[Joint House and Senate Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 118-221
AGING AMERICANS AND A WANING WORKFORCE:
DEMOGRAPHIC DRIVERS OF OUR DEFICIT
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HEARING
BEFORE THE
JOINT ECONOMIC COMMITTEE
OF THE
CONGRESS OF THE UNITED STATES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 15, 2023
__________
Printed for the use of the Joint Economic Committee
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
54-665 WASHINGTON : 2024
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
SENATE HOUSE OF REPRESENTATIVES
Martin Heinrich, New Mexico, David Schweikert, Arizona, Vice
Chairman Chairman
Amy Klobuchar, Minnesota Jodey C. Arrington, Texas
Margaret Wood Hassan, New Hampshire Ron Estes, Kansas
Mark Kelly, Arizona A. Drew Ferguson IV, Georgia
Peter Welch, Vermont Lloyd K. Smucker, Pennsylvania
John Fetterman, Pennsylvania Nicole Malliotakis, New York
Mike Lee, Utah Donald S. Beyer Jr., Virginia
Tom Cotton, Arkansas David Trone, Maryland
Eric Schmitt, Missouri Gwen Moore, Wisconsin
J.D. Vance, Ohio Katie Porter, California
Jessica Martinez, Executive Director
Ron Donado, Republican Staff Director
C O N T E N T S
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Opening Statements of Members
Page
Hon. David Schweikert, Vice Chairman, a Representative from the
State of Arizona............................................... 1
Witnesses
Dr. Julie Topoleski, Director of Labor, Income Security, and
Long-Term Analysis, Congressional Budget Office, Washington, DC 2
Dr. John C. Scott, Project Director, Retirement Savings, The Pew
Charitable Trusts, Washington, DC.............................. 4
Dr. Benjamin H. Harris, Vice President and Director of Economic
Studies Program and Director of the Retirement Security
Project, The Brookings Institution, Washington, DC............. 5
Dr. Kathryn Anne Edwards, Independent Economic Policy Consultant,
Washington, DC................................................. 6
Submissions for the Record
Prepared Statement of Hon. Martin Heinrich, Chairman, a U.S.
Senator from New Mexico........................................ 30
Prepared Statement of Dr. Julie Topoleski, Director of Labor,
Income Security, and Long-Term Analysis, Congressional Budget
Office......................................................... 34
Prepared Statement of Dr. John C. Scott, Project Director,
Retirement Savings, The Pew Charitable Trusts.................. 39
Prepared Statement of Dr. Benjamin H. Harris, Vice President and
Director of Economic Studies Program and Director of the
Retirement Security Project, The Brookings Institution......... 50
Prepared Statement of Dr. Kathryn Anne Edwards, Independent
Economic Policy Consultant..................................... 58
AGING AMERICANS AND A WANING WORKFORCE: DEMOGRAPHIC DRIVERS OF OUR
DEFICIT
----------
WEDNESDAY, NOVEMBER 15, 2023
United States Congress,
Joint Economic Committee,
Washington, DC.
The committee met, pursuant to call, at 2:35 p.m., in Room
1334, Longworth House Office Building, Hon. David Schweikert,
Vice Chairman, presiding.
Representatives present: Schweikert, Arrington, Beyer,
Trone, Moore, and Porter.
Senators present: Heinrich, Klobuchar, Hassan, and Welch.
Staff Present: Matthew Cernicky, Sebi Devlin-Foltz, Ron
Donado, Colleen Healy, Jeremy Johnson, Jessica Martinez,
Michael Pearson, and Alexander Schunk.
OPENING STATEMENT
Vice Chairman Schweikert. All right. Let's bring our
hearing to order.
The good Senator was explaining to me that this is his old
haunt, and I was sharing with him this is my first time ever in
this room. So it is the difference between people who know
natural resources and those of us who do a lot of tax work.
For our witnesses, please, thank you for being here. I am
going to do the basic introductions. We may do quick opening
statements, and then we are truly interested in hearing and
then we would really like some dialogue of some of the nature
of the questions.
All right. I would like to introduce our four distinguished
witnesses. Dr. Julie--I'm going to get it right--Topoleski--did
I get close? All right, I will practice on that--is the
Congressional Budget Office director of Labor, Income Security,
and Long-Term Analysis, and directs the annual publication of
CBO's Demographical Outlook, which is actually--last year's--is
on my table in my office.
Before that, she led the long-term analysis on which is
responsible for the long-term projections on Social Security,
Medicare, Medicaid, and the Federal budget, as well as long-
term analysis of policy changes in those areas.
She received her Ph.D. in economics from the University of
Maryland. Thank you for joining us.
Dr. John Scott is the director of the Pew Retirement
Savings Project. His research focus is on retirement policy and
aging issues, including Social Security retirement savings
plans.
Before joining Pew, Dr. Scott taught and conducted research
in public policy at the University of North Carolina at Chapel
Hill with a focus on issues related to aging tax policy and the
policymaking process.
Where are you when we need you?
Dr. Scott received his master's in sociology from the
University of Maryland and his law degree from Pennsylvania
State University.
Dr. Ben Harris is vice president and director of the
Economic Studies Program and director of the Retirement
Security Project at the Brookings Institution. He most recently
received his assistant secretary of Economic Policy and chief
economist at the U.S. Treasury Department.
Could you make the title any shorter?
Prior to joining Treasury, Dr. Harris was the executive
director of the Kellogg Public-Private Initiative, and a
research associate professor at Northwestern University.
Dr. Harris has held several senior positions in government,
including chief economist and economic advisor to then-Vice
President Joe Biden, senior economist with the White House
Council of Economic Advisers, and senior economist at the U.S.
Budget Committee. His primary area of research focuses on
fiscal policy and retirement policy.
Dr. Kathryn Anne Edwards is a Ph.D. economist, and
independent economics policy consultant. She is also adjunct
economist at the RAND Corporation and a lecturer at the
University of Maryland's School of Public Policy.
Dr. Edwards previously served as an economist and associate
economist at the RAND Corporation, and as a research assistant
at the Economic Policy Institute. And I think we are repeating
ourselves.
Her research focus is on the intersection of labor markets
and public policy, including unemployment and underemployment--
or unemployment insurance, women's labor issues after children,
poverty, and Social Security.
Doctor, can we begin with your 5 minutes.
STATEMENT OF DR. JULIE TOPOLESKI, DIRECTOR OF LABOR, INCOME
SECURITY, AND LONG-TERM ANALYSIS, CONGRESSIONAL BUDGET OFFICE,
WASHINGTON, DC
Dr. Topoleski. Chairman Heinrich, Vice Chairman Schweikert.
Vice Chairman Schweikert. You may have to do two things.
Make sure your mike is on, and pull it very close to you. The
mikes can sometimes be quite sensitive.
Dr. Topoleski. Is that better?
Vice Chairman Schweikert. Wonderful.
Dr. Topoleski. Okay. I will start over.
Chairman Heinrich, Vice Chairman Schweikert, and members of
the committee, I appreciate the opportunity to appear before
you today. I will discuss the Congressional Budget Office's
preliminary demographic projections to the United States, which
we finalized in January.
I would like to make four main points. First, our
population projections drive our budget and economic
projections. For example, the number of people who are employed
and paying taxes on their wages depends on the size of the
working-age population. That population, the number of people
ages 20 to 64, grows more slowly in our projections than the
number of people age 65 or older. The number of beneficiaries
of Social Security and Medicare depends on the size of that
older population.
Second, the population of 342 million in 2024 grows by 46
million over the next 30 years in our projections. Population
growth is determined by births, deaths, and net immigration.
Over the next decade, immigration accounts for about 70 percent
of the overall increase in the size of the population. The
greater number of births and deaths accounts for the remaining
30 percent.
Digging in on that a little bit, the total fertility rate
for women ages 14 to 49 is around 1.7 in our projections. That
is below the rate of 2.1 births per women needed for the
population to replace itself and lower than it has been
historically.
Also in our projections, mortality rates continue to
decline, and life expectancy at age 65 increases. And to note,
beginning in 2042, net immigration more than accounts for all
population growth. Put another way, without immigration after
that year, the population would shrink.
And just to note a comparison with projections the Census
Bureau released last week, our total population numbers over
the next 30 years are similar to those in the Census Bureau's
high immigration scenario.
Third, our estimates of net immigration for 2022 through
2026 are greater than we estimated last year. In 2024, for
example, net immigration is larger than we projected last year
by 2.1 million people, primarily because net immigration of
foreign-born people without legal status is larger in our
projections.
In our projections after 2024, the amount of net
immigration largely returns to its historical average by about
2027.
Just to highlight one factor that has led us to make this
change in our projections this year, we know that in 2023,
officials of U.S. Customs and Border Protection have
encountered more people attempting to enter the country at the
southwest border than in previous years. And they are releasing
more of those people into the United States with humanitarian
parole or with a notice to appear before an immigration judge.
Fourth, our projections are highly uncertain. Rates of
fertility, mortality, and net immigration could all be higher
or lower than we are projecting. Our estimates of net
immigration or foreign-born people without legal status are
particularly uncertain.
