The Congressional Budget Office’s Long-Term Budget Outlook
Chairman Paul Ryan - Opening Remarks as Prepared for Delivery
Welcome all, to this important hearing. The purpose of today’s hearing is to discuss what can be done to avoid a debt-fueled economic collapse in this country.
Our witness today is Doug Elmendorf, director of the Congressional Budget Office. I thank you Doug for your professionalism and hard work at the CBO, and for appearing before this committee today.
Yesterday, the CBO released its Long-Term Budget Outlook. This report throws harsh light on the challenges we face, and sounds an alarm that too many in Washington have been ignoring for far too long.
The federal government will race across a dangerous tipping point this year: According to the CBO, total U.S. debt will reach 100 percent of GDP. Our debt will have eclipsed the size of our entire economy.
Economists who have studied sovereign debt tell us that letting total debt rise above 90 percent of GDP creates a drag on economic growth and intensifies the risk of a debt-fueled economic crisis.
The CBO is candid about the increasing likelihood of this crisis, and the report states: “Such a crisis would confront policymakers with extremely difficult choices and probably have a very significant negative impact on the country.”
This quote demonstrates the CBO’s flair for understatement. A sudden fiscal crisis would be a complete catastrophe for this country. Families and businesses would bear the full brunt of the painful consequences.
If the nation ultimately experienced a panicked run on its debt, policymakers would be forced to make immediate and painful fiscal adjustments, like the austerity program that has provoked riots in Greece. This would mean massive tax increases on working families and steep benefit cuts that hit our most vulnerable citizens the hardest.
The CBO is a non-partisan agency, so it does not take a position on what will be required to prevent this crisis.
But we can draw our own conclusions from the evidence in this report.
For one thing, this report makes clear that exploding government spending, not insufficient tax revenue, is driving us toward this crisis point.
If we simply keep revenues at their historical average as a share of GDP, then government spending – driven by an aging population and rapidly rising health care costs – will cause federal debt to grow to unsustainable levels.
Yet again, CBO makes clear that Medicare and government health care programs are driving the debt – and driving these programs themselves into bankruptcy. Attacking solutions to save these programs threatens both the health security and economic security of the American people.
If we try to chase ever-higher spending with ever-higher taxes, the CBO is clear about the consequences: It estimates that GNP would be 2 percent lower in 2035 than it would be otherwise.
That number represents hundreds of billions of dollars in lost income for American families and businesses, on top of the much higher taxes they would all have to pay.
The House of Representatives has passed a budget, The Path to Prosperity, which answers the CBO’s warning and averts the crisis before us. The House-passed budget tackles the explosive growth of spending, saves critical programs such as Medicare, and puts our budget on a path to balance – without resorting to job-destroying tax hikes.
Meanwhile, the President still hasn’t put forward a credible budget, and it has been 785 days since the Senate passed any budget at all.
We have a leadership deficit in Washington, and our window for solutions is closing quickly.
Instead of tuning out CBO and others who are working to inform us of the danger, let’s work together now, before it’s too late, to put America’s budget on a sustainable path, grow the economy, and leave the next generation with a better country than the one we inherited.
Thank you, and with that, I yield to the Ranking Member, Mr. Van Hollen.