affordable care act actually was able to reduce the medicare spending i reforming it instead of cutting it. we come as a result of the affordable care act, dr. elmendorf, we are seeing reduce medicare costs, isn't that the case? >> yes, that's right. >> that's a significant part of the reduction or repair time, right? >> yes. >> our republican colleagues after initially lambasting that an demagogy that, they included a provision in their own budget so they would achieve those deficit savings. so we were able to achieve medicare savings without hurting beneficiaries. and that is the model that we will continue to look at, and combined with closing tax rates or special interest in order to meet these long-term challenges. but our immediate challenge is to put people back to work, and that's why we need to adopt our infrastructure investment plan, pass the minimum wage, and for the folks who are still out there hurting, we should extend

emergency unemployment insurance. and we certainly, mr. chairman, should not mess around with one that we pay our bills on time. thank you very much. >> dr. price. >> dr. elmendorf, welcome to the committee once again. appreciate the good work cbo has done anything my friend from maryland says the report is good news and bad news. and i would agree with that. the problem is that when you compare it to last your support and reports prior to the, there's more bad news issue than it was last year, and less good news this year. our friend makes a comment about decreasing medicare spending. spending in medicare has decreased by $700 because of the affordable care act but it is forced reductions and as a physician i can say that my former medical colleagues will say that it actually is harming health care for seniors. and so the challenge that we have here is to put in place programs that don't harm seniors. and our friends on the other side seem to be willing to put in place programs that do harm seniors.

dr. elmendorf, what happens in a fiscal crisis to those benefits for seniors? >> well, it depends on the nature of the crisis and what the congress does to respond to it but the fiscal crisis as we use the term, at a point in which investors are unwilling to buy u.s. government debt unless it carries very high interest rates. and that then put determined to squeeze on the rest of the government budget -- >> a squeeze that might happen is that services to beneficiaries actually decreased significantly under a fiscal crisis, is that not correct the? >> that could happen. >> your estimation that congress hasn't done anything to address challenges of a fiscal crisis in the last year's? >> as you know that congress has taken a number of steps and i don't want to diminish those that it is clear from our report that the fundamental fiscal challenge remains, which is significant increases in spending for certain programs, and even all the rest of the

government is on track to become smaller relative to the size of economy we show high and rising debt. the country will need to make choices that have not yet made about cutting back those large programs or raising tax revenue to pay for them. >> which is a great segue to the medicare program. trustees say the medicare program is going to go bankrupt by 2026. what does it mean to real people? it means that services that been promised to seniors, there won't be the resources to be up to provide those services. so what our side, and i love how our friends on the other side of you like to characterize our solution. effect of the matter is our solution actually solve the problem. in fact, we put forth multiple solutions for the mandatory program any and medicare, we talked about a pregnant support system and i want to draw your attention, if of may, dr. elmendorf, to report that cbo put out last september that modeled premium support systems. and it wasn't the specific one but the question that i want to

get the answer to is, it brings support system may, in fact, be possible without to quote the report, combined spent by both the federal government and beneficiaries that premiums and out of pocket costs would be less than if current law remained in place under premium support system. is that the conclusion you alter? >> yes. as you know, there are many, many specifics that can affect the budgetary outcomes and the effect on beneficiaries of an awful lot so one should not take that as a statement about anything that would be labeled a premium support system but that would be affect by our estimates of the system we analyzed. >> a premium support model, that is, something that saves medicare for seniors would decrease spending in potential decrease in to the federal government and decreased spending for beneficiaries. i think it's important when folks are listening to solutions that the solutions be explained by those individuals that actually promote the solution,

not those that criticize the solution to in the short, i have remaining i want to touch on this issue of the interest rate question that the chairman got to. again as i said, i think this is more bad news than there was last year. and table de- 1 the pilot stage the british interest rates, a percent increase, 1% increase in interest rates last year was projected to cost $1 trillion. this year it is $1.5 trillion. what happened? what's the difference? >> i believe, congressman, most effective change in a projection of the amount of debt. yeah, so jeff is pointing out that on some issue to this day was two years ago. we did a more abbreviated report last year because congress acted even later under more time constraint. two years ago it is more expensive because larger debt projection but it's not funny

extra trillion dollars of this years provisions in this year year, included provision lecture which was much larger, remembered him because our current law based on before that -- >> what it means him as the chairman said, time is running out, it's time to act. >> thank you, mr. chairman. dr. elmendorf, nice to see. thanks for your testimony. i want to dig deeper into the methodology that you use to assess the impact of the affordable care act on hours worked. and the chairman i think was mentioning an example of a young person, at least that would be a shame if somebody couldn't find his or her way up the economic ladder starting to work and so forth. my son is 30, single. he found insurance through the kentucky exchange, pretty good coach for him at $180 a month. so we talking about $2200 a

year, premium. if he got 100% premium support, subsidy, what in the world kind of incentive would he have to not work? >> well, by working your income is dependent on many other things. health insurance is only one of -- >> seems to me there's an impression out there that you talk about a disincentive to work as a part of the impact and i'm guessing i'm committed of the methodology because i can understand why a 62 year-old under the affordable care act mindset i want to retire, and now i can retire because i guess i can find coverage that i can afford, whether and not i get a subsidy or not. i understand that example. i'm trying to figure out the example of somebody who is at the lower end, who, where it would be an incentive not to work spent i guess you are right, pakistan, if some of

these people, the early retirees as you describe. the way i put the other part of it is, it's not so much an incentive not to work. it's less of an incentive to work. so under the law prior to the affordable care act, if one were to, decided to work more hours, then one would earn higher cash wages and what made receive health insurance. but would give up some of those extra cash wages in the sense of paying some tax on them or losing some of the benefits. by providing additional benefits to people of very low income, a significant one in the form of subsidized health insurance been increase in the standard of living of those people would have been working working more hours would be smaller than would b be otherwise. those who have a higher standard of living by working, but the standard of living wouldn't be as much high relative to what could have if they didn't work or if they work fewer hours. so by providing a somewhat smaller incentive to work, somewhat fewer people would work. >> as i understand it, the

subsidy was set up in a way to you should not have, know what you got to be more about 9% of their income for health insurance. could you give me, and -- not on the spot, some kind of numerical examples of someone who have a disincentive to work because of subsidy, whether 90% or 50% or whatever it is? i'm having a hard time understanding how that could possibly make sense. >> happy to send you an example. they have a smaller incentive than they would otherwise. >> moving on, as we look at the long-term repercussions of deficits and projections and so forth, and the impact of entitlements, ma social security, medicare and so forth, have you done an analysis of what immigration reform would do

to soften the impact of those expenditures? i shouldn't prejudice as you. to change the long-term impact of health care costs, such as grid, benefits and also of economic benefits? >> yes. so we did a very thorough analysis of immigration bill that was passed by the senate last year and we found that legislation would reduce budget deficits and lead to larger economy, and over time lead to higher output per person in this country. >> and it does that because you could have a lot of younger people paying into social security and paying the medicare tax, but not receiving benefits for 30 years or 40 years, isn't that kind of just -- >> the age matters, also the composition of the additional people who would be let into the country and given a chance to work under the senate legislation. so a number of those people would we think we see some

