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25–238 2017

THE CONGRESSIONAL BUDGET OFFICE’S 

BUDGET AND ECONOMIC OUTLOOK 

HEARING 

BEFORE THE

COMMITTEE ON THE BUDGET 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, FEBRUARY 2, 2017 

Serial No. 115–02 

Printed for the use of the Committee on the Budget 

( 

Available on the Internet: 

www.gpo.gov/fdsys/browse/committee.action?chamber=house&committee=budget 


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COMMITTEE ON THE BUDGET 

DIANE BLACK, Tennessee, Interim Chairman 

TODD ROKITA, Indiana, Vice Chairman 

MARIO DIAZ-BALART, Florida 

TOM COLE, Oklahoma 

TOM MCCLINTOCK, California 

ROB WOODALL, Georgia 

MARK SANFORD, South Carolina 

STEVE WOMACK, Arkansas 

DAVE BRAT, Virginia 

GLENN GROTHMAN, Wisconsin 

GARY J. PALMER, Alabama 

BRUCE WESTERMAN, Arkansas 

JAMES B. RENACCI, Ohio 

BILL JOHNSON, Ohio 

JASON SMITH, Missouri 

JASON LEWIS, Minnesota 

JACK BERGMAN, Michigan 

JOHN J. FASO, New York 

LLOYD SMUCKER, Pennsylvania 

MATT GAETZ, Florida 

JODEY C. ARRINGTON, Texas 

A. DREW FERGUSON IV, Georgia 

JOHN A. YARMUTH, Kentucky, 

Ranking Minority Member 

BARBARA LEE, California 

MICHELLE LUJAN GRISHAM, New Mexico 

SETH MOULTON, Massachusetts 

HAKEEM S. JEFFRIES, New York 

BRIAN HIGGINS, New York 

SUZAN K. DELBENE, Washington 

DEBBIE WASSERMAN SCHULTZ, Florida 

BRENDAN F. BOYLE, Pennsylvania 

RO KHANNA, California 

PRAMILA JAYAPAL, Washington 

Vice Ranking Minority Member 

SALUD O. CARBAJAL, California 

SHEILA JACKSON LEE, Texas 

JANICE D. SCHAKOWSKY, Illinois 

PROFESSIONAL STAFF

RICHARD E. MAY, Staff Director 

ELLEN BALIS, Minority Staff Director 


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C O N T E N T S 

Page 

Hearing held in Washington, D.C., February 2, 2017 .......................................... 1 

Hon. Diane Black, Interim Chairman, Committee on the Budget ...................... 1 

Prepared statement of ...................................................................................... 4 

Hon. John A. Yarmuth, Ranking Member, Committee on the Budget ............... 6 

Prepared statement of ...................................................................................... 8 

Keith Hall, Ph.D., Director, Congressional Budget Office ................................... 10 

Prepared statement of ...................................................................................... 12 

Hon. Tom McClintock, Member, Committee on the Budget, questions submitted for the record ............................................................................................ 52 

Hon. Todd Rokita, Vice Chairman, Committee on the Budget, questions submitted for the record ............................................................................................ 53 

Director Hall’s responses to questions submitted for the record ......................... 54 


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THE CONGRESSIONAL BUDGET OFFICE’S 

BUDGET AND ECONOMIC OUTLOOK 

THURSDAY, FEBRUARY 2, 2017 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE BUDGET, 

Washington, DC. 

The committee met, pursuant to call, at 10:00 a.m., in Room 

1334, Longworth House Office Building, Hon. Diane Black [interim 

chairman of the committee] presiding. 

Present: Representatives Black, Cole, McClintock, Sanford, 

Grothman, Renacci, Johnson, Lewis, Faso, Smucker, Arrington, 

Ferguson, Yarmuth, Moulton, Jeffries, Higgins, DelBene, 

Wasserman Schultz, and Khanna. 

Interim Chair BLACK. The hearing will come to order. Welcome 

to the Committee on the Budget Hearing on the Congressional 

Budget Office’s Budget and Outlook. I want to thank everyone for 

being here this morning. We are holding this hearing today to discuss the Congressional Budget Office’s budget and economic outlook which gives us a 10 year projection of our spending, our national debt, and how the economy is going to perform over the next 

decade. 

The report forms the cornerstone of the work we do here at the 

House Budget Committee, and I want to thank everyone at the 

CBO for their hard work in producing this report. I would also like 

to welcome the CBO director, Keith Hall. Director Hall, I do appreciate your taking the time to testify today, and I look forward to 

your insight as we discuss this report. 

The discussion we will have today is a serious one because as 

CBO indicates, we face enormous fiscal and economic challenges. 

Deficits are beginning to rise again and economic growth continues 

to be subpar. Legacies of the last administration’s policies that encourage more spending, more debt, and more government. These 

challenges have a real impact on every person in this country. 

The numbers we are reviewing today affect the ability of every 

American to buy groceries, obtain a loan, to start a small business, 

or to get a good return on their retirement plan. We know this to 

be the case because CBO’s report is telling us of what would happen if we kept President Obama’s policies in place. Without any 

changes to the current law, the deficit would rise from $587 billion 

in fiscal year 2016 to $1.4 trillion in fiscal year 2027. And during 

that same time period, our national debt will jump to $30 trillion. 

To put that in human terms, that is $93,000 for every American. 

And for a lot of folks, that is about what it costs to buy a home. 


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CBO tells us that this ever-increasing debt spiral will hamper economic growth and consign the country to a lower standard of living. 

As a grandmother, I want my grandchildren to have every opportunity that I did. But on our current path, the dream of a good job 

or owning a home and sending their kids to college is becoming 

harder and harder. Much of this unsustainable 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 and paid into them 

for their entire lives. 

To compound these problems, economic growth is set to average 

at a morbid 1.9 percent over the coming decade, well below the historic average of just over three percent. 

Slow economic growth hurts our country in multiple ways. It 

means fewer jobs and less opportunities for Americans, it means 

smaller paychecks and less financial security for those Americans 

who have a job. In fact, more than 5 million Americans are working 

part-time because they cannot find a fulltime job. 

That means that we got welders, computer technicians, nurses, 

and people in all sorts of industries who want to contribute to our 

economy, but they are being let down by the rules and regulations 

coming out of Washington. The problem is particularly acute 

among men. 

One of the key symptoms of this subpar economic recovery has 

been the decline in the labor workforce participant rate of those of 

primary 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 for 7 years. 

I am a hard worker and I have never tried for any government assistance. I am positive I will have a job soon, but I have 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 7- 

year-old. 

Now, it is pretty clear that Chris is exactly the type of worker 

that makes our economy the best in the world, and he is a good 

husband and father who wants to take care of his family. Chris 

wants to make our country stronger, and it is 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. 

CBO’s report tells us what will happen if we do nothing, but that 

is 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 I can help guide us informing 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, Mr. Yarmuth. 


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[The prepared statement of Interim Chair Black follows:] 


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Mr. YARMUTH. Thank you, Chairman Black, and thank you, Director Hall for appearing before us today to outline CBO’s updated 

economic and budget outlook. Long-term outlook remains troubling, 

of course. We are a few years away from an increase in Federal 

deficits and debt driven by the increased healthcare and retirement 

costs of an older population. 

Your report outlines our circumstances as a new administration 

takes office. Total deficits over 10 years are essentially the same 

as you projected in August. You projected this year’s deficit to be 

lower than last year’s and next year’s to be lower still, and as your 

report says, the economy is currently on solid ground. That is a 

much better starting point than President Obama faced 8 years 

ago. President Obama inherited an economy in freefall. The country was in the midst of the deepest recession in generations, losing 

nearly 800,000 jobs per month. 

In its January 2009 outlook, CBO was projecting a deficit of more than $1 trillion and the economy was projected to shrink by 

2.2 percent. That turned out to be optimistic. In contrast, President 

Trump is inheriting a healthy economy. 

The economy has added 15.8 million private sector jobs since 

2010. The unemployment rate is less than half its 2009 peak, and 

the budget deficit has fallen by more than $800 billion, a nearly 

two-thirds reduction as a share of the economy. This year’s CBO 

report projects that the economy will grow at a 2.3 percent rate. 

Job creation will also grow at a steady rate, and the deficit will 

shrink over the next 2 years. What a difference 8 years makes. 

President Obama’s economic agenda is also paying dividends on 

many other fronts. Tens of millions of Americans now have the economic security that comes with having health coverage and thereby 

being free from fears of an accident or illness sending them into 

bankruptcy. Stock market has tripled in value, the auto industry 

has recovered from a near death experience, manufacturing has 

added jobs for the first time since the 1990s, and wages have begun 

to grow at a healthy pace. 

The financial industry is better capitalized and more secure with 

stronger protections for consumers. We have dramatically reduced 

our dependence on foreign oil and increased our production of renewable energy. Housing prices have largely recovered and millions 

of home owners are no longer under water on their mortgages. I 

could go on and on, and I probably should because I know my colleagues on the other side of the aisle will present an alternative reality. 

I am dealing in facts, and the fact is this Congress and the new 

Trump administration are getting ready to take our country down 

a far different path. Republican leadership is moving to repeal the 

Affordable Care Act with no plan to replace it. Thirty-two million 

people will lose health coverage, premiums will double, and we will 

return to the days when insurance companies decide who lives and 

who dies. House Republicans are planning deep tax cuts and a rollback of financial protections. Recent Republican Presidents have 

tried this approach. 

Each time, it resulted in skyrocketing deficits, a recession, and 

ultimately a financial crisis, the most recent of which brought our 

country to the brink of total collapse. I was briefed by Paulson and 


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Bernanke 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, I want to raise the issue of immigration. It has been 

heart wrenching to see the immediate impact of the President’s executive order during the past week. It is discouraging that the first 

immigration action of this White House separated families, vilified 

the innocent, and will fail to make our Nation safer by every logical 

measure. 

That being said, I was a member of the Gang of Eight in 2013, 

four democrats and four republicans. We drafted comprehensive 

immigration reform legislation that we were confident had the bipartisan votes to pass the house. The only thing missing was the 

political will of Republican leadership to bring it to the floor. 

Beyond addressing humanitarian and security needs, CBO has 

repeatedly told us that comprehensive immigration reform would 

mean a larger economy and a smaller budget deficit. It is my hope 

that my colleagues across the aisle will recognize these facts and 

enact the immigration reform we so desperately need. We cannot 

solve the challenges we face as a Nation whether it is immigration, 

health care, the economy, or passing a congressional budget without acknowledging what got us here and continuing on that path. 

To return to where we were and abandon all the progress we 

have made would be devastating, not just for American families 

today but for generations to come. With that, Director Hall, I look 

forward to your testimony. I yield back. 

[The prepared statement of Mr. Yarmuth follows:] 


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Interim Chair BLACK. Thank you, Mr. Yarmuth. In the interest 

of time, if any other members have opening statements, I ask you 

to submit them for the record. 

I would like now to recognize the director of the CBO, Dr. Keith 

Hall. Mr. Hall, thank you again for your time today, and the committee has received your written statement, and it will be made 

part of the formal hearing record. You have 5 minutes to deliver 

your oral remarks. You may begin when you are ready. 

STATEMENT OF KEITH HALL, PH.D, DIRECTOR, 

CONGRESSIONAL BUDGET OFFICE 

Mr. HALL. Thank you. Chairman Black, Ranking Member Yarmuth, and members of the committee, thank you for inviting me 

to testify about the Congressional Budget Office’s most recent analysis of the outlook for the budget and for the economy. 

I will discuss a few highlights of our updated budget and economic projections which were released last week. After my brief remarks, I will be happy to take your questions. 

The economic forecast that underlies CBO’s budget projections 

indicates that in real terms gross domestic product will expand an 

average annual pace of 2.1 percent over the next 2 years, if current 

laws remain generally unchanged, after rising last year at an annual rate of 1.8 percent. We expect that growth to boost employment, virtually eliminate the remaining slack in the economy, and 

drop the unemployment rate to 4.4 percent by the fourth quarter 

of 2018. 

Further ahead, according to CBO’s projections, GDP will expand 

at an average annual rate of 1.9 percent over the second half of the 

coming decade. That growth rate represents a significant slowdown 

from the average over the 1980s, 1990s and early 2000s, mainly because of the slower growth projected for the Nation’s supply of 

labor which largely results from ongoing retirement of baby 

boomers and the relative stability in the labor force participation 

rate among working women. 

As slack diminishes over the next 2 years, we expect the rate of 

inflation to rise to the Federal Reserve’s goal of 2 percent and to 

stay there on average. We also anticipate that the Federal Reserve 

will steadily raise the target for Federal funds and that interest 

rates over the next few years will be significantly higher than they 

are now. 

CBO’s current economic projections differ a bit from those it published in August 2016. The agency now expects GDP in 2016 to be 

modestly lower than it projected last summer. It also expects lower 

interest rates in the next 5 years but projects a higher rate of labor 

force participation throughout the next decade than it projected in 

August. In fiscal year 2016, for the first time since 2009, the Federal budget deficit increased in relation to GDP. 

