    [Senate Hearing 118-012]
    [From the U.S. Government Publishing Office]

                                                        S. Hrg. 118-012

                       THE PRESIDENT'S FISCAL YEAR 2024
                                BUDGET PROPOSAL

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

                                    HEARING

                                   BEFORE THE

                            COMMITTEE ON THE BUDGET
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 March 15, 2023

                                   __________

               Printed for the use of the Committee on the Budget

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                www.govinfo.gov

                                    __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    52-111                       WASHINGTON : 2023

    -----------------------------------------------------------------------------------

                            COMMITTEE ON THE BUDGET

                   SHELDON WHITEHOUSE, Rhode Island, Chairman
    PATTY MURRAY, Washington             CHARLES E. GRASSLEY, Iowa
    RON WYDEN, Oregon                    MIKE CRAPO, Idaho
    DEBBIE STABENOW, Michigan            LINDSEY O. GRAHAM, South Carolina
    BERNARD SANDERS, Vermont             RON JOHNSON, Wisconsin
    MARK R. WARNER, Virginia             MITT ROMNEY, Utah
    JEFF MERKLEY, Oregon                 ROGER MARSHALL, Kansas
    TIM KAINE, Virginia                  MIKE BRAUN, Indiana
    CHRIS VAN HOLLEN, Maryland           JOHN KENNEDY, Louisiana
    BEN RAY LUJAN, New Mexico            RICK SCOTT, Florida
    ALEX PADILLA, California             MIKE LEE, Utah

                       Dan Dudis, Majority Staff Director
            Kolan Davis, Republican Staff Director and Chief Counsel
                       Mallory B. Nersesian, Chief Clerk
                      Alexander C. Scioscia, Hearing Clerk

                                N T E N T S

                                  ----------

                           WEDNESDAY, MARCH 15, 2023
                    OPENING STATEMENTS BY COMMITTEE MEMBERS

                                                                       Page
    Senator Sheldon Whitehouse, Chairman.............................     1
        Prepared Statement...........................................    39
    Senator Charles E. Grassley, Ranking Member......................     3
        Prepared Statement...........................................    41

                        STATEMENTS BY COMMITTEE MEMBERS

    Senator Patty Murray.............................................    10
    Senator Ron Johnson..............................................    11
    Senator Debbie Stabenow..........................................    13
    Senator Roger Marshall...........................................    15
    Senator Ben Ray Lujan............................................    17
    Senator Rick Scott...............................................    19
    Senator Chris Van Hollen.........................................    21
    Senator Mitt Romney..............................................    22
    Senator Tim Kaine................................................    25
    Senator Mike Braun...............................................    26
    Senator Jeff Merkley.............................................    28
    Senator John Kennedy.............................................    30
    Senator Lindsey O. Graham........................................    32
    Senator Alex Padilla.............................................    34
    Senator Mike Lee.................................................    35

                                   WITNESSES

    The Honorable Shalanda D. Young, Director, Office of Management
      and Budget.....................................................     6
        Prepared Statement...........................................    46

                                    APPENDIX

    Responses to post-hearing questions for the Record
        Hon. Young...................................................    48
    Questions as submitted for the Record............................   109
    Charts submitted by Chairman Sheldon Whitehouse..................   121
    Document submitted for the Record by Senator Charles E. Grassley.   124

                       THE PRESIDENT'S FISCAL YEAR 2024
                                BUDGET PROPOSAL

                                  ----------

                           WEDNESDAY, MARCH 15, 2023

                                               Committee on the Budget,
                                                           U.S. Senate,
                                                        Washington, DC.
        The hearing was convened, pursuant to notice, at 10:15
    a.m., in the Dirksen Senate Office Building, Room SD-608, Hon.
    Sheldon Whitehouse, Chairman of the Committee, presiding.
        Present: Senators Whitehouse, Murray, Stabenow, Merkley,
    Kaine, Van Hollen, Lujan, Padilla, Grassley, Crapo, Graham,
    Johnson, Romney, Marshall, Braun, Kennedy, R. Scott, and Lee.
        Also present: Democratic Staff: Dan Dudis, Majority Staff
    Director; Joshua P. Smith, Budget Policy Director.
        Republican Staff: Matthew Giroux, Deputy Staff Director;
    Krisann Pearce, General Counsel; Erich Hartman, Economist.
        Witness:
        The Honorable Shalanda D. Young, Director Office of
    Management and Budget
        Chairman Whitehouse. The Committee will come to order.
        This is a hearing of the Senate Budget Committee regarding
    the President's Fiscal Year 2024 Budget Proposal. We'll begin
    with my opening statement, and then Ranking Member Grassley's,
    and then we'll proceed to you, Ms. Young. Thank you so much for
    being here.

              OPENING STATEMENT OF CHAIRMAN WHITEHOUSE \1\
    ---------------------------------------------------------------------------

        \1\ Prepared statement of Chairman Whitehouse appears in the
    appendix on page 39.
    ---------------------------------------------------------------------------
        Chairman Whitehouse. Ranking Member Grassley, Members of
    the Committee welcome. Special welcome to Director Young, who I
    know, who has had a very busy past few weeks. We look forward
    to your testimony. A budget is a statement of values. It makes
    clear what we prioritize. President Biden's budget would lower
    costs for households, strengthen Medicare and protect Social
    Security. It would invest in our kids and our families and in
    our communities. It would reduce the deficit, and it would make
    our corrupted Tax Code fairer.
        It is decidedly not a budget for creepy billionaires and
    fossil fuel overlords. It is a budget for families. The
    investments proposed in this budget are more than worthwhile.
    They are overdue. I challenge anyone to say it's not worthwhile
    to make investments in our kids. The Biden budget would
    increase childcare options for 16 million more kids, lower
    costs for parents, fund pre-K access for all four-year-olds,
    and restore the full child tax credit, which we beta-tested and
    saw work wonderfully well through COVID.
        I challenge anyone to say it's not worthwhile to ensure
    workers can care for a child or a loved one and still keep a
    steady paycheck. The Biden budget would guarantee up to 12
    weeks of paid family and medical leave, bringing the United
    States in line with our peer countries around the world, all of
    whom guarantee paid leave. I challenge anyone to say it's not
    worthwhile to reduce the astronomical cost of prescription
    drugs and college education, to improve Medicaid's home and
    community-based services, and to reduce costs for homeowners
    and renters.
        To accomplish all this and more, the Biden budget would
    stop the freeloading by large corporations, by the wealthiest
    families in our country, and by firms that pollute the
    environment and won't clean their mess. Ending tax breaks for
    corporations sending profits offshore and outsourcing American
    jobs reduces the deficit by over a trillion dollars, ending
    nearly $100 billion in wasteful tax breaks for the fossil fuel
    industry, and hundreds more billions in subsidies to Big Pharma
    not only helps the deficit, but is the right thing to do.
        Our corrupted tax system currently has teachers and
    firefighters paying higher tax rates than billionaires. The
    Biden budget puts a 25 percent minimum tax on those who earn
    over $100 million annually. The President's budget would extend
    Medicare solvency by 25 years, in part by asking the wealthy to
    contribute a little more to Medicare, and by closing loopholes
    that allow those at the top to contribute less than nurses and
    cashiers. I plan to introduce legislation including this
    commonsense proposal.
        These investments and these remedies to our Tax Code are
    worthwhile on their own merits. Put them all together, and they
    also reduce deficits by almost $3 trillion. This is a bright
    contrast to the dark House Republican plan to attack popular
    programs that promote economic growth, a plan that hides its
    evil effects behind political rhetoric like ``woke'' and
    ``weaponized,'' a plan where the math doesn't add up and
    wealthy donors keep getting their free ride.
        The new House Majority has said it will make permanent the
    Trump tax giveaways, over 40 percent of which go to the top
    five percent, at a cost to the country of $3 trillion over a
    decade. According to a letter Senator Wyden and I received
    yesterday from the Congressional Budget Office, the Republican
    promise to balance the budget in ten years, while extending the
    Trump tax giveaways and imposing draconian cuts to the programs
    that boost economic well-being is, in a word, impossible.
        Mathematically it cannot be done. Even if Republicans were
    to zero out everything but Social Security, Medicare, veterans'
    services and defense, that means eliminating 100 percent of the
    funding for public safety, border security, Medicaid,
    environmental protection, health care, treatment for opioid
    addiction and so much more, they would still not be able to
    meet their own goal of balancing the budget.
        What they would be able to do is make nearly every family
    worse off and send our economy into a tailspin. So okay, if
    that's what House Republicans really want, they should own it.
    Champion it through the regular legislative order the
    Constitution provides, not by stealth, not with debt limit
    threats, not by trying to force some covert backroom deal to
    gut popular federal programs.
        Here's our choice: President Biden's pro-growth
    investments, which also reduce the deficit by nearly $3
    trillion, versus spending cuts deep enough, economists believe,
    to plunge the U.S. into a recession, coupled with extending the
    Trump tax giveaway and adding $3 trillion to the deficit.
        Families versus creepy billionaires. Economic opportunity
    and fiscal responsibility versus chaos and corruption. Seems
    like an easy choice; we welcome the debate. Thank you. Member
    Grassley.

               OPENING STATEMENT OF SENATOR GRASSLEY \2\
    ---------------------------------------------------------------------------