benefits but a number would be high skill, high educated people who would be paying a lot in texas. >> thank you very much. i yield back. >> mr. campbell. >> thank you, mr. chairman. thank you, dr. elmendorf. if there's one good thing to you from both sides this morning is no one is saying it's great that the deficit has increased and that it's going to get to a trillion dollars. everyone is interested in reducing the deficit, that is a good thing. let's talk about taxes, that decided to read bunch of tax increases in 2013. those are reflected in these projection. also 2014 there's about 60 tax, i think it is tax credits and deductions that expired. had to include those in this as well? >> no. the provisions that have expired as you we follow current law on the projection but we do provide some alternatives, policy

scenarios for your use. one of which extends all of these expiring tax -- >> but in summary table one can you assume to expire. >> that's right. >> they were tax increases in 2013. they were tax increases in 2014, and they think there's even some in 2015. that are reflected in this which is what revenues go from 15 points 7% of gdp last year the summer between 18-18-point for. >> two key factors. one of them which is the change in a tax provision and the other is the strengthening of the economy which pulls in more revenues as a share of gdp. >> okay. but a number of tax increases from 2013-2014 are included. we have had tax increases. you mentioned four things and i have probably 30 seconds for each one. i'm not going to mention the order you did in your opening statement that you said are driving the deficit from certainly from the spending side. one was interest on the debt.

two reasons for that, interest rates are not expected to stay at these historical low level but the others is the deficit itself feeds more debt which feeds more interest. so the best cure for that is to eliminate the deficit, right? >> i mean, all other considerations aside, yes, a small deficit would lead to less interest payments. >> venue talked about the cost of medical care going up and now that's affecting the various medical programs, so you're still rejecting the cost in medical care will go up but i'm trying to balance that against the argument that obamacare is reducing the cost curb. >> congressman, there's been a very pronounced slow down in the rate of growth of health care costs per person come in both federal programs and the private sector over the past half-dozen years or more. we've taken significant lesson from that end of lowered our projections for the federal program going forward.

but we're not lower them so much that they have no more growth left. that would be a really quite extraordinaire turn of events. what role the affordable care act has played in this is i think quite unclear to analysts. >> said you're basically saying that there are conditions out there before obamacare, whatever, that increased health care costs independent of government actions to continue to some degree? >> exactly. not at the rate we thought before but at a positive spin you mentioned aging of the publisher which is something that guess what, we here in congress for chilling cannot control. so those two factors are what is driving up the cost of so many of the major entitlement programs. so if we're going to get the steps under control we got to do something about those, don't we? >> i think you either need to cut back on some of those large programs or raise revenues to a larger share of gdp, or some

combination of those two policies. >> we just did raise revenues as a share of gdp -- >> to some extent, yes. >> okay. then the last thing you mentioned was driving this was obamacare. so that's driving on the cost side to understand their our tax increases involved with it but it's driving a lot of additional costs as well. >> yes. the expansion of medicaid and subsidies, the tax credits to be provided through exchanges is part of what's pushing a federal healthealth care spending. >> while the two-and-a-half million full-time equivalent job loss, whatever that is, 2 million, doesn't that retard revenue as well? that's people who aren't working to aren't making money, aren't paying taxes. >> yes, relative to not having those attacks. that lowers tax revenue. revenue still rising of course. it means it would've happened without that effect, that reduction in implementing reduction in gdp, has a

reduction in tax revenue. >> thank you. i yield back. >> that morning, mr. chairman. director elmendorf, do you believe that when social security was passed, it had an impact on labor supplies since we're distinction between labor supply and demand? >> yes, absolutely. >> very clearly in a similar way you would project obamacare will have? >> i think, the specifics will be different but the basic point is in which is the provision of them, -- over 60 doses of have allowed some of them to choose not to work who otherwise would have felt compelled to work. >> i wonder if there's a headline back then in 1936-37 about what was going to happen to demand. if it were revealed, let me ask you this question.

-- repealed the court benefits were quite cut through privatization, an option, that would have an impact on labor supply, wouldn't it is? >> yes, that's right. >> how? >> it would push up labor supply. in fact, with an aspect of the effect of raising the eligibility age for social security. we think that would increase the amount of work that people do primarily in the '60s. >> particularly with seniors more would work beyond -- spent they would work longer than they could under current law. >> the fact that americans would be tied to a job they don't want or need so because of its the only way for them to get affordable health care, it's a feature of obamacare. as i look at it. director elmendorf, if your assumptions prove cracked, 2.39 americans -- proved correct, what effect will that have on the unemployment rate and on wages? >> we think that people will be

leaving, choosing not to work because of the incentive provided by the affordable care act would have essentially no effect on the unemployment rate big we said that very clearly in our report. the ethics and wages can we did not analyze formally, complicated, depends on how the capital investment responds to changes in work, and we've not tried to model that our estimate that specifically. >> what you're saying is because of the security of obamacare, that it provides, a six-year-old, let's take that as an example, to retire and open up a job for someone who is unemployed today, is that correct? >> yes, that's right. >> this is an example of a drop in the labor supply. now, in fact the cbo report, you specifically state the estimated reduction spends almost entirely from a net to climb the amount

of labor that workers choose to supply rather than from a net drop in businesses demand for labor. i didn't see this any of the announcements about this yesterday. i just wonder why. very trees about that. you said it, i didn't. so in other words, this isn't employers cutting jobs, newly empowered workers choosing to go a different path. i think that's a good thing. chairman ryan, my good friend, you said in 2009 when we were debating obamacare -- [inaudible] why not? we want to address job loss, this is what you said. so the key question that ought to be addressed in any health care reform legislation is, are we going to continue job loss, or are we going to allow individuals more choice? and probability, affordability

to fit the 21st century workforce, unquote. i agree with you 100%. i think the answer is yes, giving workers more choice is not unique to obamacare. other federal programs have reduced the amount of labor that workers choose to supply just like social security, right, mr. chairman speaks i will take the rest of your 39 seconds to respond. >> go right ahead. >> a couple points. the purpose of in was to help produce a system so that older workers could not be destitute and can be for younger workers for jobs. so it sort of the opposite intent which was to bring under workers into the workforce by providing those yesterday benefits back during those days. this is the opposite. this is saying, younger workers, the very people we want to go into the workforce to work are

being disincentivized to do that. so it is certainly opposite of what you're trying to suggest -- >> can i take my time to speak with i will continue. i told you i was going to do this. job loss in this case is a subsidy that ends and it's a cliff to try. what we've always said is common it should be structured differently so that you don't produce this kind of effect. so we have literally a very different idea how to address this issue so that you always encouraged a person to go into the workforce, so you always encourage a person to work. and obamacare is structured the opposite of what -- >> that's your opinion. that's your opinion. we are still evident and basically talk about older workers -- >> my point -- >> i'm glad which is a because now we can all agree it's not a socialist at scheme. >> the gentleman's time has expired. [talking over each other]