CBO projects that over the next 10 years, if current laws remain 

generally unchanged, budget deficits would eventually follow an 

upward trajectory, the results of three main trends. 

First, strong growth in spending for retirement and healthcare 

programs targeted to older people, especially Social Security and 

Medicare. 

Second, rising interest payments on the government’s debt. 


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And third, modest growth in revenue collections. By the end of 

the period, the accumulating deficits would drive up debt held by 

the public from its already high level. Moreover, 3 decades from 

now, if current laws remain in place, that debt would be nearly 

twice as high relative to GDP as it is this year and would reach 

a higher percentage than any previously recorded. 

Such high and rising debt would have serious negative consequences for the budget and the Nation including an increased 

risk of a fiscal crisis. 

Our estimate of the deficit for 2017 is lower than our August estimate, primarily because we now expect lower mandatory spending. The current projection of the cumulative deficit for the 2017 

to 2026 period, however, is about the same as we published in August. 

I am often asked specifically about our projections for Medicaid 

and Federal subsidies for health insurance purchased through the 

market places established by the Affordable Care Act. By CBO’s estimates, an average of 12 million people under the age of 65 will 

have health insurance in any given month in 2017 as a result of 

the expansion of Medicaid under the ACA. 

In addition, CBO and the staff of the Joint Committee and Taxation estimate that this year, nine million people per month on average will receive subsidies for nongroup coverage purchased 

through the marketplaces. An additional 1 million people are projected to be covered by unsubsidized insurance purchased through 

the marketplaces. We estimate that 27 million people under the 

age of 65 will be uninsured on average in 2017. 

CBO and JCT currently estimate that in 2017, Federal spending 

for people made eligible for Medicaid covered by the ACA will be 

$70 billion and that net Federal subsidies for coverage obtained 

through the marketplaces will be $45 billion. For the entire 10 year 

period, 2018 to 2027, if current laws remain in place, those two 

types of costs would total $1.9 trillion. It is important to note 

CBO’s baseline is not intended to be a forecast of what will happen. 

Rather, it is meant to provide a neutral benchmark that policymakers can use to assess the potential effects of policy decisions. 

CBO’s budget and economic projections are predicated on the assumption that the laws that are currently governing Federal taxes 

and spending generally remain in place for the entire projection period. Even if that occurred, and there are no changes in those laws 

before the end of the period, it would still not be possible to predict 

budgetary and economic outcomes precisely because many other 

factors are uncertain. 

Our goal is to construct budget and economic projections that fall 

in the middle of the distribution of possible outcomes given both 

the fiscal policy embodied in current law and the availability of economic and other data. I would now be happy to answer your questions. 

[The prepared statement of Mr. Hall follows:] 


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Interim Chair BLACK. Thank you, Mr. Hall. Now, we will begin 

the question and answer session. If I could ask the staff to bring 

up Figure 5 from my first question. Mr. Hall, CBO’s economic forecast has been trending sharply downward in the recent years, and 

roughly 5 years ago, CBO was expecting real GDP growth to average around three percent over the 10 year budget horizon. Close to 

that long-term average growth rate that we have seen here in the 

U.S., that figure has been dropping consistently, and in this latest 

forecast, it is down to just 1.9 percent. 

So, it seems that CBO is expecting that the U.S. economy will 

experience a protracted economic malaise for at least the next decade under current policies. So, two questions I have for you. First 

of all, what are the reasons for CBO keep ratcheting down its projections for the GDP growth, and secondly, how will this much 

lower expected growth path affect our Federal budget? 

Mr. HALL. They look forward over the next 10 years. We do expect the slack in the economy to be virtually eliminated over the 

next 2 years, so we will be on what we think is the potential 

growth of GDP, and what is constraining the potential growth of 

GDP as we forecast it something like 1.8, 1.9 percent, is a combination of a more slowly growing labor force. A lot of that is an aging 

population as baby boomers retire, not all of it, however, and slower productivity growth. 

Since the end of the recession, productivity growth has only been 

0.8 percent, so it is less than 1 percent productivity growth. We expect that will go up by the end of the period as something like 1.3 

percent, but that is still lower than it has been in the past. So, in 

fact, if you sort of take that labor force of growing 0.5 percent, productivity growing 1.3 percent, add those together, that 1.8 percent, 

1.9 percent is about our economic forecast. And so, the challenges 

are slower growing labor force and slower growing productivity, 

and again we have this issue with baby boomers in particular that 

we have seen coming for a long time. It is just starting to get closer 

and closer now. 

Interim Chair BLACK. How do you expect what you are projecting 

up here to affect the Federal budget? 

Mr. HALL. Well, this is going to have an impact. This is going 

make, it is going to contribute probably to the growth in the deficit 

going forward. Something like productivity, for example, which is 

part of what is at the heart here, has a pretty significant impact 

on our budget forecast, so if we get some increase, for example in 

productivity, we will have a smaller growing deficit, but the problem is so big that even that is not really going to solve the problem. 

Interim Chair BLACK. So, to the other end of that, coupled with 

this sluggish economy is the relentless rise in our government 

spending and deficits. And your figures show that the tax revenues 

are already above the 50 year averages of percentage of DDP and 

are projected to keep growing, and yet our spending keeps growing 

faster. If we tried to balance the budget just by raising taxes, how 

big would the tax increase be required in order to be able to catch 

up? 

Mr. HALL. Well, just to give you some idea. We have actually got 

a great little Figure 17, and it gives you some idea of the size of 

the deficit relative to the size of things like revenues and discreVerDate Sep 11 2014 04:38 May 06, 2017 Jkt 025238 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 E:\HR\OC\A238.XXX A238

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tionary spending and etc. We see the deficit in 10 years it is going 

to be about $1.4 trillion. That is about 5 percent of GDP, and total 

revenues are going to be about 18 percent of GDP in 10 years. So, 

it is a major chunk of revenues right now. So, it would be a pretty 

significant increase in revenues to get there. 

Interim Chair BLACK. Any idea of what percent we would have 

to increase taxes in order to be able to get there? 

Mr. HALL. We have not done a scenario like that. 

Interim Chair BLACK. But significant is what you are saying. 

Mr. HALL. It would be significant, and it would probably also significantly change our economic forecast as well, so it makes it particularly complicated. 

Interim Chair BLACK. So, even for those who would favor some 

combination of spending restraint and tax increases, is it fair to 

say that getting control of spending is really indispensable in this 

equation to overcome those chronic deficits and debt? 

Mr. HALL. Well, that seems to be the picture. The growing deficit 

and the growing debt is so large it is hard to imagine just picking 

on either revenues or outlays and not looking at both things, and 

the broader you look, the smaller the change you need. So, if you 

restrict yourself to just smaller buckets, for example, just discretionary spending, you really got to reduce discretionary spending. 

So, that is clearly one of the features here that we see that this 

is a really big hole to fill. 

Interim Chair BLACK. So, on the other side of that. If we could 

achieve a more robust degree of economic growth, say something 

closer to that historic average of just a little over 3 percent, how 

much would that help us in shrinking those deficits? 

Mr. HALL. I will give you a little bit of an idea. We do not have 

GDP in here, but we have a little scenario with productivity 

growth. For every one-tenth of a percentage point in productivity 

growth, we see the deficit in 10 years shrinking by about $50 billion. So, something like an increase in productivity of a half a percentage point would be pretty significant, and that is going to reduce the deficit by about a $250 million and that is out of a $1.4 

trillion deficit. So, that makes a difference, but it is, even a half 

a percentage point is not enough to balance the budget essentially 

in 10 years. 

Interim Chair BLACK. Let me go to another topic. Let’s go to Figure 2, please. One of the most troubling aspects of our CBO’s outlook is the stubbornly low rate of labor workforce participation. 

That rate now stands at 62.7 percent close to a 40-year low, and 

CBO expects this to continue declining over this next decade which 

is just really disappointing. Obviously, the ongoing retirement of 

baby boomers generation plays a key role, but CBO also states that 

government policies are exacerbating the trend. 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 crease incentives 

for work? 

Mr. HALL. 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. You can look at labor force growth, and you 

can look at productivity growth. If you compare our growth that we 


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see over the next 10 years to what we had in the 1990s when we 

had 3.3 percent GDP, the slowdown of labor force growth is about 

half that difference. 

So, it is pretty significant, and you are right, although baby 

boomers retiring is a source of that decline in labor force participation, we also have lower labor force participation by every cohort 

in the United States. And, that is certainly one of the targets I 

think for having sort of a supply side impact that raises potential 

GDP is doing things to increase the labor force participation by 

working age people. 

Interim Chair BLACK. What kind of policies can we initiate to 

change this tragectory? 

Mr. HALL. Well, certainly we have identified, we often do, we 

point out what amounts to implicit taxes on work. There are a 

number of things that are implicit taxes on work where we reduce 

benefits when income goes up. The ACA itself probably reduces 

labor force participation. That is a drag as well. There are a number of things like that. I do not want to get too specific about it, 

but just the sort of things that will get people back into the workforce are things that will help that labor force participation and 

help this potential GDP growth problem that we have. 

Interim Chair BLACK. I do thank you for all of your comments 

on this, and I will go back to my opening remarks as I conclude 

my time, that it really bothers me so much that we have people 

who are out of the workforce because I know from my career and 

my children and so on, that work is good for the soul. And I often 

tell people that after you ask someone, you say hello, this is my 

name, what is the second question you ask them? What do you do? 

And if you are productive and you are feeling good about your work 

and what you are contributing to society, that overall helps the entire society. 

And so, this is for me even more about how we have our society 

grow as a society that is whole and healthy as much as it is and 

what it will do to help keep the economy going. All of this together 

is what makes our country great. Thank you, and I now yield to 

the ranking member, Mr. Yarmuth. 

Mr. YARMUTH. Thank you, Chairman Black. I am going to defer 

my questions to later in the hearing. 

Interim Chair BLACK. So, who came into the room? Oh, it is coming. Okay. Would you like to yield to one of your members? 

Mr. YARMUTH. Sure. I would like to. 

Chairman BLACK. You know, that was here first. 

Mr. YARMUTH. All right, Mr. Jeffries from New York was here 

first, so I will yield to him. 

Interim Chair BLACK. Mr. Jeffries, you are recognized for 5 minutes. 

Mr. JEFFRIES. Thank you, chair, and thank the distinguished 

ranking member for yielding. A statement was made earlier that 

we can chose to get the economy working again. I want to pursue 

that for a moment, because I think that the economy has been 

working ever since the turnaround that we engineered by the previous President 8 years ago. Is not it in fact the case that when 

Barack Obama came into office this country was in a mess and in 

the danger of total collapse? 


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Mr. HALL. Well, that is right. We were undergoing significant job 

loss and decline in GDP growth. 

Mr. JEFFRIES. Stock market was a mess. Correct? 

Mr. HALL. Yes. 

Mr. JEFFRIES. Automobile industry a mess. Correct? 

Mr. HALL. Yes. 

Mr. JEFFRIES. Bank industry a mess. Correct? 

Mr. HALL. Yes. 

Mr. JEFFRIES. 401k is a mess. Correct? 

Mr. HALL. Yes. 

Mr. JEFFRIES. Housing market a mess. Correct? 

Mr. HALL. Yes. 

Mr. JEFFRIES. And since 2010, this country has gained more than 

15 million private sector jobs. Is that right? 

Mr. HALL. I think that is right. 

Mr. JEFFRIES. Eight years ago, the stock market was around 

6,000. Is that right? 

Mr. HALL. That sounds right. 

Mr. JEFFRIES. And now it is over 19,000. Is that correct? 

Mr. HALL. Yes. 

Mr. JEFFRIES. Eight years ago, the unemployment rate was at 

over 10 percent. Is that right? 

Mr. HALL. Yes. 

Mr. JEFFRIES. And now it is under 5 percent. Is that correct? 

Mr. HALL. Yes. 

Mr. JEFFRIES. The deficit has been reduced by more than a trillion dollars over the last 8 years, correct? 

Mr. HALL. That sounds right. 

Mr. JEFFRIES. Okay. So, the statement about getting the economy working again I think perhaps is inaccurate as a snapshot of 

what actually has occurred over the last 8 years, and so it seems 

that what we need to do is build upon the tremendous progress 

that has been made under the leadership of Barack Obama and 

keep this country moving forward. I would also note on this question of whether we should cooperate with the new President, that 

Barack Obama was able to lead an economic turnaround without 

an ounce of cooperation from the other side who decided to pursue 

an agenda of obstruction today, obstruction tomorrow, obstruction 

forever over the last 8 years and so hopefully we can find ourselves 

in a situation where we move forward in a cooperative fashion in 

a way that benefits all of America. In terms of our present situation, the CBO expects that economic growth will be sluggish over 

the next decade. Is that right? 

Mr. HALL. That is correct. 

Mr. JEFFRIES. And in part that is because of a decline in labor 

force participation. Correct? 