        \2\ Prepared statement of Senator Grassley appears in the appendix
    on page 41.
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        Senator Grassley. Well first all, I appreciate your holding
    this hearing, and I hope it's the first of many more that will
    have--discussing the nation's finances and Director Young, I
    welcome you to this hearing as well because we all know you
    have a very not only important job, but a difficult job. Some
    decades ago when federal government was staring at maybe
    something as small as $200 billion budget deficits, there was
    then a Senator Joe Biden, who warned of quote-unquote
    ``economic disaster'' unless Congress took quote-unquote
    ``dramatic action on deficits right now.''
        Senator Biden called for getting a grip on federal spending
    and limiting its growth with a temporary government-wide
    spending freeze. That's right, including COLAs. He called for
    reviewing the efficiency and necessity of government programs,
    and he pushed for changes to the budget process that would
    improve accountability and make it harder for presidents to
    pass the buck. Today, we face a far dire situation and
    President Biden ought to borrow from Senator Biden's playbook.
        You might be interested in reading, not that you're going
    to do it, but May the 2nd, 1984, when this across-the-board
    budget freeze called the Grassley-Kassebaum-Biden-Baucus budget
    freeze passed the Senate by a one vote margin. You might want
    to read about the hour-long speech that President, now-
    President Biden, then-Senator Biden gave during that debate.
    Unfortunately, the President's budget proposal continues to
    take our nation down a path of fiscal and economic ruin.
        The White House referred to this budget as Biden's vision
    for the future of America. Let's talk about what the vision
    looks like. President Biden is proposing levels of debt,
    deficits and spending previously reserved for times of world
    war or recession. President Biden's vision for the future is
    job-killing tax hikes, cradle to grave entitlement proposals.
    If that sounds familiar, it's because it's the same proposal
    members of his own party rejected last Congress, as they called
    it, ``too extreme.''
        The President uses slight of hand to claim he's reducing
    the deficit. Well, according to the non-partisan Congressional
    Budget Office projections, cumulative deficit between 2021 and
    2031, that ten-year window, will be $6 trillion higher than
    what was projected when Biden took office. President Biden,
    whose spending priorities are on track to put even more on our
    already maxed-out credit card. President Biden's vision for the
    future is a continuation of his administration's assault on the
    fiscal health of our nation during times of economic
    uncertainty.
        Annual deficits were always expected to decline from
    pandemic levels, because we put emergency programs in place and
    those emergency programs were to expire. In other words, when
    you put something in because we have a national catastrophe of
    a pandemic, and those programs wouldn't be in place if it
    wasn't for the pandemic, when those programs go away then you
    ought to get back to the level of expenditure pre-pandemic plus
    inflation, plus increase in population.
        But the leadership here in Congress has recklessly
    accelerated the return to multi-trillion-dollar deficits
    through legislation and even executive actions. In 2021,
    despite warnings from President Obama's former economic
    advisor, Democrats abused the budget reconciliation process to
    fast track a $2 trillion liberal wish list that sparked the
    highest inflation that we've seen in 40 years. Democrats
    followed that up last year with another partisan reconciliation
    bill that they claimed would reduce inflation and cut the
    deficit. But it should be to nobody's surprise and backed up by
    CBO figures and other independent experts, found that the bill
    actually increases inflation.
        And by this administration's own estimate, the bill added
    another $200 billion to the nation's tab. But at least those
    bills actually passed Congress. The same can't be said of the
    administration's $400 billion or more student loan bailout, or
    its unilateral expansion of the Food Stamp Program. In
    President Biden's vision for the future, public debt towards
    our nation's entire economic output, annual deficits under
    Biden budget grow from 1 and 4/10ths trillion last year to over
    $2 trillion ten years from now.
        By 2027, public debt would surpass record levels set in the
    wake of World War II, and continue to climb, and we have a
    chart that shows that. Like a family or business that incurs
    more debt simply to make good on past debts, our nation risks
    entering a vicious debt spiral as interest rate costs soar. In
    President Biden's vision of the future, interest on the debt
    costs more than the national defense. Interest costs nearly
    triple from 476 billion last year to over 1 and 3/10ths billion
    at the end of the ten-year budget window, and total a
    staggering 10 and 2/10ths trillion over ten years as you can
    see in the chart.
        That's $10 trillion in hard-earned tax dollars that will
    not go to improving the lives of Americans, with the largest
    share of the budget tied up in servicing our debt, we'll be
    less able to respond to future recessions, pandemics and
    foreign threats. In President Biden's vision for the future,
    American debt leaves us more vulnerable and less competitive on
    the world stage.
        At home, private business investment is increasingly going
    to be crowded out, leading to anemic economic growth, lower
    wages and fewer jobs. You get out of this budget situation not
    by growing taxes, but by growing the economy. We had bank
    failures this past week. Those bank failures highlighted how
    fragile our economy is right now, given decades-high inflation
    and rising interest rates.
        The more Congress borrows and spends, the higher interest
    rates will have to go up, and ultimately, it's families and
    small businesses that will suffer the economic consequences.
        President Biden's vision for the future includes $5
    trillion in tax hikes on all income levels, including millions
    on families with incomes under 400,000, regardless of what the
    President says, limiting it to just people 400,000 and above.
    Tax revenues are currently at historic highs. Yet the President
    wants to extract more from families and small businesses
    already struggling under decades-high inflation, and remember
    inflation is a tax, right now about five percent on everything
    you buy.
        Under his budget, the government's bite out of the economy
    would be the largest since World War II, and despite all that
    he continues adding to our national debt at breakneck speed.
    Clearly, we aren't going to be able to tax our way out of the
    current fiscal mess. To climb out of a fiscal hole that we dug,
    we must stop digging. This isn't just a Democrat problem of
    deficit spending; Republicans have been culpable as well.
        Instead, the President's proposed 2-1/2 trillion dollars in
    new mandatory spending programs, meanwhile he largely ignores
    the existing major trust fund programs that are on a path to
    insolvency. To the extent such programs are addressed, his
    budget relies on smoke and mirrors to kick the can down the
    road. So, President Biden's vision for our future is more
    taxes, more debt, less opportunity and fewer resources for
    essential government services. If my colleagues on the other
    side of the aisle are happy with this budget and want to
    embrace it as their own, then I'd say fine, let's have a vote
    on it. I'd challenge Leader Schumer to bring it to a vote and
    predict it would be getting very few votes, and that's happened
    to Republican budgets as well.
        In other words, presidents propose, Congress disposes.
    Let's actually do our job and have the Budget Committee mark up
    a budget resolution. Let's see how the--show how the process is
    supposed to work. Republicans are ready and willing to work
    with presidents to get a grip on Washington's out of control
    spending and debt, but working together will require shared
    acknowledgment of the serious fiscal problems we're facing, and
    a willingness to work across the aisle.
        Unfortunately, I don't see any evidence of that in this
    budget. But Senator Biden recognized that when he wanted to
    freeze the budget across the board, helping me do that. Thank
    you.
        Chairman Whitehouse. Thank you, Senator Grassley. Our
    witness today to speak about President Biden's Fiscal Year 2024
    Budget is Shalonda Young, the Director of the Office of
    Management and Budget. Thank you for being here, Director
    Young. Please proceed with your opening statement. Your full
    testimony will be made a matter of the record.

    STATEMENT OF THE HONORABLE SHALANDA D. YOUNG, DIRECTOR, OFFICE
                      OF MANAGEMENT AND BUDGET \3\
    ---------------------------------------------------------------------------

        \3\ Prepared statement of Hon. Young appears in the appendix on
    page 46.
    ---------------------------------------------------------------------------
        Director Young. Great. I'll make this quick so we can get
    to the question-and-answer portion. Chairman Whitehouse,
    Ranking Member Grassley, distinguished Members of the
    Committee, thank you for the opportunity to testify on
    President Biden's Fiscal Year '24 Budget. President Biden came
    into office with a very clear plan, to grow the economy, not
    from the top down but from the middle out and the bottom up.
        Over the past two years in the face of significant
    challenges, that strategy has produced historic results for the
    American people. Under the President's leadership, we've added
    more than 12 million jobs, more jobs than two years than any
    president has created in a single four-year term. The
    unemployment rate has fallen to 3.6 percent, one of the lowest
    rates in over 50 years.
        We've taken action to lower prescription drug costs, health
    insurance premiums and energy bills, while driving the
    uninsured rate to historic lows. The President's economic plan
    in rebuilding America's infrastructure, promoting workers and
    fueling a manufacturing boom that is strengthening parts of the
    country that have long been left behind.
        The President has done all of this while delivering on this
    commitment to fiscal responsibility. During his first two years
    in office, the deficit fell $1.7 trillion, the largest decline
    in American history, and the Inflation Reduction Act will
    reduce the deficit by hundreds of billions of dollars more over
    the next decade.
        The President's Fiscal Year 2024 Budget details a blueprint
    to build on this progress and finish the job. It's built around
    four key values: investing in America, lowering costs for
    families, protecting and strengthening Medicare and Social
    Security, and reducing the deficit. It does all of this while
    ensuring that no one earning less than $400,000 pays a penny
    more in taxes.
        The budget more than fully pays for its investments,
    cutting deficits by nearly $3 trillion over the next decade, by
    asking the wealthy and large corporations to begin to pay their
    fair share, and cutting wasteful spending to special interests.
    The budget builds on the progress made over the last two years
    and proposes additional policies and lower costs for working
    families, including for health insurance, prescription drugs,
    childcare, utilities, housing, college, energy and more.
        When working families have a little more breathing room,
    they can help power our economy forward. The budget protects
    and strengthens Medicare and Social Security, bedrock programs
    that America's seniors have paid into their entire working
    lives. It also invests in America and working families. The
    budget will bolster manufacturing, make our communities safer,
    provide paid leave, support research in cancer, deliver for our
    veterans, cut taxes for families with children and more.
        These investments will pay dividends for decades to come,
    and in what will be a decisive decade for America and the
    world, this budget reflects the National Security Strategy by
    including robust investments in military readiness, our
    diplomatic and development tools, and honors a sacred
    commitment to our veterans.
        Thank you, Mr. Chairman, Mr. Ranking Member, Members of the
    Committee for the opportunity to appear here today and testify
    on behalf of the President's Fiscal Year '24 Budget.
        Chairman Whitehouse. Thanks, Director Young. It's great to
    have you here. Last year, OMB estimated that by the latter part
    of this century, federal spending on crop insurance, coastal
    disasters, health care and fire suppression would increase by
    between 26 and 134 billion dollars per year due to climate
    change.
        Put in terms of ten-year budget windows, which is the way
    we put things in this Committee, that would result in between
    260 billion and 1.3 trillion dollars in additional federal
    spending, with a middle case estimate of around $700 billion in
    additional spending.
        Now that estimate does not include a variety of other
    federal programs that would be affected by climate change,
    disasters, including defense spending and infrastructure, and
    it does not include that we've been hearing about in this
    Committee's hearings, of what are called systemic risks, when
    there's a whole economic meltdown associated with things going
    wrong.
        For instance, when property values crash in coastal or
    wildfire areas because the risk is uninsurable and properties
    are therefore unmortgagable, or the widely reported carbon
    bubble risk, is it fair to say that OMB's estimate is a lower
    bound estimate of the budgetary risk of climate change?
        Director Young. I agree with that assessment, your
    assessment that the expenditure impacts we have our an
    undervalue or under-reported here. One thing we have to do a
    better job here and in the private sector is incorporate what
    climate damages will mean for our expenditures in the future. I
    just met with some economists in outside organizations who do
    economic forecasting, so we can share information and figure
    out how we accurately build this into our economic forecasts in
    this country and into our budgets.
        Chairman Whitehouse. Freddie Mac's Chief Economist has
    suggested that a coastal property values crash is likely as a
    result of the sea level rise and storm risk, and that that
    could cascade out into the economy in the same way that the
    mortgage wreckage of 2008 cascaded across the economy.
        How would you describe how well the federal budget did as a
    result of the 2008 mortgage meltdown?
        Director Young. We saw the impact of that meltdown. I think
    most people will tell you, the economic scarring from that took
    years to recover from. Some say we still see some of the
    weaknesses that that crisis brought to bear, and it gave us
    some lessons we learned in responding to the COVID pandemic and
    the economic outcome of that, which we learned to go big and
    address those problems head on so we didn't see that scarring.
        But you're right. When you look at climate change the
    potential for that level of crisis, if you compare to the
    Financial Crisis of 2008, it could have sustained economic
    fallout for the United States and the rest of the global
    economy.
        Chairman Whitehouse. One of the things that my friend Kent
    Conrad used to point out when he sat in this chair years ago
    was that the only times, we've successfully balanced the budget
    over the last 50 years have been when revenues accounted for 19
    to 20 percent of GDP. If we go below that, we go into deficit
    and if we are accruing revenues at that level, then we've got
    the chance to have a solid budget.
        Under the President's budget, what share of GDP would
    revenue account for, and how does that compare to the last time
    we had a balanced budget during the Clinton administration?
        Director Young. So on average, the President's policies
    would bring in about 19.6 percent as a percent of GDP, and
    that's right in line where the policies were, tax revenue was
    under President Clinton, as you mentioned, the last time we've
    seen budget surpluses.
        Chairman Whitehouse. And a time when the economy was doing
    very well.
        Director Young. Yeah. You also saw economic growth, and
    frankly the investments we make here today is about growing the
    economy. If we want more people in the workforce, then you have
    to look at childcare policy in this country. Can women and
    families enter into the workforce in a meaningful way? Well,
    most of them will tell you they need adequate childcare in
    which to do that.
        Chairman Whitehouse. Last question. The President's
    Medicare tax proposal seems like it would both make our Tax
    Code fairer and extend Medicare solvency, which looks like a
    win-win to me. Could you comment on that?
        Director Young. We will have disagreements about tax policy
    I'm sure a lot today, but the President's vision is clear here.
    There are billionaires, hundreds of millionaires in this
    country who pay a less effective tax rate than nurses, teachers
    and firefighters. Some analyses have shown some billionaires
    have an effective tax rate of eight percent.
        The President believes that inherently unfair. He believes
    that the Tax Code needs to be changed to make sure that
    everyone pays their fair share in this country, not just
    working families, and we have several proposals in which to do
    that. Medicare, we have several proposals that would extend the
    Medicare Trust Fund by at least 25 years. The actuaries at CMS
    have put out a report, so don't take our word for it.
        These policies would extend Medicare by one, making sure
    our net investment income tax, which was always meant to go
    into the Medicare Trust Fund, is actually going into that fund;
    making sure that those over 400,000 pay 1.2 percent more into
    Medicare; making sure that legal loopholes are closed, so that
    people who are supposed to pay into Medicare actually pay into
    Medicare. The wealthiest have found loopholes.
        So those policies will extend the Trust Fund by at least 25
    years.
        Chairman Whitehouse. Thank you very much. Ranking Member
    Grassley, then Senator Murray.
        Senator Grassley. OMB puts out an annual Pay-As-You-Go Act
    report. This report clearly shows that last year's
    reconciliation bill added 199 billion in deficits to the budget
    scorecard OMB is required to maintain. Since the majority party
    have tried to claim phony tax gap savings from the law's IRS
    funding last year, but when legally required to produce an
    accurate cost estimate, even this administration was forced to
    admit the bill increases deficits. So, I'm asking you to put
    that report in the record.\4\
    ---------------------------------------------------------------------------
        \4\ Document submitted by Senator Grassley appears in the appendix
    on page 124.
    ---------------------------------------------------------------------------
        Chairman Whitehouse. Without objection.
        Senator Grassley. Okay. The President in this budget's
    supporting documents continue to falsely claim that he is a
    deficit reducer. Nobody believes that. People know about the
    trillions spent in spending binge of the last Congress, and the
    costly administrative actions. CBO's current law baseline when
    compared to February 2021 baseline, when President Biden took
    office shows increased deficits of six trillion over 2021 to
    '31.
        You can see it here. So, it seems to me the administration
    misleads the American people on real deficit reduction. Your
    response to that?
        Director Young. Senator Grassley, CBO's job is to show the
    path on deficits as if no policies happened. The President has
    policies. His policies would bring down the deficit by $3
    trillion. CBO has not looked at the President's policies yet.
    They will do that later this summer, so CBO gave you a
    baseline.
        That assumes none of this happens, and that is why the
    President is putting these policies forward, because we do
    believe staying on current course is not sustainable.
        Senator Grassley. You can see from the chart that the
    deficit actually goes up, and I'll just leave that where it is.
    What is the primary driver of our long-term deficit problem?
        Director Young. So, deficits, as you know, are year over
    year. So, if you don't want to make the longer-term debt
    problem worse, you've got to deal with yearly deficits. That's
    why this President's put forward policies that would say over
    the ten-year period deficits come down three trillion.
        So as some doctors say, do no more harm. So, we have got to
    get our deficits under control, and that in return has impacts
    on our debt. But as you know, most of our spending in this
    country are in entitlements, the aging of our country, and that
    is typically what makes up at least half of federal
    expenditures on the year.
        Senator Grassley. So, it's--if you don't include climate
    change in that list of things, that the budget is going up, is
    that right?
        Director Young. So, as I exchanged with the Chairman, we
    have got to do a better job of incorporating climate change
    into our economic forecasts and into our budget. That is a
    deficit we have.
        Senator Grassley. Families in Iowa and across the nation
    are feeling the pinch of inflation, that is caused by the
    reckless spending that I've already referred to. This
    administration has repeatedly tried to downplay the country's
    inflation crisis. Why did the administration's first budget
    predict inflation would be in 2021?
        Let me answer that for you, because I think that it was
    going to be two percent, but it ended up being 6.7, and then
    for 2022, 2.9, but the actual inflation was 7.1. So this
    administration has dramatically missed inflation for two years
    in a row. So why should we believe that you will say
    inflation's going to be three percent this year?
        Director Young. Senator Grassley, as you know, the Fed has
    tools that they are using, and what we see is the
    administration's policies, what the Fed is doing. We are seeing
    an impact here on inflation. We are clear. Inflation is too
    high. American families are paying too much, and we have to
    keep our foot on the pedal to bring down costs.
        What we have seen is a moderation and inflation on a yearly
    basis, total CPI is down more than three percent, three
    percentage points from its most recent peak of 9.1 percent in
    2022. So we have to keep, keep our eye on bringing down costs.
    I'll point out that this budget has lots of policies that bring
    down health care costs, energy costs for families. Those are
    kitchen table issues that most families tell you they're paying
    too much for. That's why we put these policies forward.
        Chairman Whitehouse. Senator Murray and then Senator
    Johnson.

