welcome. 50 years ago, the war on poverty represented a dramatic shift in the federal government's priorities for helping those who are left behind in the growing economy. we hosted president and lady bird johnson's daughter, last month, she reminded us that the major legislation that was passed during that time was bicameral, bipartisan and was with the leadership of the white house. and it worked, even though we have a long way to go. i want to thank the chair, congressman ryan, chairman ryan for at least beginning to engage in a debate around poverty. in the omnibus appropriations bill, the president signed into law january 17 come we were able to secure link and i just want to read this just want to reduce the, it says poverty is far too prevalent in the united states. congress and the administration should work together to implement in the agency efforts and support proven antipoverty

programs that reduce the existence of poverty and the suffering associate with it. so i want to ask you, what policies are antipoverty initiatives tend to get the most bang for our buck in terms of boosting economic growth? for example, what is the impact of economic impact of not extending unemployment compensation for the 1.7 million people have lost their checks what they're looking for a job? will we see them fall into the ranks of the poor? does raising the minimum wage boost economic growth and reduce poverty? what's the impact on poverty and economic growth rate as a result of, unfortunately not, the impact of structural and long-term unemployed as we continue to recover from the recession and can't seem to get any jobs past. i would like for you to respond to this issues around poverty, given the sense of congress that was put into the omnibus bill.

>> yes, congresswoman. we have estimated that if the congress were to extend the additional unemployment insurance benefits that expired, that would add about a quarter of a percent in 2014. and would have a couple hundred thousands people to the ranks of the employed. and we've not done an estimate of the poverty rate but that would be good for people. some people who would otherwise be below the poverty line in the above the poverty line because of extra benefits. we've not tried to quantify that. on the minimum wage, we are currently doing an analysis with respect to raising the minimum wage, both in terms of the high wages income for people who keep their jobs and in terms of people who would probably lose their job. and we hope to present that announces to the congress in just a few weeks. so i don't want to speculate at this point about the results of

that analysis. on the long-term unemployed, you are exactly right that for many people who lose jobs and cannot find jobs again, the economic consequences to them can be devastating. and, in fact, the consequences on families on on the health and so on come and there's a substantial amount of research about this and we report on it a few goes -- a few years ago. many independently bad shape and end up below the poverty line. i begin we have not tried ourselves to quantify just how many more people that would be, but persistent level of high unemployment. we should and are labor market report, a company the outlook, that the rate of long-term unemployment remains today, although it come down from its peak of you is is a, remains toy than at any high point before this last recession and weak recovery. the economic and human costs of that are very, very large. >> i would like for you to look at the language in the bill, in the senate bill, and see if it's

appropriate and possible to give us some of your suggestions as it relates to congress and the president, what we should do to implement the policies and interagency effort, and support and to operate from programs. we would like your perspective on what we voted into law. finally, i have a few more minutes. let me ask you about the cbo report last year as it relates to the public option. in the health care exchange. i think you said it would reduce the federal deficit by 158 billion through 2023, which reflects a 37 billion reduction in at least. and 121 billion increase in revenue. now, with your new report, have you recalibrated that or do we think that still hold? >> we've not we estimate that, congresswoman, but this estimate was to be quite applicable. >> thank you.

>> turn one. director elmendorf, thank you for joining us today. i'm sure that americans, real-world americans that are watching today's adjustment, their eyes are glazing over, so for that i would summarize -- >> i'm offended. >> no offense to you. but i would like to summarize that economics is essentially a mathematical expression of aggregate human and business behavior. and in that vein i would say that this latest cbo report i think is a better reflection of aggregate human employ an employer behavior over time as a result of government policy. obamacare is one policy that has been enacted by the federal government in addition to that there were several other policies had been enacted over the past five years that have affected our economy. in your report you talked about the impact, the affordable care

act or obamacare, on the supply side of the equation in terms of what employees are prospective employers did come and use of equipment of 2.3 million jobs would be lost due to expressed, let me rephrase that. hours of labor would be less, would be offered and job losses would be 2.3 million to not be 2.3 million. not to sit 2.3 when jobs would be lost. have you looked at the demand side of the equation? the affordable care act, or obamacare, has a huge impact on employers. and they're making economic decisions to determine how many employees they hire and what sort of hours that they ask these opposed to work. can you tell me in a short amount of time what impact that would have? >> yes. we looked in report and outlook on the effects of the affordable care act on the demand for labor. we highlighted two channels, one

was defective the overall demand for goods and services and unemployment. the other is the effects of the employer penalty, the demand for labor. in the very short run, requiring employers to pay something the amount for each of the employees in some circumstances amounts to raising the cost of those employees and would lead employers to reduce their number of people they hire. but we expect as other analysts believe that over time, costs that employers bear for their employees into being borne by employers in the form of lower wages, health insurance causes one example in this mandate would be another. so we think after a few years the cost of implementing is basically showing up in wages, and are affecting ultimately workers supply of labor, but no longer employers demand for the most part. >> just to summarize, you potentially, essentially took

the potential negative impact on labor demand and translated it further into labor supply. >> because we think wages will adjust. >> i can live with that. i mean, i don't like the fact that we are labor supply or labor demand, even when. i think that's bad policy, and we as republicans in the house are looking forward to our replacement, alternative that doesn't do that. does the cbo routinely analyzes administrative actions and tries to trim the impact on the economy. that's -- that process isn't terribly transmit at this point but when you take obamacare and epa action and department of labor actions, just to show actions, you could after every agency and they have issued tens of thousands regulations over the last five years.

