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>> welcome. committee will come to order. committee on the budget hearing today on the congressional budget offices budget and economic outlook will commence. we'll hear testimony from director swagel through the congressional budget office. welcome. without like to yield myself such time as a may consume. we are talking about fisa mac this week, which is an issue of national security. and want to quote admiral mullen, at a hearing defense hearing where when asked what the biggest threat to nationals could do was come his response was the biggest threat to

national security is our national debt. jerome powell the fed chairman who probably is loath to opine on fiscal policy in the 60 minutes interview said the national debt, our fiscal path, is completely unsustainable, and it's an urgent matter that we must address. i think that's significant. that's some backdrop to the budget baseline update on february. was recently in may of 23 and then this recent update here in february. bottom line is, on valentine's day when you think about how much we love our significant others, one could ask how much do we love the country? how much do we love our children's future in the

country? well, as shakespeare said, let me count the ways. maybe the ways we're not letting our country, $2,020,000,000,000,000 in debt for the next ten years. 34 trillion record, record high to 54 trillion. clearly the mandatory spending is driving this. demographics but also inflation. inflation is significant. we will dig into that because of the cost-of-living adjustments in these entitlement programs we are spending a lot more money. not to mention the 10,000 baby boomers retiring today. that adds to this unsustainable fiscal path. interest costs, interests, interest rates are recently in record highs, and interest expense on the debt is exploding. in fact, the revision from may to february, , just months, was

$125 billion in additional cost to service the debt. that's more than homeland security department. that's more than the budget of commerce and education. the debt or the interest on the debt rather is now higher than when we spent on all of national defense. if the 870 billion rejections come true. some particularly upwards of $1 trillion. of the the $20 trillion in additional debt, because of the current policies and programs in the federal government, we are going to see over 60% of all of that cost in interest alone. not anything to address the solvency of our senior safety nets, not anything to help ensure our soldiers and sailors are safe and successful in the most important job to provide a common defense. not a dollar or dying to infrastructure.

just hang china, , japan, and other bondholders of u.s. treasuries has of our massive deficit spending and debt appetite, which is 1.7 trillion the annual deficit last year, which is more than the entire discretionary budget that we are fighting over. and often between my own party. so there's great concern, and yet there's a silver lining in your report. i'm anxious to more about it, dr. swagel. you mentioned that one bright spot is that the deficit spending is actually gone down year-over-year in the short run. it is eclipsed by the growth in mandatory and interest in the ten year but year-over-year spending goes down because republicans decided to use basically the action forcing mechanism in moment of the debt

ceiling to bring my democratic colleagues to the table and negotiate a spending cap deal. that fra spending cap those bipartisan that we passed and the president signed into law will save 1.6 trillion over ten years. so as moody's and fitch mention in the report, as he downgraded our credit rating and, and our outlook, we need to do more fra deals the reduce spending, but we need to focus on mandatory programs. by the way, in ten years mandatory spending, or the spending which is on autopilot, goes from under 75% of the total budget of the united states, to 80% or 79%, 9%, almost 80% of the entire budget.

so we have a bipartisan fiscal commission, dr. swagel, that would focus on the long-term unfunded liabilities that would address what fitch enmity suggested that we have a long-term plan and that we're both parties at the table to address it. if we can keep doing the fra, modest improvements on the controlling spending on discretionary and get serious about reining in this runaway spending on the mandatory side, we might say this country. we might give jerome powell something to be more confident and sanguine about with respect to america's fiscal future. again, thanks to come. we appreciate your time. and insights. without i yield to my ranking member for as much time as he may consume. >> thank you, mr. chairman. welcome back, dr. swagel. there is no debate, none

whatsoever. america's economy is a strongest in the world, and in the of other developed nations. no economy on earth has recovered more quickly and more strongly than that of the american economy. here are the facts to back that up. there have been just under 15 million jobs created since president biden took office. in fact, we may very well hit the 15 million mark next month. more jobs created in this presidential term than any other previous term in history. the three-month average job growth is 289,000 jobs a month. the unemployment rate at 3.7% has now been under 4% for the last two years, historic. this economy now has, to those who spread the false claim that

we are just regaining the jobs lost during covid, consider this fact. the economy today has 5.4 million more jobs than before covid. in 2023, gdp growth was 2.5% year-over-year. and on inflation, which is ravaged every single economy on earth as we came back from covid, inflation here in the united states has fallen from the peak of 9% last summer to now only 3%. and finally, consumer confidence which was one area that was until recently lagging, consumer confidence has turned around, and now hit a two-year high. none of this was achieved by accident. it happened because with our nation was struggling, democrats and this administration worked

together to take action to rescue our economy, invest in working families, rebuild our infrastructure, and bring manufacturing back to america. so let's make sure as we move forward we don't do anything that risks these historic economic gains. now, transitioning, dr. swagel, to what we will hear from you in terms of next year projection and perhaps longer term the next year, we do of course in the long-term have our challenges. every single nation in western civilization is having to do with the fact that our population, or i should say the percentage of those who are older, is increasing. and that does put certain physical demands on our entitlement programs. but i remind people -- fiscal -- remind people who sometimes

forget when we say entitlements, these are earned benefits, social security, medicare. these are programs that workers paid into over a lifetime of work. as we are looking to address in the long-term the challenges we have with both trust funds, we must do nothing whatsoever that would imperil those programs, or pushed through devastating cuts that are absolutely unwarranted and unjustified. so, dr. swagel, i will, many more things i could send this topic but i will posit there and i look forward to you hearing from her testimony. thank you thank you, mr. chairman. you back. >> thank you. mr. boyle if any of the member has an opening statement i hold the record open to the end of the day to accommodate those members who may not have prepared written statement. i would like to recognize director swagel now, and thank

you again for his time. i yield the floor to you for five minutes. >> thank you, chairman arrington, ranking member boyle, members of the committee. thank you for inviting me to testify about the economic outlook. i will talk first about the federal budget and then briefly discussed economics. in the budget projections we released last week the deficit grows at $2.6 trillion in 2034. measured in relation to economic output, deficits during the coming decade are about 50% larger than their historical average over the past 50 years. net interest costs are a major contributor to the deficit. they are equal to about three-quarters of the increase in the deficit from 2024 to 2034. why the end of that tenure period net interest cost of roughly 1.5 times larger than either defense or non-defense discretionary spending. also boosting deficits are two

familiar underlying trends, the aging of the population and growth in federal health care costs per beneficiary. those trends put upward pressure on mandatory spending. measured in relation to economic output, federal debt held by the public prizes from 99% in 2024 to 116% in 2034, surpassing its historical peak, yet continues to rise reaching 172% of gdp 30 years out. from 2024 to 2033, the deficit is about 7% smaller than we projected last year, primarily as a result of the fiscal responsibility act of 2023 and the subsequent continuing resolution. together, those laws those laws reduce the growth of discretionary spending including the effects of debt service, let's set of changes in total reduce deficits i $2.6 trillion over trillion dollars over the next ten years. that's all that much is that of

changes. in our projections, the deficit also smaller than it was last year because economic output is greater, partly as a result of more people working. the labor force in 2033 is larger by 5.2 million people, mostly because of higher net integration. as a result of those changes in the labor force we estimate that from 2023 to 2034 gdp will be about $7 trillion larger and revenues will be higher by about $1 trillion that would've been other. immigration is also so she would increase spending and with many other effects and we continue to assess the implications of immigration for revenues. the two key factors partially offset the deficit reduction compared to last years projections, the first is that net interest cost rise as result of higher interest rates. and then second, is that the

cost of the energy-related tax provisions are much higher than the staff of the joint committee on taxation originally projected. those costs reflect new emission standards, market development and actions taken by the administration to government the tax provision. our next update to this budget projections will come this spring and will incorporate the actual data about 2023 budget outcome that typically accompany the release of the president's budget, as well as other new information including about any new rules, any new administrative actions that have come into place since early january when we finalize the projections i'm talking about today. to keep you informed on a regular basis about the status of the deficit we issue the monthly budget review showing federal spending and revenue totals for the previous month and the fiscal year to date. let me briefly turned to the economic projections. the u.s. economy grew faster in 2023 that it did in 2022 even as

inflation slowed to reduce the economic growth slowing 2024 with slightly higher unemployment, and continued lower inflation. we expect the federal reserve to eventually respond by reducing interest rates starting around the middle of the calendar year. since february 2023 when we last published our full economic forecast forecast we have lowered our projections of economic growth and inflation for this year, in part because last year was so strong. we expect interest rates to be a bit higher over the next couple of years then we projected last year in 2027 are projections were similar. let me stop their unhappy to be an happy to take questions. >> thank you, dr. swagel. now begin with the question and answer session. i give myself five minutes. so when i think about what's happening with the cost of living in this country, i see it

as an imbalance between supply and demand. i just want to make sure as an economist you understand it the same way. we had an administration, policies of this administration that squeezed supply with higher taxes, with higher and more regulations, higher costs, and with paying people more than they made in the previous job for for a long time which created a labor shortage. we still have lower job participation rate than we did prior to covid. that's the supply-side squeeze. on the demand, overstimulating the man we flooded the market with federal money. started with the trillion dollars in so-called covid relief. we had the trillion from prior code relief unspent. the irony was supposed to be deficit reducing, or at least pay for itself. now i think you update is it will cost $300 billion in

additional deficit spending. add the total debt, do debt since this resin has been in office, is $6 trillion. so you've got squeeze in supply and overstatement to man. you have record forty-year inflation. is that how you see it and is that an accurate depiction of what has brought us to the recent inflationary environment? >> that's consistent with the way we look at inflation, that imbalance between the net and the supply constraint. >> is inflation causing an increase in mandatory spending because earned benefit programs and other mandatory spending programs are going up because there is a cola or an index for and that's causing tens of billions of dollars in increased cost to the taxpayers and in our

budget forecast? >> yes, that's right. inflation was that into the mandatory spending and it also enters the interest goes with high inflation translates into higher interest rates speed is why our interest going up? are interested going up to try to tamp down on inflation by causing growth to receive so that we can pull off this cost-of-living crisis? isn't interest, art interest hikes directly related to inflation, which are directly related to the overspending and the squeezing of the supply-side? is that a fair characterization. >> i think that's right that the fed respond with high interest rates by taking action that high inflation come sorry. by raising interface. i try to become about to blend blame the president for everything, my democratic colleagues for everything, but it think there failed economic policies and their unbridled spending has put us in a situation where we had to bring these costs down.

let's talk about the interest for a minute. prior to president biden taking office, your projections over the ten years for interest expense related to servicing the debt was about $4.5 trillion. today, it's over $12 trillion. i think that the interest costs for the year the president took office was about 340 billion. today, your new projection is, as i said, higher than the expense of the national defense of the greatest country and military in the world, $870 billion. is that a fair depiction of our balance sheet and some of the sector? >> absolutely. you said, interest costs are not about defense spending. >> so republicans were much maligned for pushing back on the debt ceiling. it was, to me, a flashing red

light, if not yellow, saying your debt is now at the highest levels, debt to gdp. the path isn't sustainable. the unfindable i believe 30 years of 120 trillion. we were accused of being reckless for saying wait a minute, we have an opportunity to have a conversation, republicans led the debt ceiling negotiations. as a result we got the fra deal. some of us including the thought it should be more aggressive at reducing spending on the discretionary side. but regardless, the bipartisan outcome was a reset of the baseline and slower growth in discretion, sega 1.6 trillion or is that a fair characterization. >> was right and that's what you see in our projection, the change in the deficit, lord death of his is coming from the legislative action. >> well, my time is expired so i will now yield to my ranking member for five minutes for his questions. >> thank you, mr. chairman.

