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S. Hrg. 114–459 

UNDERSTANDING AMERICA’S LONG–TERM 

FISCAL PICTURE 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JULY 9, 2015 

Available via the World Wide Web: http://www.fdsys.gov/ 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

KEITH B. ASHDOWN, Staff Director 

SATYA P. THALLAM, Chief Economist 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

TROY H. CRIBB, Minority Chief Counsel for Governmental Affairs 

KATHERINE C. SYBENGA, Minority Senior Counsel 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN M. CORCORAN, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Johnson ............................................................................................... 1 

Senator Carper ................................................................................................. 3 

Senator Enzi ..................................................................................................... 12 

Senator Tester .................................................................................................. 14 

Senator McCaskill ............................................................................................ 20 

Prepared statements: 

Senator Johnson ............................................................................................... 31 

Senator Carper ................................................................................................. 33 

WITNESS 

THURSDAY, JULY 9, 2015 

Hon. Keith Hall, Ph.D., Director, Congressional Budget Office 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 35 

APPENDIX 

Chart referenced by Senator Johnson .................................................................... 47 

Chart referenced by Senator Johnson .................................................................... 48 

Chart referenced by Senator Johnson .................................................................... 49 

Chart referenced by Senator Johnson .................................................................... 50 

Chart referenced by Senator Johnson .................................................................... 51 

Chart submitted by Dr. Hall ................................................................................... 52 

(1) 

UNDERSTANDING AMERICA’S LONG-TERM 

FISCAL PICTURE 

THURSDAY, JULY 9, 2015 

U.S. SENATE,

COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:03 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Ron Johnson, Chairman of the Committee, presiding. 

Present: Senators Johnson, Lankford, Enzi, Ernst, Sasse, Carper, 

McCaskill, Tester, Booker, and Peters. 

OPENING STATEMENT OF CHAIRMAN JOHNSON 

Chairman JOHNSON. Good morning. This Committee hearing will 

come to order. 

I want to welcome the Director of the Congressional Budget Office (CBO), Dr. Keith Hall, here today and certainly thank you for 

your time and your appearance and your thoughtful testimony. 

The issues we are going to deal with in this hearing are difficult. 

I was speaking to the Director ahead of time. How do you convey 

to the American public the depth of the problem so that we collectively can take the first step in solving any problem, which is admitting we have got it? I have done a lot of problem solving in my 

manufacturing background and you have to first lay out the reality, 

understand the definition of the problem, describe it properly, but 

you really have to take that first step and admit we have really got 

a problem, if you have any hope of solving them. 

This Committee has a mission statement, and I do not think we 

can repeat it enough. It is to enhance the economic and national 

security of America. And, I think this hearing is going to address 

both of those components, because I believe, and I agree with the 

former Chairman of the Joint Chiefs of Staff, Admiral Mike 

Mullen, when he said the greatest threat to our national security 

is literally our debt and deficit, and we are going to be talking 

about our deficit now. 

I would define the problem we are facing in terms of our debt 

and deficit not as a 10-year budget window problem, which is so 

much of what we are always grappling here with our budgets, it 

is the 10-year budget window. What we really have is we have a 

30-year demographic problem here. We have all the Baby Boom 

generation people like Senator Carper and myself. We have white 

hair. Yours is not quite as white as mine—— 
2 

1The chart referenced by Senator Johnson appears in the Appendix on page 48. 

2The chart referenced by Senator Johnson appears in the Appendix on page 47. 

Senator CARPER. It is getting close. That is OK. At least we still 

have hair. There you go. [Laughter.] 

Chairman JOHNSON. We are retiring at the rate of 10,000 people 

per day. We have made all these promises to the Baby Boom generation and we really do not have a way to pay for them. We have 

to step up to the plate and admit that. 

Part of the problem is we are not admitting it as political leadership, and I have to repeat this story because it is pretty relevant. 

I was in the White House. To President Obama’s credit, he did go 

out to dinner with a number of us, and partly, maybe largely because of my prodding, I asked the President, well, if you are serious about making a dent in our debt and deficit, make your White 

House staff available to us. Let us start working. Let us try and 

find those areas of agreement, which is what we are trying to do 

in this Committee. Do not worry about things that divide us. Concentrate on the areas of agreement. I know Senator Enzi is a pro 

at that in terms of legislation. What can we agree on? 

And, so, I brought my accounting skills. I brought that problem 

definition skill. So, we were in the White House for a 2-hour meeting and President Obama came in for the last half and, of course, 

he wanted everything on the table. I said, fair enough, Mr. President. If you want everything on the table, here is how you do it, 

and I slid in front of him a chart1 that looks something similar to 

this, 30 years by decade. Here is the size of the deficit. Use your 

bully pulpit. Take the truth to the American public. Make sure the 

American people understand the depth of the problem so that, collectively, we can take that first step in solving any problem, which 

is admitting we have one. 

You know what he said to me? He said, ‘‘Ron, we cannot show 

the American public numbers that big. If we do, they will get 

scared. They will give up hope.’’ And, he says, ‘‘Besides, Ron, we 

cannot do all the work. We have to leave some work for future 

Presidents, future Congresses.’’ That is not leadership. That is an 

abdication of leadership. 

So, again, the purpose of this hearing is to show the American 

people the truth. And, what we need to do, as much as I appreciate 

all the work CBO has done, their long-term projections—and again, 

let us stipulate, these are projections. It is hard to fully understand 

and predict out into the future. But, we can take a look at projections and we can compare those to previous history. And, as much 

as I understand the relevance and the necessity of looking at these 

things as a percentage of gross domestic product (GDP), the problem is, most people do not deal in percentages. We deal with dollars. That is how we pay for things. So, dollars are more relevant. 

And, so, I want to continue to work with Director Hall and the 

CBO and the economists there of trying to figure out a way to 

present the reality, the depth of the problem, to the American people so they understand it. 

I have a lot of charts and graphs. We developed a one-page income statement, which is on the chart2 right now, that pretty well 

lays it out. I mean, by the way, that is the purpose of any income 
3 

1The prepared statement of Senator Johnson appears in the Appendix on page 31. 

2The prepared statement of Senator Carper appears in the Appendix on page 33. 

statement. Describe reality, but describe reality for the purpose of 

directing action. This one-page income statement does that. 

In one page, it shows pretty much the financial situation of 

America on an income basis, and it shows that Social Security will 

pay out about $14 trillion more in benefits than it takes in the payroll tax over the next 30 years. Medicare pays out about $34 trillion more. And then the rest of the $103 trillion deficit over 30 

years which we are going to be talking about today is interest on 

the debt. Three elements—Social Security deficit, Medicare deficit, 

and interest on the debt—drive that $103 trillion unsustainable 

deficit. We need to understand that. 

But, let me just throw out one more little factoid here that I 

think, hopefully, will grab the attention of the audience, of the 

Members of the Committee, and hopefully the American public. We 

are all witnessing pretty much the collapse of Greece’s welfare system, how unsustainable that model is. And, again, we hear this all 

the time. I have been here now 41⁄2 years and I have heard witness 

after witness talk about how our current fiscal situation in America 

is unsustainable. Let us just do a comparison. 

We calculated this number as of the end of the first quarter, so 

they are comparable between Greece and America. Today, or at the 

end of March, in America, every American’s share of our current 

Federal debt as of March 31, 2015—every American’s share, my 

share, my kid’s share, my grandchild’s share—is $56,710. By comparison, the share of every Greek’s share of their debt in Greece 

is $30,786. So, Americans, on an individual basis, our share of our 

Federal debt is almost double what Greeks’ share is of their Federal debt. 

Now, why do we not have the riots in the streets? Why do we 

not have a financial crisis today, like Greece has? Well, because we 

are the world’s reserve currency and we can effectively print money 

to fund this debt. Greece’s creditors have run out of patience. At 

some point in time, America’s creditors are going to run out of patience. They are going to look at America and say, you are not very 

serious in coming to terms with the debt and deficit. We are not 

going to loan you any more money. Or, we are certainly not going 

to loan it at that interest rate. And, at that point, interest rates 

spike. For every one percent increase in interest rates, that is $180 

billion more that is added to our interest payments. 

That is what we are dealing with. That is what we have to try 

and convey. That is what we have to admit. 

So, again, I would ask unanimous consent to enter my opening 

statement into the record.1

With that, I will turn it over to Senator Carper for his comments. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Thanks, Mr. Chairman. 

I, too, would welcome Dr. Hall. Thanks. It is very nice to see you 

again. 

And, I would ask that my full statement be made a part of the 

record.2
4 

I just want to respond and maybe add a couple of thoughts for 

us to keep in mind. Harry Truman used to say the only thing that 

is new in the world is history we never learned or forgot, and I 

want us just to go back in time a little bit. It is not that long ago 

we actually had four balanced budgets in a row, and we had a Republican Congress and we had a Democratic President, Bill Clinton. And, when he left office, he turned over a surplus and we had 

the strongest economy on earth. We were flying high. 

Eight years later, the next administration turned over an economy that was going down and some were afraid we were going to 

go down for the count. The week that this President, the current 

President, this Vice President, were sworn into office, that one 

week alone, we lost 600—628,000 people signed up for unemployment insurance. Think about that, 628,000. Two-and-a-half million 

people lost their jobs in the last 6 months of 2008. Another 2.5 million lost their jobs in the first 6 months of 2009. The budget deficit 

that year was $1.4 trillion. 