what has been the impact? i ask you from this frame of reference, as a person has created or helped create hundreds of jobs in the real world, i know firsthand the impact of that policy but i was wondering, do you have accused the number of potential jobs lost because of obamacare and all the government policies that been an active the last five is? >> i'i'm sorry, we do not to our focus as you know, legislation that congress is considering the we got to go back and look at how the law is a minister and as part of why we look at the affordable care act again this time but we don't in a sort of copper into the analysis. >> i think that would be well served because i mean, one of the reasons the inflation rate is so low because employers have decided that they can't hire those types of employees where they stand and so -- prospective employee base has given up. i would just say that the

government policy allows the use has expanded the poverty trap but it's dropping, pushing them out of middle-class and hurting opportunities. i yield back. >> the gentleman's time has expired. i just want to keep us on the clock. >> thank you, mr. chairman. and thank you, mr. director, for your testimony. i believe you testified last year that the imposition of sequestration would cost the economy potentially 750,000 jobs that would be lost, is that correct is? >> that sound right. i don't remember without looking. >> there are estimates that engineered unnecessary reckless government shutdown post a comment about $24 billion in lost economic productivity, correct? >> i've seen investment but we're not done investment ourselves. i can't vouch for it. >> i believe cbo itself is set as it relates to the failure to

renew or extend unemployment compensation, that could cost the economy 200,000 jobs during this calendar year, correct? >> yes, that's right. >> so that our choice this congress has made or will make moving forward that could adversely impact the economy economic productivity and job creation moving forward, correct speak was yes, congressman. >> as it relates to the cbo, discussion concerning the aca, if you estimate that the aca will result in the decline of full-time equivalent employment, correct? >> that's how, one of the ways we have measured the effect that we've and alaska yes. >> just so i understand, this stems from a net decline in the amount of labor that workers would choose to supply. i believe you said that on page 117. >> exactly. >> as an that estimate on impact of the aca's -- this estimate of

the impact the aca would have on labor market participation, you yourself nonetheless go on to characterize its substantially uncertain, true? >> yes spent the reason why is because this is a new program and the impact of the imposition and the effects of the program are on clough, correct? >> correct. >> notwithstanding all the hysteria that has been created over the last 24 hours related to asthma on the impact of labor participation, by her own as mission is not even clear that there will be an adverse impact moving forward, correct? >> we've not tried to quantify the uncertainty. in some cases we give the congress not only our best estimate but a range of possibilities. that requires more analysis. we've not done that in this case. >> on page 118 of your report

you state that the actual effects of the aca code, on labor participation, could differ notably from your estimates, true? >> yes, that's right. >> now, it's my understanding that the cbo also concludes that the impact of the aca on the supply, even assuming that your estimates prove to be true, will be small or negligible for most categories of workers. is that also your position? >> yes, that's right. >> okay. now, just so i understand, and i believe this was pursued in an earlier line of inquiry. the reason why you estimate that the aca could have an adverse impact on labor participation is because the aca its older workers in particular in a better position than they otherwise might have been at a certain stage of life, is that true? >> it puts a set of workers in a

better position. some are older and some are younger so we've not tried analyze this for different age cohorts separately. >> because it puts a set of workers in a better position, they might voluntarily decide not to participate in the labor market at numbers that they otherwise might have done, correct? >> exactly, congressman. >> okay. now, at the turn of the century did the imposition of child labor laws reduce the impact on labor participation? >> i guess, i think so. i never thought about that question. >> this standardization of the 40 hour workweek in america reduce labor participation in this country? >> it reduce the number of hours, total number of hours worked. i think, yes. >> would you also say that the successful assault, not complete, but the successful assault on sweatshops in american reduce dissipation in the labor market?

>> yes, i think it probably has. >> thank you. i yield back. >> mr. rush. >> thank you, mr. elmendorf. is a really interesting material, and getting my hands about, still a freshman congressman. i have some questions that probably i should know, but i just need clarification. trying to add up these alloys in this figure. what percentage, total spending -- what is the percentage of total spending -- total spending as a percentage of gdp in 2024 based on the statutes? >> in 2024 we think the federal government cover outlays will be 22.4% of gdp. ..

>> revenues will be about 1% of gdp. >> so, at what point -- i know economists speculate what point of the revenues of gdp will drag on the economy. if you collect too much it begins to drag on the economy. what percentage is that? >> there is no tipping point that economists are aware of, congressman. in part because the effect

depends an awful lot on how the tax code is structured. it's not just a total amount of revenue raised, it is even more so the way the revenue is raised and so this has do with the nature of the tax code and the particular incentives and disincentives created by the provision. >> said it could be 50% of gdp and it wouldn't be a drag on the economy? >> i didn't say that. but i want to say is there is no magic number. the higher the tax rates are, all else equal the more that distorts people's behavior. and if you're taxing work and saving the more that will reduce the amount of work and saving all else equal. the amount of debt we have depending on the gap in the revenue and outlay also affect economic growth over time. so what else is equal in the = the calculations. but leaving aside when you have taxes of a certain level, the higher the tax rates are, the more that would tend to distort

the behavior. also, the more revenue than you might raise and reduce the deficit and have beneficial effects. but in our analysis we take on board the benefit of the tax rates on the economy but there is no number that you go beyond where it is a problem and it becomes an increasing problem as you work your way up. >> i don't have any more questions. thank you. >> thank you mr. charan and doctor ellmendorf. i want to talk about the jobs portion of what you have. first if i can briefly -- i know it's repetitive but i think it's important given the new i got the chance to see the washington misinformation sheehan yesterday. when we had the best panels because of the affordable care act and i got to see up close

around the 2.5 million jobs it was going to cost it was employed there would be a decreased demand for labor from businesses that somehow people would be reducing the number of hours people are working and the economy would be worse off. i want to verify and doublecheck these things one more time. you said that workers would be leaving participation because they are going to be choosing to leave rather than businesses demand for labor reducing, correct? >> yes, congressman. >> second, you said there is no compelling evidence part time has increased because of the aca? >> yes congressman. >> you also sent by allowing low-income households to redirect some of the funds they would have spent on the purchase of other goods and services they have increased overall demand which would induce some employers to hire more workers or increase the hours of current employees during the period. >> yes chairman.