it's a story in my district yesterday. i appreciate you not blaming president biden for that snowstorm. in the litany of things that democrats and the president are sometimes blame for. one thing i think that the president and democrats in congress can be credited for is this remarkable economy that i talked about in my opening statement. approximately one year ago probably the last time, well, you were last year last week, but you also hear about a year ago sitting at the table. everything you could read from bloomberg to forbes to down the line was projecting a recession. literally one headline from about a year ago said 100% chance of a recession. did we end up having a recession this past year. >> was no. it doesn't look like it. and i would say our economic forecast is consistent with that come with a sort of what people

think of as a soft landing. >> it has been a remarkable economy and economic growth. isn't there any projection over the course of the next 12 months that we would drop into a recession? >> no. we have economy flowing with high interest rates but job growth continues to be positive. >> and on the interest rate point i believe the fed has foreshadowed the interest rate cuts, and the markets are actually pricing in one, et cetera understand? >> that's right. our forecast has three rate cuts this year and the more after that. >> and certainly if there would be more after that, that would improve the amount that we are come spending on interests on to service the debt, , correct? >> that's right. lower interest rates reduce the net interest out like. >> let transition here just --

one of the great things to have happened over the last decade is medicare spending has actually slowed and flattened. somewhat unexpectedly. many experts believe and cite the affordable care act as responsible for these savings. so does cbo's base i could get it to project the slowed and medicare spending per person compared to what it would have been otherwise? >> it does. it's something we've looked at very carefully. the affordable care act reduce some of the payment rate to providers like hospitals, and that reduces the trajectory of medi-cal caustic are other factors that are cardiac care come some slower price growths for drugs. we are still looking at it to receive what are the other factors that lead to slower growth.

>> let me ask you though and grilled out a little bit then. do you believe the aza imprint access to healthcare and cost-cutting measures may have contributed to the sort of medicare spending per person over the last decade pgh yes. it's something we're still looking at but there is evidence that some of the provisions in the aca reduce the cost growth in health care. >> that is wonderful news and certainly the last thing then that we would want to do is eliminate the affordable care act, or obamacare, sm candidates for office for national office are proposing to do right now. with that i will you back to reserve more time for the remaining members. thank you, dr. swagel. >> i take my ranking member, and now recognize the gentleman from your stay, , mr. smucker, for fe minutes. >> thank you, mr. chairman. good morning, director swagel. appreciate your leadership at cbo and the work of your team. obviously cbo is the

organization that all members of congress look to for an evenhanded, fair view of what we stand and what things look like in the future. and you've done i think a good job of fielding questions from different perspectives, and providing that i could look for members of congress. this forecast is a tenure forecast, which you're forecasting at the end of this tenures will be 116% debt to gdp, which would be a record high. you also looked in other reports, at the longer term forecast, up to 30 years. can you explain to us what debt to gdp looks like in those forecast at the end of the 30 years? >> iq. in the tenure outlook at the very back we have a box that gives a preview of 30 report but

is something we're working on now, about in the spring. the challenge of the high deficits continue out into the future and, therefore, that mounts and goes north of 150% of gdp by the end of the 30 year high. >> over 150 150 dash one ofr ports had close to 180%. >> i was getting to that. >> almost, getting close, almost a double which is something that every member of congress ought to be concerned about, correct. >> was that's right. >> can you tell us a little bit, it's not sustainable i think you talked about that. what's sort of the best case scenario? it's going to be rising interest rates that are going to impact the ability of the government to fund anything. and worst case scenario would be what? >> so net interest payments, the rising that interest payments will credit other activities that of the choices that you as policy makers have. the worst-case scenario our risk

of instability, financial instability if global investors doubt the willingness of the united states to pay into debt, without giving into high placement that would be a sovereign debt crisis. >> that would be a debt crisis or an inflation crisis. >> which would have massive impacts on every american. do you agree with that? >> that's right. fact we've seen country sale in similar situations throughout history. do you agree with that? >> i do. >> yeah. so you with the independent voice telling every member of congress that this is really an existential crisis for the future of the country. is that correct? >> no, i think it's fair. i said i would look at other countries that have failed this challenge -- >> do you think the american people understand what we are faced with? >> i would like to think that broad awareness that we faced a serious problem. the difficulty is finding the way -- >> the purpose come on sorry, i'm doing this quickly but the purpose of the debt commission i believe, what are the main

purposes is to really explain this for the american people. did you see value in the? >> no, i do. explain the problem and the range of possible solutions. >> yes. which is exactly what hoping to set to do with the debt commission. can you explain just for a second what your projections are and direct never talked about social security and medicare testing programs that have been paid into and so in some sense earned. but what will happen with his programs in less than ten years if nothing is done? >> that's the challenge. our projections and have so security trust fund exhausted by the end of the budget window here benefits for all americans would be reduced in a sense by more than 20%. >> so literally in nine years people can expect they will not receive the social security benefits if congress does not take some action?

>> that's right. under current law the would not be enough resources to pay the benefits of social security. >> i think it's important for the american people to that from you, and i think it's really important that if we are successful in putting together this fiscal commission that we really go out and explain to the american people, what we really have here is a math problem. it's potentially a political problem as well but if nothing is done, every single american will be impacted in the short-term within nine years, every single american who is accessing social security, and potentially dramatic income, or impact to current americans conservative future generations if we don't change course. do you think we still time to act, or is this something that would be difficult to resolve? >> you know, the challenge is knowing when that sort of. of crisis comes in things could be stable stable stable and then

interest rates -- that's the challenge. >> thank you. >> the gentle but from pennsylvania yields five minutes to the gentle little of a ms. schakowsky for five minutes. >> thank you, mr. chairman, and thank you, mr. slagle, for being here again today with us. you know, to me one of the key findings from your research is that immigration actually has a really positive effect on our economy. unfortunately, yesterday the secretary mayorkas was removed doing nothing to help with the problem of immigrants or the border. but, in fact, overall immigration is a good thing, that it looks like that you

found that you project that the economy could grow 7 trillion -- was it, you know, over the next decade. and then also that we found that the government itself, the revenue would be increased, it's estimated, by a trillion dollars over, over several, over the next great . mac. so i wonder if you could comment on immigration? why it is a plus for our economy and what you think comprehensive immigration reform instead of just taking people out of the office, would actually do something? >> no, no, thank you.

key findings in a report is the role of immigration in the economy in the budget and, of course, i recognize there are many aspects to immigration and see the of course of folks on economic and budget but what to start by acknowledging social skills and social aspects and many others. we do find that the labor force is more than 5 million people hire at the end of the ten year window than we had previously expected, thus because of the surge of immigration. and as you said more workers means more output, more income, and that in turn leads to high revenue, the trillion dollar figure that you mentioned. >> so the answer that immigration is we need the workers and we would have more workers if we had more immigrants that were in this country. is that what you're saying? >> that's right. the domestic fertility and the united states, the number of births per woman has been

declining and there's a sense in which immigration is to offsetting the decline in fertility. >> the other issue i wanted to raise is about tax cuts for the wealthiest. you know, we see in your report that what we knew was true, that donald trump's tax cuts actually drove a big hole in the deficit deficits, and adding to that, which is what republicans have said, would be a real problem. so while we have talked about spending, somehow it's a problem and then they always raise, you know, the programs for seniors, for social security, that these are to have -- are we concerned about the issue of creating more deficit because of giving more

tax cuts to the wealthy? and i'm just wondering if you think this is a good idea that we continue to add more tax cuts for the wealthiest americans or the big corporations, or whether not we ought to consider trimming that? >> you know, our projections are based on current law and the kinds the changes you are mentioning, additional changes in taxes, lower taxes, would mean yet higher deficit and the more challenging fiscal trajectory. >> i just want to say that every time it seems on the republican side of the aisle when we talk about how are we going to make sure that we don't continue to build deficits point at the things that make america great, social security, medicare, medicaid, taking care of people,

ordinary americans who really need help. so i thank you for what you said and i yield back. >> i think the gentlelady, and now yield five minutes to my friend from texas, dr. michael burgess. >> thank you, mr. chairman. i do want to associate myself with the turbines remarks early on about the linkage between -- chairman schiff -- the vast increase in spending and the occurrence of inflation which impacted the inflation rate that has now come back to visit us in form of higher interest rates, higher interest rates on the national debt to the point that interest on the national debt for the first time in history with eclipse been on national defense to i think it's very important point that people should not overlook. this was an intentional act that caused this. the other thing i feel obligated to point out is people who are supposed to be watching this sort of stuff, that is the president of the fed, that is the secretary of the treasury,

absolutely missed inflation when it was occurring by almost a year, and had they reacted sooner with some interest rates increases, it would not have been necessary to guide the interest rates to the roof way they did and said schooley now we are left with the situation that we're in. you told me i think it was may of 2001 when we first the first had an opportunity to meet, that you did not appreciate how strong the economy was going into and coming out of the coronavirus pandemic, that the economy was actually really hitting on all cylinders and they continue to do that even in spite of some of the arbitration fans that occurred during coronavirus. do i remember that correctly? >> yes, sir, you do. at the beginning of the 2021 as

a vaccination program proceeded and you know job creation was accelerated, economy was reopening i did not appreciate how strong demand was at it didn't, i did not appreciate at the time how strong the supply disruptions were that remained is what the cherub was pointing out his will in his opening. >> i do think that something we do need to bear in mind -- the chairman was pointed -- people who indulge themselves as fantasies say that the economy was on, flat on its back during the latter part of the trump administration but, in fact, that is not true. it was a strong economy and emerge from the coronavirus strong because it went into it strong. the other thing that i just have to ask you about, the ranking member brought up that the cost of medicare for a tenure window has reduced greater than

expected and, of course, he attributes to the affordable care act. what is that time when we are talking about, from when to win? is is that. a timer medicare spending has been lower than what you expected? >> since 2010 we've had a lower growth rates in medicare than the cbo had expected. and in our projections now we have medicare growth a bit higher than that, but still lower than it was in the preceding decade. >> just as an observation, of course the affordable care act was passed in 2010 at implementation was several years subsequent to that. one of the things that happened prior to 2010 as part d benefits that allowed seniors to have access to lower-cost generic medications like statins, like ace inhibitors that lower blood pressure. and the effect that these

medicines had over the longer time i would submit is probably a greater effect than the affordable care act because we all remember one of the criticism of the affordable care act was that it was ten years of taxes for six use benefits, and indeed the benefits such as it were the affordable care act did not kick in until later in that time window that you're describing. let me ask you this. overall is the affordable care act increase or decrease the cost of healthcare in this country? >> overall, oh, boy, you know, i apologize. i don't have a single answer to that. there's so many impacts and so much that has changed that, i was going to say, and among other impacts one that you highlighted his improvement in cardiac care which reduced the growth of healthcare spending overall. maybe some of that was from the aspect of the affordable care

act, the dco, the accountable care organizations. but we know the cardiac care improvements matter. we are not sure exactly what it was that led to the speedy correct. was it the people of medicine at a lower cost, party, or the evolution aco's what you get i don't think they have paid off on the promise that was suggested to us, the chairman of the cms told us what he was doing with that. look, there's never enough time. i've gottheimer question unkindest mythos in writing. i pre-should also you working on the concept of what has the affordable care act cost us over, i mean you've had, it's been over ten years since its implementation. you've had ten year projections. the back and look at which a project and what actually happened. i think that be an interesting case study in economics if nothing else so thank you much for being here and i get back. >> i think the general from texas and now yield five minutes