don't ask one to get a position of the other because you won't get a straight shot. mr. cole. >> thank you very much. although i hate to interrupt that debate, it was actually pretty good. [laughter] i may just yield my time back to both of you. [laughter] but a couple specific points and for someone to thank you for the work is exceptionally helpful. and i think very fair. i'll just say for the record i'm exceptionally -- i think most of us are disappointed. we worked and made a little progress here in the last few years on the deficit. i thought -- mr. chairman, you did as well. the budget agreement that you negotiated with senator murray also restrained discretionary spending. that made a little more progress in the right direction and some mandatory spending as well. we were spending $164 billion

less indiscretion budget and we were spending in the last year of the bush administration, fiscal year 2008. so that's real problem -- progress. when you look at this report it really doesn't translate in the long-term deficit reduction for the simple fact we simply haven't done enough on the endowment fund. is that a for statement? >> i think congress hasn't done enough on and commerce and revenue and some commendation. it's not our place to say which side of the budget you should -- >> between the two which have we done more on, revenue or entitlements? >> well, that depends on how you view extension of expiring tax provisions. a few years ago. under current law assumptions we worked on, the extension of most of expiring income tax cuts in the early 2000s produced a big cut in revenue, and a big increase in the desert. i recognize that's not what many of you have thought about the starting point in your own mind.

>> i know, that's why want you to answer it. are we going to have a lot more revenue than we would have had, had we retain all of the bush tax cuts speak with you would have had more revenue, exactly. some were allowed to expire. >> roughly how much more over a decade? >> i would guess a trillion dollars or so but i'm not sure that we -- >> ballpark but if you want to correct it later, that's fine. >> i think my ballpark has been agreed to. >> let me ask you this. if we had $1 trillion worth of reforms and empowerment programs? >> well, the transfer made substantial reduction in spending for medicare, as you know. i really have not tried to assess what that would look like over the same 10 year time period as s. like some of these tax cuts to expire so i think i should not speculate those numbers i haven't looked up.

>> let me come at it -- politically, it's obviously i think the revenue picture is easy to do within the entitlement picture is easy to deal with. i don't care which side of the aisle you're on. that's just the case of it. we saw the struggle with entitlement spending, frankly, in the budget agreement between chairman ryan and chairman murray. that's just politically a very charged every. let me ask you this. of the entitlement programs, which are the largest conservators to the deficit going forward over the next decade? >> the largest program, single largest program is social security, the programs that are growing, whose increases our sharpest in dollar terms are social stratum medicare and medicaid. >> let me ask you this. this is going to be a pop on both houses. has either party put forward a plan to deal with social security? >> we've not analyzed any plan, in the last few years.

years. >> i suggest that's because one hasn't been present. we have not presented one on our side of the aisle because it's politically -- our friends and the administration haven't presented one. it's probably statistically the easiest one to deal with because we got to know how many people turn -- it's much more predictable, much easier and yet neither party has had anything to say about it, is that correct? >> well, we have provided congress with a large menu of possible changes to sosa security and other parts of the federal budget. >> i'm not suggesting -- [inaudible] >> the last person who tried to lead visiting with president bush who actually did put forward proposals and did do something. so i would actually, i would say this for the record for my friends because we'll have a lot -- this is in a way think we ought to sit down. is where got to go down. our friend, mr. delay come on your side of the aisle had an interesting bill to make congress vote up or down the same way we do in brac. i would suspect it would be full

of unpalatable choices for both sides of the aisle. but that's something i would like to see us begin to look at and did. are most important single program we have, most likely, the one most americans want us to ensure and yet neither side of the out has put a plan on the table. yield back. >> thank you very much. at the outset i would like to say, chairman ryan, i was listening to your opening remarks and it was interesting because you kind of echoed some of the language president obama from his state of union address. you said you hope this is a call to action, and the president last week said they should be a year of action, so i hope there's a way we can come together to focus on speed. [inaudible] >> economic opportunity, economic growth and there is some goo good news because we he made progress on job growth. but we have to do more to the economy has added private sector jobs for 46 consecutive months,

and the total of 8.2 million jobs has been added over that period. this is reflected what i hear at home in florida where small businesses are doing better. it's been a very difficult kline from out of the great recession that kind of his earlier in housing in 2007, but he we are 2014 and people -- businesses are hiring again. the economy looks better. except we have this intractable problem, it's kind of a jobs crisis. and the cbo report demonstrates that the outlook for job creation remains weak. and then we are dealing with the retirement of the baby boomers. that's what every time there's an announcement on jobs numbers, every month the unemployment rate is going down but yet people are retiring and dropping out of the work force. so we're going to have to be much more strategic in how

government partners with this is to create jobs. and that's why it was a very concerning to me, the part of your report that highlighted congress is eroding commitment to scientific research, education. you say now that that kind discretionary spending that has been really, that provides the jobs for the future is going to be at its lowest level in 40 years but can you expand on that and take us through some of the areas, whether its r&d education, or tell us where that weakness is? >> yes. we wrote a report in the fall about the facts a federal investments that have the amount of federal investment has changed over time. i think roughly speaking, about half of non-defense discretion spending can be viewed as an investment in physical capital like highway, bridges, in human capital, economist called in

education and training of workers. and the research and development. and that nondefense discretionary spending will under, current law, under the cap, fall two a share of gdp. lower than any point in 50 years for which there is date on that has been collected in that way. now we don't know, congress does not just how the money under this category allocated for different activities so we can do projection, research investment, spending directly. but that estimate about half of that total amount of discretion spending over time. and if that sure is maintained in future and the federal government will be do less investing relative to the size of its economy by the second half of this decade and it is in any point in my lifetime. >> so that's education? >> education. it is investment in physical infrastructure like roads and highways to it is investment in research and development. >> so that's the national

institutes of health, nih, national cancer institute, medicine speed all in that category, yes. >> infrastructure and defense as well? >> defense, discretion spending is also on track have also lower share of the economy than it's been at any point in the last 50 years. and again how those cutbacks are allocated between the research done by the defense department in the things the defense department something that congress we did decide in future appropriation bills. >> a lot of folks are believed that this question has been replaced here in the short term for a couple of years. and they tend to focus on the crisis that is right in front of them, but the challenge of looking ahead in the next decade is going to be how we maintain these investments in what makes america great in education and research and development, and infrastructure. and that's why i do think it's

important for us to work together as we learned that the aging population is going to be a challenge, a fundamental budget jumped into my colleague, mr. gore, i would agree to work with you -- mr. cole. i don't think it's fair to say that the democrats haven't been focus on social security. we are focused like a laser. i would recommend congressman ted deutch bill from florida. i agree we need to work together to make sure that we are being -- >> thank you. >> thank you, mr. chairman. and thank you for the work on this as well. let me just bring a couple of things together we've talked about already. there's been some conversation about discretionary spending obviously. there's been a lot of conversation about discretionary spending. is it the cbo's conclusion that there is no additional waste in government and the government is running as efficient as it can possibly run so there is no additional places in the discretion area where we can do

with whistles been? >> no. our volume of budget office in the fall which provided to congress was a dozen of options for cutting back on discretionary programs if you choose to go that direction. we also noted that i think the entire staff of options we give you would all be needed and maybe more than that in order to meet the caps are already in place because the caps are such that the current set of programs, there will be enough money to continue the current set of programs and services under those caps. even under current law you and your colleagues would need to take event of a wide range of cutbacks and programs in order to meet the caps spent programs and services come with it in reducing duplication and try to do with some of those inefficiencies, inappropriate payments and all that? >> congress and, that would depend on what the cost i doesnt also on people's interpretation. my experience, some members of u.s. ways, other members view as important. not my place to judge that. >> i've noticed that as well i

suppose. let me mention a couple things on interest. last year once we get the tender when the we get the 2023. you estimated the interest payments alone at 857 billion. that interest payment in 2020 is 819 billion. so we have made some quote unquote game at that point. but a i've also noticed the amount of interest with a versus the increase in the deficit each year, that number is strikingly similar many years. some years the interest payment increases higher than the deficit and some years it's a little bit different. but if i try to just the increase in how much interest we are paying, it's very similar in numbers to actually the increase in our deficit every single year. so this seems to be a problem that is driven primarily right now, obviously there are other factors as well, by an increase in interest rates going up as well. am i tracking that correctly?