                      STATEMENT OF SENATOR MURRAY

        Senator Murray. Thank you, Mr. Chairman. Director Young,
    thank you for coming here today and for all the work from you
    and your staff into delivering this budget. The President often
    says it, the Chairman said it a minute ago, a budget is a
    statement of your values.
        This budget shows that President Biden's values are with
    the working people in this country, putting forth a budget that
    will build a safer, stronger country and ensure America stays
    competitive for decades to come, even lowering the deficit.
        All by simply asking billionaires and giant corporations to
    pay their fair share. There is a lot to like in here. The
    President's budget understands that tackling the childcare
    crisis, as you just mentioned, is an investment in our
    workforce and in our economy, and includes a lot of other
    important investments, everything from boosting the supply of
    affordable housing to strengthening Medicare and Social
    Security for the next generation.
        Those are the exact kinds of investments that House
    Republicans are attempting to hold hostage now, or cut entirely
    as Congress looks to address the debt ceiling. The full faith
    and credit of the United States to pay our bills on time like
    every family's expected to should never be held hostage to
    score cheap political points.
        So let me be clear for the sake of the House Republican
    colleagues. Threatening economic catastrophe to cut Pell grants
    is not the political winner you think it is. The President is
    absolutely right. We need to drop the politics, address the
    debt ceiling without any strings attached and soon, just like
    we have done under administrations of both parties.
        Director Young, my question for you. Can you talk to us
    about the importance of the level of non-defense discretionary
    spending proposed in this budget, and how a strong non-defense
    discretionary top line that does invest in our families and our
    infrastructure and our workforce directly strengthens our
    country's ability to compete with China and others on the world
    stage?
        Director Young. Yeah, I'll add one thing to that as well
    Senator, our national security, and what still baffles me is we
    keep defense on one side and State Department, USAID, FBI,
    Department of Homeland Security all on what we call non-
    defense. So, if we have to take drastic cuts to non-defense
    discretionary, some plans would actually wipe out non-defense
    discretionary.
        We would see drastic cuts to the only childcare program we
    really have at the federal level. The childcare block grants
    will be obliterated. So families who use that for childcare
    assistance would be left out in the cold. Low-income heating
    assistance, which I know many of your communities rely on, also
    helps with cooling. That would be let go.
        State Department would be harmed. Our border operations
    would be harmed. So, the list goes on and on. It would be
    detrimental to see those cuts. Sequestration, for example, we
    talked a lot about what happened in 2011 and 2012. That was a
    five percent cut, small in comparison to what some are talking
    about now, and some agencies, some programs that working
    families rely on are still trying to build back from those
    harmful sequester cuts.
        Senator Murray. Well thank you for that, and I'm just going
    to say that now we do have the President's budget, as Chair of
    the Appropriations Committee, we are going to be pressing
    forward with the work of writing our nation's spending bills as
    quickly as possible in a bipartisan way.
        I'm working very closely with Vice Chair Collins on this. I
    believe we have a real opportunity and responsibility to work
    together to make our country more safe, more competitive, and
    do some good for the people we represent.
        And at the risk of sounding like a broken record, while
    it's good to see many Republicans acknowledge the need to build
    on these key defense investments, I have to say it again as she
    just did, investments in non-defense spending are just as
    critical as investments in defense spending.
        We have to invest in our workforce to build those
    semiconductors here in America, just as we invest in military
    readiness. It's not a question of either/or; we need both. So,
    I do hope that my colleagues on both sides of the aisle take
    this into consideration. As we do move forward on our
    appropriations bills to regular order, rest assured we are
    going to be very busy in our Committee with hearings and
    markups, to get these bills to the floor as soon as possible.
        Just let me say, my last 20 seconds, Director, thank you
    for the Hanford site in funding. You know that's important to
    my state. I'm glad that President Biden heard me loud and
    clear, and I really appreciate the progress that this budget
    makes. Thank you.
        Chairman Whitehouse. Senator Johnson, then Senator
    Stabenow.

                      STATEMENT OF SENATOR JOHNSON

        Senator Johnson. Thank you, Mr. Chairman. Director Young,
    welcome. Seeing that this is the Budget Committee, I'd like to
    separate rhetoric from actual numbers, and start using some
    numbers. We've heard a lot of rhetoric in terms of the wealthy.
    In your testimony, you said the wealthy ``were going to begin
    to pay their fair share.''
        So, I think my question for you is at what point would you
    consider the wealthy paying their fair share? The most recent
    analysis I have comes from the Tax Foundation for the tax year
    2020, where the top one percent made 22.2 percent of income,
    but paid 42.3 percent of the income tax.
        Now the 2019 analysis showed that they made about 21
    percent of income and paid 24 percent of total federal tax. So
    again, the one, top one percent paid about 42.3 percent income
    tax and somewhere around of 24 percent of total taxes. What
    would be a fair percent of total income taxes in your mind for
    the wealthy to pay?
        Director Young. So, I will point out that you talked a lot
    about federal tax.
        Senator Johnson. I also did total tax, which was about 24
    percent.
        Director Young. Yes.
        Senator Johnson. So, in your mind, again you have to use
    metrics here. When will the top one percent pay their fair
    share? What percent of income taxes, what percent of total
    taxes will be their fair share?
        Director Young. I'll go back to a statistic that I talked
    about earlier, where some analyses showed 400 of the wealthiest
    families in the country pay eight percent effective rate.
        Senator Johnson. Let me start with the top one percent pay
    an average of 26 percent top rate. The bottom 50 percent pay
    3.1 percent. So, the bottom 50 percent pay 3.1 percent. The top
    one percent pay an effective rate of 26 percent. That's a
    pretty big delta. That's a progressive tax rate.
        Again, I want to know at what--what should the top one
    percent pay in terms of total income tax, what should they pay
    as a percent of total tax? What percentage should that be?
    Right now, it's 42.3 percent of total income tax; it's around
    24 percent of total tax.
        Director Young. Senator, I'll be happy to take a look at
    that analysis you're looking at. I'm happy to share ours,
    where----
        Senator Johnson. No listen, you don't even need to look at
    it. Right now, it's 42 percent.
        Director Young. That's your analysis.
        Senator Johnson. Should it be 50 percent? Should they pay
    70 percent of the total income tax? Should they pay 50 percent
    of total tax? I mean in your mind, to step away from rhetoric,
    at what point will you be satisfied that the top one percent
    are paying their fair share? I mean you ought to be able to
    figure that off the top of your head.
        Director Young. Yeah. Senator, I've told you, and I'm happy
    to share this analysis. 400 of the wealthiest families in this
    country----
        Senator Johnson. That's not answering the question.
        Director Young. Okay.
        Senator Johnson. Total tax paid in 2017 before Republican
    tax reform, $3.3 trillion revenue raised. Last year, 4.897.
    That's a 47.6 percent increase in total revenue raised. That's
    pretty good, don't you think? By the way, corporations paid in
    2017 $297 billion. Last year they paid $425 billion. That's a
    43 percent increase.
        So again, we're raising a lot more revenue because of
    economic growth. I will say the tax reform worked in spurring
    economic growth. So those are just the facts. But in your
    testimony, you said that this budget, the President's budget
    reduced the deficit. In 2019, prior to the pandemic, we ran
    deficits of $984 billion, which is still way too much. In 2022,
    it was $1.37 trillion. In 2023, it's projected to be over 1.5
    trillion. The President's budget now is projecting 1.8
    trillion.
        So from 1.3 to 1.5 to 1.8, how can you claim that's
    reducing the deficit?
        Director Young. Easily, Senator. My entire statement said
    over--we talk about ten-year budget windows. Over the ten-year
    budget window, if you go look at 2033, the President's budget
    would bring down deficits by $3 trillion, nearly 3 point
    trillion dollars, 2.9.
        Senator Johnson. But again, year to year. I mean I think
    most people say when you're reducing the deficit, you're
    looking at year on year. So, we're going from 1.3 trillion to
    1.6 trillion to now 1.8 in the budget. You're actually
    increasing the deficit by about $300 billion in 2024 is your
    projection over the 2023 projection.
        You're increasing the deficit, and by the way, that's a
    massive deficit, $1.8 trillion. What do you think is sparking
    inflation, which caused the Fed to start increasing interest
    rates, which is causing the run on these banks? At what point
    are you going to acknowledge the harm this massive deficit
    spending is causing our economy? You're surely not recognizing
    in your 2024 budget.
        Director Young. Senator, what I hope we all realize is that
    inflation is a global, a global phenomenon. The UK doesn't have
    the same laws over the last two years of the United States
    has--it has inflation. India, the same.
        Senator Johnson. When America sneezes, the rest of the
    world catches a cold.
        Director Young. Senator, it absolutely has nothing to do
    with one piece of legislation. Every developed economy in the
    world is experiencing inflation. What that tells us is there's
    not one piece of legislation passed by the United States that
    has an impact----
        Senator Johnson. But our trillions of dollars of deficit
    spending, trillions of dollars printed chasing too few goods,
    that's what caused inflation, and that's what was promoted by
    this President. Thank you, Mr. Chairman.
        Chairman Whitehouse. Thank you very much. We're going to
    turn to Senator Stabenow.