to the gym with from virginia, mr. scott. >> thank you. thank you, mr. chairman. dr. swagel, you've heard a lot about inflation. how has inflation in the united states compared to inflation in other countries? >> inflation has come down a lot in the united states. you know, our growth is probably the most of the rest of the world. i don't know offhand inflation the u.s. versus of the countries i apologize. >> okay. you mention interest of the social security program. doesn't the trust fund make money on higher interests? >> it does. high pitches, u.s. government, you know, both pays for and makes poor with higher interest rate. >> okay. and study the aca and medicare, in your study are you looking at the question of whether or not people delayed treatment, uninsured people at 64 wait until the qualified for medicare

at 65 and get the treatment of then, making it a medical expense rather than aca expense, and effective treatment is probably more expensive than if they've gotten that under aca at an earlier stage? >> no, that's right. it's something we've looked at in the context you mentioned about expansion to the aca. we have looked at in the context of expansions and medicare as well, that when people, better health with more access to health insurance. >> and you talk about social security being unable to pay promised benefits within ten years if we don't do something. >> that's right. >> now, how do quote paid promised benefits, how did the promised benefits ten years from now compared to what people are getting today? >> so the benefits that are payable are still higher in real terms than a benefit the people received today. >> okay. we know the deficit isn't just

revenue or just spending. it's spending -- revenue. is talk about the deficit going to do anything about the deficit? that's a rhetorical question. >> i did not have an answer speeders are you aware we reported a bill creating a deficit reduction commission to talk about doing something about the deficit? but before we can vote on on the fourth we passed a tax cut of over $200 $200 billion baso corporations. you're aware that. >> yes. prepared a cost estimate for the fiscal commission. >> before we could vote on the fiscal commission we passed a big vat tax cut. could you tell us where corporate tax rates are historically? >> the 2017 tax act reduce the corporate tax rate. so it's lower now than it was before the 2017 act.

>> historically, go back 20, 30, 50 years, tax rates for corporations, where are they? >> well, they are in, if i remember right the mid-'20s whereas now the average tax rate for corporations is lower than that. >> the dash let me -- >> the tax treatment for the 2017 act if i remember right was around 25% or higher. >> the rate was about 45%. >> wasn't 35? i'm sorry. i'm sorry. i've worked on this in the past but it don't have it at my fingertips. >> okay. well, the corporate tax rates have been about as was event in 100 years, is that right? >> you know, it sounds right. i have to get back to you. i apologize. as you can see this is like the window without succumbing to my mind. >> can you say the word about the effect of a good economy on

the budget? >> a strong economy means more job creation and more revenue, and you know, in tends to improve the budget deficit. >> spending in the ira of the internal revenue service, was effect on the budget of those increased spending on the internal revenue service? >> so our projections show the providing more resources to the irs allows them to provide better customer service and put more effort into enforcement and that brings in more revenue. it's about a two to one ratio, so net of about one to one. >> okay. thank you, mr. chairman. i yield back. >> i think the general from virginia and ask director swagel if you follow up with him on the tax question. >> i will. >> 35% down to 20%.

but yet of the questions and if you would please follow up with him. >> i will. >> thank you. and now i yield five minutes to another good virginian, bob good, for his line of question. >> thank you, mr. chairman. and thank you director swagel for being with us at once again i want to refer, topological refer to some the comments were made by the previous speaker from the other side very good friend from virginia, mr. scott perry doesn't want us to talk about the deficit and the debt, doesn't want us to talk about that's we just want to recklessly relentlessly spend money but don't talk about it, which i would -- cycling, , the previous speaker from the other side said what makes america great is how much government come how much money we spend on government programs. i'm thankful to her that she wants to make america great again but it don't think that's through growing governments programs which for the assessment of that situation and why we hear today. director swagel, since president

biden took office has a administration has unilaterally through executive action spent over 1.5 trillion new spending which has resulted in the 40 inflation that we are all suffering under, the 20 year high interest rates would just cause you to have to revise upward the projection on the cost of debt by about five children since the president has taken office. with respect to the executive action a number final rules published each year by this government is generally in the range of 3000-4500, according to the office of federal registers. that's negative action roles as by the department, agency, the records under elected. in 2022 for two for each bill that congress passed the agencies issued 23 new regulations. in 2021 federal agencies vitalize over 280 new regulations and the final cost of those was over $200 billion. the average, private sector, to

pay damages company pays about $10,000 per employee for the cost to comply with federal government regulations. manufacturing companies pay double that, about 20,000 per employee while small manufacturers, those with fewer than 50 employees, regularly calls for the thorough, cost them about 35,000 per employee this is from national association of manufacturers so director swagel, how much focus does the cbo place on the cost of proposed rules, or final rules while creating the cbo baseline? >> no, thank you. we do look at both proposed rules and final roles, official in the basement and a you said at the beginning, some of those roles have financial budgetary costs. so, for example, the baseline has changes through loans and as of the example of change of proposed were from epa on tailpipe emission necessary

large fiscal impact. >> so president biden's original propose student loan transfers can was a spike cost about 400 billion. in the pipeline now with what he's trying to do as he tries to continue to avert the will of commerce and, frankly, the ruling of the supreme court how much has he cut and if i find out from student debt loan load transfers are trying to know? >> that's right, so after the debt cancellation was undone by the supreme court, the administration department. not debt cancellation or debt forgiveness. not forgiveness, transfer. >> transfer. >> transferring it to help? who was at debt being transferred to? >> well -- >> was a going. >> was a future generation. >> thank you. of the people. of the people who did nick arbuckle had. anyway, that's important to clarify. >> no, no, i appreciate that. he put in place the save role so income driven repayment and

we've evaluated the fiscal impact upon doing that regulation and that, that's more than $100 billion. >> i think 125-ish as we talked about in our education that we had resulted which is a implement a regular budget would allow you to better project future costs by having a better sense of all of the federal spending? what a regulatory budget help? >> it could provide us more information. you know, the cbo to evaluate some rules and regulations. we are not set up to evaluate every rule and regulation pics of that be something i need to talk to the committee about how we would go about doing this. >> would be feasible for cbo to publish sort a master list of basement with the budget impact of all executive actions that may be a certain threshold? >> you know, it's feasible in principle. it's probably not with our current staff, the current size of the agency. >> practice is harder than a

principle i understand. i do have a bill, regular budget act which would require a regulatory budget detail the regulatory costs similar to and you budget for taxes and procurement spending. i certainly would like to see that come to fruition, that builder thank you, mr. chairman. i yield back. >> thank the general from virginia and appreciate you mentioning the regulatory budget i hope we can debate your bill here, maybe even mark it up. thank you for your leadership on that. now yield five minutes to my friend from texas, mr. lloyd doggett. >> thank you, mr. chairman and thank you, director. i appreciate very much the commitment of cbo to accuracy and transparency, and to defending your estimates and your work despite some very serious partisan challenges this year. mr. scott just referred to one of them, but we had comments suggesting how in the world can it be that if you cut spending for the irs that you actually increase the deficit?

in fact, the first piece of legislation at the shop with the estimate was $114 billion added to the deficit by the first of the republicans passed. can you just explained in short how can it be that cutting spending, which they want to do for the irs as they keep coming back to it to protect tax cheats, how can that result in more deficit? >> okay. yes, sir. so we look at the uses to which the irs would put the additional resources, customer service, helps people in terms of understand their obligations and pay them. and a force that helps the iris go after people who don't meet our obligation. of those have returned and that's analysis we do in coming up with the two to one ratio that i mentioned to mr. scott. >> thank you very much. of course we have people on this committee all the time that are saying all with reference to the budget deficit and the national debt, we don't have a revenue problem. we just have a spending problem and, therefore, they have

proposed to come for example, you out the work-study program that allows many students to work and study at the same time. zero out family-planning. and, of course, this week the biggest zero that offer us thanks to the putin wing of the republican party is to zero out in assistance for ukraine to fight putin. let me ask you a broader question. if we just zeroed out all discretionary spending that we have, everything for nasa, for border patrol, for national parks, where that be enough to bring our budget into complete balance. >> was you know, it's one of the challenges we face is that in just a few years, by 2031, the deficit would be larger than all of our discretionary spending. >> and as far as the tax cuts are concerned, i believe joint tax actually provides most of the estimates on what a tax-cut would cost. but in your report have you considered what the effect would

be of promoting extending the expiring individual tax cuts. >> is no, that's right. they provide the initial estimate. we then look at subsequent efforts picked the last time we evaluated extension of the 2017 act was last year, was about $300 billion cost per year. that's in the second half of the window after the provisions expire. >> is that just for the individual tax cuts or does it cover all the corporate giveaways? >> that would be for the entirety of -- >> about $300 billion. this is something, idea, disassembly that comes up next year if as the legislation also to be introduced by if we extend those provisions, $300 billion a year is estimate of how much to add to our debt? >> that's right. we will provide more information. >> when it comes to tax expenditures there pretty big spenders and as far as the revenues and the spending are

concerned, while there were some additional, initial revenue increases from the trump tax giveaways, isn't it correct that last year revenues really crashed down to earth and the was about as the data i've seen about $450 billion less than we collected in 2022 last year was collected? >> that's right. that our projection of revenue for last year was too optimistic, it's a 22-22 is a strong year for revenues. >> one of the other complaints that some of had about the budget deficit is that we added to it with the new climate law, and then in fact, the estimates of the cost of that climate law have been very low pick i think there was one report out this past week that there might be as much as twice as much. some of the people that would

defend subsidies to the oil and gas industry to the coal industry to their death by those who are complaining the loudest about the fact that we use tax credits to encourage people to go green, to reduce the greenhouse gas emissions. does there appear to be a significant increase in the cost of these provisions? >> yes. working with jct, we project an increase in that the costs and you say that's more up take it that or credit for electric vehicles, for wind and solar and that will add to the cost. .. >> from texas now yields to the pride of west point, georgia, 5 minutes, drew forget ifson. >> thank you, mr. first of all, i'd like to enter into the record, without objection, a letter from r street that looks

at the budget committee's concerns about the blunt sustainable outlook for the country. >> without objection, so ordered. >> thank you. as i've said is before, i believe that you are an honest broker and someone who is incredibly bright, but i think you have an incredibly bad set of rules that you have to operate by. let me go ahead and just touch on something here. when we were freshmen many 2017 -- in 2017, the chairman and my colleague from pennsylvania and michigan here, cbo told the us that the spending for a 10-year window in 2017 was going to be about $52 trillion, okay? guess what in we're at about a $82 trillion now, and i'm happy to give you all these numbers. we got 'em from you. the revenue difference was, in 2017 over the 10-year window was expected to be -- 43 trillion, and now it's at 62 trillion.

