Yarmuth. The gentleman's time has expired. The
gentleman's time has expired. If he will let the witness
respond, then we can move on. But you can't continue to debate
her and when your time is expired.
Mr. McClintock. I asked her a simple question, I would like
a simple answer. How much is this costing?
Ms. Young. I look forward to the support you have for the 5
percent increase at DHS that will allow to manage the Southern
Border.
Mr. McClintock. So it is in your don't know, don't care
file? I get it.
Thank you.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from New York, Mr. Jeffries,
for five minutes.
Mr. Jeffries. Thank you, Mr. Chairman, for you leadership,
for convening us here today. Director Young, it is always
wonderful to see you. Thank you for the extraordinary job that
you and the Biden Administration are doing relative to the
economy. Look forward to discussing some of those more accurate
numbers momentarily.
I see my good friend, Albio Sires. I want to just
acknowledge his presence, congratulate him on the great run
that the St. Peter's Peacocks had. Of course Albio is a former
varsity basketball player for St. Peter's. He set this all in
motion. Albio, it is good to see you and what a great run. I
know you are proud as a peacock.
Shalanda, Director Young, there were several numbers that
were thrown out, but I want to talk about just a few more
accurate ones. 3.8 percent. That is the unemployment rate. But
when President Biden first took office, just a little over a
year ago, that unemployment rate was about 6.4 percent. Is that
correct?
Ms. Young. That is correct.
Mr. Jeffries. And did it come down in record time?
Ms. Young. Let me point out that all of this was not by
accident. None of the numbers we have talked about--the fastest
decline in history, the employment rate, would have been
possible without this President's management of the pandemic.
Mr. Jeffries. That is correct. Beginning with the American
Rescue Plan, which not a single one of my Republican colleagues
voted for in either the House or the Senate, that was the
foundation for turning the economy around. And the economic
growth comparison doesn't relate to what happened when the
country shut down under the previous President. Am I correct
that what we have seen under the Biden Administration, the
Biden economy, is the fastest rate of economic growth in 40
years?
Ms. Young. It is. Absolutely, year over year.
Mr. Jeffries. Now, with respect to fiscal responsibility,
my colleagues talk a lot about that and they talk about
socialism. You know what socialism is, that is the GOP tax
scam--83 percent of the benefits going to the wealthiest 1
percent. That is socialism for the wealthy, the well off, and
the well connected for no reason other than to subsidize the
lifestyle of the rich and shameless.
I am proud of the economy and the budget that you have put
forward, which is designed to invest in every day Americans. In
fact, wages are up right now. But we do have to continue to
work to lower costs. Could you speak a little bit about that
effort in the context of this budget?
Ms. Young. Absolutely. One, I spoke about global supply
chain challenges. We need to get stuff off of ships and onto
shelves. And this budget provides investments in our port
infrastructure. I also want to thank the Congress for the
infrastructure bill. A second round of Army Corps funding was
just announced that dredged important ports around the country
to ensure that we can move these goods to shelves so the
American people can continue to buy things. And we believe that
is a key part of fighting inflation. We also believe we have to
ensure that corporations, companies have competition in the
system in the way we operate.
So we absolutely know we have to work on this, but one
thing we need to do is a balanced approach. We have seen wage
growth. We need to make sure as we tackle inflation we can keep
these gains in wage growth and also economic growth. So there
is a balancing act here.
Mr. Jeffries. Now, with respect to some of the revenue
proposals, I think most every day Americans would have no issue
with increasing the taxes that 25 richest billionaires in
America pay because currently they pay little to no taxes. That
is less tax often than firefighters, police officers, nurses,
social workers, transportation workers, healthcare aids, and
our healthcare heroes who have helped us get through this
pandemic. Can you talk a little bit about the resources that
are being raised just in the context of what it will allow us
to invest in as the Biden Administration invests in every day
Americans?
Ms. Young. So tax reform has two benefits. One, it is a
fairness issue. Should the richest Americans, 700 people, pay
less than half of regular folks who you represent. The other
benefit of tax reform is we get to invest in the regular
Americans who have price pressures that we have talked a lot
about here today. Should we have legislation that reduces the
cost of childcare, for example? Families shouldn't pay more
than we think--shouldn't pay more than 7 percent of their
income on childcare costs. We believe that we should have
efforts to negotiate prescription drug prices through Medicare,
so families can afford lifesaving treatment.
So we have a difference of agreement. We all want to help
these families, but we think the way to do that is through
proposals that invest in the American people to help with those
pocketbook issues that both sides of the aisle have brought up
many times today.
Mr. Jeffries. Thank you very much.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from Texas, Dr. Burgess, for
five minutes.
Dr. Burgess. And I thank the chair and thanks to our
witness for being here today.
You know, we have not had a hearing with the Congressional
Budget Office, the base line CBO report has not come out, and
when you ask the reason why, at least what they told me was
because OMB was--hadn't produced their numbers yet. Now,
perhaps, Mr. Chairman, that OMB has produced the President's
budget we will get to hear from the Congressional Budget
Office. But in that interim, in that meantime, the Director of
the CBO could visit with some of us individually. And I am
grateful that he did that.
So let me just ask a couple of things that were assertions
that were made to me by the Director of the CBO. And I will ask
you to attest to their veracity or not. One of the things the
CBO Director said was that we vastly underestimated how strong
the economy was going into the pandemic. And thank God that it
was, to be able to withstand the ravages of the pandemic. But
would you agree with that statement, that the economy so
significantly stronger than anticipated going into the
recession?
Ms. Young. I would say we did enter a recessionary period
during the pandemic. We believe we were able to recover from
that not from the economy that was there before the pandemic,
but because of the work, in many cases bipartisan work. This
Congress on a bipartisan basis passed COVID legislation to help
the former Administration respond to the pandemic and ARP----
Dr. Burgess. Yes, let me----
Ms. Young [continuing]. we believe to finalize the job.
Dr. Burgess. Let me reclaim my time. The fact is we were on
our way out of the recession when we threw gas on the
inflationary fire with some of the other reconciliation bills
that passed last calendar year.
Mr. Swagel also asserted that the collections, the federal
income tax collections that--and I guess we are working current
laws, the 2017 tax law, correct? And that collections have been
at all time highs. In fact, they didn't diminish during the
pandemic. They have been sustained. Was that an accurate
statement that----
Ms. Young. Yes.
Dr. Burgess [continuing]. he made to me?
Ms. Young. Yes.
Dr. Burgess. So even under what people are describing as a
dreadful and unfair taxing system, it is producing historic
levels of revenue more so than the pre-2017 tax law that had
been in place for 31 years, greater than that produced? Is that
correct?
Ms. Young. We think the wealthiest did quite well during
the pandemic.
Dr. Burgess. That, you know, wasn't the question.
Let me ask you this, Mr. McClintock asked it and then it
didn't get answered, but taxing unrealized gains, OK, that is
going to be a little tough, but I am sure someone will be able
to figure it out, but what happens to those equities that are
held in retirement as retirement securities? Are those
unrealized gains in that fund going to be taxed as well?
Ms. Young. No, we are not talking about that. We are
talking about unrealized gains from stocks for the 700 people
who are worth more than $100 million.
Dr. Burgess. Will they be able to deduct--I have also been
a holder of some investments when the economy went the other
way and the statement during the 1980's was well, you haven't
lost it until you sold it. Will they be able to deduct losses
from their taxes if the market goes down?
Ms. Young. For those 700 people we are phasing over five
years for exactly the reason you talk about. We don't want to
get into a situation where on year your stock may be worth $100
and you pay and then you come and ask for a refund when it is
worth $80 the next year. So this is a phased in approach for
things you own before this will go into----
Dr. Burgess. Yes. Good luck. It sounds absolutely----
Ms. Young. So in five years.
Dr. Burgess [continuing]. unworkable. Let me just ask you
this. I see where the commitment is made to provide--the total
was $4 billion, it is now nearly $1 billion this year that is
going to the governments of Central America. And this I assume
is on top of the foreign aid that was already going to El
Salvador, Guatemala, and Honduras. Is that correct?
Ms. Young. We do have a----
Dr. Burgess. This is in addition?
Ms. Young. Yes. We do have a request in to deal with the
northern triangle.
Dr. Burgess. And methods of accountability. I mean if those
governments really cared about the people that they were
supposed to care about, I don't think we would have as many at
our Southern Border. Are there built in accountability methods,
as the previous Administration had done?
Ms. Young. The previous Administration, as you point out,
did not send funding down. We also have the option. The way
appropriations usually writes the law to withhold if we aren't
getting the results. We need see, but we do believe we have to
deal with the root causes of migration and this funding would
allow us to do that.
Dr. Burgess. Well, again, I submit you are pouring gasoline
on fires that exist.
Mr. Chairman, let me just ask you this, are we ever going
to vote on a budget this year?
Chairman Yarmuth. That is a good question.
Dr. Burgess. Maybe if we vote on a budget will the
President's budget be introduced and give everyone a chance to
vote on the President's budget?
Chairman Yarmuth. That decision hasn't been made.
The gentleman's time has expired.
I now recognize the gentlewomen from Illinois, Ms.
Schakowsky, for five minutes.
Ms. Schakowsky. Thank you, Mr. Chairman.
Director Young, welcome and congratulations.
Ms. Young. Thank you.
Ms. Schakowsky. It is wonderful to see you here.
You know, I am so happy that you mentioned I think a couple
of times that the President believes in building an economy
from the middle out and the bottom up. It is so refreshing to
me. And despite the robust support for the wealthiest Americans
and the biggest corporations that I hear from the other side of
the aisle, in fact most Americans understand that the rich have
been getting richer and the poor have been getting poorer, not
by accident but by policy, tax policy, et cetera, that we have
had. And that the President is committed now not to punish the
wealthy, but to say they need to pay their fair share. And
there is a big cheer out in bipartisan way in this country for
that kind of idea.
For the last 10 years we have really had an austerity
budget, particularly because of sequestration. And so I--and it
has really I think hurt so much of our economy. And one agency
I wanted to talk to you about that has been the victim of
sequestration has been the National Labor Relations Board,
which has remained pretty much flat funded since 2014.
And so in order for it to really--for the NLRB to really do
its job, it needs to have increased funding. We have seen a 50
percent increase in union election petitions, but the total of
funding has fallen by 30 percent since the year 2010.
Now, I know that the budget that you have--that the
President has presented has actually increased the NLRB funding
by 16 percent, but I wanted to ask you if you really feel that
the kind of funding that we are going to be able to see is
going to help protect and empower American workers. And let me
just add the second part, would the Administration raise any
concerns if the Congress were to provide additional funding
increase to the NLRB?
Ms. Young. None at all. And, as you point out, the agency
has really been starved of resources and has lost significant
staff capacity over the years. This budget I would say begins
the rebuild with a $45 million requested increase. But
certainly if Congress wants to start that rebuild faster, we
would be supportive.
Ms. Schakowsky. Let me ask you another question. One of the
constituent service issues that I get all the time is that
people, ordinary people who are trying to get information about
their 2020 taxes has been a real problem. And I am just
wondering if we are going to be able to bolster the number of
employees at the IRS that are going to be able to address this
problem?
Ms. Young. So as you have heard, we have an increase in the
budget for IRS. We believe it is--Americans should not have to
wait for hours on hold to get information about their tax
situation. If there is one mistake on your form, you often have
to--some of the worst stories--wait months to get refunds due
to you. So we believe that this increase is the right thing to
do for the American citizens who are required to pay taxes and
should have this service that goes along with that requirement.
Ms. Schakowsky. Thank you.
And it seems to me too that if we are looking at making the
most of efficient work of the IRS, that we also begin to look
again at the wealthiest Americans who we are--you know, it is
kind of like where do you go, you go where the money is. And I
am just wondering if we can refocus on making sure that the
very wealthiest are paying something, because we have seen
paying nothing too often from the wealthiest Americans. Can we
make sure that we are not just focusing on every day working
people, but also on the people who are making the most money?
Ms. Young. So we are--I am certainly not going to suggest
that we tell the IRS who to look at, but I will point out not
just the wealthiest corporations, 50 corporations on the
Fortune 500 list paid no taxes in 2020. We think that is not
right. So certainly this budget recognizes inequity that you
have pointed out and we do need resources in the IRS mostly to
ensure that our citizens can get the services they deserve.
Ms. Schakowsky. Thank you.
I yield back.
Chairman Yarmuth. The gentlewoman's time has expired.
I now recognize the gentleman from Georgia, Mr. Carter, for
five minutes.
Mr. Carter. Thank you, Mr. Chairman.
Director Young, thank you for being here. I appreciate your
attendance very much.
