Washington, D.C. – Kentucky Congressman John Yarmuth, Chairman of the House Budget Committee, gave the following opening statement at today’s hearing on the Congressional Budget Office’s (CBO’s) updated budget and economic outlook. Remarks as prepared are below:
Welcome Director Hall. Thank you for joining us today, and for all of the work you and everyone at CBO has done to update the baseline and economic outlook that will help guide our work this year.
Since today was supposed to be the original day of the president’s State of the Union address, let’s start by acknowledging what should be obvious. The State of our Union is unsustainable. Deficit projections over the next decade are unrivaled by any time in our nation’s history save for World War II and the immediate aftermath of the Great Recession. Only this time, we weren’t responding to an emergency, we created one. We’re not in this situation because we were forced to make a tough choice to save the American people, no. We’re facing this bleak fiscal reality because this president and the so-called fiscal conservatives in his party chose to squander our nation’s wealth and solvency, to exacerbate record income inequality, to take resources from those in need so they could bolster the already wealthy with reckless tax cuts for millionaires and multinational corporations.
Director Hall, you project a deficit this year that is $118 billion higher than last year. Average deficits over the next decade are projected to rise. The national debt is expected to reach 93 percent of GDP by 2029, before rising to an unprecedented 150 percent of GDP in 2049.
This is despite the fact that the economy is undergoing the second-longest expansion on record – 114 months of economic growth since 2009. Beginning under President Obama, we have had 99 months of uninterrupted job creation, with unemployment falling to historic lows. But despite all this good news, our fiscal future is getting darker, not brighter – and the reason is clear.
Just over a year ago, Congress passed a tax bill that showered the bulk of its benefits on corporations and the wealthy. My Republican colleagues didn’t mind that our economy was healthy, and the wealthy were doing just fine. They promised these tax cuts would trickle down to everyone else, unleashing miraculous economic growth and long-overdue raises for workers. Even better: we would get all of this for free.
The reality. A burst of welcome – but very brief – economic growth. Followed by greater income inequality, and exploding deficits.
This outcome was not a surprise. Republicans have cut taxes and sent deficits soaring time and time again. But this time around, they hit a new record. Corporations took the tax cuts handed to them and bought back more than $1 trillion worth of their own stock. Not a trillion dollars worth of worker bonuses, or a trillion dollars for raises when wages that have been stagnant for decades. Not even a trillion dollars of new investment to expand business operations.
In last year’s report, CBO put the cost of the tax law at $1.9 trillion over 10 years – even after accounting for macroeconomic effects. Those numbers indicated that had we not passed it, the deficit outlook would have improved considerably. And the economy would likely be stronger. In fact, your report confirmed that the tax cuts will reduce our economic growth rates by the end of the decade. This new forecast further confirms that inescapable reality.
And we know how this story continues. My friends on the other side of the aisle will point to Social Security, Medicare, and Medicaid as the culprits of the deficit. They will call for deep cuts to these and other vital programs in order to reduce the deficit they exploded. They will call for a balanced budget and ignore the role their tax cuts played in damaging the fiscal outlook.
Make no mistake: As this, and previous, CBO reports have warned, we face serious fiscal challenges going forward. From caring for an aging population to mitigating the financial costs of a warming climate, to making the investments we need to compete in a global economy and help American families succeed, the federal budget will be increasingly strained. These are real problems that demand real solutions. And they will require a fair and responsible approach that includes revenue, that tackles the causes of high health care costs, and that improves efficiency of federal spending without harming seniors’ retirement security or imposing more burdens on struggling families.
Returning us to a sustainable fiscal trajectory will require smarter use of the nation’s fiscal resources and that is what I hope to do this year as Chairman of this Committee. I want our Committee to help shine a bright spotlight on the reality of the situation we face, to fully vet the choices we have and then set the stage to make the most responsible decisions as a Congress.
Director Hall, thank you for helping us begin that conversation. I look forward to hearing your testimony.
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