As Prepared for Delivery
Today’s hearing marks an informal kickoff to a renewed effort by this committee to reform the Congressional budget process. This is not this committee’s first look at this topic. We began to examine the broader contours of a reform effort through two hearings we held last year.
Nevertheless, we are beginning what will be a series of hearings over the coming weeks. The aim is to have these discussions inform the drafting of legislation to enact a true overhaul of the 1974 Congressional Budget Act.
But before we get too fully immersed in the details and mechanics of what a functioning budget process ought to look like, we need to step back and remember why we need a functioning budget process in the first place. We have to look at the big picture to get an appreciation of the fundamentals at play in this discussion.
You do not get more fundamental from a legislative or legal standpoint than the Constitution. Before there was a Budget Committee or the antiquated budget process we have today, there was the Constitution – with the roles, responsibilities, and authorities it prescribes.
And the Constitution makes it quite clear that budgeting is not to be viewed as ancillary to the larger governing process – but rather fundamental to it. In Article I, the Constitution gives Congress the power of the purse. Congress writes the laws that govern this land and it appropriates the funds necessary to help carry out those laws.
Appropriately, the Constitution does not prescribe a specific budget process for Congress to follow. The architects of our republic were wise in understanding the limits of their own foresight. They left it to Congress to fill in the blanks with a system that will allow the people’s representatives to carry out their Constitutional duties. Right now we do not have such a system in place that serves the people well or that holds Congress accountable.
Because of that fact, over time Congress has surrendered much of its power of the purse to the executive branch. The question we have before us today is how can we go about reclaiming Congress’ authority and, in so doing, restore greater order and credibility to the governing process as a whole.
A breakdown in budgeting leads to a breakdown in broader policymaking. That is why this reform effort goes far beyond the interests of just this committee or our friends on the Appropriations Committee. All of Congress and all committees have a vested interest in seeing that we have a functioning budget process.
Perhaps the most troubling consequence of our current failed process is the remarkable growth in automatic spending. This is the spending that Congress has largely avoided addressing and which is done outside the annual appropriations process.
Automatic spending is the sole source of Federal spending growth as a share of the economy. It is the main driver of government debt. Unchecked growth in this type of spending is truly an affront to the spirit of Article I because it removes an important part of Congress’ power of the purse – namely the power to choose when NOT to spend. By design, automatic spending requires the consent of the executive – a presidential signature – to turn it off.
For those needing a real world example of what we are talking about today, look no further than the recent ruling by a U.S. District Court judge. In a decision announced just a few weeks ago, a DC Circuit Judge ruled that the administration could not expend funds to a program for which Congress had refused to appropriate money. This court ruling in no uncertain terms reinforced Congress’ Article I power of the purse.
Lastly, today’s hearing should hopefully shed some important light on the hidden regulatory costs that are too often overlooked during budgetary discussions. In 2015 alone, Federal regulatory costs were upwards of $1.9 trillion. That’s equivalent to roughly half of what the Federal government spent last year. It is more than was collected in income tax revenue. And none of these costs were directly approved by Congress. They are born out of executive branch rule-making.
So we have a robust set of challenges before us, and this ought to be a non-partisan discussion. A sound budget process benefits no single party or governing philosophy. It is necessary for the health of our republic – something we all care about.
I want to thank all of our witnesses for being here today and for their interest in these issues. We have Philip Joyce, Senior Associate Dean and Professor at the University of Maryland School of Public Policy; Stan Collender, Executive Vice President at Qorvis MSLGROUP, and Matthew Spalding, Associate Vice President and Dean of Educational Programs at Hillsdale College and the Allan P. Kirby, Jr. Center for Constitutional Studies and Citizenship.
Thank you all for being willing to take time to share your insights into how Congress can reclaim the power of the purse and restore a healthy, constitutional balance of power.
And with that I yield to the acting Ranking Member, Mr. Pascrell.
Good morning and thank you all for being here.
