[Senate Hearing 118-257]
[From the U.S. Government Publishing Office]
S. Hrg. 118-257
THE PRESIDENT'S FISCAL YEAR 2025
BUDGET PROPOSAL
=======================================================================
HEARING
before the
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
----------
March 12, 2024
----------
Printed for the use of the Committee on the Budget
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
S. Hrg. 118-257
THE PRESIDENT'S FISCAL YEAR 2025
BUDGET PROPOSAL
=======================================================================
HEARING
before the
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
March 12, 2024
__________
Printed for the use of the Committee on the Budget
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
www.govinfo.gov
_______
U.S. GOVERNMENT PUBLISHING OFFICE
55-278 WASHINGTON : 2024
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
CONTENTS
----------
TUESDAY, MARCH 12, 2024
OPENING STATEMENTS BY COMMITTEE MEMBERS
Page
Senator Sheldon Whitehouse, Chairman............................. 1
Prepared Statement........................................... 36
Senator Charles E. Grassley...................................... 3
Prepared Statement........................................... 39
STATEMENTS BY COMMITTEE MEMBERS
Senator Alex Padilla............................................. 7
Senator Patty Murray............................................. 10
Senator Mitt Romney.............................................. 12
Senator Debbie Stabenow.......................................... 14
Senator Rick Scott............................................... 16
Senator Chris Van Hollen......................................... 18
Senator Ron Johnson.............................................. 20
Senator Tim Kaine................................................ 22
Senator Roger Marshall........................................... 24
Senator Jeff Merkley............................................. 26
Senator Ben Ray Lujan............................................ 29
Senator Mike Braun............................................... 32
Senator Lindsey O. Graham........................................ 34
WITNESS
Hon. Shalanda D. Young, Director, Office of Management and Budget 6
Prepared Statement........................................... 42
APPENDIX
Responses to post-hearing questions for the Record
Hon. Young................................................... 44
Charts submitted by Chairman Sheldon Whitehouse.................. 104
Charts submitted by Senator Charles E. Grassley.................. 106
Chart submitted by Senator Lindsey O. Graham..................... 108
Chart submitted by Senator Ron Johnson........................... 109
Charts submitted by Senator Roger Marshall....................... 110
Chart submitted by Senator Rick Scott............................ 113
Document submitted for the Record by Senator Jeff Merkley........ 114
THE PRESIDENT'S FISCAL YEAR 2025
BUDGET PROPOSAL
----------
TUESDAY, MARCH 12, 2024
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, Warner,
Merkley, Kaine, Van Hollen, Lujan, Padilla, Grassley, Graham,
Johnson, Romney, Marshall, Braun, and R. Scott.
Also present: Democratic Staff: Dan Dudis, Majority Staff
Director; Josh Smith, Budget Policy Director.
Republican Staff: Chris Conlin, Deputy Staff Director;
Krisann Pearce, General Counsel; Erich Hartman, Director of
Budget Policy and Review; Ryan Flynn, Staff Assistant.
Witness:
The Honorable Shalanda D. Young, Director, Office of
Management and Budget.
OPENING STATEMENT OF CHAIRMAN WHITEHOUSE \1\
---------------------------------------------------------------------------
\1\ Prepared statement of Chairman Whitehouse appears in the
appendix on page 36.
---------------------------------------------------------------------------
Chairman Whitehouse. All right. Let me call this hearing of
the Budget Committee to order. Let me thank my colleagues for
indulging the late start. We start at 10:15 instead of 10:00
today because I had a presentation to make over at the Supreme
Court, so thank you for indulging that. We will now----
Senator Warner. Mr. Chairman, were you arguing at the
Supreme Court?
Chairman Whitehouse. No, I was presenting to the Judicial
Conference for their biannual meeting at the Supreme Court.
Semi-annual, biannual, which ones meet twice a year, semi-
annual.
So, let me first say good morning to our Committee members
present and offer a special welcome to our witness, Shalanda
Young, Director of the Office of Management and Budget.
Director Young, it is always a pleasure to have you here before
the Committee. There is simply no better communicator of
complicated budget procedure and arcana than you. And President
Biden is very lucky to have you in this important position.
As the President is fond of saying, a budget is a statement
of values. That message is especially salient this year, as
President Biden and MAGA Republicans offer starkly different
visions of our country's future. On the one hand, President
Biden released a fiscally responsible budget that puts the
middle class first, cuts the deficit by three trillion dollars
and paves the way for a stronger, safer, and more prosperous
America.
On the other hand, MAGA House Republicans voted to undo
pro-growth investments that are creating jobs, driving a clean
energy boom, and lowering costs for households across the
country, all while calling to make the Trump tax cuts for the
very wealthy permanent.
Today we'll hear about the values represented by the Biden
budget, like fighting for the middle class, lowering costs for
families, and investing in communities. For example, President
Biden's budget guarantees 12 weeks of family and medical leave.
It would bring back the expanded child tax credit, which cut
child poverty nearly in half, and it would increase funding for
Pell Grants to make higher education more accessible and
affordable to all students.
The Biden budget lowers health care and prescription drug
costs for tens of millions of Americans. For example, it would
build on Medicare's authority to negotiate the prices of
prescription drugs, a history-making initiative in the
Inflation Reduction Act so Medicare could negotiate the prices
of at least 50 drugs a year, reducing the costs of medicines
and saving Medicare $200 billion over 10 years.
The Biden budget reflects the President's continued
commitment to fighting climate change, a danger too many
Republicans pretend does not even exist, ending unfair fossil
fuel tax breaks and requiring high-flying owners of private
jets to pay fairly for the damages they cause. As we've heard
in this Committee, the International Monetary Fund estimates
fossil fuel subsidies at over $600 billion, with a ``B'',
billion dollars per year.
By contrast, what the House Republicans value? They value a
tax code in which billionaires, big oil, and big Pharma keep
getting massive handouts while the middle class foots the bill,
in which corporations contribution to American's fiscal health
continues to dwindle, and I'd refer you to this graphic, which
shows how much of corporate tax revenues are in our overfall
revenue picture. They are less than less in balance.
MAGA Republicans value defunding the tax police, so that
billionaire tax cheats can keep cheating with impunity. And as
we've seen, they want secrecy. They will not come clean with
the American people about which vital and popular services they
would actually cut to help the billionaire elite. That should
tell you something.
One thing we've learned, when the Republicans say deficit
reduction, it's not going to come out of the pockets of
billionaires. It's going to come out of yours. They admit to
wanting to extend the Trump tax cuts skewed toward the wealthy
and corporations at a $3.5 trillion cost. They rely on economic
fairy dust and fantastical growth numbers to claim that
corporate giveaways will pay for themselves, a magical tale
rebutted in this Committee by Republican and Democratic
witnesses alike. Tax cuts simply do not pay for themselves.
President Biden's budget would reduce the deficit by
ensuring that big corporations can't get away with paying
nothing and that billionaires don't pay lower tax rates than
teachers and firefighters. It would end write-offs for
corporations that offer exorbitant compensation to executive
and close loopholes for big corporations that outsource jobs
and shift profits offshore, and it would make sure the IRS can
see to it that the wealthy and well-connected pay the taxes
they owe.
As we heard in testimony before this Committee, those
investments save money and have a fiscal return as high as 12
to 1. Unlike tax handouts, tax enforcement does pay for itself.
Fixing our corrupted billionaire coddling tax code is good for
its own sake, but the revenue also can support investment in
the American people and reduce the deficit.
When the wealth contributes a little bit more to Medicare,
we can extend its solvency indefinitely, as achieved by my
Medicare and Social Security Fair Share Act. Lifting the cap,
so the wealthy pay their fair share will protect Social
Security. My bill does just that, extending Social Security
solvency indefinitely. And I look forward to working on these
bills with the Administration.
Republicans claim they no longer want to cut Medicare and
Social Security benefits. If that's true, the only other way to
ensure long-term solvency is making the wealthy chip in more.
The Biden budget is a proposal for how to reduce deficits by
investing in our families and communities, by demanding that
the tax system be fair, and by actually enforcing our existing
tax laws on the wealthy.
Deficit reduction the Biden way leads to a declining debt
to GDP ratio, a sound marker of a responsible fiscal path.
Creating a safe, prosperous, and fair nation: Those are our
values. House Republicans would rather gut essential programs
and services to help their rich donors get even richer. Which
path we take is the choice that's before us today. I look
forward to today's conversation on the President's budget.
Chairman Whitehouse. I will now recognize my distinguished
Ranking Member Senator Grassley and then we will turn to our
witness, the Director of the Office of Management and Budget.
And just so that everybody knows, Senator Padilla is obliged to
preside this morning, so I'm going to be swapping positions
with him. He will have the opening round of questions and I
will go to the end of the line and take his.
OPENING STATEMENT OF SENATOR GRASSLEY \2\
---------------------------------------------------------------------------
\2\ Prepared statement of Senator Grassley appears in the appendix
on page 39.
---------------------------------------------------------------------------
Senator Grassley. Thank you, Mr. Chairman, for holding this
hearing and thank you, Director Young, for coming to give the
position of the Administration on the budget. Today's hearing
is doing what the Budget Committee is supposed to do, budget
issues. We've spent a great deal of time over the last two
years on climate, on abortion, and a lot of other issues, but
this is what this Committee should be doing, so I compliment
the Chairman for having a budget hearing.
I was cautiously optimistic hearing President Biden's call
for bipartisanship and unity during his inaugural address, but
boy, have I been disappointed. For three years the President
has embarked upon a far-left agenda. He's taken a ``my way or
highway'' approach to governing, whether those who disagree
with him are attacked as extremists. He topped that off last
week with the most partisan State of the Union address that
I've ever heard, and I've heard a lot of those presidential
State of the Unions.
A partisan president I find is so different from the
bipartisan Senator Biden I worked with for 28 years in the
United State Senate. Now, come his fourth budget offering more
of the same radical agenda. At a time when we need real
solutions to put our fiscal house in order, this budget offers
nothing but false promises and a far-left wish list. You know,
we all know that this would never pass, even this Congress.
Just a few years ago, this Administration tried to claim
that blowing up the deficit was a fiscally responsible thing to
do. In fact, they said at that time higher interest rates would
be a good thing. Now, our nation is barreling down the fiscal
crisis that was started then. We're over $34 trillion in debt
and still counting. Even the President's media allies can't
stomach his dishonest deficit reduction claims.
CNN, for instance, called the President out, noting that
his policies, in fact, ``have had the overall effect of
worsening the annual deficits, not reducing them.'' Thanks to
irresponsible policies, reckless spending, and decade-high
interest rates, debt service costs have more than doubled since
2021.
According to the Congressional Budget Office, interest on
the debt will total $870 billion this year, exceeding what we
expect to spend on national defense, the number one
responsibility of the federal government. If that isn't
daunting enough, within 10 years the Social Security Trust Fund
is projected to go broke, putting benefits for over 50 million
seniors at risk.
Now, isn't this a sad political climate when a candidate
Trump and a President Biden both say that they're not going to
touch Social Security benefits. Well, what do they think is
going to happen in 2033, just eight years down the road, when
we all know that if we don't do something about Social Security
everybody's benefits are going to go down to 77 percent of what
they're getting now.