And I want to ask you, Director Young, the President said,
and I quote, ``Budgets are statements of values and the budget
I am releasing today sends a clear message that we value fiscal
responsibility, safety, and security at home and around the
world.'' Let me begin saying that I applaud these new found
priorities that include advertised increases for defense at 4
percent. However, as we all know, inflation is at 8 percent. So
if we are increasing the defense by 4 percent, we are actually
looking at a cut here.
So even though inflation ends up it being a cut and we also
see a cut for funding the police, let me ask you, Director
Young, was the Administration aware that Russia was occupying
Crimea and other parts of Eastern Ukraine?
Ms. Young. I am happy to talk about the budget elements----
Mr. Carter. And that is what I am getting.
Ms. Young. OK. I would leave that to the policy experts in
the Administration, but that is not my----
Mr. Carter. But you would agree that they were aware of
this even though they proposed a cut in defense?
Ms. Young. That is a policy best directed----
Mr. Carter. Understand.
Ms. Young [continuing]. to the Department of Defense or the
National Security Council.
Mr. Carter. Understand.
Ms. Young. I would be happy to answer anything about the
budget.
Mr. Carter. Yes, I got you. And that is why I am asking
this, because this is about the budget. Did the Administration
consider Russia an adversary or a threat to national security
of the United States at the time when it only increased defense
by 1.6 percent? And that is a budget question. Because when you
formulate a budget, as the President said, it represents your
values. So what I am trying to get at here and what I am trying
to understand is what the Administration considered when they
proposed a cut in defense.
Ms. Young. Do we consider the 4 percent increase this year
a cut?
Mr. Carter. We do because inflation is at 8 percent.
Ms. Young. We don't see the defense budget as a cut. The
Secretary of Defense will--I am sure many of you will hear from
him when the comes to Congress. He will tell you he stands
behind this number and we believe it is strategy based.
Mr. Carter. What about crime in our cities as well?
Because, again, if it represents the values, then the values
have to go along with knowing what is going on in our country,
knowing what is going on in our world. If we are talking about
a budget that reflects the values of the Administration and the
values of this country, what about the cuts that went to state
and local governments from the Justice Department of $2
billion.
Ms. Young. There are no cuts in the budget to cops for--we
are asking for a $300 million increase in community oriented
policing, $3.2 billion for all state and local grants at DoJ.
Mr. Carter. But there are--to the Justice Department, there
are cuts of $2 billion.
Ms. Young. The grants to state and locals to deal with
violence is increased in this budget. In addition, there is a
mandatory proposal we hope that many of you will support of $30
billion to deal with crime in all our communities.
Mr. Carter. Let me ask you something. And obviously I am
trying to get a point across here, that we are making cuts to a
budget, to defense, to crime, where we should be making
increases and where we should be reflecting our values, as the
President says this budget is supposed to reflect the values of
this Administration, of this country, and of this executive
branch. So that is what I am trying to about, to get the point
out here.
And from last year--I asked this question last year, does
the Administration not think that these are credible threats
when talking about defense spending that we should be conceding
our world leadership role? And yet, here we are a year later
and we are still making essentially cuts to defense and not
addressing crime like we should be.
This budget is too little, too late. It truly embodies the
Administration's leading from behind strategy. In fact, I would
call it simply reacting. People have already died. People have
died because of crime, people have died because of our lack of
funding defense. The number of murders in 2021 was 5 percent
higher than counts recorded in 2020. And, as we know, Russia
has invaded Ukraine.
Again, if we already knew these were problems, and they
were widely reported, why are we just now asking for funding to
fix them?
Ms. Young. Funding that are increased over last year. I
hope we can, you know, agree to, you know, simple facts.
Department of Defense will receive a 4 percent increase under
this budget. We ask again, Congress did not provide, but this
President is asking again for community oriented policing,
increase of $300 million and we are asking for support of our
mandatory proposal for $30 million to deal with violence.
Mr. Carter. Understood, Ms. Young. But, again, I am trying
to get at what the President is referring to as the values that
this Administration embodies and that this Administration
embraces. Trying to understand that.
Just out of curiosity----
Chairman Yarmuth. The gentleman's time has expired.
Mr. Carter. Thank you, Mr. Chairman, and I will yield back.
Chairman Yarmuth. The gentleman's time has expired.
I now yield five minutes to the gentleman from Nevada, Mr.
Horsford.
Mr. Horsford. Thank you so much, Chairman Yarmuth, and to
the Ranking Member.
Director Young, thank you for being here today to speak
with us and for your work to deliver a budget that proves that
we can invest in America while also bringing down the deficit
and fighting inflation. You should be proud, Director Young.
You have risen from staff director, from the House
Appropriations Committee, to now testifying in front of
Congress as the Senate confirmed director for OMB. We could not
be prouder for you.
I want to commend the Administration's efforts to finally
make the wealthiest in this country pay their fair share in
taxes. For too long the hardworking men and women of this
country have been left holding the bag while billionaires have
used their army of tax lawyers to pay virtually nothing in
federal taxes. If we want to invest in the American spirit and
do so in a financially responsible way, then we need proposals
like the 20 percent minimum tax to at least make sure
billionaire CEOs pay a comparable rate to regular hard-working
Americans. I don't understand how my colleagues on the other
side would want an average person in their district to pay more
than a billionaire.
By proposing the deficit reducing budget, President Biden
made sure that we can responsibly invest in our working
families, but we must ensure that those investments actually
make it to the individuals who need them most. Even though more
Americans are taking home a paycheck and families have more
money in their pockets, family budgets are still tight. Anyone
can see that prices are rising on essential goods across my
district and in this country. The pain for working families I
real and it is imperative that this Congress work with the
Administration to lower costs for everyday American. Reducing
our deficit, increasing our domestic productivity, and lowering
families' biggest costs, can fight inflation while also
investing in America.
In Nevada, and specifically my district, we have seen
unconscionable increases in the cost of rental housing, with up
to 30 percent increase in rental costs over the past year. I am
pleased to see that there is $50 billion in this budget for
affordable housing construction to grow our supply of housing
stock and to stabilize these high price increases.
Director Young, as you know, many of the inflationary
pressures we feel today are from repeated supply side shocks.
So in your opinion, what are some other meaningful steps the
Administration could take to provide a budget similar to this
one to relieve supply constraints and deliver lower costs to
Americans?
Ms. Young. So, I have talked a little bit about the need to
get things off of ships. We have seen extraordinary backlogs at
many of our ports, from the West Coast to the south. Not just
funding, but we have tried to bring the full weight of the
Administration to deal with our port challenges, including
going so far as to recruit truckers to get more truckers on the
road to move goods. Also ensuring that our railways--we can get
things moving by rail. We saw during the pandemic--you know, it
was a good problem to have at the time--people bought a lot of
goods. Our economy turned from service based where people spent
a lot of money on services, to purchasing a lot of goods. And
it fundamentally how our economy operated. So we have to keep
our foot on the gas to make sure that we can unclog our supply
chain issues because some of those things are going to be with
us for a while. We still haven't seen the return to services
out of the pandemic that you would expect our economy service
to good ration to be.
Mr. Horsford. Absolutely.
With my remaining time I want to turn to demographic data
collection. I am pleased to see throughout the budget an
investment in data collection on STEM participation, climate
impacts, and maternal health disparities, but more needs to be
done.
So, Director Young, while there are significant investments
in the President's budget toward racial equity in particular, I
want to focus on the Justice-40 commitment of $3 billion. What
is the Administration's plan to make sure these investments are
targeted accurately to reduce disparities and direct funding to
the hardest hit communities throughout our country?
Ms. Young. I am sure you know about our Executive Order
13985. It requires that we incorporate equity in all we do,
racial equity, rural equity, those left behind, our disabled
brothers and sisters. Our government should work for all people
all the time. So when we do procurement we want to make sure
that our dollars are spent with socially disadvantaged
companies. So we are implementing this Executive Order not just
in the budget, but in how we do business.
But you are right, without data we don't know if we are--
what kind of job we are doing. So we are absolutely committed
to improving our data collection.
Mr. Horsford. And I look forward to working with you in
your role as director of OMB so that we can have better data
collection and make more informed decisions.
Thank you.
Mr. Chairman, I yield back.
Chairman Yarmuth. The gentleman yields back.
I now recognize the gentleman from Virginia, Mr. Cline, for
five minutes.
Mr. Cline. Thank you, Mr. Chairman. I want to thank the
Director for appearing today.
Last year when you testified before this Committee, the
Consumer Price Index was up 4.2 percent over the last 12
months--and at that time was the largest 12 month increase
since 2008. Almost a year later, thanks to the Biden
Administration's policies, the annual inflation rate for the
U.S. is 7.9 percent for the 12 months that ended February 2022.
And we can blame Russia for gas prices, we can blame the supply
chain for inflation rates, we can blame the--all of the
different policies of this Administration, but this is the
highest inflation rate since January 1982, according to U.S.
Labor Department Data published March 10. That translates into
a $3,500 annual inflation tax that is being paid by, as you
said, normal people. In 2021, $296 extra per month going toward
the higher cost of inflation due to this Administration's
policies, 54 percent higher inflation growth than wage growth,
a $12,000 inflation tax to be paid by American families under
the Biden budget. The price of meat is up 13 percent, the price
of milk is up 11.2 percent, the price of electricity is up 9
percent, the price of baby food is up 8.4 percent. Gas prices
have risen since Joe Biden took office 82 percent. That is
$2,000 in additional costs per family due to the rising cost of
gas.
So the path we are on is unsustainable. This budget does
nothing to address inflation. In fact, the term ``inflation
crisis'' doesn't show up in this budget once. And it pushes
into perpetuity permanent fiscal imbalance. It does nothing to
address the permanent imbalance in revenues and expenditures
that this federal government is experiencing. So it kicks the
can down the road and the national debt is nearly the size of
our economy and will reach a record 107 percent of GDP by the
end of the decade.
I want to focus on two things that are going to be
happening in this decade, the insolvency of the Medicare
Hospital Insurance Trust fund and the insolvency of the Highway
Trust Fund and then the insolvency of the Social Security, Old
Age, and Survivor Insurance Trust Fund by 2033. Why is it that
the Biden Administration is not sounding the alarm about this
looming crisis? And why doesn't this budget, which should be a
reflection of the values of this Administration, propose to
avoid this insolvency in Social Security, Medicare, and Highway
Trust Fund that my constituents depend on so much back at home?
Ms. Young. Thank you, Mr. Cline.
One, I want to assure you, the budget assumes, and it is
built into the numbers, that those programs, even given
insolvency, that those programs continue at the current rates.
So that is built into our figures. We are required to do that
by law. So the assumption--all the numbers you have here assume
that those programs continue.
Mr. Cline. But it--so it assumes that they are heading for
insolvency in the years that I cited?
Ms. Young. It shows that we are spending the same level,
the benefits don't stop.
Mr. Cline. Which will result in insolvency in the years
that I cited.
Ms. Young. Yes, we absolutely need bipartisan solutions. My
guess is it is going to take both sides of the aisle here and
the Administration to come together to find solutions to make
sure we deal with the insolvency issues. You are absolutely
correctly point out----
Mr. Cline. Your part is in control of the presidency----
Ms. Young. But----
Mr. Cline [continuing]. your party is in control of
Congress, so I would encourage you all to put forward those
solutions so that we can work with you.
Ms. Young. I appreciate that, but I would like to ensure
that you know the budget fully assumes that those programs
continue.
Mr. Cline. Assumes that they go off the cliff.
I have no further questions.
I yield back.
Chairman Yarmuth. The gentleman yields back.
Before I recognize Ms. Wexton, I want to remind everyone
that at 12 o'clock we are going to take a recess for a half
hour, which means we will hear from Ms. Wexton, Mr. Feenstra,
Mr. Scott, Mr. Good, and Mr. Sires and then everybody else will
be--have to come back after 12:30.
So with that I yield five minutes to the gentlewoman from
Virginia, Ms. Wexton.
Ms. Wexton. Thank you so much, Chairman Yarmuth. And,
Director Young, it is wonderful, wonderful to see you again.
So a lot has changed over the past year, including your
confirmation by the Senate. I couldn't be happier that you are
now Director Young.
Now, reflecting on where we were one year ago, I think it
is important that we remember, you know, how far we have come.
And you have already talked about that some. I mean we have
added more than 6 million jobs, the most ever in a single year.
The unemployment rate is now down to pre-pandemic levels. We
have vaccinated more than 200 million Americans.