from 2017-2018% increase in interest payments of $89 billion. at the same time there's an increase in deficit spending of 74 billion. so if the interest rate wasn't accelerating, we would make progress but we are not. it's increasing but if the go between 2018-2019, it's an increase of $76 billion in interest payments that $97 billion in deficit spending. can we talk about the interest? >> yes, congress and to your right, one can isolate the interest is that all the rest of government spending and revenues, the gap between them would actually be fairly stable in dollar terms over the coming decade and -- spinning but what do you asked with rising interest payments, why is that interest them accelerating at this point? >> interest payments are rising part because of rising debt. but even more so because of rising interest rates but interest rates as you have been

unusually low over the past half-dozen years and we expect as financial markets expect those rates to return to typical levels. so interest rates on the 10 year treasury note will be rising from 2% something to we think 5%. that's the cause of a very sharp rise in interest in the government will have to make. >> ten years in our only payment is $880 billion speak with yes. in the 10th year, 2024. >> 2024. >> this concept of simply getting to the primary balance and we're just going to try to get the balance for separate interest is what pays the same with hud get the balance except for around the last trillion. >> we are not testifying that but you're right, the interest things will be very, very large. >> i want to make it, that is not related to cbo and a square structure. each year, the conversations there is a scoring issue that deals with manager programs. where we take money from

existing in a fund to move into the next is fun, count that as savings. would you consider that -- i know cd officially considered that savings. would you consider a change of program or an account to be an actual savings? >> yes, congressman. we think that if an appropriations bill make a change in mandatory program so the government pays out less in the year, that is a real savings. you are right that the budgetary passion is comfy and these things can look -- and next year we tend to focus on you done in appropriations and make the change demanded for spending part of our mandatory spending projection. but i don't think we believe that there's anything that is fake about the changes in medicare programs, not you really haven't made a change in law that cuts been is a, then that's a we are recording when we give you an estimate. >> i yield back. >> thank you very much. drama.

first of all, thank you and 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 theyoulde btt

you mentioned there would be better off in your report in your language, and it was a plot -- implied that if your people had their virginity you would be better off, but part is it is saying aging population, more people are not participating. seventy-eight a taco bell don't have to do that, but secondly it could be someone on the lower and working to part-time jobs instead of three part-time jobs. what that means is, instead mib will detect a child in bed night and read a bedtime story are good to an activity which means they're better off. that is salad is in my part of wisconsin. so let me ask a question about what we can do in your report about jobs because as we just talked about, mr. jefferies, the sequester was about 750,000. i know we relieve some of the pressure this year, but we go back to putting a lot more of that and 2015. we're going to lose jobs because we are not extending unemployment extensions. so while people want action by

congress rather than the president, the problem is this congress is not acting. air not doing anything to create those jobs. let me just ask you, what policy tends to get the biggest bang for your buck in terms of boosting economic growth that we could be feeling in the near term? >> a number of times in the past normandie years we have given the congress a set of options for spurring the economy in the short term, on the fiscal policy options and most effective, those that put money in and the people who are most likely to spend it. .. 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 you can't buy 100 soap is necessarily. i think there are some big houses congressman that peoplent send -- spend a smaller share. >> he has his house up forw sale because they don't want to gono into foreclosure and they are ct not inviting friends over for dinner because they can't afford it. in the past we have extended stringsnefits with no attached what is the unemployment rate than in thist country?at h >> so i don't have the facts ofe that i am afraid congressman but as we noted the unemploymenty rate in this country hiremains very high in the rate of long-term unemployment is higher today than it's been at any point for decades. yrs the whole decades we have the series for except for the past two years. it's come ai little bit off itse

peak but remains extraordinarily high in the cost to the economy and the people involved are vero high. >> thank you. >> thank you for being here.th i want to follow up with what mr. roh kita said because i think it's very important. i agree with all of your answers to the questions but what stimulates short-term growth.k as i look at all of that effort that was supposed to produceou short-term results what i see from your report is they have virtuallyc doubled the debt held by them public so we were so s committed to short-term stimulus that we borrowed more as an percentage of gdp and then we have in the previous history of venetian combine. we can argue about whether that's a good idea or a bad idea but we did it to create short-term growth. when in your projections do we return that debt that to

historically normal levels collects we do these things to stimulate short-term growth that you have to pay the piper sometime. when you're projection duly returned a debt to historical levels? >> the debt does not return. as we showed in our long-term outlook last fall the decades beyond that. >> again i agree with what you said to mr. poe can bet if we can stimulate economic growth but presumptively bad is good for the economy. what you are saying is the things that we did so exacerbated our debt that even in your longest term windows we never return debt to a store for normal levels? it's always at this abnormally high and perhaps dangerous level? >> let me add interpretation to this. the first thing to realize is a large share of the increased deficits and debt of the past years was not anything any of

you did deliberatdeliberat ely. they were automatic stabilizers in the budget and we quantify those the best we can in the outlooks of the biggest thing i think that raise deficits and debt was not the deliberate actions. it was just in a weak economy tax revenues fall by a lot. so a large share of the increased debt would have happened if congress had taken no actions. additionally congress took action which by our projections added jobs during that. meant that you are right that if that debt is never paid down then for all of this good in the short-term it becomes a drag on the economy in the longer-term. >> i regret that when you and mr. van holland where having your discussion earlier we talked about balanced budget in the 90s and early 2000's because what i think of as the cash flow surplus during those years but the truth is congress is borrowing from the social security trust fund money that was supposed to be dedicated elsewhere. i don't want to take issue with

that but what i want to take issue with is the suggestion that tax rates were higher and that led to prosperity. when when when i locate your 10 year window i see income tax receipts as a% of gdp to about 9.4% and as i look back historically at the decade upon decade upon decade that you report covers i can only find one here in the history of our nation that income tax revenues were higher than they are projected to be in this 10 year window so we are going to have historically high income tax collections but to say again you are saying that debt is not going to return to normal levels and in fact that's going to continue to rise nominally? >> yes congressman and i would just add there has been a shift as you know in distribution of taxes over time so the tax going to corporate income tax has collected less in revenue over some periods than others in payroll taxes as well.