If there was ever a time for a President to show leadership
with his budget, this is it. Instead, he offers proposals so
far out of the mainstream most have already even been rejected
by congressional Democrats. Even if all the President's fantasy
proposals were enacted, the budget still fails to reign in
unprecedent debt and deficits. Under this budget, publicly held
debt as a share of the economy would rival the record set at
the wake of World War II.
Over the 10 years, the President's budget racks up a
disastrous $16 trillion in cumulative deficits, and I think
when I go to my 99 counties to have Q&A with constituents,
which I do every year, not at every one of them, but at most of
them they yell at the back of the room what are going to do,
Grassley, about the $33 trillion national debt? Soon, we're
going to be asked what are we going to be doing with a $50
trillion national debt.
That's despite proposing five trillion dollars in new job
killing tax hikes. That's in addition to a two trillion-dollar
tax hike in store for families earning under $400,000 due to
the President's shelving of the 2017 tax bill. Now. How do you
get around the fact that the 2017 tax bill sunsets under budget
law because you can't enact permanent law for more than 10
years, without even a vote of Congress? We're going to have the
highest tax increase in the history of the country.
Now, unwittingly, the President's budget shows what anyone
who understands our fiscal situation knows, there aren't enough
rich people to solve our budget woes. So, I would remind even
the Chairman that just talked about taxing the rich, that you
could confiscate, not tax, but confiscate all the wealth from
people in this country and you'd run the government for just a
few weeks, or at most, a few months. Eventually, you're taxing
people that aren't rich to do everything it wants to be done.
I think Margaret Thatcher said it best, and I quote, ``The
problem with socialism is that you eventually run out of other
people's money.'' The President's budget is a case in point. It
includes no serious attempt to address ballooning autopilot
spending that is the main driver of our record debt and
deficits. Moreover, it piles another two and half trillion
dollars in new mandatory spending, amounting to one of the
largest expansions of the federal government in American
history.
Now, it's simple math. If you want to implement European-
sized government, you'll to impose European-sized taxes on
everybody because that's what the--well, I can't think of the
across-the-board tax cuts that they have for everybody that's
similar to what we have called sales tax here. I'm sorry I
can't think of that word, but it's simple math. If you want to
implement European-sized government, you'll need to impose
European-styled taxes. That means higher taxes and higher
prices for Americans of all income levels and that's what this
budget does.
Ironically, President Biden likes to boast that our economy
is doing better than Europe's. That's been true nearly my
entire lifetime. Our economy does better than Europe's because
this country has always rejected the kind of big government tax
and spend policies envisioned by this President copying Europe.
Unfortunately, when it comes to the President's budget, the
President proposes, and the Congress disposes, I see Congress
wasting no time before disposing of this budget.
If the other side disagrees with me, then I challenge them
to set a date to mark this budget up. It won't happen because
even most Democrats wouldn't vote for this calamity.
Unfortunately, this budget is another lost opportunity for the
President to demonstrate leadership on pressing fiscal
challenges, leadership that's desperately needed if we're ever
going to climb out of a fiscal hole that we've dug ourselves
into. Thank you, Mr. Chairman.
Chairman Whitehouse. Thanks very much. I now turn to our
distinguished witness today to speak about President Biden's
Fiscal Year 2025 budget request, and she is Director Shalanda
Young of the Office of Management and Budget. Director Young,
we will now hear your opening statement. At the conclusion of
your opening statement, I will recognize Senator Padilla to
step in, in my place, and I will swap and take his place
further down the line in order to accommodate his
responsibilities to preside in the Senate. And the order will
therefore be Senator Padilla, Ranking Member Grassley, Chairman
Murray, Senator Romney, Senator Stabenow, Senator Scott,
Senator Warner, Senator Johnson, and then Senators Van Hollen,
Kaine, Lujan, Whitehouse, and Merkley, unless interspersing
Republicans appear. And with that, over to you, Director Young.
STATEMENT OF SHALANDA D. YOUNG, DIRECTOR, OFFICE OF BUDGET AND
MANAGEMENT \3\
---------------------------------------------------------------------------
\3\ Prepared statement of Hon. Young appears in the appendix on
page 42.
---------------------------------------------------------------------------
Director Young. All right. Thank you, Chairman Whitehouse,
Ranking Member Grassley, members of the Committee. I know when
some people say they're happy to be here, they don't really
mean it, but I spent the majority of my adult career in this
institution in Congress, so even though it might be a rough
morning for me, I'm happy to be here and thank you for the
chance to get to talk about the President's fourth budget, as
you heard Ranking Member Grassley say.
And from Day One, this Administration, President Biden has
tackled challenges head on while delivering long-lasting
results for the American people. Over the past three years, he
has overseen a strong economic recovery, amassed one of the
most successful legislative records in generations, growing the
economy from the middle out and the bottom up and delivered
important progress for the American people.
Under the President's leadership, we've added almost 15
million jobs, the unemployment rate has remained below 4
percent for over two years, a 50-year record, while inflation
has fallen by two-thirds. This Administration has taken action
to lower costs for working families from everything from
prescription drug costs and health insurance premiums to
everyday goods and services, and the President's top priority
remains lowering costs for the American people.
At the same time, the President has restored U.S.
leadership on the world stage while Americans safe and
promoting democracy at home and abroad. The President has
delivered this progress for the American people, all while
fulfilling his commitment to fiscal responsibility. The deficit
is more than one trillion dollars lower than when the President
took office, thanks in large part to a strong economic
recovery.
In addition, the President has also enacted another roughly
one trillion in deficit savings over the next decade through
the Fiscal Responsibility Act. The President's 2025 budget
details the President's vision for a more equitable,
prosperous, and powerful America with proposals for
responsible, pro-growth investments in the American people. The
budget protects and builds on the progress made over the last
three years and proposes additional policies to lower costs for
our working families, including for health insurance,
prescription drugs, childcare, utilities, housing, college,
energy, and more. These investments will help working families
keep more of their hard-earned paychecks and strengthen our
economy.
It also invests in American working families. This
President has shown us that we can be both fiscally responsible
and invest in America. The budget will bolster manufacturing
and industry across the nation, make our communities healthier
and safer, provide paid leave, support researching cancer,
deliver for our veterans, cut taxes for families with children,
promote a flexible and dynamic workforce and more.
The budget protects Medicare and Social Security bedrock
programs that generations of American have counted on and
seniors have paid into their entire working lives. It extends
Medicare solvency indefinitely by requiring wealthy people to
pay their fair share toward Medicare and reducing prescription
drug costs and it reflects the President's commitment to reject
any benefit cuts to Social Security, extend solvency by asking
the highest income Americans to pay their fair share, improve
financial security for seniors and people with disabilities,
and ensure that Americans can access the benefits they have
earned.
And in what will be a decisive decade for America and the
world, the budget reflects a national security strategy by
including robust investments in military readiness, our
diplomatic and development tools, and honors a sacred
commitment to our veterans. The budget achieves all of this
while building on the President's proven record of fiscal
responsibility and honoring the President's promise that no one
earning less than $400,000 in this country a year will pay a
penny more in new taxes.
His budget reduces the deficit by roughly three trillion
dollars over 10 years on top of paying for all new investments
in the budget by cracking down on fraud, cutting wasteful
spending, including by reducing prescription drug costs, and
making the wealthy and corporations begin to pay their fair
share.
I also want to thank the federal workers who have worked on
this budget, my team at OMB, my team with me. Thank the
senators for being here, and also your staffs. I did what you
do for a long time in my career. I know this wouldn't happen
without your hard work, so I want to thank the teams who all
helped to put this together today. So, thank you.
Chairman Whitehouse. Thank you, Director Young. Standing in
for me, Senator Padilla.
STATEMENT OF SENATOR PADILLA
Senator Padilla. Thank you, Mr. Chair. I appreciate the
consideration. First question, Director Young, in five words or
less, how is the baby?
Director Young. The baby went quietly and peacefully to
daycare this morning, so the baby could not be better.
She knew I had some place to be.
Senator Padilla. Not so baby anymore. In my time, there are
two timely issues I'd like to cover with you, and appreciate
the call last week to begin the conversation on some of these.
Colleagues' household water and sewer bills have increased by
more than 50 percent this last decade, leaving one in three
Americans struggling to pay their bills. Now, during the
pandemic, we actually had a very successful low-income
household water assistance program that was approved which
served than 1.4 million households in 49 states, 5 U.S.
territories, the District of Columbia, and 97 Tribal
Communities.
So, I appreciate the Administration's continued recognition
of the success program in the budget by allowing its
continuation under Low-Income Home Energy Assistance Program
(LIHEAP), at least until we can pass my legislation that would
make Low Income Household Water Assistance Program (LIHWAP)
permanent. The goal there is to provide a separate, long-term
authorization of the program. But unfortunately, in
appropriating the funds,
Congress has failed to allow for the set aside that the
Administration has proposed in this and previous budget
request.
So, Director, the question is, is the expansion of eligible
uses to allow LIHWAP services factored into the $4.1 billion
funding level proposed for LIHEAP was this budget to ensure
that the United States Department of Health and Human Services
(HHS) can provide both LIHEAP and LIHWAP assistance without
eating into the LIHEAP program. So, can you speak to that and
the importance of enacting an appropriations bill that reflects
this goal?
Director Young. One, I helped get that program started in
the Appropriations bill. It saved a lot of families from water
cutoffs in the middle of pandemic. How terrible that would've
been had we not done something, and we absolutely support the
set aside 2.7 percent and believe that would allow the LIHWAP
program to continue without eating into the LIHEAP program,
which is also incredibly important.
Senator Padilla. Okay. Because obviously, we don't want to
eat into one program because they both have a significant merit
and need, so look forward to working with you on establishing
the permanent program when the time comes.
The other issue I wanted to raise is the--well, let me just
say, in that call last week very much appreciate your
recognition of the importance of following the science when it
comes to the Mars sample return mission. For the first time in
history of callings, we will launch a spacecraft from the
surface of Mars with samples for detailed study. This effort is
being led by the incredible team at the Jet Propulsion
Laboratory in Southern California. And as you now, Congress was
unequivocally in the Appropriations Minibus we enacted last
week in support of the Mars sample return mission and in the
larger decadal survey process that determines National
Aeronautics and Space Administration's (NASA) funding
priorities.
Director Young, could you reiterate for the record the
Biden Administration's commitment to supporting the Independent
Review Board assessment and the funding profile resulting from
its conclusions.
Director Young. We are so committed to making decisions
based on the internal assessment that we held off on providing
a '25 number while that assessment is being done so we can put
forward a '24 number because the Appropriation's bill asked us
to take time and make sure we got that right in addition to a
'25 number after that assessment is done to make sure we get it
right.
Senator Padilla. Can you assure me that both OMB and NASA
are on the same page when it comes to this commitment?
Director Young. We're both on the same page when it comes
to this commitment. We are waiting for the internal review at
NASA to conclude. Clearly, one of the things we'll look at is
the long-term viability, the cost of the project, lots of
missions NASA has to undertake, but we are committed to
following the science.
