He was questioned by House Budget Committee members related to Economic Growth and Government Spending. This is just over two hours. The hearing will come to order. Welcome on the congressional hearing on the offices budget and outlook. I want to thank everyone for being here this morning. Were holding this hearing today to discuss the congressional budget offices economic out look which gives us a look at our spending, National Debt and how the economy is going to perform over the next decade. It forms the cornerstone of the work we do here at the House Budget Committee and i want that thank for their hard work and would also like to welcome director hall. I do appreciate you taking the time to testify today and look forward to your insight as we discuss this report. The discussion we will have today is a serious one because as cbo indicate we face economic challenges. Deficits are beginning to rise and Economic Growth continues to be sub par. Legacies of the last Administration Policies in a encouraged more spend k, more debt and more government, these challenges have a real impact on every person in this country. The numbers were reviewing today affect the ability of every american to buy groceries, obtain a loan, or start a Small Business or get a good return on their plan telling us of what would happen if he kept president obamas policies in change, without any changes to the current law, it would rise to 1. 4 trillion in fiscal year 2027. During that same time period our National Debt will jump to 30 trillion. To put that in human terms thats 93,000 for every american. For a lot of folks, thats about what it cost to buy a home. Cbo tells us this ever increasing debt spiral will consign our country to a lower standard of living. As a grandmother i want my grandchildren to have have every opportunity i did, but it is becoming harder and harder, much of this unsustainable path fiscal path is driven by projected spending for medicare, medicaid and Social Security over the next decade. But without reforms these programs are going to fail our seniors who have worked hard an paid into them for their entire lives. To compound these problems Economic Growth is set to average at a morbid 1. 9 over the coming decade, well below, well below the historic average af just over 3 . It hurts our country in multiple ways, fewer jobs and less opportunities for americans, smaller paychecks and less Financial Security for those americans who have a job, more than 5 million americans are working two jobs because they cant find a fulltime job, we have people in all sorts of industries who want to contribute to our economy but being let down by the rules and regulations coming out of congress, one is particularly men, one has been the decline this the labor Work Force Participation rate of those of prime working age. And here is a story. From a gentleman named chris back in my own district in tennessee. He said he was laid off just last year and in his letter he said this to me and i want to quote, i worked at this job seven years and im a hard worker and have never tried for any government assistance. Im positive ill have a job soon but ive been without a paycheck for months now and if i have to wait anymore i will have no money for utilities or support for me, my wife and sevenyearold. Now its pretty clear that chris is exactly the type of worker that makes our economy the best in the world. And hes a good husband and father who wants to take care of his family. Chris wants to make our country stronger. And its our job to help give him that opportunity. A job is so much more than the way we pay for rent or put gas in our car. A job helps us to define ourselves. It gives people a sense of purpose. It helps to build communities and it can break cycles of poverty and when americans have a steady job they know the dignity of work. Cbos report tells us what will happen if we do nothing, but thats certainly not the only choice we have. We can choose to get our fiscal house back under control. We can choose to get our economy growing again so that it works for men and women of this country. And here at the House Budget Committee, that is exactly what we intend to do. Director hall, thank you again for being here and i look forward to your testimony in how it can help guide us in forming the best policies to hold the federal government accountable, grow our economy and serve the American People and with that i yield to my Ranking Member. Thank you director hall for appearing to outline cbos updated economic budget and out look. It remains troubling of course. Were a few years away from increase in federal deficits and debt driven by increased health care and costs of older population, your report outlines our circumstances as a new Administration Takes office. Total deficits over ten years are essentially the same as you projected in office, projected lower than last years and as your report says is currently on solid ground. Thats better than president obama faced years ago, they were losing nearly 800,000 jobs per month. In january 2009 out look cbo was projecting more than 1 trillion and economy was expected to shrink by 2. 2 . That turned out to be optimistic. The economy has added 15. 8 jobs, the deficit has fallen by more than 800 billion. This years cbo report projects the economy will grow at 2. 