Thank you for the opportunity to talk about the role of
population in our budget and economic projections, the growth
in our total population, the key role of immigration in those
projections, and the uncertainties involved. I will be happy to
answers your questions.
[The prepared statement of Dr. Topoleski appears in the
Submissions for the Record on page 34.]
Vice Chairman Schweikert. Thank you, Doctor.
Dr. Scott.
STATEMENT OF DR. JOHN SCOTT, PROJECT DIRECTOR, RETIREMENT
SAVINGS, THE PEW CHARITABLE TRUSTS, WASHINGTON, DC
Dr. Scott. Chairman Heinrich, Vice Chairman Schweikert, and
members of the committee, thank you for the privilege of
appearing today.
Pew is a nonprofit, nonpartisan research organization that
uses evidence-based solutions to address pressing public policy
problems.
In summary, the United States is aging both in terms of the
absolute number of older persons and in terms of their number
relative to the working-age population. And these trends,
combined with insufficient retirement savings, will have
serious implications for both Federal and State budgets.
The Nation's 65 and older population will increase by an
estimated 50 percent from 2020 to 2040, going from 54 million
to an estimated 81 million. This rate of growth is nearly 10
times as fast as the growth of the population under age 65.
Population aging will not be uniform across all States. For
example, Nevada's older population will increase by 102 percent
with over 1 million older residents by 2024. In contrast, West
Virginia will see an 18 percent increase.
The relationship between older and younger households will
also shift. Working-age households form the core of the Federal
and State tax base, but they will not keep pace with the
growing older population. In 2020, there were 37 older
households for every 100 working-age households, but by 2040,
there are projected to be 54 older households for every 100
working-age households, a 46 percent increase.
Different forces affect population aging, and I will focus
here on birth rates and life expectancy. After the end of the
baby boom in the 1960s, women in the late 1970s, on average,
gave birth to 2.2 children over their lifetimes. Women today
are forecast to bear 1.4 to 1.9 children. These lower birth
rates mean that younger generations will not offset a growing
older population.
Increasing life expectancy also adds to the growth of older
households. In 1935, the year that Social Security was created,
life expectancy at birth was 62 years. By 2021, life expectancy
increased by 14 years to an average of 76.
Those who reached the age of 65 have seen a similar trend.
In 1960, the average life expectancy at age 65 was 14 years. By
2021, a 65-year-old could expect, on average, to live another
18 years.
These aging trends impact retirement readiness. Research
shows that retirees are not saving enough. And according to
Pew-sponsored research, in 2040, households will fall short of
recommended levels of retirement income by an average of $7,050
a year.
Insufficient retirement income will reduce the quality of
life for many retired households, but it will also affect
government budgets. A lack of savings increases the likelihood
that a household will need social assistance.
Insufficient savings are expected to cost means-tested
Federal programs for older Americans, a cumulative 990 billion
over the 20-year period from 2021 through 2040.
Insufficient savings will also cost State budgets. My
written testimony provides a State by State breakdown of these
costs over this 20-year period, but the aggregate cost of
insufficient savings for the States is an estimated 334
billion.
Additional work at older ages could help reduce these
fiscal pressures, and labor force participation among older
Americans is rising, but health issues associated with aging,
such as an increased risk of disability and chronic health
conditions could limit work.
Increased retirement savings can also reduce the fiscal
cost of inadequate retirement incomes. Our analysis found that
households saving an additional $140 a month could erase that
7,000 income shortfall.
Recent initiatives could boost retirement savings,
including pooled employer plans, a revised Federal savings tax
credit, and State savings programs for workers without
retirement benefits. It is too early, however, to tell the
extent to which these initiatives would significantly reduce
these fiscal impacts.
In conclusion, the aging population in the United States is
growing, as is the ratio of older households to working-age
households. These factors put pressure on programs designed to
support older Americans, and those pressures will increase in
the future.
Policymakers would be wise to consider measures that
encourage savings to lessen future demands on State and Federal
programs.
I would be pleased to answer your questions. Thank you.
[The prepared statement of Dr. Scott appears in the
Submissions for the Record on page 39.]
Vice Chairman Schweikert. Dr. Scott, thank you.
Dr. Harris.
STATEMENT OF DR. BENJAMIN H. HARRIS, VICE PRESIDENT AND
DIRECTOR OF ECONOMIC STUDIES PROGRAM AND DIRECTOR OF THE
RETIREMENT SECURITY PROJECT, BROOKINGS INSTITUTION, WASHINGTON,
DC
Dr. Harris. A heart-felt thank you to Chairman Heinrich,
Vice Chairman Schweikert, and members of this committee for
inviting me to testify at today's hearing. I am honored to
appear before you to discuss topics I have studied throughout
my career in public service and academia. In particular, the
intersection between an aging population and longstanding
fiscal imbalances.
Over the next few decades, the United States will be forced
to address the fiscal challenges of an aging population. Our
Nation is in the midst of a rapid demographic transmission
where the share of Americans age 65 and older increases by
roughly 0.4 percentage points per year between 2012 and 2030,
over which time their population share will increase from 13
percent to 20 percent with a slower rate of aging both before
and after this quarter-century period.
In the absence of corrective action, the spending increases
required by an aging population pose a threat to our Nation's
long-term fiscal health.
Mandatory spending currently makes up about 70 percent of
all noninterest spending. And major entitlement programs,
Social Security, Medicare, and Medicaid comprise 72 percent of
all mandatory spending. The current demographic shift will put
increasing pressure on these entitlements. All three are
projected to reach all-time high levels of spending as a
percent of GDP in the next 20 years.
Stagnant rates of revenue growth with tax revenue as a
share of GDP that are lower than many competitor nations have
played an outsized role in driving persistent imbalances. The
Tax Cuts and Jobs Act of 2017 projected increased deficits by
roughly 1.8 trillion over 10 years has exacerbated the
insufficient nature of the tax code.
This ongoing demographic transition has contributed to a
sobering and, perhaps, even dire fiscal outlook. The
Congressional Budget Office's long-term budget outlook projects
that the national debt will reach 181 percent of GDP by 2053,
far above recent historical experience, and multiple
independent analyses paint an even more pessimistic picture.
At some undetermined point, persistent and rising fiscal
imbalances will demand policy action. I will conclude by list
these in turn but will first note potential approaches that
should not be adopted because they are insufficient to address
the magnitude of the shortfall or because the negative economic
consequences would prove too severe to warrant their adoption.
These include cuts in nondefense discretionary spending,
utilizing the debt limit as a tool for fiscal changes, and
abandoning Keynesian stimulus in times of economic downturns.
More promising approaches, in my opinion, for achieving an
improved fiscal outlook include raising tax rates on income or
wages, reversing the steep reduction in the corporate tax rate
enacted in 2017, eliminating major tax expenditures, providing
sufficient funding to tax administrators to enforce the tax
code, introducing a new tax base on consumption or carbon
emissions, increasing rates of legal immigration, slowing or
reversing inflation rates in health care, or gradually changing
the age at which Social Security benefits can be claimed.
Thank you again for the opportunity to testify. I look
forward to your questions.
[The prepared statement of Dr. Harris appears in the
Submissions for the Record on page 50.]
Vice Chairman Schweikert. Thank you.
Dr. Edwards. Get close to the mike.
STATEMENT OF DR. KATHRYN ANNE EDWARDS, LABOR ECONOMIST
Dr. Edwards. Yes, of course.
Thank you so much for having me.
The U.S. budget is not age neutral. How a person interacts
with it, from the taxes they pay to the benefits they receive,
changes over the course of their lifetime. This wouldn't matter
much if the population were steady and all birth cohorts
identically sized, but we know that that is not the case, and
we are facing the drastic effects of a large generation getting
older and a smaller one coming of age.
Today the youngest boomers are 59 years old, drawing our
focus to their aging and retirement. For decades, however, the
boomers' vast numbers in our workforce obscured weaknesses in
our labor market. Rather than their size necessitating policy,
as it does today, it obviated the need for it when they were
young. Now that they are retiring, those weaknesses are laid
bear.
There are policies that can counter the demographic pull on
the deficit, policies that have long been good ideas but have
been seemingly less urgent. Chief among them is labor supply.
The U.S. should increase the number of people working and, by
extension, paying income taxes.
Understand first that prime age labor force participation
is at a historic high right now. Young people today are working
just as much as the boomers did when they were younger. There
are simply fewer of them.
The first step in expanding labor supply and increasing the
number of people working is retention. There are tens of
millions of Americans who, because of some incident or shock or
hardship in their life, have had to leave their job and never
come back, representing years of lost work if not decades of
lost income taxes.
Among the more common reasons for leaving, having your job
eliminated, you, your partner, parent, or child becoming
acutely sick or disabled, being incarcerated, having children.
Each circumstance presents distinct needs that are worthy of
their own policy agenda. At the same time, however, policies to
address any one of them will have broad spillover effects
because the problem is essentially the same. Once you leave the
labor market, it is very hard to come back.