Senator Padilla. Thank you very much. And in closing,
Mr. Chair, I just wanted to thank Director Young for the
inclusion of $38.5 million for the Bhadra River Project to
continue the important work safeguarding that historically
underserved largely farmworker community in California and also
for the increased funding for the International Boundary and
Water Commission. We've been working closely with your office
to address the needs of critical infrastructure around the
Tijuana River. Thank you, Mr. Chair.
Director Young. You know we supported that in the
supplemental as well.
Senator Padilla. Thank you.
Chairman Whitehouse. Ranking Member Grassley, followed by
Chairman Murray.
Senator Grassley. President Biden has repeatedly claimed
that he wouldn't raise taxes on anyone making under $400,000.
The President's budget includes five trillion dollars in new
tax hikes with much of that targeted at corporation and
businesses. Of the five trillion, approximately 2.7 trillion is
targeted primarily at corporations. Now, I quote or refer to an
Executive Branch study. On its website, Treasury Office of Tax
Analysis provides a distributional analysis for all taxes.
That analysis shows that household with incomes below
$310,000 bear approximately 37 percent of the corporate tax
under current law. Using Treasury's own analysis, isn't it
accurate that those earning under $400,000 would see their tax
burden increase, at the very least, by hundreds of billions of
dollars just under the corporate tax proposal alone?
Director Young. Senator Grassley, I'm happy to look at that
analysis, but we took a lot of time working with Treasury to
make sure none of our proposals impacted those making under
$400,000. If the assumption is corporations will pass on any
tax increases the President's asked for, for hardworking
Americans, that is all something we should all be concerned
about. But all of his proposals are focused on those people
that make over 400,000. And frankly, most of the tax proposals
will hit those in the top 1 and 2 percent earnings in this
country.
Senator Grassley. Well, this estimate is by Treasury, and
you said you worked with Treasury, but then they're giving
conflicting views compared to what I quoted. We have also data
from the Joint Committee on Taxation suggesting taxpayers under
400,000 would shoulder more than half of President Biden's
corporate tax hike. And I think you keep forgetting that
corporations are nothing but a sheet of paper. They're
management, they're employees, and they're customers and
everything that corporations pay is passed onto somebody else.
So, you've got to get over this that tax increases on
corporations affect workers by--37 percent is what your own
Treasury Department said.
As part of his budget, President Biden fails to include an
extension of the 2017 tax law. Based on information supplied by
the Joint Committee on Taxation, approximately 70 percent of
the benefits of the tax law flows to taxpayers earning under
400,000. That equates to approximately two trillion-dollar tax
hikes on those earning under 400,000. So, I want to make an
important point that not extending these tax cuts would be a
direct violation of the President's pledge and that.
So, my next question is this. The nonpartisan Congressional
Budget Office (CBO) has been providing Congress with an
independent analysis of the President's budget since the 1970s.
In recent years, CBO hasn't been able to re-estimate all the
proposals in the Biden budget, citing a lack of details from
the Administration on several multibillion-dollar proposals.
So, would you commit to providing CBO with the necessary
information it needs to provide Congress with an independent
assessment of all the policies in the President's budget?
Director Young. Congress absolutely needs CBO's analysis
and I've never heard this concern from CBO and I'm happy to
take that back, Senator Grassley, but we will provide CBO what
they need to do this independent assessment.
Senator Grassley. Okay. My last question is the President's
budget estimates that making Obamacare subsidies permanent for
higher income earners, some of whom make over $200,000 a year,
will cost $273 billion over 10 years. This is a 67 percent
higher than what you estimated three years ago. Enrollment only
explains half of this increase. Obamacare subsidies are growing
four times greater compared to total national health
expenditure. Could you explain this re-estimated $110 billion
increase in Obamacare subsidies to high income earners? And
keeping in mind enrollment only explains about half of this
increase. Why do Obamacare subsidies cost much more than
overall health care costs.
Director Young. Well, Congressman, I want to thank the
senators that supported extending the premiums to American. We
are very proud of the fact that enrollment has increased
substantially under the Affordable Care Act, happy to go look
at the analysis, but I think the good news story here is more
Americans have access to health care through the Affordable
Care Act. As some states pull back on Medicaid, it is
incredibly important that we ensure that Americans have health
insurance.
It will cost us more in the health care system if we did
not have this critical program at this juncture. So, I'm happy
to look at the analysis you have, but frankly, the good news
story if we have more Americans covered under this law and we
will continue to push to make these premiums permanent.
Senator Grassley. You can't explain the $110 billion, in
other words, is what you're telling me.
Director Young. So, I'm saying enrollment is why the costs
have gone up and I'm happy to work with your team to see what
the difference in numbers are. I'm not in the habit of
answering analysis that I haven't seen, but I'm happy to take
that back.
Chairman Whitehouse. Chairman Murray, followed by Senator
Romney.
STATEMENT OF SENATOR MURRAY
Senator Murray. Thank you very much, Chair Whitehouse. As I
always say, a budget is a statement of values and President
Biden's budget tells working people and families very clearly
and simply, we have your back and we're going to be building a
stronger future together. You just don't get a sharper study of
contrast than President Biden setting forward a budget that
protects and strengthens Medicare, Medicaid, and Social
Security while former President Trump goes on TV to say he
thinks you can ``Do a lot in terms of cutting these programs.''
But while the leader of the Republican Party wants to pull
the rug out from under families and seniors, President Biden
understands the source of our nation's strength is our people
and investing in working families does pay off in a major way.
This budget offers a roadmap for progress on tackling the
housing crisis that is crunching Americans pocketbooks and we
are really feeling this in my home state of Washington.
Tackling the childcare crisis, like I have long championed,
so working families nationwide can find the childcare they need
for about $10 a day. Continuing our historic work tackling the
climate crisis and rebuilding our nation's infrastructure,
including funds for the Howard Hanson Dam Fish Passage Project
in Washington State, which I thank you for. And there is a lot
more, like critical investments to bolster our national
security by strengthening our Military and our alliances, which
are so crucial. And the President's budget recognizes it is
absolutely possible to invest in the American people and put
our country on a more sustainable fiscal footing.
This budget also lowers the deficit by simply closing
ridiculous loopholes that billionaires count on to avoid paying
the taxes they already owe and ensuring the ultrarich and
largest corporations finally start paying their fair share.
That should not be too much to ask. There is never any good
reason billionaires should be paying less than firefighters or
teachers or nothing at all.
So, Director Young, good to have you here today. Thank you
for all this work. As you well know, we just passed the first
slate of FY24 bills, which conform to the Fiscal Responsibility
Act caps and the agreement that accompanied that. Those
constraints made for pretty tough funding decisions, as I have
said repeatedly, but we did manage to hammer out serious,
bipartisan bills that protect key investments and we are now
hard at work to pass the rest.
In FY25, we're going to be facing an even tougher set of
constraints within the second year of caps and fewer
adjustments to make use of the outset. Can you talk with us
about how the President's budget protects and strengthens our
core investments, particularly on the non-defense side, while
working within those caps? What are the tools that you all
employed to make sure we are able to pass a strong set of
funding bills within those tough caps.
Director Young. Chair Murray, one, thank you for what you
did last week with the six bills. I know that the final six are
underway and your committee is hard at work.
Non-defense discretionary, sometimes high, what we're
talking about, we're talking about veterans' funding. We're
talking about the Department of Homeland Security, childcare,
Department of Education, Pell Grants, these are absolutely
critical programs. It's the smallest amount we spend in the
federal government, and we often find ourselves struggling
because we had to enact budget caps to make sure these critical
programs, frankly, both parties have historically supported.
In this budget, because a lot of the debt deal had
adjustments to make sure adequate funding could be had were
used to make sure your '24 process could happen, this budget
shows a path by using adjustments that have historically been
used, like changes in mandatory programs and emergency spending
where necessary. Congress has used both of those tools in the
past in Appropriations bills and it's going to be needed more
than ever at higher levels to ensure that programs, National
Institutes of Health (NIH) and every other place that has
bipartisan support isn't cut unnecessarily.
Senator Murray. So, those are the same tools we used in our
Appropriations Committee last summer.
Director Young. We will need more of those because most of
the offsets your committee typically uses to make sure non-
defense programs are continued and members priorities are taken
care of are gone, frankly, and we will have to do more changes
in mandatory programs, lovingly known as Changes in Mandatory
Programs (CHIMPS), to those of us who work on this, and
emergency spending will be necessary.
Senator Murray. Okay. Thank you. And quickly, I just want
to thank you for Hanford. You know how important that is to me
and just always ask for your continued work with us as we make
sure that that critical funding is there. And I always want to
thank you again for the Howard Hanson Dam Fish Passage Facility
Project. I'm glad the President heard me on how critical that
is, and I really appreciate your working with us.
Director Young. Thank you.
Chairman Whitehouse. Senator Romney, followed by Senator
Stabenow. Senator Romney.
STATEMENT OF SENATOR ROMNEY
Senator Romney. Thank you, Mr. Chairman. It's appropriate
that this hearing is being held during Academy Award season.
I'm afraid what we do here is more Barbie than it is
Oppenheimer. The public thinks we work on the budget, but we
don't. You realize from the time I've been on this Committee
we've never met privately. We've never come together and
negotiated and given some give and take and come up with
proposals to somehow get us closer to a balanced budget or deal
with the debt.
Frankly, the only time we meet is in these hearings. And if
you've been watching over the 118th Congress, you realize that
we've had 28 hearings before today. Do you know how many of
those hearings have been on the budget? Two. Now, I'm concerned
about the climate, but 14 of our hearings have been on climate
change. For instance, The Cost of Oil Dependence in a Low
Carbon World, How Climate Change is Changing the Insurance
Market, The Real Cost of Fossil Fuels, How The Climate Crisis
Threatens Ocean Industries. These are important topics, they
just don't belong in the Budget Committee.
This is a committee that's about performing, getting on
stage and acting like we care about these things, but there's
actually no work being done by this Committee to deal with our
budget and to deal with federal spending.
Now, we pretend we're going to be bringing down the
deficit, but the Administration is comparing our spending to
the COVID years and any American knows that we spent a massive
amount of money to deal with the COVID crisis and to help
American families. And pretending like we're cutting the
deficit when we're comparing to a COVID year is absurd.
Now, people on both sides of the aisle, including
economists, say that the increase in debt is unsustainable.
That raising debt as a percentage of the GDP cannot go on
forever, and we're apparently not in the position to do the job
because we won't even meet to talk about it. So, my question is
does the Administration support the idea brought forward by
Senator Manchin and myself in our chamber, but also in the
House by two leaders there, to put in place a bipartisan,
bicameral, commission to look at ways to see if we can't hold
the debt as a percentage of the GDP at a constant level? Does
the Administration support that legislation?
Director Young. Senator, there are lots of commissions. The
House Budget Committee just passed a Fiscal Commission. I won't
pick amongst commissions that are flowing----
Senator Romney. But do you think that's a good idea?
Director Young. But what I will say is, it will take
bipartisan solutions to deal with our fiscal path. We're
putting a path forward here. I know you may not agree. Our
revenue proposals----
Senator Romney. But you see, in order to have a proposal
that actually becomes law, it takes both sides to come
together. I can put a proposal out there that I know has no
chance of passing and pretend like I'm doing something
responsible. The Administration puts a proposal out it knows
has no chance whatsoever of passing because we have Republicans
and Democrats. We have to come together and work together, but
we don't. So, look, it's this sleight of hand, which is look at
all the things we're doing. We get a proposal that makes it
work. You don't have a proposal that actually would get
accomplished because you can't bring together both parties to
do it.