and the deficits were going to be at $9.4 trillion, now they're at $20 trillion. we have, we consistently miss the mark on the accuracy and, i mean, it is true for both sides, okay? and it is really hard for both republicans and democrats to go argue their points with a sense of confidence when year in and year out cbo gets it wrong. and i think it has a lot to do with the rules that you have to operate by, current law. you're not able to predict the changes in the economy that are going to be coming. but, you know, we're off a by several hundred billion dollars on the i.r.a.. therapy off by several hundred billion dollars on revenue from the tax cuts and jobs act. and really the only thing that you do is you give the competing sides fuel for their arguments, okay? if that happen to be wrong in

citizen many cases. in many cases. so how do we -- the numbers that you're putting out in this baseline today, and we're looking at 10-year windows, how are we supposed to trust that in year 4, year 6, year 8 and year 10 they're going to be anywhere chose to accurate? -- close to accurate? >> no, it's an important point. >> damn right, it is. i mean, when you get it right by ten of billions -- hundreds of billions of dollars over the long haul, i mean, how are we supposed to trust the numbers that you give us that in 10 years the decisions that we're making are going to be accurate? forget whether or not policy is right or wrong or, you know, if you believe in one thing or another whether it's green energy, health care, whatever, wherever you believe that. how are we going -- how should we and the american people trust that when you give us a 10-year number, it's going to be anywhere close given the abysmal

track record of cbo over the last decade? >> i can tell you i am a very confident that the fiscal trajectory's unsustainable. and so if there, you knowing under current law are. -- you know, under current law. and so that's one of the key messages of our budget projection. >> okay. well, i think that's something that a we can all a look at the numbers and agree on right now. mr. chairman, i think that we need to really focus on reforming the budgetary process, making sure that the experts that a we rely on have the tools where they can make more accurate predictions. i think has wildly important. we can have debt commissions, we can talk about entitlement spending, but all we're going to do is take a cbo-static score and use that for the basis of a political argument and a policy debate, we are, as i said to you the other day when you were here, simply shooting rubber bands at the moon. we will aim at the target and

fail to hit it every single time. would you agree that reforming your process to include dynamic scoring or some variation of that and modifications along the way, would that be helpful in making better predictions out into the future? >> i agree, we do some of it, i want to do more of it. as the economy changes, what does it mean for the -- >> what do you immediate in order to make that happen? you say you do some of it, but you want to do -- you're trying the to do more of it. to me, trying is simply failing slowly. what do you need to to be successful in that effort? >> i, i hate to come before the committee and say give me more people, give me more money, but that's the answer -- >> you can do more dynamic scoring if you have more people and more money. >> yeah. the agency is -- >> so you're going to tell me -- mr. chairman, if i could have just a few more seconds, you're going to tell me even when you had more people and more money and you were getting it wrong a decade ago, i mean, it doesn't

seem to be the answer here. do you need different rules, or can you do it with the exact same ruling -- rule that you have now? if or are you thinking about technology? are you using a.i.? >> no, thank you. no, the rules of the house, the current house rules direct us to do dynamic analysis from legislation, and we will absolutely do that. >> the gentleman's time's expired. >> thank you, mr. chairman. >> appreciate the line of questions on the budget process that will make us act more ponce by and -- responsibly and you all provide more timely and and accurate data. that's something i hope we're all committed to, and i appreciate -- but i also had a thought, if trying is slowly failing, failing slowly, i wonder what that means for congress who often, we often a don't try at all. >> mr. chairman if, i surmise that based off of the last few years, we're not failing showily, we're failing pretty -- slowly, we're failing pretty

damn fast. >> on that note, ms. fallon from if vermont, i yield 5 minutes for your line of question. >> thank you, mr. chair. dr. swaying ising, thank you so much for coming this morning -- swagel. the cbo's budget and economic outlook for 2024-2034 indicates that the economic growth achieved during the biden administration will remain steady, inflation will continue to fall and job growth will continue. after the covid pandemic, we is have a lot to learn -- we have a lot to learn from all of this and a lot to celebrate about the recovery which has been the best in the world. but today i want to specifically talk about an issue that's a incredibly important to vermont, which is housing. it is surprising to many people to learn that vermont has the second highest rate of per capita homelessness in the country. and like many parts of the nation, we have many, many fewer homes that are needed.

and this has made rentals and home ownership out of reach for too many vermonters. but it's a national crisis too. according to a recent estimate from freddie mac, america is horse by 3.8 million units of housing both for rent and for sale, and that's certainly something i hear from a lot of young people as i travel acarrot vermont, their -- across vermont, their concerns for the future whether there'll actually be housing for them when it's time for them to start a family. the average rent in the united states has increased by 24% between 2020 and 2023, and more than half of low and moderate income boar if rowers now -- borrowers now spend between 20-50 president of their income on mortgage payments or rent. and this cost burden is way too high, obviously, for working families and for the elderly in mar. and so this week i -- in particular. and so this week i introduced a bill that would make a

transformational investment in building new, affordable housing. it's rooted in innovative solutions that vermonters have embraced for many years such as a community land trust, shareed equity models. and by emphasizing new supply and long-term affordability and protections for renters, we can get to the root of this complex problem both in vermont and across the country. and we can help more people and more families, but by doing that we also help the economy in vermont and nationally. and so my question for you is, can you tell me what the effects are that the housing crisis has had on our nation's economy and looking out how could increasing dramatic the units that are the available for people to rent and own, again, help the nation's economy as a whole? >> no, it's -- you put your finger on a really important issue economically and socially. and we've seen the impact of, as

interest rate hikes on the housing sector. we project pretty strong growth in housing based on the factors that you said, very strong demand for housing continues, the supply focus as you said that is probably the policy, you know, one policy lever to have innovative changes on the supply side. it would improve the economy, and it would have important social effects. i think the issues of inequality you mentioned and others of mobility, being able to move to the right job or the right place for them and their family. >> and so looking backwards, and i know you're really about projections, but looking backwards, can you speak to when was the last time that we had a concerted effort federally to try to house all the folks in

this country that are desperately seeking rental housing, a pathway to home ownership? it feels like it is, it is holding folks back in my county, but when i -- my state, but when i talk to colleagues across the aisle, this is something that's impacting just about every congressional a district. there's just if not -- just not enough housing. i'm wondering when was the last time we saw a federal investment of the size that that's needed? >> no, that's right. as you said, it's a local issue and a national issue. i can't think of the last time as a full scale issue. there have been programs with some resources, the american rescue plan act had some housing assistance, but not the national effort that you're, what you're suggesting. >> so in closing, i just want to say that the bill that i put forward is a $500 billion investment in housing. it is a big ticket item. it's what's needed right now when we talk about nearly 4

million fewer homes that are needed right now. it's a real crisis not just for individual americans, but for the economy as a whole. thanks for being here. >> thank the gentlelady and now yield 5 minutes to my friend from california, mr. tom mcclintock. >> thank you. director, starting on ms. genachowski 's point regarding illegal immigration, your testimony is that the more people that are working, the greater the economic output. so on the back row level, that registers as an increase in economic activity, correct? >> that's correct, yes. >> but since illegal immigrants are generally lower wage workers and we're flooding the labor market with them, what does that do to the wages for working americans? >> no, that's right. the new immigrants will tend to go into industries that have relatively low productivity that will lower the level of productivity of the country as a

whole and lead to lower wages on average. >> lower wages for working families. >> that's right. >> so the party that keeps touting itself as the friend of the worker actually is advocating policies that are suppressing the wages of working americans by flooding the labor market now with more than 5 million illegal immigrants that they, that their administration's released into this country. which i find absolutely appalling. now, and because illegal immigrants are generally lower wage earners, they pay relatively lowerrer taxes -- lower taxes and consume relatively higher government services. the center for immigration studies estimates that on average the net lifetime cost of an illegal immigrant is $69,000. that's per person. that's the costs consumed minus the taxes paid. it's a net loss of $69,000 per

individual. you is have any reason to question that estimate? >> so it's something that we're still working on, is looking at the composition of the immigrants and the trajectory of their work profile, the benefits that they would draw. >> so there's no reason at least at this point not to expect that every illegal immigrant who's admitted into this country is a net cost to american taxpayers and is suppressing the wages of working americans. thank you, party of the workers. let's go to point regarding taxes. tax foundation reports that the top 1% of income earners earn 20% of all income roughly but pay 40% of all a income taxes. are those figures in the ballpark? >> yes. our tax system is sharply progressive in the way that you're saying between -- >> so they earn 20% of the income, they pay 40% of the income taxes. so if you're actually arguing

that they should pay their fair share, they're actually arguing to cut their taxes in half, sounds to me, which is a rather bizarre position for the democrats to take. and what we've found in california and a number of other very high-tax states is that arthur the laugher was right -- arkansas a enough laugher was right -- arthur laffer was right, there's nothing more portable in this world than money and rich people. when taxes reach a certain point, what happens to tax revenues? >> as you said is, people can move and move across borders, and that's something that we see when we look at state and local issues. >>ing and that's why we see high-tax states like california, the more they raise their taxes, the more their that tax revenues go down. in fact, when the trump tax cuts took effect, the projection was that they'd reduce total revenues, but our total revenues actually went up after the tax cuts. not down. so how do you explain that? >> no, that's right.

the challenge of making that evaluation is that events subsequent to the tax act a, and we expected that to increase growth, it's just hard to distill the impact of the tax act from -- >> but in this case what we saw was taxes were cut, revenues went up. now, we're at about 17.5% of gdp on our revenues right now according to your report. now, isn't that about average for the postwar era? >> that's right. the 17.5, we have this year, it's slightly above the -- >> and the highest amount we've ever brought in in the postwar era was in 1945, that was 19.8%. truman then cut spending, cut taxes dramatically, and between 1945 and 1950 we saw revenue decline to 13.1% of gdp, but the result was the postwar economic boom. is that also about a right? >> no, that's right. the -- after the adjustment act

of world war ii, as you said, we had an economic boom. >> just one take, one other point just raised regarding housing. something's scarce, it's expensive. when it's plentiful, it's cheap. what impact have rent controls had on the supply of rental housing historically? >> generally, that kind of policy would tend to reduce the construction of new housing. >> and, therefore, force up prices. not to mention 100,000 per-home mandates as we're seeing in california. zoning restrictions that constrict the supply of housing and delays of years and years that that add enormously to the holding costs for developers. all of those are self-inflicted wounds by government, are they not? >> no, that's right. and these are state and local issues generally, and the zoning that you pointed to is a key issue in the supply of housing. >> i thank the gentleman from california. for his questions. i now yield 5 minutes to our friend from kansas, ron's e he's. estes. >> thank you, mr. chairman.