                     STATEMENT OF SENATOR STABENOW

        Senator Stabenow. Thank you, so much, and welcome Director
    Young. Thank you so much for your leadership for President
    Biden. So much to respond to, and I want to talk about one
    important Michigan project. But let me, let me start by just
    saying for the record that what we know is that of all the
    deficits ever created in the history of the country, 25 percent
    came from four years of President Trump.
        And so we are certainly moving forward to lower that
    amount. You indicated $1.7 trillion in deficit reduction in the
    first two years. I think it is important to know that in your
    ten-year budget, you are proposing a $3 trillion reduction.
        What I've seen from, particularly House Republican
    proposals that are public, that what they want to do, it would
    increase the deficit by 3 point trillion, by maintaining the
    huge Trump tax cuts and really doubling down on making sure
    that rich people don't have to pay their taxes through IRS
    audits and so on and so on.
        I also, just to respond to my colleague about what is the
    number, what should folks pay? Well, prior to the Inflation
    Reduction Act, 19 of the top 100 corporations basically paid
    zero. So, we'll start with zero is not okay when small
    businesses are paying a top rate, when individuals are paying.
        Zero is not okay if you benefit from clean air, clean
    water, drive on the roads, our health care system, our
    military, etcetera, etcetera. And so now at least we have a
    floor for those corporations, which I think is only fair for
    everybody else.
        And so I'm glad that we're now investing in America, and
    appreciate so much we're bringing jobs home and investing in
    putting money in the pockets of the middle class and working
    folks and small businesses, because that is growing the
    economy, fastest-growing economy in the last, I don't know. In
    my lifetime maybe under the first two years of the President,
    and so I appreciate that vision.
        I also wanted to thank you for the wonderful funding for
    behavioral health in the budget, and this is a bipartisan
    priority. We added, as you know, to our gun safety legislation
    last year, an expansion of certified community behavioral
    health clinics, and you make that permanent in this budget.
        And not only am I smiling, but our former colleague,
    Senator Roy Blunt I'm sure is as well, and all of our
    colleagues who care deeply about mental health and addiction
    services. So, I thank you for that. And the other thing I want
    to thank you for is understanding that Social Security and
    Medicare are great American success stories. We certainly don't
    want to do what we again are hearing from House proposals,
    raise the age of Social Security to 70 or Medicare to 70, so
    you have to wait five more years to health care as a senior.
    But we want to keep those strong, so thank you.
        I do want to spend my last moment talking about something
    you and I have talked about, but I want for the record to just
    really make the case as it relates to a job, national security
    economic project, that runs through Michigan. And that is the
    Soo Locks, a national project of significance.
        We have a large Lock 1 that will allow large barges and
    ships to come down the St. Lawrence Seaway and into the Great
    Lakes. From there, they're carrying raw materials. They're
    carrying products that they go by rail and truck to every part
    of our country. This is major infrastructure project, and we
    know that simply put, if this one lock, which is the only large
    functioning lock we have went down, this would be devastating
    to our economy.
        It would harm manufacturing, it would harm agriculture, it
    would jeopardize our national security. According to the Army
    Corps, who we have, really have an excellent relationship with,
    so appreciate their leadership. 1But a six-month unscheduled
    outage at the Soo Locks would result in 11 million jobs lost.
    Six months, 11 million jobs, $1.1 trillion hit to the economy.
        And the Department of Homeland Security says it's hard to
    conceive of a single piece of infrastructure more consequential
    in terms of its impact on the economy and national security
    from an unexpected and sustained closure. So, we need to get
    this done. We're in the middle of the project as you know and
    appreciate your support.
        But we're on borrowed time to get this done. And so I could
    go on and on, I will not. I appreciate what has happened to
    date, but I would just ask you Director Young, given the stakes
    of the Soo Locks project, is this a priority for you and the
    administration? Do I have your commitment to do whatever it
    takes to make sure that we complete the project, and to do that
    whatever it takes to secure the funding for the Soo Locks, not
    only this year but through completion?
        Director Young. Well let me be clear. This budget holds
    $235 million for this project. That is not a small amount. That
    should hopefully show you our commitment. The federal
    government understands the importance of this project, and you
    have our commitment to remain partners and get this job
    finished.
        Senator Stabenow. Thank you. Thank you, Mr. Chairman.
        Chairman Whitehouse. Thank you very much. Senator Marshall.

                     STATEMENT OF SENATOR MARSHALL

        Senator Marshall. Thank you, Mr. Chairman. Listening to my
    friends across the aisle today and the rationale behind the
    President's budget proposal, I'm fearful the White House is
    using the same voodoo accounting that brought down SVC Bank.
        I'm often asked what's the greatest threat our nation
    faces, and I'm here to tell you it's not Russia, it's not
    China, it's not North Korea, it's not Iran, and though I love
    the environment, it's not climate change. The greatest long-
    term threat the United States faces is our national debt.
        At $31 trillion and growing, paying almost $500 billion in
    interest last year alone, this national debt is unsustainable.
    For two years, Democrat one party rules-controlled Washington,
    D.C. and ran up the tab, maxed out the nation's credit cards on
    the backs of hard-working Americans.
        In the first 20 months of office, President Biden has spent
    more than any other president in United States history. This
    reckless spending agenda has added another $3.7 trillion to the
    debt, a 13 percent increase and costs hard-working families in
    the wave of 40-year high skyrocketing inflation, which we all
    know is a tax on hard-working Americans.
        Under this administration, energy prices have risen more
    than 37 percent, home heating fuel more than 52 percent,
    electricity prices more than 23 percent, gasoline more than 45
    percent, grocery more than 19 percent. All the while, real
    wages aren't keeping up with inflation.
        To the Biden administration, these added costs are just a
    number. But to families I meet in rural America, it's their
    hard-earned wages that now get nearly 20 percent less groceries
    for their families than they just two years ago. Now the White
    House gives this Committee a new budget that will almost double
    the annual interest, and soon push our annual deficit towards
    $2 trillion.
        If that's not enough, they promise $4.7 trillion in new
    taxes, including raising corporate taxes that as we all know
    are going to be passed down to consumers, further fanning
    inflation. This budget and issue and how we handle it will be
    the defining action of this Committee and the 118th Congress.
        Let me tell you what this reminds me of. This is the
    equivalent of a young adult who's maxed out their own personal
    credit card, and now instead of cutting expenses, asks their
    parents for another credit card. I ask you what parent would
    comply with this ill-fated request? Folks, we have used this
    debt ceiling issue to pry the nation's maxed out credit card
    from Joe Biden's hands. He must come to the negotiating table
    and work towards balancing the budget.
        If not, he must be held responsible for the dramatic
    increase in spending over the next two years, the past two
    years, and blowing through the debt ceiling. He and he alone
    will bear this responsibility. This Committee needs to take
    back the nation's credit card and restore the purchasing power
    back to the American people.
        I will not support any budget that does not work to
    responsibly balance. If the President would negotiate in good
    faith, this would be a different story. There's historical
    precedent for coupling spending reductions with increasing the
    debt limit. For the sake of my children and grandchildren, I
    will hold the line.
        The President will not get permission from me to increase
    the debt limit without real substantive cuts to our spending. I
    hope the Members of this Committee will join me. Director
    Young, does this administration have any intention of
    negotiating in good faith with Republicans to stop this
    reckless spending and get back to balancing the budget, yes or
    no?
        Director Young. Senator, I've been here. This is my third
    year on the budget. There's a budget process. There's an
    appropriations process. We work together every year to fund the
    government and talk about spending priorities, and we are happy
    to do that again this year.
        Senator Marshall. So yes or no, will this President work in
    good faith towards negotiating a budget that gets back to a
    balanced budget?
        Director Young. As he has done in December, he will work on
    a bipartisan basis to talk about what the appropriate spending
    levels are.
        Senator Marshall. That doesn't sound very optimistic to me.
    How do you intend to do that when you know our goals, and
    you're bringing a budget that's a month late and has the
    highest sustained level of taxes, spending and deficits in
    American history?
        Director Young. Senator, let me be clear. The President is
    not going to support cutting programs that are essential to
    working families in this country. What he believes is correct
    is ask those at the top of the ladder to pay more, so we can
    invest in those working families you talked about. I'm from a
    small town, less than 2,000.
        What they tell me is they want infrastructure. They want
    the government to work for them. This budget does that, by
    asking billionaires, who don't exist in Clinton, Louisiana and
    places like it, to pay what they pay when they go to work as an
    effective tax rate----
        Senator Marshall. Last quick question. Whose idea was it to
    cut $600 million from the Department of Homeland Security, when
    there's a raging crisis at the nation's southern borders?
        Director Young. I'm happy to give you a piece of paper that
    shows the DHS budget is increased by nine percent. That is not
    correct. There is a fee issue on passenger fees, where we--it
    is literally a budget scoring issue, where DHS will keep
    passenger fees rather than give them back to the Treasury in
    actual dollars in budget authority.
        The Department of Homeland Security goes up by nine
    percent, including $4.7 billion contingency fund that would
    fund our operations at the southwest border.
        Senator Marshall. This is the funky voodoo accounting I'm
    talking about that gets this nation in trouble, that brings
    down banks as well. But we look forward to working with your
    office. We'll show you our numbers, we'll show you the budget
    shown to us and we'll look at yours as well.
        Thank you so much for being here.
        Director Young. Thank you.
        Chairman Whitehouse. Senator Lujan

                       STATEMENT OF SENATOR LUJAN

        Senator Lujan. Thank you, Mr. Chairman and to our Ranking
    Member for this important hearing, and to Director Young, thank
    you for the work that you and your team put in day after day,
    and to have your expertise here. I certainly appreciate it, and
    I also appreciate getting a chance to visit with you yesterday.
        Now one of the areas that we chatted about is in the area
    of behavioral health, and I agree with our Chair, with Chair
    Stabenow, about the importance of the investment that came in
    mental and behavioral health, about $387 million which would
    help train about 18,000 behavioral health providers to help
    respond to the mental and substance abuse challenges that we
    face across the country.
        The one area that I'm hoping that we can still work
    together and that we can work together as colleagues is in the
    area of retention. What I've heard from providers across New
    Mexico and in different parts of America is the concern of a
    reality, where we're losing a lot of folks, and that tells me
    that we could be doing more for retention.
        So, is that an area that we could work together to ensure
    that we're able to retain what we have, while we're still
    making a significant investment to train those that we need?
        Director Young. You absolutely have my commitment to do
    that. We saw during COVID the burnout for people who worked in
    those jobs, in nursing jobs, and we have got to do something or
    we're going to have a long-term shortage issue in behavioral
    health. So, as we hopefully work together in a bipartisan
    manner to increase resources here, we don't have the personnel
    to do the work, the resources are going to be for naught. So,
    you have my commitment to work on that together.
        Senator Lujan. I appreciate that Director, and I certainly
    hope that again in a bipartisan way, you'll see action by the
    Senate and by the legislative branch of government to work
    together for the good of the country.
        Now turning to broadband, I have the honor of chairing a
    subcommittee in the Commerce Committee that has jurisdiction
    over many of these areas. What we have seen recently is through
    a bipartisan effort, the creation of the Affordable
    Connectivity Program, and authorize the Federal Communications
    Commission to provide $30 a month for families at 200 percent
    of poverty, and $75 a month on tribal lands.
        As we've heard from many in a bipartisan the importance of
    this program towards affordability when it comes to broadband
    across America, Congress appropriated $14 billion, which is a
    lot of money, for this effort to help households to afford the
    broadband being used for work, school and health care.
        16.6 million households currently participate in this
    program. That's 43 million Americans. Unfortunately, the
    Affordable Connectivity Program is expected to run out of money
    in 2024. Some studies showed by June; some are suggesting by
    the end of the first quarter.
        Director Young, yes or no, does the President support
    funding this critical program?
        Director Young. Yes, and we thank you for the resources
    provided in the infrastructure law for this.
        Senator Lujan. I appreciate that. Why was there not
    additional support in the budget for the Affordable
    Connectivity Fund?
        Director Young. As you pointed out, thanks for the
    infrastructure law. 42 billion was invested NTIA's program. The
    planning grant has been awarded. The future awards to states
    and localities will be announced soon. So, there is a belief
    that there is money about to hit the ground that will make a
    historic difference, and before that money's spent, there's
    some view that it would be premature to add additional, so
    those grants to state and locals had not happened yet.
        Senator Lujan. And Mr. Chairman, the reason I asked that
    question is I think it's important for all of us to bring more
    attention to this particular program, which was supported
    broadly, Democrats and Republicans. Former FCC Commissioner
    Mike O'Rielly, a conservative voice, has talked about
    conservative approach to this particular program.
        My concern is that the Internet service providers and
    others that are responsible for this program, they have to
    start planning a few months in advance. If in fact projections
    show that this program's going to run out in the first quarter
    of '24, that means at the end of this year there's not going to
    be anymore.
        That's a concern that I have. I certainly hope that we can
    look at all the ideas that are out there that allow us to
    ensure that this program will in fact eliminate the Digital
    Divide. I mean that was the point of the investment that we
    worked on together, and I would just point to a quote from the
    Urban League, where their observation was if Congress fails to
    reauthorize ACP, the federal government likely will end up
    overpaying for broadband deployments.
        As a result, the federal dollars will end up funding
    deployments to significantly fewer unserved and underserved
    homes and businesses. So, I certainly look forward to working
    with the Committee in this space and with our colleagues across
    the board, and hope that this is something we can tackle
    together. Thank you, Mr. Chairman.
        Chairman Whitehouse. Thank you, Senator Lujan. Senator
    Scott, and then Senator Van Hollen.