The sleight of hand, I mean, the President said the other
night that these wealthy, I think, billionaires he was
describing, pay only 8 percent in tax. Well, what he didn't say
was--he wasn't talking about in income tax. I mean it was very
disingenuous, a sleight of hand. Again, Academy Awards worthy.
He's not talking about the income tax they pay. He knows the
income tax that those people pay is a very high rate, as it
should be. He's talking about putting in place a tax on the
increase in value of their assets, so called unrealized capital
gains. I don't know of any country in the world that does that,
do you?
Director Young. If I can talk about this in a way, if those
unrealized----
Senator Romney. Are there any countries in the world that
tax unrealized capital gains?
Director Young. Senator, if those unrealized gains are good
enough to a bank to get hundreds of millions of dollars or
billions in loans----
Senator Romney. I asked a different question and I get to
ask the questions----
Director Young [continuing]. They should be taxed like
income.
Senator Romney [continuing]. That I want, and I hope to get
a response from you. I don't believe there's any country in the
world that taxes assets or unrealized capital gains. I believe
France tried it for a while and found it was a disaster and
gave it up, but the President's proposing doing it and telling
the American people they're only paying 8 percent. They're not
paying 8 percent in their income.
That's disingenuous. And by the way, I think it's the
stupidest idea I've ever heard, would devastate our economy.
I'm not worried about how much money the billionaires are going
to be paying taxes. That's not my concern. It's the idea that
we'd be transferring everything from the public markets into
private assets that couldn't be valued easily.
Look, I would describe it, as well the other proposals
made, sounding as if they have a chance at passing, they don't.
We need to work as a committee and as a Congress to stop acting
for the cameras and start working for the American people to
finally deal with the massive deficits and debt that we have
and that's not happening. That's why Senator Manchin and I have
proposed a bipartisan, bicameral commission to finally tackle
this before it becomes such a crisis it can't be resolved
without calamity. Thank you, Mr. Chairman.
Chairman Whitehouse. Thank you very much, Senator Romney.
Let me take a Chairman's minute to defend the Committee on
three points. First of all, we're operating under a budget
agreement that holds through October of 2025, bicameral,
bipartisan budget agreement. Second, about a third of our total
federal debt is produced by crises that we were warned of and
didn't respond to. My God, if there's ever a crisis looming
that we're not responding to that's going to smash into the
budget, it's climate change. So, I have no hesitancy about
continuing to do that work.
And finally, I've repeatedly offered members of this
Committee to get together with health care bipartisan
solutions. I do think that the ticket to entry should be
actually a proposal rather than just senators talking at each
other. Our last hearing was on that, and I renewed the
commitment. So, I renew that commitment again right now. Let us
look at bipartisan ways we can reduce the massive cost of our
health care spending in ways that do not cut benefits.
Senator Romney. I agree with you on climate change, Mr.
Chairman, but 14 of 28 hearings are on climate change.
Chairman Whitehouse. Wait until the budget gets blown out
by it and the budget is under the rule of the bicameral,
bipartisan agreement. Senator Stabenow, followed by Senator
Scott.
STATEMENT OF SENATOR STABENOW
Senator Stabenow. Thank you very much, Mr. Chairman. I
think all of what we're talking about is about the budget and
it's about our values and where we want to invest as a country.
I do think it's important to note that when we have a
Republican president there's a very different discussion about
deficits. I mean we all know that the two trillion dollars in
unpaid for tax cuts to the wealthiest Americans done under
President Trump put us in a situation where 25 percent of all
of the national debt of the country ever, ever, ever, ever
created was in those four years, and I didn't hear a lot of
that. In fact, I'm sure we're going to hear when those tax cuts
come up for renewal, that we should be extending all of them
with the debt.
So, what I appreciate, Director Young, and I appreciate
President Biden for, is you're changing the paradigm. For years
we've heard about trickle down economics, let it trickle down.
Some way it's going to hit you. People in Michigan are still
waiting for it to trickle down. But now, we have something
different and hit's actually working by the numbers. You just
have to look at the facts.
This President has said grow the middle class, lower costs
for people, grow the middle class and we'll see what happens
here. Coming out of the worst crisis we have had ever in COVID
and the mess that everybody was handed at that time, horrible
situation for families, but also for a new President coming out
of all of this.
So, three and a half years later, as my mom would say,
proof is in the pudding. We got 15 million new jobs, 351,000 of
those in Michigan. We've got unemployment below 4 percent for
the longest stretch in 50 years, more small businesses are
being created, which I love. And I have to put a caveat in,
really lead by Black women entrepreneurs, so I'm excited about
all of what I see coming for small businesses as well. And I
could go on and on in terms of what the numbers show us.
We have not seen the crash that we keep hearing about from
the other side and the doom that's been expected. We are seeing
growth. We are seeing costs beginning to come down and there's
more to do. So, I want to first thank you for this budget
because you are building on the progress that's been made of
smart investments to grow the middle class and to ensure,
frankly, that large corporations and the wealthy pay more of
their fair share, which I think people certainly in Michigan
think is a good idea to see happening.
I appreciate that this budget invests in affordable
childcare, helping people buy their first home. And by the way,
as a caveat, when I was in Northern Michigan last year talking
to a coalition of 15 really terrific chambers of commerce of
small communities all across Northern Michigan, their top two
priorities, Mr. Chairman, were childcare, Senator Murray, and
affordable housing. These are not radical socialists. Most of
these folks are probably registered Republicans and I love
working with them, but their priorities were affordable
childcare and affordable housing is what they want us to work
on as folks in small communities across Michigan.
So, this budget cuts student debt, lowers prescription drug
costs, again, thank goodness, as we move forward would love to
have bipartisan support for that. We had the first round, $35
insulin cap, negotiating with Medicare. We didn't get any of
our Republican colleagues. It'd be wonderful to get some
Republican support for this, this time. And of course,
restoring the child tax credit, which when we did it two years,
cut child poverty in half, which I think should be celebrated.
So, thank you for that. And also, this proposal would
reduce the deficit by another $3.2 trillion while achieving
long-term Medicare solvency without harming Social Security or
Medicare. So, I have a question for you. First, again, Director
Young, thank you for supporting so many things that Michiganers
care about, Soo Locks, Great Lakes Restoration Initiative, all
the things that are important for us in Michigan, protecting
our natural resources and growing our economy.
We know that we work together, the Biden Administration
and, in fact, this wonderful bipartisan effort around
behavioral health, really funding and supporting health care
above the neck the same as health care below the neck and we
have made dramatic steps forward across the country right now
to fund comprehensive, Certified Community Behavioral Health
Clinics (CCBHCs) strongly supported by communities and law
enforcement, and again, very bipartisan.
So, in addition to increasing the investments in CCBHCs in
the President's budget, you have several other proposals to
strengthen and improve access to behavioral health. I wonder if
you might speak for a moment about this because this too out in
the real world, certainly across Michigan, and I know across
the country, these are very, very important issues.
Director Young. Thank you for all the points you've made. I
could not have made them better. Look, the President's budgets
are to show a vision. Most budgets are not picked up lock,
stock, and passed. But the idea is Presidents should put
forward how they believe the country should move forward. This
President believes we have to keep investing in the American
people, grow the economy for the middle class, give working
families a shot in this country, and we can do that through a
fairer tax code.
But that also means we get to do stuff like behavioral
health, not only not adding to the deficit, but having three
trillion dollars in savings in the deficit. And we're proud of
the behavioral health budget, $20.8 billion in discretionary
and mandatory resources across Health and Human Services, $2.2
billion over 2023 spending. We've enabled more Americans with
private insurance, Medicare and Medicaid to access mental
health and substance use disorder care.
The 988 crisis line, thank you all for helping get that
started. We need more resources to make that more robust. I
don't think anyone here thinks we need to do less for suicide
prevention in this country for civilians and our veterans. So,
this budget makes those commitments to the American people, and
we do so in a fiscally responsible manner.
Senator Stabenow. Thank you, Mr. Chairman.
Chairman Whitehouse. Thank you, Senator Stabenow. Senator
Scott, followed by Senator Warner, if he is here, and if not,
we'll go onto Senator Van Hollen. Senator Scott.
STATEMENT OF SENATOR SCOTT
Senator Scott. Thank you, Chair. Thanks for being here. So,
you work for a President that has a whole different vision of
how you grow an economy. When I got elected back in 2010, the
full economy was in the doldrums.
We'd lost 800,000 jobs. We'd not balanced the budget in 20
years. We were going into default in our debt. And so, we
actually balanced the budget. The first year we balanced the
budget, and we balanced the budget every year and what happened
is even though I cut taxes and fees 100 times, my revenues
skyrocketed which gave me the ability to have record funding
for education, transportation, environment, the things people
care about. Our job growth was faster, our wage growth was
faster because we lived within our means.
So, I want to do two things. Just talk about here's the way
the American public looked at your budget and here's what's
actually happening to the American public. So, first since
2019, the population is up 2 percent. So, your budget increases
spending by 66 percent. That's a lot. The American public says,
okay, so what'd we get for that, 66 percent increase from
populations up 2 percent.
If you look at the numbers, you're spending per American--
it's not yours, it's President Biden's, but spending is
$21,965. The average American income is only $59,430. You're
expecting the American taxpayer to spend 36 percent of their
income, 36 percent to pay for this budget. The increase per
person in spending for every new person is $434,000. So, if you
just look at what's happened as a result of the deficits, as a
result of the spending, look what's happened to interest
expense. When in 2022, interest was actually--you projected
305, but projected was ultimately ended up being $476 billion,
so your projection right now is 965 and so far, the projections
out of the President's budget have been dramatically off every
year. It's been dramatically low every year.
Even with that, let's say it's right, this year interest
expense will be in excess of Medicare and Defense. So, I mean
when anybody says they care about Medicare or Social Security
when you see a budget that just doesn't even come close to
balancing it, it doesn't make any sense. There's no money--
there's not a dime in here to improve the Social Security Trust
Fund. There's not one penny.
So, then you go look and say, okay, this is Biden's fourth
year, so let's see if it's working. So, the revenues are not up
this last year. They're down. The federal revenues are down 9
percent, so that's not working. So, I cut taxes 100 times; my
revenues went up. Inflation, so if you think about both of us
grew up in families that didn't have a lot of money. So, if you
think about what's impacting families like ours, groceries are
up 21 percent in three years. Gas is up 40 percent. Shelter is
up 20 percent. Car payments are up 26 percent.
If you wanted to try buy a house today, Biden took office,
the cost has just skyrocketed with what's happened to interest
expense. Immediate household income has gone from $77,800 to
$74,755. It's down 5 percent. So, if you look at it, inflation
is up. The wages are down. You're projecting a corporate tax
rate--not you--President Biden's projecting a corporate taxes
rate of 28 percent. I cut taxes when I was governor because I
wanted every company to come to Florida.
What we're telling people is don't come to America. Well,
Communist China has lower corporate tax rates. If our tax rates
are higher, we're in a global economy, what's a company going
to do? They're going to go where their taxes are lower and they
should, whether we like it or not.
