[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
BIDENOMICS: A PERFECT STORM OF
SPENDING, DEBT, AND INFLATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ECONOMIC GROWTH, ENERGY POLICY, AND REGULATORY AFFAIRS
OF THE
COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 19, 2023
__________
Serial No. 118-67
__________
Printed for the use of the Committee on Oversight and Accountability
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov,
oversight.house.gov or
docs.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
53-521 PDF WASHINGTON : 2023
COMMITTEE ON OVERSIGHT AND ACCOUNTABILITY
JAMES COMER, Kentucky, Chairman
Jim Jordan, Ohio Jamie Raskin, Maryland, Ranking
Mike Turner, Ohio Minority Member
Paul Gosar, Arizona Eleanor Holmes Norton, District of
Virginia Foxx, North Carolina Columbia
Glenn Grothman, Wisconsin Stephen F. Lynch, Massachusetts
Gary Palmer, Alabama Gerald E. Connolly, Virginia
Clay Higgins, Louisiana Raja Krishnamoorthi, Illinois
Pete Sessions, Texas Ro Khanna, California
Andy Biggs, Arizona Kweisi Mfume, Maryland
Nancy Mace, South Carolina Alexandria Ocasio-Cortez, New York
Jake LaTurner, Kansas Katie Porter, California
Pat Fallon, Texas Cori Bush, Missouri
Byron Donalds, Florida Shontel Brown, Ohio
Kelly Armstrong, North Dakota Jimmy Gomez, California
Scott Perry, Pennsylvania Melanie Stansbury, New Mexico
William Timmons, South Carolina Robert Garcia, California
Tim Burchett, Tennessee Maxwell Frost, Florida
Marjorie Taylor Greene, Georgia Summer Lee, Pennsylvania
Lisa McClain, Michigan Greg Casar, Texas
Lauren Boebert, Colorado Jasmine Crockett, Texas
Russell Fry, South Carolina Dan Goldman, New York
Anna Paulina Luna, Florida Jared Moskowitz, Florida
Chuck Edwards, North Carolina Vacancy
Nick Langworthy, New York
Eric Burlison, Missouri
Mark Marin, Staff Director
Jessica Donlon, Deputy Staff Director and General Counsel
Daniel Flores, Senior Counsel
Kim Waskowsky, Professional Staff Member
Mallory Cogar, Deputy Director of Operations and Chief Clerk
Contact Number: 202-225-5074
Julie Tagen, Minority Staff Director
Contact Number: 202-225-5051
------
Subcommittee On Economic Growth, Energy Policy, And Regulatory Affairs
Pat Fallon, Texas, Chairman
Byron Donalds, Florida Cori Bush, Missouri, Ranking
Scott Perry, Pennsylvania Minority Member
Lisa McClain, Michigan Shontel Brown, Ohio
Lauren Boebert, Colorado Melanie Stansbury, New Mexico
Russell Fry, South Carolina Eleanor Holmes Norton, District of
Anna Paulina Luna, Florida Columbia
Chuck Edwards, North Carolina Raja Krishnamoorthi, Illinois
Nick Langworthy, New York Ro Khanna, California
Vacancy
C O N T E N T S
----------
Page
Hearing held on September 19, 2023............................... 1
Witnesses
----------
Ms. Carrie Sheffield, Senior Policy Analyst, Independent Women's
Forum
Oral Statement................................................... 4
Mr. E.J. Antoni, Research Fellow, Grover M. Hermann Center for
the
Federal Budget, The Heritage Foundation
Oral Statement................................................... 6
Prof. Casey Mulligan, Professor in Economics, University of
Chicago
Oral Statement................................................... 8
Mr. Bobby Kogan (Minority Witness), Senior Director, Federal
Budget
Policy, Center for American Progress
Oral Statement................................................... 9
Opening statements and the prepared statements for the witnesses
are available in the U.S. House of Representatives Repository
at: docs.house.gov.
Index of Documents
----------
* Report, Moore, Antoni, ``Impact of Biden Economic Policies on
Americans' 401k and Other Retirement Plans''; submitted by Rep.
Fallon.
* Report, Mulligan, ``Paying Americans Not To Work''; submitted
by Rep. Fallon.
* Report, Mulligan, ``Payroll Tax Revenues Down $400 to $900
Billion Due to Lower Wages and Less Growth''; submitted by Rep.
Fallon.
* Report, Moore and Mulligan, ``The Cost of Biden's War on Oil
and Gas: Nearly $100 Billion a Year in Lost Output''; submitted
by Rep. Fallon.
* Questions for the Record: to Mr. Kogan; submitted by Rep.
Bush.
* Questions for the Record: to Ms. Sheffield; submitted by Rep.
Fallon.
* Questions for the Record: to Mr. Antoni; submitted by Rep.
Fallon.
The documents listed above are available at: docs.house.gov.
BIDENOMICS: A PERFECT STORM OF
SPENDING, DEBT, AND INFLATION
----------
Tuesday, September 19, 2023
House of Representatives
Committee on Oversight and Accountability
Subcommittee on Economic Growth, Energy
Policy, and Regulatory Affairs
Washington, D.C.
The Subcommittee met, pursuant to notice, at 2:06 p.m., in
room 2247, Rayburn House Office Building, Hon. Pat Fallon,
Chairman of the Subcommittee, presiding.
Present: Representatives Fallon, Boebert, Edwards,
Langworthy, Bush, Brown, Stansbury, and Norton.
Mr. Fallon. The hearing of the Subcommittee on Economic
Growth, Energy Policy, and Regulatory Affairs will come to
order. I want to welcome everybody here.
Without objection, the Chair may declare a recess at any
time.
I recognize myself for the purpose of making an opening
statement.
Today's hearing is an opportunity to discuss an issue every
household in America is familiar with, with a clear failure of
Bidenomics and the crisis caused by this current
Administration's reckless spending. Joe Biden likes to say that
Bidenomics is just another way of saying restoring the American
Dream. I beg to differ. But just last week, the Consumer Price
Index showed prices have risen 17.4 percent since Mr. Biden
took office. That means that 26 months of consumers watching
their paychecks disappear before their very eyes due to the
rising costs of living. Worse yet, mortgage rates have nearly
doubled since Joe Biden took office, making it much harder for
Americans to buy a new home, and that is clearly not the
American Dream.
Joe Biden likes to say Bidenomics is about building from
the middle out and the bottom up. That is a clever slogan, but
it does not reflect reality. In fact, let me say this, those
hurt most by these rising prices are low-income households and
seniors that are relying on Social Security for their monthly
retirement.
Wage growth has fallen behind the pace of inflation in 20
of the past 22 months, and most Americans are now unable to pay
for the surprising expense of, you know, if there is something
that cost $400, suddenly they are struggling to pay that bill,
something that was unforeseen, and that is not building from
the middle out or from the bottom up. Joe Biden likes to remind
us he promised not to raise taxes on anyone earning less than
$400,000 a year, but as of June 2023, the average worker was
paying an inflation tax, kind of an invisible tax because what
inflation is, is a tax on everything that we need and have to
buy. That 13.5 percent is effectively like a second Federal
income tax, particularly for low-income earners. The truth is
Bidenomics has been an abject disaster, and I think most of the
American people know that.
A recent poll found that 80 percent--let me say that
again--80 percent of Americans credit Joe Biden's policies for
the current state of the economy, and 70 percent agreed that
their incomes were not keeping pace with inflation. And if you
see any poll in the last year-and-a-half, 2 years, you have
seen that the Biden Administration scores, of all the major
topics that we discuss, they score the worst on the economy.
Our current economic track is nothing short of
unsustainable, yet the Biden Administration really does not
seem to be concerned. In fact, Joe Biden considers the current
environment a huge success, and he said that often on the
campaign trail, proudly taking credit for every failed business
that could not stay afloat under his crushing regulatory
regime, or parents that are forced to pay bills with a credit
card and then going into debt because their wages were not
keeping up with inflation.
According to Joe Biden, we are supposed to believe that we
are actually better off today than we were when he took office,
but the facts tell a very different story. The pain households
are experiencing can be tied directly back to the disastrous
policies posed by this Administration, which was so much
reckless spending into the trillions of dollars. Now we are
about to cap over $33 trillion in debt that our grandchildren
and their grandchildren will have to pay.
In the early days of COVID, emergency spending did make
some sense. It clearly did. I was not in Congress at that time.