>> i know it happens, sometimes perception becomes reality rather than reality becoming reality so i want to emphasize those points. >> the reason we don't use the term lost jobs is there is a critical difference between people who like to work and can't find a job or have a job that's lost for reasons beyond their control and people who choose not to work. if someone comes up to you and says the boss says i'm being laid off because we don't have enough business to pay any other person feels bad about that and we sympathize for them having lost her job. their job. if someone says i decided to retire or stay home and spend more time with my family and spend more time doing my hobby, they don't feel bad about it, they feel good about it and we don't sympathize. we say congratulations. >> i think it was just inferred earlier that somehow if fewer people -- you mentioned that they would be better off in your report and language presented to

us and it was implied people had an opportunity to get to middle-class you wouldn't be better off. but part of it is you're saying in the aging population people aren't participating. that's part of statistic for people who like my mom don't have to do that, but secondly it could be on the the low were and who is now working two part-time jobs instead of three part-time jobs and instead they might be able to tuck their child in bed at night and read a bedtime story or go to inactivity which means they are better off. at least that's what it means in my part of wisconsin. then let me ask a question about what we can do in your report about jobs. as we talked about with mr. jeffries, the sequester was about 750,000 in full force. i know we released some of the pressure this year but we go back to putting a lot more of that in 2015. we are going to lose jobs because we are not extending unemployment extensions. while people want action by

congress rather than the president, the problem is that congress isn't acting. we aren't doing anything to create those jobs come in jobs, therefore someone has to do something about that. what policies tend to get the biggest bang for the buck in terms of boosting economic growth that we could be doing in the near term? >> a number of times now in the past, we have given to congress our estimate of congress our estimate of the set options for spurring the economy in the short-term. as the fiscal policy options, does that put money in the hands of people most likely to spend it. so increasing the aid the unemployed has been very high on the list in terms of the bang for the buck, so providing additional refundable tax credits to the lower income households reducing the payroll taxes. those things are more effective in spurring growth in the short term under the current economic conditions than the government spending increases or tax cuts focused on people who are likely to save rather than spend a larger part of the extra money the end up with.

>> at some point you can only buy one so far you can't buy 100 sofas come is that the theory? >> those are some big houses, congressman. but people tend to spend a smaller share. >> let me ask on the unemployment benefits because in the state of the union in my district someone lost his benefits and has his house for sale because he doesn't want to go into foreclosure, they are not even having friends over for dinner because they don't believe they can't afford food. what is the unemployment often than in this country? >> i'm sorry, i don't have the facts of that at hand i am afraid the congressman. but the unemployment rate in the country remains very high and the rate of the long-term unemployment is higher today than it has been at any point in decades. except for the past few years it's come down a little off its peak but it remains extraordinarily high and the cost of that to the economy and the people involved.

>> i hadn't planned on it but i want to follow-up with what he said because i think it's important. i agree with all of your answers to questions about what stimulates a short-term growth. and of course we have done that. we had a stimulus package in the first year of the president's administration. we did a trillion dollars health care bill. and as i look at all of that, the effort that was supposed to produce short-term result, what i see from your report is that it virtually doubled the public debt held by the public. so, we were so committed to the short-term stimulus that we borrowed more as a percentage of gdp coming in in about five years than we had in the previous nation combined and we can argue whether that was a good idea or bad idea but we did that to create a short-term growth. when in your projections do we return that dates back to historically normal levels presumptive lead we are going to

do these things to stimulate short-term growth and have to pay the piper sometime. when in your projections do we end up returning to the historically normal levels? >> if it doesn't return to the historical traditional share of gdp at any point in the next ten years or as we showed in the long-term outlook last fall in the decades beyond that. >> i agree what you say that we can do things in the short-term to stimulate economic growth. presumptively that's good for the economy. what you are saying is the things we did has exacerbated our debts not just in the ten year window but also in the longest term when does we never return back to historically normal levels? is always at this abnormally high perhaps dangerous levels? >> so, let me add a bit of interpretation to this. the first thing to realize is that a large share of the increasing in baghdad was not anything you did deliberately. it was an automatic stabilizer in the federal budget and we quantify those as best we can in

this outlook. the biggest thing that raised the deficit and debt wasn't a deliberate action but it was the tax revenue has fallen by a lot and spending rises automatically. this large share taking no actions. additionally congress took actions that by our estimate substantially strengthen the strengthened the economy had added outputs and jobs, but you are right that if that debt is never -- the extra debt is never paid it down, then for all that's good in the short-term, it becomes a drag on the economy. >> sort of a long-term drag. i regretted when you were having your discussion earlier we talked about balanced budgets in the '90s and in the early 2000's. but i think of as a cash flow, the congressman was borrowing from the social security trust fund that was supposed to be elsewhere. it's hard to call that a spending balance. i don't want to take issue with that. what i want to take issue with is that the tax rates were

higher and that led to some prosperity. when i look at your ten year window, i see income tax receipts as a percentage of gdp rising to about 9.4%. and as i look back historically in the decade upon decade upon decade that your report covers, i can only find one year in the history of the nation that income tax revenues were higher than they are projected to be in this ten year window. so we are going to have historically high income tax collections. but, to see again, you are saying that the debt is not going to return to the normal levels and in fact that is going to continue to rise nominally? >> yes, and i would add there has been a shift in the distribution of taxes over time. so certain tax going to corporate income tax had collected less revenue in some payroll taxes as well. and the individual income taxes are the portrays the rising was to substantially over the next