Now, let's look at jobs. In the last four months, we've
lost 1.78 million full-time jobs. We've only added part-time
jobs. We've added 9,900 part-time jobs. Just look at the
employment numbers that just came out. Immigrants, legal and
illegal, in the month of February added one million jobs.
People born in America lost 500,000 jobs. When I go back to
Florida, people don't think this economy is headed in the right
direction.
Then you look at debt. Debt to GDP since Joe Biden took
office the debt has grown faster than GDP and if you look at
these proposed budgets, the debt is going to continue to grow
faster than GDP. How is this ever sustainable? You can't do
that. You can't do it in business. You can't do it personally.
You can't do it as a country. So, I know you're working for
somebody that has a totally different vision of the country
than I do, but if you look at the numbers the proposal that's
been made by Joe Biden has not worked for three solid years and
what I'd hope is that at some point that it would change. But
thank you for your hard work.
Chairman Whitehouse. Would you care to respond, Director?
Director Young. I'd just make one point worth, native-born
employment when the President took office was 6.5 percent
unemployment, 4 percent unemployment January 2024. So, if we're
looking at facts for native-born employment, which I hear is
important and the Senator brought up, I thought that was an
important data point to point that unemployment for those
native-born in this country have come down by more than 2
percentage points since the President took office.
Chairman Whitehouse. Senator Van Hollen.
STATEMENT OF SENATOR VAN HOLLEN
Senator Van Hollen. Thank you, Mr. Chairman. And Madame
Director, it's great to see you. I just heard Senator Marshall
mention that that coming down on unemployment was all COVID.
Isn't it a fact that around the time the President was sworn
in, economists across the board were projecting much deeper
levels of unemployment and for longer than we've experienced?
Director Young. Senator, it took us nearly five years to
get through the economic scarring of the Great Recession many
of us lived through in 2009, so it was not a surety that we had
come out of this pandemic with the strength that this economy
has, and the President deserves strong credit. Thank you all
for the American Rescue Plan. And people should not assume that
that was a given, that the President could lead us so strongly
out of a global pandemic.
Senator Van Hollen. I appreciate that. In fact, the non-
partisan Congressional Budget Office projected that
unemployment rates in the United States would last at a higher
level for a lot longer. And as you say, because of the American
Rescue Plan, we were able to, not only address the COVID health
crisis, but also address the economic fallout from that crisis.
And unfortunately, we didn't have any help from any of
Republican colleagues in passing that.
Let me just take a moment to thank you and the President
for some of the important priorities in the budget. For
Maryland, for example, continuing robust cleanup of the
Chesapeake Bay, important support for NASA-Goddard, which is a
national asset, and a number of other priorities, including the
National Institutes of Health, which, of course, benefit all
Americans who have experienced health issues, which just about
every American family. So, I want to thank you for some of
those priorities.
I also commend you on dealing with tax expenditures, right?
Tax expenditures are tax breaks where special interests don't
have to sort of pay the same rate or under the same rules as
everybody else because they've got a carve out. It's
essentially a handout through the tax system by creating
special exceptions. So, I appreciate the fact that the
President's budget goes after some of these tax breaks like
corporate jets, like a lot of the big tax breaks for the oil
and gas industry. Could you just talk about why it's important
that we have a fair tax system that doesn't include carve outs
for special interests and how that also helps, not only provide
important investments for working families, but also
contributes to reducing the deficit.
Director Young. Look at our Medicare proposal, Senator. By
asking the wealthiest in this country to pay 1.2 percent more,
by closing loopholes for people who have found ways not to pay
Medicare taxes, we can save the Medicare program indefinitely.
That is a small example if you extrapolate to lots of different
policies here what we can do. We can do more for middle class
and working families. 1.2 percent for Medicare, you heard the
President say he's not trying to keep rich people from being
rich and maybe having two boats instead of three by helping all
Americans.
And it goes on and on, in-kind contributions, all of those
things ensure that we pay for every investment. We make sure
NIH has the resources they need. We make sure we have a
childcare system that is actually affordable. I pay childcare
every month. I don't know how families do it. I really don't,
other than leaving their children in places where they're
nervous every day to leave their kids. The richest nation in
the world we can do better, and we can pay for that. We can
help families by having a fairer tax code.
Senator Van Hollen. I appreciate that, Madame Director. And
I would also point out when it comes to Medicare, in addition
to providing long-term stability and solvency through the
mechanism you talked about, the President also said he wants to
announce and will announce or wants to announce additional
drugs that would be subject to negotiating, so that we can both
reduce costs for Medicare and extend its life and lower costs
for seniors on Medicare.
He also said, and I fully support the idea of trying to
bring down those prescription drug costs for everybody. We did
it for insulin on Medicare. We're trying to do it for
everybody.
In my remaining time, the Social Security Administration, I
was pleased to see the increase for resources for the Social
Security Administration, which, of course, is based in
Maryland. But can you just talk for a minute about how stressed
it is, how outdated the technology is? This is something we
should all support. We're not talking about the benefit side.
We're talking about the administration side.
Director Young. Well, we are talking about benefits.
Senator Van Hollen. The access to the benefits.
Director Young. If we want Americans to access their
benefits, we cannot continue to starve the Social Security
Administration of resources and that is what has happened.
We're asking for a 9 percent increase. We've asked for an
increase every year and we are frankly begging for your support
to help fund this agency. We cannot starve an agency of funding
and then question why phone calls aren't getting answered.
Now, on our side, we have finally a new administrator in
place, and thank you all for making that happen. It's
incredibly important to have confirmed leadership there to make
sure management practices are up to date, but there's only so
much more you can do with a lot less and they have been starved
of resources for far too long and people should have their
phone calls answered. And we're doing all we can with what we
have at Social Security, but we need the resources.
Senator Van Hollen. Thank you. Mr. Chairman, I would just
observe that the Social Security Administration is serving 50
percent more people than it was decades ago with less staff
than were there.
Director Young. Senator, you should see the graph the
Administrator has. Benefits, people needing benefits and
staffing, they cross each other in a very troubling manner and
it's just going to get worse and worse.
Senator Van Hollen. Thank you. Thank you, Mr. Chair.
Chairman Whitehouse. Thank you, Senator Van Hollen. Senator
Johnson, followed by Senator Kaine. Senator Johnson.
STATEMENT OF SENATOR JOHNSON
Senator Johnson. Thank you, Mr. Chairman. Ms. Young,
welcome. Ms. Young, do you know what a dollar that you held at
the start of the Biden Administration is worth today?
Director Young. I'm sure you'll let me know, Senator.
Senator Johnson. It is a number you should know. It's worth
85 cents. That is driving an awful lot of the numbers on your
budget there. It's causing an awful lot of pain for the
American public. I want to kind of pick up where Senator Scott
left off without really asking questions. But if you take a
look at what we were spending prior to the pandemic, about $4.4
trillion. I personally think in 2020 we spent too much.
We started talking about the Coronavirus Aid, Relief, and
Economic Security (CARES) Act, it was about $750 billion within
a few weeks, so it was up to $2.2 trillion. It wasn't money
spent very efficiently, but I think we had to do something
fast. We had to do something massive so that markets wouldn't
collapse. But after 2020, because we spent another two trillion
dollars in 2020, we had so much money sloshing around the
economy, at most I think we were down 25 million jobs for a few
months. Within a few months, we were up to about eight million
job losses, but come January of 2021, again, so much money
sloshing around. There was so much pent-up demand those jobs
are going to be coming back relatively soon, what do you think
sparked the four-year high inflation?
Director Young. Senator, we can also talk about inflation
that has come down by two-thirds. And I think most people----
Senator Johnson. What caused, what sparked----
Director Young. Most economists will----
Senator Johnson. What sparked 40-year high inflation?
Director Young. Most economists agree that coming out of a
global pandemic, which is why we saw inflation across every
major economy in this country, it was the supply chain issues,
economies turning back on coming out of a once-in-a-generation
pandemic, which is why you saw inflation across the globe
increase.
Senator Johnson. I mean, you don't think that too many
dollars chasing too few goods is the primary cause of inflation
and when you spend two trillion dollars one year over the next
and then you don't readjust the baseline, I mean, how can you
justify spending $4.4 trillion, as Senator Scott was saying,
the population grew less than 2 percent over this timeframe.
So, we go from $4.4 trillion to $6.5. In 2021, when President
Biden comes into office, we spent 6.8 and 6.3. We haven't reset
to the 2019 baseline. How are we ever going to recover from
this?
Director Young. Senator, we set forth a proposal, a way to
continue to invest in the American people. If we think we have
adequate childcare and paid leave in this country, I welcome us
to talk to hardworking Americans. We can do that by asking the
top 1 and 2 percent to add more into the system. That way we
can not only pay for our investments, but we can bring down the
deficit of the three trillion dollars. We can't just talk about
spending as if it only hits those programs that hit working
families in this country.
Senator Johnson. I mean it's a fantasy if you make the rich
pay their fair share, and by the way, the top 1 percent garner
about 20 percent of the income and pay about 40 percent of the
income tax. I mean I some point in time you have say, well,
that's probably a pretty fair share.
Director Young. Well, if you add sales tax and local tax,
they pay about 25 percent.
Senator Johnson. But I remember when a couple hundred
billion dollars was like real money. The political process
would be all upset if you're running a couple hundred billion
dollar a year deficit. Your plan to get us out of this you're
running deficits of 1.8, 1.5, 1.5, 1.5, 1.5, 1.6. It never
comes down. You're basically locking in at least $1.5 trillion
deficits for the next 10 years. That's what you're budgeting.
Clearly, this is unsustainable. You don't worry about, once
again, sparking massive inflation that further devalues the
dollar from a dollar to 85. What, is it going to go down to 70,
to 60.
Director Young. Senator, absolutely. That is why we put
forth a plan that would actually bring deficits down by three
trillion. We care about our fiscal path. This President has
shown how you can still invest in the American people and
achieve deficit reduction. And by the way, he worked with
Republicans to sign a Fiscal Responsibility Act that would save
a trillion dollars on our deficit.
Senator Johnson. So, you're proud of a 10-year budget that
never reduces the deficit, never brings it down below basically
$1.5 trillion. You're proud of that work?
Director Young. Senator, Of course, I'm proud of a budget
that reduces deficits by over three trillion dollars that
continues its investments in the American people. And by the
way, most economists will tell you the way to look at our
affordability of debt is to look at debt and deficit as a
percentage of GDP. As a percentage of GDP, deficits are below
4.5 percent.
Senator Johnson. I don't think average Americans take a
look at, at least $1.5 trillion deficits as far as the eye can
see and think this Administration is bringing down the deficit.
I mean that's just fantasy talk. Thank you Mr. Chairman.
Chairman Whitehouse. Senator Kaine, followed by Senator
Marshall.
STATEMENT OF SENATOR KAINE
Senator Kaine. Thank you, Mr. Chair. Director Young, good
to be with you. Budgets aren't about numbers. They're about
people. The U.S. economy has come out of COVID stronger than
any economy in the world, any large economy. Jobs are up,
unemployment is down, manufacturing jobs are up, inflation is
coming down. People's 401(k)s are up. The rate of people who
have insurance in this country dramatically up. These are the
measures that I look at when I look at a budget and economy and
I don't see a competing economy in the world that has done what
the U.S. has done and we've exceeded our own expectations from
the CBO and others, as Senator Van Hollen stated.