Retention policy aims to keep people from leaving, making
it easier to return when they want to. The cornerstone of
retention policy is paid leave. It is a program that
acknowledges that workers may need to leave for a period of
time, but through a partial wage replacement and job protection
keeps them anchored in the labor force. The U.S. needs paid
medical leave and paid family leave.
Among the most broadly beneficial bang-for-the-buck
retention policy is accommodation. Accommodation policy
codifies into law the right to work part-time, the right to
request flexible and remote work arrangements, and a minimum
number of paid sick days.
Last year the U.S. had the highest labor force
participation in history for workers with a disability because,
primarily, of new remote work options, a lesson for us that
when workplace accommodations expand, it expands who gets to
work in our labor market.
Given today's theme, it is also worth noting that neither a
social insurance leave program financed via a payroll tax, nor
an amendment to the Fair Labor Standards Act to guarantee
accommodation would necessarily add to the deficit, but it
would add workers to our economy.
But there are also investments that are costly in the short
run that you can no longer defer. A job search stipend for
long-term out-of-the-labor-force workers who are looking to get
back in, a long-term unemployment retraining program for
workers whose jobs has been eliminated because of technological
change, like the potentially 2.4 million jobs that will be
eliminated for our economy by the end of the decade due to
regenerative AI.
But, of course, the most urgent policy and probably the
smartest investment that the U.S. does not make in demographics
is childcare. Accessible, affordable childcare would increase
the number of women working in our economy. It would also
likely help increase fertility. Since 2007, fertility has
fallen nearly every year, and what started as a slide
attributed to the Great Recession is now a sustained 15-year
decline in U.S. fertility.
Having children is a very personal decision, and yet
Congress has a wide avenue for intervention to make it safer,
easier, and cheaper to have kids. Childcare is a massive price
tag for families, more than college tuition and mortgages in
most States. It prevents women from staying in the workforce
and families from having additional children.
I will end by noting that I would be remiss if I did not
use this platform to ring the alarm bells that I have hoped
that you have heard before, that U.S. maternal mortality is
unacceptably high. It is 10 times higher in the U.S. than in
peer countries, an increased 78 percent over the past 3 years.
Demographics are not fixed. Policy can make a difference.
[The prepared statement of Dr. Edwards appears in the
Submissions for the Record on page 58.]
Vice Chairman Schweikert. Thank you, panel. I truly
appreciate this.
I am going to ask Chairman Heinrich to make the first few
minutes of inquiry.
Chairman Heinrich. Thank you, Vice Chairman.
I want to start and just go down the line with each of you
and ask you whether you think that both reductions in spending
and revenue are both going to be necessary for us to reduce the
deficit to more manageable levels, or if you think we can get
there with one side or the other alone. So just your thoughts
on whether or not revenue is going to be necessary.
And we will start with Dr. Topoleski and just go down the
line.
Dr. Topoleski. Well, let me start by saying that CBO does
not make policy recommendations, although we are happy to work
with you to estimate the costs of things.
One could certainly fix the problem by cuts in revenue,
by--sorry--by increases in revenue, by cuts in spending, or
some combination of both. There is a large fiscal gap to fill,
but I will defer it to you all to come up with the policies
that can do that.
Chairman Heinrich. Dr. Scott.
Dr. Scott. Yes, I would just say that Pew has not taken a
position or even done much in the way of research on that. I
mean, I would say, as a recovering academic that have done a
lot of work on tax policy and fiscal issues, I mean, there are
certainly a wide range of tools that combine both.
So I would echo what Dr. Topoleski just said, is that, you
know, I think you have a wide range of tools. It is really what
you think is the right mix.
Dr. Harris. I will just say my views represent my own self
and not the Brookings Institution. And my views are that the
long-term fiscal imbalance cannot practicably be fixed without
some combination of revenue increases and spending cuts.
Chairman Heinrich. Dr. Edwards.
Dr. Edwards. I would agree. You are going to need to do a
little bit of everything to get there. I would caution you from
cutting off your nose to spite your face and that we still have
to make investments to grow the economy. Cost cutting isn't
going to grow our way out of this.
Chairman Heinrich. Dr. Edwards, sort of shifting gears a
little bit back to what you were talking about in terms of paid
medical leave, paid family leave. Do we have data on places
that States, for example, that have implemented those policies
and the impact through labor force participation that has had
on their State budgets, for example?
Dr. Edwards. Yes. It will vary based on the number of years
the program has been in place and the generosity of the
benefits, but the direction is very certain. When you have paid
family leave and paid medical leave, you are able to retain
workers and increase labor force participation.
Chairman Heinrich. Dr. Harris, I want to go back to you
with respect to you made a mention of the role of tax
expenditures as a tool. Can you just elaborate a little bit
more on that?
Dr. Harris. Sure. We have a massive tax expenditure budget.
Tax expenditures, as you know, Senator, are effectively tax
provisions designed to achieve some economic or social goal. I
think some of them are well justified by economic research.
Others are less so.
So, for example, one tax expenditure, which I would be in
favor of rolling back or repealing as a way of righting our
long-term fiscal imbalance would be the step-up in basis at
death for capital gains, which is not just about raising
revenue but also has some negative economic impacts in that it
encourages investors to hold certain investments longer than
they would otherwise in order to avoid paying the taxes. So
that's one example of a tax expenditure I think should be on
the table.
Chairman Heinrich. Thank you.
Childcare is incredibly expensive for the average family
and far too few workers have access to paid leave today. In my
State, the average annual cost of childcare is well over
$8,000, while only one in four workers in the private sector
actually has access to paid family leave.
So Dr. Edwards, can you describe how these policies support
labor participation of parents, especially mothers, and keep
them in the labor force?
Dr. Edwards. If the cost of childcare is prohibitive, it is
simply not worth it for a woman to work or possibly to have
another kid. If it is larger than your mortgage, you wouldn't
necessarily buy an extra house every year. That has massive
effects on parents' behavior.
The notion of labor force retention policy like paid family
leave is just to make sure that, you know, people will make
decisions that are best for their family and best for
themselves, but you are going to give them a period of time to
sit out the labor force so that they don't have to make the
decision basically under duress. And that is what you are
giving them is time and space to make a decision for their
family and not basically forcing them out the door.
So while you are distracted, I will say it is probably not
the best that we cut family income by not having paid family
leave right when a child is born.
Chairman Heinrich. I'm sorry. Say that one more time, Dr.
Edwards.
Dr. Edwards. I said, while you are distracted, it is also
not advisable policy to cut family income right as a child is
born.
Vice Chairman Schweikert. We are actually doing a weird
juggling, because we are also running a Ways and Means hearing
right below us. And, Ms. Moore, I was going to let you go next
so you have some optionality of where you wanted to be.
Representative Moore. Well, that is very kind of you.
Well, thank you so very, very much. This is an extremely
important hearing, and I just want to thank the co-chairs for
really putting this on the agenda.
Dr. Edwards, I was particularly interested in your
testimony. You started out talking about the U.S. budget is not
age neutral. So that brings in everything from Social Security
and Medicare down to childcare and, as you pointed out, child
birth, immigration policy. It just brings in a lot of things.
You noted in your remarks that, you know, women are not
having children. The replacement rate, all of you kind of have
agreed to that, is not what it ought to be. But I think the
data do show us that we are going to depend on a lot of
immigrants in order to fill, backfill from the low birth rates.
And so do all of you agree that immigration reform would be
very important toward filling the workforce and also increasing
the payments into FICA? Right now we have got a half trillion
dollars a year that immigrants pay in just local sales tax and
so on.
Would all of you, Dr. Edwards first, would sort of agree
that immigration policy is important?
Dr. Edwards. There is very little economic gain to having
so many people not able to participate fully in our economy.
Representative Moore. Dr. Harris.
Dr. Harris. Yes, I agree that immigration reform can be a
big part of the program agenda.
Representative Moore. Dr. Scott.
Dr. Scott. Well, certainly immigration reform could affect
the number of workers in this country, absolutely.
Representative Moore. Right. And I think those data we have
seen, CBC reports that have really demonstrated to us that just
depending on costs versus expenses, we can see, over a course
of 10 years, maybe a trillion dollars added to stuff. Like FICA
has sort of helped us out of our conundrum with Social
Security.
I wanted to get a little bit more into your testimony, Dr.
Edwards. You talked about, you know, age, the budget not being
neutral on age. You talked about the importance of not only
women, for example--and you have answered this with Chairman
Heinrich's question--having access to childcare, because those
people who are kind of in the middle class either are not poor
enough to get subsidies but not wealthy enough to afford the
market failure that childcare is and that, of course, that has
an impact on women's workforce participation.
But you also talk about the importance of having a healthy
workforce. So expenditures on healthcare. I am just wondering
how many of you all think that having a healthy workforce and
providing that benefit would increase workforce participation?
And then specifically, Dr. Edwards, you talked about
infertility treatment as being important. I have never heard
that before, and I am going to give you a chance to talk about
that as part of the array of things. You know, we have heard
paid family leave, childcare, that kind of stuff. But
infertility treatment.
