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

Partial transcript of Q&A with Rep. Tom Price (R-Georgia) 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. Tom Price (R-Georgia):
…When you compare it to last year’s report and reports prior to that, there’s more bad news this year than there was last year, and less good news this year.

Our friend makes the comment about a decrease in Medicare spending. Yeah, the spending in Medicare is decreased by $700 billion because of the Affordable Care Act, but it’s forced reductions. And as a physician, I can tell you that my former medical colleagues will say that it actually is harming health for seniors. And so the challenge that we have here is to put in place programs that don’t harm seniors, and our friends on the other side seem to be willing to put in place programs that actually do harm seniors.

Dr. Elmendorf, what happens in a fiscal crisis to those benefits for seniors?

Douglas Elmendorf, Director of the Congressional Budget Office:
Well, it depends on the nature of the crisis and what the Congress does to respond to it. But a fiscal crisis, as we’ve used the term, as a point in which investors are unwilling to buy U.S. government debt unless it carries very high interest rates, and that then puts a tremendous squeeze on the rest of the government budget.

Rep. Tom Price (R-Georgia):
So the squeeze that might happen is that services to beneficiaries actually decrease significantly under a fiscal crisis, is that not correct?

Douglas Elmendorf, Director of the Congressional Budget Office:
That could happen, Congressman.

Rep. Tom Price (R-Georgia):
…Is it your estimation that Congress really hasn’t done anything to address the challenges of a fiscal crisis in the last year?

Douglas Elmendorf, Director of the Congressional Budget Office:
Well, sir, as you know, the Congress has taken a number of steps, and I don’t want to diminish those. But it’s clear from our report that the fundamental fiscal challenge remains, which is significant increases in spending for certain programs. And even though all of the rest of the government is on a track to be smaller relative to the economy, we nonetheless show high and rising debt. That means that the country will need to make choices it has not yet made about cutting back those large programs or raising tax revenue to pay for them.

Rep. Tom Price (R-Georgia):
Which is a great segue to the Medicare program. Medicare trustees say the Medicare program is going to go bankrupt by 2026. What does that mean to real people? It means that services that have been promised to seniors there won’t be the resources to be able to provide those services.

…And I love how our friends on the other side of the aisle like to characterize our solutions, but the fact of the matter is our solutions actually solve the problem. In fact, we’ve put forward multiple solutions for the mandatory programs. In the area of Medicare, we’ve talked about a premium support system. And I want to draw your attention, if I may, Dr. Elmendorf, to a report CBO put out last September that modeled premium support systems, and it wasn’t this specific one. But the question that I want to get the answer to is a premium support system may in fact be possible that – to quote the report – “combines spending by both the federal government and beneficiaries that these premiums and out-of-pocket costs would be less than if current law remains in place” under a premium support system. Is that the conclusion that you offered?

Douglas Elmendorf, Director of the Congressional Budget Office:
Yes, that’s certainly the estimate we made for the system that we analyzed. As you know, there are many, many specifics that can affect the budgetary outcomes and the effects on the beneficiaries an awful lot. So one should not take that as a statement about anything that would be labeled premium support system. But that was the effect by our estimates of the system that we analyzed.

Rep. Tom Price (R-Georgia):
Therefore, a premium support model – that is something saves Medicare for seniors – would decrease spending – potentially decrease spending for the federal government and decrease spending for beneficiaries. I think it’s important that when folks are listening to solutions that the solutions be explained by those individuals that actually promote the solutions not those that criticize the solutions.

In the short time that I have remaining, I want to touch on this issue of the interest rate question that the Chairman got to. Again, as I say, I think this is more bad news than there was last year, and table D1 that highlights the issue as it relates to interest rates – a percent increase – 1% increase in interest rates last year was projected to cost $1 trillion. This year, it’s $1.5 trillion. What happened? What’s the difference?

Douglas Elmendorf, Director of the Congressional Budget Office:
I believe, Congressman, this is mostly effect of changes in our projection in the amount of debt…The last time we issued this table was actually two years ago. We did a more abbreviated report last year because Congress acted even later than we were under even tighter time constraints. So, relative to two years ago, it is more expensive and the reason for that is larger debt projection, but it’s not from the extra trillion dollars of this year’s – provisions from this year – includes provisions from last year, which was much larger. Remember because our current law baseline before that had incorporated expirations of the tax credits…

Rep. Tom Price (R-Georgia):
As the Chairman said, time is running out. It’s time to act.

###

Learn More:

Leave a Reply

Your email address will not be published.