And, we have slowly but surely climbed out of here, and it is not 

just because of this administration, it is not because of the Congress. It is a lot of factors, and I hope—Presidents get blamed for 

stuff when it goes badly. They also sometimes get credit when 

things go well. But, we are in a hell of a lot better shape than we 

were, I think, 61⁄2 years ago. The deficit for this year is—when the deficit hit $1.4 trillion, it 

was about 10 percent of GDP. Ten percent, that is a lot. It is still 

about 3 percent of GDP. We think that is a lot. 

I am an old State Treasurer. I was Treasurer of Delaware when 

we had the worst credit rating in America. We were tied for dead 

last with Puerto Rico. We were in such bad shape that we would 

sell tax-exempt revenue anticipation notes—just to meet payroll 

and make our pension payments. We were the best in the country 

in overestimating revenues and underestimating spending. That is 

how we got to have the worst credit rating in the country. So, I 

bring sort of the thinking of an old State Treasurer and an old Governor to these jobs. 

I think there are, like, three things—let us just think of a pie 

chart of how we spend money in the Federal Government. Over 

half of it, entitlement spending. Over half of it is entitlement 

spending. About 5 to 10 percent is debt service. The biggest part 

of what is left is defense spending, and then the remainder is nondefense discretionary spending. We could wipe out entirely non-defense discretionary spending and we would still have a deficit. So, 

we have got some work to do here. 

The Bowles-Simpson Commission said there are really maybe 

three things we need to focus on, and one of those is entitlement 

spending that does not savage old people or poor people, but actually finds a way to save money in these programs, make sure they 

are going to be around for our kids and our grandchildren, and that 

is our challenge, and I think we have to be up to that. We cannot 

walk away from that. 

I think we are chipping away at the growth in health care costs, 

which used to be going up by 18 percent of GDP. We are down now 

about 17.5 percent. We are trending down in terms of health care 

costs as a percent of GDP. We have to continue to bring that 
5 

down—find out what works, do more of that. So, entitlement reform, No. 1. 

No. 2, tax reform. Bowles-Simpson says broaden the base. Let us 

lower the rates. Whatever revenues we generate, we make sure 

that some of that goes for deficit reduction. I think that makes a 

lot of sense. 

And, the last thing that they said to do was to look at everything 

that we do, everything we do in government and say, how do we 

get a better result for less money, every single thing. 

I am sure everybody on the Committee remembers something 

that one of our constituents said to us, maybe at a hearing, maybe 

at home, that we just have never forgotten. I will never forget a 

town hall meeting when I was a Congressman. I used to do a lot 

of town hall meetings then. A woman said to me, ‘‘I do not mind 

paying taxes, I just do not want you to waste my money.’’ That is 

what she said. ‘‘I do not mind paying taxes, I just do not want you 

to waste my money.’’ 

One of the reasons I want to be on this Committee is because we 

really focus on finding ways not to waste people’s money, not to 

waste taxpayers’ money. 

So, I am delighted that you are here, Dr. Hall. 

Let me say maybe one last thing. The idea of budgeting for—we 

used to budget for, like, year to year to year to year, and then 

maybe 5-year budgets and 10-year budgets, now we look out as far 

as 20 years. If you actually look out 20 years and look how much 

money we will actually save by implementing most of the Affordable Care Act (ACA), we save hundreds of billions of dollars over 

the next 20 years, even more than that. If we could somehow figure 

out how to do something close to comprehensive immigration reform, we would save hundreds of billions of dollars and our GDP 

would grow, as well. 

And, the last thing I would say is this. If we can somehow put 

our heads together and put our heads around a way to fully fund 

a 6-year transportation plan, robust 6-year transportation 

plan—McKinsey Global Institute just gave us these numbers. Here 

is what they said. One-point-eight million new jobs created and 

GDP to grow by 1.5 percent a year annually and that is worth 

doing, and it is also worth paying for, as well. 

I will leave it at that. We are glad you are here and look forward 

to hearing from you. 

I am going to be in and out. We are working in Finance on transportation funding right now, so I need to be in and out, so I apologize for that. But, thanks for joining us. 

Chairman JOHNSON. Good luck to you in those endeavors. 

So, it is the tradition of this Committee to swear in witnesses, 

so if you would please rise and raise your hand. 

Do you swear the testimony you will give before this Committee 

will be the truth, the whole truth, and nothing but the truth, so 

help you, God? 

Mr. HALL. I do. 

Chairman JOHNSON. Thank you. Please be seated. 

Our sole witness today is Dr. Keith Hall. He is Director of the 

Congressional Budget Office. On April 1, he became the Director. 

He has previously served as Chief Economist at the International 
6 

1The prepared statement of Mr. Hall appears in the Appendix on page 35. 

Trade Commission, a Senior Research Fellow at the Mercatus Center at George Mason University, Commissioner of the Bureau of 

Labor Statistics, Chief Economist for the White House Council of 

Economic Advisors, and Assistant Professor at the University of 

Arkansas. Dr. Hall. 

TESTIMONY OF THE HONORABLE KEITH HALL, PH.D.,1

DIRECTOR, CONGRESSIONAL BUDGET OFFICE 

Mr. HALL. Thank you. Chairman Johnson, Senator Carper, and 

Members of the Committee, thank you for the opportunity to testify 

on the Congressional Budget Office’s recently released assessment 

of the long-term outlook for the Federal budget. 

CBO has frequently expressed concerns about the likelihood that, 

under current law, the Federal Government’s debt will rise over 

the next few decades to a level rarely seen in U.S. history and we 

are pleased to provide some analysis that will help this Committee 

focus attention on that worrisome prospect. 

Let me first talk about that projected increase in debt. CBO’s 

long-term outlook for the Federal budget has changed little since 

last year. If current laws remain generally unchanged in the future, we expect that Federal debt held by the public will decline 

slightly relative to GDP over the next few years as the economy 

continues to move toward greater recovery from the Great Recession. 

After that, however, the effects of our aging population and rising health care costs will become more apparent and growing budget deficits will push debt back to and above its current high level. 

The deficit will grow from less than 3 percent of GDP this year to 

more than 6 percent of GDP in 2040. At that point, the already 

high Federal debt held by the public would have risen above 100 

percent of GDP. 

When making comparisons between amounts of debt in different 

years, CBO typically expresses debt as a percentage of GDP. Although that measure is not perfect, there are other ways of putting 

the amount of debt into perspective. This has the advantage of giving some indication of the ability of the United States to reduce or 

eliminate debt in the future. It accounts for changes in price levels, 

population, output, and income over time, all of which are important in assessing the sustainability of the budget. Just as a household’s income and assets are a measure of how much debt it can 

reasonably bear, GDP broadly conveys the means available to finance debt held by the public. 

I should reiterate that CBO made these projections under the assumption that current law remain the same. In that case, rising incomes would push tax revenues to a level that is high by historical 

standards relative to GDP. Also, spending for programs other than 

Social Security and the major health care programs would be quite 

low by historical standards relative to GDP. If the law did change 

in a way that kept revenues and spending for those programs close 

to their historical averages, the result would be even higher Federal debt. 
7 

Though the long-term outlook has worsened dramatically since 

2007—in that year, CBO projected that the Federal debt would be 

below its historical average in each of the next 25 years if current 

laws at that time had remained unchanged. But then some major 

changes came along, specifically the Great Recession and some significant alterations to tax and spending laws. 

In 2009 to 2012, budget deficits were the largest relative to the 

size of the economy in any year since 1946, causing the government’s debt to soar. The total amount of Federal debt held by the 

public nearly doubled during that period and is now about $13 trillion. That is equivalent to about 74 percent of the economy’s annual output, a higher percentage than at any point in U.S. history 

except a brief period around World War II. 

Under current law, debt is projected to rise continuously relative 

to the size of the economy in the long run. That path could not be 

sustained indefinitely. Investors would eventually begin to doubt 

the ability of the government to cut spending or raise revenues by 

enough to pay its debt obligations. Such a fiscal crisis would 

present policymakers with extremely difficult choices and would 

probably have a substantial negative impact on the country. 

Unfortunately, there is no way to predict with any confidence 

whether or when a fiscal crisis might occur in the United States. 

In particular, there is no identifiable tipping point in the debt-toGDP ratio to indicate that a crisis is likely or imminent. All else 

being equal, however, the larger a government’s debt, the greater 

the risk of a fiscal crisis. 

Of course, budgetary outcomes are uncertain. Under current law, 

unexpected changes in the economy, demographics, or other factors 

could probably lead to outcomes different from those that we have 

projected. Nonetheless, our analysis shows that under a wide range 

of possible outcomes, tax and spending policies under current laws 

will probably leave the Federal debt in 2040 at a much higher level 

than it is now, which is already elevated by historical standards. 

So, how large would policy changes need to be to lower the trajectory of Federal debt? To put the Federal debt on a sustainable 

path for the long term, lawmakers would have to make significant 

changes to tax and spending policies by reducing spending for the 

large benefit programs below the projected amounts, letting revenues rise more than they would under current law, or adopting 

some combination of these approaches. The size of such changes 

would depend upon the amount of Federal debt that lawmakers 

considered appropriate. 

Just holding Federal debt at its current high level of 74 percent 

of GDP until 2040 would require significant changes in tax and 

spending policies. A combination of increases in Federal tax revenues and cuts in non-interest Federal spending relative to current 

law of about 1.1 percent of GDP in each year for 25 years would 

be needed. In 2016, this would be a spending and/or a tax revenue 

increase totaling about $210 billion, and more than that for each 

year after that. 