and thank you, director swagel, for being here today. the updated cbo baseline confirms some things that we've known for a while, we're at an economic and fiscal tipping point in this country. you know, every second we borrow another $90,000. so in the amount of time it took me to say $90,000, we borrowed another $90,000. and created this $34 trillion debt that's actually increasing at about 2.6 trillion if you look at the last year in terms of the amount of money that's been borrowed. and projections are that our deficit and our additional borrowing will increase by over 5 of gdp over the next -- 5% of gdp over the next several years. i'm going to vary off of my prepared remarks partly because of some comments that were made earlier, but partly just to reflect on what's really going on. we, yesterday the consumer price index, cpi, was reported for the month of january, and it e went

up. so, and the year to year went up, the month to month went up above projections and above previous months. and, in fact, one of the things that was noted earlier today was that the actual interest costs on our debt went up an additional $9 billion yesterday just because interest rates went up because investors demand more money when inflation goes hire. and inflation's continuing to increase prices. you know, the amount of government spending over the last three years when the democrats were mostly in control, this splurge that resulted in actually now prices are 17.9% higher than what they were three years ago, in january of 2021. and actually it has a drastic impact on, on the viability of us, our net debt, our net interest costs as well as the

overall concerned about what we can afford. we talked earlier about a defense and interest costs going to be the higher than what we're spending on defense. as well as health and human services and agriculture and environment and everything else that we spend money on. we've got to make some serious changes. you mentioned earlier the fiscal responsibility act was helped bend the curve on some of that. some of the other things that have been talked about earlier is, you know, discretionary spending, the piece that we get e to vote on every year is less than 30% now of our extra spending versus the mandatory spending program. so we've got to do some work. the tax relief for american families and workers act that passed last week was a good bill to be helpful in terms of promoting economic growth to help keep our tax revenue coming in. you know, if we implement some of the policies to boost the economy and revenues, we still have to cut spending in order to

improve our nation's fiscal health. >> yes, sir. i mean p even with a strong economy and policies that, you know, the strong economy you have in mind, we still need to take action to adjust our fiscal trajectory. >> and, you know, automatic spending, but, you know, as much as we're spending now on interest which has fallen into that automatic spending category, can you share how much of a percentage of our budget is spent on interest and how that's going to change over the next few decades and what's, what's the impact? >> so it's -- that's a key challenge, is that what we spend on net interest now is roughly equal to, you know, either defense or non-defense discretionary spending, a little bit below one, a little above other. over the next 10 years, those interest payments are rising by so much that they're one and a half times either defense or non-defense. and that's just an illustration of the point that you're making,

that interest payments will just crowd out everything else in the budget. >> and another question i've got is does the cbo baseline account for some drastic differences in this? i know there's some comments made earlier about the process and what's used. how do we ensure greater act a rahs a city? there's other d accuracy? there's other estimators out there whether it's wharton, university of chicago on key pieces of legislation, so of called inflation reduction act which, obviously, the numbers were completely off based on the baseline estimates, so how do we reconcile and come back with better answers to that? >> you know, we do do our to be in the middle of the range of possible outcomes, and we mow there's uncertainty about all of our outcomes. we consult with outside experts, our panel of advisors. ultimately, it's on us to, as you say, go back and look at

what we've done, where we got it wrong and if there's a way for us to improve our process. >> i know you mentioned people and money, but, i mean, there may be some of those other models to look at to incorporate, to utilize at well. so, mr. chairman, i'm out of time. i'll yield back. >> i thank the gentleman from kansas and yield 5 minutes to our friend from the hoosier state, mr. rudy -- [inaudible] >> thank you, mr. chairman, for holding this hearing today, and thank you to director swagel for being here to testify on cbo's baseline projection. as we previously discussed, the cbo plays a critical and vital role in providing congress with objective and nonpartisan data to help us as legislators make the most informed decisions possible. cbo's baseline is important to understanding our nation 's current economic and fiscal state as well as helping this committee put together our annual budget resolution. this year's baseline does show some concerning figures about the fiscal state of our nation. our nation currently sits at

$34.2 trillion of debt or 122% of gdp. and over the next decade, the cbo projections figure to grow to 54.4 trillion or 130% of our gdp. additionally, this year's baseline shows multiple government trust funds going insolvent over the next decade. for example, the cbo projects that the old aging survivors' insurance trust fund which funds the majority of social security will bomb insolvent -- become insolvent by 2033 which would result in an automatic 25% cut for social security recipients. let me state that again. if we do nothing, we will have an automatic 25% cut for social security recipients. you also project that the highway trust fund will be exhausted by 2028. these figures are very deeply concerning to me. while we cannot allow our debt and deficit to continue on this

unsustainable and irresponsible path, we in the house must do something about it. my question, first question for you would be, it's something that i'm very deeply concerned about, the rising cost of our national debt. projecting our annual interest becames to -- payments to rise to $870 billion in 2024 which is a $211 billion increase from last year. how do our rising interest payments impact our long-term debt trajectory, director swagel? >> net interest payments sometimes are going to overwhelming all the, you know, other possible uses of our budget, right? we have the mandatory spending that continues on autopilot and discretionary spending that will get overwhelmed and crowded out by the rising -- >> and so are there, fiscal and/or particularly the economic implications, if we could just go there. talk about the economic implications tied to our growing interest payment. >> to me, that's the real

long-term concern, is that the rising interest payments, the rising deficits and debt will feed back into yet hire interest rates and have other negative economic consequences; lower investment, lower job creation, lower growth. excuse me, less ability for us to -- up to our economic and and other challenges. >> and to that point, in this house and, you know, obviously we need to restore fiscal responsibility. we talk a lot and almost exclusively in the house about the need to cut discretionary spending. in your estimates, i mean, the numbers are very plain and very simple. can we rein in our debt and deficit with only changes to discretionary spending? >> no. it's just not possible. eventually you have to look at other things. >> other things being -- >> either mandatory spending or revenue. >> thank you. how does the cbo baseline account for the potential impact of regulatory policies? >> we do in part, we do do our

to look at the regulatory policies that a have been enact ad, incorporated or put in place by the administration or proposed and look at what the economic impact and the fiscal impact. we're not able to detail each and every regulation, but we get some of the major ones. >> and you talk about -- can you talk about how the regulatory costs under this administration, under the biden administration, how it compare to the last administration? has it even creased -- has the biden administration's regulatory actions they've taken increased or decreased the fiscal outlook or i should say maybe the total projected debt over the next decade? >> you know, it's a good, it's a really good question. i can't compare against the last administration. i just don't have that off the top of my head. i'm not sure we've even done that. but some of the major regulations show up in our budgetary projections. the epa and and student loans and others. >> and last spring we passed the

fiscal responsibility act, or the f pressures a, which imposed caps on discretionary spending for fiscal year '24 and '25, how did it impact our projected deficit over the next 10 years? >> those caps and the c.r.s that put them into practice were the largest impact in reducing our deficit trajectory. in total, that was about $2.6 trillion over 10 years. >> thank you. mr. chairman, wild back. i yield back. >> i thank the gentleman from a indiana. we have ten members all on the republican side, so we're just going to continue to roll through this. but i appreciate my republican colleagues being here for this important conversation. mr. moore from utah, 5 minutes. >> thank you, chairman. thank you, director. thank you for being here. the cbo's updated baseline shows that house republicans, and in order to do this we had to win the majority back, and we did

that. we've taken that opportunity and been effective at forcing the biden administration to agree to lower federal spending. unprecedented levels from if '2. winning back that mate, we were able to put a clamp on that. that's a positive. cbo is now projecting that the federal government will spend 10% less on discretionary spending over the next decade largely due to the fiscal responsibility act that was passed last summer. that's significant. and that's a significant conservative win that we were able to lower that and trim that out of the budget for the next little while. but while it's a great step, the updated baseline also demonstrates that we have a lot more work to do. within next 10 years, nearly 80% of federal spending will be on mandatory spending and our annual appropriations process will only consider a shortening and a lessening 20 of what a our federal government spends each year. my legislation, the comprehensive congressional budget act, which i introduced

with my colleague from washington state, congresswoman marie perez, would reform our budget process to better empower members to make reforms to revenues, direct and discretionary spending each year instead of just ignoring $4.5 trillion of our $6 trillion budget. it would actually incorporate the entirety of it. it would do kind of like what states do and why states are able to keep their spending in a responsible trajectory unlike us, the federal government. dr. swagel, a couple quick questions. this year spendingen on interest crosses to service the national debt will exceed the federal government's spending on medicare and our national spending. by the end of the 10-year window, cbo projects our country will spend nearly $2 trillion annually on interest costs. what are the long-term implications of the growing interest costs? >> it's a budgetary challenge and an economic damage. rising interest costs will crowd out other possible uses of government resource pros and then also pose a risk to our economic stability, our

financial stability to high interest rates, to job is creation. >> every constituent e that comes into my office and has got a program that they care about and it ma matters, they show the data how it's effective, and i put a graph on there, talk to them about the interest costs and what it's doing to crowd out the things we need to be able to address. highest inflation we've had in four decades following inflationary policies. i look at the american rescue plan as a very, very rapid bill that happened really quick without much concern for what it would do to inflation their pressure in the u.s -- inflationary pressure in the u.s. and, of course, the i'm sorry r.a. which was -- i.r.a. which was much more expensive than projected. the updated baseline now is 41 -- 4.1%. this affects not only how much the federal government spends to service the national debt, but it also ripples throughout the economy. can you seek to how increasing interest rates affect the economy writ large, particularly

families and job creators? >> yes, i can. and you put your finger on it, families, higher interest rates make it more expensive for families to spend, do the things they want to do, and higher interest rates affect businesses that are looking to invest and create jobs. and both of those affect the economy and, therefore, the federal budget. >> and the inflationary pressure in the nation right now, with republicans winning back the majority, we were able to put a clamp on trillions and trillions of dollars that president biden enacted and was continuing to push. and that simply controls our monetary policy. and our monetary policy now under control than it has been in the last couple of years, we're seeing inflation, but prices are unfortunately here to stay because of what we went through those couple of years, but we are doing our part to put a clamp on that. last question, the ceo's recent baseline indicates that medicare will be insolvent -- will be solvent throughout the 10-year budget window. in the medicare trustees' report last march they project that the

h.i. trust will come insolvent in 2031, resulting in an automatic across the board cut for seniors. what factors account for the difference between cbo and the trustees' estimates? they're different. cbo, it's solvent9 through the 10-year cycle, but the trustees has it at 2031. what factors are different? >> okay. no, it's the an important question. we have somewhat different modeling approaches, but we also have different economic project nexts. -- projections. ours is more recent, so we probably have more of the higher inflation which, you know, is a negative for families but means more, you know, more tax that revenue coming in to medicare because we tax the nominal base. and so i suspect that's part of it, is that we have a slightly better revenue path than they do, maybe a better, you know, lower spending path. we both see the system as facing severe challenges. it's just a matter of -- >> whether it's a couple years or what not -- >> absolutely.

>> when will the trustee address updated numbers? >> you know, sometimes -- >> [inaudible] >> sometimes the in the spring they will put out a -- >> thank you, director. >> i thank the gentleman from utah. our deputy chair of the republican conference, which makes him the likely next candidate for speaker of the house, with that, i yield 5 minutes to dan kildee from the great state of michigan. >> i thought you liked the gentleman from utah. [laughter] thank you, mr. chairman. i thank you and the ranking member for holding this meeting. mr. swagel, good to see you again. i promise, no references to professional wrestling, and i just made one. [laughter] one aspect of the cbo baseline that i'd like to touch on is the projected tax revenues over the next decade. obviously, we know americans deserve a government that's fiscally responsible and is

working to lowerrer our national debt, but reducing our deficit means looking at the entirety of the budget, not just cutting those programs or that are important to families, to seniors, to kids, but also having a tax code that's fair. one that does not allow the wealthiest individuals and the largest corporations in this country to avoid paying anything close to their fair share in taxes. our tax code should not let fortune 500 companies get away with paying less in federal taxes than a teacher in bay city, michigan, for example, or a nurse in saginaw or a factory worker in midland. so let's just quickly review the facts. under president trump, republicans had an $8 trillion -- added $8 trillion to the national debt including nearly $2 trillion alone from the trump tax scam that gave overwhelming, overwhelming benefits to the wealthiest

millionaires and billionaires in america. and now we see a desire to extend those tax giveaways to the super wealthy. so, mr. swagel, the cbo issued a report last may, and i know mr. doggett addressed this, but i wonder if you might be specific on this issue if you could. the cbo report last may dealt with this issue. how much would extending, according to your report, how much would extending the trump tax cuts for the wealthy add to our national deficit? >> after, after 2025 when many of the provisions expire, extending all of the expiring provisions would run about $300 billion a year. >> but just to be clear when you aggregate that, the may 2023 report found that extending the trump tax cuts to the wealthy americans, large corporations would add $3.5 trillion to the national deficit.

