Price Opening Statement: The Need for Fiscal Goals

As Prepared for Delivery

The focus of today’s hearing is on the need for Congress to establish fiscal goals to drive discipline and accountability in the budgeting process. In short, it is about building consensus. Policymakers and the public at large need to reach consensus on a standard or set of standards against which we will measure our level of fiscal responsibility. Without such consensus, we lack a sound foundation upon which to build an effective budget process. We will be destined to budgeting through trial and error – a particularly daunting prospect for a nation $19 trillion in debt with an annual operating budget of nearly $4 trillion.

From the beginning of this effort to reform the Congressional budget process, I’ve tried to stress that this should be a bipartisan project. We all have a vested interest in a well-functioning budget process. Establishing and codifying a set of fiscal goals should help there be bipartisan success in this endeavor. After all, if we can agree on where we aim to go from a fiscal perspective, we already have something in common – even if there are real and meaningful disagreements about how we get there.

For most of our nation’s early history, balancing the budget in peacetime was the consensus, the norm. It was a common sense position that you do not spend more than you take in. In fact, during our country’s first 100 years, the budget was balanced 70 percent of the time and most deficits were short-lived during wars. Since World War II, the budget has been balanced only 15 percent of the years. $19 trillion in debt is clear evidence that this standard is one the country has too often failed to follow. In the absence of adherence to a balanced budget, however, there has yet to emerge a benchmark that achieves a consensus among policymakers and the public.

Today’s hearing will examine whether we should seek to re-establish a simple balanced budget standard, modify that standard to reflect different budgeting priorities, or choose a different fiscal goal altogether. There are a variety of potential fiscal goals that could be under consideration – including a balanced budget that would ensure the annual operating expenditures of the federal government do not exceed revenues while still allowing for borrowing to fund capital investments.

Other ideas include determining what is a sustainable level of debt as it relates to the economy and the country’s ability to service that debt while maintaining flexibility to respond to the unforeseen; limits on the growth in spending to a level less than or certainly no faster than the growth in the economy; caps on discretionary and/or automatic spending; or some other goal that can secure the support and the trust of the American people.

Whatever benchmark the country adopts, the integrity of the standard will require defining the terms and enforcing the goals – remaining vigilant against attempts to re-classify spending in order to go over, under, and around enforcement mechanisms. In a dynamic, dangerous and complex world, there will naturally be exceptions made. But exceptions – by definition – must not become routine.

We establish goals in order to build and maintain consensus which is essential to effective governing and accountability. Goals also keep our eyes trained on the long-term challenges and consequences of policymaking. Short-sighted decision-making is far too common in this town. We need fiscal goals that will inform a budget process that – however we go about achieving those goals – puts the country on a sustainable path.

Our fiscal goals should serve a purpose beyond an accounting exercise. They should be supportive of a healthy economy and fair to current and future generations of taxpayers. They should also aid in promoting certainty – for policymakers, taxpayers, business, individuals and families.

To help illuminate and inform this discussion, we have with us today Douglas Holtz-Eakin, President of the American Action Forum; Maya MacGuineas, President of the Committee for a Responsible Federal Budget; and Harry Stein, Director of Fiscal Policy at the Center for American Progress.

Thank you all for being here. You bring a wealth of knowledge about these issues, and we look forward to your testimony and discussion to follow.

And with that, I yield to the acting Ranking Member, Mr. Yarmuth.