                       STATEMENT OF SENATOR SCOTT

        Senator Scott. Thank you, Chairman. Director Young, thanks
    for being here.
        Director Young. Thank you.
        Senator Scott. I think you have an impossible job. I can't
    imagine trying to defend a $6.8 trillion budget. I mean if you
    look at, if you look at what this President has done and you
    have to come here and defend it, the biggest budget in the
    history of the country, unbelievable increase, massive
    inflation, massive deficits, no plan to balance the budget, not
    even close to a plan to balance the budget, debt that continues
    to go up, wages not staying up with inflation, low labor
    participation. So, I think you have an impossible task.
        I sent you a letter, you know, just to make sure you had
    some of the questions I was going to ask. So let me just go
    through some of those. Do you believe that excessive government
    spending, especially deficit spending, causes inflation?
        Director Young. As I talked to some of your colleagues
    earlier, I believe inflation, we see as a global----
        Senator Scott. No, no, no, no. My question's real simple.
    Do you believe excessive government spending, running big
    deficits, causes inflation?
        Director Young. I believe one thing does not cause
    inflation and----
        Senator Scott. Oh okay. You say no.
        Director Young [continuing]. And that inflation is
    pervasive around the globe.
        Senator Scott. That's fine. I mean that was an answer.
    That's no. The federal debt has risen to more than $31
    trillion. Since Biden took office, it's almost up $4 trillion.
    Do you believe that his budget reduces debt, the debt of the
    country?
        Director Young. Sir one, I use $24.7 trillion. That is
    publicly held debt. The rest of the debt that you cite is Other
    Government Trust Funds----
        Senator Scott. Do you think his budget reduces debt?
        Director Young. Our budget focuses on the deficit, which in
    turn has an impact on the debt.
        Senator Scott. So, it doesn't. That's a no. Okay that's
    fine. So is President Biden's budget balanced, meaning does
    it--are you going to--are we going to spend more than we
    collect?
        Director Young. Senator no, because we believe that would
    hurt working families.
        Senator Scott. Okay. Do you--what are you paying right now
    under--for interest? What is the trade-in?
        What's the duration of the debt?
        Director Young. The duration of the debt, as you know,
    depends on Treasury policy, on what they do in the bond market.
    But right now, it's about a little over five years, the
    maturity of the debt.
        Senator Scott. And what's the interest rate that you're
    paying in your budget?
        Director Young. The interest--yeah. The interest rate is
    close to three percent on the budget, on the debt.
        Senator Scott. So, and do you believe that's--so you
    believe in your budget, are you assuming interest rates are
    going to come down then?
        Director Young. We do show what we believe are accurate
    forecasts, where interest will rise and then level off. Of
    course, interest rates are rising now as the Fed deals with
    inflation.
        Senator Scott. And what, what will the federal government
    have? Under your budget, what will the federal government have
    to pay in interest expense next year?
        Director Young. Over 600 billion, 661 billion.
        Senator Scott. So as a percentage of the budget, do you
    know what that is?
        Director Young. I'll be happy to not do math here but give
    that you for the record.
        Senator Scott. So, since 2019, so you know pre-COVID, last
    budget pre-COVID, how much has the U.S. population gone up do
    you think? Do you have any idea?
        Director Young. We talked to your staff. But yeah, five-six
    million people.
        Senator Scott. Six million. So as a percentage, how much is
    that do you think? It's less than two percent. It's 1.8
    percent.
        Director Young. So, the question yeah, is like what do we
    spend per person?
        Senator Scott. Yeah. So here--let me ask it this way.
        Director Young. Yeah.
        Senator Scott. So, the population since 2019 has gone up
    1.8 percent. How much do you think your proposed budget has
    gone up from the 2019 budget?
        Director Young. So, one way we look at it is that spending
    is down roughly five percentage points of GDP since the
    President took office.
        Senator Scott. So it's up--so here's the numbers. So, the
    population in the last five years has gone up 1.8 percent, and
    your budget would take the budget up 55 percent. Now explain
    it? Why, and that's $400,000 per new American.
        So why would--why would we only have a six million increase
    in the number of Americans since 2019, but we have a 55 percent
    increase in our budget? How could anybody explain that?
        Director Young. Senator, I'll take your information as
    fact, but the way we look at a lot of these budget measures are
    percent of GDP. We think that is the way to determine health,
    and I stated federal spending has gone down as a percentage of
    GDP since the President took office.
        Senator Scott. Or there's COVID. Let's go back to pre-
    COVID. That's not even close to being true if you go back to
    2019. So, the GDP has not gone up 55 percent. I mean so you--I
    mean Biden came in in the middle of a COVID crisis. So of
    course, there was extra COVID spending.
        But I mean think about it, just go back. The population's
    only up 1.8 percent, and your budget's up 55 percent. That's
    staggering.
        Director Young. So, I know people don't want to give the
    President credit for presiding over a $1.7 trillion budget
    deficit reduction, but he did. That did not happen by accident.
        Had he not gotten the pandemic under control, had a vastly
    successful vaccine program, I'm not sure pandemic spending
    would have ended, because we would have still been dealing with
    the scarring of the pandemic and the economic fallout from it.
    So, because he did that, I believe we are in a better place
    economically.
        Senator Scott. 55 percent.
        Chairman Whitehouse. Senator Van Hollen, and then Senator
    Romney.

                    STATEMENT OF SENATOR VAN HOLLEN

        Senator Van Hollen. Thank you, Mr. Chairman. Madam
    Director, it's great to see you. I would point out that the
    Inflation Reduction Act that we passed reduced the deficit by
    $200 billion. It also did something else very important, which
    was to cut the cost of prescription drugs to seniors on
    Medicare, including capping the cost of insulin for Medicare
    recipients at $35 a month and putting in place other changes
    that will reduce cost to seniors on Medicare.
        I applaud you and the President for going even further in
    this budget, in terms of saving costs for seniors on Medicare
    when it comes to prescription drugs. As I see it, you're
    talking about $200 billion in savings, which not only saves the
    taxpayer and helps shore up the Medicare program as part of
    your strategy to keep it solvent for 25 years, but it will also
    bring down the cost of drugs to seniors, is that not right?
        Director Young. That is correct. And Senator, one thing we
    have not talked anything about is outside of the Medicare
    population, this President's put in for the proposal to cap
    insulin prices for all Americans who have private insurance at
    $35 a month.
        Senator Van Hollen. Yes, and that's something that I
    certainly strongly support. As you know, we had a vote on that
    in the Senate. Unfortunately--in the past Congress.
    Unfortunately, we were not successful in getting that passed. I
    hope that we will be successful in the coming years.
        A lot of talk about the deficit and debt, and appropriately
    so. But this budget will reduce the deficit by $3 trillion over
    the next ten years. We're all looking forward to seeing
    alternatives that are put out there. I know that the House
    Freedom Caucus is talking about various proposals. We're all
    eager to see what they would do in terms of their budget
    proposals. The House Republicans really need to put something
    on the table.
        But let me just say with respect to the deficit and debt, I
    also applaud the President and the Biden administration for
    looking at the issue of how we tax work unfairly relative to
    wealth. The President has a number of proposals in here to help
    change that equation, so that working people don't face higher
    tax rates than people who make money off of money.
        If you look at long term impact of the President's revenue,
    revenue changes in this budget, as I look at it, in addition to
    the $3 trillion deficit reduction over the first ten years, the
    projection is $7 trillion in deficit reduction in the second
    decade.
        While the debt as a shared GDP will rise because of the
    baby boomers and more people benefitting from Medicare and
    Social Security, under this budget it is--you stabilize the
    debt to GDP ratio in 2042. So could you just talk a little bit
    about that?
        Director Young. Sure. So look, there's a choice here. We
    can zero out programs that communities depend on in the name of
    fiscal responsibility. But if you keep tax cuts for the
    wealthy, you actually do not save any money for the deficit. Or
    we can continue to invest in the middle class through things
    like child care, paid leave, those policies that bring people
    into the workforce, while asking those at the very top, the
    very, very top to begin paying something that looks close to
    what people who go to work every day pay as far as the tax rate
    goes.
        What that does is, as you pointed out, bring down the
    deficit over ten years by nearly $3 trillion, and when you deal
    with deficits and bring down the deficits, make sure that our
    debt problem does not get worse. As you pointed out, we do have
    a population that's getting older. But what we can do is make
    sure our deficits are under control.
        We're happy to enter into conversation with anyone who
    wants to talk about that. But this President is very clear. He
    believes the economy grows when you focus on those in the
    middle and working families, and when you look at how those at
    the very top borrow against money, they never pay taxes on and
    have incomes that are never taxed, he believes that's unfair.
        This budget does something about it and puts us on a strong
    fiscal path.
        Senator Van Hollen. I agree, and you know, I think it's
    been pointed out here that if you look at the total cumulated
    United States debt, a quarter of that was accumulated during
    just the four years of the Trump administration, and the debt
    ceiling was raised three times during that period.
        So I really hope going forward, as we work through the
    budget process and look at the House's proposal and look at the
    President's proposal and deal with the budget issues, that
    people will not take our economy off a cliff by threatening not
    to pay our bills on time. Thank you very much. Thank you, Mr.
    Chairman.
        Chairman Whitehouse. Thank you, Senator. Senator Romney's
    up next.