Now, when President Biden took office, the daily COVID
reporting was about 250,000 infections every day and we are now
at a tiny, tiny fraction of that. We lowered the child poverty
rate to the lowest level ever and the number of families
reporting food insecurity also dropped 32 percent. Now, that
didn't all happen on its own, it happened because we passed the
most significant economic legislation ever, the American Rescue
Plan, which literally saved the economy. On top of all that, we
passed infrastructure legislation that is finally going to help
us fix our aging roads, bridges, and power grids, amongother
things, also make universal broadband a reality. And we finally
ended the joke of ``Infrastructure Week'' once and for all. We
were even able to do that with some Republican assistance, so
thank you to those folks who crossed the aisle who actually
voted for that legislation.
Not to mention the COMPETES Act, which is going to be--
going to conference shortly and will be singed into law I think
not before too long, which will definitely put the U.S. in a
much better place globally for now and into the future.
So it has been quite a year. And I just want to thank you
for everything that you have done to help us get there.
Now, I represent tens of thousands of federal workers in
the D.C. Metro region. I know that you are aware of this. And I
wanted to thank you for what you did in the budget. First thing
I do when I get it is flip to the federal employees' section to
see where the pay increase, and I was pleasantly surprised to
see that it was 4.6 percent. So thank you so much for that. I
along with a number of people from the Metro Region had been
advocating for 5.1 percent, but I think that 4.6 is the
highest--is the biggest increase in many decades. Is that
correct?
Ms. Young. I have been a federal worker in some form or
another for 21 years. I can't remember an increase this large
in recent memory.
Ms. Wexton. Thank you so much. And it is a lot better than
the freezes and cuts to benefits that were proposed by the
previous Administration.
I also want to talk for a minute about substance abuse
treatment. Now, the nation's overdose crisis--you know, our
overdoses were up 17 percent from 2019 to 2020 and it has
gotten even worse over the course of the----
Chairman Yarmuth. We have lost the audio. Your signal is
frozen. You should be back now.
Ms. Wexton. OK. Sorry about that, Mr. Chairman. I tried
plugging in and everything.
But, anyway, so about substance abuse treatment and
substance abuse coverage. Can you just explain how the budget
addresses mental health and substance use disorder coverage?
Ms. Young. Thank you for that.
The budget includes $500 million increase over 2022 for
state opioid response grants and $1.2 billion over the 1922 CR
level for the substance abuse prevention and treatment block
grant. You heard the President speak to both mental health and
opioid as something he hoped to bring the country together.
These are bipartisan interests. So we are very proud of putting
forth robust requests for both opioid--the opioid epidemic to
deal with it and also the mental health crisis. And in some
ways these two things are connected and this budget seeks a
holistic way of dealing with both.
Ms. Wexton. Thank you so much. And that is something that
affects every congressional district across the country,
regardless of whether it is represented by a Republican or a
Democrat. So thank you for doing that.
I was also really happy to see a 19 percent increase in the
funding for the National Science Foundation, especially because
they will be doing a lot of research into the opioid addiction
treatment and the future of medical treatment for those
disorders. So thank you so much for that as well. Very good to
see that this critical research will be fully funded.
And with that, I yield back.
Chairman Yarmuth. The gentlewoman yields back.
I now recognize the gentleman from Iowa, Mr. Feenstra, for
five minutes.
Mr. Feenstra. Thank you, Chairman Yarmuth and Ranking
Member Smith. And I want to thank you, Director Young, for
testifying today. It is great to see you and I just want to
congratulate you on your confirmation as role of director.
Talking with economists, and I taught many economics
classes over the years, most economic people would say that it
takes approximately 18 months to have something--to go into
effect--full swing effect when you start talking about taxes,
especially when you want to increase taxes or something like
that. Would that be a fair statement concerning the Department
of Revenue and things like that?
Ms. Young. I just want to make sure I understand you. So
we--if Congress passes these policies tomorrow, we--it would
take 18 months to see the effects?
Mr. Feenstra. Yes, there a part--12 to 18 months. Because
you have to collect the revenue and things like that.
Ms. Young. Correct. But we would see the receipts during
the next budget cycle, the next fiscal year. So we would
actually I believe----
Mr. Feenstra. Eventually. I mean you would have--so that
would take six to eight months, probably be a year to 18 months
before you see the true effect?
Ms. Young. We think we would see the receipts next tax
season and begin to see a reduction in our deficit within that
first year of implementation.
Mr. Feenstra. So the reason I am saying that is that we
passed the Trump tax cuts and now they are coming into full
effect. And we have seen a 5.7 percent growth increase, and
frankly that is because of the Trump tax cuts that happened. I
think that is a fair statement. And yet we want to repeal the
tax cuts in this budget. I think that is really bizarre when
you have an economy that is going very fast. Obviously we have
inflation and all this other stuff, and yet we now want to chop
the legs off from underneath what has happened through all
these tax cuts.
That being said, I just want to note that a budget is a
statement of values and I tend to agree with that. And we all
understand that we have an energy crisis in our country. I mean
we are all paying a tremendous amount of gas at the pump right
now and it affects every family and business. So my question
is, being from Iowa, why don't we have American made biofuels
in this budget? There is not a line item or anything in here
that addresses biofuel, American made. Can you address that?
Ms. Young. I am happy to discuss. I believe EPA will have
more details when they talk about their biofuels work, but what
this President is also doing, he has released 60 million
barrels of oil from the strategic national stockpile. We
believe that is a quick way to deal with the inflationary
pressure.
Mr. Feenstra. Well, I thank you for that, but there is no
biofuels. I mean here is American made Iowa, Midwest biofuels,
and crickets, nothing, zero in the budget.
Anyway, I think I have a question for you. In the budget
proposal you clearly lay out $2.5 trillion in new taxes on
families and businesses and then you create a side deficit
neutral reserve fund to pay for your Build Back Better
priorities, but you don't really show how you do that. At the
same time it says here in this green book that your baseline
includes all revenue provisions from Build Back Better, which
would mean that the Biden Administration is increasing taxes by
$4 trillion.
I am trying to make sense of this. Is it $2.5 trillion you
are increasing or is it $4 trillion based on this book that I
see and what it says?
Ms. Young. So we are holding some revenue back for
legislation that we talked about here today to cut costs for
the American people. I will point out one thing we are not
repeating in this budget that if Congress would like to use its
savings for Build Back Better, and it is the savings--we get
about $600 billion to reduce the cost of prescription drugs,
the AGS surtaxes and other things.
Mr. Feenstra. But I get that, I get that. But in essence it
is $4 trillion then because you are putting in this line item.
You are showing us here that you are assuming that H.R. 5376 is
going to be a pass, so in essence that would be a $4 trillion
increase?
Ms. Young. Yes, we are holding revenue for legislation and
its cost for families----
Mr. Feenstra. A $4 trillion increase.
Ms. Young [continuing]. and raising additional tax revenue
in this budget.
Mr. Feenstra. Gotcha. All right. One more question. I am
worried about our seniors. I really am. About what is going to
happen in society here. And you said that you didn't do
anything to change how things were happening right now. So in
essence we are telling our seniors that our Social Security
Trust Fund will be gone by 2031. You are talking Highway Trust
Fund that will be done by 2027, Part A will be done by 2026.
This is going to scare a lot of seniors, don't you think?
Ms. Young. I think the scarier thing is if we put forth
options to reduce their benefits, which this President is not
going to do.
Mr. Feenstra. I don't think anybody is asking to reduce
their benefits, unless the Democrats are asking to reduce the
benefits----
Ms. Young. Well there have been some proposals----
Mr. Feenstra [continuing]. or the Administration is asking
to reduce the benefits.
Ms. Young [continuing]. around to do that. We are not going
to do that. We think focusing on the wealthy and those making
more than $400,000 is the more appropriate thing to do.
Mr. Feenstra. OK. So seniors sitting at home, the budget
doesn't touch this. I mean this is scary time. I mean if I am
them, I am going, oh, my word. I am 68, 78, I have no more
money, I have no more Social Security Part A.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from Virginia, Mr. Scott, for
five minutes.
Mr. Scott. Thank you, Mr. Chairman, Ranking Member, and
congratulations, Director Young, for your confirmation.
I want to thank you for your patience as you have been
lectured about fiscal responsibility. I just want to point out,
as you know, that every Democratic president since Kennedy is--
every Democratic administration since Kennedy has left office
with a better deficit situation than they inherited, without
exception. And every Republican president since then has left
office with a worse deficit situation than they inherited,
without exception. President Trump was well on his way to
fulfilling that trend before the pandemic.
And so my question is will President Biden maintain that
trend of Democratic presidents improving the deficit,
notwithstanding all of the lectures you have been hearing?
Ms. Young. So, sir, I will repeat again, and I am happy to
report that we have seen the largest year over year decline in
the deficit this year. $1.3 trillion in this budget would also
further reduce the deficit by over $1 trillion in the next 10
years.
Mr. Scott. Thank you.
And you have heard a lot about the $3,500 inflation that
families are having to address. I think they have ignored the
fact that your Administration has actually done something to
help them address that $3,500 burden. For a family of four,
stimulus checks of $5,600 would help them pay the $3.500, child
tax credit, $6,000 would help them the $3,500, improve their
premiums in the Affordable Care Act, increased benefits under
the earned income tax credit, increase SNAP benefits. All have
helped them deal with inflation. And it works. There is a
measure of stress. Credit card delinquencies last year
according to the Federal Reserve were the lowest rate they have
been since they have been keeping records.
You have also mentioned that you are not only helping them
make the payments, you are doing something about it. You talked
about the supply chain, trains, roads, and bridges. I want to
thank you for your investments in the ports. Hampton Roads
didn't suffer the problem, but in the California ports that had
ships all out in the ocean. Those good could have been in the
market helping to reduce prices, increase the supply. You made
those investments.
You have also invested in productivity, in childcare.
Millions of people could go to work if we had better childcare.
Job training. They can work better. And that is work too. You
mentioned job creation, best job creation in history.
And so you actually are doing something about it.
So my question I guess is, is it better to do something
about it or just sit back and complain?
Ms. Young. Well, we are not going to do that. And so we
believe--and there are legitimate differences here, but this
President believes that it makes sense to bring down the cost
of healthcare for Americans. We are talking about inflationary
pressures. Look at the exorbitant amount that Americans pay on
healthcare. We believe that we should have legislation that
brings down energy costs for Americans. And childcare you
mentioned. So we--again, I am--legitimate differences here, but
this President has put forth ideas in which to deal with them.
Mr. Scott. Thank you. Better to do something about it than
just complain.
As you know, I chair the Committee on Education and Labor.
And one of the problems in education is student loans. And that
is exacerbated by the erosion of the value of the Pell Grant.
Are you doing anything on Pell Grants?
Ms. Young. One, Mr. Scott, thank you for the omnibus bill
recently passed that would up Pell Grants by $400. We also
invest in Pell Grants in this budget. Through your Committee we
are asking to increase the maximum Pell Grants. This President
wants to double Pell Grants to get Pell Grants closer to
$13,000. So both on the discretionary and mandatory side we are
asking for increases to meet the President's goals.
Mr. Scott. There is a chronic achievement gap of low-income
students. Have you done anything with Title 1?
Ms. Young. Title I, again, I want to thank all of you for
the omnibus, which provided record increase of $1 billion for
Title I that helps our children across school districts across
the country. We continue to ask for $19 billion more so our
children have access--all of our children have access to first
class education.
Mr. Scott. And in the labor space. Let me ask three
questions all at once. Are you doing anything for those
returning from prison, are you protecting people from
discrimination with the EEOC, and with increased interest in
joining unions while the work force at the NLRB has been
declining, are you doing anything at the NLRB?
Ms. Young. You have heard that we have a $45 million
increase in NLRB to begin to rebuild that important agency. As
far as formerly incarcerated persons, we think it is
appropriate to invest to ensure--it is part of our crime
initiative. We are asking for $30 billion in the mandatory
space to bring down crime, institute criminal justice reform,
and help those formerly incarcerated become productive citizens
in this country.
Mr. Scott. And the EEOC?
Ms. Young. And EEOC asking for increase, Mr. Chairman.
Mr. Scott. Thank you.
Thank you, Mr. Chairman.
Chairman Yarmuth. The gentleman yields back.
And now I would like to recognize the gentleman from
Virginia, Mr. Good, for five minutes.
Mr. Good. Thank you, Mr. Chairman.
Director Young, would you say that this Administration is
economically, financially, and fiscally incompetent and doesn't
understand the consequences of this indefensible budget? Or,
worse, this Administration does understand the tremendous harm
they are doing to the country, and therefore wants to destroy
the country financially and bankrupt our future?
Ms. Young. Mr. Good, thank you for that. I don't accept
either of those premises----
Mr. Good. I am going to reclaim my time and not make you
try to defend the indefensible.