A couple of comments on some Virginia priorities then I
want to dig into childcare with you. First, I really appreciate
the President's budget has funding to save Tangier Island in
the Chesapeake Bay. I asked you a question for the record in
your confirmation hearing about the President's willingness to
invest in fighting sea level rise and promoting coastal
resilience and the President's budget includes funding that
builds on Congressionally Directed Spending (CDS) funding I've
received in the past to make sure we save this island in the
Chesapeake Bay that has lost about 70 percent of its land mass
and is extremely vulnerable to climate change.
I was not happy that the President's budget zeroed out a
program that I care a lot about, the Lorna Breen Act, which is
funding for the mental health needs of our health care
providers. The budget is strong with respect to behavioral
health. I think that's great, but there's a particular program
that I've worked on bipartisan that focuses upon the mental
health needs of health care providers named after a Virginia
emergency room physician who died by suicide in April of 2020,
and I'll work with my colleagues to make sure we continue that
funding.
I know you're under some tight budget caps that affected
some of the priorities that I care about. Let me ask you about
one right now. The President sent us a supplemental that we had
passed in the Senate by 70 to 29 vote for national security and
one of the items in the supplemental was a significant
investment in an initiative of President Biden's I strongly
support, the Australia United Kingdom United States (AUKUS)
framework. We'll work together with Australia and the United
Kingdom (UK) to buildout more deterrents in the Indo Pacific,
and pillar one of that framework is construction of Virginia
class submarines and selling them to Australia in the 2030s,
eventually equipping Australia with the capacity to build their
own subs in the 2040s.
So, the President strongly supports it, and he should. It's
a great initiative, but the President's budget that was sent up
to us actually reduces funding for Virginia class subs. We've
been budgeting at two a year. The President has suggested in
this budget that we would only build one a year to get to our
commitment level where we can meet what we've committed to with
Australia, we have to get to 2.3 a year. So, I view the two to
one in this budget as an unfortunate backslide that is sort of
in a cognitive dissidence with the President's request that we
fund the AUKUS initiative.
Can you tell us about some of the challenging tradeoffs
that you've had to make in putting this budget together in
order to meet budget caps?
Director Young. Look, we felt it was important. When the
President makes a deal, he keeps a deal to stick by the Fiscal
Responsibility Act, but I want you to know the President, I,
the Administration fully believe in the AUKUS partnership with
Australia. We fund about the equivalent of 1.3 submarines a
year. We need that number to go to something like 2.3. So, it
is not just funding the submarines. We've got to invest in our
submarine industrial base, so one thing I'd ask you to do is
look at this in concert with the supplemental.
We need that supplemental to move out of the House, not for
just for our partners, Ukraine and Israel and humanitarian
assistance, but we don't talk about the submarine Indo Pacific
part enough and that money is critical to not just building
submarines, but building the base so we can actually when we
ask for two we can get two. Because right now the industrial
base is not sufficient and does not have enough capacity to do
that. So, we really need that supplemental to move in order to
keep our agreement intact with AUKUS and we look forward to
working with you and others to make sure that AUKUS remains in
place, that we get the submarine money, and the industrial base
fit to produce more submarines.
Senator Kaine. Thank you. Other colleagues have praised the
President's budget in the childcare area, and I join that. So
good for parents, so good for kids, so good for childcare
workers, great for the economy. It'll free up more people to
come back in who are out of the economy now.
Last question is how challenging it is for you to be six
months into a fiscal year and not have Appropriations bills
done?
Director Young. The old staff director in me is on the
backseat in trouble. I now regret the late bills I may have
worked on and did not fully appreciate how difficult it is to
implement programs, the efficiency. Just think about last
Friday, big fire drill, four o'clock, we're like is the Senate
going to pass this in time? Activating lots of people, seeing
if we have to put stuff on hold. It is no way to run a
government and so we share your frustration. We want to look
for ways, speaking of bipartisanship and things we have to work
together on. One is on the process questions, I'm one of those
believers that process makes a good output, gives us a good
product, and we have to do something and work on the process of
the Appropriations process. And my guess is, it's something
I'll think about and work on for the rest of my time working in
this town because it's incredibly important and the agencies
depend on this.
And by the way, I'd like the annual process. I don't want
to see the frustration with that process do away with that. I
think it's a good thing that Congress looks at--now it's 30
percent of programs every year. But unless we fix the process,
that frustration is going to bubble up because you see the
problems with it, the threats of shutdown.
Senator Kaine. You have many supporters on that point in
the Committee, including the Chairman. I appreciate your
service. Thank you.
Director Young. Thank you.
Chairman Whitehouse. Senator Marshall is next and then,
depending on who's here, our order is Senators Lujan, Graham,
Warner, Whitehouse, and Merkley. Senator Marshall.
STATEMENT OF SENATOR MARSHALL
Senator Marshall. Thank you, Mr. Chairman. Today I'm here
fighting for my grandchildren's future, for your
grandchildren's future, for our grandchildren's future. They're
going to have to live in a world where we're spending more
money on interest than we do on Medicare, on the Military,
because of our unquenched appetite for spending money. When
their children are going through school, there'll be less money
for good schools, for good hospitals, for highspeed Internet,
for a strong Military because of the spending we're doing today
they will suffer the consequence of this interest.
I want to quote something that you said, and you've written
as well, Director Young. ``The President's budget reduces the
deficit by three trillion dollars over the next 10 years.'' I
think that's deceitful. I think it's disingenuous. You've
repeated here multiple times. You decrease it from what to
what? You decrease it from 19 to $16 trillion. Only in
Washington, D.C. do you make the claims that increasing the
cumulative deficits by $16 trillion is a decrease. At the end
of the day, you're adding $16 trillion that my grandchildren
will be paying interest on. I think it's disingenuous and I
think the American public gets that.
My first question, Director Young, how much money is the
federal government going to spend this year?
Director Young. Senator, the budget, as many slides have
shown is about seven trillion dollars.
Senator Marshall. So, we're going to spend in the current
fiscal year of 2024, we're going to spend about seven trillion
and then seven trillion in the next fiscal year; is that
correct?
Director Young. Well, Senator, we haven't put a budget for
the next fiscal year, but if you're talking about baselines, if
nothing changes, calendar year '24 outlies will be about seven
trillion dollars, this budget year about $7.3 trillion.
Senator Marshall. Okay. Thank you. I would just point out
that over the last five years that government spending has went
up over 50 percent with no end in sight. Next, I want to talk
about budget deficits for a second. $2.8 trillion we can blame
that all on COVID, if you want to, make sure it's the same
graph I'm looking at, but we continue with these budget
deficits of approaching two trillion dollars and perhaps more.
I don't think anyone can argue that that's the future.
And then, we look at our national debt, of course, that
we're going to add another two trillion dollars to our national
debt. That's at the end of the day budgets be damned. I want to
turn and ask a couple questions about Ukraine funding.
Yesterday, Politico reported that the Department of Defense has
sent $10 billion worth of weapons to Ukraine that it does not
have the money to replace; is that reporting accurate?
Director Young. Senator, I think no one was officially
quoted from the Administration in the article. I've read the
article, so I'm not going to comment on unauthorized or people
who speak on background. What I will say is if our Ukraine
supplemental passes the House----
Senator Marshall. I understand that----
Director Young [continuing]. Then we would have the----
Senator Marshall. Is the $10 billion funding accurate?
Director Young. Senator, if we had the Ukraine funding----
Senator Marshall. I understand. That's not my question.
Director Young [continuing]. We would have funding----
Senator Marshall. I wish you would just answer my questions
and not divert to different things.
Director Young. Senator, you asked me a question based on
unnamed sources within the article.
Senator Marshall. So, is the $10 billion figure accurate--
--
Director Young. We are very disappointed----
Senator Marshall [continuing]. That really in reality we
didn't just send $113 billion. There's a big difference between
what these weapons we send costs versus the value of them
today.
Director Young. That's right.
Senator Marshall. So, in reality--this is not a question.
So, in reality, we've really sent them $121 billion, and you've
said nothing to dispute that as being accurate. I want to go
on. Here is a question for you. Does the Administration have
the ability to provide any additional aid to Ukraine in the
absence of Congressional action; yes or no?
Director Young. So, Senator, we have to do the
supplemental.
Senator Marshall. I understand that's your opinion. We
don't have to do anything. That's your opinion.
Director Young. Well, I----
Senator Marshall. Would you just try to answer my question?
Does the Administration have the ability to provide any
additional aid to Ukraine in the absence of Congressional
action? That's a yes or no question.
Director Young. Senator, if we have additional
replenishment funds.
Senator Marshall. I understand that. So, you're not going
to answer my question.
Director Young. Senator, I'm trying to. If we have
additional replenishment funds, if materials come in cheaper
than we thought, that will give us the room to maybe do another
drawn down package. We're looking at that. The Department of
Defense goes and buys the equipment. If some comes in cheaters
and we have----
Senator Marshall. Let me ask you the question in a
different way.
Director Young. We will do that.
Senator Marshall. Will this Administration provide Ukraine
any additional aid in any form until Congress passes the
supplemental?
Director Young. Senator, if we believe we can do that--to
your first question, if we believe we can do that without
affecting U.S. readiness in a detrimental way, we absolutely
will. It is the President's commitment that we will not let
Vladimir Putin march through Ukraine.
Senator Marshall. We've been told over and over by this
Administration----
Director Young. We will look for everything we can do.
Senator Marshall [continuing]. That we need to spend
another 10 or $20 billion to replenish what we've given to
Ukraine, so we didn't properly account for what we've already
sent them. I still think we're 10 or $20 billion short of what
we appropriated versus what we sent them.
Director Young. Well, Senator, we're worried about defense
readiness, pass the supplemental.
Chairman Whitehouse. Thank you, Senator Marshall. Senator
Merkley.
STATEMENT OF SENATOR MERKLEY
Senator Merkley. Thank you. Director Young, are you
familiar with the term ``greedflation.''
Director Young. Did you say ``shrinkflation''?
Senator Merkley. Greed, greedflation?
Director Young. Greedflation? I think I know what it is.
Senator Merkley. Well, what it is, is in Fortune Magazine.
I want to submit for the record, if there's no objection, an
article titled ``Greedflation caused more than half of last
year's inflation surge as corporate profits remain at all-time
highs.'' If I can submit that for the record.
Chairman Whitehouse. Without objection.
Senator Merkley. Thank you very much.
[Insert of Fortune Magazine article appears in the
appendix.]
Senator Merkley. It points out that a big source of the
inflation we've been dealing with is corporations doing huge
price increases on products and have all-time high profits,
which is a different explanation that we might've heard earlier
in this hearing.
And then, my colleague from Utah was talking about
unrealized gains and we have in America a system of dynasty
wealth protection and it works like this. If you have stocks
and bonds and you hold them until death, then they receive
what's called ``stepped up basis,'' which means they are never
taxed for their increase in value as you pass it onto the next
generation.
