Transcript: Opening statement by Rep. Chris Van Hollen on CBO’s budget and economic outlook for 2012-2022
Transcript of opening remarks by House Budget Committee Ranking Member Rep. Chris Van Hollen (D-Md.) on the CBO’s budget and economic outlook for 2012:
“Thank you, Mr. Chairman. I want to join the Chairman and welcome you, Dr. Elmendorf, and your two daughters. It’s great to have members of the family here today.
“And I want to reference the report that was issued by CBO yesterday the Chairman mentioned. Because while it shows that the economy remains very fragile, it also shows that it is slowly recovering.
“It demonstrates that we still have much work to do to create jobs, tackle the deficit, and return the budget to a long-term fiscally sustainable path.
“But for a moment, let’s focus on the positive signs of the budding economic recovery and remember where we were just three years ago…
“What this slide shows is that when the day that President Bush left office, the day that President Obama was sworn in, the economy was collapsing at an ever faster rate than originally thought. The gross domestic product (GDP) was plummeting at a rate of 8.9%. In other words, negative 8.9% GDP. And we were shedding more than 840,000 jobs a month. So in the month the President was sworn in 840,000 jobs were lost.
“As shown in previous CBO reports and findings, the passage of the Recovery Act coupled with actions to save the auto industry and efforts by the Federal Reserve helped end the free fall and began the climb upward toward economic growth.
“Now, we’ve all heard the expression that we’re entitled to our own opinions but not our own facts. The fact is that the CBO said that the Recovery Act helped save or create up to 3 million jobs in the year 2010, that it lowered the unemployment rate by up to 1.8% in calendar year 2010, and lowered unemployment by up to 1.4% in 2011 compared to what it would have done if the Congress had not taken action.
“The private sector has now added jobs every month since March 2010, adding 3.2 million jobs in total. More jobs were created last year than in any year since 2005.
“And what this chart shows very plainly is that we were on a huge downhill cascade, and that after the President was sworn in we began to reduce the downward momentum, turn the corner, and have been steadily heading up. Reducing first the rate of job loss, which you obviously have to do when you’re losing GDP at a 8.9% rate, and headed into a positive job territory.
“So the facts as reported by the CBO are clear that the Recovery Act did serve its purpose. It’s kind of like when you’re walking up an escalator that’s going down very quickly. If you take no action, you will go down very fast. Even if you take action, it would appear at first that you’re running in place and then slowly you will be moving up. And that’s what we’re doing.
“The CBO report, of course, also shows that the economy remains fragile and that we still face serious budget obstacles.
“While the economy continues to grow, at the current rate it will take too long for unemployment to return to the pre-crisis levels, which is why our first priority has to be making sure that we do what we can to help small businesses and businesses help put people back to work. We should take immediate action in this House on the plan the President submitted to the Congress last September – the President’s Jobs Plan, including his significant infrastructure investments to help rebuild our infrastructure around the country. We should finish the job with respect to extending the payroll tax cut for 160 million Americans and making sure that unemployment insurance is there for people who have lost work through no fault of their own…
“Finally, the Congressional Budget Office’s report underscores the need to address the looming deficit in a balanced, reasoned way.
“The Budget Control Act that this body passed last year and the President signed saves about $1 trillion from cuts in the discretionary over the next decade. It will also result in an additional $1 trillion in deficit reductions starting in January 2013. There are better ways to do that and there are worse ways to do that. I hope that this Congress will come together and do it in a way that makes sense.
“But I think as we listen to the testimony from Dr. Elmendorf, it will be clear that the bipartisan commissions that have looked at this challenge were right – Simpson-Bowles, Rivlin-Domenici. That you really need to tackle this in a balanced way.
“And I’m just going to quickly put up two charts and I’ll conclude the opening statement.
“What this chart shows – and I believe, Dr. Elmendorf, is in your testimony – is that under current law, the deficit will be reduced to that bottom heavily blue shaded line so that over the 10-year period, the deficit would decline substantially. If we packed our bags and went away and didn’t come back ’til next year, it would reduce the deficit significantly. Now, that very lightly shaded blue right over at the bottom bar is the revenue that is lost if we keep in place all the current tax policies. And so clearly that is a factor.
“Now I don’t think anyone is suggesting that we want to put in policies that would capture all that revenue. I’m not suggesting that. But this is [an] important chart to understand what current law would do and the impact of revenue.
“If we go to the next chart, it quantifies those numbers and makes it clear that if you extend all the 2001 and 2003 tax cuts and index AMT, that adds $4.5 trillion to the deficit. And the other tax extenders, if you continue those, it adds $839 billion. If you add the debt service on that, you get to over $6.3 trillion in revenue. If you look at the CBO’s baseline deficit cumulative over 10 years, they’re just over $3 trillion. So the cost of continuing all those policies on the revenue side leads to a doubling of the deficit over the next 10 years.
“So I want to make it clear: I am not proposing that we change all the current policies, but I think this does give us a very clear indication of the order of magnitude. Well, I’ll give a very clear example. $1 trillion of that is accounted for by the tax cuts for the folks at the very top, and if you return those tax rates to what they were during the Clinton administration – a period of great economic growth – that would be $1 trillion of that.
“I think we need to tackle this through tax reform, closing loopholes, sensible tax reform. I do think this underscores what the bipartisan groups have said – that you need to take a balanced approach. Yes, we need to make some cuts. We need to make some reforms. But we also need to deal with the other side of the equation as well.”
- WhatTheFolly.com: Transcript: Testimony of Doug Elmendorf on CBO’s budget and economic outlook for 2012-2022
- WhatTheFolly.com: Transcript: Opening statement by Rep. Paul Ryan on CBO’s budget and economic outlook for 2012-2022
- C-Span.org: Video of the House Budget Committee hearing on CBO’s Economic and Budget Outlook for 2012
- House Budget Committee: Hearing on the Congressional Budget Office’s budget and economic outlook
- Rep. Chris Van Hollen (D-Md.): Van Hollen Opening Statement at Hearing on CBO’s Budget and Economic Outlook
- Congressional Budget Office: Budget and Economic Outlook: Fiscal Years 2012 – 2022 (PDF)