you're right the income tax is what we see rising most substantially over the next decade. >> you have an incredibly difficult job and i'm glad that you have agreed to say that deficits are declining sharply and will decline more. folks in my district will hear you when you say that in a trust you when you say that in of course that's factually accurate. what is not said is they are declining to a level that is still higher higher than they historically highest level it has never been before this administration and i just ask you as we work going forward i think it's something we agree on collectively. any sort of movement looks less extreme than where you were but whether or not it's the responsible thing to begin to accept that as the new normal or whether we have an application to continue to describe that as being damagingly high i hope it's a question that we can continue.

again when dr. elmendorf talks, people listen and i'm glad that they do because those words matter. >> thank you. that's very flattering congressman. we tend to focus on budgets complements relative to the size of the economy as a percentage of gdp particularly comparisons over long time periods with prices in the population in the size of the economy have changed less of a deficits for this year and next year are at or below historical average share of gdp looking back over the last 40 years. what is outside of the historical shortage in the history is gdp. >> mr. cárdenas. >> thank you very much mr. chairman. thank you dr. elmendorf for your report in your remarks. i have a question for you. let me set up where i'm going here so we can understand the

question. 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. american worker doesn't want a handout. i don't believe the american worker wants a handout. i think 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 that doesn't involve evenly across the united states. huge disparities exist in unemployment rates from heavily impacted states and those with lower employment rates. how would the unemployment rate be impacted by providing long-term unemployed workers with a lump-sum unemployment benefit to help cover living costs so workers can move from one area of high unemployment and perhaps to an area flow unemployment rates in order to accept employment that would require them to move? >> congressman i'm afraid we have not had an opportunity to analyze that proposal.

it's a very very interesting one and might well have beneficial effects that we need to sit down and spend some time trying to think that through to give you a useful answer. >> does that data bear out that in some areas of america today a snapshot of it is employment opportunities are much greater in certain regions are states where other states unemployment is higher in other regions? >> the labor market is tight in some places in very poor and others. historically what has helped to bring the labor market back to a better place after previous downturns has been the mobility of people and there's evidence mobility of americans has declined over time which may be an aggravating factor. we have to try to think through how a particular possibility -- policy might be able to address that. >> you don't have analysis that indicates perhaps one of the factors is the lack of resources to make that move? any person who has ever moved knows it costs more to move

across town or across to another state or another region that would just to drive back and forth to work. there are intending factors and financial factors that say if i don't have another rental place for my family there expenditures in the move. >> that is certainly true congressman and that logic sounds right to me. analyzing that policy is complicated and i try not to do it just sitting here without the benefit and expertise of my colleagues. >> it would be helpful for us to look at that because again as you seem to agree it's logical that perhaps that is a factor but he probably would have to analyze it in order for you to dispense that here to us. but if in fact we figure out a way to help people mobilized 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 that they are looking for employees there and they have a much lower unemployment rate, if we figured out a way to do that without help the economy? >> yes that would congressman. >> without help economy and is it overly logical to assume if someone gets off the unemployment rolls onto the taxpaying working world that helps the economy? >> well it certainly helps the budget if we get people to jobs where they can earn money and pay taxes on it. the one thing i would emphasize despite the differences across regions as you understand taking the country as a whole they are significantly fewer jobs and people who want them so moving to the people to wear there more jobs can help but in any case however effective that would be for it would not solve the problem because the country is in less demand for goods and services than we have the

ability to produce them and that has weakened businesses across the country. >> there is the bigger picture but if i'm a parent who is trying to feed my family and i'm sick and tired of getting an unemployment check and i really want to work and have the dignity of work like many americans i believe do, to that person they are bigger picture their picture. living in the city or county i grew up and i finally have the guts to say hey i am hearing for my cousin lives they are hiring an unqualified for that job. all i have to do is move my family over there and i can get that employment. to me that is a big enough picture for us to concentrate on that kind of effort so that we can hopefully make policy to improve that family. >> thank you. >> thank you mr. chairman. dr. elmendorf i am sure --

but we do appreciate you being here. >> that's actually not true congressman. i'm happy to come and talk about about -- >> the chairman asked questions relating to this issue about 2 million in equivalent lost jobs and i think the best way that i can explain back to make sure i'm understanding it right is the equivalent of 2 million full-time jobs for people to look at the benefits they are getting under obamacare, it's better for me just to stay in not work because i get those benefits. speaker2: not work or to work fewer hours, yes. >> if we look at that in isolation whether fact this at half on total tax revenues? >> reduction in employment, whether it is voluntary or not and in this case or not, either way that will

reduce the income being earned in the country and the amount of tax revenue. >> people choosing not to work and revenue is going down i think i read the report that estimates that there's about $1.2 trillion in the budget window that are used to subsidize the exchanges. about 792 is medicaid expansion so roughly $2 trillion over the 10 years to pay for exchange subsidies for obamacare. >> we call that the gross cost taking account of some of the effects on tax revenues so we end up with a net cost of the coverage provisions of 1.5 chilean dollars over the next decade. >> we are spending 1.5 to 2 trillion more in taking and less revenues because people are choosing to work less or to stay home.

it looks to me like that is adding to the problem. is that right? the congressman when we evaluate affordable care act as a whole including not just the coverage provisions that you are referencing but also the explicit cuts in medicare payments and the cuts in tax revenue the last time we did the analysis that lives a whole we found would reduce budget deficits but you are right this piece of the law that expands the subsidies for insurance coverage cost the government money. >> obamacare also includes a bailout for insurance companies in case things go bad. since enrollment started in the fall it looks like we have had fewer people that enrolled in obamacare than we thought were going to. have you looked at the

fact that the insurance companies call this adverse selection, that it's the people, those that are going to need more expensive coverage, what is that going to do to the subsidies for insurance companies could insurance companies. >> congressman buyer estimates the program and the affordable care act will actually reduce government deficits and lead to net savings in the federal government because it is a program in which insurers cost significantly exceed their expectations. the federal government is on the hook for some of that but if insurers cost falls short of expectations they can share most savings. the closest analogue where aware of is the risk program in medicare part d the drug benefit which in fact have savings for the federal government consistently. our estimate is the affordable care actual yield savings although we knew in our report i was not certain estimate. our original projections

take account of the adverse selection you are talking about. we thought enrollment this year would be a third of what it was a few years from now and we thought the people who would enrolled this year would be sicker on average than people who would roll time and we presume insurance companies understood that as as well incorporated that understanding into setting premiums. neither we nor the insurers know now how much we lined up for this year how sick or healthy they will be. their estimates and setting premiums in our estimates now are highly uncertain. speaker1: final question. i think the report indicates we anticipate the unemployment rate to go down which is in my mighty good thing because labor participation is also going to decrease. now that we have fewer people working and unemployment going down. >> well so, we thank employment will rise. let me try to put these

pieces together. a participation is the share of the total population. we think that share will decline primarily because a lot of people who are in their 50s and 60's now will be moving to their 60's and 70's while participation rates are much lower. most of that is just using the population. all the people that choose to participate in the labor force is a slightly smaller share of time will not be able to find work but the rest of the share will be able to find work so we thank employment will rise over the next decade but not as fast as it would if we didn't have this aging population of at the same time. >> thank you. congressman blumenauer. >> thank you mr. chairman and i appreciate this line of inquiry because i think it's very important. what i heard you say is that risk corridors which we borrowed from the republicans when