A small business owner within the hour just told me on the
phone, he is a builder, a developer, a job creator with my home
district in Virginia, five, and he just said ``Nothing they're
doing makes sense unless they hate the country.'' So, again, I
am going to take most of my time to speak rather than ask you
defend the indefensible, because this proposed budget exposes
either the incompetence or the deviousness of this
Administration.
You literally couldn't do more harm fiscally to the country
unless you were doing it on purpose. To spend $73 trillion--God
forbid Democrats ever find out what comes after a trillion--so
that you spend $73 trillion over the next 10 years, a 66
percent increase--66 percent over the previous 10 year period,
for what? What is the average American going to get for this
budget? What are they going to get besides higher taxes on all
Americans, more debt, which will require additional higher
taxes rapidly increasing inflation, which decrease purchasing
power--in effect another higher tax on Americans--less control
over their own lives and how they spend their money, decisions
they make, from what kind of cares they drive to how they heat
their homes, and a bleaker financial future for their children
and their grandchildren.
This budget proposes $58 trillion in taxes, 80 percent
increase over the previous 10 years. The only thing the
Democrats do more or raise more quickly than spending is
taxes--again, on all Americans. But not to worry to any
American who has the misfortune of watching this hearing, not
to worry, because this budget hires 87,000 more IRS agents,
America, to make sure they collect those taxes they intend to
increase on all of you and to make sure that you pay what they
consider to be your fair share. I am sure my fellow colleagues
and Members in this Committee hear from their constituents the
same thing I do. The one thing we need is more IRS agents. How
about if we instead make the IRS employees actually come to
work and process those outstanding tax refunds from last year?
Incredibly, when we owe $30 trillion in national debt. And I am
embarrassed to say that on this Committee when I say that I
have Members on the other side say don't talk about how much we
owe, because when I say it is $90,000 per citizen right now--
$90,000 per citizen for 330 million Americans for $30 trillion
in national debt, I get told by leadership on this Committee,
don't say that because we are not asking anybody to pay it
back, as if it is not real. As if it is Monopoly money and it
doesn't matter, it doesn't count. It is already, what, the
third largest budget is paying the interest on the debt. Every
1 percent increase in the interest rate costs us roughly $300
billion a year just to pay the debt.
So I am sure my--so this Administration--so here we have
got $30,000 in debt and we actually propose or admit--we
admit--we have the audacity to admit that we are going to to
intend to increase the national debt by another $16 trillion
over 10 years--$16 trillion over 10 years. That is $50,000 per
American.
I submit that no American would vote for that willingly and
say, yes, raise my share of the national debt by $50,000
because I am going to get what from this budget. What American
would vote for that?
This budget, comparing apples to apples, it is a 30 percent
increase, $1.4 trillion, over the fiscal--for fiscal 1923 over
the last year, fiscal 1920, before the government crushed the
economy in the name of the China virus. So, in other words, it
was $4.4 trillion budget in fiscal 1919, now in fiscal 1923--or
fiscal 1920 is $4.4 trillion, now in fiscal 1923 it is $5.8
trillion, a 30 percent increase. Incredibly, the incompetent
and irresponsible response of this Administration beyond that
is trillion dollar increases in the deficit as far as the eye
can see.
Meanwhile, this Administration, the President said it
during the State of the Union speech, and you have said it
already here this morning, we are trying to give ourselves a
medal and pat ourselves on the back because we are going to be
the first Administration in the history of the country to cut
the deficit by a $1 trillion in a year. So just because we are
not spending the ridiculous amount that was unwarranted in the
name of the China virus, and we don't have quite that much
spending in this bloated, exorbitant, massive budget proposal.
Director Young how can you keep the title of the Director
of Management and Budget? Don't you think it should be called
the Director of Mismanagement and Excessive Spending? I mean is
that management? Is that budgeting, what we are doing?
Ms. Young. Mr. Good, if you would like a policy that cuts
Medicare and Social Security, which you are promoting, either
you raise revenues on the wealthy, or you cut Medicare and
Social Security
Mr. Good. What I propose is we don't bankrupt the future of
America and we don't do it on the backs of our children and our
grandchildren.
Chairman Yarmuth. The gentleman's time has expired.
I now recognize the gentleman from St. Peter's for five
minutes, Mr. Sires.
Mr. Sires. Thank you, Mr. Chairman.
Director Young, first of all, thank you for coming before
this Committee to answer questions about the President's budget
proposal for 2023. And let me first start by saying that I love
this country. I think this is the greatest country in the
world. I think that there is no other country like this country
and I am eternally grateful for the opportunity to have come to
this country for me and my family. So I do not hate this
country, I do not hate this budget. As a matter of fact, I am
pleased with the request for the robust funding levels in
programs that are important to me.
First of all, let us talk about affordable housing. I come
from a district that affordable housing is very important.
Director, do we have an increase in there?
Ms. Young. Not only do we deal with the demand issue
through increase in vouchers, we have a $50 billion mandatory
proposal that ensures that we deal with the lack of supply many
communities have.
Mr. Sires. Thank you.
Do we have an increase for security of communities with
police?
Ms. Young. $3.2 billion, including a $300 million increase
for cops, as well as a $30 billion multi-year proposal to deal
with community violence.
Mr. Sires. So that goes along with what the President said,
there is no cut in policing, right?
Ms. Young. There is an increase for policing.
Mr. Sires. There is an increase. Thank you very much.
Do we have an increase of Pell Grants, something that is
very important to my district, especially people who I
represent?
Ms. Young. Absolutely, sir. We believe that is a path to
making college affordable for those amongst us that can't
afford college and leave college in debt. And we are on the
path to doubling the maximum Pell Grant.
Mr. Sires. Thank you, Director.
And under this President do we have an increase in
infrastructure spending? Because my whole state in New Jersey
is one big transportation hub and there is a very aged
infrastructure. And I am very happy to see that the
infrastructure bill was passed and the increase that we are
seeing. So do we have an investment in infrastructure in this
country?
Ms. Young. Yes, we continue our investments through
increases in the Department of Transportation, 6 percent over
the 1921 levels, the Department of Housing and Urban
Development, and some of those investments in the housing
supplies we have talked about.
Mr. Sires. Thank you, Director.
And I know that every time we increase--the Democrats
increase defense funding, defense funding is never enough. But
do we have an increase in defense funding--spending in this
bill?
Ms. Young. The Department of Defense would see a 4 percent
increase over the omnibus level.
Mr. Sires. But obviously when it is the Democrats that
increase it, it is never enough.
And I have to ask you one more question which is important
to me. People always criticize the undocumented, the people
that are working in this country that do not have documents. Do
they contribute to Social Security?
Ms. Young. Many of them do and many of them pay local taxes
and contribute to their communities.
Mr. Sires. Now, and many of them do not collect their
Social Security when they retire, right?
Ms. Young. It would be difficult. I don't know how they
would do that without proper paperwork?
Mr. Sires. So that is money that goes into our budget.
Would you know how many billions of dollars that is? Or----
Ms. Young. No, sir. But I would be happy to see what we
have and to provide it for the record.
Mr. Sires. Yes, I would appreciate it if you would do that,
because, you know, I know it is as much as $9 and $10 billion
that they never collect because they either go back to their
country or they are just not allowed to collect it.
Ms. Young. That is correct, Congressman, that is my
understanding of how that would work. If they paid into the
system, there would be no way to get funding out of the system.
Well, I just want to say thank you for this budget, thank
you for you being here so we can ask you all these questions. I
am sure that in your 26 years of work in this field you have
developed enough experience to be called Director of the Budget
Office.
Thank you.
Ms. Young. Thank you.
Chairman Yarmuth. The gentleman yields back.
Per our agreement with Director Young, the Committee will
recess briefly.
Without objection, the Committee will stand in recess
subject to the call of the chair. I request that Members return
at 12:30 p.m. so the hearing may proceed.
[Recess]
Chairman Yarmuth. The Committee will come to order. We will
now continue with the hearing, the question and answer period.
And I now yield five minutes to the gentlewoman from Iowa, Mrs.
Hinson.
Mrs. Hinson. Well, thank you, Mr. Chairman, for holding
this hearing. And thank you, Director Young, for coming before
us today. I look forward to hearing your answers to our
questions.
I would like to start off by thanking our Ranking Member
Smith for pointing out that the Tax Cuts and Jobs Act will
expire as a part of this budget, raising taxes on working
families in Iowa. It raises taxes on our small business, on
firefighters, on teachers, on shift workers building tractors,
and on the healthcare heroes who have dedicated their lives to
make others healthy, especially during a pandemic. We are going
to reward them with a tax increase.
I just finished my fifth 20 county tour across the
district, held a telephone town hall last night. There is a
clear consistent theme from my constituents. What I am hearing
on the ground, what I heard on that last night, and that is the
concern about rising prices. So whether it is farm repairs,
farm inputs, the price at the pump for gas, the increases for
everyday goods like groceries, bacon, milk, working families
are struggling right now to continue to put food on the table.
And that is largely because of the Administration's policies.
And we know increased federal spending is driving up these
costs.
And yet the President's budget request proposes $73
trillion in spending over the next 10 years with a projected
$14 trillion impact on the deficit. That is a tab that is up to
the next generation to have to pay. We are leaving that for
them. Inflation today is at 7.9 percent, the highest it has
been in four decades, and yet the President's budget plan
assumes inflation will only be 2.3 percent through the next
foreseeable future here, all the way to 2032. This is just out
of touch. And we have heard why that it so, but I asked you a
little bit about this same issue last year. Here we are a year
later with even worse inflation than what we had a year ago.
So my question is why is the Administration continuing to
make these claims that are out of touch about inflation, low
inflation here, high inflation with what we are paying at the
grocery store and what consumers are actually facing. Because
that is affecting Iowans every single day.
Ms. Young. We hear you, Mrs. Hinson, and we share your
concerns. We might disagree on a proposal to get inflation
under control, but the President is concerned about these cost
pressures on Americans. You mentioned farmers. We have worked
at the Administration, for example, to ensure that those who
work farms can, for example, fix their own equipment. We have
found that there is that competition always and people have----
Mrs. Hinson. Right to repairs, completely different issue
from what I am asking about here. I am asking why specifically
or not being accurate in your accounting of inflation here.
Because I mean if you are making a budget projected based on
numbers that are wrong, that is irresponsible and disrespectful
to taxpayers.
Ms. Young. Well, actually the numbers were baked in
November. That is how budgets work. We have to close the books
at some point and send you a budget. But I hope you know that
inflation both--has an offsetting effect. Both revenues usually
go up with higher inflation as well as spending. Therefore the
long-term projections are not affected by a different inflation
rate. But you are absolutely right, it is higher than our
estimates were in November when we locked what we
affectionately call a data base.
Mrs. Hinson. Well, I hope going forward that we can be
cognizant of the fact that those numbers are inaccurate, so as
we as a Committee are continuing to work with you and your
office, being cognizant these numbers are not right is going to
be crucial as we are making the right decisions.
I am glad you mentioned farmers in this Administration
because Americans are struggling with the cost of fuel. This
includes billions of dollars in funding for EVs and charging
infrastructure. These taxpayer dollars do nothing to actually
drive down the cost of fuel for Iowans, but the subsidies will
make inflation even worse.
And on the campaign trail the President came to Iowa and
looked Iowans in the eye and said you could count on him for a
new era of biofuels, quoting the President here, ``Lip service
won't make up for nearly four years of retroactive damage that
has decimated our trade economy and forced ethanol plants to
shutter.'' So we have heard that it is already not in this
budget, but I am wondering why. Why is it not in this budget?
Why does the Administration break their promise here to Iowans
and to Americans to not support the usage of renewable
biofuels, domestic fuels, domestic energy production, like
ethanol?
Ms. Young. Thank you for bringing this up. And I am sorry I
didn't get a chance to fully address this with Mr. Feenstra.
This budget, as you all know, starts October 1. Many of the
inflationary increases we are seeing in gas have to do with the
Russia-Ukraine situation. We have to deal with that fluid
situation before this budget even takes effect. So we are happy
with the $13 billion this Congress provided to help with
assistance to Ukraine, but the gas situation in addition to
selling 60 million barrels from the strategic petroleum
reserve. We will also be looking to other things in which to
bring down costs for Americans. But that is going to be before
this budget takes effect.
Mrs. Hinson. Well, we are looking at obviously projections
here for many years out, so I think Iowans want to know why it
is not included. If you are having conversations about all
these other things in the future, why is biofuels noticeably
missing.
My final question, we have obviously 2 million encounters
at the southern border, we saw some increased funding for CBP
in the omnibus and a supplemental there, but we are back at
square one here with these cuts--to propose cuts to the CBP.