Mr. HALL. That is correct. 

Mr. JEFFRIES. Now, would the retirement that will continue of 

baby boomers out of the labor workforce exacerbate this problem in 

a way that will continue to provide modest, if not sluggish, economic growth moving forward over the next 10 years? 

Mr. HALL. That is right. It is almost certainly going to happen 

and certainly going to be a difficulty in achieving higher economic 

growth. 


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Mr. JEFFRIES. And this is a problem that Japan for instance 

which had a booming economy in the 1980s is experiencing today. 

Is that true? 

Mr. HALL. That is true. 

Mr. JEFFRIES. And one of the reasons why Japan in experiencing 

that problem is because they got very harsh immigration policies, 

and they do not have the natural growth from their own population 

that would lead to robust participation in the labor force. Is that 

right? 

Mr. HALL. Yes. 

Mr. JEFFRIES. So, there was a comprehensive immigration reform 

bill that I think was passed by the Senate in 2013. Mr. Yarmuth 

mentioned it worked hard to get it enacted into law here in the 

House, but due to the politics of the situation, it did not go anywhere. I believe the CBO studied that particular piece of legislation 

and concluded that over about a 20 year period it will reduce the 

deficit I think by $700 billion. Is that right? 

Mr. HALL. That sounds right. 

Mr. JEFFRIES. So, it would have a positive impact, comprehensive 

immigration reform, on our economic situation. Correct? 

Mr. HALL. That is right. It is primarily through increased growth 

in the labor force. So, that is one of the primary constraint going 

forward is the growth in the labor force. 

Mr. JEFFRIES. And one of the ways that we can deal with the 

labor force moving forward is to make sure that our immigration 

policies continue to welcome individuals who come to America, 

work hard, will contribute to the labor force since we are not naturally able to produce the numbers that would result in increased 

economic productivity. Is that a fair statement? 

Mr. HALL. It probably is, although keep in mind the effects of 

any particular labor immigration policy can be complicated, so we 

would have to sort of see exactly what is being proposed, but there 

is one constant in that it does affect the labor supply and that 

labor supply does help GDP growth. 

Mr. JEFFRIES. Okay. Thank you. I yield back. 

Interim Chair BLACK. The gentleman from Oklahoma is recognized. Mr. Cole. 

Mr. COLE. Thank you, Madam Chairman, and thank you, Mr. Director, for your testimony. It is always good to have you here. I 

want to focus in on this trendline in terms of the deficit just a little 

bit, and we as you know think of the Federal budget in two different pots, discretionary and mandatory spending, mandatory 

being primarily Social Security, Medicare, Medicaid, the classic entitlement programs.’’ What has been the trendline on discretionary 

spending over the last few years? 

Mr. HALL. Well, discretionary spending is looking like it is going 

to decline as a share of GDP. It has been declining, so in fact while 

we look forward to the next 10 years and see spending increase 

really significantly, discretionary spending is not increasing significantly, and that in fact is declining as a share of GDP. 

Mr. COLE. As a share of GDP and since 2009 it has actually declined very substantially in real terms just as an amount. I mean 

we were actually spending considerably less on the discretionary 

portions of the budget and that is everything from defense to NASA 


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to National Institutes of Health than we were in 2009 and 2010. 

Is that correct? 

Mr. HALL. That is correct, yes. 

Mr. COLE. Give us the trendline if you would on mandatory 

spending, again the classic entitlement programs. What has that 

trend been in the last 5 or 6 years? Where do you see it going over 

the next decade? 

Mr. HALL. Well, mandatory spending continues to grow faster 

than GDP, quite a bit faster. Ever, you know, the revenues are 

growing as a share of GDP, but spending especially mandatory 

spending is growing a lot fast. So, it is sort of a race that mandatory spending is winning in adding to the deficit going forward. 

Mr. COLE. And are there any significant proposals out there on 

either side of the aisle to change the direction of that, slow it down, 

manage it a little bit better? 

Mr. HALL. Nothing comes to mind. You know, one of the things 

I like to point out, we just produced something called options for 

reducing the deficit. Sort of a nice thick volume with over a hundred options, and we give you some options on things like mandatory spending and other things that you can look at for reducing 

the deficit going forward. It gives you some idea of how much of 

an impact those different options would have. 

Mr. COLE. When was the last time we had significant reform in, 

let’s say Social Security? 

Mr. HALL. I think it has been a while. I am not an expert in Social Security. There have been some adjustments in benefits in delaying eligibility and some things like that, but they still have not 

affected the long-run problem that we have seen coming for decades. It is still coming. 

Mr. COLE. I think the last time we really made much progress 

in this area was actually very bipartisan, and it was with President 

Reagan, and the House was Democratic in the period. Tip O’Neill, 

Howard Baker in the Senate. In other words, they came together, 

set up a commission and extended the life of Social Security fairly 

dramatic in the middle 1980s. We have not really gone back and 

done too much since then. Is that correct as you recall? 

Mr. HALL. That is correct. 

Mr. COLE. I say this in a very self-serving way because my 

friend, Mr. Delaney, on the other side, and I have a bill that would 

set up another commission that would be, by nature, bipartisan. It 

would be 7 and 6. We actually have introduced it in a couple of 

Congresses. Seven members chosen effectively by the President and 

the majority party, six by the minority, but you would have to have 

nine votes to actually report something to Congress. Congress 

would then have about 60 days to vote it up or down, and I would 

invite my colleagues on both sides of the aisle just to look at that 

legislation because I think if you read the numbers, which you so 

accurately and persuasively put out here, sooner or later we have 

to address mandatory spending. 

Neither side in the last campaign did that in any meaningful 

way. Neither side, frankly, in the House and the Senate has actually advanced legislation. We actually always write a budget that 

addresses this, and I hope we do that again, Madam Chairman. I 

hope we do not ignore the elephant in the room, so to speak, and 


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I am sure we will not under your leadership and my good friend 

and ranking member I know has these same concerns. But I know 

I am not using the question, but I do want to finish and then I will 

yield back. I just would invite my colleagues. 

We can score points against one another all day. We both have 

great arguments and great talking points. This is a problem we 

could solve. It is a math problem. It is not as tough as Medicare 

and Medicaid. We literally could sit down and negotiate this 

through just as President Reagan and Speaker O’Neill did and 

Howard Baker, and I would invite us to begin that process because 

I do not like the way your numbers look at the end of the decade. 

With that, I yield back. I thank you very much. I thank you for 

your indulgence, Madam Chairman. 

Interim Chair BLACK. Thank the gentleman from Oklahoma. The 

gentleman from Massachusetts, Mr. Moulton is recognized for 5 

minutes. 

Mr. MOULTON. Thank you, Madam Chair. I would just like to 

begin by echoing the comments from Representative Cole because 

I think you are right. Sometimes people ask me about what it is 

like to serve on the Budget Committee and I say it is often a great 

place for people who do not do math. If we started doing math, we 

could solve a lot of problems. So, thank you, Mr. Cole. 

Director Hall, as I am sure you know, immigration has become 

a major topic of discussion following President Trump’s executive 

order last week. Now, there is a lot of evidence that the order is 

unconstitutional and it is certainly hurting our national security 

overseas. Secretary Mattis and others have made that clear, but it 

is also having a detrimental impact on our economy here at home. 

The concern, of course, is that with this executive order, the Trump 

administration is scaring away some of the very people we need to 

continue growing the economy as our labor force shrinks. 

Now, many of America’s major corporations and businesses were 

founded by immigrants. For example, Steve Jobs. His father came 

from Syria. Apparently, more than half of the current crop of U.S. 

based startups valued at a billion dollar or more. So, more than 

half of the current startups with a valuation of billion dollars or 

more. Collectively, these 44 companies are valued at 168 billion. 

They were started by immigrants. 

So, $168 billion of valuation creating 33,440 jobs in the U.S. market and immigrants in these companies make up more than 70 percent of key management or product development positions. So, we 

have heard in the past weeks CEOs from Facebook, Starbucks, 

Goldman Sachs and other leaders in the business community who 

have already stated that this ban will hurt their ability to attract 

and retain talent, and that it may spur people or companies to discount the U.S. as a place to pursue business and investment opportunities. Colleges and universities have also raised alarms, including those in my district, about the impact that this will have on 

students and faculty who hail from the seven countries targeted by 

the order. 

In 2016, international students in U.S. colleges surpassed 1 million for the first time, contributing more than $32 billion a year to 

our economy. Thirty-two billion dollars a year, Madam Chair, 


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would certainly help with our budget deficit. That is the kind of 

consumer spending that we need because it creates jobs. 

So, I want to speak briefly about the impact on our healthcare 

system because more than a quarter of the physician workforce in 

the U.S. comes from other countries with more than 8,400 doctors 

working in the U.S. from two countries listed in the executive orders, Syria and Iran alone. Now, we want those talented doctors to 

be here saving American lives and helping our healthcare system 

at a time of physician shortage. America does not currently produce 

enough physicians to keep up with demands. We have a current 

deficit of over 8,200 primary care doctors. So, that deficit would literally double if the doctors from Iran and Syria were not here. 

And so, Director Hall, I know you cannot speak directly to the 

effects of this executive order as it was just released, but based on 

the 2013 CBO report on immigration reform and other work that 

CBO has done on this issue, can you talk in general terms about 

the impact that such restrictive immigration policies might have on 

the growth of our economy? 

Mr. HALL. Well, you raise an interesting aspect of immigration. 

And one of the reasons why we really kind of need to see specific 

proposals is because the type of proposal has different kinds of effects. The evidence is, for example, that increased immigration of 

unskilled workers probably has an effect in lowering wages for 

lower skilled workers in the United States. However, when you go 

to the skilled workers, they in fact increase productivity because as 

you say there are a lot of entrepreneurs, etc. who are immigrants 

and skilled immigrants, so that has sort of a different sort of side 

effect. 

Mr. MOULTON. Right, and if you look at the countries in the 

order like Iran and Syria, are they mostly skilled or unskilled 

workers who are coming to the U.S. 

Mr. HALL. I do not know offhand. 

Mr. MOULTON. It is mostly skilled workers. Disproportionately, 

entrepreneurs and business people. Thank you. Please continue. 

Mr. HALL. Okay. Sure. So, you know, if you look at immigration 

proposals it makes a difference if you are just going to broadly increase immigration. If you are going to increase immigration that 

is focused more on skilled workers that has sort of a different effect 

than if it is unskilled workers. The fundamental that our increased 

labor supply is there, it is sort of the other effects that depend 

upon exactly who is immigrating, and then of course the size of 

these would be pretty significant. It is not clear that the executive 

order that, at least from what I have seen, that that is large 

enough to make us change our forecast. 

Mr. MOULTON. Thank you, sir. 

Interim Chair BLACK. The gentleman’s time has expired. The 

gentleman from California, Mr. McClintock is recognized for 5 minutes. 

Mr. MCCLINTOCK. Thank you, Madam Chairman. There seems to 

be two dominant themes coming from my friends across the aisle. 

One is that the Obama economy has been wonderful and second, 

we need more foreign immigration to compete for American jobs. 

As to the first, I give them the same advice I tried to offer them 

at our last meeting on Obamacare. Every American has an up close 


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and personal experience with the economy. They know what is 

going on in their own lives, and any politician who tries to convince 

them otherwise looks downright foolish. Some people are doing 

very well in the Obama economy, most people are not. If most people were doing well in this economy, the Democrats would not have 

lost 67 U.S. House seats, 13 U.S. Senate seats, 11 U.S. governors 

and more than 900 State legislative seats, not to mention the presidency over the past four election cycles. Just a word of unsolicited 

advice. Second, with respect to foreign immigration, our foreign immigration over the last decade has been unprecedented. 

If my friends were correct, this should be the golden age of the 

American economy. The impact has been very clear. Badly depressed wages for working families and the lowest labor participation rate since Jimmy Carter. But that is not what I want to talk 

about. What I want to talk about is what Admiral Mike Mullen 

warned us was in his professional military judgment, the greatest 

single threat to our national security, and that was our Nation’s 

debt. And that warning was issued about 5 years and about $4 trillion of debt ago. You report that the debt held by the public this 

year is 77 percent, but actually our total debt is well over 100 percent of our gross domestic product. Is it not? 

Mr. HALL. Well, we look at debt held by the public because that 

is the important debt for the economy. 

Mr. MCCLINTOCK. I know you do, but I think that is highly deceptive. The difference is mainly because Social Security as it runs 

chronic deficits, we pay back what we borrowed by going to the 

public for further borrowing. So, what we have got in that overall 

debt number is in effect converting intragovernmental debt into 

debt held by the public. Is not that what is going on? 

Mr. HALL. Well, that is right. To get to your number. 

Mr. MCCLINTOCK. So, we are so deceptively understating the 

problem since unless we change the law, that gross debt which is 

now over 100 percent of GDP is destined to become debt held by 

the public over the next few years. Is not that correct? 

