counter speech comes in. the response to something that you don't like as not to take it down but to challenge it, to challenge the idea and that is why we will tackle the underlying social issues that do lead to some of the issues we have talked about today. >> one last question. jared was talking about forcing da'ish from the web. given the scale and the money and organization that goes into da'ish and extremism is that realistic and what success looks like and how do we monitor success or how do you know that you guys again he write? >> it's not something we would expect to -- but wheelan others and if you read reports they will tell you that facebook has become a hostile place for da'ish. it doesn't mean that they don't try. absolutely they will try and so

we want to share what we have learned with other platforms. there are many more platforms of course. social media are not just the three companies and they have been created all the time. it's understandable that those people who want to use this kind of technology for evil won't go to those places where they put their resources into it. they don't come to select committees anywhere. >> thank you. james berry. >> mounting the most successful publicity campaign for an needle regime since goebbels and the nazis and they use platforms to do it at. against that effort by da'ish your companies have some of the top tech -- in the world and you are some of the most profitable companies in the world. so are you seriously telling us

with all the expertise and all the power your companies have that you can do more in the fight against da'ish? >> i think there's -- as i is possible to do more. we have outlines of the things we are looking at this year but our discussions with the home office, discussions with this committee are always good ways for us to understand what more can be done. i think as i have outlined we are at the are doing a lot. this is something that is not new to us. we have been working on this topic for years. we and i will repeat what simon said earlier, we do want to be humble about what we are able to do. we can't solve all of the world's problems but if we can make a platforms for hostile place for extremism, then we are committed to doing so and committed to working with the other platforms who aren't here today to make sure they are on the same scale. >> i reject that you're

suggesting that da'ish has been a success because of our platform. absolutely that is not the case. we have worked very hard to disrupt what they do in partnership with other organizations also committed to disrupting them. we will continue to strive to do better. of course we can always do more. we are always trying to learn but i reject the suggestion that we don't care about the issue. that's far from the truth. >> that wasn't the suggestion. the question was because i'm sure you could do more but you may have reasons of principle or costs cost for not doing more but there's plenty. on facebook you banned -- and it causes offense to women with breast cancer or women who are that you have technology that bans -- and yet terrorist content provides this. sometimes he gets through the net. >> mr. berry with respect that is not true. we allow people to post pictures of their mustek to me scars. we don't allow nudity but we

don't be use technology and they rely on human review of reports. there's no technology that spots female. >> mr. berry numerous academics have looked at this question of all to make -- alternating the algorithm to find this content. we can begin the texture of language. that's something that's a distant hope for the future but it's incredibly difficult to do now. and speaking of doing more. i think as we have heard we all look to do more. jm merger who is with the george washington university on extremism these are the people to validate our efforts and i think he published a report last march that said supporting social network has been significantly constrained. we are not the people to be the

orders produced for academics to talk about this and finally social media is one part of the system. they're still face-to-face interaction and the question of territory. the da'ish territory it is recognized by academics. >> all three of your companies have spent a huge amount of money-making yourselves more profitable and generating more advertising and have been successful in the services you provide. can you get this committee and idea of how high up your list of priorities, adding isis. >> obviously you have covered this in the evidence he gave us just a word is fine. >> is of fundamental importance. we don't want a platform to be an unsafe place in our ongoing success is critical. >> keeping people safe for. it's not the only extremist organization or behavior we care about. >> this is taken seriously

across the top brass of the company. >> mr. winnick and finally mr. ghani. >> ultimately if you were to dedicate more resources to taking action and doing more as mr. berry has just described you would probably need to put, take twitterers example more than 100 people onto your team to keep a check on what is happening in relation to 320 million users. we do not accept that whilst i don't know the extent to say it's your parent and subsidiary boards coming your directors coming your strategic management at have a legal obligation to maximize profitability, but you also have obligations with respect to public safety.

will you except you don't always get that write? >> mr. milner a quick answer. >> we started the proceedings with comments about ms. sandberg and the speech in berlin recently that demonstrates the commitment from the absolute top of our presentation to doing everything we can to make, can to continue to make facebook a hostile place place for extremist and anybody wanted to organize terrorism. it's an absolute commitment to this. we want to do more. want to do more in an informed way based on the evidence of what works. >> and the appointment of burkart former prosecutor to set up your counterterrorism squad numbers of which you won't will add -- tell us some any work paid. >> monica has been part of her company for a few years now and she beats our content policy pitch he doesn't actually work in the community operations team were the experts in terrorism are achieved works very closely with them.