So, again, why is that happening?
Ms. Young. You see actually a 5 percent increase to DHS,
including for agents. Many in our party will disagree, but we
believe there is a necessity for additional personnel to ensure
that we have an orderly immigration system. In addition to
that, we have an increase for immigration judges to make sure
we move people through the legal system. So we absolutely have
put forth what we believe is a balanced approach to deal with
the border.
Mrs. Hinson. Well----
Chairman Yarmuth. The gentlewoman's time has expired.
Mrs. Hinson. Thank you. I yield back.
Chairman Yarmuth. I now recognize the gentleman from
Massachusetts, Mr. Moulton, for five minutes.
Mr. Moulton. Thank you, Mr. Chairman. And, Director Young,
thank you so much for being here with us.
A lot of my questions are about modernization. How we face
the future and meet the challenges and opportunities that it
presents. Can you talk to me for a second about how we are
modernizing our military? Our national security? Here we are
watching Russian tanks get destroyed by drones on TV. One of
the biggest threats that Americans face from this ongoing war
in Ukraine is the threat of cyber attacks here at home. And our
biggest adversary in the world is China. China has not only
invested in future capabilities, like advanced missile systems,
space systems, and artificial intelligence, but they have made
important cuts to make those investments possible.
We used to quite frankly be thrilled that China had a
million man army because it wasn't that good. Well, they have
cut that army to invest in future capabilities. How is the
Administration meeting that challenge?
Ms. Young. Thank you for that.
And we are increasing the Department of Defense budget by 4
percent. It is in line with the National Defense Strategy. Last
year the Administration was new, still working on how we saw
the military of the future. But we are investing more in AI, we
are invested in hypersonics.
In addition to the legacy equipment, F35s, submarines that
many, many of you are interested in, so we have to do both. We
have to invest in our traditional capabilities as well as look
to the future, including our cyber threats.
Mr. Moulton. It has often been said that Congress gets in
the way of the cuts we need to make to invest in the future.
Would you agree with that?
Ms. Young. Out of deference to my former place of
employment, I am just going to say this is the beginning of a
process and I look forward to working with you throughout it.
Mr. Moulton. Well, if you won't agree to my statement, I
will. I think we have a lot of work to do here to make sure
that we are not just protecting parochial interests at the
expense of our national security.
China is also trying to out compete us in foreign aid by
attacking really one of our strengths. And that is the allies,
the partnerships that we have around the globe. Look at much
they are investing in places like Africa. This budget puts $682
million toward Ukraine's support. Is that correct?
Ms. Young. That is correct. But remember, that is the
longer-term objective. What we are really using for enhanced
humanitarian aid now is the $13 billion Congress thankfully
provided to us earlier this month.
Mr. Moulton. It is amazing to compare $682 million that we
are investing or proposed to invest in Ukraine with the amount
that Trump proposed investing in Ukraine when he tried to
blackmail Zelensky, which was exactly zero.
Director Young, it is also important that we take this
opportunity, having passed this historic infrastructure bill,
to invest in the future of transportation. Is it the
Administration's position that we should invest in modes and
investments in--that have a high ROI, a high return on
investment for the American taxpayer?
Ms. Young. That is what we believe. We also believe
projects should have high benefit-cost ratios. And we certainly
have put out guidance, at the consternation of some, that does
try to focus our transportation in innovative modernizing ways.
Mr. Moulton. I mean I would point out that high speed rail
has some of the highest ROIs in transportation, which frankly
is why the rest of the world is investing in it. China has
built in just the last 12 years the largest high speed rail
system in the world.
Are you familiar with the size of the United Kingdom's
budget compared to our own?
Ms. Young. I am not actually.
Mr. Moulton. Well, the United Kingdom, a country that is 1/
40th our size, is investing $120 billion on a single high speed
rail line to the north of the country. How does that compare
with our investments in high speed rail?
Ms. Young. I mean clearly, Mr. Moulton, we have to work
with Congress, as you pointed out, that represents many
different parts of the country.
Mr. Moulton. Well, I would just say that if America is 40
times bigger than the United States, we shouldn't be moving
around much more slowly than the rest of the world. The Brits
can go three times as fast as we can on our interstate system
on their new high speed rail line. Investing in more highways
creates more traffic jams. Investing in a lot of electric
vehicles makes those traffic jams silent, but we still have a
lot of traffic jams.
So we have passed this historic infrastructure bill. I
think the Administration has an opportunity to truly make these
investments for the future. We can build more 1950's era trains
and railways, or we can build for the future. And I hope you
take that opportunity.
Ms. Young. Thank you.
Chairman Yarmuth. The gentleman yields back.
I now recognize the gentleman from Florida, Mr. Donalds,
for five minutes.
Mr. Donalds. Thank you, Mr. Chair. Director, thanks for
being here. I really do appreciate it.
Obviously, you know, a budget in five minutes, we are not
going to be able to deconstruct this entire thing. So let us
try to focus in.
No. 1, the corporate tax increase. The corporate tax rate
under your budget--under the President's budget, excuse me--
goes up to 28 percent. Is it the Administration's belief that
an increase in the corporate tax rate will have no impact on an
already inflationary environment with higher prices for
consumers?
Ms. Young. We don't believe it will change the operations
of how corporations make decision. No, we don't.
Mr. Donalds. Well, no, no, the question, Director Young,
does the Administration believe that higher corporate income
taxes will have an--will force an increase in prices in an
already inflationary environment that a lot of people actually
really believe now was unleashed by the American Rescue Plan
from last February.
Ms. Young. Mr. Donalds, I do--we do not believe that is the
case.
Mr. Donalds. OK. So the Administration doesn't think that
higher taxes are going to lead to higher prices on top of an
already inflationary environment?
Ms. Young. For corporations, are you assuming they pass on
their tax rates onto----
Mr. Donalds. Right. Corporations always pass on the costs
increases. They are doing it with inflationary costs with the
ability to get their products right now. The portions that they
need to create their products to sell to consumers, when the
cost of freight is up, the cost of wheat is up, the cost of oil
is up. That is all being passed through. Yes or no?
Ms. Young. Mr. Donalds, I don't believe that--we don't
believe, this Administration, that asking corporations to pay
28 percent--they used to pay 35 percent before the last tax
cuts--will increase inflationary pressures.
Mr. Donalds. Director Young, does the Administration
acknowledge the fact that when the corporate tax rate was cut
from 35 to 21 that the United States raised more revenue in
corporate income taxes than in any other point in American
history?
Ms. Young. What we saw was a continued use of legal
loopholes that prevented--I mentioned this earlier--50
corporations of the Fortune 500 from paying any taxes.
Mr. Donalds. I am not talking about the uses of what is
already in the tax code. I actually would argue that if we are
going to have a fair code, we should adopt a flat tax or a fair
tax. I mean I don't think that is the Administration's
position. That is my position if we are going to have a fair
code. But to talk about what they use in the current legal
structure of the tax code, you can't make that argument and say
that, oh, well they are using these things. I am talking about
did they raise--did the government raise more revenue from
corporate income taxes? Yes or no?
Ms. Young. And corporations continue to make more. That is
the point, Mr. Donalds.
Mr. Donalds. All right. Let us move on, because I know we
are not going to get anywhere there.
In your proposal, I am reading like the expanded
explanation here.
Ms. Young. You are reading the green book?
Mr. Donalds. Yes, I am reading the green book right now.
Right now we have a serious situation in the United States
associated with gas prices and rising oil prices, which is
going to impact every American, whether they are rich or poor,
whether they are black or white. The one thing that will be
consistent is that it will affect everybody. There will be no
inequality associated with rising energy prices. In your budget
proposal the Administration is actually saying that they are
going to unwind every tax benefit associated with fossil fuels
in the United States. Does the Administration believe that
completely eviscerating all oil and natural gas tax treatments
that we have had in our country frankly for 30-40 years, do
they believe that that will actually lead to lower prices on
oil and natural gas?
Ms. Young. We don't believe the tax structure offered will
lead to increased gas prices, but you are right, Mr. Donalds,
we have to do something to bring down the cost. But I hope you
would agree that costs have gone up since the Russian
aggression in Ukraine.
Mr. Donalds. Director Young, we have to acknowledge that
oil prices have been up far before Vladimir Putin invaded
Ukraine on February 24.
Ms. Young. But $1 since.
Mr. Donalds. The price of a barrel of oil was up
significantly, the price of gas was roughly $3.65 cents on
average in the United States. That was already significantly
higher than what it has been over the last four years in the
United States. Do you acknowledge that?
Ms. Young. I acknowledge that there were increased energy
prices that have further increased since Russian aggression.
Mr. Donalds. Director Young, OK, so we understand that
prices are higher now since February 24. we are going to
acknowledge for the record that prices have been higher under
the President's Administration currently. The President has
talked about how he wants to get away from fossil fuels. Is the
Administration's position that essentially eliminating all tax
treatment, which makes oil and gas production in the United
State far easier, that that is actually going to be to the
betterment of the United States from an energy perspective
going forward I the country?
Ms. Young. Mr. Donalds, we think we need a comprehensive
approach. I will remind everyone here, our country is one of
the three before Russia took this route that produced over 10
million barrels a month. This country----
Mr. Donalds. Let me ask you a question.
Ms. Young [continuing]. does not have an oil production
problem.
Mr. Donalds. A quick followup on that. That is under
current tax treatment. I would argue that if the tax treatment
and oil and gas companies goes up, we are going to have a
production problem. But to that point, one of the main talking
points from the Administration is that you want an economy that
works for everyone, you want a tax system that is fair. Is it
fair for the green energy portion of energy in the United
States to have significantly more favorable tax treatment than
oil and natural gas?
Ms. Young. As we know, these are developing systems. We
need to ensure that those systems, as many systems in this
country have received----
Mr. Donalds. So it is OK for oil and natural gas to be
treated unfairly.
Chairman Yarmuth. The gentleman's time has expired.
Mr. Donalds. But we were getting to the answer, Chairman.
Come on, now, give me a couple of minutes. Come on, Chairman,
we were good.
Chairman Yarmuth. Well, I will let her answer, but you
can't continue to debate.
Mr. Donalds. All right, all right, all right. Thank you,
Mr. Chairman.
Director Young, please.
Ms. Young. And, Mr. Yarmuth, thank you.
And, by the way, many of the subsidies for people who want
to buy electric vehicles, this is to help consumer. Many
consumers want solar panels, many consumers want electric
vehicles. The government--we believe the best way to help them
achieve that and also a cleaner world is to provide subsidies
through our tax system.
Chairman Yarmuth. The gentleman's time----
Mr. Donalds. The Chairman cut me off. I am good. Thanks,
Mr. Chairman. Thank you, Director Young.
Chairman Yarmuth [continuing]. has expired. The gentleman's
time
Ms. Young. Thank you, Mr. Donalds.
Chairman Yarmuth. As always, you have the opportunity to
submit questions in writing to the Director and she can then
subsequently answer for the record.
I now yield five minutes to the gentlewoman from
Washington, Ms. Jayapal.
Ms. Jayapal. Thank you, Mr. Chairman. Director Young, it is
great to see you and to call you Director. Congratulations
again on your appointment.
And I wanted to say, first of all, that there are many
things in this budget that we appreciate, including the taxes
on the wealthiest. As you know, I am a lead sponsor of the
Ultra-Millionaire Tax Act. We also appreciate the restrictions
on stock buy backs, as well as some of the immigration
provisions that you mentioned earlier. The investment in
judges, the legal counsel, and community-based alternatives to
detention. We appreciate all of those things. So thank you for
those.
Switching gears, America has a monopoly crisis that is
strangling small businesses and hurting people's pocketbooks
while corporations have made immense profits through pandemic
profiteering and price gouging. And I was very pleased to see
the historic increases to the anti-trust division and to FTC to
robustly enforce our anti-trust laws. But that is just one
piece. As you know, we have very bipartisan efforts here in
Congress to give federal agencies more tools to ensure
competition.
Director Young, do you agree that those efforts should be
prioritized?
Ms. Young. We do. And that is why we talked earlier--
increasing competition is one way. We have to deal with
inflation in this country. And why you see a $273 million
request for the anti-trust division and Department of Justice,
$88 million increase, 48 percent over 2021, and a $498 million
request or a 40 percent increase over 2021 for the FTC.
Ms. Jayapal. Thank you. And I also appreciate the
Department of Justice's recent letter stating the Department's
views that the ``Rise of dominant platforms presents a threat
to open markets and competition. And we are looking forward to
moving our package along.''