And if you have property, it's even better. You sell one
property, you buy another, you use a 1031 exchange. You're
never taxed on the gain. And at death it also receives stepped
up basis. So, essentially, the wealthy investing in property
proceed to never be taxed ever on their income from growing
value of assets; is that not correct?
Director Young. That is correct and this budget does
something about it.
Senator Merkley. So, this dynasty wealth protection has
resulted in the United States having the worst distribution of
wealth, the most inequality of any of the developed countries.
I just went though the chart, and to give you a sense of this,
in American the top 1 percent own 40 percent of household
wealth compared to Canada at 20 percent and Japan at 10
percent. If you look at the top 10 percent in American, the top
10 percent own 80 percent of our household wealth. In Canada,
it's 50 percent. In Japan, it's 40 percent. So, we have put
laws in place that essentially create the very dynasty wealth
that the founders warned us against as creating a very inequal
society; is that not right?
Director Young. Senator, we share your concerns, which is
why this President speaks a lot about closing the wealth gap in
this country. That is why we do something about in-kind real
estate transactions. That is why do a 25 percent billionaire
tax. Most Americans have no idea of all these ways of getting
around paying taxes.
Senator Merkley. Absolutely.
Director Young. Most people work, they get a paycheck, and
they get taxed.
Senator Merkley. My father was a mechanic and he said why
is it that in America the laws mean that those who earn income
by the sweat of their brow pay a much higher tax than those who
earn money through investments? And in your budget, you have
for those with incomes over $100 million a provision to help
provide some tax on unrealized income; is that not correct?
Director Young. That is correct.
Senator Merkley. Well, hallelujah, because it's the first
I've seen a real proposal coming from an Administration to try
to help tackle this challenge. Our system is enormously
beneficial to the already wealthy.
They're making them more and more wealthy, while the burden
is borne by ordinary Americans, blue collar Americans, like my
parents, who strived to save in a system that designed to not
help the ordinary Americans, but to help the very, very
wealthy. So, I appreciate that effort.
And I wanted to note that under the Trump Administration,
you had in 2020, 55 of the biggest companies in America that
had incomes over $40 billion, paid zero in federal income
taxes. So, these companies use the vast amount of our
educational system because of the people they hire, a vast
amount of our highway system for transportation, a vast amount
basically at every stage and paid zero in taxes. And your
effort, the Biden Administration, to have minimum corporate
taxes says those who use all these assets that grow from our
investments need to pay some share towards it. That's the right
thing to do; isn't it?
Director Young. It is. And by the way, Senator, we're
already on the path thanks to you and others who voted for the
Inflation Reduction Act. We have for the first time a 15
percent minimum. This budget would take that 15 to 21 percent.
Senator Merkley. That's a terrific improvement. Thank you.
Chairman Whitehouse. Thank you, Senator Merkley. Good to be
with you, Director Young.
Director Young. I'm not used to you going last.
Chairman Whitehouse. I know. Well, I wanted to let Senator
Padilla go and do his duty on the Senator floor. My Medicare
and Social Security Fair Share Act would implement the Medicare
tax proposals in the Biden budget and ensure that Medicare can
pay out 100 percent of Medicare benefits indefinitely. How
would the Medicare tax proposals in the Biden budget assure
this program's solvency in a fair and equitable manner?
Director Young. I talked about this a little earlier, and
thank you for your work on this proposal, Senator. It not only
helps the Medicare programs stay around indefinitely if we
adopt. The prescription drug piece would ensure that seniors
payless, and the government pays less, and it helps with our
deficit reduction.
The President's Medicare proposal would ask that those at
the top 1 and 2 percent to pay 1.2 percent more into Medicare.
It also closes loopholes that the wealthy have found not to pay
Medicare tax in this country. It would expand our prescription
drugs from the amount that are in law now due to the Inflation
Reduction Act to bring in more drugs. That saves costs for the
American people, and frankly, these are commonsense things.
If we want to do something about Medicare solvency
indefinitely, these are commonsense ways to go about, and the
President believes in them, and this is our second time
proposing these changes.
Chairman Whitehouse. And relatedly, on Social Security,
according to the Social Security actuary, the Medicare and
Social Security Fair Share Act would extend Social Security
solvency indefinitely also, and it would do so by making those
earning above $400,000 contribute the same share that regular
workers are obliged to for the first levels of income. It lifts
the cap, essentially, and kicks in above $400,000. Is that
proposal in line with the principles that your budget is
seeking to achieve and will you work with us on that?
Director Young. Absolutely. You heard the President speak
about this very clearly Thursday, no benefit cuts on his watch,
asking higher income earners to pay their fair share to make
sure Social Security is solvent.
Chairman Whitehouse. We had that wonderful moment in the
previous State of the Union when the President talked about
Republicans who wanted Medicare and Social Security cuts and
they all rose in unanimous opprobrium to say, no, no, no, we
don't do that. We had this unanimity moment about Social
Security and Medicare cuts.
Now, of course, that was based in fact. We've had actually
members of this Committee say that they want to take Social
Security and pull it up by the roots and get rid of it. That's
hardly opposition to benefit cuts. And just this week, the
former President said that, as part of his campaign, he was
looking at cuts to Social Security and Medicare. So, it's
really important that we get this done now while we have the
ability to do this under President Biden because otherwise all
the signs are that there will be cuts to Social Security and
Medicare.
Let's look a little bit about health care savings. There's
an enormous health care issue in the budget and we've done a
lot of good work, I think, post the Affordable Care Act to
prove in real practice that you can save on health care costs
without cutting health care benefits. Things like accountable
care organizations and value-based care have shown that. Will
you work with us to continue to develop proposals for savings
in the federal health care spend that do not touch benefits?
Director Young. Absolutely, Senator. One, we have to bring
down health care costs and we have seen improvements since the
Affordable Care Act was passed. But we also know what the costs
to the American people the government spending is if we don't
do all we can to bring down the cost of health care. We know
also it costs a lot for uninsured populations to exists, so I'm
proud of the increased enrollment in the Affordable Care Act,
but we pledge to work with you to make sure we continue to
bring every tool at our disposal to bringing down health care
costs.
Chairman Whitehouse. We have seen in Rhode Island through
two of the best performing accountable care organizations in
the country the cost of care per patient going down, the
happiness and joy per patient, if you will, going up. They love
the additional services that they get that help bring the costs
down. And of course, health care outcomes improve and that's
the path I intend to follow.
Let me ask on one final point and then I'll turn to Senator
Lujan. The Crime Victims Fund is largely sourced from criminal
fines and penalties. As a former prosecutor, I'm very well
aware of how it enables state and local communities to provide
emergency services to crime victims like shelters and
transportation, and very often, for victims of domestic
violence and to support them seeking medical and mental health
care that victims so often require in the aftermath of a crime.
Director Young, the President has proposed a plan for
appropriations to help support the fund over the next five
years. Why are those appropriations so important for us to
maintain our support for victims of crime?
Director Young. You know this is incredibly personally
important to the President. This budget would deposit about
$1.35 billion. We also have a provision to restore the Crime
Victims Fund so that funding for victims can be maintained in a
sustainable, predictable manner over the next decade and we
would love to work with you on that proposal to make sure the
Crime Victims Fund (CVF) has the robust funding these victims
rely on and need.
Chairman Whitehouse. Thank you. Senator Lujan, followed by
Senator Braun.
STATEMENT OF SENATOR LUJAN
Senator Lujan. Thank you, Mr. Chairman. Director Young,
thank you for being here today and for your leadership.
Director Young, the President's budget mentions the pending
supplemental request to continue the Affordable Connectivity
Program through December of 2024. The budget also promises
``The Administration will work with the Congress to secure
additional funding for this important need in 2025 and
beyond.''
Director Young, yes or no, if Congress allows the
Affordable Connectivity Program (ACP) to lapse, would it
abruptly cut connectivity or millions of low-income families,
eliminating access to work, to education, and to health care?
Director Young. Yes, millions.
Senator Lujan. I've been proud to work with Senator Thune
and other colleagues in the House and the Senate to move
towards incorporating the ACP into a Universal Service Fund to
ensure its long-term stability and improve program
effectiveness. Director Young, will you commit to working with
me to secure additional funding for the Affordable Connectivity
Program, not just in 2024, but 2025 and beyond?
Director Young. Absolutely, Senator. And we'll work very
hard for--you heard us talk about the Ukraine supplemental. The
President's also asked for six billion dollars for this very
critical broadband connectivity program, and we hope Congress
will act soon so millions of Americans don't lose access.
Senator Lujan. I appreciate that very much. Now, the mental
behavioral health system in the United States has been pushed
to its breaking point. I was just visiting with a few mayors
that are in our nation's capitol with the League of Cities.
They heard from the President just yesterday. Now, over the
past 25 years, New Mexico has had the highest alcohol-related
and drug induced death rates in the nation and the consequences
of drug use continue to burden New Mexico communities and this
is something that we've heard day in and day out from our
mayors. That's why I'm proud that this budget makes investment,
not only in individuals and families impacted by substance
abuse, but also across different communities at are especially
highly at risk to overdose. This includes pregnant and
postpartum women and their families, individuals with substance
abuse disorders like those who experience housing instability
or seeking services for addiction to opioids, alcohol, or even
polysubstance use disorder.
Director Young, why is it important to fund evidence-based
and public health focused, harm reduction, prevention, and
treatment for substance and polysubstance use disorder for all
Americans?
Director Young. Well, Senator, there's a reason this is
prioritized in the President's budget. We have seen American
family after American family, their story about substance use
disorder and what it has done and the generational harm it can
cause is absolutely critical, just like any other health care
disorder that we have the resources needed. We have to make
sure that insurance companies cover mental health and substance
abuse disorder like any other ailment that might befall someone
in a physical nature. So, we take this seriously. I've been
heartened by the bipartisan interest in doing something about
this. It's going to take both parties coming together.
One more thing we haven't talked a lot about today is also
stopping the flow of some of these dangerous drugs that have
come across our border. And part of the President's supplement
request that remain stuck is putting equipment to our land
ports of entry to make sure we can stop fentanyl crossing our
borders.
Senator Lujan. I appreciate that.
Chairman Whitehouse. If I could interject just for one
second on some procedural business.
Senator Lujan. Yes, Mr. Chairman.
Chairman Whitehouse. We'll restart the clock at a minute,
30 seconds for Senator Lujan, but he has kindly agreed or at
least his staff have kindly agreed for him, to gavel out the
rest of the hearing. I have to get to Judiciary. We have an
important hearing on the Voting Rights Act. Let me just
conclude by thanking Director Young very much for her testimony
here today and for a budget that we can all, I think, support
of and be proud of. And with that, back to Senator Lujan for
his time, then Senator Braun and then Senator Lujan will close
us out. Thank you.
Director Young. Thank you, Mr. Chairman.
Senator Lujan. Thank you, Mr. Chairman. And I very much
appreciate that response and especially the latter. The one
thing I'll compliment--well, there's many compliments I have
for Chairman Whitehouse, but one of his responsibilities also
is chairing the counter narcotics group of us as well. And the
one area, Director Young, that I believe also needs more
attention is looking at illicit financial markets. These
cartels and bad folks see this as a business. There's a lot of
money moving around the country, and I just don't hear a lot in
that particular space. I look forward to working with our
office and, of course, with Senator Whitehouse's team and
others to make sure we're able to put a dent in there as well.