as i do and my policy colleagues from across the world, when required so there's an awful lot of cross functional working and monica is a part of it. >> but the announcement he made last thursday. >> an interview with yahoo! news in which he talked about the work we are doing in this space that i'm not aware there was a particular announcement. >> my final question to mr. pickles. i have raced the conflict that inevitably there's going to be between the bottom line and keeping people safe but i feel duty bound to ask mr. pickles how he can come at these issues objectively. this is the question, not necessarily a statement in my view but we have to ask you part of the civil liberties campaign brotherhood a brotherhood watch what companies can people have in light of your background that

you can approach these issues in an even-handed and objective manner? >> we employ people who used to work for the fbi. they have arranged back onto the companies provide great things about having a company that shares diverse opinions are the challenging issues but only seek campaigns like black lives matter on her platform they have campaigned to give us the greatest sense of pride because they are challenging the issues of the day. >> thank you. >> what mr. berry said about making a profit he talked of the people he rely on about the different campaigns you work with. surely the quickest way is reducing the threshold with what levels these people can post on their web sites to looking at here community guidelines but of course that means having more than 100 people monitoring or whatever numbers you have pretty means collecting data that's going to e into your profits. i'm word we you will come back and talk about freedom of expression.

surely we can talk about safety and community that trump that to some degree and i follow my colleagues concerned that this is more about make you money than making sure your pipe worms are a safe space. >> and can you give us a quick answer to that? >> art community guidelines go well beyond the u.k. in terms of what we do tomorrow. the speech which is allowed not only in this place but the streets in the u.k. that we don't allow in our community because we think it's not part of for dialogue paid. >> upper house. >> the long-term profitability of our platforms is based on fear being safe places. >> safety is something we see is a core part of our business and we constantly refine our policies to make sure we can keep people safe and get people greater clarity about the content of these. >> gentlemen thank you for coming in. do you feel haunted by the physician or do you understand why three years after we published published the report of this committee we are so

concerned about the fact that the internet companies are not doing enough as is then expressed by questions put by the members of this committee to deal with da'ish and those trying to propagate terrorism. you understand the real concern about this? >> dr. house. >> we are obviously doing a lot. there is more we could be doing and the types of threats we as a society face will continue to evolve. >> i'm incredibly proud of the things my colleagues do with in combating extremism and terrorism and the use of it on her platform. we all want to do more. i'm very much welcoming the opportunity to introduce you to some of my colleagues he can't come here and can't be public figures because of the work they do. believe me this is an incredibly solid community so as a result of this hearing do you still feel that our companies are committed to this cause the need to to work harder to convince you. >> mr. pickles. >> this dialogue is extremely important.

>> it's not a dialogue today to be frank. as the committee answering questions. we will be producing a report which we hope will help you do your work. i was saying to you feel hunted by a permanent? >> this is an issue of importance for everybody. and an opportunity to hear your concerns is invaluable. >> you mentioned several times the need for international cooperation. do you think this is lacking in very quick we who should be taking the lead? should the united states, should it be the united kingdom, should it be the e.u. because there seems to be something happening in our jurisdiction something completely different happening in other jurisdictions. >> some good examples of cooperation at the e.u. level in terms of the home secretary and her colleagues meeting might also spot came to the meeting. recently the u.k. government held a joint or am with minister

gary from the air of an art's -- arab emirates. so different forms. it's all about sharing best practices. its different forms and not one particular organization taking the lead and that's why people are able to make sure that these particular laws are working in the same direction. >> every form is a welcome for in predicting the u.k. government is shown a significant amount of leadership on this topic. but i think there is more that can be done. >> i spoke at the anti-da'ish coalition which is an excellent example of bringing everybody together to focus on the strategic communications and in the case of surveillance. >> it doesn't actually give us an international treaty, does that? >> i think the league has been taken on surveillance and another area since showing best

practice. i am colleagues around the world have been attending many meetings on this issue and we will continue to do so. >> thank you so much for coming in. we are very grateful and we will be writing to you with follow-up information that members of the committee of requested. order, could be called

this week, c-span is on the ground in new hampshire following the candidates, leading up to the first in the nation primary. live election coverage starts tuesday at 8:00 p.m. eastern on c-span, c-span radio and c-span.org. keith hall projected an increase in the deficit today at a house budget committee hearing. he predicts that the deficit will reach $544 billion and the debt will be 86% of gdp by 2026. this is about 2 1/2 hours.