that's what the report indicated, correct? >> in total over time. >> $3.5 trillion. thank you. so, mr. chairman, i would ask man pows consent to enter into the -- unanimous consent to enter into the record the a may 2023 report that found extending the trump tax cuts would add $3.5 trillion to the deficit through 2033. >> without objection, so ordered. >> thank you. also under democratic leadership one of, for me anyway, one of the proudest achievements was capping the cost of since lin at $35 a month out of pocket -- insulin -- for our seniors. democrats and president biden got that done. and, unfortunately, republicans opposed that a legislation. under this new law, we also gave medicare the power to negotiate directly with big pharmaceutical companies to stop them from charging our seniors and others outrageous prices for the medications that they rely on. on february 1 the biden administration took the very important step in implementing this new program, sending

companies that make 10 of the most expensive drugs initial offer as to kick off the negotiating process. and i wonder, director swagel, if you might let us know how much drug price negotiation program established under the inflation reduction act would reduce our national deficit and save the american people over the next 10 years. >> our estimate was that the drug price negotiation you're focusing on would lower the deficit by just under $100 billion over the 10-year period, $98.5 billion of deficit reduction. >> okay. so just for the record -- i appreciate that -- the proposal to extend the trump tax cuts would add $3.5 trillion to the deficit, and the democrats and the biden administration approach to drug price negotiation would save $100 billion. have i got that right? >> yeah, i think you've got the numbers g. >> actually, you got it right,

because those are your numbers. [laugher] i appreciate it very much is. i yield back. >> i thank the gentleman from michigan. now yield 5 minutes to our friend from north carolina. >> thank you, mr. chairman. thanks, mr. swagel, for being with us again this afternoon. you testified just a few minutes ago that the cbo baseline had declined by i believe it was $2.3 trillion as a result of the fiscal responsibility act and the further continuing of appropriations of other expense tensions act. which of those acts accounted for how much of that reduction in the baseline spending? >> so in a sense, it's the sum of all those because that fiscal responsibility act put in place the caps, and then the continuing resolution implemented those caps other --

over, you know, over the extent, the subsequent period. and so that's why it's a combination of all those things together. 2.3 trillion, as you said, was the savings just from the fra and the -- [inaudible] >> so 2.3 trillion is not merely enough, but it seems like a pretty good start. i'm just curious when in america's history have we reversed that baseline by as a much as $2.3 trillion? >> you know, it's certainly not in my time as director. this is my fifth year. and that was why we highlighted it. it was, you know, a noteworthy improvement mt. fiscal trajectory. -- in the fiscal trajectory. i can't think of the last time. maybe -- yeah, you know, i just don't know. i'd have to go back and look. >> do you think there has been a time in american history when we've changed the baseline by that a significant of an amount in. >> the baseline would change with changes in the economy,

change, with changes in legislation. you know, cbo's had trouble predicting recessions, and so when a recession or a financial crisis hits, the baseline changes typically for the worse. so it could be that that's been the case, and i just, you know, i just don't know. >> one of the other things that really caught my attention many your report -- in your report really because of the political noise that i keep hearing about the economy is just booming, everything's going well, but when i look at the collection of personal -- individual income taxes, i see a sharp decline between 2022 and 2023, and you cite that the biggest part of that the is because of the decline in capital gains. i'm having a tough time reconciling a great economy and if such a reduction in individual income tax because of

capitallen gains. can you help -- capital gains. can you help me understand the truth on the two of those? >> i can. it is a challenge for us in projecting revenues because families get to decide when no -- to realize their capital gains and pay faxes on them. we can see the stock market going up and going down and know that affects capital gains, but but the -- between the realization and the revenues is indirect because it depends on family behavior. we had extraordinarily high capital gains in '22, and we took a look at them come down in '23. it looks like they came down i much more than we expected, and that's, you know, that's one of the challenges that we face in thinking about, well, what is our revenue projection for the future. >> do you see or how do you see the collection of income tax on capital gains being an indicator of the condition of the economy?

>> it's an indicator in part that changes in the equity market, you know, the very strong equity market we had in '21 coming out of the pandemic, you know, said something about people's expectations of the economy. but by far, it's not the only -- of the strength of the economy. but there is a relationship. >> thank you. mr. chair, i yield. >> thank you. >> thank the gentleman from north carolina. give 5 minutes to our friend from oklahoma, josh -- >> thank you, mr. chairman. >> no, i thought all my democratic colleagues adjust slipped on out the back door with all these very strong lines of questions that we're hearing, jimmy pa net that, our friend from california. i apologize, mr. bar with keen. i should give you as much time -- [laughter] but i will not do that in the interest of time. jimmy, take it away, my friend.

>> thank you, mr. chair. josh, or sorry about that. director swagel, good to see you again. coming back, as always.. i'm sure you'd like to see less of us, but we're glad you're always willing to testify before the budget committee given your intelligence and the cbo's very good work. obviously, the report on our debt and deficits i guess you would say is both troubling and informative at the same time. it really gives us a better understanding of the key drivers of debt and how it is predictable, it is predictable and predicted, excuse me, to grow in the near and long term. it also gives us some hope though that as a the deficit in fiscal year 2024 is decreasing went compared to fiscal year 2023. and so at this hearing we got an opportunity to at least examine the report, take a good look at what is working and what needs to be addressed. and we can ask what we can do to increase revenues with or would

want increasing taxes, and we can reduce spending with or without making cuts to programs. but i guess first and foremost, let me just kind of say it especially in light of some recent votes that this committee has taken, what are the odds that if we simply do nothing, do nothing, economic conditions might change to a degree that deficits start to close on their own? >> you know, stronger growth would help, but it's not plausible for us to have enough stronger growth to close the deficit. >> so we have to doing something. >> have to. >> and your projections for our social security trust funds are based on current law which, again, i would say is doing nothing. what are the odds that without any policy changes demographic shifts address, address our trust fund shortfalls? >> you know, again, better demographics would help, you

know, more workers relative to retirees, but the gap in the trust fund is so large that it's just not plausible that, you know, those changes by themselves would prevent the exhaustion of the trust fund. >> once again, manager needs to be done. >> something needs to be done, i agree. >> while prices are still high, our economy has been remarkable as noted by many people throughout the world, i would say. our economy has been remarkably resilient, and inflation is coming down i think which we can with all a agree on based on the numbers which could soon lead to interest, interest rate cuts as we're seeing. but what impact does strong economic growth have on our debt and receive -- deficit? >> so more growth, stronger job creation means more income and more revenue. and it also means lower outlays for something, the means-tested benefits, lower unemployment insurance payments and things like that. so stronger growth helps on both the outlays' side and the

revenue side. >> now, as we've seen, the unemployment rate is, has been, continues to be at a pretty much almost at record lows. and is if clearly -- clearly, it would help if we had people to fill those jobs. and i think that is where immigration comes in. why does increased immigration pretty much, how does that help in reducing our debt and deficit? >> so we have a surge in immigration from '22-2026 in our projection means a much larger labor force, and that means more workers, as you said, more income and then more revenue, and that contributes to a lower deficit. >> now, clearly, obviously, we want it legal, we want orderly immigration, but there's also policies that do that in regards to the h2a program or green card programs. would those help in regards to reducing deficit?

>> i mean, the details would matter, but in general a policy that increases the number of legal workers would tend to mean a stronger economy and lower taxes -- deficit. >> thank you, director swagel. i yield back. >> now yield to my friend from oklahoma, mr. josh burr keen, for 5 minutes. >> thank you, mr. chairman. thank you, director, for being here with us again. the debt at $34 trillion comparative to our gdp, i think our new numbers are $27.5 trillion, gross domestic product is all labor, services, cost associated with -- dollar figure associated with that. so we know we're at a historic high. we know our public debt puts us at 100 percent% -- 100% debt to gdp ratio. i think there's only 11 other countries that have the same level out of 195 different

countries. reagan once said we don't have deficits because people are taxed too little, we have deficits because people spend too much. throw some numbers out, and tell me if this is what you recall a n. 2017 we had a $3.a 5 trillion in revenue, and our spend, our outlays was $4.9 billion. does that sound correct? >> i don't have it in front of me, but that sounds about right. >> and then, fast forward a few years, get on the other side of the pandemic, we have $4.4 trillion in revenue and $6.trillion in -- 6.1 trillion in outlays. so if you look at that in a matter of, number of several years, the 3.5 trillion in revenue has jumped by a trillion in revenue, but our spending has jumped much surpassing that. if we would just maintain our level of spend, we would almost have been within $500 billion of a balanced budget. >> that's right. if outlays had not risen, as you said, the deficit would be much

lower. >> again, to reagan's point, we don't have deficits because we tax too little, we have deficits because we spend too much. now, parking lot of that's mandatory spending, i understand that. the autopilot locks in on the mandatory side. we have to revisit that. and i want to talk about something that is increasingly alarming. as much as your time here, this is so informative for our country to have it from somebody that is not partisan, you are tasked with being nonpartisan. again, you give the budget committee the best information. i want you to talk, i want you to highlight, we are finding ourselves -- you predict this year that our interest payments will match what we spend in defense of our country, about $800 billion to each. talk about how monumental of an intersection that is, please. >> these rising interest payments are a budgetary challenge and an economic challenge. and the comparison you make, i think, is a valid one. it's an important one, that we have to pay the interest and that that means policymakers,

you and your colleagues have to make difficult choices about how we spend money or how we raise more money. and that, that's the budget impact. the economic impact, higher interest payments mean higher deficits, and that poses economic challenges. it affects our growth, it affects our investment, affects job creation. >> i love you talked about a how it affects our growth. we're having to attract investment to take on our debt whereas otherwise it'd be going into the economy. these people that would look for an opportunity to invest in something that could increase our gdp, now it's going into a more attractive feature, government is looking at ways to have people finance our debt. there are studies out there that show once we get past -- some studies say 78% of our gdp, debt to gdp, that you have a lag on your economy, some say at 90%. whoever's right or wrong, we're at 100% now. peter peterson foundation says when we get to 2040, 40% of our

total cost, our total spend is going to be on the interest payments alone are. that's 25 years from now. how dangerous is that? >> that is, the problem we have now which is greatly magnified, the difficult choices between deficits -- interest spending and everything else and then the impact on the economy and job creation would be much greater. >> when these people use the term sovereign debt crisis with medicare insolvency hitting us within a number of years, three years, social security insolvency by 2033, do you think it'll take as long as 2050 when 40% of our revenue's devoted to interest payments for us to get into a sovereign debt crisis, or do you think it hits much, much sooner? >> it's a challenge that i can tell you the situation is unsustainable. i can't tell you when, you know, we'll cross the line and we'll have that crisis. don donna. but -- i don't know that. but i know at some point under

current law it will happen. >> mr. chairman, i yield. thank you. >> thank the gentleman from oklahoma. yield 5 minutes to my colleague from texas, ms. sheila jackson lee. >> thank you very much, mr. chairman. good to be looking at you from this location. [laughter] >> [inaudible] [laughter] >> i was eyeing it, but i dare not. good to have you back. and you will, as you sit, you are looking to your right, and there are my good friends, but you're looking to doom and gloom. as you look over in this direction, you're going to look to a degree of excitement. first straightforward question i want to ask is, is the economy of of the united states the strongest in the world? >> yes. the u.s. had strong growth last year. we project continued growth this year, and our growth is better than much of the rest of the world. >> so i'm going to put on the record that we were in enormous

panic about the inflation. we now can say that we do have falling inflation. would you say that is correct? >> that's right. and we expect inflation to continue to fall. >> what is amazing to me is the level of job creation. i do want to have you, since i'd like to be an honest broker in this, i think the job creation is stupendous, but you hear -- i should say every once in a while you hear this company or that company laying off 800, 1,000. what does that mean even with job creation being strong? >> no, it's -- at the same time, we had strong job creation, as you said, there's been a adjustment in some sectors. the tech sector has faced adjustment in particular. and that's consistent with a growing economy, is that some sectors will attract -- contract and other sectors will grow. >> i think that is very important because it can be taken out of context. oh, they're laying off people by the dozens or the hundreds.