Mr. HALL. Well, let me put it this way. The debt held by the public is going to grow really significantly. 

Mr. MCCLINTOCK. It is already baked into our total debt which 

is simply converting the debt we owe to Social Security by borrowing from the public. That is already in those numbers as long 

as Social Security continues its chronic deficit, that is going to continue, and that is going to require a change in laws. Is it not? 

Mr. HALL. That would, yes. 

Mr. MCCLINTOCK. So, we are already approaching uncharted territory for this Nation, and the question I have is that on our current trajectory, are we courting a sovereign debt crisis? 

Mr. HALL. We are. One of the difficulties is, I cannot tell you exactly. 

Mr. MCCLINTOCK. What does that crisis look like? 

Mr. HALL. Well, as the debt continues to grow, interest rates 

when they go back up to normal ranges, we are going to have a 

major share of our budget just paying off interest. So, that is going 

to be a real drain. 

Mr. MCCLINTOCK. So, would that affect our ability to provide 

basic services? 


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Mr. HALL. It will. It is going to reduce flexibility. 

Mr. MCCLINTOCK. Would it imperil our ability to respond to a 

military challenge on the magnitude that we faced after Pearl Harbor? 

Mr. HALL. Yeah, absolutely. Our ability to spend money is going 

to be really limited. 

Mr. MCCLINTOCK. How would it affect our overall economy? 

Mr. HALL. Well, part of what is going to happen is this is a drag. 

This is an increase of interest rates. A lot of Federal borrowing 

crowds out private borrowing, so we actually have lower economic 

growth. 

Mr. MCCLINTOCK. In other words, when the Federal Government 

borrows a dollar, it borrows it from that same capital market that 

would otherwise be available to loan to consumers to make consumer purchasers, to businesses to expand jobs. Is that correct? 

Mr. HALL. That is correct. 

Mr. MCCLINTOCK. Home buyers to buy new homes? 

Mr. HALL. That is correct. 

Mr. MCCLINTOCK. Taxes are often suggested as an antidote to 

debt, but are not debt and taxes the same thing? I mean, after we 

have spent a dollar, have not we already decided to tax it. The only 

question is whether we tax it now through current taxes or borrow 

it now and tax it later through future taxes? 

Mr. HALL. Yeah, we certainly sort of constantly remind you that 

however you do it, whether you raise taxes or spending or etc., a 

lot of the stuff it depends on how you pay for it. Whether you let 

the deficit grow or not makes a big impact. 

Mr. MCCLINTOCK. Well, the deficit is just a future tax. We borrow it now and we pay it back through future taxes. In other 

words, is not to borrow from the Clinton maxim, is not the spending stupid? 

Mr. HALL. Well, certainly spending is the biggest single problem 

going forward. The rate of spending exceeds the tax rate. 

Mr. MCCLINTOCK. Thank you. 

Interim Chair BLACK. The gentleman’s time has expired. The 

gentlelady from Washington. Ms. DelBene is now recognized for 5 

minutes. 

Ms. DELBENE. Thank you, Madam Chair and Director Hall. 

Thank you for being with us. My district in Washington State has 

a northern border and is also home to I am pretty sure nearly 

every point of view on every issue most of the time, but one key 

difference has been immigration reform. We have heard from business community, farmers, State-based community, folks in travel 

and tourism, law enforcement all asking for comprehensive immigration reform, and I was one of the folks who lead the bill that 

we introduced in the House in the 113th Congress similar to the 

one that passed the Senate that the CBO has said would have a 

significant impact in reducing the deficit about $700 billion in the 

second decade. I think you confirmed that was the correct number. 

Mr. HALL. That sounds right. 

Ms. DELBENE. But when we look at individual sectors, and when 

I was elected in talking to our farmers, they said we need two 

things. We need a farm bill and we need comprehensive immigration reform, and we got a farm bill and folks have said we are not 


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sure we can stay in business if we do not have immigration reform. 

If you look at a sector like agriculture, do you see lack of immigration reform as actually having a negative impact on economic 

growth? 

Mr. HALL. We have not done that sort of analysis. We would 

have to do a little work. 

Ms. DELBENE. Well, I can tell you that farmers definitely feel 

that way, and it is an incredibly important issue, and the reckless 

executive order has not helped and has impacted many people’s 

lives and has only continued to have a negative impact. Before 

coming to Congress, I was a business woman and entrepreneur and 

also ran the Department of Revenue for the State of Washington, 

and since coming to Congress, I have been very frustrated with our 

budget and appropriations process with how they do not work. 

In particular, we seem to live off of continuing resolutions, and 

you would never run a business 30 or 60 days at a time, and you 

definitely, it is no way to budget. It is probably the most expensive 

and least efficient way to budget. But we also, with sequestration 

on top of that, we end up looking at folks have been focused on cuts 

but not on return on investment, and I know that sometimes 

spending money on important projects actually saves you money in 

the long run and we get a great return. I was wondering when you 

look at your models and look at things like infrastructure, research, 

and education, how does our lack of investment in those areas impact our future growth? 

Mr. HALL. Well, I think the research is fairly clear that generally 

Federal investment does increase productivity and it does have an 

impact on growth. The research if pretty incomplete in that it, 

identifying the different kinds of investment is difficulty, what the 

rates of return are on different kinds of investment. One of the big 

things though about increasing investment is really depends upon 

how you pay for it. If you increase investment and reduce spending 

in another spot, so you do not have a net impact on spending, that 

is a much more positive impact on the economy than if you let a 

deficit grow. 

Ms. DELBENE. But if we, for example, have a pothole in the road 

and we do not fix it and it might have cost a certain amount to 

fix that pothole, next time because we did not fix it, we end up having to replace the road bed, we end up spending a lot more because 

we did not make that investment early on. Is not that a fair point 

of view when we look at a lot of these issues that we are not funding, or providing those investments because we do not have a normal budget or appropriations process? Is not that hurting our ability to see progress in those areas? 

Mr. HALL. That is right. Federal investment doing anything that 

sort of helps companies be more productive, move products around, 

encourage innovation, that does help productivity, and that is obviously one of our big problems going forward. In one of the issues, 

it is a little bit like in my mind a little bit like cutting taxes. They 

both can stimulate the economy and depends on how they work. 

They can both affect long-term growth. The question a little bit is 

how much? You know, investment, Federal investment in particular, there is often a big delay, and there is some impact on interest rates, and that impact on interest rates does raise the cost 


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of debt in the economy. So, it is not quite so clear, for example, that 

if you just increase Federal investment, do not pay for it, let the 

deficit grow, that probably does not have a net positive on the economy. 

Ms. DELBENE. But also just cutting and not investing in programs that give us a great return has a negative impact too, and 

I think that is our role to decide what is giving us a great return 

and making sure we are making those investments, seeing what is 

not working and not making those investments, and continuing 

resolutions and sequestration are us not taking that responsibility 

seriously here and not making those decisions and making the investments in the right way they need to be made. Thank you. My 

time has expired. I yield back, Madam Chair. 

Interim Chair BLACK. The lady’s time has expired. The gentleman from Ohio, Mr. Renacci, is recognized for 5 minutes. 

Mr. RENACCI. Thank you, Madam Chairman. It is interesting. 

First, I want to go back to my colleague, Mr. Cole, and say the 

exact same thing. We could sit here all day and fire bullets back 

and forth on political issues, but that is not going to solve the 

issues of the day because the issue of the day is that we have to 

get a budget and we have to live with a budget, and before we can 

even get a budget we have to figure out where we are out which 

is another problem around here. I have mentioned since day one 

that we do not have a complete record of financial information because we do not allow for all of our debts to be added up, and we 

do not use the information that we have then to make decisions, 

and then we do not look at the past at the decisions we made. 

As a business guy for 30 years, and actually a business guy that 

took over 60 failed businesses and successfully turned them 

around, you have to see where you are at first before you can go 

forward. So, my frustration always builds when we start to get into 

these political talking points because everybody’s district is going 

to have issues that concern them. 

My district, I can tell you, the businesses, the people, the individuals are all concerned about tax reform, regulation reform and 

Obamacare reform, so again it is not what the district is, it is what 

we can do as far as putting a budget together and getting things 

moving. But, Dr. Hall, do not we have the record revenues in the 

Treasury over the last few years? 

Mr. HALL. That is right. Well, I am not sure the record. They are 

certainly above average right now and they are going to actually 

go up as a share of GDP. So, we do not have declining revenues. 

Mr. RENACCI. Right. So, we have record revenues, and in my 

business world, what I would find is if you have record revenues 

you were really doing really well except when you had record expenditures that were exceeding those record revenues, and I heard 

you say earlier that one of our issues is that we are spending, you 

know, our biggest problem really is our spending problem. Would 

you agree? 

Mr. HALL. Yes. That is the major contributor to the deficit. 

Mr. RENACCI. So, until we come together as Republicans and 

Democrats and realize we have spending issues, and taxing, we are 

not going to tax our way out of this, and we can put a budget together, I think that is the starting point that I hope at some point 


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this committee can get to, having a good solid budget that then we 

live with. My concern is again, it is extremely alarming that our 

interest and our national debt is projected to nearly quadruple to 

$768 billion in 2027. It appears that as numbers continue to grow, 

we are going to have less. 

The time is now to start looking at our spending side because if 

we just sit back and start saying the last President was great, the 

President before that was great, and we do not do anything, we are 

going to be in a deeper, deeper hole in the next few years. Would 

you agree with that? 

Mr. HALL. Absolutely. I think the sooner we get to solving the 

deficit problem whether it is spending or whether it is taxes or anything, but the sooner we start to address that, the less of a change 

it is going to be. The easier it is going to be to try to deal with it. 

Mr. RENACCI. I think the sooner we recognize that it is one of 

the reasons I introduced the Fiscal State of the Nation which 

would require the Controller General would come before the House 

and Senate, a joint session of Congress, I had almost 170 cosponsors, Republicans and Democrats. 

I actually hoped that new members here would join me as we 

have refiled that bill, but do you agree that it would be a good 

starting point to have someone, the Controller General, come before 

the House and Senate and explain our growing deficits and where 

the numbers are occurring and what is going on so we have a starting point? 

Mr. HALL. Absolutely. I hope we were providing some of that information to you, but yes. 

Mr. RENACCI. I understand, and that is what you are doing here 

today, but I think the important is as we continue to look at these 

numbers, we have to start to realize that the growth of our Federal 

debt is another issue concerns me and I heard one of my colleagues 

earlier talk about this. If we do nothing, I think the Federal deficit 

is projected to grow, if we just stay on the same track, $9.6 trillion 

in the next 10 years. Is that correct? 

Mr. HALL. That is right. 

Mr. RENACCI. So, these are all issues I hope that my colleagues 

on both sides of the aisle can start talking about as a way we can 

work together to come up with a solution and a budget. I also have 

another bill which I think is so important. When we pass a budget, 

we should follow a budget. We have had a Budget Act since 1974. 

Most people do not realize that even though we pass budgets, we 

never follow them. 

Members from this committee, other committees come to the 

floor, pass bills that break the budget. If we are ever going to make 

things work, we have to come up with a solid budget and live with 

that budget and not break the budget. So, I am hoping that we can 

continue to work forward with these numbers. I appreciate the information. There is plenty of information in your report if everybody takes the time to read them. We are not going in a great direction. We do not have a healthy economy. We have what I would 

call a—we have an anemic economy. Would you agree with that? 

Mr. HALL. Yes. 

Mr. RENACCI. Thank you. I yield back. 


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Interim Chair BLACK. The gentleman’s time has expired. The 

gentlelady from Florida, Ms. Wasserman Schultz, is now recognized 

for 5 minutes. 

Ms. WASSERMAN SCHULTZ. Thank you, Madam Chair. Our colleagues on the other side of the aisle would do well to stop patting 

themselves on the back for and take credit for voters putting them 

in the majority rather than the cartographers and map drawers 

who did a really good job of partisan gerrymandering, Mr. McClintock, to ensure that the scales are tipped in favor in virtually every 

State. Particularly, the States where Republicans hold the majority 

and voters are not able to choose their legislatures but rather legislators choose their voters. And that is reflected in the brimming 

sea of diversity that we see in this committee on the other side of 

the aisle as opposed to our side of the aisle, and that also is reflective of the difference dramatically in the policies that result in how 

we govern. So, please spare us the political advice. 

That having been said, I think it is important to note that Mr. 

Hall indicated that the slack in our economy is mainly attributed 

to the available labor force. Largely attributed as your said, Mr. 

Hall, to retirement of baby boomers and the stability of women in 

the workforce. Is that right? 

Mr. HALL. That is right, and by stability, I mean that in the 

1990s we had this great period of where women’s labor force participation was growing very quickly and we had significantly more 

economic growth as a result and they have sort of closed that gap 

and it is now sort of holding, so we are no longer getting that faster 

growth. 

Ms. WASSERMAN SCHULTZ. You did indicate in your opening 

statement that primarily, the slack in the economy is attributed to 

those two things. 

