Chairman Yarmuth’s Opening Statement at Hearing on CBO Baseline
WASHINGTON, D.C. – Today, Kentucky Congressman John Yarmuth, Chair of the House Budget Committee, gave the following opening statement at the committee’s virtual hearing on the Congressional Budget Office’s (CBO) Budget and Economic Outlook. CBO Director Phillip Swagel testified at the hearing. Remarks as prepared and video are below:
Good morning. I want to thank Dr. Phillip Swagel, Director of the Congressional Budget Office, for appearing before our committee today to testify on CBO’s newly-released Budget and Economic Outlook — also known as the CBO “baseline.”
Dr. Swagel, your agency is an indispensable partner to Congress — and to the House Budget Committee in particular — and I want to thank all your dedicated staff for their hard work in putting out this report.
We are holding this committee hearing a little later in the year than usual since Congress did not complete the Fiscal Year 2022 appropriations bills until March, and CBO needed those final funding levels to finish the outlook. But today’s hearing is still a great opportunity for us to examine CBO’s new projections for the next decade as Congress begins the FY 2023 budget and appropriations process.
When comparing CBO’s new outlook with the one published shortly after President Biden took office, one thing is abundantly clear: the American Rescue Plan delivered critical lifesaving and life-changing relief that changed the course of the pandemic, rescued our economy, and helped American families and small businesses stay afloat.
The American Rescue Plan helped power a historic recovery — the most equitable in recent memory — and contributed to the largest job growth ever in a calendar year. The percentage of people receiving unemployment insurance has now fallen below 1 percent for the first time in more than 50 years. The unemployment rate is currently down to 3.6 percent — a level that, prior to the Rescue Plan, CBO projected we would not reach during the entire decade. Now, CBO is projecting that the unemployment rate will drop even further in 2023 — to 3.5 percent — the lowest rate our country has seen in nearly seventy years.
Small businesses — which account for nearly half of all American jobs — are booming. Americans submitted 5.4 million applications for new businesses in 2021, the most in recorded history, and small businesses are creating more jobs than ever before.
The Rescue Plan nearly doubled our GDP growth in 2021. As a result, the U.S. was the first major advanced economy in the world to come back above pre-pandemic levels of GDP. Faster economic growth has boosted hiring and wages, and powered record deficit reduction. CBO projects we’re on track to see the deficit shrink by $1.7 trillion — from $2.8 trillion in 2021 to $1 trillion this year.
All of these indicators are evidence of the same truth: our economy is far outpacing what CBO projected without the Rescue Plan. The Rescue Plan laid the foundation for America’s unprecedented recovery and economic resilience, and we are in a far better place because of it.
We have made incredible progress, but inflation is our new challenge. I will reiterate what economic experts across the ideological spectrum have said over and over — international supply chain bottlenecks and higher energy costs due to Russia’s war in Ukraine are the primary drivers of current inflation.
These are global problems, which is why inflation is a global issue. In fact, inflation in the UK hit a 40-year high last week. The 38 member countries of OECD are averaging an inflation rate of more than 9 percent. Clearly, this inflation is not unique to the United States, but the American Rescue Plan is.
Because we enacted this legislation, American families, state and local governments, and our national economy are facing this new challenge from a position of economic strength. But additional action is needed to protect Americans from rising costs and keep our economy strong.
The Federal Reserve is best positioned to tackle immediate inflation concerns, and Congress can — and must — do everything it can to lower costs for American families overall. The costs of health care, housing, education, child care — the basic needs of American families — have been rising for decades. That’s why House Democrats have passed legislation to lower prescription drug prices, expand the supply of affordable housing, cut childcare costs, expand access to higher education, and ensure that big corporations cannot take advantage of American consumers with excessive price hikes.
These actions would lower families’ monthly costs substantially, and I look forward to discussing this today with Director Swagel.
This is an important hearing and an important time for the future of our nation. I hope that today we can focus on the facts and on solutions that will deliver relief to American families and build a stronger, more equitable, and more resilient economy. Director Swagel, thank you again for appearing before our committee today, and I look forward to your testimony.
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