Many combinations of policies could be adopted to meet such a 

goal. We have illustrated some of those in one of our figures from 

the written testimony that has been distributed to you. For example, if those changes came from increases of equal percentage in all 
8 

types of revenues, they would represent an increase of 6 percent 

relative to current law for each year between 2016 and 2040. In 

2016, for example, an average middle-income household would have 

to pay $750 more in taxes, and more than that each year afterwards. 

Or, if the cuts came from cuts of equal percentage in all types 

of non-interest spending, that spending each year would have to be 

5.5 percent less than projected. If the reduction was applied across 

the board to all types of non-interest spending, an average 65-yearold in the middle of the earnings income who retires in 2016 would 

see a reduction of about $1,050 in his or her initial annual Social 

Security benefits, more than that in each year afterwards. 

The more ambitious goal of returning public debt by 2040 to its 

average level over the past half-century, which is 38 percent of 

GDP, would require more than that. This would require a revenue 

increase and/or interest spending decrease totaling 2.6 percent of 

GDP every year. This means an average middle-income household 

would have to pay $1,700 more in Federal taxes in 2016 and larger 

amounts in subsequent years. Or, by cutting non-interest spending 

across the board, average Social Security benefits for a 65-year-old 

in the middle of the earnings distribution would have to drop by 

$2,400 in 2016 and by larger amounts in later years. 

Regardless of the chosen goal for Federal debt, you as lawmakers 

would face tradeoffs when deciding how quickly to carry out policies. The sooner significant deficit reduction was implemented, the 

smaller the government’s accumulated debt would be, the smaller 

the policy changes would be needed to achieve the particular longterm outcome, and the less uncertainty there would be about what 

policies could be adopted. 

Even if policy changes to shrink deficits in the long term were 

not implemented for several years, making decisions about them 

sooner rather than later would tend to increase output and employment in the next few years. Such decisions could hold down longterm interest rates, reduce uncertainty, and enhance businesses’ 

and consumers’ confidence. 

Thank you. 

Chairman JOHNSON. Thank you, Director Hall. Again, thank you 

for appearing and thank you and your staff at CBO for all your 

hard work. 

I think the question is, how do we grab the American people’s 

attention with numbers, with financial data. I am an accountant, 

you are an economist. I like numbers. You like percentages. It is 

a difficult problem. It is something I have been grappling with for, 

literally, 41⁄2 years. 

One of my attempts in this was really with a couple amendments 

that I offered that were adopted unanimously in our budget process 

this year. The guts of it says the Congressional Budget Office shall 

provide a projection of Federal revenues, outlays, and deficits for 

the 30-year period beginning with the budget year expressed in 

terms of dollars. 

This is kind of what I had in mind, and I want to keep working 

with you. I would really prefer this was a Congressional Budget Office chart so that we did not have to take the detailed information 

and try and grapple with it and come up with our interpretation, 
9 

1The chart referenced by Senator Johnson appears in the Appendix on page 48. 

2The chart referenced by Senator Johnson appears in the Appendix on page 49. 

so it was incredibly authoritative, because this is extremely important, that we have a nonpartisan organization, an agency like yourselves, that definitively say, this is what this projection results in, 

in dollar terms, because, again, people do not pay for their electricity bill and food in percentages. They use dollars. So, Americans 

understand dollars. 

Let us start here, and this is your alternate fiscal scenario, done 

by decade. I think this lays it out pretty simply, and coming from 

the business side, I like the KISS principle, keep it simple. First 

decade, about $10 trillion of projected deficit, according to your alternate fiscal scenario. The second decade, $28 trillion. The third 

decade, $66 trillion, for a whopping total over the next 30 years, 

projected deficit by your alternate fiscal scenario of $103 trillion. 

Now, again, we are becoming immune to these massive numbers. 

Who can really understand them? So, I have added to this chart1

the dollar value of all private assets. The net asset base of America 

is $116 trillion. That is what we are looking at over the next 30 

years. 

Now, I want to talk—let us take that one down and put up the 

next chart,2 because this is where I will convert to percentages on 

a relative basis, and it is really going to be the base of my first 

question. The numbers you were talking about in your testimony, 

it was really based off your baseline, correct, your baseline projection. I am showing the alternate fiscal scenario. 

For me to take a look at projections—this is what I did in business, I would do my budgeting process—I would always take a look 

at history. Are these numbers relevant? Do they compare to history? So, what I have done—again, trying to keep it as simple as 

possible—I have laid out percentage of GDP for these spending categories the prior 30 years, from 1985 to 2014. Then I have CBO’s 

baseline projection. And the third column is CBO’s alternate fiscal 

scenario. 

So, let us just—again, trying to keep it simple—entitlements, 

total entitlements, Social Security and health care, the last 30 

years, about 7.7 percent of GDP, and under both scenarios, that is 

expected to rise to 13.1 percent. Now, that is—health care is the 

more difficult one to really project. Social Security is pretty darn 

close, right? I mean, we know because of demographics, actuarial 

math, that type of thing, we have a pretty good handle on Social 

Security over the next 30 years coming in with about a $14 trillion 

deficit in terms of what we pay out in benefits versus the payroll 

tax, is that correct? 

Mr. HALL. That is right. Health care definitely has more uncertainty. 

Chairman JOHNSON. But, again, so—but, this does show the dramatic increase, 7.7 percent to 13.1. 

Now, on defense, the last 30 years, on average, we spent about 

4.2 percent, and this includes the 1990s where we really went pretty low historically as a percentage of GDP. According to your baseline, CBO’s baseline says over the next 30 years, we will spend 

about 2.6 percent of GDP. The alternate fiscal scenario is 3.4. So, 
10 

1The chart referenced by Senator Johnson appears in the Appendix on page 50. 

I guess when I take a look at this, understanding the problems in 

the world, OK, the threats to our national security, I look at that 

and I go, that is probably not realistic that we are going to be able 

to get away with spending only 2.6 or only 3.4 when historically 

we spent about 4.2 percent. I mean, would you disagree with that? 

Mr. HALL. Well, our numbers came from averages, right, so the 

2.6 percent is under current law and the bigger number was something close to long-term averages. But, you are exactly right that 

one of the uncertainties that are there in our forecast is something 

like a major war, another recession, something like that that would 

make the picture of the deficit look much worse. 

Chairman JOHNSON. Even 4.2, you take a look at the last 50 

years, what we had during the Korean War, I think we were at 10 

percent. During the 1970s and 1980s, I think we were 8 and 7 percent. We are at historically low percentages of GDP spending already on defense. 

Let us go on to all other spending in the Federal Government. 

Over the last 30 years, it has been about 6.2 percent of GDP. Your 

baseline says it will drop down to 4.6 percent. Your alternate fiscal 

scenario is 5.9 percent, OK. And then interest, again, it is the plug 

figure, and it depends on what we think interest rates will be, and 

nobody really knows that. 

But, I guess the point I am trying to make, if you are really looking at how realistic are these projections, baseline versus alternate 

fiscal scenario, it kind of gives you a range of projections, I mean, 

I would look at this, and one of the reasons I use alternate fiscal 

scenario, I would say of the more likely scenario based on 30 years’ 

prior history, I would just kind of look at alternate fiscal scenario. 

You could maybe even make an argument that that might still be 

low as projected deficits. Would you comment on that. 

Mr. HALL. Well, we wanted to be careful about predicting what 

Congress was going to do. 

Chairman JOHNSON. I understand. 

Mr. HALL. So, the regular baseline is under current law, but our 

alternate fiscal scenario is trying to look at the way that Congress 

has behaved in the past. And, so, we did make an effort to do 

that—— 

Chairman JOHNSON. Oh, I know, and Congress is very difficult 

to predict—— 

Mr. HALL. Yes. 

Chairman JOHNSON [continuing]. Other than we will continue to 

be somewhat dysfunctional. 

Let me go, with my remaining seconds here, let me go with the 

last point. No, first of all, leave on—I want to talk about revenues, 

because the last 30 years, on average, we have generated about 

17.2 percent of GDP in terms of revenue of the Federal Government. Now, if you go back 50 years, it has probably been more 

around 18.1 percent. So, your baseline shows about 19 percent average over 30 years. The alternate fiscal scenario is really pretty 

much about that 50-year average. 

Now, let us go to the last chart1 here. This is a chart that shows 

what percentage of GDP we have raised in revenue comparable to 
11 

the top marginal tax rate. How much are we going to try and punish success and how effective are we at punishing success and dramatically increasing the percentage of revenue we raise as a percentage of GDP? You can see, going back to the late 1950s when 

we had a top marginal tax rate of 91 percent—now, I think that 

would give pleasure to a fair amount of people who would like to 

do that, let us stick it to the rich guys. We still only had about 18.1 

percent average. Look how steady that is, regardless of the top 

marginal tax rate—at 91 percent, at 70 percent, or 50 percent, or 

28 percent, or 39.6 percent. 

So, I guess I want you to comment on our ability as a Federal 

Government to try and punish success and do it successfully so 

that we actually increase revenue to the Federal Government, because to me, it is somewhat of a fool’s errand, and when you start 

dramatically increasing marginal tax rates, I would say you dramatically increase the disincentives for people to take the kind of 

risk taking that actually helps grow our economy. 