Mr. HALL. Well, right, and really, I think I was trying to refer 

to the potential growth, the long-term growth of the economy, but 

yes, I did talk about those two things. 

Ms. WASSERMAN SCHULTZ. Okay. Thank you. Our former CBO 

director, Douglas Elmendorf, in a recent talk noted that under the 

current caps on annual appropriations, Federal investment in infrastructure, R&D, education and training, will soon be smaller relative to GDP than at any time in the last 50 years. He said that 

is not forward-looking growth-oriented budget policy just to maintain the traditional level of investment as a percentage of the economy requires a substantial increase in the caps on appropriations. 

The caps on appropriations would you not agree are a large part 

of what limits our ability to see growth in the economy? 

Mr. HALL. It certainly has been the limit on the discretionary 

spending growth. That has been part of why it looks to be declining 

over the next 10 years. 

Ms. WASSERMAN SCHULTZ. With the Budget Control Act of 2011 

and sequestration, we continue to see dramatic cuts in nondefense 

discretionary spending, dramatic cuts. 

In 2010, nondefense discretionary spending was 4.5 percent of 

GDP, 2016 it was 3 percent. It is projected that in 2027 nondefense 

discretionary spending will only be 2.4 percent of GDP, and furthermore investment in infrastructure as a percent of GDP has 

dropped from 0.8 percent in 1980 to 0.5 percent in 2015. InvestVerDate Sep 11 2014 04:38 May 06, 2017 Jkt 025238 PO 00000 Frm 00036 Fmt 6633 Sfmt 6602 E:\HR\OC\A238.XXX A238

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ment in research has dropped from 1 percent in 1965 to 0.4 percent 

of GDP in 2013, and finally investment for education and training 

programs has dropped from 1 percent of GDP in 1975 to 0.5 percent in 2013. 

Director Hall, do you agree with your predecessor that capping 

investing in research, infrastructure, and education is incompatible 

with a budget policy that promotes growth in the American economy? And should not we aim each year to include a certain percentage of spending on discretionary programs that promote economic growth especially given the President’s Muslim ban which 

will among other things keep those leaders and research and development out of our country and hurt our economy? 

Mr. HALL. I would not make a recommendation, but I will say 

that increase in Federal investment is one of the tools you have for 

increasing potential GDP growth because it does increase productivity of labor going forward. 

Ms. WASSERMAN SCHULTZ. And would not you say that generally 

taking a balanced approach which is what Democrats have promoted over the last 8 years to responsible spending cuts and generating revenue is the most responsible way to address deficits over 

a period of time, and would not you also say then when it comes 

to dealing with our debt, that there is a dramatically negative impact on our overall economy when we threaten, as a Congress, to 

potentially not pay our bills? 

Mr. HALL. I should say however Congress decides to address the 

deficit, if they address it in a broader fashion, they may need to 

make less dramatic changes in any one thing so that does seem 

like that is a strategy certainly Congress could take. 

Ms. WASSERMAN SCHULTZ. Thank you, very much. I yield back 

the balance of my time. 

Interim Chair BLACK. The gentlelady yields back. The gentleman 

from Minnesota. Mr. Lewis is recognized for 5 minutes. 

Mr. LEWIS. Thank you, Madam Chair, and thank you, Dr. Hall, 

for being here today. Talk a little bit about Federal investment or 

Federal spending. In 2002, the Federal budget was $2 trillion. 

Today, it is $3.4 trillion to your numbers. The 50-year average is 

about 18.4 percent of revenues. We are well above that now and 

headed above that. Outlays, however, are well above the 50-year 

average as well. Correct? 

Mr. HALL. That is correct. 

Mr. LEWIS. The top one percent of income earners, if we are 

going to look at revenues to balance this budget, the top one percent of income earners right now pay about $543 billion in income 

taxes. That is less than this year’s deficit. Correct? 

Mr. HALL. I think that is right. I do not know the numbers exactly but that sounds about right. 

Mr. LEWIS. My question is this, I do not think we have a revenue 

problem, if you look at these numbers again we are above the 50- 

year average of 18.4 percent and moving higher than that. How 

would we do that if you are just going to raise revenue? I mean 

there is not enough money at the top is there? 

Mr. HALL. Yes, we have not had any real specific analysis of that 

but you are right, putting it all in revenues makes it a pretty significant revenue increase just like putting it all in outlays involves 


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a pretty dramatic outlay drop. So, sort of spreading it out is a different sort of strategy. 

Mr. LEWIS. You are servicing the debt and that interest on the 

debt, $768 billion larger than the defense budget, for instance, I believe in the next 10 years. What are you basing that on with regards to interest rates? I think the post-World War II 10-year 

treasury average is about 5.7 percent or down, way down now to 

about 2.4 percent. How did you come up with that calculation? 

Mr. HALL. First of all, interest rates have been really low. We 

have interest rates climbing up into somewhat their historical 

range but we are still kind of at the lower end of that range. So, 

we are somewhere over 3 percent eventually on the interest rates. 

And that is a really important point to be honest, because we are 

at a pretty low interest rate relative to history and, in fact, if interest rates go up by more—— 

Mr. LEWIS. Or back to their average. 

Mr. HALL. Or back to their average. Let me give you an example; 

if interest rates were one percentage point higher over this 10-year 

period than our projection, we are talking about adding $1.6 trillion 

to the debt over that time period. And that is a lot of money for 

just one percentage point. So, that is one of the more important 

things in our forecast. 

Mr. LEWIS. So, the debt interest payment of $768 billion in 10 

years is based on historically low interest rates? 

Mr. HALL. That is correct. 

Mr. LEWIS. Let’s talk a little bit about Japan. I am not an expert 

on their immigration policy, but I do not know that it has changed 

remarkably. But I do know their economy has hit this deflationary 

spiral. So I am not certain if you got the same policy in one particular area but all of sudden you go into a tailspin that you can 

blame that policy. But what you might be able to look at is credit 

expansion. And we have had a very similar experience here where 

we have monetized a lot of debt, where we have let the credit expansion go, created asset bubbles, as some would say, on the monetary side. 

Is it your experience, or I do not want to ask your opinion, but 

your analysis that Japan is suffering a debt lag? That we have created so much debt that they cannot grow their way out and is that 

a danger for America as far as a hyperinflation scenario stuck in 

a debt spiral and stuck with deflation and low growth? 

Mr. HALL. I am afraid I do not know enough about Japan or Japan’s policies. 

Mr. LEWIS. That makes two of us. 

Mr. HALL. Okay, so it would be hard. And we can follow up with 

some description, if you like, on Japan and what has been happening there. 

Mr. LEWIS. I mean, there is a reason for these low growth rates. 

And, you know, we have created money, we have created fiat 

money, we have certainly engaged in Federal spending. We look at 

those figures I just cited, well above historical means, so why the 

low growth rates? 

Mr. HALL. Again, I do not know enough about Japan to offer an 

opinion. 


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Mr. LEWIS. I would suggest that the reason we have not hit 3 

percent growth for 11 straight quarters, the reason that during the 

Reagan robust recovery, even the Clinton robust recovery where we 

had growth of 5, 6, 7 percent is the level of debt today, that we are 

stuck. Our balance sheets do not look so good, and when you are 

trying to service that kind of debt it is very hard to grow out of 

it. 

Mr. HALL. Yeah, I will just say one of the most remarkable 

things that is going on now, and has since the end of the recession, 

has been very low productivity growth of 0.8 percent. And we do 

not understand that very well. And that has been a major head 

wind. 

Mr. LEWIS. One final point quickly, Dr. Hall, and thanks again 

for coming. But, when we fund Federal investment, where does 

that money come from? Some of it comes out of the private sector, 

some of that which would be private investment correct? 

Mr. HALL. That is correct. 

Mr. LEWIS. Thank you, sir, I yield back my time. 

Interim Chair BLACK. The gentleman’s time is expired. The Gentleman from New York, Mr. Higgins is recognized for 5 minutes. 

Mr. HIGGINS. Thank you, Madam Chair. I am listening to the 

discussion here which is thoughtful, and I believe that people truly 

are sincere in their beliefs about the performance of the American 

economy and the policies that we in Congress are responsible for 

enacting to help influence hopefully economic growth. And I think 

there are two very different views of it. 

You know, the good thing about the economy is, you know policy 

either works or it does not. It is not ideological; it is arithmetical. 

And if you look at the performance under various administrations 

relative to the policies they advance, the measure of their effectiveness or lack of effectiveness is the performance of the economy. 

Now, it has been referenced here that in the waning days of the 

last Bush administration a decision was made to enact tax cuts 

that disproportionately benefited higher wage earners, people that 

make a lot of money. The theory is trickle down, it is supply side, 

it is call it what you will it is because if they save money because 

of tax policy, that money will find its way back into the economy 

in new business investment and job growth. That is the theory. 

That is indisputable. That is what they say. 

Job growth during the George W. Bush administration was the 

lowest level in the past 75 years. In the waning days, the economy 

went into a very severe contraction. In March of 2009, the stock 

market was at 5,600. We were losing 600,000 jobs a month. The 

auto industry was a disaster. The U.S. and world financial markets 

were falling apart. Something had to be done. 

So, new policies were put in place to allow those tax cuts for the 

very, very wealthy to expire and continue tax cuts for the middle 

class because higher wages, higher take home pay increases aggregate demand in the economy, aggregate demand creates economic 

growth. And as a result, since 2010, in the past 6 years, we created 

in this economy almost 16 million private sector jobs. 

You know, the American economy we used to make things and 

sell them to the rest of the world, now the things that we used to 

make and sell to the rest of the world they make and sell to us. 


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As a consequence, 70 percent of the American economy is consumption. 

So, how do you create aggregate demand in the economy? You 

put more money in the pockets of more Americans as humanly possible because here is what you know, they are going to spend it. 

And when they spend it, there is growth. I think, you know, you 

are always looking for silver linings in these views of economic policy. And I think the one real clear silver lining here is infrastructure spending. And there is talk about a trillion-dollar bill, and it 

does two things. In the immediate sense, it creates jobs, I think 43 

jobs for every million dollars of investment in the construction 

trades and supply and materials industry. 

But the second economic benefit you get from that is, when you 

invest in infrastructure, it unleashes the creativity and the resources of the private sector. So, your views on a trillion-dollar investments in infrastructure publicly financed. And do not tell me 

about deficit financing because this Nation spent $110 billion rebuilding the roads and bridges of Afghanistan. This Government 

spent $76 billion rebuilding the roads and bridges of Iraq, both of 

which were deficit financed and did not create one American job. 

So, your views on infrastructure investment and financed in a traditional way. 

Interim Chair BLACK. Mr. Hall, you have 10 seconds to answer 

this. And I am afraid, Mr. Higgins, since you did not leave him 

adequate time, I am going to let him give a very brief comment, 

but if Members would remember if they are asking a question and 

they need to leave a little time for our witness to answer the question. Otherwise if you could briefly answer and if there is more 

that you would like to do if you could do it in writing. 

Mr. HALL. Okay. A basic principle I think is all over our work. 

You know whether you change spending or change taxes, if you increase spending or lower tax, however. How you pay for that makes 

a difference because the deficit has an impact on that. So if you increase spending but you do not pay for it you increase the deficit, 

that makes a difference, how you pay for things. So that is something just to consider always with what we are talking about. 

Interim Chair BLACK. Thank you, Mr. Hall. The Gentleman from 

Texas, Mr. Arrington, is recognized for 5 minutes. 

Mr. ARRINGTON. Thank you Madam Chair and Dr. Hall, I appreciate your time and your service and I am happy to be on this bipartisan House Budget Committee, I say that a little tongue and 

cheek based on some of the comments that are made. The American people are tired of partisan bickering and tit-for-tat. They 

want us to do like they do in their businesses and in their homes 

and their daily lives and roll up our sleeves and go to work and 

solve this problem. 

The other thing they are tired of is Congress playing by a different set of rules. And one of the rules that they have to play by 

and live by is that they have to live within our means. And so, we 

have to work together to solve this. I am excited to be on this committee because I think it is the greatest threat to the future of our 

country. 

My commitment is not to the Republican Party or to the leadership, my commitment is to my three children that they will have 


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a safe, strong and free America to live in. That they will in fact 

have a future to grow up in the shining city on a Hill, and this is 

the greatest threat to that future. And so, I am grateful to be a 

part of the problem-solving venture that we are about to undertake. 

I think there is spending issues and cuts to be made across the 

board, but I am very concerned about the elephant in the room that 

was mentioned. That mandatory spending and the entitlement programs that were mentioned are squeezing very important investment that we need to make as a country if we are going to have 

a prosperous Nation going forward. Now, I think about agriculture. 

AG is the lifeblood of economy in west Texas and if we do not 

make the investment in risk management tools for our farmers or 

the safety net, we will not have the capacity to feed and clothe the 

American people. Dr. Hall, how much do we spend on the AG risk 

management or the AG programs within the farm bill as a percentage of our Federal budget? 

