[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
           
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                            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

                              ----------                              

                       WEDNESDAY, MARCH 15, 2023
                OPENING STATEMENTS BY COMMITTEE MEMBERS

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

                    STATEMENTS BY COMMITTEE MEMBERS

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

                               WITNESSES

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

                                APPENDIX

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

 
                   THE PRESIDENT'S FISCAL YEAR 2024 
                            BUDGET PROPOSAL

                              ----------                              


                       WEDNESDAY, MARCH 15, 2023

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

          OPENING STATEMENT OF CHAIRMAN WHITEHOUSE \1\
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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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