decade. >> you have a difficult job, and i'm glad you have agreed to do it. you opened your statement with saying that decline sharply wilkey -- sharply decline more. that is accurate. what is not said if they are declining to a level that is still higher than the historically highest level they have ever been before this administration. and i just would ask you going forward because it is something that we agree on collectively. when the extremes on either end looks less extreme than where you were but whether or not it is the responsible thing to begin to accept that as the new normal or whether we had an opportunity to continue to describe it as being damaging and high i think is a question that we can continue. becausewhen doctor ellmendorf talks, people listen. i'm glad that they do, but those

words matter. >> we tend to focus on the size of the economy as a percentage of gdp during the comparisons over a long time period when the population and the size of the economy have changed a lot since the deficits we see for this year and next year are actually at or below the share of the gdp looking back over the last 40 years. with outside of the historical average it it as best as a share of gdp. and i look pain and that remark as well. >> thank you. >> thank you very much mr. chairman. thank you, doctor ellmendorf for your report and remarks. i have a question for you. let me set up where i'm going so that you can understand what my question is. today unemployed americans continue to struggle seeking a job that will support their family and give them a chance to

earn their share of their american dream. the american worker doesn't want a handout. i don't believe the american worker wants a handout. they want to work. they want a paycheck, and i think we must come together to remove the barriers that promote full-time employment. while long-term unemployment is a national problem, it doesn't fall evenly across the united states. disparities exist and unemployment from heavily impacted states and those with with liver unemployment rate. how would the rate would be greatly impacted by the long-term unemployed workers with a lump-sum unemployment benefits to help cover living costs for the workers can move from one area of high unemployment and perhaps area of london limit rate in order to accept employment that would require them to move? >> have not had an opportunity to analyze the proposal. it is an interesting one that might have beneficial effects but we would need to sit down

and spend some time to give you a useful answer i'm afraid. >> does the data show that in some areas of america today a snapshot of it is employment opportunities are much greater in certain regions of the states where other states it is higher than other regions? >> the labor market is very tight in some places and poor in others. historically part of what has helped to bring the labor market back to a better place after the previous downturn has been the mobility of people. and there's evidence the mobility of americans has actually declined over time which may be an aggravating factor but we have to think how of a particular policy might be able to address that. >> so you don't have any analysis that indicates perhaps one of the factors is a lack of resources to make that move. it costs more to move across the town or across to another state

or another region than it would drive back and forth to work. there are impending factors, financial factors that say if i don't have the first and last to get another rental place for my family, what have you, there are expenditures in a move. >> that is certainly true, congressman, and the logic sounds right to me. i just analyzed the policy of complicated. i try not to do it just sitting here without the benefit of the expertise of my colleagues. i would be happy to spend some time -- >> it would be helpful for us to look at that because again, as you would seem to agree it is logical that that is a factor, but you probably would probably would have to analyze it in order for you to dispense about here. >> if in fact we figured out a way to help people mobilize from one region or one state for example to another one, where they have a much higher likelihood of finding employment just because of the simple fact

they are looking for employees and they have a much lower unemployment rate. if we figured out a way to do that, would that help the economy? >> yes that would. >> is it overly logical to assume if somebody gets off the unemployment rolls and into the taxpaying working role that helps the economy? >> it certainly helps the budget if we gave people the jobs they can earn money and pay taxes on it. i want to emphasize the difference across the region as you understand taking the country as a whole, there are significantly fewer jobs and ban people that want them. moving people to where there are more jobs can help. but in any case, however effective it can be by itself, it won't solve the whole problem because right now there is less demand for goods and services than we have the ability to produce them and that weakens the demand by workers across the country. >> there's the bigger picture

come about if ima parent who is trying to feed my family and i'm tired of getting an unemployment check and i want to work and have that dignity of work like many americans i believe do, to that person, the bigger picture is their picture. here i'm living in a city or the county i grew up in and i finally have the guts to go ahead and say i hear where my cousin lives they are hiring an unqualified. all i have to do is move my family over and i can get that employment. to me that is a big enough picture to concentrate on that kind of effort so that we can actually hopefully make progress that can improve the family. >> thank you. >> thank you mr. chairman. doctor ellmendorf, i'm sure when you write your notes on fun things i did this year they said that the day may not make the

list. but we appreciate you. >> i appreciate the chance to talk about the analysis my colleagues and i have been doing the question about the 2 million equivalent lost jobs, and i think the best way that i could explain back as the chairman, the equivalent of 2 million full-time jobs are people that look at the benefits that they are getting under obamacare and sable gets better for me to just stay and not work because i get those benefits. is that right? if we look at that in isolation, what effect does that have on the total tax revenues to the federal government? >> reduction and employment whether it is voluntary or not, and in this case or not, either way that will reduce the all else equal the income earned in

the country and the amount of the tax revenue that is collected. >> people choosing not to work because they are not paying into the revenue is going down. i think i read the report and it estimates that there is about $1.2 trillion over the ten year budget window that are used to subsidize the exchanges. and about 792 billion for medicaid expansion. so, roughly a total of $2 trillion over the two years to pay for exchanged subsidies and medicaid expansion under obamacare. >> recall that the gross cost of taking account of some of the other effects on tax revenues and so on. we end up with a net cost of $1.5 trillion over the next decade. >> we are spending 1.5 or $2 trillion more. we are taking in less revenues because people are choosing to work less or stay home. it looks to me like that is