Mr. HALL. I do not know, but it is not a large percentage. 

Mr. ARRINGTON. A quarter of 1 percent, so that we have a safe 

and affordable and abundant supply of food for the American people. We have cut billions of dollars in that discretionary program. 

Whether it is transportation and making sure that we meet the 

transportation needs or R&Ds so that we are the laboratory of innovation for the world and we continue to be on the cutting edge 

of technology in this country. Or it is on National Defense. 

I am concerned on the lack of investment in these important 

areas all because we have squeezed I think just about all of the 

blood out of the turnip on the discretionary side. At what point Dr. 

Hall do we reach diminishing returns on the cuts on the discretionary side, maybe in some of the programs I have mentioned? 

Mr. HALL. It is hard to say on any of this. You know the growing 

deficit, any of these numbers, they look bad and we have been on 

record to say that the debt is unsustainable if you look out a lot 

of years, so it is hard to say too much. Focus on discretionary 

spending, one of the things I think is a little interesting sobering 

factoid here, is we expect in 10 years that just the payment on 

debt, the net interest on debt, will exceed all non-defense discretionary spending in the country. So, that will become a bigger item 

in all non-defense discretionary spending, that is part of the problem. You have this net interest becoming a major part in the budget going forward. 

Mr. ARRINGTON. Quick response; of the risks to balancing our 

budget and getting our arms around this deficit spending and national debt, which one is the greatest risk, interest rates, economic 

growth, domestic spending or the entitlement programs and the 

runaway costs there? 

Mr. HALL. It is hard to rank them, right, because obviously you 

can look at any of those to address the deficit problem. 

Mr. ARRINGTON. Here is my last point and again, thank you for 

your time. We cannot keep kicking the can down the road, we do 

not have any more runway. We do not need more analysis; we do 

not need more accountants or budgetary experts. We need leaders 

with the courage to solve the problem. The problem is mandatory 


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spending. I look forward to getting after it, as we say in West 

Texas. Madam Chair, I yield back. 

Interim Chair BLACK. The gentleman’s time is expired. The gentleman from California, Mr. Khanna, is recognized for 5 minutes. 

Mr. KHANNA. Thank you, Madam Chair. I appreciate following 

Congressman Arrington. We may not agree with much regarding 

economics but he has shown a lot of graciousness in reaching out 

to the freshman class across the aisle and trying to build stability 

in the country first so I appreciate following him. Dr. Hall, thank 

you for your service, and your service not just in this role but at 

the Commerce Department and Treasury Department and White 

House and I look forward to hearing some of your expertise. 

I represent a district at the heart of Silicon Valley with Google, 

Apple, Yahoo, Intel, Cisco and Enrico Moretti, economist at Berkeley, has written that there is a tech multiplier of 4.5 jobs. For every 

one job created in tech, four and a half jobs are created. Pastor 

Trieber and Pastor Burnell who are in for the National Prayer 

Breakfast will tell you that in our district not everyone who works 

for tech goes to their church but there are folks that are baristas, 

and lawyers and others who have those jobs partly because of the 

tech industry. 

Now in Eastern Kentucky, thanks in part to Ranking Member 

Yarmuth’s work with the administration, there was this model 

where 40 jobs were recently created for folks of coal-miners’ kids 

who were being trained on IOS software on the Apple phone and 

android software with the Google phone, a four month class. All of 

them have jobs. It was funded by the tech initiative that the administration worked on with Congress and the Regional Appalachian Economic Center. My issue, and I do not think it is a partisan issue, is how do we get these tech jobs across the country and 

what are your thoughts on what this congress needs to do to make 

that possible? 

Mr. HALL. It is a little hard to speak too specific to that, I do 

not want to make specific recommendations, that is not what CBO 

does. But I can put it in general terms, the long run problems are, 

you know we talked a little bit about the labor force participation. 

Getting the labor force growth increase, working age people sort of 

back in the labor force but also there is productivity side of things. 

There are lots of things that government can consider that will 

increase private sector productivity, right? Whether it is looking at 

tax policy, where trying to find a more efficient way of collecting 

taxes that is hopefully tax neutral. Whether it is looking at the regulatory environment, whether it is looking at increased Federal investment. 

All those things are things that can impact private sector productivity, and that is really an important part of the recipe. One of the 

real difficulties we have, anybody has right now, on being too specific, we do not understand productivity growth really well and we 

do not understand how policies affect productivity growth very 

well. So, it is very hard for almost anybody to have too many solid 

recommendations about how to achieve higher productivity because 

we just do not know that much about it. 

Mr. KHANNA. I appreciate that, would you say that preparing 

folks for these jobs though has to be a component of it? 


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Mr. HALL. Yes, absolutely. 

Mr. KHANNA. The other line of questioning I have is slightly different and that is on Social Security and without taking a particular view. If we were to scrap the cap, how much revenue would 

that raise? And how much would that go towards solving some of 

the structural deficits? 

Mr. HALL. It would certainly have an impact. I do not have the 

number in my head. But we actually did that calculation and that 

options for reducing the deficit volume that we just produced, that 

was one of the options that we put in there. If you look at that, 

and we can follow up too, that will give you an idea of how much 

of an impact that would have. 

Mr. KHANNA. I would appreciate that, I yield back the balance 

of my time. 

Interim Chair BLACK. The gentleman yields back, we appreciate 

that balance of time. The gentleman from South Carolina, Mr. Sanford, is recognized for 5 minutes. 

Mr. SANFORD. Thank you, and I appreciate the thoughtful comments from my colleagues from New York and from California, and 

we do see things differently. And I want to bore down though on 

what my other colleague from California, Mr. McClintock was getting at. In the danger of a sovereign debt crisis, I think it is much 

more real than what people realize and I think it is much closer 

than people realize. So, you yourself have identified the debt as 

unsustainable, that we are on a path that we cannot possibly continue. And I think the numbers are compelling on that case. 

But what I would like to flesh out is how this may be a nearer 

term event that would have cataclysmic consequences with regard 

to the value of our currency with regard to future inflation with regard to the American standard of living. I think it is interesting, 

I saw a McKinsey report the other day and what it showed was, 

we are at about 250 percent debt to GDB globally and in the wake 

of 2008 what we saw was a roughly $57 trillion increase in debt 

which was highly unusual because what the report showed was 

that going back really over the last 50 plus years, actually no it 

was more than that, it went back to 1930. That in the wake of financial crisis or economic slowdown, that historically there was a 

de-leveraging that followed. 

But in this instance, post-2008, what we have seen is a reverse, 

is significant leveraging in the wake of a financial crises. And 

therefore we lived in a time like no other, and you can see the 

same numbers at the Federal level, you know our debt to GDP 

numbers, I guess a post-World War II high, and they are at a peace 

time high. So, I was looking at the numbers the other day and I 

think this is a really interesting chart, that again suggests how 

vulnerable we are and how a crisis could come much sooner than 

people realize. 

This is from the Fed, and it’s net worth as a percentage of disposable income, you could also do net worth as a percentage of 

GDP. But basically, what it shows is over the last 75 years, we 

have been fairly constant at an average of around 500 percent of 

net worth to disposable income. But in the early, I guess late 

1990s, we had a peak it represented the tech bubble, we went 

above 600 percent and we did it again in the housing crisis, or just 


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pre-housing crisis went above 600 percent and we have done it 

again now. 

And what is interesting what followed the tech bubble we know, 

what followed the housing bubble we know, but we are at that 

same percentage in an overall inflated environment with regard to 

debt both domestic and internationally. Is there a much greater 

level of vulnerability than we realize? And let me add one other 

thought to that. I pulled the numbers on economic expansions, we 

are now living in the fourth longest economic expansion in American history. So, we had the tech bubble, we had the Reagan expansion, we had the Kennedy-Johnson expansions but you know the 

average is 60 months we are about a third past that which would 

suggest to me another layer of vulnerability. And finally, we live 

in a zero interest rate policy. Which is a policy that we have in essence never lived in. 

You know, I guess it was Roosevelt’s Treasury secretary that at 

time of the Depression talked about pushing on a string how there 

was just no more juice in terms of making things happen. So, 

would you flush out in the minute and a half that I guess you have, 

with a little bit of color with regard to, you know, while we may 

be unsustainable in the long run, maybe this can creep up on us 

much sooner than people realize? 

Mr. HALL. Sure. Part of the trouble is that there just is not research, and there is no way to know how much debt is too much. 

Mr. SANFORD. Well, I think there is regression to the mean for 

a reason. I mean, I think it is even dangerous when we talk about 

interest policy and we say, Well, we are going back to the average. 

Well that is not what has historically happened, the reason you regress to the mean is typically you go far on the other side so interest rates go up a bunch to give you that average. So, I think that 

the law of averages and numbers works. 

Mr. HALL. Yeah, and the sort of comparison that we wind up 

making and it probably should be a sobering comparison, 77 percent of GDP and debt is a really high number. You go up a little 

bit more and you have the highest debt ratio since the end of World 

War II. The end of World War II was a pretty special time, so it 

is way above historical numbers. 

Mr. SANFORD. Well, and that was a case where we were actually 

fighting for our survival as a republic. Right now, that money is in 

essence going towards consumption and again what many would 

argue to be sustainability. Oh, we are going to have fun, come on. 

Interim Chair BLACK. The gentleman’s time is expired, I am very 

sorry. The ranking member, Mr. Yarmuth, is recognized. 

Mr. YARMUTH. Thank you, Madam Chairman. Once again, thank 

you, Director Hall. I look forward to reading your new publication. 

I think that would be something mandatory reading for all of us 

here. One thing we have not talked about yet during this hearing 

is tax expenditures. And I think your report shows that tax expenditures actually are on a path, if not now, they are larger than 

the discretionary spending in total, including defense spending. 

Somewhere going to $1.5 trillion. Is there any difference, in terms 

of the impact on the budget, between a dollar of tax expenditure 

and a dollar of discretionary spending? 

Mr. HALL. No, the effect on the deficit is the same. 


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Mr. YARMUTH. And have you done an analysis of what types of 

discretionary spending maybe have a more positive or negative impact on the budget as on the deficit as you would have . . . so, you 

would for instance, a charitable deduction versus R&D tax credits 

versus mortgage deductions. 

Mr. HALL. Not that comes to my mind so much. Our colleagues 

at the Joint Committee on Taxation who have done a lot more of 

that work they might have some numbers for you. 

Mr. YARMUTH. And last year, this House renewed about $800 billion of tax expenditures as I recall with no offset [inaudible]. 

Mr. HALL. The numbers, that could be correct. 

Mr. YARMUTH. It was pretty substantial. 

Mr. HALL. Yes it was. 

Mr. YARMUTH. So, what we are talking about, and I hope you 

dealt with this in the new publication, because clearly when you 

are looking at over a trillion dollars of tax expenditures, you are 

looking at another significant impact on the deficit. And something 

that we do not spend nearly enough time looking at in terms of 

which ones really pay off for the taxpayers. I mean, most of the 

mortgage deduction benefit goes to wealthier tax payers, is that not 

correct? 

Mr. HALL. I think that is probably correct. Can I just say something in general, I referred to it but one of the ways to try to approve efficiency and productivity is to look at the efficiency of taxes, 

of our tax system. Right? Because our tax system has lots of things 

that encourage behavior that causes distortions. And so there are 

things one can look at. 

Reducing taxes on capital investment for example—it is a really 

direct way of affecting productivity because capital investment increases productivity. Worrying about our tax base, right? There is 

some offshoring behavior that reduces our tax base. Some of those 

things, especially if they are sort of tax neutral, would have an impact potentially on long-term growth without adding to the deficit. 

Mr. YARMUTH. Well, presumably, we are going to have that debate later this year as the House takes on tax reform. So that will 

be an interesting forum. I know this will be totally out of character 

for me. I am going to ask questions that have no political point at 

all. I am just curious about them. In your report, you project Medicare spending per beneficiary to go up 4.3 percent through 2027, 

which is 3 percent higher than it has been over the last 5 years. 

Why such a dramatic increase in projection of the cost per beneficiary? 

Mr. HALL. That one is actually pretty difficult for us to forecast. 

Healthcare spending has been consistently growing faster than 

GDP. And a lot of that for us is just continuing the trend that we 

have seen in that. And it is actually part of our forecast that will 

continue, per beneficiary growth of health care generally, will grow 

faster than GDP. And that actually is part of the growing deficit. 

Mr. YARMUTH. But that has not been the case over the last 5 

years. 

Mr. HALL. Right. 

Mr. YARMUTH. Part of it is the ACA, part of it is in the economy 

and so forth. I know there are a lot of actors there. My point being 

that could be a dramatic difference in your long-term forecast for 


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Medicare. If the growth rates per beneficiary stayed at one third 

of what you are projecting. 

Mr. HALL. Well, that is right that could have an impact. And you 

are right that the growth has slowed down. And I do not know if 

we have it in this report but somewhere we have got a sensitivity 

analysis where we vary the cost of health care to see what sort of 

impact that has on the budget deficit. We can get back to you on 

that. 