>> the hearing will come to order. i want to welcome all to the committee on the budget hearing on the congressional budget offices, budget and economic outlook before we begin, i'd like to welcome two new members to the committee. frank ginta of new hampshire who is a returning member of the committee. and bill johnson of ohio. we want to welcome them to the committ committee. without objection, so ordered. the house is scheduled to have votes later today. i ask unanimous consent, the chairman be authorized to reconvene at any time. i want to welcome dr. hall to our hearing on your cbo budget

and economic outlook. these numbers matter, the consequences for the american people are real. and i think that will become much more clear in holding this hearing. if no changes are made to current policies, deficits over the next decade will total $9.4 trillion. this is up from $7.6 trillion from the estimate of last year. national debt will rise to $20 trillion, from its current all hoo high of $19 trillion. an average economic growth over the next two years will be a full one third lower than

historical average. skyrocketing debt will mean less opportunity, fewer jobs and smaller paychecks. and a nation increasingly vulnerable to national security threats both at home and abroad. this isn't an optimistic outlook for america. it's not a sustainable outlook for any nation. the longer we take to address these challenges, the harder it will be and the fewer options there will be to solve them. >> you can put up the interest, slide figure 6 for me please. you look at the interest payments on the debt just what we spent to service our debt by the end of the decade. we will talk about spending a trillion dollars a year just on interest on the debt. that's more than we spend on defense, medicaid, education. pick a priority. money that's spent on paying this interest will crown out all

of the important priorities that the american people have, buying a car, paying rent. buying a house. starting or expanding a business. sending a kid to college. all of the things that are made more difficult that the american people want to spend their money on are made more difficult because of the level of debt that we continue to accumulate in the government. interest on our debt will be the third largest line item in the budget behind only social security and medicare. how can we solve these challenges? many of our friends on the other side of the aisle think we ought to take more money out of the pocketbooks and the purses of the hardworking american taxpayer. the cbo projects that federal revenues, that is money coming into the governments are going to go up by $127 billion in fiscal year 2016 alone. a nearly 4% increase over last year. revenues are slated to be 18.3%,

which is well above historical average. the government is taking in more money from the american people than it ever has in the history of our country. my constituents know, and i suspect many of my colleagues in this room here today and in the congress that uncle sam doesn't need a raise. washington needs to get our act together and stop spending at levels we cannot sustain. according to cbo, spending will reach 21.2% of gross domestic product in 2016 and climb to 23.1% in 2026. this will far exceed historical averages. that means more money again taken from the pocketbooks of the americans and spent on things that crowd out or decrease the likelihood of being able to spend on things they want to. we ought to focus on real solutions, reforms that will make government more efficient

and accountable. solutions that will support a stronger and healthier economy. we focus on these two goals, we will not only balance the budget. we will also create an environment in this country will more americans will achieve success and provide for themselves and their families and have a nation that's more secure. sadly under the policies of president obama, americans have experienced the worst recovery in modern times. the cbo has continued to downgrade its growth predictions year after year. we learned the u.s. economy grew at an anemic 0.7%. dismal economic legacy this president continues to champion. >> we have a choice in this nation. we could continue down this road, stick with the status quo and turn cbo's projections into reality. or turn the page and put in place a budget that balances, that saves and strengthens and secures medicare and social security. that supports our brave men and

women in uniform. right now our committee is hard at work putting together that plan. i want to thank you for being here today. and thank you for your work and that of your colleagues at the congressional budget office. i look forward to your testimony and how we solve the challenge before us. i'm pleased to yield to the ranking member from maryland for his opening statement. >> thank you to your cbo team what struck me in looking at this budget outlook. it was really not that different from last year's budget outlook. it showed that deficits as a percent of the economy have fallen dramatically since 2009 and will remain relatively stable for a couple years, and then you begin to see increasing deficit

deficits in health care costs. the biggest single component of the increase in the 10-year deficit projection were the unpaid tax cuts that congress voted on just last fall. 8$817 billion. round up you get to a trillion dollars. added to the deficit last november and december. when our republican colleagues put that forward and refused to pay for a single penny. that figure includes the interest rate. your deficit goes up. so do those interest costs. you just referred to congress added significantly to those interest costs by refusing to pay for those tax increases.