adding to the problem of our death; is that right? connect again, congressman, when we evaluate the affordable care act as a whole and not just be affordable as you have been referencing that the exquisite cuts to medicare payments and the cuts to the increase in tax revenue, the last time we did the analysis of and behold we found out it would reduce the budget deficit. but you are right that a piece of the wall that expands the subsidy for the insurance coverage costs the federal government money on balance. >> obamacare also includes a bailout for insurance companies in case things go bad. the risk. since enrollment started in the fall, it looks like we have had fewer people enrolled in obamacare than we thought were going to. have you looked at the fact that insurance companies called this adverse selection, but it's the

sick people, those that are going to need more extensive coverage -- what is that going to do to the subsidies for insurance? >> by our estimates, the risk quarter program in the affordable care act will actually reduce the government deficits and it will lead to the net savings on the federal government because it is a program in which it ensures the cost significantly exceed their expectations. the federal government is on the hook for some of that but if they fall short of their expectations, then the government can share those savings. and the closest analogue that we are aware of is the risk quarter medicare program in part and if it's which has yielded savings for the government consistently. our estimate is that the quarter program on the affordable care act will yielded savings into and those are very uncertain estimates. our original projections on the affordable care act takes care of the adverse selection that you're talking about. we thought that enrolled --

enrollment would be one third of what it is right now and we thought the people that would enrolled this year would be more sick on average than the people that enrolled over time and we presumed insurance companies understood that as well and incorporated that into the settings of premiums. neither we or the insurers know now how many people left this year or how healthy they will be or if that is -- their estimate in setting premiums and our estimates now are highly uncertain. >> one final question. i think the report indicates over the ten-year window we anticipate under the unemployment rate actually go down. that's a good thing. but this is the labor participation is also going to decrease. how is it that we have fewer people working in the unemployment coming down? we think that employment will rise. the participation rate is a total share of the population over age 16 that is working.

a lot of people in their 50s and 60s now well be into their 60s and 70s where the participation rates are much lower. so if that is the aging of the population. of the people that choose to participate in the labor force, we think it is a smaller share over time will not be able to find work. they are unemployed. but the growing share will be able to find work and the employment will rise over the next decade. but not as fast as it was if we didn't have the aging population under way at the same time. >> thank you. >> thank you mr. chairman and i appreciate the line of inquiry because it's very important. what i heard you say is the risk corridors, which we actually borrowed from the republicans when they did the prescription medicare drug program. the risk corridors were in there where they not?

>> yes. >> and you said that helped save money over the long haul. and that in your estimation, and that of your team of analysts, it will save money over the long haul under the affordable care act. >> it's only a three-year program as you understand. >> unlike the medicare prescription drug program that didn't have a time limit, this is just three years. but if it were eliminated, it adds to the volatility and it will probably cost more. >> i really appreciate my friend bringing that out and i appreciate him digging in with you the difference between jobs and workers. the unemployment rate is very likely to go down even though there are people leaving the workforce as we are not going to put a gun at their head and force them to work past

retirement age or if for some reason they are not tethered to a job cause of their fear of losing their. people might have more choices. so there is less participation for whatever reason, but not less jobs. i appreciate the clarification. i don't know if you have had a chance for your team to look at and analysis from the urban institute and the robert wood johnson foundation that found that 1.5 million americans might start new businesses. because of the freedom under the affordable care act. have you looked at that report? >> i think my colleagues have that i have not had the chance myself to talk about it. >> i found it interesting that here's an opportunity to actually increase employment, and it would appreciate at some point getting some feedback whether the folks at the robert wood johnson and the urban institute were off in the ozone

or if s. is usually the case it's pretty good and analysis, that would be very valuable to hear that from you experts if you have had a chance to look at it. >> i want to just focus for a moment on this notion that my friend talked about on the tax levels being high, higher than if i understood them correctly and that if we haven't seen this era of high deficits such as we have experienced and maybe looking at the future. looking at the chart that you provided that shows that the long-term average for the revenues was 17.4%. you'd think that that is going to go up to 18.1% on going forward as a percentage of gdp.

but on that same chart on page six of the documents provided to us, it shows back when we were actually in the surplus. the revenues were higher than the 19.1%. and i think that my friend, mr. van hollen eluded to that in his opening statement. no, we have seen revenues that were higher back when we were producing surpluses. and we have seen deficits that were much higher back when we were struggling with the depression and world war ii and we get these things into balance. i hope this is the day that you look forward to, because i like watching you walk the tightrope, refer back to the data, encourage us to do so, and not

take the topline focus group points, but look at what it actually says. and i think what you have done here in your testimony is pointing out the difference between jobs and workers and loss of workforce persecution, not necessarily bad. and that risk corridors are not some foreign concept that's going to cost us money that we can steal as part of a budget debt ceiling notion and that revenue we have enjoyed over time when we were in surplus are actually higher. >> thank you. >> mr. williams. >> i'm going to take one of his second as he went on as you noted. >> i cut him off as well. >> i don't cut off director ellmendorf. i cut off members. [laughter] >> now you get the drill.