3 rate. Job creation will also grow at a steady rate and the deficit will shrink over two years, what a difference eight years makes, it is also paying dividends on other front. Tens of millions of americans have the security of having health coverage, stock market has tripled in value, the Auto Industry has recover from the a near death experience, manufacturing has added jobs for the First Time Since 1990s. The financial industry is it better capitalized and secured for proaffection ftection for u. Housing prices have largely recovered and millions of home owners are no longer under water on their mortgages, i can go on and on and probably should because i know my colleagues will show other realities. The fact is the Trump Administration are ready to take our country down a far different path. Moving to repeal the Affordable Care act with no plan to replace it. Premiums will double and we will return to the days when Insurance Companies decide who lives and who dies, House Republicans are planning deep house cuts, recent republican president s have tried this approach and each time resulted in skyrocketed premiums, and i was briefed by in 2008 i know how close our nation came to having the lights go out. The American People cannot afford for us to make those same mistakes again, finally the issue of immigration, its been heart wrenching to see the impact of the president s executive order during the past week, it is discouraging the first separated familiesvillely fi four democrats and four republicans we drafted comprehensive Immigration Reform legislation we were confident had the bipartisan votes to pass the house, the only thing missing with us the political will of the Republican Leadership to bring it to floor. Beyond humanitarian needs, we have repeatedly told us a larger economy and smaller budget deficit. It is my hope my colleagues across the aisle will recognize these and enact what we need. Whether its the health care, economy or passing a congressional budget without acknowledging what got us here, to abandon all the progress we have made would be devastating not just for American Families today but generations to come. With that i look forward to your testimony, i yield back. Thank you. In the as beinterest of time i e any others so submit Opening Statements forward. Thank you director haul again for your time today. Your written statement will be made part of the record. You have five minutes. Thank you. Members of the committee, thank you for inviting me to testify about the most recent analysis of the out look for the budget and the economy. I would discuss a few highlights of budget and Economic Projections released last week, after my brief remarks i will be happy to take your questions indicate 2. 1 over the next two years if the current laws remain generally unchanged after rising at an annual rate of 1. 8 . We expect it to boost employment, drop the Unemployment Rate to 4. 4 by 2018. Gdp will expand add an average rate of 1. 9 over a decade. That represents a significant slow down over the 80s, 90s and early 2000s, which largely results from on going retirement of baby boomers, as slack diminishes over the next two years expect the rate of inflation to rise of the goal of 2 and stay there on average. We anticipate that the Federal Reserve will raise the target for federal funds and Interest Rates over the next two years will be significantly higher than they are now. They differ a bit from those published in august of 2016, now expecting to be modestly lower than last summer, lower Interest Rates in the next five years but expects a higher rate of Labor Participation than projected in august. For the First Time Since 2009 the federal budget deficit increased, projects other the next ten years if current laws remain unchanged budget deficits would follow an upward trajectory. First strong growth and spending for retirement and Health Care Programs targeted to older people especially Social Security and medicare, second rising Interest Payments on the governments debt and third modest growth and revenue collections. By the end of the period the accumulating deficits would drive up debt held up public by the high level. More than three decades if current laws remain in applies the debt will be twice as high and reach a higher percentage than any previously recorded. It would have serious negative consequences including increase risk of a fiscal crisis, our estimated deficit for 2017 is lower, because now we expect lower mandatory spending, for the 2017 to 2026 period however is about the same as we published in august. Im often asked specifically about projection for medicaid and subsidies established by the Affordable Care act. By cbos estimates people under the age of 65 will have Health Insurance in any given month in 2017 as expansion of medicaid, in addition the Taxation Committee estimate 9 Million People will receive subsidies for noncoverage through marketplaces, 1 Million People are projected to be through the marketplaces, 27 Million People under 65 will be uninsured in average by 2017. Federal spending for people made eligible for medicaid will be 70 billion. And obtained by the marketplace if current laws remain in place, those two types of costst would total 1. 