I believe my colleague, my Ranking Member, was not either, but
the country was thrown into a tailspin, and we had to ensure
that our economy did not capsize. However, this Administration
plowed forward, maintaining these ``wartime'' spending levels
long after the spending was necessary and really long after the
pandemic was a national emergency any longer. It has been said
``never let a good crisis go to waste,'' and they did not. From
the American Rescue Plan to the Inflation Reduction Act, the
Administration has wasted no time throwing mindboggling numbers
at varying crises at their choosing with seemingly no regard
for the consequences. The Biden Administration apparently does
not care if a gallon of milk cost six bucks--I know I do--or
how much gasoline costs or an airline ticket, so long as it
forces everyone to purchase an electric vehicle that costs more
than the yearly median household income.
Decades ago, Republicans banded together with the Contract
with America to bring about some of the most impactful economic
reforms seen in generations. By combining a series of targeted,
fiscally conservative policies into one unified agenda, House
Republicans paved the way for Americans everywhere to prosper.
We have already seen the blueprint for what works, so we do not
need to reinvent the wheel. We should go ahead and achieve that
kind of success again, or at least that should be our goal. We
have also seen the blueprint for what does not work, and thanks
to Bidenomics, we have an ugly reminder of what anti-growth
policies bring.
I want to thank our witnesses, all four of you all, for
being here today, and I look forward to a thoughtful
discussion. The Chair now recognizes Ranking Member Bush for
the purpose of making an opening statement.
Ms. Bush. Thank you, Mr. Chairman. St. Louis and I are here
today to discuss the real economic situation of the people of
this country. From gas prices to food, the cost of living is
rising. New Census data indicates that real incomes fell
significantly in 2022 as inflation reduced the size of our
constituents' paychecks. We know there are investments that the
Federal Government can make to reduce poverty.
The Republican Party's inability to govern has us rapidly
moving toward a total government shutdown. This will disrupt
important benefits and services for all of our constituents,
such as food and cash assistance. Too many people across this
country are struggling to make ends meet. A government shutdown
would affect more than 42 million people who receive SNAP
benefits, nearly 3 million people who receive TANF benefits,
and over 6 million participants who receive WIC benefits.
Congress pulled together in a crisis to provide COVID relief,
this emergency relief that people needed.
My vision of a progressive economy led by the Biden
Administration must include Medicare For All. It must include
raising the Federal minimum wage, ensuring housing
affordability, reinstating the child tax credit, and canceling
student debt. That is my vision. During the pandemic, we made
direct payments to families through the child tax credit and
provided student debt relief by freezing interest and payments.
We still need to do more now. These two concrete examples show
Congress can ease the effects of economic hardship and boost
the economy overall. When it was in place, the child tax credit
lifted nearly 4 million children from poverty, causing child
poverty to hit a historic low of 5.2 percent. The expanded
child tax credit slashed child poverty, infused local economies
with billions of dollars, and reduced food insecurity by nearly
one-third. In Missouri alone, the child tax credit lifted
73,000 children out of poverty. Without the child tax credit,
child poverty in the United States has more than doubled in
just 1 year. Since its expiration, nearly 3.7 million children
have fallen back into poverty, including the impacted children
of Missouri.
Millions of people in this country are buried in burdensome
debt to make ends meet--medical, credit card, and student debt.
Student debt payments will resume soon after numerous payment
policies extended by the Biden Administration. Though that
temporary relief has helped many, we need much more, and we
must cancel student debt. The Federal student loan portfolio
currently totals more than $2 trillion owed by over 40 million
borrowers. Black people carry the heaviest debt burden, meaning
student debt. Say it again. Student debt relief is a racial and
economic justice issue. As lawmakers, we must ensure education
leads to prosperity, education leads to opportunity rather than
inescapable debt.
While my Republican colleagues are slashing programs to
help keep kids out of poverty and fighting against student debt
relief every step of the way, we have an over $880 billion
defense package moving forward. The money is there. The
question is how we as elected officials choose to invest in our
communities. The money is there. We can deliver for our
constituents to help them out to not only survive, but to
prosper.
Republicans are trying to distract us from the internal
dysfunction which is steering our Nation toward a government
shutdown. The question is, do we choose to invest in defense
contractors or reduce poverty for millions of people? Thank
you, and I yield back.
Mr. Fallon. We have with us today an expert panel of
witnesses who each bring valuable experiences and policy
insights that will be beneficial to our discussion. First, we
have Carrie Sheffield, who is a senior policy analyst for the
Independent Women's Forum. She previously managed Municipal
Credit Risk at Goldman Sachs and rated healthcare bonds at
Moody's Investor Service. We also have E.J.--it is Antoni,
right? OK. I get nervous when I see vowels. My mother's maiden
name is Genovese. I want to get it right. OK.
Mr. Antoni serves as a research fellow for the Heritage
Foundation's Grover H. Hermann Center for the Federal Budget
and a senior fellow at the Committee to Unleash Prosperity. He
focuses his work primarily on fiscal and monetary policy. Casey
Mulligan serves as a professor of economics at the University
of Chicago and previously served as the chief economist for the
Council of Economic Advisers under the Trump Administration.
And finally, we have Bobby, is it Kogan? OK. Bobby Kogan, who
serves as a senior policy director of Federal Budget Policy at
the Center for American Progress. I am a Member of Congress
from Texas, but I grew up in Massachusetts. So, I will quote a
Boston term, ``you are all wicked smart.'' Thank you again for
being here.
Pursuant to Committee Rule 9(g), the witnesses will please
stand and raise their right hands.
Do you solemnly swear or affirm that your testimony you are
about to give is the whole truth and nothing but the truth, so
help you God?
[A chorus of ayes.]
Mr. Fallon. Let the record show that the witnesses answered
in the affirmative. Please sit.
We appreciate you being here and look forward to your
testimony. Let me remind the witnesses that we have read your
written statements and they will appear in the full hearing
record. Please limit your statements to 5 minutes.
As a reminder, please press the button on the microphone in
front of you--I believe it says ``talk''--so that the Members
will be able to hear you. When you do speak, the light in front
of you will be turning green for 4 minutes, 1 minute will be
yellow and then will be red, and that is when your 5 minutes
are up, and if you are at that red, if you can just wrap it up,
that would be great.
I now recognize Ms. Sheffield for her opening statement.
STATEMENT OF CARRIE SHEFFIELD
SENIOR POLICY ANALYST
INDEPENDENT WOMEN'S FORUM
Ms. Sheffield. Thank you, Chairman Fallon, Ranking Member
Bush, and Members of the Committee. Thank you for inviting me
here today. As has been said, my name is Carrie Sheffield, and
I am a senior policy analyst at the Center for Economic
Opportunity at Independent Women's Forum. We are a nonprofit
organization committed to increasing the number of women who
value free markets and personal liberty. We advance policies
that enhance people's freedom, opportunities, and well-being.
My work focuses on expanding economic opportunities for women.
We are here to discuss ``Bidenomics: A Perfect Storm of
Spending, Debt, and Inflation,'' and indeed this storm is
already hammering suffering communities and homes nationwide.
Evidence shows that President Biden's signature legislative
packages, such as the American Rescue Plan and the Inflation
Reduction Act, contributed to persistent inflation and are
failing to bring it back down more sustainably. This increased
government spending triggered more inflation, eroding wages and
increased government spending and buying power. The White House
has talked about an uptick in nominal wages, but as research
from the Federal Reserve Bank of St. Louis shows, real wages
have not recovered to pre-pandemic levels even as they are
starting to rise nominally.
Families are stretching their dollars further each day
since their paychecks and retirement funds are worth far less
than they were when President Biden took office. CNBC reported
this year that an alarming 54 percent of the American public
reported using savings to pay for everyday expenses, such as
groceries and rent. Savings are down as is economic confidence.
The recent, multi-trillion dollar increases in government
spending erode the value of the dollar through inflation
because the money is expanding demand and driving prices up.
CBO projects the Federal budget deficit in 2023 is $34 billion,
more than the deficit recorded last year. That increase would
be larger if not for a shift in the timing of certain payments
and the spending cuts that were forced by House Republican
leadership this past April in a sustainable manner.
Fraudulent actors may have stolen some $1 out of every $7
in pandemic unemployment, totaling as much as $135 billion,
according to a new GAO report. That means that scammers made
off with between 11 and 15 percent of the increased jobless
benefits that Congress approved on a bipartisan basis early in
the coronavirus crisis. This tragic waste of taxpayer money is
stealing from American families, who are now more than $1
trillion in credit card debt, a historic high hit last month.
