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

Partial transcript of Q&A with Rep. Mark Pocan (D-Wisconsin) 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. Mark Pocan (D-Wisconsin):
…I just like to talk a bit about the jobs portion of what you have here.

First, just very briefly, I know it’s repetitive, but I think it’s important given that being new I got a chance to see Washington misinformation machine in operation yesterday…around the 2.5 million jobs that [ACA] was going to cost. It was somehow implied that there would be a decreased demand for labor from businesses, that somehow people will be reducing the number of hours people are working, and the economy would be worse off.

And I’m reading your report, and I just want to verify – just double-check – these things one more time.

You said that workers will be leaving participation because they’re going to be choosing to leave rather than businesses demand for labor reducing. Correct?

Douglas Elmendorf, Director of the Congressional Budget Office:
Yes, Congressman.

Rep. Mark Pocan (D-Wisconsin):
And then second, I think you said that in the report that there’s no compelling evidence that part-time employment has increased because of the ACA.

Douglas Elmendorf, Director of the Congressional Budget Office:
Yes, Congressman.

Rep. Mark Pocan (D-Wisconsin):
And then finally, I think you also said that by allowing low-income households to re-direct some of their funds that they would have spent on that care towards the purchase of other goods and services, they will increase overall demands, which would induce some employers to hire more workers or increase the hours of current employees during that period.

Douglas Elmendorf, Director of the Congressional Budget Office:
That would be the effect of net channel, yes, Congressman.

Rep. Mark Pocan (D-Wisconsin):
I know we talked about it but I just want to repeat it because I know it happens. Sometime perception becomes reality rather than reality becoming reality. I just wanted to emphasize those points.

Douglas Elmendorf, Director of the Congressional Budget Office:
Can I say, Congressman? The reason that we don’t use the term “lost jobs” is because there’s a critical difference between people who would like to work but can’t find a job or have a job that’s lost for reasons beyond their control and people who choose not to work.

If somebody comes up to you and says, “The boss says I’m being laid off because we don’t have enough business to pay me”, that person feels bad about that; we sympathize with them for having lost their job.

If somebody comes to you and says, “I’ve decided to retire” or “I’ve decided to stay home and spend more time with my family” or “I’ve decided to spend more time doing my hobby”, they don’t feel bad about it. They feel good about it, and we don’t sympathize; we say congratulations…

Rep. Mark Pocan (D-Wisconsin):
Thank you. Because it was just inferred earlier that somehow if fewer people – you mentioned they’d be better off in your report, in the language that you’re presenting to us. And it was implied somehow that fewer people have the opportunity to get the middle-class you wouldn’t be better off.

But I would argue, you know, part of it is you’re saying people who are in the aging population, more people aren’t participating, that’s part of the statistics. So people like my mom who worked ’til she was 70 at a Taco Bell don’t have to do that. But secondly, it could be someone on the lower end who now is working two part-time jobs instead of three part-time jobs, and what that means is instead they might be able to tuck their child in bed at night and read a bedtime story or go to an activity, which means they’re better off. Right? At least that’s how it is in my part of Wisconsin.

Douglas Elmendorf, Director of the Congressional Budget Office:
Those are possibilities, yes.

Rep. Mark Pocan (D-Wisconsin):
So let me ask a question about what we can do in your report about jobs…The sequester was about 750,000 when it was in full force. I know we’ve relieved some of the pressure this year but we go back to putting a lot more on it in 2015 and we’re going to lose jobs there. We’re going to lose jobs because we’re not extending unemployment extension.

So, while people want action by Congress rather than the President, the problem is this Congress isn’t acting. We’re not doing anything to help create those jobs therefore someone has to do something about that.

Let me just ask you this: What policies tend to get the biggest bang for your buck, I guess, in terms of boosting economic growth that we could be doing in the near term?

Douglas Elmendorf, Director of the Congressional Budget Office:
So, Congressman, a number of times now in the past half dozen years we’ve given the Congress our estimates on a set of options for spurring the economy in the short-term. And the fiscal policies that are most effective are those that put money in the hands of people who are most likely to spend it. So increasing aid to the unemployed has been very high on the list in terms of the bang for the buck. So is providing additional refundable tax credits to lower and middle-income households, reducing payroll taxes. Those things are more effective in spurring growth in the short-term under our current economic conditions than government spending increases or tax cuts focused on people who are likely to save rather than spend the larger part of the extra money they end up with.

Rep. Mark Pocan (D-Wisconsin):
At some point how much you make, you can only buy one sofa. You can’t buy 100 sofas necessarily, correct, is that the theory?

Douglas Elmendorf, Director of the Congressional Budget Office:
I think those are some big houses, Congressman, but yes, people who spend tend to spend a smaller share.

Rep. Mark Pocan (D-Wisconsin):
Let me ask one more question around the economic – the unemployment benefits because I brought someone to the State of the Union from my district who lost his benefits, has his house up for sale because they don’t want to go into foreclosure, not even inviting friends over for dinner because they don’t know if they can afford food. In the past, when we’ve extended these benefits with no strings attached, what’s the unemployment rate been in this country?

Douglas Elmendorf, Director of the Congressional Budget Office:
So, I don’t have the facts of that at hand, I’m afraid, Congressman. But as we noted, the unemployment rate in this country remains very high and the rate of long-term unemployment is higher today than has been at any point for decades – the whole decades we’ve had the series for except for the past few years. It’s come down a little bit from its peak but remains extraordinarily high and the cost of that to the economy and the people involved are very, very high.

###

Learn More:

Leave a Reply

Your email address will not be published.