the good news is this forecast predicts stronger economic growth this year. 2.7%. that's good news, because although the economy has generated new jobs for 70 consecutive months. we need to add more jobs. most importantly we should get to work on strategies and wages. it's so disappointing in this new congress instead of getting to work on the business of the american people, the very first thing we did in 2016 was vote for the 62nd time in a row to dismantle the affordable care act and just a little earlier this week, the 63rd time in an attempt to override the president's veto, which wasn't going to happen. and by the way, that vote also included the 11th attempt to

roll back the programs that protect women's reproductive health. despite the fact that a grand jury recently vindicated planned parenthood and decided instead to indict their accusers. rather than just repeating over and over again these efforts to dismantle the affordable care act, we should be focusing on growing the economy and increasing wages. and i'd like to put up a chart. we should address those issues by investing more in our economy. it's troubling to hear some members on your side may be talking about revisiting the caps that we agreed to last year, which made room for some estimates. as we look to the long term deficit.

we should also remember that the largest category contributing to the deficit, according to the congressional budget office, are the so called tax expenditures. these include a lot of tax breaks in the tax code that benefit the very wealthiest americans. they include tax breaks like the carried interest loophole for hedge fund managers which means that folks who are managing a hedge fund play a lower tax rate than people driving a bus. we need to end the loophole on inversions. every day we're reading more about companies that are changing their overseas address, to escape their responsibility to american taxpayers. which means everybody else in the country pays more, while these companies that continue the benefit from what america has to offer are paying less. as you can see from this chart, if you add up the cost and tax expenditures on an annual basis. they're higher than the total costs of medicare and medicaid.

and higher than the total cost of social security. which is why it was so disappointing that rather than addressing those issues, our republican colleagues last year voted for the largest increase in the deficit in recent times, adding over $800 billion to that 10-year deficit. if we're going to get serious about this, we're going to have to look at the tax expenditure column and end the tax breaks which disproportionately flow to the top 1%. 17% of the benefit of those tax expenditures, go to the top 1% of the income scale. that is a system rigged in favor of the wealthy, we need to change it. thank you, mr. chairman. >> thank you very much. we want to welcome again dr. hall. your complete testimony will be made part of the record and we

look forward to your opening statement, you have five minutes. >> thank you, chairman price. members of the committee. i appreciate the opportunity to testify. i'll summarize the key elements of cbo's economic forecast for the next decade. we anticipate the economy will expand by 2.7% this calendar year and 2.5% in 2017. consumer spending is expected to provide the largest contribution to that growth. the anticipated pickup in growth above last year's 1.8% rate, stems largely from investment and business capital and in housing. because of the projected growth, we expect slack in the economy to diminish over the next few years. lowering the unemployment rate to just under 4 1/2%. pushing up compensation and encouraging greater labor force participation. that reduction in slack will also push up inflation and

interest rates. over the years following 2017 we project output to grow at a more modest pace constrained by relatively slow growth in the nation's supply of labor. nevertheless, in those years, that pace of growth is expected to be greater than it has been in the past decade. describe some of our key findings about the budget outlook. in fiscal year 2016, the budget deficit will increase, in relation to the size of the economy for the first time since 20 o 9. if current laws generally remain unchanged, the deficit will continue to grow and debt held by the public will rise to $24 trillion or 86% of gdp up from 27% of gdp by the end of 2015. moreover, it would be an upward trajectory. debt would reach 155% of gdp. a higher percentage of any previously recorded in the

united states. such high and rising debt could have serious consequences for the budget and the nation. including an increased risk of a fiscal crisis. in our projections deficits are projected to increase because growth and revenue is outpaced by growth and spending. revenue will remain stable in relation to the size of the economy. reflecting changes that offset each other. corporate taxes, payroll taxes and remittance from the federal reserve. almost half of the project ed increase is for social security and medicare. in large part because of the number of people that are more than 65 years old.

