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

Partial transcript of Q&A with Rep. Todd Rokita (R-Indiana) 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. Todd Rokita (R-Indiana):
…I want people – and my party wants people – to live the best possible lives and build it for themselves that they can, whether or not they vote for us. And that’s what America has always been about.

I am for young people having their first job. I am for women being part of the workforce. We are for all that. We are not saying no. But we’re just saying that there’s a better way.

So in light of that, as you’re completing your study, can you tell me if you’re going to contemplate any alternatives to the meat-handed approach of just raising the federal minimum wage across all sectors? I mean, are you going to look at the effects of the earned income tax credit? Are you going look at the effects of maybe a subsidy of maybe a payroll tax deduction on the employee side of things or anything like that?

Douglas Elmendorf, Director of the Congressional Budget Office:
Congressman, this report will focus on the effects of raising the minimum wage. We will note that other approaches have been discussed in the past as alternative ways of boosting the after-tax income of low-income people. As you may know, CBO has done analysis of some of those alternatives in the past.

Rep. Todd Rokita (R-Indiana):
…So if the federal minimum wage that [President Barack Obama] is calling for apply to programs that he’s also calling for, like Head Start, that would increase the administrative costs of Head Start programs, thereby reducing the number of slots for kids who deserve and need programs like Head Start.

Douglas Elmendorf, Director of the Congressional Budget Office:
I see your point, Congressman. We would not analyze that carefully. We will tell you all that we think we’ve been able to figure out in the time we’ve been working on this.

We do intend to talk about how the change in minimum wage would interact with parts of the government budget. But exactly what we will say, how specific we would be about certain things, we’re just not done yet.

Rep. Todd Rokita (R-Indiana):
…Did you discuss at all in any depth the MyRA program?

Douglas Elmendorf, Director of the Congressional Budget Office:
No.

Rep. Todd Rokita (R-Indiana):
Let me go down that road a little bit. The President recently proposed in the same speech, MyRA program, which would allow all Americans who qualify invest in a U.S. debt instrument similar to what is available to federal employees through our thrift savings plan. It’s called the G Fund. Now, the G Fund is a fund available to federal employees, it’s non-marketable, and the best way I can describe it is that it provides a subsidized interest rate over the long-term for what really is a short-term security.

If we apply something similar or the G Fund product to the entire American public or some subset of it, wouldn’t that increase our borrowing costs as a government?

Douglas Elmendorf, Director of the Congressional Budget Office:
Congressman, I don’t know. We don’t as a matter of course analyze the effects of a particular administrative action because as you know our role is to provide analysis of legislation that Congress is considering. However, we do follow administrative actions because we need to understand that when we are updating our baseline. So if this particular change is one that we conclude ultimately would have important effects on the budget, then you will see that come through in our next baseline projection. But I don’t know at this point if we’ve really had any time to stop and look at that.

Rep. Todd Rokita (R-Indiana):
…I hope we all understand the difference between deficit and debt by this point. The debt is not going down, right? The debt is increasing.

Douglas Elmendorf, Director of the Congressional Budget Office:
Right.

Rep. Todd Rokita (R-Indiana):
Is it better to encourage people to work in order to reduce the deficit or to encourage people not to work in order to reduce the government’s deficit?

Douglas Elmendorf, Director of the Congressional Budget Office:
Well, if the encouraging can be done at no cost to the budget itself, then – let me rephrase. The more people who work, all else equal, the larger our output and income and the larger tax revenue and the smaller the deficit.

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