Dr. Edwards. Thank you. I was joking with a friend before
that fertility policy is not as communist as it sounds. There
are just things that we can do within our economy to encourage
people to have children, not necessarily forcing their hand but
maybe removing some barriers that make it harder for them to
make the choices they like.
What has never changed in the past five decades is the
number of kids people say they want to have. Our fertility is
unmet fertility intentions, not a change in fertility
intentions. People are not having the kids they want.
Representative Moore. That is exactly right.
And the child tax credit. You know, we need to stop looking
at it as an expense but an investment like you were talking
about. Do you think--we didn't see any change in workforce
participation when we provided that child tax credit.
Do you agree that that child tax credit would enable us to
put more workers into people to participate?
Dr. Edwards. You know, we only had the child tax credit to
low income families for 6 months. It still flows to wealthier
and high income households the way that it always did. But we
didn't see any market effects on labor force participation for
the 6 months we had----
Representative Moore. You didn't see people dropping out,
in other words.
Dr. Edwards. You didn't see people dropping out, but I
would say that it is also--it is not on the same order of
magnitude of childcare. A child tax credit of 1,000 bucks is
not even an eighth of the way to paying for 1 year of childcare
for one kid.
So whatever affect it has on family, it is likely going to
be eaten up by basic necessities like food. If you have a child
tax credit, the biggest effect will probably be on food and
security.
Representative Moore. Well, let's feed the babies.
I have got a cute video of my 5-month-old great grand baby
eating if anybody wants to see it. I mean, it is really--it
really does inspire us.
Thank you. And I yield back.
Vice Chairman Schweikert. All right. We look forward to the
videos. And you remember how terrified some of our Ways and
Means--insanely, I have a 15-month-old, and he was sitting on
my lap 2 weeks ago as we were holding a committee hearing.
Representative Moore. He seemed to be clinging to you
pretty good.
Vice Chairman Schweikert. No, no. It is a joy.
Okay. I am going to just--in the juggling, I am going to
actually ask a few questions. We are going to run back down to
Ways and Means. My Senator friend here promised he won't let
the fact that only my friends on this side are here run off the
rails.
Well, you are good. You are one of the people I like. Him,
he makes me nervous.
We may have a reservation for the canyon almost in December
if you want to come.
Representative Moore. Uh-oh. Wait a minute, now.
Vice Chairman Schweikert. He is my hiking buddy.
Okay. Now back to being serious.
One of the reasons we agreed to do this hearing is we are
trying to get our heads around what is the reality of the
numbers. I saw a number during the pandemic. I believe it has
come back that fertility rates had fallen--touched all the way
down to 1.62.
But what I am--and I am going to start from one end and
work over. First, help me understand. Let's not do policy right
now. What is the scale of the imbalance? If you and I were
sitting in this room 10, 20 years from now, what does America
look like? You know, what does our over 65 population compared
to our prime age working population look like?
I'm trying to get an honest understanding of the resources.
And I have been given a couple numbers in all of your opening
testimonies, but I want to just start on one end. And
basically, what does our world look like 10 and 20 years from
now?
Doctor.
Dr. Topoleski. So looking today, there are--and I am
reading off a chart that has no numbers on it, so forgive me if
my numbers aren't precise. There are about three and a half
people between the ages of 20 and 64 per person over the age of
65. Within 30 years, that number falls fairly dramatically to
less than three.
So that is the sort of your pool of people available to
work and available to support the elderly population.
Vice Chairman Schweikert. Dr. Scott, how would you
reference it? How fast are we aging?
Dr. Scott. Well, we are aging quite a bit faster. I mean, I
would just second a lot of what you just heard, but one thing I
would maybe note is that the growth of the oldest pool of our
population, those that are 75 and older and 85 and older is
rapidly growing. I think in the testimony we say that both
those cohorts will double in size by the year 2040, and the
majority of the older population in 2040 is projected to be 75
or older.
So you are going to have not just a lot older people but,
you know, people are living longer. So at those very older
ages, there is going to be a large growth.
Vice Chairman Schweikert. Dr. Harris.
Dr. Harris. So I should say I usually turn to CBO for
numbers on this, but I think the easiest way for me to
conceptualize this is that in 2010, we had about 10 percent of
the population was older than 65. By 2030, it will be double
that, 20 percent of the population. That is a pretty massive
increase over the course of two decades.
Dr. Edwards. I would remind you that our fertility is not
fixed. I mean, we are coming out of a 15-year declined
fertility. But when you ask what it looks like in 20 years,
that is up too. I mean, we could have another baby boom with
certain policies.
Vice Chairman Schweikert. To that question, Dr. Edwards,
I'm sorry to interrupt, tell me the country in the
industrialized world that has been facing this for 30 years
that has had successful policy that has changed long run
fertility rates.
Dr. Edwards. So France's fertility is above replacement. It
is about, historically, at 2.1.
Vice Chairman Schweikert. And where did they go to their
lowest?
Dr. Edwards. I am not sure.
Vice Chairman Schweikert. My understanding is France has
stayed actually quite stable, and substantially that is from
their immigrant population.
Dr. Edwards. That is my understanding as well. I don't know
their exact numbers. I do know they have childcare.
Vice Chairman Schweikert. And Hungary, is it true on the
third or fourth child, they literally buy you a home, and it
has barely moved their fertility rates?
Dr. Edwards. So I am not sure about Hungary. I do know that
Germany's fertility rates had fallen for a period of time and
it is starting to increase. I am not sure how it fared in the
aftermath of the pandemic.
Vice Chairman Schweikert. Yes, you have to make an
adjustment for those months.
And, look, I have a dataset in my binder that basically
talks about a couple things. In the 1970s, for every I think it
was $5 for people under 20, there was $1 spent on seniors.
Today that has functionally reversed and will continue to
reverse.
Impact--would any of you be able to speak to the fact that
there was a number here I think it was saying--was it 2042, 84
million, 65 and up. Can anyone help me with that?
All right. So if we are here 20 years from now, how much of
the U.S. budget basically is for earned benefits, both the
health care costs and Social Security? Because we have, what, 9
years, and we have to start to deal with the fact that the
Social Security trust fund is gone.
In the very first year, so 2033, we have a $616 billion
shortfall. The math says we double senior poverty. So that 25
percent cut that is coming in Social Security will double
senior poverty.
There is an article out there that says we expect
functionally in the next decade to see doubling of homeless
baby boomers. Am I being a bit apocalyptic? Please, someone
correct the numbers that I am being given.
Dr. Scott.
Dr. Scott. I won't correct your numbers. You know, I would
just note that, I mean, there are a lot of pressures that are
going on. I mean, I talked about the growth of the oldest old,
and that has implications for a lot of the means-tested
programs that we studied at Pew. We certainly know that the
number of people with Alzheimer's is going to grow by a very
large percentage.
So I think, you know, those are the worst case scenarios.
It is not necessarily apocalyptic to say that, but it is not
necessarily what could happen too. But I think that we see
these trends and are very concerned about the impact on both
Federal and State budgets going forward.
Vice Chairman Schweikert. And I will return, Mr. Chairman.
The CBO puts out a number, and it makes it very, very clear
from today through the next 30 years, every dime of future
borrowing is functionally Medicare, interest, and, if we
choose, to backfill Social Security in 9 years when the trust
fund is gone. The rest of the budget is substantially flat or
imbalanced.
And I think actually some here is first to have a
commonality of how tough the demographic numbers are and the
fact that the fight we all have back and forth, it is revenues,
it is spending, it is actually demographics.
And with that, I shall return.
Chairman Heinrich [presiding]. We will see you soon.
Senator Klobuchar.
Senator Klobuchar. Thank you very much, Mr. Chair. And
thank you to our witnesses for your testimony.
Dr. Harris, your testimony references the comprehensive
immigration bill, kind of way back, 2013. Although, we keep
discussing it on a bipartisan basis in the Judiciary Committee
because it did make it through the U.S. Senate.
And one of the things that I think it overlooked in that
bill in future efforts is not only the way it gets at workforce
shortage, which is so important because no great nation has
expanded with a shrinking workforce. We could try to be the
first experiment, but I would rather not, and especially when
you look at the need for, as we look at the seniors and the
changing demographics, the need for people to take care of
seniors. And pretty soon there is going to be no one to take
care of grandma in the middle of Nebraska at our assisted
livings. And we are going to have issues and already do in
rural hospitals and the like.
So that bill--and I remember it because Grover Norquist was
one of my witnesses at this very committee because he supported
the bill because it reduced the debt. And it showed back then
that the bill would have increased GDP by 3.3 percent and cut
the deficit by about 900 billion over two decades. I will admit
these are 2013 figures, but I think we could imagine the same
thing now.
Could you talk about how similar legislation could have the
same effect now?
Dr. Harris. So economists don't agree on a lot, but we do
agree on the benefits of immigration reform and economists
support that statement.
And from the perspective of caregiving, I mean, there is
almost too many benefits of immigration to list. We see
increases in patents. We see decreases in prices. As we start
to be selective about what types of workers we let in to
address certain workforce gaps, we start to see less specific
labor markets.