Mr. HALL. Well, I do not want to comment too much about specific tax policy things, but you are absolutely right that tax revenue 

has been fairly much around 18, 19 percent. There has only been 

a brief time where it was as high as 19 percent, to where we projected under our extended scenario, under current law. So, that is 

one of the things that I think is a caution, is under our, just our 

regular extended scenario, tax revenues get to a historically high 

level and we still have a really significant problem 25 years down 

the line. 

Chairman JOHNSON. Does this chart not basically show that, yes, 

we can attempt to increase revenue as a percentage of GDP by increasing marginal tax rates, but people change their behavior. I 

mean, this kind of gets back to the static versus dynamic scoring 

debate—— 

Mr. HALL. Right. 

Chairman JOHNSON [continuing]. That I think this is a pretty 

darn good argument that if we are going to change tax policy, we 

really do need to understand the dynamic effect of those tax policies on people’s behavior, and in some way, shape, or form—and 

trust me, there is a real complexity here in terms of deductions and 

what type of income, which I think is kind of silly, too, to have different rates on different types of income, income is income from my 

standpoint—we should dramatically simplify our tax code and I 

think you might have a little more responsiveness if it were not so 

complex. 

But, anyway, it is just very difficult to really take more than 18 

percent away from the American public, is that not kind of—is that 

not what that chart pretty well shows? 

Mr. HALL. Historically, yes. It just has not been done. And let me 

just say, too, in part of our forecast, we do have a dynamic component in our economic forecast that underlies this and we do have 

some dynamic effect of the tax rate being to an historically high 

level. So, that actually does impact economic growth. 

Chairman JOHNSON. OK. Well, thank you. 

Our next questioner is another accountant, Senator Enzi. 
12 

OPENING STATEMENT OF SENATOR ENZI 

Senator ENZI. Thank you, Mr. Chairman. I appreciate you doing 

this hearing. I know from experience that solving problems early 

is usually less expensive than solving problems late. 

I used to be the Mayor of Gillette and we had some infrastructure problems that we needed to solve and that required us to have 

some debt. I had to appear before Standard and Poors (S&P) and 

Moody’s and answer how I was going to pay off this debt, and I was 

kind of stunned by some of the questions because they were all 

about our retirement system. We were a very young community, so 

we had everybody at the beginning of their retirement cycle, but 

what I discovered is that the questioners were on a panel to save 

New York City, which had a policy of pensions of full retirement 

at a very young age. 

Currently, Greece and other countries across Europe are experiencing economic crises that are due to their pension and entitlement promises that they cannot afford. Given CBO’s long-term outlook on the challenges we face, are there any lessons that we can 

draw from their problem in a short amount of time? 

Mr. HALL. Yes. Actually, I do think there is a very important lesson. Greece is going through a very difficult experience, and I think 

the main thing we ought to take from this is that it is extremely 

difficult to make fiscal policy decisions under the pressure of a financial crisis. So, this is my ‘‘hurry up and make decisions.’’ If you 

wait until the debt gets very large in the United States and we get 

something close to a fiscal crisis, then it is very difficult to find fiscal policy decisions that will solve your problem. 

Senator ENZI. In your testimony, you mentioned that Social Se- curity would have to be, I think it was a $1,050 reduction in payments, and then more each year. Could you expound on that a little bit more. 

Mr. HALL. Sure. What we did was we figured out a fixed percentage of savings we would need to have from spending on Social Security, and the reason that it comes out to that, we were trying to 

look at something like an average person, what are the costs in 

2016, and that number would go up. That is a yearly number, and 

it would go up based basically on GDP growth. If GDP growth went 

up, that number would go up and incomes went up. So, that was 

an effort just to give you some idea of a nice, simple impact on average people. 

Senator ENZI. But you meant that it would be just a few additional dollars each year, not a total $1,050 additional reduction? 

Mr. HALL. Oh, right. Yes, that is right. 

Senator ENZI. I am trying to—— 

Mr. HALL. That is right. 

Senator ENZI. Because, otherwise, pretty quickly, people would 

be at zero. 

Mr. HALL. Oh, right. Right. Yes. No, that is a fixed amount, in 

percentage terms, anyway. 

Senator ENZI. What effect do you think that the collapse of 

Greece, if they do not meet their Sunday deadline, will have on interest rates for us? Will that make us a more secure country or will 

people worry about putting their money anywhere as far as buying 

bonds? 
13 

Mr. HALL. Well, so far, the Greek crisis has not had a lot of effect, but probably the biggest effect is going to be through the exchange rate, and it would probably modestly affect our trade balance with the Eurozone. And, if Greece were to—so, I think in that 

respect, it would be fairly minimal. But, if they were to exit the 

Eurozone, I think we might get a bit more of effect, where the dollar would appreciate a bit further, Treasury rates would actually 

fall a little bit, and U.S. equity prices might fall a little bit if they 

actually pull out of the Euro. 

Senator ENZI. Because I keep worrying what will happen with 

our budget if the interest rate goes to a norm for the United States 

instead of hovering around the less than 2 percent that we are at 

now, which costs us $235 billion a year. 

Mr. HALL. Right. 

Senator ENZI. If that more than doubles, we will be spending 

more on that than we will be on national defense or all of the rest 

of the spending that we do that we have control over. There is a 

whole lot that you point out that we do not have control over. 

Now, former Canadian Prime Minister Paul Martin told the 

Budget Committee a year ago that the No. 1 problem facing Canada during their fiscal crisis in the 1990s was interest payments 

on the debt. According to Martin, the problem was that the Canadian people would not believe that writing checks to pay interest 

would hurt as much as writing checks to the government to pay for 

health care or for living expenses. 

Dr. Hall, what is the CBO’s long-term outlook for interest payments on the debt in the country, and how does this compare to 

the amount that we will be spending on health care, for example? 

Mr. HALL. Sure. Well, this year, we forecast that our payment, 

the interest payments on the debt are equal to about 1.3 percent 

of GDP. And in 25 years, under current law, that is going to go all 

the way up to about 4.3 percent of GDP. So, that is a pretty significant increase. And, of course, that is going to be sensitive to exactly 

how much interest rates go up over time. 

Also, right now, net Federal health care spending is about 5.2 

percent of GDP and it will go up to about 8 percent. So, in 25 

years, our interest payments will be about 4.3 percent. Our Federal 

health care spending will be about 8 percent. 

But, let me just point out one thing, though, that between 2015 

and 2040, our health care spending is going to go up by about, by 

our forecast, by about 2.8 percentage points. I know I am using a 

lot of percentages. I apologize. But, interest is going to go up by 

3 percentage points of GDP. So, actually, the increase in the cost 

of interest will be more than the increase in the cost of health care 

under our projection. 

Senator ENZI. But 12.3 percent of GDP between the two will be 

a considerable amount. 

Mr. HALL. Yes. 

Senator ENZI. Now, you have also projected—CBO has projected 

for many years—and I realize you have only been there a short 

time, we appreciate all your efforts during that time—but CBO has 

projected for many years dramatically increasing outlays for federally funded retirement programs. I keep going back to the retirement programs. Indeed, CBO has also argued that revenues will be 
14 

woefully insufficient to pay for these programs, which means that 

the government’s borrowing requirement will be dramatically increased, as well. 

You suggested recently in testimony before the Budget Committee that this public sector borrowing will crowd out private borrowing, which will slow the pace of economic growth. Will this 

slower pace of growth also reduce worker productivity? Could this 

reduction in worker productivity result in slower wage and slower 

growth and fewer job opportunities? 

Mr. HALL. Yes, it will, and in our forecast, there is an interesting 

little rule of thumb. For each dollar that the deficit rises, domestic 

investment falls by between 15 and 50 cents. So, there is a pretty 

big impact. And the effect of that deficit on investment, because it 

crowds out private investment—people’s savings get pulled into 

funding the government rather than funding the making of goods 

and services—will lead to a smaller capital stock in the economy, 

less investment, which makes workers less productive and then decreases wages as a result, and we do have some estimates of the 

amount of income, the average income, how much lower it is because of the borrowing. 

Senator ENZI. Can you repeat that very first part? For each dollar—— 

Mr. HALL. Yes. For each dollar that the deficit rises, domestic investment falls by between 15 cents and 50 cents. 

Senator ENZI. Thank you. My time has expired. 

Chairman JOHNSON. First of all, Dr. Hall, no need to apologize 

for using percentages. This is incredibly complex, there is no doubt 

about it, and that is what we are trying to do, is work with you 

to try and simplify it as much as possible so we all can understand 

it. 

But, I will make a commitment, by the way. This is just a first 

in a series of hearings. This is the overall macro look at the budget, 

trying to come up with some method of simplifying it. We are going 

to drill down into Social Security, a special hearing on that. We 

will do it on Medicare. We will probably talk about interest and the 

effect on the economy from that standpoint, as well. 

So, this is just the first in a series of hearings we are going to 

certainly have under my Chairmanship because this is so incredibly important and because it is complex. It is one of the reasons 

I do not think we have grabbed the American public’s attention, 

which is what we need to do if they are going to, like I say, admit 

we have the problem to put pressure on us to fix it. Senator Tester. 

OPENING STATEMENT OF SENATOR TESTER 

Senator TESTER. Thank you, Mr. Chairman. Thank you for holding this hearing. Thank you, Dr. Hall, for your testimony. 

As I look out into the crowd, there are a ton of young folks here. 