also because of rising interest rates and growing federal debt. the government's interest payments are projected to rise sharply over the next 10 years. in contrast. spending subject to annual appropriations is projected to drop to its lowest share of gdp in the next 50 years. most discretionary funding is cap capped at amounts more slowly than the projected economy. that's the big picture. now a few details. i'm often asked about our our projections for medicaid. medicaid spending is expected to increase by 9% in 2016 after having grown 15% in the previous two years. the optional expansion of coverage will have been in place for two years, and the rapid

growth will begin to moderate. as for exchanges, we and the staff skimt that about 11 million people per month will receive them on average during the calendar year 2016 up from an average of 8 million per month last year. the amount is -- overall, including people who do not receive sub cities on their insurance. our projections have not yet been updated. let me explain how our projections have changed since august 2015, the 2016 deficit

that we project. largely because the appropriations act of 2016 extended tax provisions. we now predict a deficit larger than the $7 trillion deficit we projected 6 months ago. about 30% of the increase is change in the economic forecast. change in slower growth over the 10 year period lowers revenues more than it lowers spending. projected spending for medicaid is higher, and that increase is only partially offset by lower

spending than we previously projected for social security. i'm happy to discuss any questions you may have. >> in reading your report, it doesn't paint a rosie picture. some of the remarks you make are honest. the likelihood of a fiscal crisis increasing. the lawmakers having less. deficit would grow over the next 10 years and by 2026 it would be considerably larger than it has for the past 50 years. that's not a pretty picture. i want to touch on growth and

spending, the major aspects of our slide. there are three ways to have income coming in. you could raise taxes, our friends on the other side of the ale believe that's the way to increase growth. growing the economy is the best way to get to balance and get to an economy that can this riv. the slide that is up there, projections from your office have increased from 3% to 2.9%

to 2.9%, 2.3%. and now 2.1%. a downward trend on growth and the economy. folks are able to get a get a job and provide for their family. why does the growth continue to go down in your estimation. >> well, in our projections, like most other projections. we have been disappointed over and over again primarily about productivity growth. the most recent reduction since august was over concerns of over productivity. two things happen, the economic data changed. the bureau of economic analysis revised down. that changed our view about

productivity. now we've had a sort of persistent slow productivity growth. it looks like it may not go away for a while. that's the heart of our most recent downgrade. >> the numbers are actually projections that have been -- you put up table one, which is figure four. i'm sorry, table one. a lot of numbers will pop up here, the bottom line, there are 15 years that cbo projected growth at a certain rate. only three of them was cbo accurate. it's likely the 2.1% isn't accurate. the challenge we have, if we could grow the economy a little bit, not back to the 3% average. say .1%.

we could see a decrease in the activity there. if we grew by more than is projected, what is the result on the deficit. >> reduced by somewhere over $200 billion. >> this increasing debt and deficit. if we could grow the economy at the average rate. we would see a decrease of 3 trilli trillion. >> remarkable ought to be our goal. you mention a lot of things that are growing. what's not growing clearly is our economy. the spending that we have on -- this is the amount of spending.

1965. one third of spending in our nation was mandatory spending. the congress could define what those priorities were year after year after year. now it's flipped completely. those programs are primarily medicare, medicaid and other mandatory programs. the discretionary part is what gets crowded out. that's everything the american people think about, when they think about the federal government, including defense. so it gets smaller and smaller. >> in your report on page 1, you identified a federal outlay is projected to rise by 6% this year. remember, the economy is growing at less than 3. 7% increase. 14% increase in interest

payments. what if we had the economy growing faster than the government. we continue to grow the government faster than the economy, what happens. >> well the reason we look at the size of the deficit compared to the growth of the economy. gives you some idea of our ability to repay the debt. over time, having the government makes it harder for us to reverse and eliminate this debt sometime in the future. >> when the government grows faster than the economy, it's more unreal we will get to the balance. >> this is a tough issue, because it gets into the scoring and how the congressional budget office figures out. if you let the american people

keep more of their hard earned money, that means the government has to find more money somewhere else than -- i want to get to the difference between mandatory spending and taxes. if that increase goes up over a period of time, not changed from the baseline. there's no effect on it from our standpoint to decrease the deficit. with taxes, with the taxes that were passed. were any of the tax extenders passed? were there any new taxes in that? >> no, no, that's right. the expiring tax provisions were extended. >> so all of the taxes that were extended or made permanent were already in place? >> what the congress did is simply continue the current policy that was in place, and yet the congressional budget