Now, you won't be surprised to know that I need to express
my deep concern with the 4 percent increase in defense
spending. This is on top of the unprecedented increase over the
President's fiscal 1922 request that just became law.
Director Young, can you tell me how much the Pentagon has
given to just five contractors?
Ms. Young. Are we just picking contractors?
Ms. Jayapal. Five large----
Ms. Young. I am sure I can----
Ms. Jayapal [continuing]. contractors.
Ms. Young [continuing]. yes--get back to you,
Congresswoman, on the top contractors I assume you are
interested in.
Ms. Jayapal. Let me tell you that up to one-third of
Pentagon contracts after 9/11 went to just five contractors.
And from Fiscal Year 2001 to 2020 these companies received $2.1
trillion in 2021 dollars. And in fiscal 2020 alone the Pentagon
have $75 billion in contracts to Lockheed Martin, which totals
more than one and a half times the entire budgets of the state
Department and USAID.
Director Young, is the Pentagon the only federal agency
that has never passed an audit?
Ms. Young. I believe that is correct.
Ms. Jayapal. So--and it has actually failed its last four
audits. And yet we are continuing to pile money on top. And I
would just say that to Representative Moulton's questions, I
would argue that there are more efficient ways to spend the
money we have. It doesn't mean that we can't have solid and
secure national security if we actually cut out waste, fraud,
and abuse and focus on the technologies that are going to
provide us with the biggest bang for the buck. And yet it seems
that our only strategy on military spending is bigger is
better.
Do you think that bigger is better for ever and ever,
Director Young?
Ms. Young. I think a defense budget has to be strategy
based. I have--Congresswoman, you have been a long time
advocate here on getting rid of waste, fraud, and abuse in the
Department of Defense. That is accurate. But we have also heard
from the other side of the aisle who believe our number isn't
large enough. That is why we believe the right thing to do here
is use the long-term defense strategy to build our budget.
Ms. Jayapal. Director Young, what--you know, I assume that
the other side also would agree that we don't want waste,
fraud, and abuse in our Pentagon budget. And I remember last
year, or last term, under a Republican president, we actually
had a Republican budget director come and testify that the
Pentagon should pass an audit. What work is going on to make
sure that the Pentagon passes a budget before we continue to
increase military spending indiscriminately just to thump the
patriotic banner and say that somehow because we are increasing
military spending, even though we can't pay for our veterans
here at home, even though we can't invest in education in the
ways that we want, even though we are having debates around
whether or not we have enough money for childcare, something
the President has advocated for, by the way, more childcare.
But as we have those debates, how are we going to make sure
that the taxpayer dollars that we are spending are actually
going to an audited agency that has cut out waste, fraud, and
abuse?
Ms. Young. There is no reasonable person who would disagree
that the Pentagon should be able to pass a basic audit. But I
do want to reiterate, we think the need here is to put forward
a budget that is tied to a national strategy. Whether or not
you agree with the strategy is another thing, but as you heard,
there are a lot of opinions on what the defense number should
be.
Ms. Jayapal. Director Young, you know how I have been
advocating on this for a long time and I just don't understand.
There is nothing that is contradictory to a national defense
strategy when we talk about making sure the Pentagon passes an
audit and cuts out waste, fraud, and abuse before we heap more
dollars on it.
So thank you again for your tremendous service to our
country in the role that you currently occupy and in everything
you have done before this. And I hope we can work together to
actually make taxpayer dollars mean something instead of just
profits to five defense contractors.
The gentlewoman's time has expired.
Ms. Jayapal. Thank you, Mr. Chairman.
Chairman Yarmuth. Thank you.
I now recognize the gentleman from Ohio, Mr. Carey, for
five minutes.
Mr. Carey. Thank you, Mr. Chairman, Ranking Member Smith.
Director, appreciated the conversation we had yesterday by
phone. Thank you very much.
In going through all of the information that I have
received, I just want to make a few points, then I will ask my
question.
No. 1, it is what is said and what is not said. In going
through the document, I realized that there is zero mention--I
think Congressman Cline brought this up--zero mention of a debt
crisis or an inflation crisis. Yet it mentions climate crisis
over 33 times. The other--some of the other mentions that I
have found interesting, it mentions tax fee or penalty 127
times. It does not mention the Keystone Pipeline, nor does it
mention--zero--any plans for new domestic oil and natural gas
production, while it mentions 27 times green, greenhouse, and
187 mentions of climate.
Now, you have had a lot of questions today with regards to
the price of gas, but again, I am going to back to just some of
the other things.
In this document there are zero mentions of border security
in the budget--zero mentions. There are four mentions of
police. Zero mentions of parents in the budget as well. So,
again, just some things that I have observed as the newest
person on this Committee that--the things that have been
mentioned and the things that haven't.
But question is going to be this, really simple, how does
this budget spend for other countries to combat climate change?
Ms. Young. We are making a historic investment, about $11
billion, in our international climate pledge to ensure that
low-income countries who do emit can join all of us in the
developing world in bringing down their pollution so our kids,
future generations, have an earth to call home.
Mr. Carey. A followup to that, Mr. Chairman.
What is the total level of funding provided, including tax
incentives, for climate related policies in this budget?
Ms. Young. Congressman, we devote about $45 billion in
climate activities. I will get our exhibit to you. I don't want
to misquote where we are in the budget, but I am happy to
provide that on the record so you have specific numbers.
Mr. Carey. One last thing. I am going to--wrote the
question down to make sure I have so I say it correctly. The
results of the provision--here it is--would any of the $30
billion in mandatory spending to prevent--combat and prevent
crime be used to enforce gun control on any of the U.S.
citizens?
Ms. Young. The idea--not on--the $30 billion pot is really
supposed to be a comprehensive look and provide state and
locals with the tools, and including psychiatrists, mental
health. But we do have increases in ATF to make sure that ghost
guns and other guns that find themselves into the hands of
criminals, that we do something about that.
Mr. Carey. Another question. How will spending $1.4 million
on a new Office of Environmental Justice at DoJ help our law
enforcement agencies do their job and tackle the crime crisis
in America?
Ms. Young. I think we have to tackle the crime crisis in
America while we tackle an environmental justice system. I read
in the New York Times, there is one county, I won't say what
state, where people's sewage actually goes into their backyard.
They have never had a sewage system at their homes. People of
color, low-income. We think something is wrong with that.
Mr. Carey. And that should be part of the law enforcement
agencies?
Ms. Young. Where there are illegal activities, DoJ
absolutely needs the tools to make sure all Americans are
treated equally under the law, even when there are
environmental issues.
Mr. Carey. OK. All right.
Thank you, Director.
Ms. Young. Thank you.
Mr. Carey. You have answered my questions and I appreciate
your time.
Ms. Young. Appreciate it.
Mr. Carey. I yield back.
Chairman Yarmuth. The gentleman yields back.
I now yield five minutes to the gentleman from Michigan,
Mr. Kildee.
Mr. Kildee. Thank you, Mr. Chairman. And thank you,
Director Young, for being here today to discuss this budget
proposal. And of course congratulations on your confirmation.
You and I have talked about a couple of these issues I want
to raise. I represent mid-Michigan. I do appreciate the focus
of this proposal on infrastructure, on strengthening the middle
class, on supporting law enforcement in particular, which is
important in the communities that I represent, and for doing
what we can to lower costs for families.
I was, as I have expressed to you, disappointed that the
budget request calls for funding the Flint Registry at a lower
level than was passed in the most recent government funding
legislation. And for those who are not familiar, the Flint
Registry is run through the Centers for Disease Control and
Prevention. It was created by Congress to respond to the water
crisis in my hometown and to connect families to healthcare, to
nutrition, to lead removal services, to do the things that they
need to do to minimize the impact of lead exposure on their
health. It is a powerful tool. It is improving the lives of
people who suffer through this terrible moment. And it also
helps other communities. Benton Harbor, Michigan, most
recently, Newark, New Jersey.
The Consolidated Appropriations Act of 2022, a bipartisan
government funding bill, included $5 million in funding for the
Registry. So the Michigan delegation, Democrats and
Republicans, support this. And I just ask if the Administration
will support fully funding the Flint Lead Registry so that we
don't have to reduce that commitment that we are making to the
families of Flint.
Ms. Young. Absolutely, Mr. Kildee. And you have heard many
times, we talk about the earliness in which we have to do
things to get a budget to you.
Mr. Kildee. Right.
Ms. Young. I will say the Flint Registry was a result of
that. We did not have time to incorporate many of the omnibus
final decisions. We absolutely support. We talk about
environmental justice, how can we support many environmental
justice things without fully supporting Flint? And so you have
my and the Administration's full support.
Mr. Kildee. It is a--thank you for that. And it is a good
example of when we invest in environmental justice, as you have
in the proposed budget, perhaps we avoid the very high cost,
both in human and financial costs, that the people of Flint
have experienced.
So thank you for that effort.
One other issue that I do want to raise. And it has to do--
and, again, you and I have spoken about this--the Delphi-
salaried retirees. When GM filed for bankruptcy during the
Great Recession, the PBGC unfairly, in the minds of myself and
many others, cut as much as 70 percent for 20,000 Delphi-
salaried retirees, more than 5,000 in Michigan. The PBGC
assumed responsibility for the terminated benefits, but
couldn't pay more than the statutory benefit would allow. These
salaried workers suffered significant losses to their benefits.
They were, I believe, unfairly targeted in the discharge of
that bankruptcy.
I have introduced legislation, the Susan Muffley Act, along
with Senator Brown of Ohio. It is bipartisan legislation. It
would restore the benefits to these retirees. A bankruptcy, by
the way, which was largely engineered by the U.S. Government.
So we do bear responsibility. These pensioners have been
fighting for the restoration of their benefits for a long time.
Can we work with you to ensure that Congress and the
Administration together deliver the restoration of these hard
earned benefits to the Delphi-salaried retirees?
Ms. Young. Mr. Kildee, thank you for your long work on
this. I have told you privately, I will tell you publicly, we
are happy to take a look at the legislation. We want to work
the Pension Benefit Guaranty Corporation, but we know those
pensioners worked their entire careers and deserve their
pensions. So we absolutely will work with you and provide
whatever assistance we can.
Mr. Kildee. I thank you for that.
And, as we have discussed, I mean the Delphi-salaried
retirees have exhausted other remedies and so that is why we
are at this place where I think action by Congress is
important. And we just want to be able to see the
Administration as a partner in helping us get this resolution
through to the President's desk.
So I thank you for that and I thank you for your testimony
and all the great work you are doing. Again, congratulations.
Chairman Yarmuth. The gentleman's time has expired.
I now yield five minutes to the gentleman from Wisconsin,
Mr. Grothman.
Mr. Grothman. Wow. Great. Thank you for coming over here.
Not all of our witnesses nowadays come over and see us in
person. So I would like to thank you for that.
Ms. Young. Second year in a row, sir.
Mr. Grothman. Very good.
A comment before, I think there was a comment that the 17
percent in AmeriCorps might not be quite enough. I will point
out, given the current situation, nobody should ever get a 17
percent, nobody should even get a 5 percent increase. So
whatever. There is my comment.
I recently was looking at some graphs and in them it showed
that the--there are different measures of monetary supply, but
M2 might not be the best measurement--but recently it has been
up 40 percent year over year. And I am old enough to remember
the inflation of the 1970's and at the time M2 was going up
about 7 percent a year, and that was considered out of line. So
I am just alarmed out of my mind that we have so much money
apparently being printed by the Federal Reserve at this time.
And, of course, one can try to blame it on something else, but
I think clearly the inflation, which I think is well over 7
percent--because when I talk to my farmers or talk to my
manufacturers, their costs of production are frequently up 80-
90 percent. So I can't help but think when their final product
gets to market, it is going to be a lot more than 7 percent.
But could you comment on the massive increase in the money
supply? You think that might have something to do with
inflation? And don't you believe with the relatively high
spending in this budget that the money supply is going to go up
even more, which mean inflation is going to go up more?
Ms. Young. So, sir, you probably know this and it will be
frustrating, but we leave monetary policy for the Fed for
exactly the reason we don't want monetary policy to be subsumed
in our great political process and it is outside of that
process. So I will leave monetary policy for the Reserve and I
am sure they--and they have the tools in which to manage most
of our inflation crisis.
But I have gone over what the President believes we can do
from an Administration to deal with this. I would also point
out many have talked about the ARP legislation. I sat with
Moody's economists yesterday who truly believe that we would
have seen a double-dip recession had it not been for ARP. But
we may have different solutions, but we agree, we have to do
something to bring down pressures on pocketbook issues for
Americans.