what you're saying is that is a normal sort of economic influence as well as industries sometimes are in the in crowd and sometimes out. is that what you're saying to us in. >> i think that's a good way of putting it. one of the hallmarks of our economy is our flexibility and the ability of americans to grow and change with the circumstances. >> so if you had to, as my -- if you had to just say what our economic outlook is right now, what would you say it is? >> so is i think our economic projection is overall a positive one. we do expect the economy to slow a bit this year as the fed's interest rate hikes, you know, continue to bite into the economy. then we expect some recovery next year, but continued growth, continued low unemployment, continueed job creation. >> which is a amazing, because i would say maybe two years ago and then beyond we were

frighteningly in a panic about china. how would you compare china today to us? you remember those times. china, look what they're doing. we can't get ahead of them. where are we now in that comparison? what is china dealing with right now? >> i look at people around the world wanting to come to the u.s., no one's trying to emigrate to china, right? no one wants to go there. the challenges they face, social challenges, economic challenges, declining population, the lack of freedom, that's just, again, just a special thing about the united states is our economic vitality. >> and that's what we need to tout, that the economy is not just number, it is economic freedom, it is social justice freedom, it is potential to think that you have a future preponderance, you can grow -- a future, that you can grow, or you have an idea and you can make it into a conglomerate. is that a good point? >> no, i think that's right.

and that fuels innovation, it fuels job creation in our economy. >> so now i'm going to give more time to a question you have nod not had enough -- i'll say enough time between the time we're here and back, but help me understand the value in knowing about history. we're in african-american history month and black history month. give you a little bit more time to discuss the question and and value of understanding the economic engine that slavery was tragically used as and the importance of having a commission that would study slavery and develop the response to that economic engine of a population that did work, build institutions, built the cap capitol that we're in and we not know what that dollar figure is and how important it would with. i yield to you. >> okay. i'll just say quickly we haven't studied it, but i agree with you that the horrible things in the past including slavery play out

in today's economy in equality and justice in our society. and a commission could look at those connections. >> and finally, if we go into the housing market and say we want to help americans be house because we talk about the unhoused, is that a valuable area of investment for america? >> it is a key challenge facing us as a society, is the growth of our economy and our population against the lack of housing and affordability problems in the housing sector. >> we should look to invest in that, if we can. we should look to invest in housing and grow the housing market. >> no p i agree. it's a key challenge facing the nation. >> all right. i thank the gentleman. i yield. >> thank you. and i yield myself 5 minutes for questioning. we can look directly at each other here in this line as i sit in for chairman arrington.

my staff the as well as i'm sure everybody's staff here spends a lot of time developing these questions to understand more of the issue. so i'm the grandfather of 10, okay? this year we'll have our first two college graduates of the grandchildren. it goes down in the age of soon to be 15. so i understand, dr. swaling, from wikipedia -- of course, we know if it's on wikipedia, it must be true, right? but i wanted to verify it here for the record that you have three children? >> i do. i have three sons. >> okay. and what's their age a range? >> we have 26 -- about to turn 26, 22 and 20. >> okay. so let's assume for the sake of discussion here that this is not the hearing room, but it's the family dinner table which which for most children is painful because they're being interrogated by their parents and grandparents,? it's just the way it works, life

works in a good family. with all the a data that we have passed back and forth between members asking questions and you providing answer as -- answers, how would you explain at the family dinner table to your children, especially let's say maybe before they got to college, they were 17 or 18, but even today what's the problem that we are dealing with here? how would you explain that to your children? >> i would say there's a gap between what americans willing -- want to and are willing to pay and what we expect. .. most importantly, if there is no

change in what is happening here with the increasing that, what the dire nature of the outcomes is, is going to be for them. can you give me as a grandpa anybody else or as a parent some phrases that we can help the next generations understand in their terms what we're dealing with here, just tearing them right? >> the deficits we are running, the debt we are accumulating will undercut -- >> give them an example, give me an example that they can understand. i hear what you're saying that can you give an example if you spend more than you make, you run out of money if your family or an individual, right? and if you have debts already incurred, i mean, is it any examples we can use to help educate the next generations, a dire nature of where we are?

>> it limits your choices if you have the resources. it affect your future in a way that -- >> do you think they understand? >> i think it would understand we have to make choices. >> will they take action? >> that is a challenge. >> how do you put them in a position where they feel that if they are not in a position to take action at that point? because they're not legislative role or some kind of a leadership role or a pointed role, whatever. how do you build the confidence in them that those people that are currently in those roles are doing the right thing for the right reason? >> you know, connecting these future choices -- >> how about action today? >> that's a a challenge. education will help, that's for sure. >> so when reality sets in, how will history, what will it right

on your, you know, epitaph if you will, or my epitaph? do you think it will say, well, they didn't take action when they had the opportunity? or, they give it the best shot that they could at the time and the results are what the results will be because good people didn't quit and they stayed focused on the issue at hand? we are here to talk about debt. we have talked about a lot of things in this hearing. very few of them have been really focused on next steps and way ahead on the part of all of us in this room to include the folks, you know, at cbo. that's the mutual challenge we all have. so i would ask all of us, especially, you do an outstanding job of explaining the issue, but with a

22-year-old here? with that i yield back. >> i recognize the gentlewoman from minnesota five minutes. >> thank you for joining us again, , director. i know you didn't come prepared to give parental advice but that was interesting to watch. this outlook looks better than expected, even compared to the pre-pandemic outlooks. job growth is strong, the economy continues to grow. it is clear that policies and investments centered on working families help support a resilient and dynamic economy. supply-side reforms like housing tilghman and child care can help strengthen our labor force, increase economic, and grow our physical capacity. for example, the cbo outlook

projects that net immigration flow will add $7 trillion to the the economy over the next decade. director swagel, can you explain how comprehensive immigration reform will keep improving our labor force and economic velvet? >> yes. as you said, immigration would add to our economy. our labor force would be hard. that means her income will be higher. our output will be higher in that interval generate additional tax revenue. that's the we have under the immigration we project so far, but could further those changes. >> wonderful. childcare is a really good example of a policy that invest in our future and can have long-term positive impact for households and the greater economy. our education labor committee passed important chapter provisions as part of the build back better plan, lowering the

cost of films and increasing the supply of stable, high quality childcare should help improve labor force participation especially from others while still guaranteeing livable wages for childcare workers. does your 2020 analysis of the democratic proposal policy for childcare support these findings? >> yes. at the time of the build back better legislation we look at those proposals and supporting childcare would increase the labor force participation. parents, especially mothers, which would mean more people in the workforce and for those individuals who want to come back to work with me higher earnings for them in the future as well. >> can you expand a little bit more in detail on the impact on long-term employment and earnings when high-quality childcare -- >> i can pick since that's connecting the policy today to

improve earnings trajectory. some of who goes back to the workforce gains experience,, gains the skills, the earnings rise and incomes rise into the future. >> and last used outlook the cbo projected revenues to amount around 18% gdp in 2023. but in this outlook you are projecting revenues will amount to 17.5% of gdp in 2024, even though this time around it seems like there are even stronger economic conditions in the assumption. could you explain this gap, specifically what variables are you saying that lead to the slightly lower revenue level? >> okay. in the sense that spoke a numerator and denominator are changing, both the revenue is changing and gdp, the denominator is changing. so we see a larger economy which

means that a given number of dollars of revenue will be a smaller fraction and that comes even though we do have revenues come in with a strong economy, and a share of the economy, the numbers, our projection for smaller this year. >> thanks. finally, can you account for, obviously we have this massive job creation, low employment, inflation is down but it seems, and you probably heard from some of my colleagues that people are still saying our economy is bad. what do you account for that? >> it's a good question. i'm not a sociologist or psychologist. we that's over years, several challenging years. the economy is coming out a bit but, of course, many families

incomes are still affected by the difficult times in the past and the high inflation that we had, even though inflation has come down the price level is still high. all these factors -- [inaudible] >> thank you. i yield back. >> thank you. the gentleman from george is recognized for fibrous. >> trouble. let's start off with this because i just want to follow with my colleagues question here about inflation. what was inflation at the time that this president took office? do you know? >> inflation speedy what was the inflation rate? >> in early 21 was below the fed's target of 2%. >> wasn't 1.4%, right? and what isn't out? >> so now the latest figures where that -- >> what is it now? >> it is above about 3%. >> so it's gone down? inflation has risen since 2020 w per okay. just want to make sure we get that straight. when he took office it was 1.4%. now with.

now it's well over 3%, okay. thank you mistress margo for being here, director, and i appreciate it. -- mr. suozzi. want to talk but two things are today. one is the calls of unilateral executive orders and other is the interest under debt. let's start with the unilateral executive actions. the economic impact of executive decisions made by the president, we know that this president has declared war on prosperity and opportunity. we know that they won one he declared war on fossil fuels and just destroying american, american energy. with that goal. we should have, and we should have an entire hearing on just that, but we don't have that opportunity. but you know, two things. first of all, this president, he's talked about forgiving and tried and attended to forgive or i shouldn't say forget because

my colleague mr. good pointed out earlier, transferring debt, student debt to other taxpayers, not forgetting it by transferring it to other taxpayers. in weakening work requirements for governor programs and crippling our energy sector as i mentioned before, but recently he's also proposed a ban on lng which does two things. first of all the economic impact that it has on this country, and then the environmental impact worldwide that it has. both of those are tragic. let me ask you, when you do, do you, doesn't cbo, to the the account for executive actions in your baseline estimate when you do your figures? >> yes, sir. we word. as an example the export ban you mention on natural gas, that came after our projections were set. in our next update in the spring we will look at that and say

what effect does it have it any on the budget. >> okay. you anticipate being a positive or negative impact? >> i would expect to be lower investment in natural gas, and that seems like you'd have a negative effect on speed is absolutely i would agree. i appreciate that very much. let me come so basically that's my next question. whenever we have these types of decisions, does decrease economic activity resulting from executive actions impact our debt? >> it does because stronger growth mean more job creation, more revenue, lower deficits and improve our debt trajectory. >> is a better or worse for future to be energy independent and to treat our resources with the rest of the world, in your opinion? >> you know, the u.s. spent economically speaking. you're an economist that's why i'm asking you.