Today’s hearing is focused on the Congressional Budget Office’s recently released Budget and Economic Outlook. In its report CBO projects that if no changes are made to current policies, deficits over the next decade will total $9.4 trillion. This is up from $7.6 trillion from your estimate last year. The national debt will rise to over $29 trillion by 2026, from it’s current too high $19 trillion – and average economic growth over the next ten years will be a disappointing 2.1 percent – a full one-third lower than the historical average.
For individuals, families and businesses, this slow growth and skyrocketing debt will mean less opportunity, fewer jobs and smaller paychecks, and a nation increasingly vulnerable to national security threats both at home and abroad.
This is not an optimistic outlook for America. It is not a sustainable outlook for any nation, and the longer we take to address these challenges the harder it will be and the fewer options we will have to actually solve them.
If you look at interest payments on the debt – just what we will spend to service the debt at the end of the decade – we are talking nearly $1 trillion dollars. That’s more than we will spend on defense, on education, Medicaid, transportation infrastructure. Pick a priority. Money spent on paying this interest will crowd out spending on other important priorities for Americans. Buying a car, paying the rent, buying a house, starting/expanding a business, sending a kid to college – all of them made more difficult because of the level of debt their government continues to accumulate. By 2026, interest on our debt will be the third largest line-item in the federal budget – behind only Social Security and Medicare.
So how can we solve these challenges? I know many of our friends on the other side of the aisle – and particularly the president – think we ought to take more money from hardworking taxpayers.
But CBO projects that federal revenues are set to go up by $127 billion in fiscal year 2016 – a nearly four percent increase over last fiscal year. Revenue levels for 2016 are slated to be 18.3 percent of our gross domestic product and remain around 18 percent over the decade to come – which is well above the historical average. The government is now taking more money than ever in taxes from the American people.
My constituents know – and I suspect yours do too – that Uncle Sam does not need a raise. Washington needs to get its act together and stop spending at levels we cannot sustain. According to CBO, spending will reach 21.2 percent of GDP in 2016 and climb to 23.1 percent of the economy in 2026. Again, this will far exceed the historical average of 20.2 percent. That means more money taken from Americans and spent on things that crowd out – or decrease – the likelihood of folks to be able to do the things they want to do.
So instead of taking more from the American people to spend more in Washington, we ought to focus on real solutions: reforms that will make government more efficient, effective and accountable and solutions that will support a stronger, healthier economy.
If we focus on those two goals, we will not only balance the budget, and get on a path to paying off the debt, but we can also create an environment in this country where more Americans will achieve success, provide for themselves and their families, and have nation that is more secure and stronger than ever before. That’s what we believe – that we ought to be working to foster a system with the greatest amount of opportunity and the greatest amount of success, for the greatest number of people, so that the greatest number of American dreams may be realized – in a fair and compassionate system.
Sadly, under the economic policies of President Obama, Americans have experienced the worst recovery in modern times. CBO has continued to downgrade its growth projections year after year, and in January, we learned that the U.S. economy grew at an anemic 0.7 percent in the fourth quarter of 2015. This is the dismal economic legacy the president is championing.
Meanwhile, vital health and retirement programs like Medicare and Social Security are headed toward insolvency – they’re going broke. What does that mean? That if we do nothing – then we will not be able to provide the services to folks who have been promised those services. And it’s already happening - we are spending hundreds of billions of dollars on assistance programs that are often failing the very people they are supposed to be helping. Medicaid is a classic example – with more money being spent and more people being forced into a program where there are fewer and fewer doctors providing care – and services are often not adequate to help the people needing help. It’s simply not right.
We have a choice as a nation. We can continue down this road, stick with the status quo, and turn CBO’s projections into reality. Or we can turn the page, put in place a budget that balances, that saves and strengthens Medicare, Medicaid and Social Security, that supports our brave men and women in uniform. Right now our committee is hard at work on building such a plan.
Thank you Director Hall for being here today and for your work and that of your colleagues at the Congressional Budget Office. I look forward to your testimony and to a healthy discussion about the challenges ahead and how we solve them.
And with that, I yield to the ranking member, Mr. Van Hollen.
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