they did the prescription medicare drug program the risk corridors were in their were they not. >> s.. cmu said that help save money over the long run 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 so we think over three years. spin like them medicaid's prescription drug program that could have a time limit. this is just three years. but if it were eliminated it adds to the volatility and probably will cost more. >> i just wanted to repeat that because i really appreciate -- appreciate my friend bringing that out and digging in with the difference between jobs and workers. the employment rate is very likely to go down

in the workforce because 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 because of their fear of losing their insurance, people might have more choices so there are less jobs. i appreciate that clarificaclarifica tion. 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 folks look at that report. >> i think my colleagues have congressman that i have not had a chance myself and we haven't had time to talk about it. >> it's interesting it gives the opportunity to increase employment and it would appreciate at some point getting some feedback whether the

folks at robert wood johnson and dearborn institute were off in the ozone or is usually the case is pretty good analysis? that would be very valuable to hear that from you experts if you had a chance to look at it. i wanted to just focus for a moment on this notion, my friend mr. woodall talked about tax levels being high, higher and if i understood it correctly we really haven't seen this era of really high deficits in our history such as we have experienced and maybe looking at in the future. minder standing and i'm just looking at the charge that you provided provided -- the chart that you provided it shows the long-term average was 17.4%. do you think that that's going to go up to 18.1%

going forward as a percentage of gdp that on the same chart on page six of the documents provided to us it shows back when we were actually in surplus, the rs were higher than 19.1%. and i think my friend mr. van hollen alluded to that in his opening statement. no, we have seen revenues that were higher back when we were producing surplus and we have seen deficits that were much higher that when we were struggling with the depression and world war ii and to get these things in the balance. i hope this is a day to look forward to because i like watching you walk the tightrope, refer

back to the data, encourage us to do so and not take topline focus group points but look at what it actually says. i think what you have done here in your testimony was pointing out the difference between jobs and workers and loss of work participation is 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 the revenues that we have enjoyed over time when we were in surplus are actually higher. >> sorry. mr. williams. >> i will take a couple more seconds because he took more time and she noted.

i will be more strategic. >> all right. >> all right. >> thank you mr. chairman and thank you doctor for your testimony. i'm a small-business owner for 42 years family-owned business and i like to think frankly like a taxpayer and the small business owner rather than a politician. the economy and the mainstream economy is not fixed. it's hurting. i can till you that and 0% hasn't worked and stimulus money has not worked. the effects are evident from high unemployment to high employment. people living paycheck to paycheck and people on food stamps. i believe the last thing to fix the economy and turn it around a small business owners and lower taxes. that is what we have left and i'm a big supporter of cutting the corporate and capital

gains and dividends and the payroll tax and accelerate depreciation and repatriation and also inheritance tax. i believe there are places that if we reduce all that small business generates a lot of opportunity to do great things, make money and frankly small business spends money on infrastructure and hiring people and that's a big answer to a lot of the problems that we have. with that being said my question to you would be what benefits would we read ira forming our broken tax code by lowering taxes and tax rates and broadening the tax based on individual and corporate basis which is revenue-neutral as i have indicated. >> congressman, the other analysts think this sort of tax reform you describe could boost economic growth but the amount of that boost

boost depends partly on the specifics of the tax reform that congress will consider and we are standing by to do an economic analysis of approaches and tax reform. if you and others on this committee would be interested. >> if you do these things i'm convinced you will put more people in the job market and more more taxpayers and more cash flow and it works. we talk a lot about the minimum which -- minimum wage often on in my question to you as someone that owns a business we will raise minimum wage had a we paid for that. >> congressman we are currently doing an analysis of the effects of raising minimum wage and looking at the effects on employment and the effects on family incomes and we hope to present that analysis to congress in a few weeks. i don't want to get ahead of that. >> it could cost jobs and could raise prices and affect the consumer. the next question would be, we talked about tax decreases. what would be the effects on the economy of increasing marginal tax rates collects.

>> we think again it's a widespread view among analysts that increasing marginal tax rates would slow the economy all else equal and the question is let me emphasize we have significant deficits. we think growing deficits we have a high level of debt and that weighs on the economy so unless some changes made to either spending or revenues of a sizable nature that high-level debt so if you think of marginal tax rates and changes in the spending programs i think it's important for your colleagues to think about the direct effects of those changes but also think about the effects on the overall budget balance on the debt and the effects of the debt on the economy. >> i agree and also it when you are a retailer and selling the product or the widget you get more people buying and more people in the system and i think that is where we are. i appreciate your testimony and mr. chairman i yield

back. >> thank you. >> mr. chairman i ask unanimous consent that we enter into the record the "washington post" article of february that is entitled no cbo did not say obamacare what killed 2 million jobs. >> without objection. >> i enter that in the record because as i sit here and listen to this, i've been here for two hours, i think of that aphorism that figures never lie back but sometimes people with an agenda in misinterpret the facts. i spent all yesterday morning sitting on the ways & means committee going to this very same

thing. obamacare is causing a decline in jobs i heard over and over again and we are hearing the same thing today. we are not blaming private companies for cutting hours on their own volition at the feet of the aca because somehow it's unreasonable to expect million-dollar or billion-dollar corporations to provide health insurance for their people who work less than 40 hours a week. now if anybody bothered to read mr. elmendorf's report all the way to the end and you have heard mr. jeffries and others talk about it but i want to point it out again. they would read the conclusion in appendix c. about the labor market is subject to quote and these are mr. elmendorf's words, substantial uncertainty and they would find this quote even more. quote in cbo's judgment there is no compelling evidence, no compelling evidence that part-time

employment has increased as a result of the aca. so all this disaster put out on the airwaves is simply scaremongering. this speculating about a disaster without evidence and before the reforms are fully implemented, that's 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 half years. the affordable care act as an going to kill any more jobs than our deficit is threatening our economy. our economy is coming back but i still hear the bogeyman weight around, oh the deficit, the deficits, the deficit. bad math. it might make it seem so but the facts don't add up. if you read that article in the "washington post," it's their fact checker he looks at the facts and comes up with a fact that what is being said on all the

headlines of the country is simply not what the report says. what is hurting us is the persistent notion that as our economy is gasping for breath we believe we should tighten our belts and ration our air. the only way we will ever get these numbers to improve from education to research to development, we have the knowledge and the ability and the exceptional people to build the economy back up but we won't do it on scraps. now this is the congress and in the house of representatives we have let the r&d tax credit expire. we have not passed a transportation bill. we are going to come up to the summer season and there is going to be any money in the states to build roads and bridges and all the infrastructure. we have cut research to our universities and it's in that venue that

we say well the aca is killing all the jobs. we can't do it without trading loans and investing in our social programs. mr. elmendorf, my view is that if you have any kind of subsidy you are going to have some disincentive to work. we are at 400% but the senate is talking about 350. they have a disincentive to work as well, right. >> has congressman. this problem is intrinsic in any program that provides benefits to people who don't have much earnings in the labor market and the amount of the effects on people's decisions to work and 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 provide benefits to people. >> let me put you into that then. if we have a universal system as the

