[Senate Hearing 118-012]
[From the U.S. Government Publishing Office]
S. Hrg. 118-012
THE PRESIDENT'S FISCAL YEAR 2024
BUDGET PROPOSAL
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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
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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
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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
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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\
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\1\ Prepared statement of Chairman Whitehouse appears in the
appendix on page 39.
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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\
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\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\
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\3\ Prepared statement of Hon. Young appears in the appendix on
page 46.
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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\
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\4\ Document submitted by Senator Grassley appears in the appendix
on page 124.
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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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