That is Bidenomics in action.
Regarding America's ticking debt bomb, The Wall Street
Journal notes that the Congressional Budget Office regularly
updates its long-term budget forecasts and says that U.S. debt
held by the public will surpass gross domestic product this
fiscal year, and that interest on the debt will equal about
three-quarters of discretionary non-defense spending. By 2031,
it will be as large. Medicare, Social Security and, of course,
interest are legally non-negotiable. Military spending is not
really optional either. It is no wonder that the Federal
Government is described as an insurance company with an army.
These unsustainable public debt interest payments will
crowd out important public expenditures for other discretionary
needs. Congress must act now to cut spending in order to rein
in these unsustainable debt and interest levels. Increased
upward pressure on U.S. interest rates we are experiencing now
will add additional pressure to businesses and the real estate
market, which has experienced a significant constriction under
Bidenomics.
The civilian labor force participation rate remains below
pre-pandemic levels under Bidenomics. It is currently at 62.8
percent in August 2023, compared to 63.3 percent in February
2020. The Consumer Price Index stood at 3.67 percent on August
1, which is a steep drop below the inflation of 9.1 percent
last summer, but it is still above the Federal Reserve's 2
percent target. And more importantly, a sharper measure of
inflation is the Median Consumer Price Index, or median CPI.
That measure was 5.72 percent at August 1, 2023, significantly
higher than the standard CPI. That is why the headlines are,
even though they sound rosier, the median CPI shows that
families are actually still suffering significantly because of
Bidenomics and inflation.
While Bidenomics may define inflation as a high-class
problem, as Ron Klain, the former chief of staff for Joe Biden
said in the White House, most Americans disagree. The median
CPI helps explain why in his recent CNN poll, 66 percent of
Americans disapprove of how Biden has handled the economy with
76 percent describing the economy as in poor shape. Congress
can act to help slow the ill effects of Bidenmomics through a
return to the economic principles that built America's
extraordinary economic engine: fiscal prudence, competition,
and regulation that enhances rather than undermines fair
competition and growth. Thank you very much.
Mr. Fallon. Thank you. The Chair now recognizes Mr. Antoni
for his opening remarks.
STATEMENT OF E.J. ANTONI
RESEARCH FELLOW
GROVER M. HERMANN CENTER FOR THE FEDERAL BUDGET
HERITAGE FOUNDATION
SENIOR FELLOW
COMMITTEE TO UNLEASH PROSPERITY
Mr. Antoni. Chairman Fallon, Ranking Member Bush, Members
of the Subcommittee, thank you for the invitation to discuss
with you today the impact of Federal spending, debt, and
inflation on the American people and various aspects of our
economy as well. I am a public finance economist at the
Heritage Foundation, where I research fiscal and monetary
policy, with a particular focus on the Federal Reserve, and I
am also a fellow at the Committee to Unleash Prosperity.
The last 3 years of public policy have been characterized,
most notably, by excessive government spending, inflation, and
anemic economic growth. Despite periods of near-record high
Federal revenues by multiple measurements, we have seen
deficits of $2.7 trillion, $1.4 trillion, and $1.6 trillion in
fiscal years 2021, 2022, and 2023, respectively, with the last
month of 2023 being estimated, and with the deficit for Fiscal
Year 2024 projected to be $1.9 trillion, yet another increase.
Massive borrowing by the Treasury and monetary financing of
deficits by the Federal Reserve created 40-year high inflation
and imposed a hidden but heavy tax on the American people.
Inflation transfers wealth from the people to the government,
and, frankly, there is no better definition of a tax than that.
It is worth pausing for a moment, as well, to emphasize that it
is the government and only the government which can create
inflation because it is only the government that has control
over the money supply.
A lot of scapegoats are thrown around for inflation, such
as greedy businesses or spendthrift consumers or grasping
unions trying to get higher wages, whatever the case may be.
These are all tropes that were dragged out in the 1970's, and
they are just as untrue today as they were then. As just one
example, prices paid by businesses have actually increased
faster under President Joe Biden than prices paid by consumers.
If businesses are being greedy, they are certainly doing it
wrong.
Prices, on average, for consumers have increased 16.6
percent since President Joe Biden took office, and wages have
not kept up. Meaning inflation adjusted weekly earnings are
down 4.7 percent for the typical American family with two
parents working and earning that average weekly pay. This has
been a loss in annual purchasing power of over $5,100.
Shockingly, the average American worker now loses more through
the hidden tax of inflation on his hourly wages than he pays in
Federal income tax. Similarly, household net worth has
increased about $23 trillion during Mr. Biden's tenure, but
nearly all of that is just inflation. Almost all the household
net worth generated over the last 2 1/2 years has effectively
been transferred to the government through inflation. And while
headline inflation has come down since June 2022, things are
not improving for many Americans. Inflation has actually
reaccelerated in the last 2 months, and the monthly change in
real earnings was negative in both July and August. In terms of
annual change, things have been even worse under Mr. Biden.
Annual weekly earnings growth has lagged inflation for all
but the first 2 months and the last 3 months of Mr. Biden's
presidency to date. The 26 months in between are record for
consecutive annual declines in real earnings growth. As
interest rates rise in the wake of 40-year high inflation,
borrowing costs have risen for businesses, consumers, and the
Treasury, creating an unsustainable problem for the United
States Treasury and the current trajectory of both the deficit
and the debt.
In terms of the American family, I estimate that for the
typical American family, they are paying an additional $1,800 a
year now in higher financing costs compared to January 2021.
Coupled with the decline in real earnings, this leaves a family
roughly $7,000 poor than when Biden took office. However, it
should be emphasized that many Americans are even worse off
than that. For those trying to buy a home today, the monthly
mortgage payment on a median priced home has risen over $1,000
during that time, and so, it costs a family about $13,000 more
per year every year over the life of a 30-year mortgage.
These are just a few examples of how Bidenomics, excessive
government spending, borrowing, and creation of money has
inflicted a tremendous amount of financial pain on the American
people.
Mr. Fallon. Thank you. The Chair now recognizes Professor
Mulligan for his opening statement.
STATEMENT OF CASEY MULLIGAN
PROFESSOR OF ECONOMICS
UNIVERSITY OF CHICAGO
Mr. Mulligan. Chairman Fallon, Ranking Member Bush, and
Members of the Subcommittee, thank you for the opportunity to
discuss with you today how Federal policy is affecting the
economy, workers, and consumers.
Under the Biden Administration's policy agenda, high
inflation has emerged as a hidden and bothersome tax.
Regulatory costs add another layer of hidden taxation,
especially burdening small businesses and low-income
households. The labor market has been affected by this agenda
with real wages falling below pre-pandemic trends. According to
the CBO, the Federal debt held by the public is already 98
percent of a year's GDP and would almost double to 181 percent
by 2053 under current law. This is driven by Federal spending.
Government spending has to be paid for either with taxes
narrowly defined, such as income taxes, or taxes in the future,
or the inflation tax. For example, the recent inflation surge
translated to a $2.2 trillion unanticipated tax on debt holders
administered in less than 3 years as the purchasing power of
their assets was eroded. A recent econometric study concludes
that the recent and previously unanticipated fiscal expansion
in the U.S. and other OECD countries is likely a key driver of
inflation in 2020 through 2022. Even without new tax
legislation, inflation increases marginal tax rates on
businesses and personal incomes, deterring business investment
and reducing real wages.
Beyond taxes, many regulations make workers less productive
and, thereby, reduce the wages that they can earn. Others make
consumer products, such as prescription drugs, automobiles, and
internet service, more expensive. The rules finalized by the
Biden Administration through the end of 2020 impose costs of
nearly $10,000 per household. That is new. Of course, we had
regulations before that, which is a $1,300 more than the new
regulations that the Obama Administration had created during
the comparable timeframe. If the 2021-2022 regulatory pace
accelerates as it did in the Obama years, costs would near
$60,000 per household after 8 years of rulemaking.
President Trump's pace was in the opposite direction,
saving the average household $80,000 compared to what the Biden
Administration is doing. The $80,000 in regulatory costs far
exceeds, for example, the revenue provisions of the Build Back
Better Act, which would have cost only--only in Washington
could I use that phrase--$14,000 per household if it had
passed.
For the purposes of understanding economic consequences,
the Biden agenda fits into two categories. One category would
be redistributive policies that reduce employment, and the
second category would be policies that reduce productivity and
real wages. Redistributive policies distort the economy twice.