                      STATEMENT OF SENATOR ROMNEY

        Senator Romney. Thank you, Mr. Chairman. You know, I think
    it's helpful if we're going to be responsible as we consider
    discussions about our spending and the budget, if we put COVID
    funding aside, because I think it's embarrassing to suggest the
    President has reduced the size of the deficit or reduced
    spending as a percentage of GDP, when we had COVID.
        When we were in the midst of COVID, we passed extraordinary
    measures. The President went far beyond Congress with a $1.9
    trillion plan. To say somehow that he's been cutting the
    deficit is just not realistic, and Senator Scott described the
    change in actual federal funding on a baseline basis. I think
    if you're serious about discussing the budget and what's going
    on and what our needs are, putting COVID funding aside is
    essential for that conversation.
        On a separate topic, you know, I'm not aware of anyone in
    this category, but are you aware of any one of the elected
    officials we have in the federal government, at Congress or
    anywhere else, that have opposed cutting current--or currently
    proposed cutting benefits for Social Security of any kind?
        Director Young. Senator, I have heard of proposals.
        Senator Romney. No, no. You've heard of proposals from a
    current Senator, currently--or a Congressman, currently
    proposing to cut benefits to Social Security?
        Director Young. Yes. Have they changed their position?
    Maybe, but yes.
        Senator Romney. No, no, no.
        Director Young. Members who are current members----
        Senator Romney. I said has anyone--I mean in the last
    several months or the last year, has anyone, Republican or
    Democrat, proposed Social Security benefits?
        Director Young. Now you're asking have people changed their
    position? Maybe. But there are records----
        Senator Romney. Are you aware of anyone----
        Director Young. There is a record of current members of
    Congress----
        Senator Romney. Excuse me. Are you aware of anyone--are you
    aware of anyone proposing cutting Social Security benefits?
        Director Young. Your first question, current members have
    well-known policies out there to cut Social Security and
    Medicare.
        Senator Romney. That's simply wrong. That is simply wrong,
    and it's not honest to say that to Members of Congress. That is
    simply wrong. There is no one who's recommending cutting Social
    Security benefits, all right? Number one.
        Number two, do you recognize that in the next ten years or
    so, the Trust Fund on Social Security is going to run out, and
    under the law benefits would be cut dramatically, like 25
    percent? You're aware of that?
        Director Young. I'm aware.
        Senator Romney. Yeah, yeah. That's a problem, right?
        Director Young. Of course.
        Senator Romney. Well, why is it then that in the
    President's budget, there's no effort to address that
    whatsoever?
        Director Young. And while we clearly disagree on this,
    there are some who have policies on websites, I'm happy to
    print them and send them to the Committee, whether they have
    changed their position is another thing, who want to cut--have
    policies to cut Social Security.
        Senator Romney. I'm sorry. That was not the question.
        Director Young. So, this President----
        Senator Romney. I'm sorry. You've got to answer the
    questions----
        Director Young. So, this President has put forth----
        (Simultaneous speaking.)
        Senator Romney. I asked the question why did the President,
    why does the President's budget not lay out what, how you would
    protect Social Security?
        Director Young. This President believes the existential
    threat to Social Security are those who want to cut it. His
    budget says no.
        Senator Romney. There's nobody in this Committee that wants
    to cut it. I know of no Republican or Democrat in the House or
    the Senate who is proposing cutting Social Security benefits,
    and it's dishonest to keep saying it. It's offensive and
    dishonest and not realistic. We have a problem in Social
    Security. We need to address it.
        You agree we have a problem in Social Security. Make it
    clear 1000 percent. No Republican is proposing cutting Social
    Security benefits. Now the question is why have you not
    proposed in your budget any action to protect Social Security?
        Director Young. Sir, I look forward to seeing plans that
    are very clear----
        Senator Romney. The question is why have you not proposed
    them?
        (Simultaneous speaking.)
        Director Young [continuing]. That those, that they will not
    cut Social Security. This President has put it in black and
    white. We look forward to seeing a plan that suggests that
    Social Security is off the table. This President believes the
    biggest threat to Social Security are those who want to cut it.
    His budget says no.
        Senator Romney. You know, I really do find that just
    offensive in the extreme, which is you can't name anyone who is
    proposing cuts to Social Security benefits. I have said and I
    know my colleagues, no one is proposing cutting Social Security
    benefits for our Social Security recipients.
        No one is proposing that on our side, and you keep on
    saying that's the biggest threat. The biggest threat is in ten
    years or so, the Social Security Trust Fund runs out of money
    and benefits get automatically cut by 25 percent. We don't want
    that to happen. I'm upset that the President hasn't included
    any effort to address that shortfall, because I want to protect
    Social Security benefits for all of our recipients.
        Now a question I have is you do fortunately look at
    Medicare and suggest hey, we need to take action to protect
    Medicare. I agree with that. I'm glad you do. You propose,
    however, the only solution is not cutting costs at all but only
    raising taxes. Do you believe there's any prospect that
    Republicans are going to vote to raise taxes only as a way to
    save Medicare?
        Director Young. For those that are over 400,000, I hope so,
    that they would raise the----
        Senator Romney. I said do you believe--do you believe that
    Republicans in the House and in the Senate are going to vote to
    raise taxes and nothing else, just raise taxes to save
    Medicare?
        Director Young. Well, that is not the only proposal. If you
    look, the net investment income tax, which was always created
    to go into the Medicare Trust Fund and was not, we suggest
    moving that over as a part of keeping Medicare extended by at
    least 25 years. So that's one part of the proposal. That is not
    a raising of tax. That is----
        Senator Romney. I know my time is up. Do you believe that
    it makes sense for a bipartisan effort to work together to find
    compromise positions, common ground to actually save Social
    Security and protect Medicare?
        Director Young. Yes.
        Senator Romney. Thank you.
        Chairman Whitehouse. Senator Kaine is up now.

                       STATEMENT OF SENATOR KAINE

        Senator Kaine. Thank you, Mr. Chair, and thank you Director
    Young. You highlighted the job gains that we've seen under
    President Biden. That's been remarkable with an unemployment
    rate as low as it's been in many decades. But the flip side is
    that I'm hearing from an awful lot of employers who are having
    a hard time hiring people. A low unemployment rate is good, but
    it does create labor market challenges.
        At the same time, I'm hearing from people all across
    Virginia who want to work, who have great skills, want to be in
    the workforce, but what's holding them up is the lack of high
    quality, affordable childcare. I think you mentioned this in
    one of your interchanges with either Senator Whitehouse or
    Senator Murray.
        How will President Biden's budget continue progress in
    dealing with this issue by funding childcare that will be good
    for kids and parents, but also be good for the productivity of
    our nation's economy?
        Director Young. Yeah, you know, it matters what you invest
    in, and we believe we have to grow the economy. One of the
    important pieces of the President's investment is childcare.
    You've always funded or for the foreseeable past funded
    childcare block grants. I think everyone here would suggest
    that's not enough.
        But this budget does, because it's our one existing program
    on the federal level, add $1 billion, building on the 30
    percent increase Congress provided to that program on a
    bipartisan basis. So, we thank you for that.
        We also go further, and we would establish a mandatory
    program that would frankly be a game changer for parents across
    this country, and the President believes that, along with our
    pre-K, universal pre-K4, and for those high performers pre-K3,
    between those childcare proposals and pre-K proposals,
    families, especially women who we saw drop out of the workforce
    during COVID, can reenter. We can grow our labor pool and get
    more people into these jobs.
        Senator Kaine. Thank you for that answer, and I look
    forward to supporting more childcare investments. Virginia's
    home to an awful lot of federal employees. They've been doing
    important work, maybe particularly the last few years as the
    constituent needs and demands escalated during COVID. Their
    wages and salaries haven't been keeping up with the cost of
    living. Talk to me about what the Biden budget does with
    respect to pay raise for both civilian federal workers and our
    service members.
        Director Young. So, one parity is very important to us. For
    the last three budgets, we have put forth a proposal to provide
    civilians and military. Many times, in DoD, civilian and
    military personnel sitting next to each other towards the same
    mission, it's only right that both receive the same pay
    increase, the same COLA.
        We also took the recommendation that ECI. The pay raise of
    5.2 percent was built based on economic factors, and it was
    right to follow that recommendation on an equal basis with the
    military and with civilians, many of them who worked diligently
    during COVID, after COVID and for the American people.
        So, we followed the recommendations of that economic index,
    because it was the right thing to do and our federal workers
    really have over-performed during this difficult time, where
    the federal government really had to respond to make sure our
    economy and our people got through this pandemic.
        Senator Kaine. Here's a question on a topic that is
    completely bipartisan, not only in this body but everywhere in
    this country. It's the desire to reduce deaths by fentanyl, and
    the desire to invest in strategies that will reduce fentanyl
    being brought into the United States.
        Most fentanyl that comes in comes across the southern
    border. It doesn't come in people's backpacks. It comes through
    ports of entry. Cartels know that they can load trucks up with
    fentanyl. We only have technology to inspect every few trucks
    and they'll run the lottery risk of getting caught every once
    in a while, if they can get fentanyl through our ports of
    entry.
        What does the Biden budget do to address strategies for
    interdicting more fentanyl at our ports of entry?
        Director Young. So, what I've seen it, I've gone to land
    ports of entry. You see the car doors popped off and a pack
    full of narcotics, a lot of it's fentanyl, is coming, as you
    pointed out, through our ports of entry. So we have got to have
    resources at our ports of entry, to make sure we have the
    equipment in place.
        The infrastructure law I've mentioned a lot today, started
    us down that path of real, true investments in our land ports
    of entry. We're going to build on that. This budget would have
    over $500 million for border technology. That will also help
    with technology that would look for fentanyl.
        Additionally, 40 million for ICE to combat fentanyl
    trafficking and disrupt transnational criminal organizations,
    to get at the root of the problem, and nine million to expand
    DEA's operations there. So we have got to keep a forward foot
    and deal with this problem before it gets across the border.
        Senator Kaine. Thank you, Director Young. I yield back, Mr.
    Chair.
        Chairman Whitehouse. Thank you. Senator Braun.

                       STATEMENT OF SENATOR BRAUN

        Senator Braun. Thank you, Mr. Chairman. I want to start off
    with just some statistics that are astounding to me, and also
    acknowledge that this migration into heavy debt through the
    federal government has been going on for a while, and I think
    it spans administrations.
        2000, we were roughly $5 trillion in debt. We put a couple
    of wars on the credit card. By 2008, we were $10 trillion in
    debt. '08 to '16, the Obama administration, we went from ten
    trillion to 16 trillion. Two years later, I get to the U.S.
    Senate, we've now structuralized trillion-dollar deficits
    annually. Therefore, 18 trillion in debt.
        In a little over four years, we've gone from 18 trillion in
    debt to 31 trillion in debt, and then a Blueprint for Success
    in this country puts us $51 trillion in debt by 2033. I don't
    know how that could be sold to the American public as a
    sustainable, healthy business plan.
        We had a conversation yesterday evening, that you're
    assuming all of a sudden, we can raise 19 to 20 percent in
    revenues, when historically over 50 years, it's been 17\1/2\
    percent and yes, you did cite for a few years back in the
    Clinton administration, we did raise close to that.
        But you're assuming that we can do that going further. I
    almost had the CBO recalculate how that last tax cut Jobs Act
    was playing into the economy, and that was chump change
    compared to what we're doing now. Remember that was a $1.5
    trillion giveaway to the rich. Pre-COVID, it was actually
    paying for itself.
        Sooner or later, if you're going to try to raise revenue
    when it's above historic levels, it always comes with a price
    of lower economic activity. And how do you justify that we're
    then, as far out as you can see, spending money in the
    neighborhood of 24 to 25 percent of our GDP? This puts us into
    such lofty territory, the only country in recent history that's
    ever been there is Japan.
        We now distinguish ourselves as being the most indebted
    country of any in the world that's got a developed economy,
    other than that of Japan. So, I know in the real world things
    have got to be sustainable. I also know that politically,
    everyone thinks you can do things differently here.
        I acknowledge that it's been on both sides of the aisle to
    date. I got a question and where I think you can probably save
    some money. I'd love to hear if there's any interest from your
    point of view. We've got a broken health care system. It's way
    too high a percentage of our GDP.
        18, 19 percent, most other places it delivers similar
    results, would be in that 11-12 percent range. Is the
    administration going to give any thought to trying to fix
    health care by making it more transparent, more competitive?
    You've got doctors now that are questioning whether they want
    to even invest the time and effort, employed by larger and
    larger corporations?
        What about tackling the one thing that would actually make
    it cheaper for how you pay for health care through Medicare or
    Medicaid or the private sector. Are you interested in reforming
    that biggest sector of our economy?
        Director Young. Absolutely, Senator. I mean you see some of
    our proposals here. Prescription drugs, for example, that not
    only saves money for seniors when we allow Medicare to
    negotiate; it actually saves the government about $160 billion
    to have more drugs in negotiation, to bring those negotiations
    forward. That's one of the proposals in this budget.
        But I don't think anyone would argue with you that the
    United States pays more as a percentage of health care than
    most other large economies in this----
        Senator Braun. So, you're going to try to use government to
    price control. Sometimes when you operate your business like an
    unregulated utility, you know, that's going to happen. I think
    the health care industry is asking for that. What about pushing
    things like transparency, competition?
        There was an executive order from the Trump administration
    asking hospitals to be forthright on transparency in pricing.
    Are you trying to enforce that? That's already out there. To
    me, it seems like there's a lot of stuff that you could do
    other than using government to force it by trying to fix the
    health care industry from the bottom up.
        Before I run out of time, it looks like you're at least
    interested in maybe considering that. Are you interested in
    what we're doing generally? Regarding of who's enterprising
    here politically, whether it's Democrats or Republicans, we
    certainly have embraced the idea that we want to borrow from
    our kids and grandkids.
        And you can do things like saying, you know, real interest
    rates are kind of being looked at. The nominal interest rates
    that we're paying, and part of the kind of debt and inflation
    bomb that was unleashed over the last two-three years, some of
    what we did bipartisan in trying to go after the CARES Act,
    that is going to come home to roost, and it is right now.
        In our own banking system, it's starting to show strain,
    because you cannot inflate the economy. You're going to sooner
    or later find these weaknesses and we're going through it, and
    it does ball down to the simple question. Do we want to run
    this enterprise unlike any other place in this country? Do you
    think it makes sense to borrow money from our kids and
    grandkids for the latest and greatest idea that comes out of
    this place?
        That seems to be what you're doing here. Just give me a
    simple answer to that. Is it worth--that would be like asking
    your kids at Thanksgiving, I want to put an addition on their
    house. I want to take a vacation, and I want you to pay for it.
        Director Young. Senator, the President's budget's clear.
    He's going to ask the wealthiest top one percent, large
    corporations to begin to pay their fair share, in order that we
    can continue to invest in the American people.
        Senator Braun. Well good luck with it, because it's never
    generated more than a 17\1/2\ percent, percentage on tax
    revenues as a percentage of our GDP over 50 years. Therefore, I
    think you're being dishonest with the American public. Thank
    you.
        Chairman Whitehouse. Senator Merkley is up next.