So, for example, we know that we have gaps in caregiving
centers, as you referenced. The caregiving crisis, I do
consider it a crisis, has two primary effects as older
Americans are subject to a lack of caregivers. The first is
higher prices for caregiving. As you have a shortage in those
caregivers, they can demand much higher prices.
The second is that unpaid caregivers increasingly bear the
burden. And we are basically talking about middle-aged women
bearing this burden right at their peak earning years. It has
enormous consequences for the labor market in general and for
these families in particular.
Senator Klobuchar. Okay.
Can you talk about the positive effect that immigration
reform could also have on Medicare and Social Security
solvency?
Dr. Harris. Yes. So when we are talking about these major
programs, as we have younger people coming in, in their working
lives, and they are paying into these programs--we are talking
about legal immigration they are paying in--they are not
receiving benefits for 20, 30, 40 years. In general, the
finances of these big programs, Medicare and Social Security,
improve with increased immigration.
Senator Klobuchar. Very good.
Dr. Topoleski--I like people with a lot of initials in
their--a lot of vowels in their last name, so thank you.
In your testimony, you talk about costs for health care
programs and rising costs. One of the things that we have been
working on, on a bipartisan basis, out of the Judiciary
Committee is how to reduce prescription drug costs. We already
have the negotiation going on with Medicare. That is a bill
that I led for many, many years, and we have the first 10 drugs
being negotiated now.
I will note that those 10 drugs, which includes Januvia and
Jardiance and Eliquis--and I like to say these names because I
memorize them--those 10 drugs, 9 million seniors last year,
they shelled out $3.4 billion in out-of-pocket on those 10
drugs alone. And you can imagine what we could do with more
negotiations.
But there is also patent issues with, you know, generics
being kept off the market and all kinds of things with the way
the pharma companies are playing with patents.
Could you talk about how that could help with reducing
costs for health care spending?
Dr. Topoleski. So on that answer, I am going to have to say
I would be happy to talk to you about that when I have the
right people in the room. I am not a health care expert, so I
wouldn't want to misspeak on that issue.
Senator Klobuchar. Does anyone want to add to that as we
look at costs?
Okay. It is just I think as we look at this deficit issue,
it is just one of the driving forces. So keep it in mind as you
keep working on these issues. I really appreciate your work.
Thank you.
Chairman Heinrich. Senator Welch.
Senator Welch. Thank you very much.
You know, we are talking about the demographic challenges,
and it is interesting. I just want to start with you, Dr.
Edwards, about the factors that you attribute the reduction in
fertility. It sounds like it is voluntary. People are making
decisions they just don't want to have kids.
Can you just go through some of the factors that you have
concluded weigh into that?
Dr. Edwards. Absolutely. So surveys of young women about
their fertility intentions have not changed much over the
years, both in terms of the ideal family size and their
intention to have children. A lot of what is driving the lack
or the decline in fertility is unmet fertility intentions.
People not having the kids they want.
For, you know, millennials, including elder millennials
like myself, part of it was a delay. The fertility that we are
currently seeing as a decline can still be regained because
fertility is falling for women under 30 but rising for women
over 30, which is why something like infertility coverage as
part of health insurance would be helpful in this notion to
drive up fertility.
But the reason why, I mean, in surveys parents say it is
expensive. Every part of having a kid is expensive. Childcare
is expensive. They don't have paid leave. It costs $2,600 to
deliver a kid out-of-pocket if you have a vaginal delivery. If
you have a C-section, it could be 32. That is a lot of money
for bringing--that is taxing, a kid being brought into the
world. That is the opposite of what you want to do if you want
children.
Senator Welch. So in France, where they have a stable
fertility rate and above replacement rate, they have paid
family leave. They have--you don't pay for your health care, so
you don't have that expense. You have childcare.
Dr. Edwards. It is not that everything is free there, but
they do have support around young children. That is certain
hallmarks that we lack in the United States. But there is also
room for just kind of basic economic malaise to hit people's
childbearing intentions. You know, you don't own a home. You
are not married yet. You don't earn as much as you wanted to.
You know, the Great Recession hit millennials----
Senator Welch. There are public policy issues there. I
mean, a lot of folks here have been very strong proponents of
having public policies that are pro family. And I think the way
a lot of us define pro family is you can afford childcare. You
can afford health care. You can have confidence that if
somebody is sick, a child, a partner, you will be able to take
some time off.
And I guess the obvious question is: In your view, and the
basis of your studies, would those types of policies likely
influence the fertility rate?
Dr. Edwards. Yes, because you can't make people have
children, but you can make it easier for them to have children.
I mean, you, being Congress, can make it easier for people to
have children.
Senator Welch. All right.
And then the other question is on immigration. I mean,
there are two parts to the immigration debate. One is the so-
called open borders and the conflict we have about that. That
is separate from legal immigration where we literally are
saying, hey, we want more folks to come in.
And I gather, Dr. Harris, you think that is a big deal if
we had more legal pathways and could have more immigrants
coming in.
Dr. Harris. Yes. So one of the benefits of legal
immigration is we can tailor the system to exactly the needs of
our workforce. We have that benefit in the United States of
America. I have heard economists refer to immigration as the
economic super food, which I think is an appropriate adjective
for what we could do with immigration.
Senator Welch. All right.
And then, you know, the other thing that Senator Klobuchar
was talking about were some of these costs. It is unbelievable
how much health care costs in this country, and it doesn't
matter whether you are on Medicaid, Medicare, private employer-
sponsored health care, or you are paying yourself. We pay the
most and get the least.
And the same is true for cable and internet. I mean, there
are a lot of expenses in this country that everyday families
have to bear that are brutally expensive.
So I will ask maybe Dr. Scott and then Dr. Topoleski. How
much--where we have policies that try to essentially promote--I
hate to say it--competition that would result in lowering cost
for family, would that have an impact potentially on people's
sense of confidence that they can have that other child that
they would love to have in their life?
Dr. Scott. I mean, I would hesitate to give an answer just
because we haven't really studied about the--which I think is a
really interested issue, how the cost of some of these services
and goods might affect fertility decisions. But certainly, you
know, we could certainly see that happening, those scenarios
where, you know, lowering certain costs could have an effect on
certain decisions.
But that is something that is a little bit beyond my
expertise, I think.
Senator Welch. Dr. Topoleski.
Dr. Topoleski. My answer is going to be quite similar in
that we haven't studied particular policies and the effect they
would have on fertility, but it is something that we are
keeping an eye on because it is very important to our
projections of the population.
Senator Welch. All right. Thank you very much.
I yield back.
Chairman Heinrich. Representative Porter.
Representative Porter. The title of today's hearing is
``Aging Americans and a Waning Workforce: Demographic Drivers
of our Deficit.''
Dr. Harris, this title pinpoints one specific group of
Americans as drivers of our deficit. Who is that group?
Dr. Harris. I'm sorry. You are asking who is the driver of
the deficit?
Representative Porter. The title of the hearing is ``Aging
Americans and a Waning Workforce: Demographic Drivers of our
Deficit.'' This title pinpoints one group of Americans as the
drivers of our deficit. Which group?
Dr. Harris. The title suggests older Americans are the
drivers of the deficit.
Representative Porter. Would you agree with that?
Dr. Harris. No. In my written testimony, I think that the
driver of the deficit is an imbalance between revenues and
expenditures.
Representative Porter. Okay. So I think what concerns me
about this hearing title is it seems to suggest that the
deficit all comes down to grandma, and that, in fact, as you
just said, the national deficit is calculated deficit, is
spending minus taxes.
So if Republicans are trying to say today that seniors,
that older Americans, aging Americans, grandma is the driver of
our deficit, seniors must be--and deficit comes from spending
less taxes--then seniors must have been responsible for making
our Nation's spending and tax decisions.
Is that right? Did seniors write our tax code?
Dr. Harris. Not to my knowledge.
Representative Porter. Did seniors write our government
spending bills?
Dr. Harris. No.
Representative Porter. Who does those things, Dr. Harris?
Dr. Harris. Congress.
Representative Porter. Congress.
For 88 years, Congress has promised seniors Social
Security. For 58 years, Congress has promised seniors Medicare.
And during that time, Congress, not our seniors, should have
found ways to keep those promises without taking on too much
debt.
Dr. Harris, isn't it unfair to blame aging Americans as
drivers of our deficit when it is really Congress' job to make
these budgeting decisions?
Dr. Harris. I would say it is unfair to blame any Americans
for this deficit. I would blame effectively those who made the
decisions.
Representative Porter. Okay. So I am curious, given that
Republicans are--you know, they are trying to kind of pin it on
seniors with this hearing title. They are not taking
responsibility onto Congress for these decisions. So I am
wondering here what Republicans are trying to hide.
Dr. Harris, under Republican control, when President Trump
was President, Congress overhauled the tax code. Did the
provisions of the Republican's tax package increase or, you
know, add to or pay down our national debt?