oncologists are saying they say we need a universal system. if we had a universal system no one would go to work, right. >> that is not chew congressman. >> defense go to work in the suites go to work in everyone else goes to work. >> s., congressman. >> dr. elmendorf it's good to see you here today and i want to go to a topic that has not been talked about. we have talked about our deficit and the growing deficit where we might be in the future if we don't attest that social security disability trust fund is a real problem president to go back and look the background so we can put some context into this since 1970 the adjusted insurance expenditures has brazen -- risen from 18,000,000,002 8400000000 00 in 2013. a portion of this increase is due to two things and we have heard that through the testimony before the aging population which we all know and then also the entrance of

women into the workforce. we have heard that but if you look at these two factors they really only account for x% on aging side and 17% increase on the entrance of women for these increasing disability insurance caseloads. at the same time, individuals are self reporting an increase in their health. that is improving and so we see approximately 20 people per 1000 have received benefits in 1970 as compared to now, about 80 people per 1000 today. so, the latest projections from the cbo estimate is that social security disability insurance will go bankrupt in 2018 so by the end of 2017 no more dollars, 2018 we are bankrupt. notwithstanding the aging population and the women entering the workforce. can you tell me why the spending has grown so rapidly in this program.

>> s. congresswoman. i don't have the specific numbers at hand but as you know we have written two reports for the congress on disability 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 me to go that route. in addition to the factors you mentioned aging population and rising participation of women in labor force thus making them eligible for disability insurance benefits if they become disabled. they have also been important changes in the rules for entering the disability insurance program legislated by the congress over the past few decades that have been pushed up the number of people receiving di benefits and the state of the economy matters as well. one thing that's happened in the past several years is people have lost jobs and not being able to find new jobs and those people who have disabilities whom otherwise would be

able to find a job that would accommodate their disability but instead have entered the disability program. there are a wide array of factors. >> i'm going to certainly get with you and make sure i'm reading those reports because i've read a lot of reports and i want to make sure i have read the reports you're referencing but what happens when this goes bankrupt? how that will this affect the beneficiaries. >> congresswoman, which must fund runs out of money than we think there will be no legal authority to pay benefits until more money comes in. as you know the last time the disability insurance trust fund was on the cusp of this problem the congress shifted money from the old age and survivors trust fund into the insurance fund. i believe the legal authority is in the trust fund that would require a substantial reduction in benefits to fall down to the level of the ongoing incoming

receipts. >> so pardon me for interacting you but they would have to be legislative action in order for those recipients to actually gain the benefits. >> s. congresswoman and we think this would happen in 2017 at the trust fund would run out of money to pay the benefits promised under current law. >> in your reports you reference the consequences of the rampant fraud we are seeing in the abuse of the program. >> we talk about that congresswoman and the issue for the congress is trying to find the policy leaders to change that and i think there are some and we do talk about that in our reports. >> i appreciate that my final question is what effective to reduce labor force participation will it have on the economy? >> it is a central factor in slowing economic growth after we

get out of this current downturn but later in this decade and beyond the principle reason why economic growth will be less than it was for most of my lifetime will be a slower rate of growth on the labor force. >> thank you and i yield back mr. chairman. >> ms. lujan grisham. >> mr. chairman thank you very much and like both of my colleagues i appreciate your efforts and the work that you do because there is and i don't think a single member of this committee or anybody in congress who isn't concerned about making sure that 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 negative population growth and really are struggling for economic growth because we have a much higher than national average federal

investments but it's largely related to intellectual investments in defense and the laboratories but we have not figured out that segue to stabilize the economy. i'm very interested in the comments on both sides of the aisle in this committee today about what we have to be doing to make sure that we are focusing on his many policies that give us as many opportunities to grow the economy as possible and i know we have talked about unemployment and i appreciate that. i want to talk about two more. one is of course increasing the minimum wage and some of my colleagues are going to argue that i think think the minimum-wage earners are mostly teenagers earning in the workforce for the first time and we are going to argue that is really a drive-in, increasing the minimum wage on the economy and you might suspect that i disagree with that statement. the average age of the minimum-wage worker is

35. these are told to bring a significant portion of their family's income and the majority of these are women. nearly two-thirds of the minimum-wage workers are women. so i would like to get more information on that second and hone in on the impact of the increase the minimum wage would have on the economy. >> congresswoman you are certainly right that minimum-wage workers expand the age just efficient. some are teenagers spent many many are not. we are currently tried to complete a report on the effects of increased minimum-wage on the economy taking into account both of the increases in wages for many people income and what we would expect would be employment loss for some people. we hope to finish that report them release it within a few weeks and i don't want to, rather not offer my sense is that until the analysis completed.

we will have that before the congress in time for to be useful information for you and your colleagues as you consider legislation. >> i appreciate that because the studies that i've read indicated as a positive impact on both wages, earnings and therefore jobs and certainly it impacts women and my state where we have so many women as single heads of household that's going to be a significant impact on our economy. as this conference of immigration reform has a significant impact on the economy not only in new mexico but on the entire country. can you estimate for me the impact passing immigration reform has on the gdp over the next decade? ps you know congresswoman we did a very thorough analysis of the legislation passed by the senate to increase immigration and we thought that legislation would reduce the budget deficit in this decade and the following decade. we thought it would increase the size of the economy and increase overall gdp and also not

right away but over time would increase gdp per person in the country. i should emphasize that analysis was specific to that piece of legislation. alternative changes in that immigration policy might be two different effects but that is the legislation as i said increase the size of economy and reduce the budget deficit. stay i'm just going to get those figures using the senate's bill that we are looking at the impact on the gdp where the debt payment is $832 billion in the impact on the deficit over the next two decades is about $850 billion in a positive? does that sound right. >> i will take your word for a congresswoman. i just don't have the numbers. >> i appreciate that in the point being again that we increase wages, we increase jobs we increase opportunity and stabilize the economy which on the other side i am interested in all of the impacts on health care, the acute care in

primary care system in my opinion with the affordable care act in future changes are easy. it's the long-term spending on medicare and medicaid and i include long-term care and skilled care and home health care and hospice benefits and last days dying in hospitals. this gives us the opportunity to be thoughtful about those decisions going forward and making them a much more balanced decision on the economy. >> mr. akita? >> dr. elmendorf thanks for coming. i was very instructive. picking up on where my colleague left off, contrary to her assumption or assertion i want people and my party wants people to live the best possible lives that they can build for themselves that they can. whether or not they vote for us. that is what america has always been about. i am for young people having their first job. i am for women actively

being a part of the workforce. we are all are -- for all of that. we are saying there is a better way so in light of that as you are completing your study can you tell me if you are going to contemplate any alternatives to the neat handed approach of just raising the federal minimum wage across all sectors? i know you will look at the effects on the earned-income tax credit and are you going to look at the effects of maybe a subsidy in terms of the payroll tax seduction on the employee side of things or anything like that. >> congressmen this report will focus on the effects of raining it -- raising the minimum wage. we will note that other approaches have been discussed in the past. alternative ways of boosting the tax income of low-income people as you know cbo's analysis of some of those in the past. >> thank you. i just came from a