                      STATEMENT OF SENATOR MERKLEY

        Senator Merkley. I thank you very much Mr. Chairman and
    thank you Director Young for your presentation. A group of
    colleagues in the House, the Freedom Caucus, they proposed a 30
    percent sales tax as a way to address revenue issues, which
    would be about a $100,000 tax on a family buying a house, and
    about a ten percent, $10,000 tax on a family buying a car. The
    President did not choose to put this into his budget. Why not?
        Director Young. Senator, I'll go back to what I just told
    Senator Braun. This President believes, and it is a core value.
    We can be fiscally responsible, and he's put forward proposals
    to do that. It will not be on the backs of middle class and
    working families in this country. It will--we need to ask those
    at the very top to begin to pay what nurses, teachers and
    firefighters pay in this country as an effective tax rate.
        Senator Merkley. Well thank you, because the idea that
    we're going to cut taxes on the rich, which is what the
    Republican plan in the House is, and put this massive
    additional tax on the ordinary families, I know it would not
    sell in my state one moment.
        I do a town hall in every county. Many of them are pure red
    counties, and the idea you're going to tax a family $100,000 on
    a house and 10,000 bucks on a car, not a single person in the
    room would stand up for that proposal.
        So I appreciate the President not taking that tack, and
    instead of saying fair share. By the way, I did read the
    analysis behind the richest 400 families paying about an eight
    percent effective tax. A very sound analysis. It notes that
    capital gains basically go untaxed, unrealized capital gains,
    and that the tax rate for dividends and realized capital gains
    are much lower than the regular tax rate.
        I for one think that the richest 400 families should pay at
    least what a middle-class American pays, rather than eight
    percent. That's what the President's budget seems to be saying.
        Director Young. It absolutely is. The billionaire minimum
    tax, for example, states that those billionaires, 100
    millionaires should pay a minimum tax of 25 percent. We think
    that is a fair way to have a tax system in this country where
    middle class and working families have paychecks, they get
    taxed.
        The ways you cited of getting around that, those same
    people often use that wealth that they never get taxed on to go
    out and borrow for homes, yachts, and if it's real enough to go
    out and secure loans, it's real enough to be taxed.
        Senator Merkley. Let's talk about homes and housing for
    middle class Americans and low-income Americans. It is the
    biggest issue coming up in my town halls. Can you talk about
    how the President's budget addresses the affordability of
    housing for ordinary Americans?
        Director Young. Absolutely. We have got to do something
    about housing supply. We often as a government have solutions
    to demand. We have voucher programs that have been hugely
    successful, still important in some areas that have supply. Not
    every area in this country is the same, so vouchers are still
    necessary. But we are proposing, like we did last year, tax
    credits that would go to developers who build affordable
    housing in this country.
        Also recognizing that zoning laws are often an impediment
    to building. We have resources that would go to help streamline
    zoning laws. I think in some areas of the country, housing is
    already at prices levels when it comes to supply, which
    impacts, as you know, the affordability of that housing when
    you have too few.
        Senator Merkley. Well thank you, because that is a huge
    issue, and we need to invest a lot more. I see that even the
    dream of home ownership fading away for so many families in my
    blue-collar community, and I see that the rising rents are
    driving, are driving folks to be paying sometimes more than 50
    percent of their income, in a way that was not the case before.
        I want to turn to the debt issue. The debt is like paying
    our national credit card. We pass the spending bills, we pass
    the revenue bills, and the result is a deficit. And then when
    the debt ceiling is related to whether or not we pay that, pay
    that bill.
        I'm concerned that a failure to pay our credit card bill,
    if you will, is going to create a crisis. At a modest level, it
    might raise the interest rates, devalue our credit rating. It
    could crash the stock market. Isn't it possible that the
    strategy of creating a debt crisis is going to raise interest
    rates that will affect adjustable rate mortgages, the cost of
    borrowing for a car, perhaps the cost of borrowing for college
    for ordinary families in America?
        Director Young. I'll just say we should study 2011. We did
    not default, but even getting close to default lowered our
    credit rating, which meant we paid more, the American citizens
    paid more for goods.
        Senator Merkley. So direct harm on ordinary families?
        Director Young. Absolutely.
        Senator Merkley. I have one more question if I have an
    opportunity, or otherwise I'm out of time.
        Chairman Whitehouse. You're out of time.
        Senator Merkley. I'm out of time.
        Chairman Whitehouse. Senator Kennedy is next.

                      STATEMENT OF SENATOR KENNEDY

        Senator Kennedy. Thank you, Mr. Chairman. Madam Secretary,
    and I'm going to call you Madam Secretary.
        Director Young. You gave me a promotion. Thank you so much.
        Senator Kennedy. No, I didn't. I'm intentionally calling
    you Madam Secretary, because you have cabinet level status, and
    you're also from Louisiana, which I'm very proud of. So, we
    claim you as our secretary. Doesn't it embarrass you, and I
    know it must because it embarrasses me--this is not a loaded
    question--that the federal government continues, as we have for
    a while, to send money to dead people and they cash the checks?
        Director Young. You and I have talked about this a couple
    of years ago, and of course we should not--that should not be
    happening.
        Senator Kennedy. Well, here's what I'm hoping that the
    administration will take a look at. During the stimulus period
    when we were trying to keep our society on its feet, we sent
    out checks to 1.4--we sent out $1.4 billion worth of checks to
    dead people, and they were cash, obviously fraud.
        As best I can tell, we don't know for sure, but we sent out
    between one and two billion dollars of checks a year
    continuously to dead people and they're cashed, obviously
    fraud. We passed a bill that said Social Security, which gets
    the information about who's alive and who's dead from the
    states, has got to talk to the Department of Treasury, to make
    sure that its Do Not Pay list includes people who are dead.
        It was--it was a shame we had to pass a bill to implement
    common sense, but nonetheless we did it. But in order to get
    the bill passed, I had to make some compromises. I can't
    imagine anybody would be against it. We're going to start doing
    that on December 23rd of this year, but it's only for three
    years.
        And the Government Accounting Office says we ought to make
    it permanent, and I'm going to try to make it permanent. I
    really wish, I'm not going to ask you today because I know you
    have to talk to the President, but if you could talk to the
    President and try to get a commitment to let's pass this.
        Director Young. I will. One of the things that was shocking
    to me is Treasury, in the last administration and this list
    from Social Security, had to develop an MOU to even share this
    database, and you would think it would be easy to do that. So,
    I support you. I'd also ask you to work with us. We have a
    fraud proposal in the budget that makes sure IGs have what they
    need, makes sure we go after fraud in the UI system.
        We saw transnational crime syndicates frankly take
    advantage of the system. So, I'd love to work with you on that
    as well.
        Senator Kennedy. Another area I'm hoping the administration
    will look at, we're spending a lot of money to send
    pharmaceutical drugs to certain hospitals at really, really low
    prices, the idea being of course that those hospitals will pass
    that savings on to people who are less fortunate economically
    than you and me.
        There's just one problem. There's no requirement that the
    hospitals do that, and some of those hospitals, I think it's
    called the 340(b) program, some of those hospitals are going
    thank you very much federal government for giving me these
    cheap drugs, and they're turning around, because dollars are
    fungible, and basically selling those drugs for a profit to
    paying patients.
        We're spending billions on this. It makes no sense, Madam
    Secretary. I really wish y'all would take a look at that.
        Director Young. I'm happy to. We just had a long discussion
    about health care costs, and I'm happy to work with you in your
    office on this and bring in HHS and CMS to the conversation.
        Senator Kennedy. My last question, I know, I listened to
    one of the President's press conferences, and he said--he said,
    you know, nobody, no middle-income people are going to have to
    pay any of this $4.7 trillion worth of new taxes. Is that
    really accurate? I mean isn't the administration proposing in
    its budget to roll back some of the provisions, many of the
    provisions of the 2017 tax cuts.
        Director Young. No sir, no sir.
        Senator Kennedy. So, you're not, you're not arguing that we
    should roll them back?
        Director Young. We are very clearly in the budget state
    that the President would support extending those tax cuts for
    those making under 400,000. Now he does believe----
        Senator Kennedy. Yeah but----
        Director Young [continuing]. We should pay for those by----
        Senator Kennedy. Yeah. But he's proposing to roll back tax
    cuts for people who are making less than 400,000, isn't he?
        Director Young. No sir. He's saying the Trump tax cuts, as
    we call them, expire in 2025. So, the '24 budget does not----
        Senator Kennedy. Some of them expire sooner.
        Director Young. Some of them expire sooner, like the R&D
    tax credit, and I know there are various proposals in the
    Senate to extend those. But on individual taxes, the President
    in black and white says he would support extending those.
        He would not support raising taxes on anyone under 400,000,
    but he thinks those over 400,000, ensuring that those are
    rolled back to pay for lower income, those under 400,000,
    should be on the table so we can do that in a fiscally
    responsible way.
        Senator Kennedy. I agree that's what he said. I just don't
    think that's what his budget does. Thank you, Madam Secretary.
        Director Young. Okay, thank you.
        Senator Kennedy. Thank you. Come visit us in Louisiana.
        Director Young. I'm always there.
        Senator Kennedy. Get out of D.C., come back to America.
        Chairman Whitehouse. Senator Graham.

                      STATEMENT OF SENATOR GRAHAM

        Senator Graham. Thank you, Mr. Chairman. So yeah, South
    Carolina, come visit us too. Do you believe we should be voting
    on the President's budget? Would you like to see the Senate
    take a vote on the President's budget?
        Director Young. Senator Graham, you know I used to work
    here for a long time, and you know what I'm probably going to
    say. Budgets are Congressional processes, and it would not be
    appropriate for me as an administration official to weigh in on
    what comes on the Senate floor.
        Senator Graham. I think it would be--I think it would be a
    good idea to vote on this budget and take the House frigging
    Caucus budget, let's vote on a bunch of these things, and we'll
    find out what we're up against. We're eventually going to have
    to find out what we're for. Do you support the idea that
    entitlements need structural reform to maintain their solvency
    over time?
        Director Young. Senator, I'm sure you know we have a
    proposal in to extend Medicare by 25 years. I heard some not
    excitement about some of the proposals in there, but the
    President stands behind those proposals----
        Senator Graham. So yeah. Are you familiar with Senator
    Cassidy's efforts to reform Social Security?
        Director Young. Don't ask me to go too deep, but you know,
    he is also my home state Senator, so I am aware he has some
    proposals and are working with Senators across the aisle on
    that.
        Senator Graham. But we may have different approaches, but
    you agree with the concept Congress needs to come together in a
    bipartisan fashion to deal with the looming insolvency of
    Social Security and Medicare?
        Director Young. Yeah, and we've put a Medicare proposal
    forward and hope to work with you. The President has supported
    policies on Social Security, so absolutely. Both parties will
    have to come together and talk about the trust funds.
        Senator Graham. Okay. Well, that's a really big step in the
    right direction, because I think when you look at the pie
    chart, it's impossible really to get us in a good budget space
    and these programs, Medicare and Social Security, are certainly
    worth saving, and I would like to be part of the effort to do
    that. So, we'll see if we can make some progress on that front.
        Now about the budget before us here today. Inflation's at
    six percent. Do you agree that's about right?
        Director Young. Yes Senator, down from over nine percent.
        Senator Graham. Yeah. No, six percent down from nine. Who
    gave us the number six percent?
        Director Young. We look at the CPI report.
        Senator Graham. Is that the administration?
        Director Young. That is not, that is not from us.
        Senator Graham. Okay. Who's it from?
        Director Young. Do we have--Bureau of Labor Statistics. So
    it is ours.
        Senator Graham. So I accept that. I assume that's pretty
    accurate. 4.7 trillion in taxes in this budget, increases. Is
    that right?
        Director Young. Yes Senator.
        Senator Graham. Okay. When you say, ``25 percent tax on
    billionaires,'' if you buy an asset at a dollar for
    simplification, and it appreciates to $3 but you haven't sold
    it yet, would the president's budget propose taxing that
    unrealized gain?
        Director Young. It would. But we would say because these
    things have ebbs and flows, it makes sense to do it over a long
    period of time. So we would suggest looking at----
        (Simultaneous speaking.)
        Director Young. Absolutely. Remember, a lot of those
    unrealized gains are used----
        (Simultaneous speaking.)
        Senator Graham. Do you think that will hurt investing or--
    --
        Director Young. Look, this President has been very clear
    Senator Graham. He believes we tried trickle down. It did not
    work. He is, he is about investing in the middle class. He
    believes we can grow the economy best from the middle class and
    working families.
        Senator Graham. Yeah, I gotcha. Couldn't disagree more, but
    I understand where you're coming from. Now you dispute that
    this budget increases non-defense spending by 8\1/2\; is that
    correct?
        Director Young. I have 7.3 percent.
        Senator Graham. Okay, and CBO is at 8.5?
        Director Young. CBO has not scored the President's budget
    yet.
        Senator Graham. Okay. Where does this 8.5 number come from?
    Is that our analysis on the Committee here on our side?
        Director Young. Maybe, maybe.
        Senator Graham. So you're saying it's 7.3 percent?
        Director Young. Yes sir.
        Senator Graham. Okay. Well, we'll see if that holds up. In
    this budget, defense increases 3.3 percent; is that correct?
        Director Young. That's correct.
        Senator Graham. So in this budget, we're increasing defense
    spending from last year under inflation?
        Director Young. So Senator, I know you and I go back and
    forth on this. If you remember in December, our defense grew
    about ten percent. Some things----
        Senator Graham. That's why I voted for it.
        Director Young. Some things not necessarily administration
    priorities that we think would fully fund the National Defense
    Strategy.
        Senator Graham. I guess--no, I gotcha. I'm just asking a
    really simple question. Inflation is six percent. The defense
    budget increase by the administration is 3.3. Those two numbers
    are accurate?
        Director Young. I'm saying we are reprioritizing some of
    the funding.
        Senator Graham. Now I mean, have I got the numbers, right?
        Director Young. You have the top lines right. We go into
    December and reprioritize.
        Senator Graham. And I'll just end with this effort here.
    You do not agree with the proposition that a 3.3 percent
    increase for defense spending when inflation is at six percent
    is increasing defense spending less than inflation?
        Director Young. Absolutely not. We reprioritize and we pay
    for inflation based on our economic assumptions in the budget.
        Senator Graham. Well, well, well, well. Okay, thanks.
        Director Young. Thanks.
        Chairman Whitehouse. Senator Padilla, and then Senator Lee.