Are you guys all interns? Raise your hand if you are an intern. 

[Show of hands.] 

That is good. Well, I appreciate you being here, because, quite 

frankly, this conversation we are having today impacts you, actually, more than it impacts me, because you will be around a lot 

longer, I hope, and it is good to have you all here. 
15 

Dr. Hall, you talked about the Great Recession and you talked 

about what transpired, and in that Great Recession that we had, 

when I got here in January 2007, and I think in about June 2007, 

I got notification from the Treasury Secretary that we were on the 

edge of a financial meltdown, or shortly thereafter. But, since that 

time, when our revenues have dropped and the safety nets like unemployment insurance kicked in, which caused our debt to explode, 

we have reduced our cumulative deficits by about $4.5 trillion since 

2010. 

And, before that, as the Ranking Member had pointed out, we 

did have a balanced budget situation in the 1990s, which was followed by Vice President Cheney, I believe, saying the debt does not 

matter, which was followed by a tax cut and a war, all put on the 

credit card at the same time. That is when the economy was booming. 

And, so, to have the debt that we have today, with the economic 

downturn and some of the policies that were put in effect 10 or 12 

years ago, should be no surprise to anybody. I am going to leave 

this Committee and go to an Appropriations Subcommittee in a 

second—we had a Defense Appropriations Committee where we 

used an overseas contingency account gimmick to take and put $40 

billion additional dollars into that account all on the credit card 

and nobody is asking anything about it. 

Why? Because it is about war, and we can fight wars all over the 

world and that is OK. We do not need to have France’s help, or 

England’s help, or Australia’s help, or any of our allies’ help. We 

will do it all on the taxpayers of this country. 

So, if we want to deal with the debt and the deficit, we can talk 

about Social Security and we can talk about Medicare, and we need 

to, but if we do not talk about what we are doing with foreign policy in this country and how we are going to deal with infrastructure, highway infrastructure that is worn out that will leave the 

kids in this audience—and if you are under 30, I will call you a 

kid—with the lack of ability to have a 21st century economy, or 

many of you are probably going to college and you know you are 

going to walk out the door with $40,000 or $50,000 in debt and you 

are not going to be able to buy a house. That is a negative impact 

on the economy. Or, the fact we do not have an immigration bill 

and we are not funding research and development, so we are funneling all those jobs to India and Brazil and China and other 

places around the world. 

So, debt and deficit is important, Mr. Chairman, and if we do not 

take a look at a lot of the policies that get us here, I will tell you 

what Mr. Bernanke told me when he left office at the Fed. When 

I said, is the most important thing we are looking at the debt, and 

he said, no, the most important thing you need to look at is handing the people in this audience, the next generation, a 21st Century 

economy, because if you do not, you will never pay that debt down. 

We are not handing these folks a 21st Century economy because 

we are saddling them with so much debt, personal debt right out 

of the chute. 

We can solve this problem. It is going to take a lot of tough decisions. I think there are people around this dais that are willing to 

do it, and I think there are people in the Senate that are willing 
16 

to do it, and I also think there are a lot of folks in the Senate that 

would rather play politics with this than get to the point, and that 

is the point I want to make. 

The question I have for you, Dr. Hall, is this. You talked about 

the debt. You talked about projections on the debt. Can we tackle 

this effort by spending cuts alone? 

Mr. HALL. Well, I want to avoid that issue because it is not my 

job, in a sense. It is your decision to—— 

Senator TESTER. I know that. 

Mr. HALL [continuing]. Obviously, it would be—— 

Senator TESTER. I just want your estimation. You do not need to 

get political. You can just say yes or no, and if they beat you up 

for it, they will beat you up for it regardless, so—these are good 

people. They will not do that. 

Mr. HALL. Well, actually, the scenarios I just gave you were ways 

to hit targets totally by spending and totally by revenue. So, I did 

give you sort of the two extremes there. 

Senator TESTER. All right. And you are not on this side of the 

dais, but if you were on this side of the dais, would you be looking 

at both or would you just be looking at spending cuts or tax increases? 

Mr. HALL. Well, again, it is—as a CBO Director, it is not my job 

to recommend policy. I will talk to you about the possible impact 

of specific things, and we actually have a document or two giving 

you some options and what the likely effects would be on how to 

improve the budget situation. 

Senator TESTER. Well, I appreciate that, although I was hoping 

for a better answer, a more direct answer, but that is the way it 

is. 

I want to just say that I think the debt is very important to handle. I think the American people are very concerned about this. I 

hear about it every time I go home. Every time I go home, I hear 

about this. And, I think that if we are able to work together, as 

I said earlier, in a bipartisan way, we can come to solutions. But, 

it is going to require some revenue and it is going to require some 

cuts. So far, we have been cutting to the tune of four in dollars in 

cuts for every one dollar in increased revenue. I, quite frankly, do 

not think that is sustainable for a 21st Century economy. 

Thank you, Mr. Chairman. Thank you, Dr. Hall. 

Chairman JOHNSON. Thank you, Senator Tester. 

I do want to respond a little bit. If you want a 21st Century economy, there are some pretty easy elements that we need to concentrate on. For example, let us not artificially drive up the cost 

of energy. If you want to manufacture things, you need power. 

Cheap power is better than expensive power. Let us reduce the regulatory burden instead of dramatically increase it, and let us simplify our tax system so we have pro-growth policies. Even with 

meager economic growth, we have increased revenue to the Federal 

Government since 2009 by more than $900 billion, with meager 

economic growth. 

Second point, the total cost of the wars since 2001 is probably 

under $2 trillion—— 

Senator TESTER. You are not taking into account—— 
17 

Chairman JOHNSON. I am saying in terms of the effect on the budget deficit today. Less than $2 trillion. We have increased our 

debt by almost $8 trillion in just 6 years. So, yes, the wars are part 

of it, certainly not the answer. And in terms of infrastructure 

spending, totally agree. We should dramatically increase what we 

are spending on infrastructure for a 21st Century economy. The 

shortfall in the Highway Trust Fund is about $15 billion per year 

in an almost 4,000-billion-dollar-a-year budget. Can we not find 

$15 billion of lower-priority spending and let us spend it on a higher priority? So, that would be my response to that. 

Senator TESTER. My response to that would be we just came 

through the worst recession since the 1930s and that is what 

caused that $6 billion to go up, income going down, expenses to go 

up. The other thing is, is we just had a hearing here yesterday 

with a gentleman from your State that raised chickens, poultry industry. Is that low priority spending? It depends on whose ox is 

being gored here. 

Chairman JOHNSON. And we are going to work to make sure that 

we take care of that situation, as well. That is why we had the 

hearing. 

Senator TESTER. Oh, I know. But, what I am saying is, is that 

it was important, and the fact is that somebody living in the middle of downtown Miami might say, the subsidies we give to crop insurance is just not important. 

Chairman JOHNSON. No, again, I was not saying that was lower priority. We can find $15 billion of lower priority spending. 

I believe it is Senator Ernst. 

Senator ERNST. I am not able to stay. 

Chairman JOHNSON. Sorry about that. Senator Booker. 

Senator BOOKER. I am on the same thing, sir, so unfortunately, 

I have to go. 

Chairman JOHNSON. Senator Carper. I have plenty of questions, 

so—— 

Senator CARPER. Dr. Hall, the first question I have for you is 

how is it going? 

Mr. HALL. It is going well. If you mean the budget, it is concerning. 

Chairman JOHNSON. It is a mess. 

Senator CARPER. People ask me, not all the time, but quite a bit, 

what keeps me up at night, and I am the senior Democrat on this 

Committee and we focus a lot on cyber attacks and all kinds of attacks on our country, lone wolves. Those are the kind of things that 

keep me up at night. 

Same question for you. What keeps you up at night, at least on 

the professional side? 

Mr. HALL. Oh, on the professional side, it is sort of my job, is 

making sure that you have the information you need, Congress has 

the information it needs to make some tough decisions every day. 

Senator CARPER. I have a couple of questions that I want to read, 

and then a couple of questions I just want to, like, ask off the top 

of my head. I will take this one that my staff has been good enough 

to provide for me. 

But, if you go back a couple of years—I want to ask about longterm forecasts. It is important for us to, of course, plan for the fu-
18 

ture and make sure the policies that we put in place, they make 

sense and they are affordable, not just for now, but for the long 

run. 

But, if someone in 1985 attempted to project our economic and 

Federal budget outlook like this year, in 2015, I think even the 

best models could never have accounted for so many factors that 

have since played a part. We had no idea in 1985, for example, that 

the Internet would exist, that what happened on 9/11 would come 

about, the war in Afghanistan, two wars in Iraq, the rise of China 

and India, the 2008 financial crisis, the Great Recession would 

happen. A projection made in 1985 would have failed even to account for the savings and loan crisis that began the following year 

that some of us lived through. 

My question would be, how do we strike the right balance here? 

Knowing that there are so many unknowns, how do we strike the 

right balance? 

Mr. HALL. Well, that is difficult, and, I think one of the things 

that we strive to do is give you our best estimate. We all know it 

is probably not going to be right, but we also try to give you some 

idea of what sort of uncertainty is there. 

For example, in the long-term budget outlook report, we go 

through some scenarios where we change the mortality rate, where 

we change productivity, it is higher or lower than it has been historically. We change ranges of interest rates and et cetera to give 

you some idea of what sort of range of outcomes you really could 

have 25 years from now, besides our point estimate. And, that is 

to make exactly this point, that things change. It is very hard to 

predict the outcomes. 