>> thank you mr. chairman and doctor for your testimony. i'm a small-business owner 42 years, family man. like a taxpayer and a small-business owner rather than a politician. the economy and main street economy is not fixed. it's hurting. i can tell you that. and the 0% hasn't worked in the stimulus money has not worked. the effects are evident from the high unemployment. people are living from paycheck to paycheck. people on food stamps, and frankly larger deficit. we see that. i believe the last thing that we have to fix its economy and turn it around is through small business owners and lower taxes. i think that is what we have left and i am a big supporter of cutting the corporate and cutting the cap gains and dividends into the tax employer and employee, accelerated

depreciation, and also inheritance tax. i believe there's places that if we let -- if we reduce all that small business generates a lot of our opportunity to do the great things to make money and frankly small business doesn't save money, they spend money on the infrastructure and hire people and i think that is a big answer to the love of the problems that we have had. with that being said, my question to you would be what benefits would we be reforming the book and tax code by lowering taxes and tax rates and broadening the tax base on the individual and corporate basis which is revenue neutral as i have indicated? >> congressman, when he and other analysts think that sort of tax reform that could you have described could boost economic growth. but the metal into the first depends specifically on the tax reform that the congress would consider. and we are standing by to do an

economic analysis that approaches the tax reform. if you and others on the committee would be interested. >> if you do these things, i'm convinced if you put more people than the job market, more taxpayers and more cash flow, it works. >> we talked a lot about the minimum wage today off and on. my question to be for someone that owns a business, we have raised the minimum wage. how do i pay for that? >> congressman cohen as i mentioned in the earlier question we are currently doing the analysis on the effect of raising the minimum wage and looking at the effect on the family income and we hope to present that in the congress, and i don't want to get ahead of that. >> it could raise prices and it could affect the consumer. next question would be we talked about the tax decreases. what would be the effect on the economy of increasing the marginal tax rates? >> we think that, again, it is a

widespread view that increasing marginal tax rates would slow down the economy. all else equal. and i would emphasize we have a significant deficit. we think growing deficits we have a high level of debt on the economy. so, unless some changes made to either spending or revenue, the sizable nature that high level of debt will weigh in on the economy so as you think about the partial tax rate and the spending programs and i think it's important for your colleagues to think about the direct effect on the changes but also to think about the effect on the overall balance and less on the debt and the economic impact on the debt in the economy. >> i agree -- the retailer when you're not selling your project, you don't raise the price cuts the price to get more people by eating and more people in the system. and i kind of think that's where we are. mr. chairman, i yield back.

>> mr. chairman and i would ask unanimous consent that we enter into the record the "washington post" article from february that says no cbo did not say obamacare will kill 2 million jobs. >> without objection. >> i enter that in the record because as i sit here and listen to this for two hours, i have to think of that the figures never lie. but sometimes people with an agenda misinterpreted facts. >> i spent all of yesterday sitting on the ways and means committee going through this name thing. obamacare is causing a deep and

jobs i heard over and over again and we are saying the same thing over again. we are blaming private companies are cutting hours on their own volition at the feet of the aca because somehow it is unreasonable to expect a million or billion dollar corporation to provide health insurance for their people to who work slightly less than 40 hours a week. has anybody bothered to read mr. ellmendorf's report all the way to the end coming and you heard mr. jeffries and others talk about it, but i want to talk about it again. may we read the conclusion in the appendix of the labor market. it is subject to, quote, and these are mr. ellmendorf's words, substantial uncertainty. and they would find this quote even more. quote, in the cbo's judgment, there is no compelling evidence, no compelling evidence that that part-time employment was increased as a result of the aca. so all this disaster, without

the airwaves, is simply fear mongering. this speculating about a disaster without evidence and before the reforms are fully implemented, but as a strategy. a political strategy for the campaign. it goes nicely with the classic deficit bogeyman that we have been hearing about for three and a half years. the affordable care act isn't going to kill any more jobs than our deficit is threatening our economy. our economy is coming back, but i still hear the bogeyman waiting around the deficit, the deficit. paranoid speculation. it might make it seem so come up but the facts do not add up. if you read that article in the "washington post" it is their fact checker that looks at the facts and comes up with the fact of what is being said while all of the headlines in the country it is simply not what the report

says three at what is hurting us is the persistent notion that as the economy is asking for a breath we believe we should tighten our belts and ration the air. the only way we will ever get these numbers by investing the education to research, the development of america's resources. we have the knowledge, the ability and the exception of people to build the economy back up. but we won't do it on scraps. this is a congress then the house of representatives we have with the tax credit expires. we have not asked the transportation bill. we are going to come up to the summer season and there isn't going to be any money in the state to build roads and bridges and all the infrastructure. we have cut research universities and it is an avenue that we say well the aca is

killing all the jobs. we cannot train if without the social programs. and mr. ellmendorf, my view is that if you have any kind of subsidy, you are going to have some disincentive to work. we are at 400%, to the senate is talking about 300%. they have a disincentive to work as well, right? >> yes, this problem is intrinsic in any program that provides benefits to people that don't have a churning in the labor market. and the amount of the eect on people's decision to work, how much to work depends on the size of the benefit and to some extent on the structure of the program. but the basic issue here is the same for any program that would try to provide that. >> let me put you to the end of that. if we had a universal system that they are saying we need a universal system that covers

everybody, if we had that kind of system, nobody would go to work, right? >> that's not true. >> if they go to work in different ideals goes to work, right? >> yes, congressman. [laughter] >> thank you mr. tremaine and doctor ellmendorf. it's good to see you today. i want to go to a topic not talked about in the deficit and growing deficit in where we might be in the future if we do not address that. but social disability, to go back and put some context on this, since 1970 one of the inflation adjusted to disability insurance expenditures have risen from 18 billion to 140 and 100 -- 2014. a portion of the increase is due to two things and we have heard that from testimony before the aging population which we all know and also the entrance of women into the workforce. we have heard that. but if you look at these factors