Now, I appreciate the President's continued support for the
Department of Energy and the Department of Energy National
Labs, but I'm concerned that the modest additional investments
requested by the President are not enough to solve our nation's
scientific challenges. For example, we must increase our
nation's energy security, while at the same time addressing the
global climate crisis. Our international competitors are not
waiting.
Now, I meet regularly with the scientists and leadership
across the Department of Energy's (DOE) premiere National
Laboratory System, including two national labs in New Mexico,
Las Alamos and Sandia. Now, I know our National Labs are
capable and eager to help the nation and the world solve the
climate crisis, but the President and Congress need to provide
them the resources to get the job done.
Director Young, as you know in his first day in office,
President Biden committed to reaching net zero emission
economy. As you know, this commitment requires a massive
reinvestment in R&D in our National Labs. Director Young, can I
get a commitment from you today to work with me and my
colleagues to increase our R&D investment to the level needed
to tackle the climate crisis?
Director Young. Senator, you have my commitment to doing
that. Our budget contains $10.7 billion for labs. I understand
more is needed. You know this is our last year of budget caps,
but I'm committed to working with you. The President
understands how vital the National Labs are to our climate
fight to reaching net zero carbon by 2050 and absolutely we
want to continue our partnership to make sure the Labs are
robustly funded to meet the moment.
Senator Lujan. I appreciate that, Director. I have other
questions I'll submit into the record. Director Young, I just
want to close in saying thank you to you and to your team. Most
recently, the Senate took a historic vote on the Radiation
Exposure Compensation Act amendments, 69 senators voted in
favor of addressing this important policy and the statement of
policy that we received from the President to the United States
I know had to be reviewed by your team extensively. I just want
to say thank you and I know that the families across America
that will benefit from this program would also like to say
thank you as well. And with that, I'll yield my time.
Director Young. Thank you. And recognize Senator Braun.
Senator Lujan. Senator Braun, you're recognized for
questions.
Director Young. I can't get over being a staff director.
I'm very sorry.
STATEMENT OF SENATOR BRAUN
Senator Braun. Thanks for getting recognized from the
witness and the sitting in senator. Looks like I'm the last
senator standing. We've had a lot of interesting discussions
about the health of our federal government and our financial
trajectory. I've got a question for you because a lot of the
facts and figures have already been covered by other senators.
Do you think a balanced budget amendment or statute would be
helpful to keep both sides of the aisle in a place where they'd
have to do that simple thing so that we don't borrow from our
kids and grandkids?
I know everybody has great ideas and intentions, but looks
like the major result probably since the Bush Administration
when we put two wars on the credit card. It's been both sides
of the aisle and that goes back to 2000. We're entering into
three decades of it soon. Where are you at on a balanced budget
amendment or statute?
Director Young. Senator, one, you're always thoughtful
about these things and I thank you for the way you approach
them. I know we have a lot of disagreements, but I know you're
honest about your ideas. My concern about that type of
amendment is what it would do to programs like Social Security
and Medicare. I do believe it is going to take bipartisan
solutions. I know Senator Romney talked about a commission.
Look, our concerns are always going to lie in what will
dramatic cuts do to the benefits of programs. I think about my
95-year-old grandmother. If we did that, what happens? What is
her source of income, of stability if we pull back dramatically
in that fashion on Social Security and Medicare? That is my
concern.
Senator Braun. What about the crowding out effect of more
and more interest year after year even to do that, and do you
think that we'll ever get to a point where--I know in the
President's budget that's assuming that that stuff can get done
that it doesn't tamper with economic growth that I think was
set in place back with some of the stuff done in 2017, which
you probably disagree with. But isn't there a point where I
think it's called the Modern Monetary Theory where deficits and
cumulative debt just don't make any difference anymore? Do you
believe that?
Director Young. Senator, I believe we need to make sure
debt and deficits as a percentage of GDP don't make our debt
unsustainable. So, no, I do think there are measures we have to
be careful about. We need to make sure real net interest stays
well below, as a share of GDP, 2 percent. Our deficits, in the
long run, are about 4.5 percent of GDP. Most economists believe
those levels make our debt manageable, so we agree on the need
to manage our fiscal house, but we think nominal numbers tell
one story. The more complex story is looking at a lot of these
things as a share of GDP.
Senator Braun. I think the only other country that's taken
that more to the limit would be Japan, and they're a country
that's got a lot of issues with their economy in terms of how
it's growing. So, going 50 years back, we've never, other than
two years, generated in revenues, regardless of the tax rate.
You raise taxes, you flush a little more into the Treasury. You
start to lose economic growth over time, as a rule. And if you
lower taxes, you take a little bit away from the Treasury. You
raise economic growth over time. Pre COVID, the CBO was about
ready to say that we were revenue neutral on the Tax Cuts and
Jobs Act. And then, of course, all the wheels fell off
associated with COVID. So, at some point we've got to not defy
statistics to where to keep Social Security healthy, Medicare,
Medicaid, and defend our country maybe we have to do fewer
things; but anymore, the mandatory spending is getting to the
point where it's driving everything structurally.
So, it sounds like you're willing to live with never
reducing principal, keeping growing debt as long as the percent
of interest doesn't swamp the deck.
Director Young. Look, I think the way to measure these
things from a sustainable standpoint is to look at real net
interest as a percentage of GDP and look at deficits as a share
of GDP. I don't think it is saying our principals should never
be paid down, but I also am a believer that revenues is a story
to tell in this. I do believe, especially with the IRS
investments we have, that there is a different story we should
be telling this country about bringing revenues in. And the
last time we had surplus in 2001 we did have revenue higher as
a percent of GDP.
Senator Braun. And a couple years out of the last 50, so I
just want to make sure you don't try to generalize that because
that's been hard to attain. The other thing I'd like to point
out is that with the economy as it's been constructed over the
last three years, I'd make the contention that government has
benefited most. The only part of our economic that actually
brings prices down, enables you to raise wages would be for
more business investment and government is another from of
consumption and we're already a consumer driven economy based
upon, I think, borrowing and spending as opposed to investing
and saving.
I'm about out of time here, even though I'm the last
senator. We're not going to get to any agreement there. I would
just want to put it on record. I think we're headed in a
direction that we've never been there before in the history of
our country. I would cite coming out of World War II where the
last time we had government as a percentage of GDP where it's
at now and we're not in a war. And we were savers and investors
there. We paid it off to where we almost had no debt, built the
interstate highway system.
A lot of what you want to do through government I don't
think is going to be sustainable when we don't put more
discipline into the configuration. So, I think a lot of the
things you talked about are in jeopardy because we just cannot,
over time, when the facts and figures say we've never generated
more than 17.5 to 18 percent of our GDP in federal revenues,
having a federal government now, it's taking government to up
to 25 percent higher than it was pre-COVID and we're not
involved in a war.
Think about that. I think we need to pay more attention to
it or else I think the country, in the long run, is going to be
going through some really tough times living beyond our means.
Thank you for being here today.
Director Young. Thank you, Senator Braun and you're no
longer the last senator.
Senator Lujan. Senator Graham, you're recognized.
STATEMENT OF SENATOR GRAHAM
Senator Graham. Thank you. Welcome, Ms. Young.
Director Young. Thank you.
Senator Graham. I'm not going to ask you any questions. So,
I'm just going to make a statement here about the budget. We've
got problems with the budget over here and taxes and spending,
but one thing about this budget that I think is not just unique
to President Biden. The Defense side of this budget is not good
for our country. It was a result of a deal negotiated, I think,
with the former Speaker of the House and the Administration
approved by the Senate.
And I just want the American people to understand, from my
point of view, for whatever it's worth, I've never seen this
many threats at once. According to the FBI Director, wherever
you look you see blinking red lights. ISIS is coming back in
Afghanistan. We've got a land war in Europe. Everybody's
running out of ammunition. Russia is outproducing the West. And
you've got Israel in a fight for its life. So, the need to arm
our allies is the greatest I've ever seen it, quite frankly.
Literally, we're having to scramble to meet production
needs. Hopefully, the aid package will get out of the House,
but our ability to deter bad actors has completely gone away.
There's no way to explain what's going on in the world, other
than people believe that America is no longer a worthy
opponent. After the withdrawal from Afghanistan, it not only
has led to the rise of ISIS, which presents a threat to us, a
broken border, on and on and on, a combination for another 9/11
like I haven't seen before.
But you see bad actors '21, the Taliban take back over
Afghanistan; '22, Russia attacks Ukraine; '23 Hamas attacks
Israel; '24, American soldiers killed in Jordan, of all places,
by Iranian proxies. The world is literally on fire. And so, our
Defense budget being presented by the Administration would take
us to the lowest percentage of GDP spent on Defense like
forever.
In World War II, 37 percent of GDP was spent on Defense
because we're in a fight for our lives. The world was being--
Hitler and Japan it was just a horrible time and that
generation rose to the occasion; 14 percent of GDP on Defense
during the Korean War; peak of the Cold War about 9 percent
trying to make sure we stood up to the Soviet Union.
On September 10, 2001, the day before 911, we're at 2.9;
during the Global War on Terror the peak was 4.7 GDP spent on
Defense. This budget in 2025 will be 3.2 percent. By 2034,
we'll be spending 2.4 percent of Gross Domestic Product on our
Defense. That makes zero sense, given what's going on in the
world.
Everybody worries about China. Well, you ought to. Our
Navy, under this budget, goes from 298 ships to, I think, 292.
The need for a Navy, according to combat China and other
threats would be 450 ships, so we're going backwards. What
would it take to get to 450 manned and unmanned ships, 5
percent above inflation for a decade? We're spending below
inflation. We're actually cutting into the bone. So, the number
one job and goal of the federal government to me is to defend
the nation. We're now having a Defense budget enacted that
would be 2.4 percent negative growth. We need to grow from 3 to
5 percent to match the threats we face.
So, Ms. Young, this was not your doing. This was negotiated
by other people, but I would say that of all the times I've
been here, and I've been here a while, I've never seen both
parties lose its edge when it comes to making sure our Defense
Department has the resources to deal with increasing threats.
This budget agreement has put us on track to have the lowest
spending on Defense in modern history at a time the world is
literally on fire. I will do everything I can to turn this
trend around. The supplemental has money, not only for Israel,
Taiwan, and Ukraine, it has money for our own defense needs, so
I'm insistent that we pass that budget. Hopefully, that
supplemental, hopefully, we can find a way to get it out of the
House. I keep trying, non-interest forgivable loan, given $34
trillion in debt may be the key, but when it comes to our
Defense needs, this budget is not only inadequate, it puts us
on a pathway to reduce our capabilities when all of our
adversaries are increasing their capabilities, a nightmare in
the making. Thank you. I want to thank Director Young for
appearing before the Committee today. Her full written
statement will be included in the record. Questions for the
record are due by 12 o'clock noon tomorrow. We ask Director
Young to respond to our questions within seven days of receipt.
With no further business before the Committee, the hearing is
adjourned. Thank you, Ms. Young.
Director Young. Thank you, Mr. Chairman. That's
bipartisanship.
[Whereupon, at 12:10 p.m., Tuesday, March 12, 2024, the
hearing was adjourned.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]