                      STATEMENT OF SENATOR PADILLA

        Senator Padilla. Thank you, Mr. Chair. Director Young, good
    to see you.
        Director Young. Good to see you.
        Senator Padilla. As you know, despite all the recent rain
    in the states of California and other areas of the west, we
    still face a crisis on the Colorado River, as drying conditions
    bring water reservoirs along the Colorado River to dangerously
    low levels.
        That means that 40 million Americans and farms across seven
    states face severe threats to their water supply. Just to drive
    home the point, when I reference the farms in the west, I'm
    speaking to a key segment of our nation's food supply. So, I
    want to first thank you for OMB's role in facilitating the
    administration's commitment to invest $250 million for the
    Inflation Reduction Act, to address the public health and
    environmental disasters at the Salton Sea.
        Because of drought conditions, changing agricultural
    practices and efforts to stabilize the Colorado River Basin,
    more and more of the lakebed of the Salton Sea is exposed due
    to decreased flows, which causes toxic clouds of dust and
    pesticides, and this pollution spreads for miles, goes airborne
    for miles.
        Addressing the Salton Sea is a critical linchpin of
    securing long-term deals to address water use in the Colorado
    River Basin. Second, the $4 billion included in the Inflation
    Reduction Act for the Colorado River I think should be just
    seen as a down payment, given the magnitude of the crisis
    facing the seven states.
        It's going a long way. It was put to urging good use, but
    it's a one-time investment in an ongoing concern. So, my
    question is this: how is the OMB working with the Department of
    Interior, the Department of Agriculture and other agencies to
    leverage Inflation Reduction Act and other funding as part of a
    whole of government approach to addressing the challenges
    facing the Colorado River?
        Director Young. Well one, we understand the problem. The
    Colorado River Basin impacts 40 million Americans, seven
    states. It is a complex problem, and it will take a whole of
    government approach, and OMB is situated to be able to bring
    the various agencies together and make sure that we are putting
    our best minds and creativeness to this problem.
        As you pointed out, this is--this needs to be reimagined
    for the long term, and we appreciate the infrastructure and the
    IRA funds. They are helping get us started, and without those I
    don't know where we would be. But this has to be a long
    systemic change in how the government views the Colorado River
    Basin, and we're committed to doing that with your partnership.
        Senator Padilla. Thank you. I'll tell where we would be
    without these investments. We'd be in dire straits. That's
    exactly where we would be, and another data point to
    underscore. Half of the 40 million Americans who rely on the
    Colorado River are in California.
        So, on a related issue Director, during your confirmation
    hearing, which probably at this point seems like a decade ago
    to you, I raised an issue of a specific Army Corps project to
    improve levees along the Powder River near Watsonville,
    California. I raised it then as an issue of equity. The Powder
    River project was long overlooked because it would protect a
    low-income community with low property values.
        Now it may or may not have been conscious ignoring of that
    low-income community, but my point is that the systemic
    consideration of these factors by the Army Corps of Engineers.
    Their rigid benefit/cost ratio formula, systemically
    disadvantages projects that would protect communities like this
    one.
        So I was proud to help secure $82 million in the Bipartisan
    Infrastructure Law to begin the project to reinforce the levees
    in this historically underserved and largely farm worker
    community of Pajaro, California. And unfortunately, I imagine
    you've seen the images for days now, Mother Nature did not wait
    for the Corps to complete its work.
        This past week, the levee broke, flooding the town and
    displacing hundreds of households, and many of the residents
    now out of work long term because nearby fields remain
    underwater. These families won't be able to return to their
    homes probably for months.
        Director Young, you and I have talked about the need to
    address how the Army Corps, as well as OMB, should be thinking
    beyond just the benefit/cost ratio in order to ensure we're
    protecting vulnerable communities equitably.
        How can we shift the federal government's approach to
    ensure that communities like Pajaro and Watsonville receive the
    resources they need before it's too late?
        Director Young. Yeah. Well one, you're talking to a child
    of south Louisiana. I've pulled out more drywall than a human
    should have to and it's devastating to families and
    communities, and those communities are more than a benefit/cost
    ratio. You have my commitment to work with you and Congress to
    make sure there is change beyond when I'm in this seat, to make
    sure that we're looking at a way to be absolutely cost
    conscious, because there's never enough money.
        Even with the infrastructure law, lots of communities have
    flood control projects that we can't get to. So we do have to
    be cost effective, but this idea that poor communities don't
    deserve the same flood control protection as those with higher
    value and houses, is just patently unfair.
        So I'm sorry we got there too late to those communities,
    but you know, I certainly want to work with you and see what we
    can do to systemically change this for the future.
        Chairman Whitehouse. Senator Lee.
        Senator Padilla. Thank you very much. Thank you, Mr.
    Chairman.

                        STATEMENT OF SENATOR LEE

        Senator Lee. Thank you, Mr., Chairman, and thank you
    Director Young for being here. I want to start out by
    correcting the record. One of our colleagues made a comment
    moments ago suggesting the House Freedom Caucus has proposed
    and is actively pushing a 30 percent national sales tax.
        It's just not true. House Freedom Caucus has one member who
    asked for a vote on something like that, but the Freedom Caucus
    itself doesn't do that, nor would the Freedom Caucus support
    that in the absence of a full repeal of the 16th Amendment
    which seems, let's just say, unlikely at the moment.
        I do, however, applaud the House Freedom Caucus for the
    work that its done in proposing ideas to get us on a
    sustainable spending trajectory. I recently proposed in fact
    that Congress should be responsibly reducing spending growth
    rates. The biggest problem we've got is the rate at which
    government spending grows is faster than the rate of increase,
    the rate of economic growth within our country.
        If we took care of that, in time we could get to balance
    over the course of a few years. They've also identified some
    areas where cuts would be appropriate, particularly on the
    discretionary side of the budget, while enacting meaningful
    regulatory reform to make sure that Congress, and not
    unelected, unaccountable bureaucrats, will have ultimately
    decision-making responsibility over regulations that affect
    economic growth and ultimately revenue.
        I do want to remind everyone, anyone watching this hearing,
    as well as American taxpayers more broadly, that it's Congress
    that ultimately determines annual spending and revenue levels,
    not the President's annual budget. Although required by law,
    the budget request of the President that he submits annually to
    Congress has long been a political messaging document
    reflecting the policy, goals and ambitions of the current
    president's administration.
        It should be noted that many of the largest policies
    embedded in this particular request have zero chance of
    becoming law, particularly in the current divided Congress, and
    with good reason. President Biden's FY '24 budget message to
    Congress alludes preposterously to ``delivering on his
    commitment to fiscal responsibility,'' and then it quite
    misleadingly makes a claim in an effort to claim credit for
    reducing the FY 2022 budget deficit to $1.4 trillion from the
    record high $3 trillion budget deficits in both FY '20 and FY
    '21.
        To provide actual context and set the record straight on
    this, remember that FY 20's deficit included roughly $2
    trillion in deficit-financed COVID relief from early 2020,
    something that was passed in both houses with overwhelming
    bipartisan support.
        FY 21's deficit included most of the $2 trillion cost of
    the deficit-financed spending bonanza that Congressional
    Democrats and President Biden enacted without a single
    Republican supporting it. At that time in March 2021 when
    inflation was still below two percent, and the economy was
    already well on its way to recovery.
        FY 22's sharp deficit decline is solely attributable to the
    expiration of pandemic spending, and yet it was still hundreds
    of billions of dollars greater than what CBO projected pre-
    pandemic. I'd further add that I find it curious if not
    troubling that the President claims to be a steward of fiscal
    responsibility, with a track record on deficit and debt
    accumulation in the last two years, during which there was
    Democratic control of both the House and the Senate. His claims
    there don't add up.
        Director Young, this budget request proposes even more
    spending over the next ten years than current law projections
    would suggest. We obviously disagree on that point, you and I
    do, but I'd be curious to know what if any proposed
    programmatic spending cuts or spending freezes the last--at a
    minimum on the discretionary side are contained within this
    budget? Can you identify any of those?
        Director Young. Sure. We have an entire fact sheet. I'm
    happy to show this Committee about what spending cuts this
    President would take on. One Pharma, paying Pharma less by
    negotiating prescription drugs and saving the American taxpayer
    $160 billion. Also closing tax loopholes for Big Oil. We have
    approximately $200 billion.
        Senator Lee. Those aren't spending cuts, those are tax
    increases, but yeah.
        Director Young. Yeah. I mean our tax cuts, do they not cost
    the American people?
        Senator Lee. Yeah. We use different accounting terms,
    different language to describe those. I'm asking specifically--
    --
        Director Young. They add to the deficit, Senator. So we
    believe the appropriate thing to do is to close those tax
    loopholes.
        Senator Lee. Understood. Now with non-defense discretionary
    spending, $661 billion in FY '19 before the pandemic. The
    President's budget calls for $1 trillion for non-defense
    discretionary spending in FY '24. This is completely
    unrealistic as an increase, even from the FY 2023 levels, and I
    endorse wholeheartedly the Freedom Caucus proposal to cap non-
    defense discretionary spending.
        Would the President ever consider capping non-defense
    discretionary spending, and if not, why not?
        Director Young. Well one, those aren't the correct numbers.
    Non-defense discretionary in the President's budget for '24 is
    $688 billion, compared to $886 billion for defense and $121
    billion for VA medical care.
        Chairman Whitehouse. Senator Lee, your time has expired.
    Thank you.
        Senator Lee. Thank you, Mr. Chairman.
        Director Young. Thank you, Senator.
        Chairman Whitehouse. Thank you, Director Young. We have a
    vote to get to, so I'm going to conclude the hearing. I
    appreciate very much your testimony here. Anybody who has
    questions for the record has until noon tomorrow to get those
    questions in, and we'd ask you to try to respond to them within
    seven days of receipt.
        I'll just conclude by thanking you very much for the
    President's attention to the blatant injustice of the Tax Code.
    It is the product of the power of big special interests and
    wealthy donors, and enormous amounts of money go out the back
    door of the Tax Code to benefit the wealthiest corporations and
    people in this country.
        The number you used of an eight percent tax rate for the
    400 biggest tax filers, the 400 number has long been a terrible
    problem, and it means that those super-wealthy tax filers are
    paying lower tax rates than their limo drivers, lower tax rates
    than their private jet pilots, lower tax rates than their
    household staff, and as Warren Buffet famously observed, he
    paid lower tax rates than his office staff.
        That has to stop, not just as a matter of economic probity,
    but as a matter of simple decency and justice. So thank you for
    keeping the pedal to the metal on that, and with that, the
    hearing is concluded.
        [Whereupon, at 12:15 p.m., Wednesday, March 15, 2023, the
    hearing was adjourned.]
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