they only account for 6% on the aging side and 17% increase on the entrance of women for the increasing disability caseload. so at the same time, the individuals are self reporting an increase in their help. but it's improving. and so, we see approximately 20 people per 100,000 of the received benefits and 1970 as compared to now about 80 people per 100,000 today. so the latest projection from the cbo estimate is that social security disability insurance will go bankrupt so by the end, no more dollars, 2018 were bankrupt. notwithstanding the aging population and the women entering the workforce. can you tell me why this spending has grown rapidly in this program? >> i don't have the specific numbers at hand but as you know we have have retained two

reports for the insurance trying to document and explain the sources of growth and to offer you and your colleagues some specific alternatives for changing the disability insurance program if you would like to go that route. in addition to the factors of the population and rise of participation to the women in the workforce making them eligible for the disability insurance benefits that they become disabled. they've also been important changes in the rules for entering the disability insurance program legislated by the congress over the past decade that have pushed up the number of people receiving benefits and the state of the economy matters as well and one thing that has happened in the past several years is people have lost jobs and haven't been able to find new jobs. to find a job to accommodate the disabilities in some cases to enter the disability in the programs into programs that there is a wide array of factors

but i do not have on hand at the relative importance of those factors. >> i want to make sure i'm reading those reports because i've read a lot of reports and i want to be sure that i'm reading the reports that you have referenced. what happens when this goes bankrupt? how will this affect the beneficiaries? >> well, congresswoman, the trust fund runs out of money and we think that there will be no legal authority to pay until more money comes in. as you know the last time the disability insurance was on the cusp of the problem of the congress they should get money from the old age survivors trust fund into disability trust fund in that outcome. but if nothing were done, then i believe that the legal authority on the to pay money in the trust fund, and that would require a substantial reduction in the benefit to fall down at the level of the ongoing income in recent. >> said, -- so,pardon me for

interrupting. but for those of the recipients to actually gain the benefits. >> this would have been in 2017 at the trust fund would run out of money to the money to pay the benefits promised under the current law. >> do you reference the consequences that we are seeing in the abuse of the program? >> so, we talked about that, congresswoman. and i -- the issue for the congress is to find the policy to change that. and i think there are some that we talked about in that report. >> i appreciate that and my final question is what is the reduced labor participation would have on the economy? >> the central factor in slowing the economic growth out of the current downturn later in the decade and beyond, the principal reason why we think the economic

growth will be less than it was well be a slower rate of growth on the workforce. >> i yield back mr. charan. >> mr. chairman thank you very much and i, like both of my colleagues, appreciate your efforts and the work that you do because i don't think there is a single member of this committee or anybody in congress who isn't concerned about making sure the economy is growing and we are providing every kind of policy support that increases job growth in any context particularly in a state like mine where we actually have the negative population growth and really struggling for economic growth because we have a higher than national average on the federal investments, but it largely related to the

intellectual investment in the laboratory that we haven't figured out that segway to stable out of the economy. i'm interested in both sides of the aisle about what we ought to be doing to make sure that we are focusing on as many policies to give as many opportunities to grow the economy as much as possible and i know we talked about unemployment and i appreciate that but i want to talk about two more. one is increasing the minimum wage and some of my colleagues are going to argue that the minimum wage earners are mostly teenagers entering the workforce for the first time and they are going to argue that it's a drag increasing the minimum wage on the economy and you might suspect i disagree with that statement and that the average age of the minimum wage workers 35 and these are the adult to bring a significant portion of the family income and a majority of these are women.

mostly two thirds of the minimum wage workers are women. while we have you here i would like to get more information on the second plate and really point and really hone in on the impact of the increase in the number of wage would have on the economy. >> you are certainly right that the minimum wage workers stand the age distribution and some are teenagers but many are not. we are currently trying to complete a report on the effect of the increasing on the minimum wage on the economy taking into account the increases and the wages to income for many people. we hope to finish that report in a few weeks and i don't want, rather enough to offer my sense of that until the analysis is completed, but this is in time to the useful information for you and your colleagues that you consider this legislation.

>> the studies have had a positive impact on both the wages, earning, spending and therefore jobs. and certainly it impacts women in my state where you have so many women as a single head of household that is going to be a significant impact on our economy. and as a comprehensive immigration reform has a significant impact on the economy. not only in new mexico, but on the entire country. can you estimate of the entire immigration reform on the gdp over the next decade? >> we did a very thorough analysis that was passed by the senate to increase immigration and we thought that legislation would reduce the budget deficit in this decade and in the following decade we thought it would increase the size of the economy and overall gdp. i should emphasize that analysis

was specific to that piece of legislation and to be situations in the immigration policy might lead to rather different effects that that piece of legislation would, as i said come increase the size, increase the size of the economy and the budget deficit. it's 832 billion the impact over the few decades is about 850 billion. does that sound about right? >> i don't have the numbers in front of me. >> the point being that again we increase wages and jobs, we increase opportunity and stabilize the economy. which on the other side i'm interested in all of the impacts on health care and the acute care and primary care system in my opinion, with the affordable care act and the future changes

are easy. the long-term spending on medicare and medicaid and long-term care and home healthcare and hospice benefits and of the last days days of dying in the hospital, this gives us the opportunity to be thoughtful about those decisions going forward and really making a much it much more than a balanced decision in the economy. >> thank you. >> doctor ellmendorf, thanks for coming. i always appreciate it. picking up on where my colleague left off, contrary to her assumption or assertion, i want people coming and my party wants people to live the best possible ways to build for themselves that they can. whether or not they vote for us. that is what america has always been upheld. i am for young people having their first job. imf are women actively being part of the workforce. we are not saying no.