workforce committee where we talked about early childhood education. i'm reminded of the present state of the union address where he demanded across-the-board minimum wage or decline in employment by businesses. i'm thinking about the hearing and a speech at the same time that he was calling for head start the early childhood education program. if the federal minimum wage that he is calling for the play to programs that he is calling for like head start that would increase it seems to me the administrative costs thereby reducing the number of slots for kids who deserve and need programs like head start? >> i see your point congressman but i have to analyze it carefully. we will tell you all that we think we will be

able to figure out. >> are you going to take particular programs as an example of your analysis. >> we are not quite finished a late brother not be specific about what we are doing but we do intend to talk about how the change in minimum-wage would interact with parts of the government budget. how specifically will be on certain things we have not done yet. >> because i wasn't here i didn't hear your testimony or questions but did you discuss the ra program? the know. >> let me go down that road a little bit. the president proclaimed in the same speech might roa program which would allow all americans to qualify similar to what's available to similar employees it's a

fund available to federal employees. it's not marketable in the best way i can describe it is that it provides a subsidized interest rate over the long term for what is a short-term security. if we apply something similar for the g fund product to the entire american population or some subset of that it wouldn't that increase our borrowing costs as a government. >> congressmen i don't know. we don't as a matter of course analyze the effects of a particular administrative action because as you know our role is to provide legislation congress is considering however we do follow administrative actions because we need to understand them when we them when we are updating our baseline. if this particular change is one that we include an ultimately would have an effect on the budget then you will see that come through in our next baseline projection. i don't know at this point if we have any

time to stop and look at that. >> in the 20 seconds i have remaining talking about this deficit versus dad and i hope we all understand the difference between deficit and debt at this point. the debt is not going down, right. >> bright. >> is it better to encourage people to work in order to reduce the deficit or to encourage people not to work in order to reduce the government's deficit? >> well if the encouragement can be done at no cost to the budget itself, more people who work all else equal larger output and income and a larger tax revenue the smaller the deficit. >> thank you. >> chairman ryan. >> we started with the rhino label and with the rain. the report did not say that obamacare would get rid of our cost to 2 million jobs, correct?

is it said the affordable care act will cost the equivalent of 2 million jobs in that means hours, correct? there will be a reduction in hours. >> we tied -- try to frame this in hours worked but i want to be careful about the word costs. returning to her important distinction between changes in people's work that 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 as many hours and the choice that individual workers will make to their hours. >> the coverage i have i can now choose to reduce its? of that group who is the largest group that you would classify the people who will make that choice. >> there a number of channels through which the affordable care act reduces the incentive to work and thus we think

will reduce work hours. some of those are through subsidies, particularly the subsidies for lower-income people but there'll some effects from higher tax rates. >> like who would this be? >> spouses. >> yes but i think a number of groups of people can be affected in that sense. we have not tried to break this down. it can be spouses but it can be primary earners who decide to scale back their hours and not leave the workforce altogether. it can be older people who decide to retire earlier than they would if ben able to otherwise. >> 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 reduce their hours in order to stay home with a baby. they would fall into this category. so a steelworker in youngstown who works from 18 years old 258 or 60 years old, retired it

now has a little part-time job, a low-wage job in order to pay for their health care, if they stop working because they now will have access to health care that steelworker would fall into this category. >> yes. >> in your analysis of this do you account for anyone who is going from say working three jobs going down to working two jobs quick. >> that would fall into this analysis as well. we have not tried to break this down. >> so someone who has done that because their member george bush was president and someone said i'm having a really hard time working and i'm working three jobs and he said that's great. what we are trying to do is to make it easier to go from three jobs at two jobs in two jobs to one person -- one job. it's easy to say those people fall into this number and they will be reducing their hours.

if you are a two-parent home and you have a sick parent i'm going to say now because we can afford health care because of the credits for expansion of health care i can the hours that i'm working to take care of his sick parent. maybe they don't have to go into a nursing home and draw in the medicaid program now. none of that is factored into the long-term cost either. you don't say well a number of these people will reduce their hours in order to take care of mom and said of her going into the nursing home. >> right congressman. >> i think that's the point. they are so many different scenarios that average people around the country are living with right now that has struggled to make ends meet. the pressure put on these families is being reduced now because of the affordable care act. and i would just like to say i think there has been an undertone of

disrespect in this hearing as i have sat through it about people just don't want to go to work. there are always a few people i am sure that will find a way even if they work to scam the company or to run a scam. there are always going to be people like that but for the most part if there is a job that opens up in our town, and it pays well there are thousands of people who want to take that job. i hope that we can get away from this idea that nobody wants to work in everybody just wants to get on a roll and nobody wants to work for a living. that's not chairman in the scenarios we have discussed outline that. so i appreciate you being very clear that this is not about 2 million jobs. this is about average people have an opportunity to reduce the burden on a family. >> thank you very much for your time dr. elmendorf and the hearing is adjourned.

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kentucky senator rand paul is our guest on newsmakers. he talks about some of the issues that are currently being discussed by members of congress as well as his own political future. here's a preview. >> i am for immigration reform and i've offered proposals to make the position of the situation better and i think my proposals would be more in the liking of republicans in the house and i told them, come to me and work with me. i will help you create a bill that will be acceptable to republicans and nobody came to me with any compromises so i couldn't vote for a bill that i just don't think will work. >> senator as stephen pointed out very many inside and outside the republican party that argue if nothing is done to address them -- immigration the republican party is going to write off the

whole hispanic vote in eventually whether at the other side of that argument i think is just as interesting. republicans who say if we pass comprehensive immigration reform we will destroy the party because you are going to have a generation of hispanic voters who are indebted to democrats. do they have a point. >> i think you can also look at it another way and say will democrats destroy their affinity or the affinity of hispanic voters for democrats if the democrats are unwilling to compromise? there are many republicans and in fact i think there is a majority who are for expanding work leases to the 11 million that are here letting them come out of the shadows, normalizing their existence, making it where they don't have to be fearful to be seen in the daylight where they can get a legitimate job and pay taxes but it stopped short of the citizenship question. that's the question. democrats are unwilling to compromise where hispanic voters say gosh why don't you at least

go halfway with republicans and try to get something past or will hispanic votes say i don't like republicans because they didn't give us everything they wanted. i think if you talk to hispanic voters there is division on this. i think most are in favor of normalizing the assistance for the women here but i think you'd find a significant number are not so -- making steps in the right direction. >> if he had the guts to stand against her she would be dumped in the garbage of her own forces. >> the privatization will go very successfully indeed. it will go successfully indeed and we have a

better way to see so we can ethic -- pontificate in the light of the facts. >> there is a whole list of what has of what has been ruled as unparliamentary expressions and indeed a few weeks ago the present prime minister i seem to recall was required by the speaker to withdraw a remark he had made which suggested that the leader of the opposition said, i can't remember the details of it now but i'll whole lot of unparliamentary speech. churchill was once instructed by the speaker to withdraw on the implication of lying and he said instead of accusing whoever it was is telling a lie he simply said to him, i will call it a terminological and exactitude. nobody can ever find that in the official report so it's probably a myth.

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