Mr. Grothman. I guess I would think, well, ultimately it is
up to the Fed to make those decisions. When we pass budgets
with sizable deficits, I think the Fed may feel they are in a
corner and can't do anything else but print more money.
But in any event, now, am I correct in looking at this
budget that the non-defense discretionary spending--and I
assume we are going to pass bills separate from the budget as
well, or separate from the regular appropriations bills--is up
about 12 percent?
Ms. Young. From the omnibus it is up about 9.5 percent with
defense up about 4 percent.
Mr. Grothman. OK. You are saying--do you think given the
huge amount of debt and the huge increase in the money supply
that it is prudent to spend 10 percent--9.6 percent, on non-
defense discretionary spending? Doesn't that alarm you? Or when
you began to put this document together, what was your target
number?
Ms. Young. So remember, Mr. Grothman, the President is
offering to pay for his proposals. So we are putting forth
spending with tax reform. I get that many may disagree with our
tax proposals, but he does believe we should pay for our
proposals. And this budget we show over a trillion dollar
decrease in the deficit. It is over 10 years.
Mr. Grothman. OK. And what is it based on? A project
inflation? A projected--because inflation determines kind of
the--what type of inflation are you--or interest rates are you
guessing when you put together the budget 10 years out?
Ms. Young. So the inflation rates, or the interest----
Mr. Grothman. I will say interest rates, yes.
Ms. Young. The interest rates we are using now are lower
than in the budget, because we did it in November--are about
2.1 percent for this year. Right now I think we are really
around 2.3. So we are slightly lower than interest rates. What
we do believe over the 10-year period, we are still paying a
lower interest rate than historic norms.
Mr. Grothman. OK. I am going to ask you a little more of a
bipartisan question. You are raising the corporate rate here to
28 percent. And it is something I kind of disagree with the
Republicans on. Historically, because we are in a worldwide
competitive situation, we treated manufacturing a little bit
different, because manufacturers have to compete with other
businesses abroad and I think in a variety of ways we are
seeing the problems that come when we are not competitive
manufacturing with other countries.
When--probably more likely have to be done with some bill
through reconciliation, but would you be open to the idea that
we go back to the old system in which manufacturing--and I
think Barack Obama was in favor of this--I think Hillary was
too--I might be wrong on that--that the tax rate for
manufacturing would--since they have got to compete abroad--
would be lower than the tax rate for other sort of businesses?
Or there is some sort of credit for manufacturing?
Chairman Yarmuth. The gentleman's time has expired.
The witness may respond.
Ms. Young. Thank you.
Mr. Grothman, I really ask you to pay close attention to
the global minimum tax proposal. You might have seen Secretary
Yellen met with other countries to ensure exactly that, that
people don't move a lot of these manufacturing bases to other
countries who pay their workers less, have low or no tax rate.
We believe that global minimum will help bring jobs back to the
U.S.
Chairman Yarmuth. The gentleman's time has expired.
I now yield five minutes to the gentlewoman from Texas, Ms.
Jackson Lee.
Ms. Jackson Lee. Mr. Chairman, thank you so very much for
the opportunity. Very, very important.
Ms. Young, let me acknowledge that the nation is better off
for the leadership of President Joe Biden and in fact your
leadership and support in his efforts.
Let me immediately start by headlines that I have heard
from some of the papers that we read here on the Hill, and you
are a Hill pro, that says that this is a--building the deficit
and spending budget. And I take issue with that. First of all,
would you comment on the alternative minimum tax, or the
minimum tax as to what it actually does? As you well know, I
have two or three questions and your brevity would help with
that. But I just want to get to frame this particular aspect of
the budget.
Thank you.
Ms. Young. I believe you are speaking of the billionaire
minimum tax. Billionaires pay about 8 percent tax rate and
other regular Americans, nurses, firefighters, teachers, pay at
least double that. So we would like them to pay a minimum rate
closer to what most Americans pay.
Ms. Jackson Lee. So you are speaking about fairness and
equity, if I can hear you correctly?
Ms. Young. That is correct.
Ms. Jackson Lee. What will it do for the budget? The
revenue that may come in?
Ms. Young. Thank you for that. That is why this budget is
deficit reducing. So we are looking to reduce the deficit, are
on track to reduce the deficit $1.3 trillion this year, and
reduce even further by over a trillion dollars with these
policies.
Ms. Jackson Lee. Thank you so very much.
Mr. Chairman, I want to introduce in the record a childcare
need under the 2019 Texas Childcare Facts that is produced by
Child Aware. I ask unanimous consent to place it in the record.
Chairman Yarmuth. Without objection.
[Report submitted for the record follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. Jackson Lee. In my state there are about a 1,812,000
families in poverty, but here is the big number--children under
six, 1,372,687 who are needing childcare. Let me briefly
comment on the investment you made, $7.6 billion in
discretionary funding for childcare and development block
grant. Tell me it will get to the children in Texas, one
million of them under six needing childcare.
Ms. Young. Not only do we support that amount, the $7.6
billion, as you talked about. It will go to the states to help
a lot of childcare businesses. As you know, during the pandemic
many couldn't keep their doors open. So families, especially
women, are finding they can't reenter the work force. And we
have to do something about that.
Ms. Jackson Lee. So a clarion call to my constituents in
Houston who are part of the 1.6 million children needing
childcare, this may enhance their opportunity and their
opportunity for women to get back into the work force?
Ms. Young. That. And, Congresswoman, I would also point
that the President has been supportive of childcare as part of
further legislation still under consideration. This would be
one part of it.
Ms. Jackson Lee. Absolutely, we support that to ensure a 7
percent cap on any family's childcare cost.
Let me just thank the Administration quickly for its COVID
action. Unlike the awkward and unprepared of the last
Administration. You have a $11.6 billion as it deals with the
pandemic and public health preparedness. How important is that?
As my time runs out and I have got a few more questions.
Ms. Young. So that looks at future pandemics so we aren't
left in the same predicament we were if another pandemic were
to occur. We need to invest in future pandemics.
Ms. Jackson Lee. Thank you. That is going to go a long way
to rural hospitals, local urban hospitals, and others dealing
with pandemic increases that may come in the near future.
I chair the Crime Subcommittee on Judiciary. Very
interested in the question of reduction of crime. That would
include enhancing training or responses to law enforcement, but
more importantly as well, the complementary support of mental
health support, support to stem the tide of domestic violence.
What is the Administration doing on that? Very quickly.
Ms. Young. The budget will propose $56 million to issue
grants to support behavioral health services to individuals
within or during reentry from jails and prisons. Also asking
for $500 million to be split between DoJ and HHS, with the
recognition that there has to be a comprehensive answer to
crime, not just from the law enforcement standpoint.
Ms. Jackson Lee. Well, the one thing we know is that the
Administration and Democrats are not soft on crime and that we
recognize we must be in the crime reducing business.
I want to thank you for your support of public housing. And
so my final questions are public housing emphasis and then the
commitment of the Administration for taking refugees from
Ukraine under the present capping that we have not utilized.
I would appreciate your answers to those two questions.
Ms. Young. As you know, we have a robust housing supply
initiative, $50 billion on the mandatory side to ensure we have
affordable housing. Also, as you point out, the budget provides
funding to resettle 125,000 refugees in 2023, including the
commitment for Ukrainians that the President recently
announced.
Ms. Jackson Lee. I look forward to working with you on
these matter.
And, Mr. Chairman, thank you so very much. This is a
robust, important budget for the American people and it is a
deficit busting budget and we need to move forward on the
President's goals.
Thank you so very much for your leadership.
I yield back.
Chairman Yarmuth. The gentlewoman's time has expired.
Now I yield five minutes to the gentleman from California,
Mr. Obernolte.
Mr. Obernolte. Thank you, Mr. Chair. And, Director Young,
congratulations on your confirmation. Thank you for the
introductory phone call. It was very nice getting to know you.
I am certainly looking forward to working with you.
So I would like to continue a line of questioning that a
number of the other Members of the panel have raised about the
assumptions that were made on the rate of inflation when the
budget was created. So my understanding is that the rate of
inflation that was assumed for this year is 4.7 percent.
Obviously we are trending toward nearly twice that. And for the
rest of the budgetary forecast, it was 2.3 percent, which I
think the Federal Reserve and most every economist would agree
is going to be substantially more than that. And you have
explained that that was because the budget was crafted in
November before the recent spike in inflation.
Do I have all that right?
Ms. Young. That is correct.
Mr. Obernolte. So I am curious as to--because I am hopeful,
Mr. Chairman, as Members of this panel on both sides of the
aisle, I am hopeful that we can actually do what Congress is
meant to do, take this budget and craft an actual budget
proposal out of it and pass that budget. So we have to rely on
the figures that you are giving us and try and craft our own
budget out of that.
What changes do you think the fact that the assumptions
that you made about inflation when you crafted the budget were
incorrect, what effect do you think that has on the numbers in
the budget?
Ms. Young. As I mentioned earlier, inflation has an
offsetting mechanism. So typically with higher inflation
revenues are also higher. So we believe our debt and deficit
targets remain about the same.
I would also point out it is a 10 year budget. Our long-
term inflation numbers are still in line with private
forecasters. And I point out the word forecasters. Just like
the government forecast estimates, so do the private markets.
And the long-term estimates are still in line with those
private forecasters.
Mr. Obernolte. OK. So the Department of Labor just recently
came out with statistics showing that real wage growth is
actually negative by 2.5 percent right now. And the
Congressional Budget Office says that that actually is going to
have--as inflation goes up, that has a negative effect on
budgets because although revenues go up, they don't go up
enough to compensate for higher expenses. And as the interest
rates rise, a greater percent of the budget has to be spent on
debt service.
So would you say that given the fact that actual inflation
is running about twice what the assumption was, would you say
that the long-term deficit reduction is going to be the same?
Ms. Young. It will be about the same. But you are right,
the more interest rates, not inflation, goes up--I was speaking
to inflation. On interest rates, you are right, that does have
an impact on what you pay in debt service. We also look at what
the historical rates are and what we pay on the debt. Based on
historical averages, we are still in line to--we are paying
less tha historical norms on debt service and even with higher
interest rates--by the way, Mr. Obernolte, our budget does
account for--we account for interest rates growing in this
budget.
Mr. Obernolte. Well, I think we all join you in hoping that
the rate that we have to pay on our national debt does not go
up substantially. But, you know, pessimistically, I am not sure
that that is going to be the case.
So long-term, I was very happy to see the President
concentrating on deficit reduction. It certainly was not the
case with his proposed budget last year. That is a concern that
many of us on this panel have. One of the things that you
touted in your opening statement about the budget is that it is
going to reduce the deficit by over a trillion dollars over the
forecasting period. But I wanted to be clear, you are talking
about cumulatively? Because our deficit is about $1.3 trillion
right now. So we are not going to reduce it to--from $1.3 to
.3, we are going to reduce it by a trillion over that 10 year
forecast period.
Ms. Young. So there are two deficit numbers I talked about,
and they are important to get right. We are on track, absent
this budget, to reduce the deficit by $1.3 trillion year over
year. The largest ever decline in one year. The budget policies
represent, if Congress takes them up, we believe another $1
trillion in deficit reduction.
Mr. Obernolte. Total over the 10 year period?
Ms. Young. Correct.
Mr. Obernolte. So I mean $100 billion a year, not a
trillion in a single year?
Ms. Young. Right. The cumulative effect.
Mr. Obernolte. We are still going to have a substantial
deficit by the end of the forecast period.
Ms. Young. But remember, we are also looking at bringing
down the deficit $1.3 trillion in one year.
Mr. Obernolte. We on the same team here.
Well, let me ask you about that actually, as kind of a
final question here. As I said, I was very encouraged to see
the President focusing on deficit reduction. What, as Director
of the OMB, what is your long-term philosophy on that? Do you
think that we need to get to a balanced budget? And if so, how
do we do that?
Ms. Young. Mr. Obernolte, I think, and a lot of economists
think, that a better measure to look at than to try to get to
zero debt, because you know this, the most spending in this
budget is our beneficiaries, to Social Security, to Medicare,
and to ensure that we preserve those benefits for our elderly
or those close to, to make sure that they get those benefits,
we believe the more appropriate thing to do is look at whether
the debt level is crowding out the country's ability to make
investments. We don't think we are at that point. There is not
a specific number that makes sense. You can't just say $60
trillion gets to be too much, or $40 or $50, it really is
depending on the size of the economy. And we believe we can
handle the debt service payments given that interest rates
remain historically low even if rising.
Mr. Obernolte. Well, on that we might disagree, but I see
my time is expired.
I yield back. Thank you very much.
Chairman Yarmuth. The gentleman's time has expired.
Ms. Young. And he has been here a long time, so thank you,
Mr. Chairman.