we are just saying that there is a better way. so in light of that, when you are completing your study, can you tell me if you are going to contemplate any alternatives to the approach of just raising the federal minimum wage across all of the sectors? are you going to look at the effects of the earned income tax credit for the subsidy in terms of the payroll tax deduction on "the side of things or anything like that? >> this will focus on the effects of raising the minimum wage and we would note other approaches have been discussed in the past and the alternative ways of boosting the tax income on the low income people come and as you know, they have been an analysis of some of the alternatives in the past. >> so i came from an education and workforce committee and we were talking about early childhood education and that is

combined with remarks i have heard so far that reminded me of the president's state of the union address, where again he demanded the across-the-board minimum wage but there wouldn't be any effect that i came in being is being replaced by machines or declining of unemployment by his businesses. at the same time, he was calling for head start increasing the early childhood education program. so if the federal minimum wage that he is calling for a prized programs that he's also calling for like head start, that would increase the administrative costs of the head start programs thereby the number of slots of the kids that need programs like head start. >> i see your point, congressman we will tell you all that we think we've been able to figure out. >> are you going to have particular programs as examples

of your analyst is? >> we are not quite finished and i would rather not be specific about exactly what we are doing, but we will try to talk about -- we do intend to talk about how the changes in the minimum wage would interact with parts of the government budget. that is exactly what we will say on how specific we would be on certain things. >> so, because i was in the other hearing i didn't hear the beginning of your testimony or questions. but did you discuss at all in any depth my program? let me go down that road a bit. the president recently proposed in the same speech, my ra program which would allow all americans who qualify in the u.s. debt instruments similar to the debt instrument similar to what is available to the federal employees through our thrift savings program. it's called the g. fund that is available to the employees and and it is nonmarketable.

and the best way that i can describe it is that it provides a subsidized interest rate over the the long term of what is a short-term security. if we apply something similar to the g. fund product to the entire american population or a subset of it within that increase the borrowing cost as a government? >> congressman, i don't know. as a matter of course we do not affect the particular administrative action. as you know. however we do fault on the administrative action because we need to understand that when we are updating the refund if this particular change is one that we conclude ultimately that has important effects on the budget, then you will see that come through in the next base fund projection but i don't know if at this point we have had any time to stop and look at that. >> just in general in the 22nd i

have remaining talking about the deficit versus the debt, i hope you'll understand at this point, that is not going down, right? the debt has increased? >> right. >> is it better to encourage people to work in order to reduce the deficit were to encourage people not to work in order to reduce the government's deficit? >> well, it could be done at no cost to the budget itself. let me rephrase that debate. people who work all else equal the larger input in the tax revenue into smaller deficit. >> thank you, chairman ryan we started with ryan and we will end with ryan. the report did not say that obamacare would get rid of or cost 2 million jobs, correct? it said that the affordable care act will cost the equivalent of

2 million jobs and that means hours, correct, there will be a reduction in hours? >> we have it in total hours worked but i want to be careful about the word cost. we are trying to draw an important distinction between changes in people's work that it is forced upon them by their employer saying we can't afford to pay you to work or we can't afford to pay you to work as many hours and the choices the individual workers would make. >> so these are choices that the workers would make because of the coverage that i have, i can choose to reduce. >> the effects that we estimate -- >> of that group, who is the largest group that you would classify as people who will eat that choice? >> so, there are a number of channels to which the affordable care act reduces the incentive to work and thus we think would reduce the work hours. some of them are through the subsidies of, particularly the

subsidies for lower income people but there are also some effects on the tax rates of higher income people. >> so who would this be? would this be houses? >> i think a number of groups of people could be affected in that sense would not try to break this down. so it could be spouses, but they could be primary earners do decide to scale back their hours and may not leave the workforce altogether. it can be older people that decided to retire earlier than they would have been able to otherwise and it also includes younger people. >> so we are talking about a situation where there is a husband and wife and they are both working and they have a baby and one of them decides to not work or to reduce their hours in order to stay home with the baby. they would fall into this category. >> yes congressman. >> so if you worked from 18-years-old to 58 with 60-years-old, retired, now has a little part-time job, low-wage

job in order to pay for their health care if they stop working, because now they will have access to health care, that steelworker would fall into this category? >> yes. >> and your analyst as of this, do you account for anyone who is going from, say working three jobs to go down to working two jobs? >> that would fall into this analysis as well. we haven't tried to break this down. >> someone who has done that, because i remember george bush come at a set mr. president i'm having a hard time working. i have three jobs. he said that's great. what we are saying is we want to try to make it a little bit easier to go from three jobs to two jobs or from two jobs to one job, and i think it's important for us to see those people fall into this number. they will be reducing their hours. if you are a two parent home and you have a sick parent and you say well, i am now because we can afford healthcare, because

of the credit or the expansion of medicaid or whatever the case may be, i can reduce my hours i'm working as a husband or wife to take care of a sick parent. and maybe they don't have to go into a nursing home and draw on the medicare program. none of that is factored into the long-term care cost either. you don't say a number of these people will reduce their hours and they will be able to take care of mom instead of her going to a nursing home. >> i think that's the point. there are so many different scenarios where average people across the country are living with right now, not anymore so much, but have struggled to make an. and the pressure put on these families is being reduced now because of the affordable care act. and i would like to say i think there's been an undertone of disrespect in this hearing as i sat through it about people just

don't want to go to work. there's always a few people i'm sure that would find a way even if they work to sca scan the coy or run a scam. there are always going to be people like that. but if there is a job that opens up in our town and the pays well, there are thousands of applicants that would want a job and we can get away from this idea nobody wants to work everybody just wants to get on and nobody wants to work for a living. that's not true. and the scenarios we discuss i think outline that, and so i appreciate you being very clear this isn't about 2 million jobs this is about average people having an opportunity to reduce the burden on their own family. >> doctor ellmendorf, thank you for your time today. the hearing is adjourned.