First, as the revenue is raised, households and businesses
change their behavior to alleviate the burden. Often this
involves less investment in business capital, less investment
in human capital, and less work. Other times investment in work
are redirected to less productive uses.
Second, economic distortions are created as the revenue is
dispersed, particularly regarding safety net programs.
Households and businesses change their behavior to become
eligible for the program or increase the benefit received. A
good projection of the combined effect of the Biden spending
regulatory and tax agenda is to reduce labor income, the income
that workers get, by 5 to 6.5 percent. Unsurprisingly, the
labor market is, in fact, falling short. Real employee
compensation per adult was already 3.3 percent below the pre-
pandemic trend as of the end of 2022.
Small businesses are especially burdened by taxes and
regulations. New Federal regulations are regressive, meaning
they proportionately hit lower-income households more than
high-income households, especially because many rules, from
health insurance to telecommunications to environment, are, in
effect, forcing middle-and lower-class families to have
champagne taste on a beer budget. Several policy options can
reduce tax debt and/or regulatory burdens.
Regarding safety net programs, eligibility and benefit
rules could return to, say, what they were in 2008 when we had
a safety net, but not as large as it is now. Even though the
latest poverty rate is 15 percent below what it was in 2008,
the fraction of the population participating in Medicaid has
increased more than 70 percent. Poverty goes down, but
government program participation up. SNAP participation far
exceeds the number of households in poverty. Safety net program
integrity has also dramatically eroded. I am not sure there is
much left with hundreds of billions of dollars spent that
should not have been spent under the law. Federal healthcare
programs can be reformed to require less revenue while
providing greater value to patients.
More specifics are provided in my written testimony on the
Trump Administration's Choice and Competition Report. Thank
you.
Mr. Fallon. Thank you. The Chair now recognizes Mr. Kogan
for his opening remark.
STATEMENT OF BOBBY KOGAN
SENIOR DIRECTOR OF FEDERAL BUDGET POLICY
CENTER FOR AMERICAN PROGRESS
Mr. Kogan. Chairman Fallon, Ranking Member Bush, Members of
the Subcommittee, thank you for inviting me to testify.
Today, I intend to make two points. First, the investments
in the last 3 1/2 years were appropriately sized and led to the
strongest economic recovery in my lifetime. And second, the
cuts proposed by the House Appropriations Committee Republicans
would harm America by underfunding critical programs. In
response to a once-in-a-century pandemic, American demand
plummeted, leaving the economy at its most vulnerable states
since the Great Depression.
[Chart]
Mr. Kogan. The prime-age employment-to-population ratio, or
EPOP, dropped 10 percentage points in 2 months. And even when
the economy largely reopened, prime-age EPOP still stood
roughly as low as the trough of the Great Recession, but rather
than taking 10 years to recover, our economy did so in under 2
years. Our rapid recovery was possible only because of
significant investment into the economy and the American
people.
The Biden Administration built upon the previous COVID
bills to provide relief and ensure the American economy was
able to invest in the future. The American Rescue Plan expanded
on many of the earlier critical programs. It was intended both
to ensure households could weather a difficult economy and to
ensure that the economy that we rebuilt would be better and
more resilient. Through the Bipartisan Infrastructure Law, the
bipartisan CHIPS and Science Act, and the Inflation Reduction
Act, the Biden Administration made significant investments in
the future. The result has been large progress.
Among G7 nations, the United States has had the strongest
pandemic recovery, and, incredibly, U.S. real GDP has roughly
returned to where CBO projected it would be before the pandemic
even happened, as if COVID and the ensuing recession had never
happened. Our historic recovery has also led to the strongest
job market in U.S. history. Adjusting for demographics, the
employment-to-population ratio is at its highest level in
history, and black prime-age EPOP is hovering around its
historic high with a historically small gap between black and
white prime-age employment.
This strong job market has benefited the American people.
Real average hourly earnings of production and nonsupervisory
employees have matched their pre-pandemic trend also as if the
pandemic had never happened, and gains have been particularly
strong among lower-wage workers. Importantly, that has happened
because inflation has come down. The United States also has the
lowest core harmonized inflation among G7 countries. Further,
the path in recent months is encouraging. Core CPI has been
trending down since the spring of 2021, with a 3-month
annualized average down to 2.4 percent. And even better, the
contribution of housing rents to CPI inflation, which rose due
to longstanding supply shortages in the U.S. meeting pandemic
shifts in demand, is cooling and approaching pre-pandemic
levels.
While inflation rose to uncomfortable levels as the economy
largely reopened, this was not caused by excessive stimulus.
CBO estimates potential GDP, which measures how much the
economy can produce without creating excessive inflation, and
it believes that GDP ran barely above potential for only one
quarter, and that the economy otherwise has run slightly below
potential. In other words, our COVID response was appropriately
sized. Instead, a global pandemic broke supply chains and
caused monumental shifts in demand. It is impossible for
inflation to not rise in the presence of supply chain issues
and massive shifts in demand, but as supply chain issues
subsided and companies shifted their supply and production to
match new habits and demand, inflation has come down.
This progress is being threatened now by the work of the
House Appropriations Committee Majority. Despite rhetoric to
the contrary, non-defense discretionary funding, excluding VA
medical care, or NDD Star, shrank as a percent of GDP in the
first 2 years of the Biden Administration. Despite this, House
Republican appropriators wrote levels $58 billion below the
debt limit deal, which would leave NDD Star at its lowest level
on record going back more than 60 years. Even worse, the cuts
proposed to achieve this low level of funding are extreme. To
highlight just three: Title I education grants would be cut by
nearly 80 percent, money that ensures our drinking water is
safe would be cut by 59 percent, and nutrition assistance for
newborns and pregnant moms would also be cut. These cuts would
harm the American people. Even worse, they seem to be the
asking price for not forcing a government shutdown. Immediately
during a government shutdown, some children with cancer would
be denied treatment at NIH facilities, and some of our food
would go without its health and safety inspections.
The government is supposed to work for the American people,
and neither cutting programs that people rely on nor shutting
down the government serves that purpose. Thank you.
Mr. Fallon. Thank you. We are going to recess for votes,
and the Committee will return 10 minutes after the close of the
final vote. Thank you very much and we will be right back.
[Recess.]
Mr. Fallon. The Subcommittee will come to order. I now
recognize myself for 5 minutes of questions.
Ms. Sheffield, in my district in North Texas, I have heard
countless constituents, you know, they complain, I mean I feel
it myself, about the cost of things. And like, for instance, I
believe, roughly speaking, the average gasoline across the
country was $2.39 when this Administration took office, and it
is now, depending on where you are, national average is about
$5. Well, actually, that was in June of last year. It is a
little lower than that now. What examples like this would it
say about the ``success or lack thereof'' of the Biden
Administration's economic policies?
Ms. Sheffield. I would say just looking at the numbers, but
going beyond the numbers as well, just talking to people that
the headline inflation is certainly not actually how families
feel and how they are actually experiencing when you are
talking about food inflation, fuel inflation. You know, my
esteemed colleague, with all due respect, his graph that he has
here when he is comparing the inflation to other countries, it
excludes energy, food, and housing, which are pretty much what
you need to survive. So, I do not----
Mr. Fallon. Would it be fair to say those three things
are----
Ms. Sheffield. Yes.
Mr. Fallon [continuing]. Main economic drivers?
Ms. Sheffield. Absolutely, and especially for the people
that are in your district, it is personal, it is their everyday
life. And so, that is why Bidenomics is failing them.
Mr. Fallon. Mr. Antoni, what has been the impact of the
expiration of the expanded child tax credit on poverty, and
what has been the impact of inflation on poverty?
Mr. Antoni. Thank you. In terms of inflation, I think it
will probably be best to discuss that one first because
inflation is actually the only thing that can increase the
poverty threshold. And so, as inflation has outpaced earnings
during the Biden Administration, it has caused more people to
fall below that poverty threshold. That is literally just what
the numbers tell us. There is nothing else that can increase
that poverty threshold.
In terms of the expansion of the child tax credit, you
would expect that once that went away that you would simply
return poverty rates for children to the level that they were
at previously, but that is not what we have seen. We have
instead seen the rate go much higher. And again, the reason for
that is because inflation has pushed that threshold so high
that many people's nominal earnings have not kept pace with
inflation and have therefore fallen below the threshold.
Mr. Fallon. And while we are visiting, what is the impact
of supply chain distributions on inflation
-disruptions, rather?