Dr. Harris. It undoubtedly added to our national debt.
Representative Porter. Republican math here. It added to
our national debt. Let me show everybody how much. Wait, hang
on. It is a two-whiteboard situation. Can you read that number
for everybody?
Dr. Harris. That is 1.8 trillion.
Representative Porter. 1.8 trillion. Couldn't even fit it
all on one whiteboard.
So this is how much they added to the deficit even as--the
premise of this hearing is that the deficit is a real problem
and that Republicans believe it is a real problem. So if they
didn't solve our deficits through the tax code, through that
tax piece, they surely took action to fully pay for Social
Security and Medicare so that we don't drive up the deficit
that way.
Dr. Harris, do you know how many Republicans cosponsor the
Social Security 2100 Act, which would make Social Security
solvent for years to come?
Dr. Harris. I don't know. I am guessing zero.
Representative Porter. Zero. It is a really small number. I
don't even need a whiteboard. I can do this one with my hand.
So Republican math, in terms of the budget, which is made
by Congress, not made by seniors, by older Americans, means
increasing our deficit by $1.8 trillion and doing zero to
reduce the effect of the debt by Social Security and Medicare
and adjusting those policies to be able to be better funded.
So I don't think we should buy into this hearing's premise.
The demographic changes in our country are really interesting.
As a single mom, I absolutely hear Dr. Edwards on the cost
of raising a child. I think the points you make about
immigration are all lovely, but I don't think we should lose
sight of the fact that we, as Congress, have a responsibility
to solve this problem by enacting policies that would make
Social Security solvent.
And the reality is here. We have zero Republicans
cosponsoring that bill. Republican math is why our debt keeps
building, and I don't think we should scapegoat our seniors
about that fact.
I yield back.
Vice Chairman Schweikert [presiding]. Thank you, Ms.
Porter.
And not having a whiteboard, that is what Democrat policies
added in 30 months. So we can both play the whiteboard, and it
turns out the math will always win.
Mr. Trone.
Representative Trone. Thank you, Mr. Chairman and staff for
gathering us here today to look at these demographic trends.
As our Nation faces an aging population lower labor force
participation, rising mortality, and declining fertility, the
responsibility to act really falls on us. We have got to figure
this out.
So we have to recognize the complexity of these trends and
pass legislation. It is going to be things that we do here in
this group to help deal with the magnitude of this issue.
And the Census Bureau survey found that 5 million people
miss work every week. Five million every week simply because
they can't get care for their children. No daycare.
If we invest in adequate health care, mental health
services, substance use disorder, recovery programs, subsidized
childcare even, heaven forbid, and early childhood education,
we can shift those trends in a better direction and get more
labor participation.
So my first question for Dr. Edwards: In your testimony,
you highlight the reasons why these individuals leave the
workforce. One of the reasons was having a child and the rising
cost of childcare.
I am strong proponent of the child tax credit, universal
pre-K, affordable childcare. Talk about these policies and
others you would support that would help us in the labor market
for working-age women to fully participate.
Dr. Edwards. Thank you so much for the question.
I mean, I think anyone who has ever met a toddler could
tell you why it is so hard to work and have children. Part of
that is having a safe and affordable place to put your kid.
Right now we know that the highest quality early childhood
is really serviced in a U, where the very richest households
are able to get high quality care, and then a select share of
the poorest households that qualify for our limited childcare
assistance. And who falls in the middle is the middle class
that basically their primary strategy is just being resourceful
and finding something to make do.
We have the opportunity to really put the thumb on the
scale in terms of the type of early childhood investments we
make, but I think it shouldn't be lost that, you know, part of
this is making it easier for women to work, but the other part
is making the workplace easier.
Countries that have had very high success with high women's
labor force participation have the right to request part-time
work. They have the right to request flexible and remote work
arrangements, something that would also benefit people who are
experiencing kind of acute or temporary health or even
disability in their life.
I mean, we do want to make the workforce healthier, but we
also want to make work more amenable for people who can't be
healthy, and that is a two-way street that starts not just with
what we invest but with kind of the rules of the game we set
out for American workers.
Representative Trone. Foreign-born people account for more
than 18 percent of the labor force, yet they are half of the
growth of the labor force. Pretty dramatic difference there.
Before the pandemic, in your testimony, Dr. Harris, you
focus on the benefits of immigration. I am a huge immigration
proponent. The beautiful diversity gives us diversity of ideas.
They give us better solutions time and time again. The creation
of jobs.
So talk a minute about, elaborate, how this increase in
immigration can really impact our labor force and drive the
deficit down.
Dr. Harris. So immigration has a wide array of economic
benefits. One I think, as you alluded to, was innovation. We
see the number of patents per capita rise substantially and
significantly when we let more legal immigrants come to the
country. In terms of the finance outlook for Social Security
and Medicare, that improves. We have younger workers coming
into the economy, and actually prices go down. And we have been
dealing with inflation as a country for the past 3 or 4 years,
and so if we are--you know, if this is an anti-inflation
program, immigration can help solve some of these problems as
well.
Representative Trone. Does anybody on the panel quickly
have a sense of how many immigrants we have let in each of the
last 5 years, lawful immigration?
Dr. Harris. I don't have that number. I will say that we
are short about 1.7 million immigrants relative to the pre-
pandemic--actually, honestly, it is relative to the pre-2017
trend. So we are down almost 2 million workers we would have
expected if we had had this hearing 6 years ago.
Representative Trone. That is exactly a big number I had
come up with also. It's huge, huge number of folks.
What about the--if we change our immigration policies at
all to begin to change and allow more folks in, as our
population is going up to 330 million, what changes have we
made in our policies to let more immigrants in legally each
year?
Dr. Harris. We have not had comprehensive immigration
reform. In 2013, we had S. 744 pass the Senate I believe with
69 votes, so there was obviously high consensus in the Senate.
But we haven't had comprehensive immigration reform in quite
some time.
Representative Trone. Would you say it is past due time to
figure out how to get more folks here, drive the economy, cut
down the deficit, and reduce inflation?
Dr. Harris. Yes, I would.
Representative Trone. Thank you.
I yield back.
Vice Chairman Schweikert. Thank you, Mr. Trone.
Actually, you are hitting actually one of my favorite
subject areas. Forgive me, but I am going to actually--because
there is a couple of things I would like to chase down.
I actually want to follow up on Mr. Trone's. And I will
start with Dr. Harris because this seems to be one of your
areas of interest. Let's say you and I were about to do
immigration reform, as we are trying to do as much population
stability, because I am going to ask the other parts of the
panel about the 75 and older. So I am trying to--but doesn't--
for productivity, for velocity, for tax receipts, doesn't it
have to be mostly a talent-based sort of model? Because there
is a brilliant article that was in the Economist magazine a
little while back that basically said the seventies, eighties,
we all went at each other for hydrocarbons. Last decade was
rare earths. With the next couple of decades, it is smart
people. How far off am I?
Dr. Harris. I think it is an excellent question. I have had
my thinking on this change a bit by research. And so, for
example, there are economists at the Brookings Institution who
have recently come out with research that has said it is not
just the high-skilled workers that can drive higher
productivity but some lower-skilled workers that have nodes to
the rest of the economy.
So, for example, truck drivers. Truck drivers aren't
necessarily terribly high-skilled workers, but they are very
important to the productivity and the economy.
Vice Chairman Schweikert. And, Doctor, actually send me
those articles, because we are actually trying to think of a
mix of what is technology replacements--and that was actually
one of the bases that originally was going to be this economy--
is how do we actually embrace the fact we are going to be an
older society? Using technology to provide certain services?
Are we heading towards a future where longer haul is an
autonomous truck, you know, starting to find the mix? And then
what do we have to supplement with higher talent populations?
Dr. Topoleski, I know CBO had worked up some data and was
it just 2 weeks ago we got an update from Census. Do you
remember what those numbers were for 75 years and up,
particularly over the next 10 years, 20 years? And has there
been an estimate of the stressors that will cause on resources
for Medicare?
Dr. Topoleski. So I don't have the numbers of 75 and up at
hand. We could certainly get those to you. We have that level
of demographic detail, and that is available in the census
projections as well. So we could send you a comparison of the
two groups. But certainly an aging population, particularly as
others on the panel have said, the oldest old, they are an
expensive group.
Vice Chairman Schweikert. Okay. Because there is a spot
here where--and Dr. Edwards and Dr. Scott came closest, and I
want to start getting some of my heads around, because also at
the same time I am looking at data that says we may be going
into our fifth year where life expectancy, particularly for
males, actually is falling. And we have done some work--it is a
little harder to vet, so I have to--where we used to believe it
was drugs--drugs is way up there, but it was actually obesity.
Maybe one of the greatest difficulties within that population
as Ms. Edwards at one point talked about some of our horrible
maternal, you know, expectancies. And if you actually dive deep
into the numbers, it is obesity in some of the populations that
are having some really difficulty. And it took a long time to
find some of those datasets.
Dr. Scott, that 75 and older, it is cost. At the same time,
I am being told life expectancies, particularly for males, is
falling. What am I not understanding?