Chairman Yarmuth. Yes, he has been.
I now yield five minutes to the gentlewoman from Colorado,
Ms. Boebert.
Ms. Boebert. Thank you, Mr. Chairman. And, Director Young,
thank you so much for being here today.
I just want to start off with a few quick questions.
First of all, what is the current national debt?
Ms. Young. The current debt is about $24 trillion.
Ms. Boebert. OK. I have about $30 trillion. How much would
each American citizen have to pay to cover that debt?
Ms. Young. That is not how debts work, so we have not
calculated that.
Ms. Boebert. I reclaim my time. Director, the answer is
$91,207 per American citizen. How much does each taxpayer--
thank you--how much does each taxpayer owe to cover our current
$30 trillion debt, not $24 trillion?
Ms. Young. And I am sorry, I have $22.3, so I will correct
myself downward, since we are using different numbers. Again,
we don't calculate the debt by person, including my 5-month
old. Thank you.
Ms. Boebert. Reclaim my time. Excuse me, Director, the
answer is $242,500 per taxpayer in America.
Now you may have been on track with some of these answers
if your numbers were correct with the $30 trillion debt that we
actually are at right now. But I would have hoped that you
would have the correct answers in your position to all of these
questions as the President and this regime really should keep
this debt at the forefront of our thinking and proposing a
budget. But this budget that was created has proposed to spend
another $5.8 trillion this Fiscal Year and $73 trillion over
the next 10 years. And, sadly, it is pretty apparent that you
were more concerned with continuing to spend trillions of
dollars of taxpayer money on liberal wish lists rather than
doing anything substantive to reign in wasteful federal
government spending.
Now, I have said multiple times the federal government does
not have a revenue problem, it has a spending problem.
Now, Director Young, Biden likes to say show me your budget
and I will tell you your values. So let us see what Democrats
really value. The word military appears 26 times in this
budget, but gender, it is used 43 times in your budget. Equity,
well that is use 75 times and climate is used 187 times in this
budget. And Americans sure do understand what Democrat
priorities are and their values. They know that the real cost
of these woke policies and so called values are impacting them
and the bill has come due for these bad Democrat policies.
Proposing to spend trillions of dollars on more woke wants
not needs is absolutely shameful. And really you should be
embarrassed to be testifying today and trying to defend this
$5.8 trillion budget.
Now, during the State of the Union Joe Biden said that his
plan to fight inflation was for businesses to simply lower
their costs, not their wages. Director Young, I am a small
business owner, and I can tell you that that is not how it
works in the real world. I understand that we use Washington,
DC. math here, but that is not how it works for real small
business owners. Meat is up 13 percent, milk is up almost 12
percent, electricity is up 9 percent.
Now, as a restaurant owner, how am I supposed to lower my
costs if everything that I use is going up? And I certainly
wouldn't be able to pay employees higher wages.
So, with this skyrocketing inflation that is taking place,
Madam Director, can you please simply describe to me, define to
me, what inflation is?
Ms. Young. Sure. The cost of goods are more expensive. It
costs more for the same goods than it did last year. The
President is very aware of that. That is why he called on
Congress to send him legislation----
Ms. Boebert. Reclaiming my time. Thank you.
Ms. Young [continuing]. that reduced cost of healthcare.
Ms. Boebert. Thank you, Director. That is not exactly what
I was getting at. Let me answer this for you. So Milton
Friedman, who won the Nobel Prize in economics, said that
inflation comes from too much money being printed in D.C.
Specifically, and I quote, he said ``Inflation is a result of
too much money and more rapid increase in the quantity of money
than in output. Moreover, in the modern era, the important next
step to recognize that today governments control the quantity
of money so that as a result inflation in the United States is
made in Washington and nowhere else.''
So, Director Young, in short, inflation comes from
Washington, DC. where the products we use aren't created, but
the products we use are made more expensive.
Director Young, shamefully this Biden budget proposes the
largest tax increase in American history and I really think
that that bears repeating. It is the largest in American
history. The Biden regime either has no concept of how
inflation is impacting Americans or simply has no concept for
Americans who find the cost of gasoline too expensive because,
after all, they can't just go buy a Tesla.
How about that for Democrat priorities?
Thank you, Madam Director.
Chairman Yarmuth. The gentlewoman's time has expired.
I think I am the last questioner and I now yield myself 10
minutes.
First of all, let me say thank you for being here, Director
Young. I think you have more than justified the judgment of the
President to name you to this position and the Senate's wisdom
in confirming you.
I love going last because it is like cleanup on aisle six.
I get to deal with a lot of the things that have been said and
messed up.
Now, I want to start with Mr. Donalds' comment about
raising the corporate tax rate. He said if you raise the
corporate tax rate that it is going to cause inflation because
you are going to--they are going to pass it along to consumers.
That would imply that if you lowered the tax rate that they
would pass the savings onto consumers. When Republicans cut the
tax rate from 35 to 21 percent in 2017, did that result in any
cost cutting for consumers that you are aware of?
Ms. Young. It did not.
Chairman Yarmuth. Right. As a matter of fact, if that were
true, we wouldn't have the inflation we have now because they
are still paying at a 21 percent rate. So that just doesn't
make sense. And you were here in 2017, you were in the
Congress, and the justification Republicans gave at that time
for cutting the corporate tax rate was that this would
encourage them to invest new equipment, new capacity, new
productivity. Did any of that happen?
Ms. Young. It did not.
Chairman Yarmuth. No, as a matter of fact most of the money
that was saved by lowering the tax rate was spent on buying
back stock and increasing dividends, not in actually being
reinvested in their businesses.
Let us talk about gas prices for a minute. How are gas
prices set? What are they dependent upon?
Ms. Young. They are dependent upon the market.
Chairman Yarmuth. Right. And it is a global market, gas is
produced all over the world. And when there is higher demand
for less gas, prices go up and conversely when there is less
demand and too much gas, prices go down. I think it was the
Ranking Member--it may not have been. I apologize if I didn't
get you right--that said back several years ago you found--
somebody found gas at $.90 a gallon. And was that during a
period when the government was shut down--I mean the country
was shut down, not the government. The country was essentially
was shut down and nobody was driving.
Ms. Young. Right.
Chairman Yarmuth. Yes, so prices are naturally going to be
lower. And now as the economy is recovering, part of the
reason--forget--in the last month or so, which I think we can
consider an aberration, we saw a much greater demand for
gasoline. Prices went up to a level that basically we have seen
before. We saw that level in 2011, 1912, 1913, 1914, and into
the Bush Administration when gasoline prices were much higher
than they were in 2020 and 2021.
When--well, you mentioned I think, but I--the annual
production now of gasoline in the United States, the number I
saw, which I mentioned last week or two weeks ago, was 12.1
million gallons a day. Russia produces about 10 \1/2\ million
barrels a day and Saudi Arabia 8 \1/2\ million barrels a day.
There is no country on earth that produces as much oil as we
are producing right now. So is it fair to say that anything
that the Biden Administration has proposed or implemented has
had anything to do--has had the impact of reducing oil
production in the country?
Ms. Young. Absolutely not.
Chairman Yarmuth. Right. And the Keystone Pipeline keeps
coming up. The Keystone Pipeline, if it were resumed--if they
resumed construction of the Keystone Pipeline today, how long
would it be before the Keystone Pipeline was finished?
Ms. Young. Not in any time to deal with any of the
increases we are seeing now.
Chairman Yarmuth. I think the estimate is 11 years from
now. And somebody mentioned that that was oil that was going to
be used in the United States. Is that correct?
Ms. Young. I don't believe that is correct. And you pointed
to oil production here. Most is shipped other places and not
kept here.
Chairman Yarmuth. Exactly.
Let us talk about the Defense Department budget for a
minute. A statement has been made, you know--and I know a lot
of Republicans are calling for 5 percent in addition to
inflation. Does inflation--the figure that we see now, 7.9
percent on an annual rate, does inflation affect every entity
the same way?
Ms. Young. It does not.
Chairman Yarmuth. So if you were in the Pentagon and you
are using a lot of gasoline, you probably are not going to the
pump every day and filling up the tanks and the jeeps and those
things. You make contracts for that gasoline, don't you?
Ms. Young. That is correct. And you typically lock in a
price.
Chairman Yarmuth. Exactly. And so to say that we
automatically have to assume that the Defense Department is
going to be--their costs are going to go up 7.9 percent isn't
based on the way things actually work.
Ms. Young. We don't believe--we believe this is a real
increase.
Chairman Yarmuth. Right. And one of the things that you are
proposing is a 4.6 percent increase in the salary of military
personnel.
Ms. Young. Military and civilians.
Chairman Yarmuth. Civilians. Which actually does kind of
accommodate the inflation that those military families are
experiencing.
Ms. Young. It is a part of the formula actually that
developed the 4.6.
Chairman Yarmuth. Right. So when the Defense Department
analysts were drawing up their budget request, they didn't say
that inflation didn't exist, did they?
Ms. Young. That is right. And I would like to point out,
unlike I think some relationships--some may have heard between
OMB and the Department--OMB and the Department of Defense
worked closely hand in hand. And I think the Secretary of
Defense would tell you this is the budget he needs to have a
ready military.
Chairman Yarmuth. Again going back to gas prices for a
second, one of the things that came up earlier is a mention of
the equity of favoring support for gasoline prices versus
support for environmentally beneficial energy sources. And the
question was asked, do you think that is fair. Well, personally
I think it is very fair. I mean I think as a country there is
broad consensus that we need to be moving away from fossil
fuels toward renewables and other clean energy sources.
But I remember in--and you may--I remember when George
Bush--George W. Bush was president and he said that once
gasoline prices get higher than $55 a barrel, that there is no
need for incentives for producers to produce. Do you remember
that comment?
Ms. Young. I do not.
Chairman Yarmuth. Well, he did. That is getting back a
little ways. But--and gasoline right now--oil is double that
amount.
Ms. Young. Yes.
Chairman Yarmuth. Basically $110-$115 a barrel. So
according to the man from the biggest oil producing state in
the country, I would say they are not necessary at this point.
Talking about the American Rescue Plan. And I know--I think
the Ranking Member said that until the American Rescue Plan was
enacted, job growth was performing at a lower rate than had
been projected. Is that a fair characterization? You didn't say
that? OK. Well, you said the first few months of the Biden
Administration job growth was not performing as the projections
were. And that was the reason--one of the reasons we passed the
American Rescue Plan, to stimulate the economy to help people
get back on their feet. And the fact that we created 6 million
jobs after that in 2021 is pretty good evidence that the
American Rescue Plan was successful.
Ms. Young. I mean as I mentioned earlier, I sat with Mark
Zandi from Moody's yesterday who believes we would have ended
up in a double-dip recession had it not been for ARP. So not
only did that not happen and we are not seeing the scarring we
saw after the Great Recession, which took four years to recover
from, we are seeing record growth out of the pandemic.
Chairman Yarmuth. And since you mentioned Moody's, a lot of
people on the Republican side, none of whom voted for the
American Rescue Plan, are trying to lay the 7.9 inflation rate
on the money that flowed from the American Rescue Plan. Moody's
made an analysis that said that the American Rescue Plan was
responsible for less than 1 percent of that inflation rate. Did
they reiterate that to you?
Ms. Young. They did.
Chairman Yarmuth. Do you have any analysis that would
contradict them?
Ms. Young. I do not.
Chairman Yarmuth. And the Federal Reserve in San Francisco
did a similar analysis and came up with the same result.
I think I am almost done.
One question I do have in my 30 seconds left. In
considering tax reform, one of the things that a lot of people,
including myself, think would be very important and useful and
justifiable, is to increase the carried interest rate. You
don't do that. None of my colleagues--well, at least the
leadership of the Ways and Means Committee has not proposed to
do that. Is that something the Administration has considered
and why has it decided not to approach that, if it--they have
considered it?
Ms. Young. Mr. Chairman, I am happy to talk to you about
that proposal. I think Treasury is our lead on tax proposals,
but I think it is a worthy conversation and I am happy to take
that offline and have a real conversation about it and tell you
if there are concerns what they are.
Chairman Yarmuth. OK. I would love to hear that.
Well, so I am over my time by 20 seconds, but I have been
pretty generous most of the day, so I don't feel guilty about
that. But once again thank you for your spending so much time
with us. Thank you for your responses, thank you for your work,
and once again we look forward to continuing to work with OMB
as we move forward in this process.
Unless there----
Ms. Young. Thank you so much.
Chairman Yarmuth. Thanks.
Unless there is any further business, this hearing is
adjourned.
[Whereupon, at 1:45 p.m., the Committee was adjourned.]
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