Mr. Antoni. Mr. Chairman, in terms of supply chains, the
disruptions there, well, let me put it this way. It is very
similar to what we just said on poverty in that if supply
chains really were the only driver behind inflation, if it had
nothing to do with fiscal and monetary stimulus, then once
those supply chain issues were resolved, not just inflation
would come down, but prices would come down. Prices would
simply return to where they were previously, and that is not
what we have seen at all.
Actually, the last several reports from S&P Global, their
Purchasing Manager Index that analyzes global supply chains,
showed that there is no more pandemic-era impact in terms of
supply chains. In other words, things are back to normal, and
yet prices are not, and the reason for that is because the
fiscal and monetary conditions today are not back to where they
were----
Mr. Fallon. So, you are saying that there is an increased
money supply, and the goods are out there. They remain steady,
so when you have more money relative to the goods, the goods
cost more, in very simplistic terms.
Mr. Antoni. Exactly. Uh-huh.
Mr. Fallon. Yes. I mean, it is easy to wrap your mind
around it. Now, is it true that real weekly earnings have
exceeded inflation, the annual rate of inflation for 26 of the
31 months of the Biden Administration?
Mr. Antoni. Yes, it is. You can see on page six of the
testimony that I submitted. Only the first 2 months of the
Biden Administration and now the most recent 3 months have seen
positive annual real earnings compared to inflation, but in the
26 months in between, it was negative, which is a record.
Mr. Fallon. Thank you. Mr. Mulligan, you are an expert in
economic growth. That is one of the purviews, of course, of
this Committee, as well as regulatory reform, yet another
purview of this Committee. Before the pandemic hit, the Trump
Administration demonstrated some of the most pro-growth
policies that we have seen in generations. How has the Biden
Administration policies reversed the possibility of growth, and
what do we need to do right now to get on the right track and
get our economy moving again?
Mr. Mulligan. Really, all the policy levers have been
pushed in the opposite direction of President Trump to the
extent they could. President Trump had a tax cut that needs
some renewing, I guess, and that might not happen. A lot of the
regulations have been totally reversed, not all of them, and
both of these things go toward reducing productivity rather
than productivity growing like you see in energy where we were
pumping more and more and more. We are less productive. We are
less able to do what we used to do.
Mr. Fallon. My time has expired. I yield to the Ranking
Member for her 5 minutes of questions.
Ms. Bush. Thank you, Mr. Chairman. St. Louis and I are here
today because our economy needs to fully recover from the
devastating effects of the pandemic. Housing is the bedrock of
our Nation's economy. One of the biggest challenges facing St.
Louis and communities across the country is a dire shortage of
affordable housing. When landlords raise rents, my constituents
face increased housing insecurity and the threat of eviction.
Renters in St. Louis and around the country are forced to
contend with Wall Street investors who buy up homes in the
area, jack up rents, and neglect building maintenance, all to
extract greater profits. Private equity firms took advantage of
unprecedented foreclosures during the 2008 recession, which
forced millions of people from their homes. These corporations
seized on historically low interest rates to purchase
foreclosed homes. Local landlords and small business developers
have been muscled out of the local housing market.
In 2022, the St. Louis Post-Dispatch estimated that out-of-
state investors owned nearly 34,000 single-family homes in the
region. Investors have doubled the percentage of homes they own
in my district over the last 10 years. In one housing complex
in my district called Ridgeview Apartments, the property has
changed hands at least 4 times in the last 3 years. This wreaks
havoc on residents and creates a dire lack of accountability.
Ridgeview residents report there are so little communication
that some people realize too late that they were sending their
rent checks to the wrong place, and it is difficult to keep
track of who their landlords are.
The St. Louis area is experiencing a housing crisis, and
evictions are at the highest level in years and still on the
rise. Wall Street speculators have turned places like Ridgeview
from homes for families into assets on their balance sheets.
Working families can no longer afford to buy or even rent many
places that were previously affordable. Mr. Kogan, what are the
advantages of homeownership for building household and
generational wealth?
Mr. Kogan. Thank you, Congresswoman. Homeownership is one
of the best ways for families to build wealth and to pass on
intergenerational wealth. And to the extent that we have seen
policies in U.S. history, such as redlining, that have
discriminated against people in the United States, this thing
that is supposed to work for everyone has been limited to a
certain cohort. And to the extent that the economy does not
work for a whole host of Americans, then that is not working
for Americans.
Homeownership is beneficial because it is forced savings
that allows you to build equity and also pushes costs away from
when you are stuck in a fixed-income later, and pushes it to
when you are more able to afford it. And so, as home equity, as
private--I am sorry--as private equities come and buy up a lot
of the housing stock, this limits the ability of individuals to
capitalize on this ability to take advantage of these
mechanisms. So as the forced savings goes away, folks are not
able to kind of to use that. Sorry. Thank you.
Ms. Bush. No, you are fine, and I think you started to hit
on this point, but Mr. Kogan, how would you say that private
equity snapping up these housing makes it more difficult for
the average American family to purchase a home? Like, you
started there, but if you could go a little further with that.
Mr. Kogan. Sure. So typically, a lot of people will be able
to buy from an individual with a whole lot of buyers or a whole
lot of sellers. There is kind of a broad ability. You can shop
around. You can find someone who fits whatever you are looking
for. And to the extent that more and more of the housing stock
is being bought up by a few select companies, we are moving
toward or moving closer and closer to a monopsony where a few
sellers are able to set all the prices. And so through this, it
is limiting kind of the ability for folks to shop for what they
need and able to find what they can do.
Ms. Bush. OK. Thank you.
Mr. Kogan. Thank you.
Ms. Bush. The Biden-Harris Administration is working to
address this problem. The Administration's Housing Supply
Action Plan will reduce barriers for families to access housing
by expanding financing for low-income and climate-ready housing
and promoting the conversion of unused commercial space to
residential space. Moreover, the American Rescue Plan, that not
a single one of my Republican colleagues voted for, included
the home program, which will add at least 20,000 units of
affordable housing across the United States while supporting
23,000 households with rental assistance. congressional
Democrats and the President have taken fundamental steps that
support American families. Far too many people struggle to
secure basic housing, and yet our colleagues across the aisle
and their type of economics seek to cut taxes for the wealthy
and cut services for those in need. It is absolutely shameful,
but I yield back.
Mr. Fallon. Thank you. The Chair now recognizes Mr. Edwards
of North Carolina.
Mr. Edwards. Thank you, Mr. Chair. Ms. Sheffield, in
opening comments, I heard that inflation, since Joe Biden had
been our President, had increased. I heard somebody testify
16.6 percent, I heard somebody testify 17.1 percent, and I also
heard a testimony that the additional cost for many of the
things that people have to buy now is being financed on their
credit cards. What is the long-term effect of $1 trillion in
credit card debt? Where are we headed?
Ms. Sheffield. It is extremely corrosive to building
intergenerational wealth to have, you know, especially rollover
balances from month to month and having to pay these very high
interest rates. So, it becomes this hole that you cannot dig
out of, and that is really the whole that is the fruit of
Bidenomics to pile on consumer debt onto families. In terms of
housing, I think it is important because housing is, you know,
quite often the largest budget chunk of the family budget.
First of all, the redlining was created by FDR, a racist
administration. The FDR New Deal program was the one that
created redlining, so that is very, very important to just
historically put on the record.
But when it comes to housing supply, if you talk about St.
Louis and other cities, the vast majority where these urban
pockets of construction of housing supplies are constricted,
they are run by Democrat regulation. They are run by
progressive policies that constrict the supply of housing. So,
if you want to have more housing supply, you need to have
zoning regulation that is more competitive. And unfortunately,
these areas where the worst housing supply constrictions occur
are in progressive areas. And so, I would say that that is my
recommendation in terms of improving housing supply.
The other massive increase in inflation is energy. And so,
we see just recently, within the last couple of weeks, the
Biden Administration again saying we are going to constrict
drilling in Alaska and other areas of the United States. Who
wins in this scenario? It is OPEC that wins. It is Russia that
wins. And so, it is so counterproductive for U.S. taxpayer
dollars to go and fund to fight the Ukrainian war against
Russia, meanwhile Joe Biden is here domestically constraining
our own domestic oil prices and hitting families over and over.