But, I think one of the things that we are in a position of saying, 

though, is under almost any reasonable sort of scenario, the Federal debt 25 years from now is going to be at a very high level and 

we are headed on a path where it will be unsustainable under just 

about any of these scenarios under current law, no matter what 

reasonably happens to productivity or reasonably happens to interest rates, and that is part of our message today. 

Senator CARPER. OK. Thanks. I think we would all agree that 

some level of debt is reasonable and running a deficit is sometimes 

necessary. I always—the two most common words we hear about, 

in times of war, in an economic recession to try to prime the pump 

and get the economy moving. How would you explain to the American people the difference between, say, reasonable debt and unreasonable debt—or unreasonably high levels of debt? 

Mr. HALL. Sure. Well, it is a complicated thing. It is one of the 

reasons that it is so hard to talk about this. And, I would suggest 

they think about themselves, they think about businesses. is it OK 

for a household to run debt? Well, yes. How much debt is too much 

debt? It is not easy to say. It depends upon how big the household 

is, what the household’s prospects are. But, at some point, if a 

household or a business works up debt, it gets to a level where 

there is a real concern that it is not sustainable. But, that is sort 

of a way to think about it. 

So, there is no easy, hard and fast rule about how much debt is 

too much debt because you cannot say that. You cannot look at 

Starbucks and say, how much debt is too much debt for Starbucks, 
19 

because you have to look at a lot of things and investors have to 

make a decision. That is sort of the same thing here for the United 

States. There is nothing wrong with a running debt, but at some 

point, you have to think about is the debt too much? Is it getting 

to where it is going to be very difficult to pay it back over time, 

and I think that is what we are pointing out, is that we are getting 

to a level where it is getting very high and it is going to be very 

difficult to pay it back if we keep our current trends. 

Senator CARPER. I am not going to be able to make a perfect 

analogy here, but I am going to try. Say you have, on the one hand, 

you have a family, and they are trying to decide what to spend 

their money on, and if they do not have enough to—for example, 

one of the spouses or both the spouses want to go back to school, 

and maybe one spouse will work full time the other spouse go back 

to school and get a better education, be able to get a better job, or 

maybe they want their kids to be able to go to school finish school 

and be more—not just more productive, but actually be able to 

raise their income, too, or maybe have a choice to want to be able 

to get to work and you have to go work someplace where you cannot take transit, so maybe you invest in a car. 

Those are investments that are designed to enable a family to increase their income. But, when you think about the Federal Government spending money—and the family, they could decide to 

spend their money to go on a vacation to Hawaii instead of investing in the kinds of things we talked about. In the Federal Government, we can invest in things that actually enhance our long-term 

economic growth or not, and one of the things I focus on a lot, as 

my colleagues know, is making sure we are making smart investments in transportation infrastructure, because there is a big payoff there. What are some things that we ought to be investing in? 

What are some things that we ought to be investing in that maybe 

we are doing enough of, or maybe not enough of, that will help 

grow our economy? 

Mr. HALL. Well, I am in a position where I cannot give policy advice, but it is certainly true that the type of spending the government had has an impact. One of the things that I think is very interesting about our long-term budget outlook is that if you look 

under current law and go forward, spending on everything else besides the Social Security and health care goes down to a low level, 

and it is still unsustainable. 

So, my point is that, to a large degree, the big problems here are 

crowding out perhaps the sort of spending that you are talking 

about, which can help support economic growth. So, that is sort of 

part of the message here, I think, that spending on things like that 

can be worthwhile, but you have to consider, especially if you are 

going to pay for it with debt, is it going to have an impact on the 

economy that you want it to have if you are paying it with debt 

versus something else. 

Senator CARPER. All right. Good. Thanks. 

Chairman JOHNSON. Senator McCaskill. 
20 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Thank you. 

I do think it is frustrating, because I think there are a lot of misconceptions in America about the budget process and the difference 

between a deficit and a debt—— 

Mr. HALL. Right. 

Senator MCCASKILL [continuing]. And the difference between 

austerity and stimulus from an economic perspective. There were 

a lot of hysterics around the stimulus, but if we look at the data, 

I think you would agree, Doctor, that the data show the countries 

that engaged in stimulus did a much better job of navigating out 

of the hole than those countries that went with an austerity program. Would that be an accurate description of the growth in the 

various nations, based on the policies they embraced after we fell 

off the cliff? 

Mr. HALL. Well, CBO has weighed in, and there is a consensus 

in the economics profession that the stimulus did have an effect on 

economic growth—— 

Senator MCCASKILL. A positive effect. 

Mr. HALL. Yes. 

Senator MCCASKILL. But, it is counterintuitive that, when the 

government is in a bad place because of an economic downturn, 

that it spends more money, I mean, because all of us in our 

homes—— 

Mr. HALL. Right. 

Senator MCCASKILL [continuing]. If you are having a bad time, 

you spend less money. So, it is one of those things that is frustrating, because I think it is complicated—— 

Mr. HALL. Right. 

Senator MCCASKILL [continuing]. For people to step back and realize that stimulative spending is, in fact, a positive for the economy, and, in fact, I think that you would agree, there is a robust 

debate among the economic community now as to whether or not 

the stimulus was large enough. 

Mr. HALL. Right. Yes, that is true, and let me sort of pivot back 

to the budget issue, in my mind. The debt has gotten so large, and 

under current law it is going to get so large, our ability to respond 

to a future crisis like this is going to be very limited because we 

have worked up so much debt. And that is one of the concerns, I 

think, about having such a large debt, is this sort of uncertainty 

and what could happen with the economy, what could happen with 

a number of things. So, there is risk involved with having debt this 

high. 

Senator MCCASKILL. So, on the debt, one of the frustrating 

things as we look at public policy is that we look at the scoring and 

we try to figure out what it is going to cost. But, you all, for a lot 

of legitimate and valid reasons, do not ever score the positives of 

policies—for example, prevention. There is no question that several 

things contribute to lower health care costs, including spending 

more money on activities that help prevent illness. But, of course, 

that is never scored. 

Another example would be what we save by having everyone 

have some skin in the game. By that, I mean the Cadillac policies 

where nobody has to go in their pocket for anything and they see 
21 

their health care as free, as opposed to people who have deductibles 

and copays, what impact that has on, ultimately, the amount of 

what health care costs are in this country. 

I mean, those are two examples. I could give you a lot of other 

examples. Could you speak to the failure to quantify the money we 

save with public policy that prevents the spending of money and 

to calculating only how much money we are spending. 

Mr. HALL. Well, when we score things, we do try to take that 

into account when there is sufficient evidence, where there is some 

good research and we can—— 

Senator MCCASKILL. Give me an example of where you have. 

Mr. HALL. I can tell you on something we are working on. We 

have not gotten there yet, but we are looking very hard at the issue 

of obesity. We have been asked to look at the effects of obesity on 

health and et cetera going forward. That has turned out to be a 

very difficult thing to sort of quantify, as to whether that has an 

effect that is measurable in a budget. But, that is something, actually, where—— 

Senator MCCASKILL. But, we know it does. 

Mr. HALL. Well—— 

Senator MCCASKILL. It is just quantifying it is hard, right? 

Mr. HALL. Quantifying it is hard, and the research is not as 

straightforward as you might hope. But, we are working on that. 

We may get there—— 

Senator MCCASKILL. Not if you take into account the onset of 

adult diabetes and what we are spending. I mean, all you have to 

do is turn on the TV. Every third ad is for a blood monitor, all of 

which we are paying for, right? 

Mr. HALL. Right. And, like I say, if we can work out some solid 

estimates and solid evidence that that is actually true, then that 

will play into what we do. 

Senator MCCASKILL. So, can you give me an example where CBO 

has taken into account money that we will save by preventing certain activities or changing people’s behavior? 

Mr. HALL. Can I get back with you on that? I am sure we can 

dig up something—— 

Senator MCCASKILL. Because I have always been told, ‘‘well, we 

cannot—that does not count’’, and certainly on the health care 

bill—— 

Mr. HALL. Right. 

Senator MCCASKILL [continuing]. They did not count anything for 

the prevention, and there is obviously a lot of prevention now that 

is occurring, because people are not having to go in their pocket for 

prevention. They are able to go and get avasectomy—— 

Mr. HALL. Well, we are happy to write up something on our 

views on that. 

Senator MCCASKILL [continuing]. Mammograms and so forth—— 

Mr. HALL. Right. 

Senator MCCASKILL [continuing]. Without having to pay for 

them, and I do not think that that was ever taken into account, 

even though the health care bill did say it was going to bring down 

the deficit, and it has, has it not? 

Mr. HALL. Well, yes, our forecast is—that is right, that the ACA, 

on the whole, does do that. 
22 

Senator MCCASKILL. OK. Great. Thank you, Mr. Chairman. 

Chairman JOHNSON. Thanks, Senator McCaskill. 

I do want to address a little bit in terms of stimulus. What you 

spend money on is pretty important, correct? 

Mr. HALL. Yes. 

Chairman JOHNSON. I mean, there is no doubt that if you spend 

a lot of money, that is going to stimulate the economy. But, if you 

spend it on consumption versus, let us say, infrastructure—— 

Mr. HALL. Right. 