9 trillion. It is not intended to be a forecast of what will happen but rather a benchmark for potential affects of policy decisions, they are predicated on the law, spending generally remain in place for the entire projection period even that that occurred and there were no changes in those laws before the end of the period it would still not be possible to predict precisely because many factors are uncertain. The goal is to construct given both the fiscal body of law and availability of economic and other data. I would now be happy to answer your questions. Thank you mr. Hall, now we will begin the question and answer session. Mr. Hall, cbos Economic Forecast has been trending sharply downward and roughly five years, it was expecting growth around 3 around the budget horizon, close to that average growth in the u. S. That figure has been dropping consistently and in the latest forecast down to just 1. 9 so it seems that it will expect an economic malaise under the current economic policies. What are the reasons to keep racheting down for the gdp growth and secondly how will this much lower expected growth path affect our federal budget . Look forward over the next ten years we do expect the slack in the economy to be virtually eliminated so we will be what we think will be the potential growth of gdp as we forecast Something Like 1. 9, 1. 9 . A lot of it is aging baby boomers, not all however, and slower productivity growth, its only one. 8 . We expect that will go up by the end of the period Something Like 1. 3 but thats still lower than in the past, so if you take that labor force of growing. 5 , add those together, that is about our Economic Forecast. And so the challenges are slower growing labor force and slower growing productivity Going Forward and again, we have this issue with baby boomers weve seen coming for a long time. Its starting to get closer and closer now. How do you expect what you are projecting to affect the federal budget . Well, this is going to have an impact, it is going to impact the Economic GrowthGoing Forward, it has a pretty significant on our budget forecast, so if we get increase for example in productive well have a slower growing deficit but thats really even not going to solve the problem. Couple with that is the relentless rise in Government Spending and deficits and your figures show the tax revenues were above the 50 year averages and are projected to keep growing and yet our Spending Continues to grow faster, if we tried to balance the budget just by raising taxes how big of a tax increase would be required in order to catch up . To give you some idea we have go to a great figure 17, gives you some idea of things like revenues and Discretionary Spending and et cetera. We see the deficit in ten years is going to be about 1. 4 trillion. About 5 of gdp and total revenues are going to be about 8 in ten years so its a major chunk of revenues, so a pretty significant increase in revenues to get there. Any idea of what percent we would have to increase taxes in order to be able to get there . We havent done a scenario like that. But significant is what youre saying . It would be significant and probably also significantly would change our Economic Forecast as well so it makes it particularly complicated. So even for those who would favor some combination of spending restraint and tax increases, if it fair to say of getting control of spending is indispensable to overcome the chronic deficits and debt . That seems to be the picture. The growing deficit and growing debt is so hard to imagine not just looking at both things the broader you look the smaller change you need. If you restrict yourself to smaller buckets, Discretionary Spending you have really got to reduce diskres ncretionary spen this is a big hole to fill. If we could achieve a more robust degree of Economic Growth something to the historic average a little over 3 how much would that help us in shrinking those deficits . A little bit of an idea. We dont have gdp, but a scenario, for every 1 10 in productive growth we see the deficit in ten years shrinking by about 50 billion so Something Like increase in productive of a half a percentage point would be pretty significant and thats going to reduce the deficit by about a quarter of a billion and thats out of a 4 trillion deficit, but even a half percentage point isnt enough to balance the budget essentially in ten years. Let me go to another topic, lets go to figure two, please. One of the most troubling aspects of our cbos out look is labor work participation, the rate stand at 62. 7 , and expects to decline over the next decade which is really disappointing. Obviously the on going retirement of baby boomers plays a role, but Government Policies are exacerbating the trends. Is it correct that the labor force is a key component of Economic Growth and how large does that role play and second to that is what are some of the policies that do affect this and how do they create incentives for work . Sure. I would say if you look at the long run growth of the economy, long run health of the economy, you can look at two different things, Labor Force Growth and productivity growth. If you compare our growth that we see over the next ten years to what we had in the 1990s, when we had so it is pretty significant. Youre right, though baby boomers retiring is a source of that decline in Labor Force Participation, we also have lower Labor Force