Mr. Edwards. Thank you for that. So, with inflation hitting
the American household, we heard a couple of different numbers
there. I am going to round it off to $5,000 a year. What are
folks doing without? How are their purchasing habits changing,
because surely, most of us could agree that when we are looking
at 17-percent inflation, most of the harm falls on working-
class families and the poor because much of their disposable
income is being eradicated by inflation, and I think that would
be a concern to all of us in this room. So how are they coping?
What are they doing without?
Ms. Sheffield. Sure. I would say it is the poor as well as
retirees as well where, you know, typically when you retire, it
is when your highest peak net assets or net worth. But
unfortunately, because of Bidenomics and what has happened with
inflation, the net worth of many seniors living on fixed income
is incredibly tight. And so, you are seeing grandparents having
to forego vacations or forego helping with their
grandchildren's education. You are seeing people actually just
dropping out of the education situation altogether, especially
young men just not even going to college because it is so
expensive. And unfortunately, the Biden Administration's plan
on student loans, it is so counterproductive, it does nothing
to actually address the root cause of inflation in education.
It simply takes the U.S. tax money and subsidizes the wasteful
policies that are being held at the university instead of
actually holding the university accountable for the rise of
inflation for student tuition.
So, you are seeing people forgo education. You are seeing
them having to intergenerational, you know, housing, more
people within the same, you know, family, grandparents living
together, which, you know, could be good or bad depending on
the family dynamic, but yes, people are making do. But
unfortunately, as I said earlier in my opening statement, I
believe it is 52 or 54 percent of families, according to CNBC,
reporting that they are dipping into their savings to pay for
groceries and to pay for everyday expenses like rent. That is
deeply unsustainable, and it is the fruit of Bidenomics.
Mr. Edwards. All right. Thank you. Mr. Chair, I yield.
Mr. Fallon. Thank you. The Chair now recognizes Ms. Brown
from Ohio. Oh, she is not here? All right. Well, you know why,
because Notre Dame is playing Ohio State, she is probably
trying to get ready, and Notre Dame will thrash them, but that
is an editor's comment.
Ms. Bush. Oh, OK.
Mr. Fallon. OK. The Chair now recognizes Ms. Norton from
D.C.
Ms. Norton. I thank the Chair. Mr. Kogan, during the height
of the COVID-19 pandemic, the world faced a bleak economic
future. High unemployment, tangled supply chains, and
inflation, all threatened the future of American families, but
let us look at where we are now. Unemployment has stayed below
4 percent for 19 straight months. Grocery store shelves are
full. Inflation is less than half its peak. So, Mr. Kogan,
would you describe the Biden-Harris economy as fairly healthy?
Mr. Kogan. Thank you, Congresswoman. Yes, I would say that
we have had enormous progress in the past 2 1/2 years.
Ms. Norton. Yes. Low unemployment, inflation improving, it
is hard to top that. The Treasury Department has shown that the
American Rescue Plan led to 4 million additional jobs and
almost doubled GDP growth. These benefits have also served to
address historical inequities and increase opportunities for
all Americans. Mr. Kogan, can you expand more about how the
American Rescue Plan has benefited the economy and American
families, particularly those families that may traditionally be
left out of economic upswings?
Mr. Kogan. Absolutely. So, there are two kind of main parts
of the American Rescue Plan. The first was to provide
assistance right then, and the second thing was to try to make
sure that we would have a strong job market coming out of the
COVID recession. So, in the first part, it built on a lot of
the bipartisan things in the Trump Administration. It sent out
more money to families. It continued the expanded unemployment
insurance at a lower rate as was necessary at that time. It
expanded the Child Tax Credit and kind of made it a monthly
benefit to make sure that working parents were able to--and
also the most vulnerable parents--were able to better afford
the cost of having children. So, that sort of stuff all helped
families at the time.
And then by also pumping money into the economy, helping
invest in the future, it created the strongest job market in
U.S. history. Right now, the employment-to-population ratio
adjusted for demographics is the strongest it has ever been,
and that has redounded to the benefit of the American people.
And we see that low wage earners are actually doing the best
out of any cohort of folks.
Ms. Norton. Well, let us turn to another one of the Biden-
Harris Administration signature achievements, the Inflation
Reduction Act. Mr. Kogan, this bill, which passed without a
single Republican vote, has already resulted in 170,000 new
jobs in clean energy and climate resilience with projections
estimating that the IRA will catalyze more than 1.5 million
additional new jobs over the next 10 years. So, Mr. Kogan, how
will these new jobs created by the IRA improve the U.S.
economy?
Mr. Kogan. Thank you, Congresswoman. So, the point here is
to make sure that not only could we have clean energy, we would
also be able to be energy independent. And these jobs were
intended to, for instance, rebuild if you had a broken-down
coal mine that was no longer operable. It was intended to turn
that into something that would be able to work in the future,
right, so whether it is now a battery plant or something like
that. So, these jobs are intended to exist going forward in
terms of our energy security and to exist for the years to
come.
Ms. Norton. Mr. Kogan, my colleagues seem very concerned
about the deficit. What effect will the IRA have on it?
Mr. Kogan. Thank you, Congresswoman. So, CBO scored at a
savings of about $300 billion. We believe that is an
underestimate because it does not take into account the
indirect effects of the tax enforcement. Of course, to the
extent that some of that gets repealed, then some of the
savings go away. Since then, we have found that some of the tax
credits are going to work better than previously thought and
therefore be a little bit more costly. The most recent estimate
is that it might still save maybe $100 billion or some. I do
not have the exact number off the top of my head, but that it
still saves money.
Ms. Norton. Democrats' American Rescue Plan and Inflation
Reduction Act are the kind of investment that the United States
has needed for decades. I continue to support the President and
Bidenomics for investing in American communities that have
faced decades of neglect, and I yield back.
Mr. Fallon. Thank you. The Chair now recognizes Mrs.
Boebert from Colorado.
Mrs. Boebert. Thank you, Mr. Chairman, and thank you to our
witnesses who are here. It has been very enlightening just
hearing the wealth of information that you all are sharing and
answering the questions.
My first question is directed to Mr. Kogan. In your
testimony, you falsely claim that because of the trillions of
dollars spent in the Biden Administration that America has the
``strongest economy recovery in more than a generation.'' And I
just want to know, are you aware that just yesterday, America
exceeded $33 trillion in debt? This is the first time in
history, $33 trillion in history. And are you also aware that
inflation's impact is on groceries and that is at an all-time
high?
Mr. Kogan. Thank you for the question, Congresswoman. What
I was saying was that real GDP, we are leading the pack in
terms of real economic growth among the G7 nations. We are back
to where CBO thought we would be, roughly, and then we have had
the first V-shaped recovery of my entire life.
Mrs. Boebert. So, Mr. Kogan, at $33 trillion in debt, all
of this is due to wasteful Washington spending by Biden, by
Pelosi. They financed and borrowed and printed money that we do
not have. We are spending more than we are bringing in, and yet
your testimony places blame on House Republicans who are
working diligently to be fiscally responsible.
We are in meetings daily right now trying to get our fiscal
house in order so we do not go off of this fiscal cliff that we
are all hanging on the edge of, but currently, we have 20
million Americans who cannot afford their electric bill.
Americans have lost more than $2 trillion in retirement
savings, and gas is nearly $4 a gallon, and, I mean, that is
back up again under this Administration, and Americans are
paying more for absolutely everything else.
People are struggling all throughout Colorado's 3d
District. This is what I am hearing--people cannot afford to
live, and this does not sound like the strongest economic
recovery in more than a generation to me. So now, Mr. Kogan,
you also state in your testimony that under this Administration
``inflation has gone down,'' and this is a boldfaced lie.
Americans are paying more for everything. Do you know how much
American families will pay due to inflation, the inflation tax,
in just over the next year?
Mr. Kogan. Thank you, Congresswoman. Inflation in this case
refers to the rate of inflation. That is how most folks talk
about----
Mrs. Boebert. Yes, but that is not how they feel it. That
is not how they are actually paying for the goods and the needs
that they are trying to provide for their family--their food,
their gas, their electric bills--all of these things that I
have mentioned. The correct answer for how much American
families will pay for this inflation tax over the next year is
$8,581. That is per family. That is absolutely absurd, and in
most cases, this is more than a monthly income for most
families. And Joe Biden has claimed that for the past 4
decades, there has never been an economic failure, and the
United States has never faced an inflation crisis as severe as
we are facing under the Biden Administration. So now, do you
know how much a gallon of gas is right now compared to 2020?