Mr. YARMUTH. Thanks. Another point you make is that the subsidies on the exchanges, assuming that they are not repealed, 

would double basically from this year until 10 years. I was curious 

whether that was predicated on doubling the number of insureds. 

A rise in the premiums so the subsidies have to keep pace with the 

premiums under current law. Is that the reason it would double in 

10 years or is it a combination of both? 

Mr. HALL. It is probably both, but certainly, I would think most 

of it is the increased use of the exchange and increased use of the 

expansion so I think they are both in there. 

Mr. YARMUTH. Okay, so now turn to Medicaid. This is now regular Medicaid not the expanding Medicaid, you project expenditures growing from $389 billion in 2017 to $650 billion in 2027 

which is a significant increase. I do not know what it is, 70 percent 

growth over that period of time, but it’s 5.5 percent a year growth. 

Is that because you are projecting, again rising cost per beneficiaries or because you expect that more people to be involved and 

be eligible for Medicaid? Which would reflect a really bad economy. 

Or would it be because such a huge percentage of Medicaid is used 

for skilled nursing and you expect the senior population to eat up 

a larger chunk of the Medicaid budget? 

Mr. HALL. Yeah, to get to that level of detail I have to get back 

to you. I am pretty sure a big chunk of that is simply the increased 

number of people but we can break that out for you. 

Mr. YARMUTH. Okay, but would that be on the skilled nursing 

side because to say that the population eligible for Medicaid is 

going to grow that much over the next 5 years, again indicates an 

economy that is going in the tank which does not comport with the 

rest of your forecast. 

Mr. HALL. Right, I mean we have pretty modest growth, but one 

of the things we do have is a continuing trend and faster growth 

in income for high income folks so the distribution of income, we 

have that continuing to change and that is a trend going forward 

that is been there for a while. 

Mr. YARMUTH. And now going to Medicaid expansion, your projection is that between now and 2027, the number of people and 

the expanded Medicaid would go from 12 million to 17 million people. 

Mr. HALL. Right. 

Mr. YARMUTH. And that the total expense of expanded Medicaid 

would go from $70 billion to $142 billion, so that is 100 percent increase, 7 percent a year is what you are projecting? Again, I am 

curious to why that is such a huge increase. 

Mr. HALL. That one I know. 

Mr. YARMUTH. Okay, good. 


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Mr. HALL. Right now, there are 31 States and D.C. that have expanded and that is about 50 percent of the eligible people. We expect that the increase, the number of States that adopt Medicaid 

expansion, that will increase about 70 percent of the total people 

of all the States. So, it is from growing State acceptance of that. 

Mr. YARMUTH. Okay, good answer. Wish we could see that. Policy 

does not look like it is going in that direction, however. You know 

in my State we have, I think arguably the most successful expansion of Medicaid in the country. We do start insured by more than 

60 percent and in my district now we are at 3 percent on insured, 

81,000 on expanded Medicaid. 

And the projections if, not your projections, but other projections, 

show that if we actually were to rescind the Affordable Care Act, 

the Medicaid expansion or just the Medicaid expansion we would 

lose an awful lot of jobs, 10s of thousands of jobs in Kentucky; one 

estimate—44,000 jobs and $30 billion worth of economic activity 

over the next 5 years. Does your data, your analysis of the Affordable Care Act reflect that kind of potential loss in economic activity 

and employment in other areas of the country or across the country? 

Mr. HALL. I am not sure if we have that level of detail. The main 

impact of, for example ACA repeal, is a change in labor supply. We 

think that would be an increase in labor supply that would sort of 

increase the economic growth from and that would sort of counter 

some of the effects. That level of detail, I do not know offhand what 

we have thought about that. 

Mr. YARMUTH. Well, thank you very much once again for your 

testimony. I yield back. 

Interim Chair BLACK. The gentleman’s time has expired. The 

gentleman from Pennsylvania, Mr. Smucker, is recognized for 5 

minutes. 

Mr. SMUCKER. Thank you, Madam Chair. Good morning, Dr. 

Hall. 

Mr. HALL. Good morning. 

Mr. SMUCKER. Thanks for being here. As any other freshman 

here, and probably other members as well, we have just come 

through a campaign where, I know I have had many, many conversations with people throughout my district and heard concerns 

that they have expressed. And one of the top things that we have 

heard is people believe that the economy is not working for them 

as it should. They are concerned that their kids, their grandkids, 

will not have the same opportunities to live the American dream 

that we all have had. People are very concerned about that. And 

they are concerned that we are asking future generations to pay 

the bill. And is it not true, Dr. Hall, that is what we are doing? 

If we cannot solve this problem here, we are transferring that problem to future generations. 

Mr. HALL. I think that is a fair statement. We do have a literature. It is a little research talking about the intergenerational 

effects of the debt that we can get to you. But I think that is a concern. 

Mr. SMUCKER. So, that is one concern. People are also very concerned; their perception is that their elected leaders are not willing 

to make the tough decisions to solve the problems that we are faced 


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with. And I am hoping that we are about to change that. And I am 

pleased to be on the Budget Committee to work to try to solve some 

of these difficult issues. 

And I agree with many of the other comments that have been 

said here today; this is not a partisan issue. These are issues that 

we should be looking to try to find solutions. It will take us working across the aisle to move our country in the right direction. So 

I am hoping that this is the beginning to finding some of these solutions. 

The other thing that I have heard and I am going to get another 

question to you, you know I am Pennsylvania, Lancaster, Pennsylvania, a lot of entrepreneurs, small companies that have grown, developed in technology or whatever it might be and created jobs. 

And the business owners that I talked to today believe that it is 

more difficult and as a business owner myself I have seen this myself, it is more difficult, there is less incentive to invest additional 

capital into new technologies, to hire people because of the environment that we have created this economy. They believe the regulatory environment holds them back, holds individuals, holds businesses back. Prevents that kind of economic growth that we have 

seen before. They believe the tax policy is no longer working for 

them. Do you think we are seeing that kind of impact? 

Mr. HALL. I certainly think that that is a potential area for improving the long-term growth, right? Because one of the two big 

challenges is productivity. You need some regulation, eliminating 

some regulation can actually hurt productivity but having regulation that is unnecessary or goes too far can impact productivity. 

Tax policies can impact productivity. 

Mr. SMUCKER. We have talked about whether we need to tax our 

way out of this—whether we need to cut spending. I think we also 

need to look at establishing the right environment to encourage 

capital investment, to encourage more hiring, to encourage activities by individuals and business to create that economic growth. I 

think it has been done before. But my question to you in this regard is how much impact will that have? Say for instance we are 

able to get to a 3 percent or 4 percent annual growth. 

You know the numbers I am looking at look every bit as bad and 

worse, they do not look any better from this side of the table than 

they do before. But how much impact could we have if we create 

an environment for much stronger economic growth? 

Mr. HALL. The problem is so big, you cannot do it with just economic growth, I think. 

Mr. SMUCKER. Can you give a sense though on how much of a 

difference that would make? 

Mr. HALL. Well, right now, we think that productivity is going 

to grow to about 1.3 percent a year by the end of our 10-year period. In the 1990s it was as high as 2 percent, which is very unusual. Well let’s say we got another half percentage point of productivity. In 10 years, we are talking about having a deficit of 

about $50 billion lower. So, the deficit going from 1.4 to .9, that is 

an impact but it is not balanced and we still have the continuing 

worsening demographics going forward. 

Mr. SMUCKER. Thank you, Madam Chair, my time has expired. 


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Interim Chair BLACK. The gentleman’s time has expired. And I 

now recognize Mr. Faso, from New York, for 5 minutes. 

Mr. FASO. Thank you, Madam Chair. Dr. Hall, thank you. You 

raise productivity, how much would making permanent the 179-tax 

incentive for business investments or 100 percent expensing for 

capital expenditures, how much have you factored that into or done 

an analysis as to how much that could improve productivity? 

Mr. HALL. I do not know if we have done an analysis on that. 

We assume that they expire when they expire. So, I would have to 

see if we have done an exercise like that. 

Mr. FASO. Could you get back to us on that? 

Mr. HALL. Sure. 

Mr. FASO. And I am also a member of the Agriculture Committee 

and I was appointed to the Nutrition Sub-Committee, and I have 

noted that despite the general improvement in the economy in 

terms of employment, that we still have not seen a decline in recipients under SNAP. And I am wondering if you have factored in 

and looked at that factor as well? 

Mr. HALL. That is sort of part of our forecast and we do think 

there is still slack in the economy. But the underlying forecast on 

SNAP I think does incorporate our economic forecast. We think we 

are still about one and one half million jobs short of full employment right now even though the unemployment rate is very low, 

so that is still a significant slack left. 

Mr. FASO. And I would add some of the comments of my colleagues, one of the things I heard frequently on the campaign trail 

and speaking to business was that they have jobs, they just cannot 

find qualified people to fill the jobs. And often these are jobs that 

might have technical skills, they might need some basic mechanical 

skills and training in robotics etcetera. 

I am thinking of one particular school, near my district, Hudson 

Valley Community College where the guy who runs it, is a robotic 

training facility, he has about 150 students in it every year. Every 

single student has a job. He told me that you could have literally 

50 of his type centers around the country, and you still would not 

meet the need for employment of those kind of jobs. Any comment 

on that? 

Mr. HALL. Two things come to mind, our issue with slowly growing labor force, that is not going as quickly. Part of that is, working 

age people are not entering the labor force like they have in the 

past, so the participation rates of working age rates are really 

lower now than they have been in the past. That is a puzzle and 

we think a lot of that just does not look like it is coming back, so 

that is something that maybe is important here. 

And the second is, you know, one of the things that we have done 

a little work on is some Federal investment in things like education 

and training. And, in fact we are coming out very shortly on a blog 

on the affects about what we see is the evidence on the effects of 

education and training that going forward that might address that 

issue. 

Mr. FASO. Okay, I would be interested in seeing that. I am also 

interested in seeing that publication you referenced about the 100 

best ways we could use to reduce the deficit. Speaking of the debt, 


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what did you say our 10-year growth in national debt is going to 

be? 

Mr. HALL. We are going to hit about 89 percent of GDP. 

Mr. FASO. And in terms of actual amount of debt, it is going to go from, right now we are at about $19 trillion to? 

Mr. HALL. I think it’s $30 trillion. 

Mr. FASO. Ten-trillion dollar increase in the debt over 10 years, 

does it get a little frustrating coming up here to Congress and to 

tell us and the American people that their national debt is going 

to be $30 trillion in 10 years, and no one seems to pay attention? 

Mr. HALL. One of things I notice every year when we put out this 

report, we do a little press conference or we talk to press and let 

them ask questions, and one of the question is always ‘‘What is 

new about this report?’’ And the most notable thing to me is well, 

it still has the same punch line and a year ago, debt is large and 

it is growing and at some points it is unsustainable. That is a continuing message from CBO and it has been that message for quite 

a while. 

Well Dr. Hall thank you for your service. I would not recommend 

it but maybe you need to set your hair on fire when you are giving 

that presentation, maybe they would pay attention then. Thank 

you so much. I yield back to Madam Chairman. 

Interim Chair BLACK. The gentleman yields back time. Thank 

you very much. The gentleman from Ohio, Mr. Johnson, is recognized for 5 minutes. 

Mr. JOHNSON. Thank you Madam Chair, and thank you Dr. Hall 

for joining us today. Let me turn to direct spending or mandatory 

spending. You know, when I was first elected in 2010, the first 

phone call I got was from my nearly 80-year-old mother, and it was 

not to say congratulations it was to say, ‘‘All right, son, what are 

you going to do to make sure Washington protects my Social Security benefits because if they do not, I am coming to live with you.’’ 

The next phone call I got was from my wife who said ‘‘You better 

do what your mother said.’’ 

For many years after the 1983 Social Security reforms, the Social 

Security trust fund ran fairly large surpluses. This was done deliberately to try to ensure the trust fund would have resources to pay 

benefits for a long time. So, what is the current cash flow situation 

with Social Security? 

Mr. HALL. Right now, their outlays exceed the revenues, even excluding interest by a fair amount. This year the outlays will exceed 

revenues by about $55 billion. 

Mr. JOHNSON. Wow. How long do you think Social Security will 

last at that rate? 

Mr. HALL. Right now, we have our exhaustion date at 2030. 

Mr. JOHNSON. Okay. If Social Security continues to pay out more 

in benefits than it collects in taxes, what, in your opinion, will that 

mean for current beneficiaries if we do not take any action here? 

I can guess what that is, I can kind of put the two and two of what 

you just said together, but I would like to hear it from you on the 

record. 

Mr. HALL. Actually, our assumptions in this is that the beneficiaries will still continue to get what they are promised. So, even 

though, unless Congress acts, beneficiaries will not get their full 


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outlays, we assume that that happens. If they did not, in 2030, 

benefits would just have to be reduced by about 29 percent right 

away. 