Chairman JOHNSON. Do you know, out of the $800-whatever billion stimulus how much of that was actually spent on something 

we would consider infrastructure—highways, bridges, that type of 

thing—versus just getting pumped into, for example, city and State 

Governments? 

Mr. HALL. I do not know that. 

Chairman JOHNSON. It is pretty small, though, is it not? 

Mr. HALL. I do not—— 

Chairman JOHNSON. The best estimate I have been able to get out of staff is about $50 billion into what I would consider infrastructure. 

Mr. HALL. Right. 

Chairman JOHNSON. I want to go back to debt burden and how 

much you can really carry, because you are right. It totally depends 

on the circumstance. In a growing organization, you take on a lot 

more debt because you are going to be a lot bigger in, 5, 10, 15 

years. Does it not really come down to debt service, though, in 

terms of whether you can afford it, and is that not what we are 

facing right here, is because we are at such historically low interest 

rates, we are not really feeling the full economic brunt of this enormous increase into our debt, where we are keeping those interest 

rates artificially low and we are able to service for the time being, 

but at some point in time, that is going to stop, correct? 

Mr. HALL. That is right, and that is in our 25-year forecast. We 

do have interest rates moving back to more historic levels. 

Chairman JOHNSON. To what level? 

Mr. HALL. I think we have the Treasury 10-year at something 

like 2.3 percent. I would have to look that up to make sure. 

Chairman JOHNSON. OK. I think right now, as Senator Enzi was 

saying, I think our total borrowing cost is about under 2 percent. 

Historically, what we were looking at is about 5.3 percent, overall 

average interest rate that the Federal Government is paying on its 

debt. 

Mr. HALL. Right. 

Chairman JOHNSON. So, I think your estimate is about 4.7 percent, so still under that 50-, 60-year average. 

Mr. HALL. Oh, right. Yes. The 4.7 percent is the net interest—— 

Chairman JOHNSON. Right. 

Mr. HALL [continuing]. Is 4.7 percent of GDP—— 

Chairman JOHNSON. But, basically nominal. That includes inflation, that type of thing. 

Mr. HALL. Correct. That is right. 

Chairman JOHNSON. OK. One thing you do not include in your 

forecast is another recession, correct? 

Mr. HALL. That is right. 
23 

Chairman JOHNSON. I just had staff quickly give me a note on 

how frequently we have recessions, and dating back to the 1960s, 

it is about a 9-year, then 3-year, 5-year, 10-year, 10-year, 8-year interval. As an economist, that is about right. Every 10 years or less, 

we are having another recession, correct? 

Mr. HALL. That is right. 

Chairman JOHNSON. So, again, your long-term projections, I understand you cannot project out a recession, but we can, based on 

the past, you can pretty well assume that there will be recessions, 

maybe three or four or more of those over the next 30 years. 

Mr. HALL. Unfortunately, that is probably—— 

Chairman JOHNSON. And that will make the numbers, the $103 

trillion, even worse. 

Mr. HALL. Well, that is right. We try to work in the long-run 

averages through a recession. So, you get some idea of a recession 

and then recovery, what it averages through that. But, there certainly is risk if there is a recession. 

Chairman JOHNSON. And, as Senator Enzi was alluding to, as 

well, part of the problem we have in terms of getting this under 

control is so much of the Federal budget is on automatic pilot, that 

we really only appropriate about a trillion dollars out of what is approaching a $4 trillion budget, is that not correct? 

Mr. HALL. Yes. 

Chairman JOHNSON. And, so, we do not have a whole lot of room 

to maneuver on an annual basis in terms of adjusting those things 

because these are programs that are termed entitlement programs, 

and if you qualify, it gets automatically spent. 

Mr. HALL. Yes. 

Chairman JOHNSON. I want to talk a little bit about the difference between total debt and debt held by the public. What is excluded from debt held by the public versus total debt, which right 

now is over $18 trillion total debt? 

Mr. HALL. Right. The idea here is that debt that is held by other 

parts of government is not included in debt held by the public, and 

the reason, at least, we focus on debt held by the public is this is 

the stuff that has economic impact. One part of the government 

owing money to another part of the government does not really impact the economy like owing to—— 

Chairman JOHNSON. It is not external debt, but it is a debt of 

the—for example, the biggest element of that is really Social Security Trust Fund, correct? 

Mr. HALL. Yes. 

Chairman JOHNSON. And that is about $2.77 trillion worth, correct? 

Mr. HALL. I think that is right, yes. 

Chairman JOHNSON. Now, to the Trust Fund, that Trust Fund 

holds about $2.77 trillion of U.S. Government bonds, correct? 

Mr. HALL. I think so. 

Chairman JOHNSON. So, again, that is an asset to the Trust 

Fund, right? But, what is a U.S. Government bond—what is it 

called to the Treasury? A liability, correct? 

Mr. HALL. Right. 

Chairman JOHNSON. Now, coming from the business world, if you 

are talking about one overall organization like the Federal Govern-
24 

ment, you would consolidate the books. So, when you consolidate 

the books of the Federal Government and you look at a $2.77 trillion asset in the Trust Fund versus a $2.77 trillion liability in 

Treasury, what does that net out to? Can you say it? 

Mr. HALL. Can you run it by me once more—— 

Chairman JOHNSON. OK. A $2.77 trillion asset in the Trust Fund 

of U.S. Government bonds is a $2.77 trillion liability to Treasury—— 

Mr. HALL. It zeroes out, yes. 

Chairman JOHNSON. It nets to—— 

Mr. HALL. Zero. 

Chairman JOHNSON. Zero. So, the Trust Fund, the Social Security Trust Fund, in terms of a financial value to the Federal Government, is equal to zero, correct? 

Mr. HALL. Right. Yes. 

Chairman JOHNSON. It is just an accounting convention. It is a 

bookkeeping—— 

Mr. HALL. Right. 

Chairman JOHNSON. OK. So, I want to just go through what happens now that we are actually paying out more in benefits that we 

are taking in the payroll tax. What is currently happening is the 

interest on those bonds are still being paid into the Trust Fund and 

the interest is covering the deficits currently. But, in a few years, 

the interest payments will no longer cover the expanding deficit in 

Social Security. So, the Social Security Trust Fund is going to have 

to start cashing those bonds in to the Treasury, correct? 

Mr. HALL. Yes. 

Chairman JOHNSON. So, they will take a bond, maybe $100 billion if that is the shortfall, give it to the Treasury, the Treasury 

will give them $100 billion to pay out benefits. But, how does the 

Treasury get that $100 billion? 

Mr. HALL. They borrow it from somebody else. 

Chairman JOHNSON. They borrow it. So, I guess, from my standpoint, the debt held within these agencies is an obligation. I realize 

we do not recognize it as such because, I think by Federal law, we 

really do not have to—we are really not obligated to make Social 

Security payments. Social Security is really not a pre-funded retirement fund. 

Mr. HALL. Right. 

Chairman JOHNSON. We did not really take those funds in and 

put those into an account for an individual taxpayer, correct? We 

brought that money in. We spent it. And in its place, we issued a 

U.S. Government bond. In a previous hearing, we actually had the 

Trust Fund. We have a picture of it. We did not bring it today. It 

is a four-drawer file in Parkersburg, West Virginia. That is what 

politicians from both parties are telling the American people, looking them straight in the eye and lying to them, saying that that 

is going to fund Social Security deficits for the next 20 or so years. 

It does not do that, does it? 

Mr. HALL. No. 

Chairman JOHNSON. No. So, the Trust Fund is a fiction. By and 

large, the Trust Fund is a fiction. It has no financial value to the 

Federal Government. 
25 

Now, had we—just real quick—had the Federal Government actually taken those surpluses and invested those in assets outside 

the Federal Government, for example, maybe a Dow Jones stock 

index fund, those would be a real hard asset that then the Trust 

Fund could actually cash those in and a different entity could have 

paid that and that actually would be funding benefits. But, that is 

not what happened, right? 

Mr. HALL. Right. 

Chairman JOHNSON. We took the money and we spent it. It is 

gone. And all we have in place of it is a piece of paper that basically says, $2.77 trillion. OK. We will be exploring this in far greater detail in a future hearing. Senator Carper. 

Senator CARPER. Thank you. 

I want to go back to the analogy of the family trying to figure 

out how to spend their money. Say you have a family that is renting. They were trying to decide whether to buy or just to continue 

to pay rent payments, and mortgage payments are maybe attractive—or mortgage rates are attractive, so they are tempted to actually buy a house, and they finally decide maybe that is in their best 

long-term interest. 

We rent a lot of space, as you know, in the Federal Government—a lot of space—and we sometimes wonder, well, maybe 

should we just go ahead and buy something or build something? 

Would we be better off? Would the taxpayers ultimately be better 

off? And, I think there is a lot of reason to say, yes, we would, and 

it is just not my conjecture, but folks a whole lot smarter than me. 

I think it was the Government Accountability Office (GAO) 

who—or maybe it was the General Services Administration 

(GSA)—but on the issue of Homeland Security, Department of 

Homeland Security continuing to rent space all over kingdom come. 

They rent a lot of space, and, it is a big agency, huge, dozens of 

agencies that are part of it. They are far-flung across this area and, 

really, across the world. But, they are trying to consolidate in one 

area, not all the Department, but big pieces of the Department. 

Former Secretaries Tom Ridge, Judge Chertoff, Janet Napolitano, 

all said in terms of actually managing the Department, it makes 

a whole lot of sense. 

