Transcript: Q&A w/ Rep. Barbara Lee on the CBO’s 2014 budget & economic outlook

Partial transcript of Q&A with Rep. Barbara Lee on the Congressional Budget Office’s (CBO) 2014 federal budget and economic outlook. The House Budget Committee hearing was held on Feb. 5, 2014:

Rep. Barbara Lee (D-California):
…50 years ago, the war on poverty represented a dramatic shift in the federal government’s priorities for helping those who are left behind in a growing economy…

In the omnibus appropriations bills the President signed into law on January 17th, we were able to secure language – and I just want to read this to you Mr. Elmendorf. It says “Poverty is far too prevalent in the United States. Congress and the administration should work together to implement policies, inter-agency efforts, and support proven anti-poverty programs that reduce the existence of poverty and the suffering associated with it.”

So, I wanted to ask you what policies or anti-poverty initiatives tend to get the most bang for our buck in terms of boosting economic growth?

For example, what is the impact or the economic impact of not extending unemployment compensation for the 1.7 million people who’ve lost their checks while they’re looking for a job? Will we see them fall into the ranks of the poor?

Does boosting the minimum wage boost economic growth and reduce poverty?

What’s the impact on poverty and economic growth rates as a result of unfortunately now the impact of structural and long-term unemployment as we continue to recover from the recession and can’t seem to get any jobs passed?

So, I’d really like for you to respond to those issues around poverty given the sense of Congress that was put into the omnibus bill?

Douglas Elmendorf, Director of the Congressional Budget Office:
Yes, Congresswoman. So, we’ve estimated that if the Congress were to extend the additional unemployment insurance benefits that expired, that would add about a quarter of a percentage point of GDP growth in 2014 and would add a couple of hundred thousand people to the ranks of the employed. And we have not done an estimate of the poverty rate but that would be good for people. Some people who would otherwise be below the poverty line would end up above the poverty line because of the extra benefits. We’ve not tried to quantify that effect.

On the minimum wage, we are currently doing an analysis of the effects of raising the minimum wage both in terms of the higher wages in incomes for people who keep their jobs and in terms of people who would probably lose their jobs, and we hope to present that analysis to the Congress in just a few weeks. So I don’t want to speculate at this point about the results of that analysis.

On the long-term unemployed, you’re exactly right that for many people who lose jobs and cannot find jobs again, the economic consequences for them can be devastating and, in fact, the consequences on their families and on their health and so on. And there’s a substantial amount of research about this and we reported on it a few years ago in a study for Congress. So, many of them end up in terribly bad shape and end up below the poverty line. But again, I would not try ourselves to quantify just how many more people that would be. But the persistent level of high unemployment – and we showed in our labor market report accompanying the outlook – the rate of long-term unemployment remains today – although it’s come down from its peak a few years ago – remains higher today than it has been at any point before this last recession and weak recovery. And the economic and human costs of that are very, very large.

Rep. Barbara Lee (D-California):
…Let me ask you about the CBO’s report last year as it relates to the public option and the health care exchange. I think you said it would reduce the federal deficit by $158 billion through 2023, which reflects a $37 billion reduction in outlays and $121 billion increase in revenues. Now with your new report, have you re-calibrated that or do we think that that still holds?

Douglas Elmendorf, Director of the Congressional Budget Office:
We’ve not re-estimated that, Congresswoman, but this estimate would still be quite applicable.

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