Dr. Scott. Well, I think it depends on--and I will admit
you have to really get sort of granular with those life
expectancies because life expectancies even for males at older
ages is starting to grow, but it does differ by race and
ethnicity, by income, so various groups. And, of course, we
just got through a pandemic, and that has affected life
expectancies.
Vice Chairman Schweikert. And if we were trying to do the
adjustment for removing the million--let's call it a million of
our brothers and sisters who COVID-19 changed mortality
statistics recently, but we also have been trying to take a
look at, even in some of our quartiles and, to be brutally
honest, morbid obesity and those things and what that is doing
in bending over life expectancies.
Am I looking at the right places? Am I fixating on the
noise?
Dr. Scott. I would be happy to follow up because I think I
have seen some data that shows we do expect some increases in
life expectancies amongst some of the older groups to catch up
some of the differentials we see between men and women, between
Hispanics and Whites, et cetera, et cetera. I would have to
follow up. But, I mean, the fact that--I was just looking at
the numbers we projected on the 75 and older, we are going to
move from 29 million people 75 and older in 2020 to 45 million
by the year 2040. That is a 107 percent increase.
So I think in general we are seeing increases in life
expectancy across the board. But I take your point, and I think
it is an important one. That is not uniform across different
groups in society. And so I would be happy to follow up on some
of those differentials and life expectancy.
Vice Chairman Schweikert. Okay. And, Ms. Edwards--and I am
not being mean here because you have actually given some
terrific stuff. But we did just sort of look up, World Bank
actually has France's fertility at 1.8. So there is always some
noise sometimes when we get data.
But you had something you wanted to share?
Dr. Edwards. Yes. In regards to maternal mortality, the
spike over the last 3 years, you know, a near doubling of
maternal mortality in the U.S. was not matched by a near
doubling of obesity.
There are long run drivers that can make a risk factor,
but, you know, this spike that we have seen is an opportunity
to identify the problems.
Vice Chairman Schweikert. Yes.
Dr. Edwards. And hospital quality is a key part of that,
not how the hospital serves everybody else, but how hospitals
serve mothers in particular. There is room for policy here, and
it is not just a mom's health when she walks in the door to
deliver.
Vice Chairman Schweikert. Dr. Edwards, I care a lot about
this one having just adopted another child who was born drug
addicted, and so maybe it is--it is always a danger when you
have Members of Congress that personalize things. Send me stuff
because I really would like to crack the rhythm out there and
find out if there is a policy set that actually we could make a
difference on.
To my fellow members of the committee, does any one else
have something burning they wish to ask?
Senator Welch. No thank you.
Vice Chairman Schweikert. Okay.
Representative Moore. I have something burning.
Vice Chairman Schweikert. What?
Representative Moore. I have something burning I would like
to ask.
Vice Chairman Schweikert. No. Ms. Moore.
Representative Moore. I mean, whoever gets to ask a burning
question.
Vice Chairman Schweikert. I said burning, not Bernie.
Representative Moore. Listen, I have heard a lot as a
Member of Congress about, you know, balanced budgets and
deficits and where we are at and deficit spending now.
I just want maybe, Dr. Harris, for you to review maybe in
the last 5 years--we have had surpluses five times in the last
50 years. And, you know, I keep thinking that whenever we give
these huge tax cuts, it seems like that is the time that we
accumulate these big deficits. Even though there is a promise
that we are going to see, you know, an increased spending--an
increased GDP, we find ourselves in a deficit situation.
It seems to me when Bill Clinton was in office--I recall
that very vividly--there was a surplus that was left. Then we
had Bush tax cuts. Then we had Obama who came in, you know, and
there was a double-down on the Bush tax cuts with all the wars
in between, and now under our previous President we had some
more tax cuts.
Can you give me just a, you know, view of tax cuts and the
occurrence of those tax cuts with deficits?
Dr. Harris. Sure. So in instances when we have had
relatively strong fiscal positions, as you mentioned in the
late nineties, it has either been driven by cuts in spending,
increases in revenues, or strong economic growth like we saw
with the dot-com boost. And so that is kind of the general, and
there is really three variables that go into our fiscal
outlook, and those are the three.
In terms of the 2017 Tax Act, I consider it to be a thought
experiment, and I consider be it to be a failed one. I have
been an outspoken opponent of the 2017 Tax Act. It has
reasonable intellectual foundations, and the notion was we are
going to dramatically cut the tax rate on corporations in hopes
you would see this inflow of investment, and that simply didn't
happen.
So I consider that to be a failed intellectual experiment,
but one that cost $2 trillion.
Representative Moore. And what about the Bush tax cuts, you
know, and then doubling down on them during the Obama
administration.
Dr. Harris. Yes. So we had the 2001 and 2003 tax cuts which
had a variety of different elements, but some of those elements
I consider to score very poorly in terms of generating economic
growth were, for example, the estate tax cut that was put in
place in 2001 and then continued through in the 2017 Tax Act.
And then also dramatically lower tax rates lower on capital I
don't think necessarily had the economic boost that the
proponents hoped.
Representative Moore. Just wondering, you know, as we talk
about deficit. Just wanted some perspective. Thank you for
that.
And thank you, Mr. Vice Chairman.
Vice Chairman Schweikert. Thank you, Ms. Moore.
Mr. Beyer.
Representative Moore. Oh, you are back.
Vice Chairman Schweikert. Yeah, we are all excited. We were
stalling for him. We knew he would make it.
Representative Beyer. Thank you for waiting.
And thank you for the testimony. I didn't get to hear all
of it, but I read all of it.
I want to--and, by the way, David and Senator, thank you so
much more doing this hearing. It is incredibly relevant, and
you see it every day, everywhere in our lives. And thank you
for all the statistics.
I saw a fascinating statistic the other day about average
family size and how in the last 30 years you had 18 percent of
women who would never have a baby, and it is now up to 36, 37
percent. I mean, just the whole notion of zero-children
families, whereas the one-child family stayed roughly the same.
But when you think about it in terms of the workforce, it gets
pretty frightening.
But I also--given this is the Joint Economic Committee, one
of the things we worry about, of course, is the gap between the
21 and 22 percent we are spending on the services that every
American demands and the 15, 16 percent--we had the little
surge after all of the economic impact payments and the like,
but 15, 16 percent of the GDP in revenues.
It would be really interesting, Dr. Harris, to talk about
how much of this goes back to the tax cuts. If I was being
partisan, I would say the Republican-led tax cuts, but the tax
cuts that go back to early Bush, before the war, the two wars,
the prescription drug plan, and then the TCJA. How much
different could our fiscal revenue problem be if we didn't have
all of these tax cuts?
Dr. Harris. Let me say I appreciate you depoliticizing the
Tax Code because I think that you are right to point out the
Tax Code is so much more than just the 2017 Tax Act. I mean,
most of the Tax Code is not that single Tax Act. These are
decisions made by Congress going back decades, if not longer.
Ultimately, it is just a math problem. When we look forward
10 years, we have the structural deficit, which means that--
according to the Congressional Budget Office, we have an
average deficit of about 3 percent of GDP. If you take out
interest payments and if you take out the business cycle--so
this is when CBO assumes we are back at full employment--we are
just 3 percent off, which is just a math problem. We raise 3
percent of GDP too little to not accumulate deficit. So I think
that you are right to depoliticize it, though.
Representative Beyer. We also look--I don't know very few
Americans who think that they are overtaxed--or undertaxed, I
should say; the one exception being the wealthiest among us
where, as we know, the people sitting here are all taxed 30, 35
percent. And yet the wealthiest--you know, the 50 million plus,
I think the average is 8 percent of their income is taxed.
Do you see ever the political appetite to go after where
the money is in order to close that 3 percent gap?
Dr. Harris. I don't necessarily see the political appetite.
But I will say I am a little confused by why we have seen the
political nature of the IRS funding. Because, in my view, it is
not about just tax burdens. It is also about competitiveness.
And so we look at small businesses or even large partnerships,
who sometimes have very large tax gaps, who have just enormous
tax liabilities they don't pay, I see this as a competitiveness
issue.
And if you came to me with a policy and said, Look, we want
to go ahead and distribute trillions of dollars in the tax gap
to various businesses based on their willingness to pay taxes,
I would say you are crazy. But, in effect, that is what is
happening, where we are not enforcing the Tax Code, it is
costing taxpayers trillions of dollars every 10 years. And,
ultimately, it is the competitiveness issue that puts those
that are willing to pay their taxes at a disadvantage relative
to those who are not.
Representative Beyer. Thank you very much.
Dr. Edwards, I know you do this great demographic work, but
according to labor supply policy, you know, we talk about how
the workers are getting older. We have been recommending that
the Department of Labor look specifically at an older workers
bureau just because, as we know, the older workers get older
and older, age discrimination which is set to cost the economy
$4 billion, and we don't really have any data on retirement
readiness, on retirement income for a lot of those folks or
just--my high school classmates tell me that I am the oldest--I
am the last person in the class not to retire at the age of 73.