But, we are also told by GSA that if they do that consolidation 

and we build, that over the next 30 years, we will save taxpayers 

over a billion dollars. But, yet, we continue to rent space, lease 

space as opposed to buying or building. 

What can we do in order to better ensure we make smarter decisions when it comes to acquiring space, paying for space? What do 

we need to do on our legislative side? My sense is that your hands 

are tied because when we try to buy or build, it does not score well 

because we have to account for everything up front as opposed to 

paying for renting something for 30, 40 years. What can we do to 

help make sure we just use some common sense here? 

Mr. HALL. Well, I suppose it is making the decision about it, obviously. It is understanding what the cost and what the extra cost, 

or not extra cost will be of buying versus renting, that sort of thing. 

Obviously, in terms of scoring something like that, that is something that we do routinely. We do not constrain anybody in that. 
26 

We just are trying to be clear what is going to be the impact of 

spending on something like that. 

Senator CARPER. Well, the way that the scoring occurs now, 

when the agency can clearly demonstrate—GSA said an agency can 

clearly demonstrate that a lot of money is going to be saved for taxpayers if we buy or build as opposed to continue renting, but yet 

we continue to rent or lease. Is there something that we need to 

do at the legislative branch in order to make sure we use some 

common sense, or enable you and your folks to use some common 

sense here? 

Mr. HALL. I do not think I have any advice on that, to be honest. 

It is something, I suppose, if you are interested in us following up 

on something like that, on likely the scoring impact of that sort of 

thing, we can talk about that in a Q and A afterwards, if you would 

like. 

Senator CARPER. Good. All right. Well, this is one I have been interested in for a while, so I will look forward to that conversation. 

Senator McCaskill was over here talking about prevention and 

that sort of thing. Major health care cost drivers, there are a lot 

of them, but among those major drivers are obesity. Among the 

drivers are dementia. I think we have about five million people 

that are suffering from Alzheimer’s disease, dementia today. That 

number is expected to grow. I used to think the drivers in Medicaid 

were, like, women and children. As it turns out, I am told maybe 

three-quarters of what we spend in Medicaid these days are for 

folks, older people in nursing homes, a lot of whom have dementia. 

Another health care cost driver is end-of-life care. We spend a 

huge amount, as you know, in the last 6 months of our lives. In 

some cases, people maybe do one of these advanced care directives 

or, stipulating what kind of care they would like to have in the last 

months or years of their life and they find that if they are in, like, 

a hospital, then they are fine, but if they get transferred to a different facility, there is no portability of that directive. 

I work out. I love to work out every day of my life, almost, and 

one of the places I work out is the YMCA back in Delaware, and 

there is a woman who works out there from time to time and I was 

talking to her. She is in great shape. I think she is in her 50s. She 

is in terrific shape. I asked her if her parents were also, like, really 

in good physical shape, and she said that they are deceased. I said, 

really? What happened? And she said her mom died of colorectal 

cancer, and I said, how old, and she said, like, in her 50s. And, I 

said, why? She said, she just did not want to get those screenings. 

They just did not like to do them. They were just uncomfortable, 

unpleasant, and she would rather than do that just take her 

chances. She died, a miserable death, too, I might add. 

One of the things we did in the Affordable Care Act is we basically tried to make sure people get their screenings, whether it is 

colorectal, whether it is prostate, whether it is breast, but I do not 

know that we always score those, and in the end, we know we save 

a lot of money. But, the score is not encouraging for us to do what 

in the end saves money. 

Could you just comment on what we need to do to change that? 

Mr. HALL. Well, actually, if you like, I think I mentioned this to 

Senator McCaskill, that if you like, we can followup with some de-
27 

scription of how we score things like that and what sort of process 

we go through in looking at how to score something like that. 

Senator CARPER. OK. The last one I would ask, just briefly, GAO 

has finally put on their High-Risk List the issue of climate change. 

They pointed out that enhancing resilience in communities may 

carry some up-front costs but could reduce the damages in the future by a lot. How should CBO factor into its analysis the growing 

costs of climate change to the economy and the Federal budget? 

Mr. HALL. We actually have done a little work on that. 

Senator CARPER. Have you? 

Mr. HALL. Yes, we have. We have looked at estimates of increased hurricanes and drawn that sort of a trend and it does have 

an impact on GDP. It is not a big impact on GDP. In fact, I think 

we have a little discussion, actually, in this report on that. And, 

the reason it does not have a big budgetary impact, of course, is 

because the shared economy that is spread along the coast is not 

that big and the ag effects can be kind of mixed, because you can 

actually have an agricultural boost somewhere else where you have 

it on a negative. 

But, we do have that—we do have some discussion on that, and 

we are, in fact, doing some more detailed work on the impact of increased hurricanes and maybe rising sea level. So, we will actually 

have some work on that pretty soon. 

Senator CARPER. Good. Well, we look forward to that. Thank you. 

Thanks very much, Mr. Chairman. 

Chairman JOHNSON. Thank you, Senator Carper. 

By the way, to both you and Senator McCaskill, if you are looking for an ally, there is a concept out there, the cure strategy, 

which I think is exactly the direction we should be going on. 

As a fiscal conservative, I think it is money really well spent to 

try and cure diseases, and what I would love to do is get a commitment of CBO to really take a look at some of the projections, for 

example, on how much we are going to be spending on Alzheimer’s 

if we do not come up with a cure. What is the current cost of just 

diabetes, those types of things. 

I think it is kind of hard to—in my guess, it would be very difficult to project prevention, and say, if you do this—but we can certainly have a pretty good hard number on what we are spending 

treating diabetes, what we are spending treating Alzheimer’s, and 

then do the demographic projection in terms of how many, with the 

aging population, what that is going to cost. I know the Alzheimer’s 

Association has done those types of things. So, I think those are extremely good numbers and the types of information you would need 

to help direct action, which kind of gets us back to the point we 

were making in this Committee. 

It is really about how do we simplify how we project, how we 

communicate those projections. It is about providing information, 

not relying on demagoguery anymore, because the only way we are 

going to solve these problems is, again, lay out the information, lay 

out the facts, have a very unbiased, nonpartisan intermediary, arbitrator of the information so that we are not sitting and battling 

over, well, this is my figure, that is your figure, but we can kind 

of come together and go, OK, let us at least first agree on the figures as best we can, understand what underlies them. 
28 

So, again, I am hoping that, we have reported a lot of pieces of 

legislation. We have come to CBO in the past looking for scores. 

I know you are busy. I am hoping you are valuing this, and I hope 

you understand the direction I am trying to go here. Let us simplify things. Let us get information to the American public. Let us 

get information to policymakers so that we are on the same page. 

So, I certainly am looking for a commitment out of CBO to, with 

what limited resources you have, and on a prioritized basis—and 

we are not going to overburden you. I am very sympathetic from 

that standpoint. But, I really would like a little bit more help in 

terms of getting scores on some of these things and work with you 

to, again, prioritize what our requests are. Is that fair enough? 

Mr. HALL. Sure. Yes. 

Chairman JOHNSON. Just two quick final questions. I want to go 

back a little bit on debt and serviceability of it. Do you have any 

sense—if you do not, let me know and we will submit it as a question to the record—what our current maturity level is of our current Federal debt versus prior years and what the recommendation 

would be going forward of trying to extend that, take advantage of 

these low interest rates? Can you comment on that? 

Mr. HALL. I cannot, but I am happy to followup. 

Chairman JOHNSON. OK. I think that is pretty important. I 

would like to see where we used to be, where we are today, because 

my sense is we have really shortened that maturity time period 

pretty dramatically to take advantage of these very low short-term 

interest rates when what we maybe ought to be doing is really trying to go as long as possible without driving up the interest rates 

themselves by having a great deal of demand. 

The other thing, again, this might be picked up in our follow-on 

hearing on Social Security, but do you know what current law is 

when we no longer have those bonds and that accounting convention runs out with Social Security benefits? Do you know what actually happens according to current law if we do not do something? 

Mr. HALL. Uh—— 

Chairman JOHNSON. We are facing that with the Social Security 

Disability Trust Fund—— 

Mr. HALL. Right. 

Chairman JOHNSON [continuing]. In the next year or two, correct? 

Mr. HALL. That is right. Yes, that is right. The Disability one is 

pretty quick. It is fiscal year (FY) 2017. No, I do not know what 

the current law is on that. I think we sort of assume that money 

is put in there—— 

Chairman JOHNSON. Something is going to happen. I have heard, 

and again, it is very difficult for us—I have heard that, basically, 

what ends up happening by current law is benefits would be reduced to equal the revenue generation, but I cannot get a real handle on that, so I cannot say that definitively at all, but if you could 

check on that, we are going to certainly bring in some experts on 

Social Security to find out what is the law if we just put our heads 

in the sand on this, which is something I do not recommend we do. 

But, again, Dr. Hall, I really do appreciate your testimony, the 

time you have taken today, and I really, in all sincerity, I want to 

work with you, because your agency is so critically important to get 
29 

that information out there for the American public to understand 

the depth of these issues, because, as Senator Enzi was saying, the 

sooner you address these problems, the less painful the solutions 

will be. 

So, with that in mind, this hearing record will remain open for 

15 days, until July 24, at 5 p.m., for the submission of statements 

and questions for the record. 

This hearing is adjourned. 

[Whereupon, at 11:26 a.m., the Committee was adjourned.] 

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