Mr. JOHNSON. All right. So, is it true the longer Congress waits 

to reform Social Security, the harder it is to implement the reforms 

without affecting current retirees? 

Mr. HALL. It is. 

Mr. JOHNSON. Okay. Let me go back and talk a little bit about 

economic growth. You know in a 2015 study on repealing the Affordable Care Act, the Congressional Budget Office determined that 

repeal would increase GDP by about 0.7 percent on average over 

the median term, that is 2021 through 2025. Mostly, by repealing 

the provisions that are expected to reduce the supply of labor in 

the economy. So, how would repealing the Affordable Care Act affect the expected supply of labor in the economy? Would it lead to 

an overall benefit in the economy in your view? 

Mr. HALL. Repealing it would likely increase the supply of labor 

in the economy, not quite 1 percentage point and actually would 

give a boost to GDP growth because of that increase in labor supply, our latest estimate was about 0.7 percent on GDP. 

Mr. JOHNSON. Okay so if we were to repeal, it would increase the 

GDP by about 0.7 and the expected supply of labor, tell me again 

what that would go to. 

Mr. HALL. Sure, we think that the number of people that would 

increase their hours or re-enter the labor force that would increase 

by 0.8, 0.9 percent of the labor force. That would be the boost to 

the labor force. 

Mr. JOHNSON. I am asking you to do some mental math here, I 

know that, but at the current labor rate that we are experiencing, 

you got any idea of how many millions of people that would be that 

would be back in the labor force. 

Mr. HALL. Right. I do not off hand. I do not want to guess. 

Mr. JOHNSON. Can you take that as a question please? 

Mr. HALL. We can do that pretty quickly, somebody just needs 

to look it up for me. 

Mr. JOHNSON. Yeah, I need a calculator too, I am sorry. So, 

thanks a lot, I appreciate you answering my questions. Madam 

Chair, I yield back. 

Interim Chair BLACK. The gentleman yields back. I do want to 

reference the report that did come from CBO, Budgetary and Economic Effects of Repealing the Affordable Care Act and I will read 

a line from this, in addition to the questioning by the Gentleman 

from Ohio. And the paragraph begins with ‘‘The Macroeconomic 

feedback effects of repealing the ACA would lower the Federal Deficit by $216 billion on the period from 2016 to 2025.’’ So, it would 

have a significant economic affect in lowering. The gentleman from 

Georgia, Mr. Ferguson is recognized for 5 minutes. 

Mr. FERGUSON. Thank you, Madam Chairman. Dr. Hall, thank 

you for coming today. I guess one of the joys of being a freshman 

and going late in this game is I have gotten to hear a lot of these 

comments and have learned an awful lot. 

So, a couple questions for you. First of all, do you believe that 

the rules set by Congress that you have to follow for scoring the 


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budget and the policy changes do they allow us to accurately look 

in the future. Just a yes, or no. 

Mr. HALL. I do not have an opinion on that, we will do whatever 

you like. 

Mr. FERGUSON. I would suggest that we are $20 trillion in debt. 

I will let the answer stand for itself there. Next, can you accurately 

talk about how the proposed reforms, tax reform policy, the rolling 

back of the regulatory cost, possible trade policy changes, spending 

in defense, infrastructure and poverty initiations simultaneously 

affect the budget? 

Mr. HALL. No, we would have to do a lot of specifics and do a 

lot more work. 

Mr. FERGUSON. It just seems, you know, it is awfully tough for 

us to have an honest conversation if we do not accurately know 

where we are going with these numbers and how they are actually 

going to affect us. Do you think that we should be using more dynamic scoring models based on predictive analytics to give your office and those around you more tools to accurately reflect what the 

policy changes are going to suggest? 

Mr. HALL. I think the policy right now is working well, the dynamic scoring we believe makes for a more accurate forecast. And 

it really makes a difference on the large pieces of legislation and 

that is when we are required to use it, so that seems appropriate. 

We are going to continue to get better at it and quicker at it but 

I think it does probably help improve the accuracy. 

Mr. FERGUSON. You know, as we sit around and we talk about 

this, the [inaudible] mandatory spending and I think we are going 

to have to be honest with ourselves and the American people about 

the promises that have been made and our ability to continue to 

keep those promises. We are going to have tough decisions to make 

and it is you know, I kind of look at it and we talk about where 

we are in the budget process, are we going to have a budget that 

balances in 10 years, are we going to have one that balances in 5 

years, is it going to be one that balances in 12 years. 

Are we not going to vote for a balanced budget because it ruins 

the political purity of a particular representative? I just get the 

sense until we are willing to fundamentally address and honestly 

address the mandatory spending crisis that we are not doing anything more than rearranging the deck chairs on the Titanic. Is that 

a fair statement? 

Mr. HALL. I want to be fair and say that there are a lot of ways 

you can address it, you do not have to just focus on mandatories. 

The broader way. 

Mr. FERGUSON. Dr. Hall you said earlier, the question I might be 

paraphrasing, all of the mandatory spending is going to outstrip all 

of the discretionary spending. 

Mr. HALL. That is right, and the spending is mandatory. 

Mr. FERGUSON. Thank you. 

Mr. HALL. That is right. 

Mr. FERGUSON. So, I mean it is coming, at some point it is going 

to eat up every single resource we’ve got so we have to address 

that. You know, the other thing and I will close with this. You 

know it is interesting, I kind of feel we are a political version of 

Thelma and Louise right now. We have been, just in this here, and 


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we have been talking about who has been the better driver for the 

last 50 miles. And now we are fussing about who is driving and the 

car is about to go over the cliff and it does not matter who is right 

or who is wrong if we do not stop that car from going over the cliff. 

The American people expect us to stop this car from going over 

the cliff and I think it is a real challenge that we have as a Congress and as an American people to have those very honest conversations that we have got to have. We have to get better at scoring the budget, I believe we have to get better at scoring the proposed changes. I think we have to able to strip the emotion and the 

politics out of our decision and use better analytics to make these 

tough decision and with that Madam Chair I yield back. 

Interim Chair BLACK. The gentleman yields back. The gentleman 

from Wisconsin, Mr. Grotham, is recognized for 5 minutes. 

Mr. GROTHAM. Thank you. I want to take up again a little bit 

looking into why the economy is doing so poorly, you know this 1.6 

percent growth is kind of pathetic with all of the new technology 

that is out there. Labor participation rate is 62.7 percent and I 

want talk a little bit more about these entitlements because in the 

last decade, means tested spending has gone up from about $670 

billion to $740 billion, so more than double. When you look at so 

many of these programs it is like they were designed by politicians 

who intentionally either wanted to keep people out of the labor 

force or not making a lot of money. 

And I want you to comment a little bit on whether, say if we did 

something about low income housing, where we kind of give people 

free housing as long as you do not work. Or the earned income tax 

credit where we like punish people if they make more than $19,000 

a year. 

Do you think we could begin to lift these numbers up, lift up the 

GDP as well as lift up our tax collections if we were to get rid of 

some of these programs and free people from the incentives not to 

work? I mean in my district my employers again and again I feel, 

‘‘Glenn it is tough competition out there to find workers and the 

toughest competition is from the Federal Government that is paying people not to work for me.’’ Could you comment on what would 

happen if we would scale back some of these programs? 

Mr. HALL. Well, sure, obviously, we would need some specifics to 

actually do a real score and do it carefully. And of course, repealing 

some of these programs would have some other effects that you 

might want to consider. But we do a number of things, and we 

make a point of putting it out occasionally, which are implicit taxes 

on working that if people work more and earn more they lose benefits or if they begin to work they lose benefits. So, that is part of 

our calculation when we look at something we look and see what 

impact it has on supply of labor, willingness of people to work, and 

that is consideration. 

Mr. GROTHAM. Could you easily come up with a hypothetical in 

which people, say if they work and make another $10,000, lose 

$10,000 in benefits between their Pell Grants and their earned income tax credit and their food stamps and low income housing. 

Mr. HALL. Well I mean those are all reasonable versions of that. 

For example, we have been talking a little bit about the ACA, that 

is part of the issue about the ACA the decline in the labor supply 


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is essentially an implicit tax on working where you lose your health 

benefits. 

Mr. GROTHAM. And it is not just a decline on labor supply, I 

think a lot of these programs will encourage you to work but not 

very hard. You know the earned income tax credit was clearly designed to discourage somebody to make more than $20,000 a year. 

Right? 

I mean that is what it appears it was designed to do. There are 

various different cliffs in the Affordable Care Act. I was in a different hearing yesterday in which an accountant talked about people holding down their income to get their subsidies. So, in other 

words again the Affordable Care Act was designed by somebody 

who wanted to discourage Americans from working hard, correct? 

Mr. HALL. Well, I do not know that was the reason for it, but 

certainly looking at the possible side effects of programs, at what 

affects they may have on incentives is an important part of any 

public policy analysis I think. 

Mr. GROTHAM. We can do both a great step towards reducing 

things on the spend side and getting a big increase on income collection if we paired back some of these programs and allowed people to work. When, you know, you run into people back in the district that have stories, some of you do not talk to these people but 

you talk to their parents, you talk to their siblings and they will 

tell you, you know. My brother, my sister, my daughter, they are 

not working because of the benefits. You think we could make a big 

step towards balancing the budget if we pared some of these things 

back? 

Mr. HALL. It would undoubtedly have an impact. I do not know 

if it would get us towards balancing the budget because this is such 

a big problem. But that could have some significant impact if one 

looked at some of the programs and worried about the incentives. 

Mr. GROTHAM. Well, means tested spending, according to what I 

have here, went up about $370 billion in the last 10 years, I mean 

that by itself would be almost half way towards balancing our 

budget. And you turn around and look at the huge degree in which 

we discourage people from working and also you get that income 

tax coming in. I suppose you would just be afraid to take a ballpark 

estimate on what would happen. 

Mr. HALL. And that is right and there is an element too of a onetime change and then apart of what we are looking for is the more 

permanent change. What happens to not just labor supply, but the 

growth of the labor supply going forward. 

Mr. GROTHAM. Well, thanks for coming over here its enjoyable 

listening to you. 

Interim Chair BLACK. The gentleman’s time is expired. As we 

conclude today, I just want to clip off a few things to help us recognize what a situation we are in as a country right now, and how 

desperate we are to change the current trajectory that we are on. 

And so, let me just clip off a few reminders. Real GDP grew only 

by 1.6 percent last year, a 5 year low and half the long-term average growth rate in this U.S. Since the recession ended in 2009 the 

economy has grown by an average of 2.1 percent making this the 

weakest economic recovery of the modern era. The headline on unemployment rate has declined sharply in the recent years and curVerDate Sep 11 2014 04:38 May 06, 2017 Jkt 025238 PO 00000 Frm 00054 Fmt 6633 Sfmt 6602 E:\HR\OC\A238.XXX A238

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rently stands at 4.7 percent and that all sounds good but the other 

aspects of the labor market remain weak. The broader unemployment rate, which includes those, working part-time because they 

cannot find full-time work and discourage workers who have 

stopped looking for work is 9.2 percent nearly double the headline 

rate. 

The labor workforce participation rate, which I continue to remind people in my district as they hear the low rate that is only 

unemployment rate, that really is the only the rate that matters, 

62.7 percent. That means that of able-bodied workers, only 62.7 

percent of them are actually employed in a full-time employment. 

Close to a 40-year low and CBO expects this rate to continue to decline in the future. CBO maintains that the Affordable Care Act is 

contributing to this decline in the overall labor supply in the economy. 

The average hourly earnings have increased by about 2.5 percent 

over the latest year, but that is well below the previous session 

level when earnings were growing by about 4 percent a year. Real 

median household income is finally on its upswing but at $56,500, 

is still $900 or 1.6 percent below its pre-recession peak in 2007. So, 

as we can see by all of its statistics and these numbers, this is affecting our economy and more importantly this is affecting the people of this country. 

So, thank you Mr. Hall for appearing before us today. Please be 

advised that members may submit questions to be answered later 

in writing. Those questions and answers will be made part of the 

formal hearing. Any members who wish to submit questions or any 

extraneous materials for the record may do so within 7 days. 

Mr. YARMUTH. Madam Chair, may I make just a brief comment 

in response to your comments? 

Interim Chair BLACK. Absolutely. 

Mr. YARMUTH. In listening to both sides and to Director Hall during this hearing we heard very few ideas for stimulating growth in 

the economy or specifics about what we would cut or how we would 

fix some of the mandatory spending programs. 

So, I think if it would be possible maybe to have another session 

in the next few months to discuss the actual recommendations that 

are in the new publication from Director Hall and maybe get some 

other people in here who can talk about how we can actually grow 

the economy. Because I am not exactly sure we know how to do 

that, either side of us. 

Interim Chair BLACK. Point well taken, Mr. Yarmuth. With that 

the committee stands adjourned. 

[Whereupon, at 12:11 p.m., the committee adjourned subject to 

the call of the chair.] 

[The following questions and responses were submitted for the 

record.] 


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