Washington, D.C.— Kentucky Congressman John Yarmuth, Chairman of the House Budget Committee, gave the following opening statement at today’s hearing examining policy options to improve economic resiliency and strengthen our fiscal toolkit for fighting future recessions. Remarks as prepared are below:
Over the last ten years, our nation has experienced the longest uninterrupted period of economic expansion in U.S. history. However, we can’t afford to take it for granted. We know that business cycles are real, and eventually periods of economic expansion come to an end. Of course, no one hopes for a downturn, and no one can know when one will hit, how long it will last, or which sectors or families will be impacted the most. As Members of Congress, it is a responsibility of ours to make sure the federal government is ready to respond to a crisis before we are in one.
Today, our expert witnesses will discuss policies that we can implement now, to ensure a more secure future for our nation and our families tomorrow.
As we all know, recessions damage our nation’s fiscal health, put stress on local and state budgets, and, most importantly, are also costly and painful for American families.
When the Great Recession hit, Americans across the country – regardless of background, education, career, or state of residence – felt its effects. Many families faced bankruptcies. Others were forced to make tough choices as they watched their savings shrink, their debt grow, and their opportunities diminish. In 2009, Congress passed the American Recovery and Reinvestment Act, increasing government investment, cutting taxes for working families and small businesses, and preventing bigger unemployment spikes.
While the Recovery Act was critical, we could have and should have done more to prevent families from being left behind. The impact of the Great Recession is still being felt in communities across our country: the bottom 50 percent of households have only just now, more than a decade later, recovered the wealth they had in 2007. Millennials – many of whom graduated college only to enter into the worst job market in a generation – have been saddled with high student loan debt, lower earnings and less wealth than generations before them, and increased barriers to economic opportunity. We see the legacy of the Great Recession in rising economic inequality and families still struggling to regain their footing.
The American people expect and deserve a government that can utilize every tool needed to stabilize our economy and soften the impact of recessions on our families. Our current automatic stabilizers – revenues that fall and spending that grows when the economy falters – are vital. They provide timely and targeted support during economic downturns and turn on and off as needed. When the economy is weak, working families rely even more on programs like Medicaid, SNAP, and Unemployment Insurance to help them meet their basic human needs. At the same time, payroll taxes and income tax withholding adjust to reflect what families are earning. And they are temporary: when the economy gains strength, fewer people rely on these programs, so spending falls.
But the automatic stabilizers in current law can only do so much. Waiting for Congress to act to provide additional help in a time of crisis slows down response time, making it harder to target relief when and where it is needed most. It is time for us to consider new approaches. This is particularly important because while the next economic downturn – whenever it comes – may not be as severe as the Great Recession, it may be more challenging to overcome. Interest rates today are significantly lower than they were before the last downturn, so we won’t be able to rely on the Federal Reserve to play as large a role.
While the world is moving at 100 miles per hour, Congress, at its optimum efficiency, moves at about 10 miles per hour. That is why it is crucial that we start the process of strengthening these programs now, before we hit a downturn. Families and communities should receive the support they need when they need it, not months later after the damage is done.
Unfortunately, the Trump Administration is pursuing policies that will put more families in jeopardy when we face the next economic downturn. Changes to critical programs such as implementing untested work requirements, making it harder to access SNAP benefits, and proposing changes to how the federal government measures poverty in a way that could cut or eliminate vital assistance for millions in need will make programs less responsive to a slowing economy. If we want to minimize the damage caused by recessions, Congress must focus on strengthening the key programs families will rely on most.
While we can’t predict when or if a recession might hit or how severe its impacts will be, it is our responsibility to ensure our government has all the tools it needs to respond when necessary. We cannot afford to leave our nation – and our families – unprotected. I look forward to hearing testimony from our witnesses on what Congress can do to best secure our fiscal future.
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