Budget

Chairman Kohl, Senator Corker, Members of the Committee, thank you for inviting me here today to discuss changes for Medicare and the health care system. The fiscal challenges we face as a nation are immense, and the single largest cause in the long-term is growing health care costs, so this is a very important hearing and we thank you for holding it.

Notwithstanding repeated attempts at monetary and fiscal stimulus since 2009, the United States remains mired in what is by far its worst economic slump since that of the 1930s.¹  More than 25 million working-age Americans remain unemployed or underemployed, the employment-to-population ratio lingers at an historic low of 58.3 percent,² business investment continues at historically weak levels, and consumption expenditure remains weighed down by massive private sector debt overhang left by the bursting of the housing and credit bubble a bit over three years ago.

Chairman Tester, Senator Vitter, Members of the Subcommittee, thank you for inviting me here today to discuss the economic problems presented by our budget deficit.

Good morning, Mr. Chairman and Members of the Committee. Thank you for the opportunity to testify today on the important topic of improving the budget process. It is a privilege to appear before the Committee.

October 1 marks the start of a new fiscal year. If FY 2011 was not the year for a comprehensive fiscal plan, we’re hopeful that FY 2012 will be.

Below is a review of FY 2011 by the numbers:

As the first meeting of the Super Committee has come and gone, it is important to take a look at the policies that they could consider. CRFB's table of overlapping policies, which appears in our recent paper on what we hope to see from the Super Committee, is a great resource for looking at the sort of ideas that will get some attention in the upcoming negotiations.

Tomorrow, the Joint Select Committee on Deficit Reduction (“Super Committee”) will hold its first meeting as part of a three-month effort to identify $1.5 trillion in deficit reduction over the next decade. Should the Super Committee fail to reach a majority agreement on a plan, or should that plan (or else a balanced budget amendment) not be passed by Congress, a $1.2 trillion across-the-board spending cut will go into effect.

With the president’s highly touted jobs speech this week, national attention is about to pivot from deficits and debt — where the focus has been for much of the summer — to jobs and how to boost the struggling economic recovery. 

Today, the Congressional Budget Office (CBO) released its Budget and Economic Update, under which current law debt is now projected to beon a declining path by mid-decade. According to CBO’s projections, debt held by the public will rise from 67 percent of GDP in 2011 to a high of 73 percent in 2013, before falling to 61 percent by 2021.

The S&P downgrade late Friday afternoon in Washington kicked off the most anxious and frenetic week in world markets since the Great Recession ended. The rating agency's observation that U.S. politics was broken might have seemed like old news to voters, but to outsiders it was a stunning confirmation that the recovery is all but over and Washington has no clue how to get it back on track. But the panic over the downgrade and subsequent sell-off has glossed over what exactly our AA+ means for the economy, our prospects, and the road back to a sterling rating.