Mr. Kogan. Right near me, my gas station right next to me
is about $1.50 more. The reason it was so much lower during
2020----
Mrs. Boebert. Because President Trump had us energy
independent, and we were producing American energy right here,
good clean American energy. We were not relying on OPEC as
much. We were relying on the American Roughneck, so that is why
it was lower. I will just answer that for you. But in 2020,
retail gas prices averaged $2.17 per gallon, and now we are at
$3.60, up to $4.32 per gallon. I mean, that is a 50-percent
increase. That is absolutely dramatic and unaffordable to
average Americans who are just struggling to get by. And what
about a gallon of milk? I mean, that was $3.32 and now $4.09
for a gallon of milk. Eggs. Eggs were $1.46 a dozen, and now
they are $3.44. That is a 42-percent increase. Families cannot
afford this.
Now, my last question. You also state that gains have been
particularly strong among lower-wage workers. Now, for the
average American family, weekly paychecks have grown about
$200, but those larger paychecks now buy about $100 less for
those income earners. Do you know the annual impact inflation
has on these American workers?
Mr. Kogan. Congresswoman, real wages are up relative to
pre-pandemic levels among nonsupervisory, and----
Mrs. Boebert. But that number is a fairy tale, is it not?
Mr. Kogan. No.
Mrs. Boebert. If you are actually spending more for the
same product that you were getting, but your paycheck looks
bigger, but you are paying more for the goods that you were
buying just a couple of years ago, the result is the equivalent
of a $5,600 annual pay cut. So, it may look good on paper. I
know engineers love that. I know bureaucrats love that. I know
the folks in Washington, DC. in the bubble love the way things
look on paper, but in the real world, that does not work.
Bidenomics is failing American families, and so are these
policies. And I hope that you would actually take a look into
the real world rather than just on paper. Thank you, Mr.
Chairman. I yield.
Mr. Fallon. Thank you. The Chair recognizes Ms. Stansbury
from New Mexico.
Ms. Stansbury. All right. Well, thank you, Mr. Chairman,
and I am glad that the last comments wrapped up around the
concept of what is happening with the economy in the real
world, because the single largest threat to the economy in the
real world right now is a government shutdown. And what is
especially strange and ironic to me is that we are sitting here
this afternoon after the Majority failed to even get a
continuing resolution to the floor to keep the U.S. Government
open, more or less passed a single appropriations bill to keep
this government functioning.
So, if we want to talk about real-world impacts, if we want
to talk about people being able to pay their bills, put a roof
over their head, buy groceries, and all of the things that we
are talking about here today, let us talk about funding the
government and making sure that the American Government and our
economy can stay afloat, because that is the real world, and
that is our constitutional duty and responsibility. But it is
also, you know, a strange hearing that we are having here this
afternoon as we are on the eve of this shutdown and hearing a
bunch of distorted and strange representations of the economy.
Now, I am going to admit I am not an economist. I am a
sociologist by training, but I am a former OMBer, and I want to
welcome my colleague who also served in the Budget Office in
the White House. And I know when folks actually understand the
economy and do not understand the economy, and I just want to
talk about the facts for a minute.
You know, Mr. Kogan, I appreciated some of the charts that
you included in your written testimony to the Committee. And I
want to make sure that we share some of those today publicly
because what we are talking about is the overall macroeconomy.
When we say that the macroeconomy is actually doing well in the
United States, in spite of this post-pandemic hangover, and we
will talk about that and its impacts here in a moment, what we
are talking about is the gross domestic product.
And what we see in, Mr. Kogan, in your testimony, you have
provided this chart here, which is the real GDP of the United
States. Is this correct? And----
Mr. Kogan. Yes.
Ms. Stansbury. What do we see right here? What is happening
in the year 2023?
Mr. Kogan. Thank you, Congresswoman. You can see that it is
back at the trend. That is back where CBO thought it would be
before the pandemic.
Ms. Stansbury. And what you can also see on this chart is
that by billions of dollars by annual rate that we are above
where we have previously been, so the GDP for the United States
is on the rise. Now, part of the reason why we are seeing the
economy come roaring back is exactly because of the policies
that this body passed last Congress and which President Biden
helped to champion.
So first of all, I want to talk about the American Recovery
Plan. Now, at the height of the pandemic, we had millions of
Americans who were unemployed, people who did not know if they
were going to lose their homes. They did not know if they are
going to be able to buy groceries. They did not know if they
were going to be able to go to the doctor, and we passed the
American Recovery Plan to get through the pandemic. It was not
intended to be a stimulus in and of itself at the onset. It was
meant to keep millions of Americans from falling through the
crack and the most significant economic disruption that this
country has seen since the Great Depression, and that is what
it did. It kept millions of American people housed. It kept
food on their table. It helped children get through the huge
catastrophic impacts, parents. That is what the American
Recovery Plan was about.
Now, subsequently, we have passed three significant bills
that have been causing the GDP to do this. That is the CHIPS
Act, which has helped to re-shore American manufacturing. It is
the Inflation Reduction Act, which we have just been talking
about. And it is the Bipartisan Infrastructure Law, which is
going to rebuild our roads, our water systems, and all of the
infrastructure that we know our communities need to have a
thriving economy. And guess what? The data does not lie. The
data show us that American manufacturing and investment in
American manufacturing is coming back with astounding
consequences, because here we are up here at the highest rate
ever in American history.
Finally, if my colleagues want to talk about inflation, let
us compare American inflation to post-pandemic inflation in
other countries. And what you can see in this chart in the
testimony that has been provided to everyone on this Committee
is that American inflation, with respect to other developed
countries across the world, is at the lowest rates, lower than
Canada, lower than the U.K., and lower than most of the
European community.
So, if our folks want to talk about facts, let us talk
about facts in the real world. The American economy is strong.
It is coming back, but families are struggling. They are
struggling because of the pandemic. They are struggling because
we still have the effects of supply chain disruptions, of
soaring housing costs and soaring food costs, and we have got
to address them. And I can tell you factually one thing that is
not going to make it better, and that is shutting down this
government. So, if my friends on the Majority want to actually
help American families, then pass the budget, and I yield back.
Mr. Fallon. The Chair now recognizes Mr. Langworthy from
New York.
Mr. Langworthy. Thank you, Mr. Chairman, and I would like
to thank all of our witnesses today for being here, and the
media has been busy championing the Administration's message of
Bidenomics' success. However, I spent just a ton of time
traveling my district, New York's 23rd congressional District,
the counties along the Pennsylvania line and the suburbs of
Buffalo, speaking with my constituents and getting a real sense
of their top concerns. And let me tell you, I did not meet one
person that thought that Bidenomics was any step in the right
direction for this country. But things that stood out loud and
clear is that Americans are having a really difficult time
affording groceries and gasoline and keeping the lights on in
their home, and there is a lot of angst about the costs of gas
and groceries. This is the reality of Bidenomics for many
Americans.
Mr. Antoni, your extensive research on inflation has shed
light onto the role of as a hidden tax on American households.
I am aware of your findings indicating that this inflation tax
frequently surpasses Federal income taxes. Can you elaborate on
how this is possible?
Mr. Antoni. Certainly. Thank you for the question. We have
to understand that inflation, because it is a devaluation of
the dollar for the sake of creating new dollars, when those new
dollars come into existence, where did their value come from? A
portion of the wealth of every other dollar that existed
previously is siphoned away and goes into those new dollars. So
as the government creates inflation, it is taking that wealth
away from dollar holders. So that is how the government
actually takes wealth away from you through the hidden tax of
inflation, and all they need to do is do this at a fast enough
rate that the amount of wealth being transferred is going to
exceed the amount of wealth being transferred via the Federal
income tax.
To be clear, this is not the first time that this has
happened in our Nation's history. You know, this exact same
phenomenon happened 40 years ago when we had very high
inflation rates then as well.
Mr. Langworthy. Thank you. and I am sure we have all heard
the Biden Administration's promise that taxes would not
increase for those earning less than $400,000 a year. Would you
say that he has kept his promise?
Mr. Antoni. No, not at all, especially when you consider
the fact that inflation falls most heavily on those who make
lower incomes. There are a lot of different reasons for that,
one of which is that lower earners tend to have incomes which
adjust slower to inflation, but also looking at the things that
those people buy. You know, just one example here would be, let
us say, someone in the middle class would buy fillet
occasionally, but now they cannot afford to, so they just buy
ground beef instead.