And yet we know that we are going to need people as old as
David and me that are young----
Vice Chairman Schweikert. Hey, hey.
Representative Beyer [continuing]. To be in the--well, you
had a little kid--to be in the world force. How do we address
older workers?
Dr. Edwards. The nice thing about labor supply policy is
that it is actually really hard to isolate. So if you were to
pursue things like an accommodation policy, the right to work
part time, you know, the right to request flexible arrangements
that you wouldn't be able to prevent older workers from taking
advantage of that.
You know, most of us have this notion of retirement,
especially young couples, that two people come to a decision
today is the day I stop work, and they just stop. But that is
not what retirement looks like in America today. Most people
phase out of work. They move to part time if they can. They
work a little bit when they want to. And a lot of people
backtrack, where they stop work and they are, like, I am
ungodly bored, I am going back, and they go back to work. And
that--you know, recognizing that retirement is not a decision
but a process certainly by our labor market and our employers
and our Social Security system would help us carve basically
the most efficient policy to let people work how long they
wanted to work and not put barriers in place in front of them.
Representative Beyer. For example, at the State Department,
you are out at age 65, despite the fact that is an age when
most people are coming into their full diplomatic skills. My
grandmother was thrown out of USAID at age 82 kicking and
screaming, but they had already given her a pass again and
again.
What can we do to encourage people to stay in the labor
market longer to stay actively working, besides making it so
they can't afford to retire?
Dr. Edwards. You know, I think you have to meet people
where they are. There are lots of instances in people's lives
where work just doesn't come first because they have a toddler,
because their wife is dying. And we can't meet that need for
flexibility with rigidity. Most industrialized economies have
the right to request part-time work.
Right now in the United States if you want to work part
time, you are working a low-wage retail job and a shift that is
not regulated that does not pay much more than the minimum
wage.
We have to extend the options for people, not just the
types of jobs we have, but the types of ways that people
consume those jobs.
Representative Beyer. Yeah. I was--Mr. Chairman, if I could
ask one more question too or just a comment?
Vice Chairman Schweikert. I couldn't stop you if I wanted.
Representative Beyer. I had the pleasure of living in
Switzerland for 4 years where the part-time people--it took us
awhile to adjust to it--they were 30 percent or 50 percent or
70 percent. And if somebody like Gwen had a 50 percent job,
that meant that she got 50 percent of the normal income, 50
percent of the benefits, 50 percent of the vacation pay. And it
wasn't like here where if you are part time, you don't get
anything. And it worked. And then people could actually take a
30 percent job or a 60 percent job and really integrate it with
the rest of their lives. And the whole economy had adjusted to
that, and it was something we could learn from.
With that, Mr. Chairman, I yield back.
Vice Chairman Schweikert. Thank you, Don.
Jodey, welcome.
Representative Arrington. Mr. Chairman, thank you for
holding this hearing.
You know, this topic is near and dear to my heart as budget
chairman, but before that I was thinking what could possibly be
more important, more destructive to our prosperity, our future,
our economic strength, national security than national
insolvency, undermining the currency, bankrupting the country?
There are a lot of ways to say it. It is just nobody believes
that I've talked to who's serious, on either side of the
political spectrum and idealogical spectrum, that the current
deficit spending and debt is sustainable. They don't--they
can't tell you exactly when this thing really goes off the
rails.
But I think the vicious cycle of deficit spending increases
and the interest that is projected to be a trillion dollars
next year and exceed our expenditures for national defense
should be alarming enough. But the vicious cycle is becoming a
fiscal death spiral. And I am not--let my democratic colleagues
put revenue on the table. I am not--that is not offensive to
me. They want to solve the problem too. I think it is a
spending problem. But if they will work with me by including
revenue, I think that is fair. Because if I don't, then we will
never have this conversation and we will never address it, and
we will bankrupt the country, and then seniors won't have
safety nets that they rely on, our soldiers and sailors won't
have the tools to be safe and successful, and China more than
likely or someone else becomes in this new world order the
global super power, and that is all unacceptable to me.
So while I have no interest in raising taxes and while
every analysis on my end suggests it is the spending that is
absolutely running away from us and it is the expansion of the
Federal Government's role beyond what I believe was ever
intended, and the fact that when you can deficit spend, that
is, if you can borrow or tax the next generation and not
actually take any money out of people's wallets today or cut
someone's favorite program--I always use the farm bill because
I am from ag country--because you don't have to do that and you
can keep borrowing and you are the world currency, that is the
recipe to end the republic as we know it, not from existential
threats, but from our inability to.
Now, let me get to the point. I know that is not--I am
sorry.
So I believe everyone is motivated here in their own way to
address this.
We need to protect, strengthen, and save certain programs.
I would say Social Security and Medicare are critical to tens
of millions of Americans and to the country as a public good.
We should make them work better, more cost effective. We should
make sure he we don't have, like, for example, on the Medicaid
side $80 billion in fraud, waste, and abuse. So taxpayers ought
to be protected. Program integrity ought to be at the highest
standards.
Here's my question. If your unfunded liability is $120
trillion, according to CBO, 30 years out--and, yeah, it is
probably--it is hard to keep up with it. It keeps climbing. If
it is $120 trillion and 99 percent of that in the 30-year
outlay on deficit spending, the cumulative debt, $120 trillion,
is two programs, Medicare and Social Security. And those are
important, and we need to make them sustainable. What's the
solution? Nobody wants to talk about it.
So I am going to just--I will ask you all. You are the
experts. We are talking about a debt commission, having a
bipartisan venue to dial down and depoliticize those issues so
we can help make them work better and sustainable over the--for
the next generation of seniors, not just for the ones today.
What do we do? What do we do? Do we just bury our head in the
sand? I had an event--a Budget Committee hearing on just that,
not on Social Security, by the way, and its viability and
sustainment, just on the debt commission. And I had some guy
who may be in here today that just followed me with his camera
all the way to the floor of the House saying, Tell the American
people why you want to take away their Social Security.
So do we just--we are just going to wait until the whole
thing collapses? By the, way then you have got austerity. You
have got everything you don't want from the tax side to the cut
side. And, by the way, you don't get a choice. It is going to
happen.
So what do we do? I will start with Dr. Edwards and maybe
go left, and then I'll be done.
Vice Chairman Schweikert. We need you to be fairly
succinct.
Representative Arrington. Yeah, I know. Did I go way over?
I am sorry. I came from another hearing and got worked up on
that too.
Dr. Edwards. So I--when people ask me what is driving
Social Security's problems, this is going to sound a bit harsh,
but it is in large part congressional neglect. This is a
program that requires maintenance as our demographics change.
It needs updates. It needs to be addressed. It has not been
touched since before I was born. The problems of Social
Security's 75-year actuarial shortfall emerged before I entered
kindergarten, and they have been around and growing since. And
every year that we wait to fix them is a year that they get
more and more expensive, and the republic does seem
apocalyptically doomed. But they don't have to be.
What I would stress to you is whatever you need to do, you
do it now. You need to address this now for the sake of
Americans who don't want to wait until the night before the
funding expires in 2033 to see what is going to happen because
uncertainty on top of everything else is not fair to give
Americans Social Security costs out, actuarial policies and
exactly how much they can fix the problem. You go shopping. You
pick what you can agree on, and, you know, we don't have to
have this discussion every year.
Representative Arrington. Maybe one more witness. That was
great. I agree.
Dr. Harris.
Dr. Harris. I will say I can give you my preferred approach
to Social Security, but I think, more importantly, I have been
doing this for 25 years and working in policy. I have found the
tone of this committee to be admirable, if not inspirational.
You all are presenting a very collaborative front, which is
what is required for any type of Social Security reform. Social
Security cannot be fixed through reconciliation. It requires 60
votes in the Senate.
So I can give you my prescription, but I think, most
importantly, it requires Members of Congress like this
committee who are willing to work with each other.
Representative Arrington. I want to compliment the chairman
that I know best in Dave Schweikert who has spoken boldly. He
has been a truth-teller on this, and I know there are other
members that are too. But we have to have political courage at
the end of the day, and we have got to care more about the
country's future than our own political future. I am not saying
I am always William Wallace of Brave Heart, but I certainly
think we all have to muster as much of that as we can if we are
going to save this country.
God Bless America. Go West Texas. And I yield back.
Vice Chairman Schweikert. Thank you, Mr. Arrington.
And to Mr. Heinrich, thank you, once again, for your
kindness. And I want to say thank you both to the Republican
and Democratic staffs. We are sort of demonstrating--you know,
we often see the world a little differently, but we are trying
to build a rhythm of--our solutions may come a little
different, but the problems are all the same.
To each of our witnesses, thank you. I am sorry for the
chaos. It is sort of the nature of the body and the nature of
our timing.
Please expect written questions being sent to you. If you
would be kind enough within a couple of weeks to respond to
those. And to members of the committees, if you have other
extraneous materials you would like to make part of the record,
please provide that within about the next 14 days.
And with that, this hearing is over.
[Whereupon, at 4:04 p.m., the Committee was adjourned.]
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