>> the energy in u.s. has been a tremendous positive for our economy. it's a competent situation but that's the picture is a huge positive for our security and our a cottage. >> okay. let ask you this and i have it written down to ask by step and a going to ask you because you're the expert. where it is interest on our debt rate now as far as first line items? is it forth, third? what is it? >> you know, it depends on how you tally it. i will tell you right now our projection for the series 870 billion, which is more than defense, the defense is 822 billion. a little bit less than nondefense which is 917 in discretionary. that gives you an indication, interest is like about the same as we're paying for defense discretion -- >> if were talking my socials could is first. what would be second, medicare? >> yes.

social security is this your we projecting 1.4 $5 trillion. >> what would be second? >> medicare is just under $900 trillion in medicaid and chip and others would be at the. >> okay. but and talk about individually. some medicare by itself is 900 -- >> just under 900. >> entertainer that is third. >> that's right. >> it won't be long before the interest on our debt will surpass medicare. >> it, in 25 that would be correct. >> so in 25 the interest on our debt will be the second-highest blind item in our budget? >> that threat. in 25 we have 951 billion of interest is our projection and medicare is 940 billion. >> wow. wow. wow. okay. thank you. i appreciate you being here today. >> the gentleman from wisconsin

is recognized. >> thank you. a couple of comments. the chairman of the federal reserve powell commented recently on the state of the economy. he stated that could you comment on his remarks, will have any effect on future proposal from president biden as far as the amount we spent? >> i'm sorry, , i speedy will te comments of chairman powell have any effect on anything on the to have budgets being proposed by president biden in the future? >> i mean, it seems like the biggest thing out of fiscal policy. it just doesn't seem like that can be an expert isn't there some kind of cautionary statements made by chairman powell? >> i mean, he talked and his last risk of it but the unsustainability speeds unsustainable. i wouldn't say that's a judgment call. and what you take out of him

saying our current path is unsustainable? >> i mean, i think that message matches ours that action needs to be taken to avoid the problems arising from fiscal crisis. >> right. and does go crisis is caused by deficit, it's progress that threat. deficit and mounting debt, that's right. >> okay. so you anticipate spending less on mandatory discretion spending because of his comments or concerns that you share with him? >> i mean, you know, like i said, the fed, the fed is really staying out of fiscal policy. >> well, i don't know if that's the way to look at it. we have a lot of people come here right now and high cost of housing is destroying the middle class for the next generation of us something is done. i think we had at least 370,000 people come into this country in december. when i talked to my local

landlords or developers, , evens far away as wisconsin, they see a growing number of apartments to lick up with people who are sometimes should be viewed as illegals. do you feel, you want to stick your nose in the housing market in response to pass questions. what effect do you think having this huge number of person come into the country, so what you think will have on the cost of housing, availability of apartments? >> no, it's, it is, it's death in the back. i just did increased immigration means increase in the demand for housing. initially the new immigrants tend to live with family and friends. >> yes, there are examples of people with eight people in an apartment or something but still, 370,000 people, new people show up in a month, that's indication to the people come here in illegal pathway

creates a housing shortage, right? i mean that's what my landlords potomac. >> overtime to increase will lead to higher prices and higher rent. >> higher prices and higher rates, that's exactly right. does that concern you? do think in any case you might want to prevent all these people come across a border to prevent housing going outside the abilities of our young people? >> it's a challenge for families. >> it's a challenge, that's what it is, it's a challenge for you if you want to start out and raise a family, right? it's a challenge when speedy that's right. >> you know how much housing has gone up percentagewise both housing and rents? >> i don't know but right now it's a key driver of our continued inflation. >> right it is a key driver, that's true, it is true. as far as, you mentioned that some people, some corporations don't pay taxes.

there's been an increase use of tax credits to do what i think historically is done by spending money. i think of the green tax credits. credits. think of the low income tax credits which i think benefit primarily, oh, property developers, maybe a little bit benefits people with low incomes as well. do you think you may be amenable to getting rid of some this tax credits and some of these big corporations can begin to pay a little bit more? >> it's a key challenge for tax policy is the complexity of the code, and the incentives that gives rise to. i can't recommend policy or not but i acknowledge how i would say speedy you a don't when of the reasons people don't pay taxes is we've generous tax credits. >> that's right.

>> i want to get them one more question before i hang up. what of the complaints i get from lawyers, and, of course, we are always looking for more people to work is that currently it seems to be we pay people not to work, okay? you can't work hard to come he luger socials could come. you can't lose harder, you can't work hard mushy lose your health care benefit. do you feel all these programs conditioned upon not working toward an at all condition to degree of working less, you think that does have a little bit of a drag on the american economy -- [inaudible] >> there are incentive effects of speed is overwhelming. there are a lot of incidents in our society to not work or at least not work george? >> it affects is excelld the next economy. >> we can work on that. okay, thank you. >> thank you mr. roy, you are ready to survive in. >> thank you jimmy the greek of the directory again. a couple times in a couple

weeks. can i just did you to enter a handful of questions here so i can clarify for the record from my standpoint? cbo in fact, estimates legislator action taken in this compass name of the fiscal responsibly act and crs will continue resolution will decrease spending compared to the may 2023 baseline about 2.6 trillion over a decade, correct? >> that is correct. >> one cbo accounts for of the factors like economic and technical changes with true decrease over the next decade that's out to about 1.4 train doors, great? >> great? >> that's right. >> cbo rejects the federal debt subject to the limit will increase from 33 trillion at the end of fiscal year 2023 to 36.8 trillion in fiscal year 2025, a $3.8 trillion increase in two years, is that correct? >> that's right. i don't have that infamy but the debt will go just -- >> fairly static increase in. what to make sure that is level

set. this video also asked was discretion spin will total 1.73 4 trillion in fiscal year '24, about 144 ilya and more than a $1.59 trillion cap set by the fra, is that correct? >> yes, that's right. >> okay. i want to repeat for all those after listening that when we have the fra, the caps that are put in place, when people say 1.5 9 trillion, that the discretion the discretion spending will total 1.734 trillion in fiscal year 2024 icbs estimates. >> that's right. and partners alleys it happens issue as result of that. >> correct. just somebody understands the numbers that that's the realities. that's because it's been the constrained by the caps doesn't truly reflect total discretion of my skinny can you come right? >> right. >> it's fair to say the widely reported $69 billion in so-called side deals under the fra contribute in part not in fault because as a defense appropriations another piece of

that and other factors, to pushing that true discretion spinella of the on the statutory caps, is that correct? >> let me just say, it would but just of course the current projection don't have any future legislation. so any future legislation that influence, you call them side deals, that's not in here. >> right but asphyxiation $9 billion in water being widely reported inside is in terms of taking money from other accounts and putting them in and then spending them, that would, in fact, would not be truly reflective of the caps come right. >> was right. on top of the number. >> okay. if congress were to strictly entered to the caps in the fra with that using the rescissions come side deals, budget gimmicks which are all the terms, to allow for spending beyond those caps, that would result in lower deficit projection, correct? >> that's correct. >> if congress were to pass before you continue resolution under the fra at the level of roughly $1.564 trillion with the

proper wording, that would drive the deficit down even further, correct? >> that's right. >> cbo estimates discretion outlays totaled 1.7 22 trillion in fiscal year 23, about 12 the and blessed 12 the blessed in what cbo rejects for cisco 2024. is it fair to say even after the passage of the fra cbo estimates discretion outlays will increase year over year from fiscal year 23 to fiscal year '24? >> that's what come in nominal terms yes. >> is a quick cbo estimates interest on the tesla will account for about 15% of total federal spending over the next decade? >> that's right. >> when the cbo project interest payments will eclipse defense spending? >> so it's, well, this year. >> 2024, now, right? [inaudible] >> interest payments on the debt will total $1 trillion in fiscal year 2026? >> that's right. >> so that's what we are facing as the country. now i'd like to at least point

out with respect to the conversation by my colleague from texas regarding the economy, was being kind of framed in all these kind of rosy scenarios. we just saw inflation report of 3.1% yesterday, right, which was higher than had been at least projected or hoped for. >> that's right. inflation came in a little hotter than people expected. >> in your own estimates, right, in calendar year 23 the economy to grow faster than 22 but as you guys are projecting your projected slow in 2024 commit increased unemployment and low inflation come is a great? >> that's right. >> so it's not all necessary i would just posit for the record you don't need respond, all roses. we've got issues to do with, inflation that's piling up on american families and when his projections of the cbo has the light of some of those reports about the slope of the economy as a possibility of interest rates cuts, what will that mean with respect to inflation? is a a couple exoplanets were offered in right now and read to

be mindful about our policy for contempt to spend money we don't have, inflation will continue to get worse. i yield back. >> judgment from virginia is recognized. >> thank you, mr. chairman. thank you, director. cbo's 2020 basement has been released and it tells a familiar story we all know to alter our nation is at a later national debt stint of record at $34.2 trillion and expected to grow by more than 20 trillion by 2034, just ten years away years away. reference our national debt has surpassed the debt to gdp levels we were expecting to the height of world war ii. interesting was a little expected to become our nation's second heist expenditure the ship and a projected anti-defense budget and medicare spending. additional resources could trust fund is expected to reach insolvency in 2033 would result in a 25% benefit cut across the board for beneficiaries. of course there's the added insult to injury of being taxed in our districts i can sit you to look at all the money being

withheld under w-2s and wondering why they are not seeing greater benefit to them. all of this goes to show how important it is congress stops the weight indicator properly stored tax payer dollars by balancing a budget and avoiding bloat on of his spending bills. in order to get their the congressional budget plays an integral role in tracking the progress with the lack thereof through its forecasting on long-term budget outlooks and scoring legislation to determine fiscal impact. welcome back to your second hearing in iraq to discuss your will further. director, cbo increase their projected labor for site in 2020 by i .1 million people. this is significant increase in your report the terms are projected net emigration. can you elaborate on your methodology calculating immigrant population and do you differentiate between legal and illegal immigrants. >> yeah, so we do. we look at the categories of immigrants.

we look at the figures from the department of homeland security and the customs and border patrol at the immigrant to come in with permits and green cards, and then ones who come in on parole, using the parole authority, and once they call the gotaways, the ones the estimate came in but they don't track. that's reflected in our figures. the increase in number of people released into the interior of the trend. >> we know this administration and director mayorkas specific as abuse our parole statutes and has been impeached by the sounds and is awaiting trial in the senate. based on reports of cbp and secretary mayorkas confirming dhs is releasing nearly 85% of individuals encountered there are over approximate 5.4 million additional migrants in the labor force now. the cbo account for the comments made by the secretary as he is releasing 85% 85% of migrans throughout the country? what negative effects on the

economy do you think that any norms influx of illegal migrants can cause? i understand mcauley from california reference that earlier. >> we do take that into account. a number they are releasing into enter your. and then we look at the budget and economic effect of this immigrant unless at the beginning, i will say it again. there are social impacts, security impacts, impacts the state and local governments. we're focused on the federal impacts but i'll be the first one to say there on the broader impacts. impacts of housing market that mr. grothman mentioned as well. there's a wide range of speedy and pox on housing, pressure on wages as mr. mcclintock alluded to as well. are you accounting for the benefit of its that illegal migrants are missing from entitlement programs? >> some of those we do have in our budget projection, the increased population, you know, means some people are entitled

to some refundable tax credits and that we would have other benefits, some of the spending discretionary in that, that would be virtue future congress. the benefit come immigrants will be entitled to overtime and we are still working to analyze all of speedy some of it is beyond the control of congress right now in my home commonwealth of virginia there debating whether or not to allow illegally present children to access state-run medicaid, and that will have an impact on our budget here federally, correct? >> that's right. the state and local impacts that affect the federal come ezell. >> other data sets are information sharing agreement you currently do not have access to at the state or federal level you believe would help give cbo a deeper insight into the cost of illegal immigration? >> you know, the data are difficult because they are piecemeal. we've been able to get the data

we need from dhs. much of it now they have made public. so it's not that we can't get it, it's just putting it all together and understanding. that's the child. >> thank you, mr. chairman. i yield back. >> -- that's the challenge. >> without objection, i would like to limit for the record an article by the "wall street journal" editorial board titled cbo shows the u.s. is paddling towards the fiscal falls. this article reiterates the growing debt crisis our nation faces. so ordered. well, thank you, dr. swagel. director swagel, for appearing before us today. please be advised that members may submit written questions to be answered later. those questions and your answers will be made part of the formal hearing record. any members who wish to submit questions or any extraneous

material for the record may do so within seven days. with that, the committee stands adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]