You are moving to a foodstuff which is already
disproportionately purchased by people with lower income. So,
what you have done now is not only is, if you want to call it
an income effect from everyone having less money or less real
money due to inflation so they can afford less. But now, there
is also a substitution effect, if you want to call it that,
where there is an increase in demand for things
disproportionately bought by people with lower incomes. In
other words, the prices of the things they buy go up even
faster than the average.
Mr. Langworthy. Makes a lot of sense. When we think about
basic economics, we know that in times of high inflation, one's
money does not go as far. One cannot buy the same amount of
goods that one was able to purchase before, and often those
most impacted are those with less flexibility in their budget,
less of a backstop for their own personal economy.
As I mentioned earlier, during my discussions with my
constituents in the district, it became abundantly clear their
concerns are revolving every day about covering the essential
costs of feeding their families and managing their energy bills
and their transportation costs. These are everyday families
who, not too long ago, they could afford a weekend getaway.
They could, you know, take the kids on vacation in the summer,
sign their kids up for sports teams. Today, these simple
pleasures, these little luxuries, they have become unattainable
as they grapple with the increasing burden of paying for the
necessities in life.
Ms. Sheffield, what should Congress be thinking about when
considering the downstream impacts that the recent massive
spending packages have had on American households in their
expenses?
Ms. Sheffield. Well, given that we know that the Bidenomics
bills, massive bills that were already passed, exacerbated
inflation, my recommendation would be to contain your spending.
Do not pass these massive multi trillion-dollar additional
bills that would further exacerbate inflation, and, in fact,
consider supporting--your colleague recently put forward a
balanced budget amendment, Jodey Arrington. I highly recommend
this because it certainly would contain not only the inflation,
but it would also help the long-term trajectory of the
congressional budget which is on, you know, the interest
payments alone will be drowning out significant investments in
the public good.
Mr. Langworthy. Well, thank you very much for the
testimony. I certainly have more questions, but we are out of
time, and I yield back.
Mr. Fallon. Thank you. Members, with that, I would like to
ask unanimous consent to submit these documents and statements
into the record: ``The Impact of Biden Economic Policies On
Americans' 401(k) and Other Retirement Plans,'' by Stephen
Moore and E.J. Antoni; ``Payroll Tax Revenue Down $400 Billion
to $900 Billion Due to Lower Wages, Less Growth,'' by Casey
Mulligan; ``The Cost of Biden's War on Oil and Gas: Nearly $100
Billion a Year in Lost Output,'' by Stephen Moore and Casey
Mulligan; ``Paying Americans Not to Work,'' by Casey Mulligan
and E.J. Antoni, and without objection, so ordered.
Mr. Fallon. The Chair now recognizes Ranking Member Bush
for her closing statement.
Ms. Bush. Thank you, Mr. Chairman. Despite my colleagues'
claims, the U.S. economy is actually growing, and this growth
directly contrasts with failed Republican economy policies,
policies that include the massive tax giveaway that former
President Trump signed into law 2018, which prompted the most
severe economic contraction in the United States since 1946 and
cost the United States $1.9 billion.
Republicans' economic proposals do not work and are
currently driving us toward a government shutdown that will
hurt families and devastate our economy. Rather than having yet
another hearing to bolster Republican talking points, we should
be focused on funding the government. In less than 2 weeks,
millions of families in need will lose access to vital programs
such as SNAP, TANF, WIC, and the administration of Social
Security, Medicare, and Medicaid will grind to a halt because
our Federal workforce will be unable to serve our communities.
Just a couple of hours ago, House Republican leaders
postponed the vote, voting on a rule to bring a stopgap bill to
the floor. We also know that a shutdown would have a
devastating impact on the economy. The partial shutdown from
2018-2019 reduced economic output in the United States by $11
billion over 2 quarters, $3 billion of which the economy never
regained. The difference is clear and of massive consequences
to our communities. Economic recovery should be the highest
priority of the Biden Administration, and we are thankful. With
that, I yield back.
Mr. Fallon. Thank you. You know, we have staffs that help
us with our comments because we are spread out a little thin,
but I took some notes during this hearing and I wanted to share
them with you. So, you hear Members from each party make claims
and then they cite statistics and studies, and if you had lived
on another planet or another galaxy and you came to this
hearing, you would be scratching your head going I do not know
who to believe.
So, let us just talk about some indisputable facts. No. 1,
inflation is now at a 40-year high. Nobody can dispute that.
No. 2, interest rates are now at a 22-year high. That is also
indisputable. Real weekly earnings have exceeded annual
inflation for 5 of the 31 months, 84 percent of the time during
this Administration. And if you want to talk about generational
wealth, generational wealth is built on a foundation of three
things to start: No. 1, graduate high school; No. 2, have a
full-time job; and No. 3, do not have children until you are
married. If you do those three tenets, regardless of race,
religion, creed, region that you live in, it is very difficult
to live below the poverty line. I am sure CNN or MSNBC will
find somebody that did all those three things and is below the
poverty line, but is absolutely the exception and not the rule.
Then, we talk about the only Federal spending program that
progressive Members ever want to talk about cutting is defense.
That is the only one. Now, they ignore the fact that we live in
a very small world, a very dangerous world, and a very
interconnected world. And while they are all too comfortable,
in fact, perfectly comfortable with cutting defense, they are
also willing to give Ukraine a blank check for Ukrainian
defense, which I find a little bit hypocritical or at least
inconsistent. And then when you look at say 2022's deficit,
which is the debt for that particular year, it was $1.38
trillion. So, if we did not spend $1 on defense, we would still
have over a half a trillion dollars in deficit spending.
Defense is not the issue. In fact, defense has been the slowest
growing major Federal spending category since 2000, and even
that 2000 year base, that base year, was following 10 years of
post-cold war cuts. So, the U.S. military as a share of GDP
remains the lowest level since World War II.
So, more spending is not the solution to inflation because
if all of those spending programs worked as well as my
Democratic colleagues have claimed, well, why did we stop at $3
trillion or $4 trillion of spending? Why didn't we spend $40
trillion if it is so good? And then let us talk about, because
the American people or my friend from the other galaxy that
attended this hearing, need to see contrasts. So, my colleague
and Ranking Member mentioned about student loans and said that
student loan forgiveness she fully supports. Well, I completely
disagree because it is not student loan forgiveness. It is
student loan transfer.
First, that program would cost, general consensus, cost
about $400 billion. And it would benefit, ironically, the
highest earners will reap about two-thirds of that benefit of
the giveaway. And then you have to think about, what about the
folks that had never went to college? What about the folks that
went to college and did not take out a loan? What about the
folks that went to college, took out the loan, and then paid it
back? Is that fair to them, and the answer to that question is,
of course, no. It is patently unfair. It is patently un-
American, in fact.
The outstanding Federal loan debt is about $1.7 trillion.
There are 255 million adult Americans. Forty-five million have
student loan debt, so that would make it to 210 million adult
Americans would have to bear the burden for, not this
forgiveness, but this transfer. And the median borrower, they
did a study in 1992 and they just recently did another study
and they found the same thing, that about four percent of their
monthly income is spent on student loans. They got plenty of
money to pay off their loans, and it also sets a horrible
precedent to folks that willingly went into an agreement to say
I will borrow money and I promise to pay it back. And then what
about future borrowers that say, hey, they give loan
forgiveness? I will sign this thing, but I am probably going to
get forgiveness in the future, or, again, more accurately
transfer. It is simply unfair.
And so, we have to recognize the fact that we do have a $33
trillion debt. And I believe from CBO, that if we continue to
spend at the rate we are going now, that in 10 years, half of
the Federal budget will go to loan repayment, will go to paying
service on the debt. That means that there is going to be less
money for defense, there will be less money for infrastructure,
and there will be less money, ironically, for entitlements.
So, I remember this very hyperbolic commercial that some
organization put out where you had an actor playing Paul Ryan,
and he was pushing grandma off the cliff. Well, it seems to me
that folks that did not want to address this runaway spending,
which would be my Democratic colleagues or at least most of
them, are proverbially, hyperbolically are they pushing grandma
off the cliff because it is going to be a heck of a lot less
money for entitlements if we do not get our fiscal house in
order.
I want to thank the witnesses for coming today. Thank you
for your testimony and your knowledge and sharing your points
of view.
And with that and without objection, all Members will have
5 legislative days within which to submit materials and to
submit additional written questions for the witnesses, which
will be forwarded to the witnesses for their response.
Mr. Fallon. If there was no further business and without
objection, the Subcommittee stands adjourned. Thank you.
[Whereupon, at 4:36 p.m. the Subcommittee was adjourned.]
[all]