office says in so doing, that increasing the deficit. what about the macro economic effect to allow the american people keep more of their money. is that not positive? >> yes, it is. >> and in this estimate, we were able to update our economic forecast all the way through the end of the year, we weren't able to update our budget forecast on that new economic forecast. we missed some of the economic data in the summer. we missed the growth effects of the extension of the tax provisions. just to put a fine point on this the tax credits that were allowed to continue. allowing the american people to keep more money in their pocket. none of them were new, it was a continuation of current policy, our friends tell us that those need to be paid for from a

government ap standpoint. one of the reasons my constituents get so irritated with how we do things in washington. the government, congress runs around trying to figure out how to take more money out of their pockets. you can put up the budget chart, the smile chart. this -- when you talk about all these numbers, people's eyes glaze over. they also get depressed. this craft shows the level of debt that we have in this nat n nation. we've gone from 76% to 86%. we're getting in that red part where the debt continues to increase. that's a bad place to be. the budget we'll continue to offer is the blue line, that

gets us down too a point where we're able to pay off the debt. isn't that a better path to be on than the current path we're on right now. >> it's certainly a path that reduces our risk of financial growing somewhere down the line when the debt gets very, very high. >> creating more opportunity for americans. more jobs, more economic vie tail 2i? >> yes, certainly it will reduce risk of having to deal with financial crisis and gives the government economic policy makers a bit more tools to deal with future challenges. >> thank you. >> mr. van hollen, you're recognized. >> thank you. >> let me begin on a comment i made in my opening remarks. director hall. i have here the estimate of the cbo, impact the deficit increase

from the tax cut bill that was passed just last november. and this is dated december 18th, 2015 it shows an increase of $679 billion over ten years. and that does not include interest. this legislation is the single largest component of the increase in your ten-year deficit estimate compared to last year, is it not? >> that's right. >> i appreciate the chairman's concern and focus on increasing deficits. the record is pretty clear, just last november and december, our republican colleagues passed an unpaid for tax cut that is the single largest contributor to the new ten-year deficit estimate. now, the chairman mentioned this was a continuation of current

policy. there were some policy changes actually. it was not a continuation of current law. and the point many of us have been making. is that if you want to extend some of those tax cuts, you should pay for them. so you don't increase the deficit. they keep taking actions directly contrary to that express concern. that's why if we could put back that chart. there's plenty to choose from. the revenue lost through tax expenditures is higher than the total amount we spend on social security. it includes all these tax breaks that benefit the top 1%. if you look at that big set of tax expenditures that are more than the value of social

security. 17% of the benefit go to the top 1% of income earners. surely, you can find a way to pay the tax credit or some of the other provisions by knocking it out some of these tax breaks. we have to stop protecting the folks that have done really well over the last 20 years and focus on increasing the incomes and tax benefits for people in the midd middle. >> just going to the fine print. if you look in the appendix and look at table f1. i would just point out to my colleagues, that the last time we actually balanced the budget and had really low deficits. revenue as a% of our economy was

in the 19 to 20% range. this is on page 145. meaning the revenue that was coming in was a little higher than it is now. you have a big economy, over a 10 year period would decrease. even a 1% growth in gdp makes a difference. hopefully we can help find that revenue by closing tax breaks for folks at the top, rather than cutting kids education, cutting our investment in transportation. and as the chairman showed his

chart, most of that growth is in mandatory expenditures he was talking about. the big items he was talking about are social security, medicare and medicaid. really, you only have a couple choices, you're either cutting social security and medicare or medicaid, you're cutting tax breaks for wealthy people. and what we're saying is we would like to go after some of those tax expenditures. we don't think hedge fund managers should get to pay a lower tax rate than people driving a bus. if you're really serious about the deficit, mr. chairman, let's not run it up like we did last night. let's find ways to offset that, that includes some of the tax expenditures that go to the folks at the top. i would point out we have an aging population. if we're going to reduce the deficits in the long term.

we're going to have to at least get back to that% of revenue that we were back in the late 1900s and 2000s, when we balanced the budget, we had a lot fewer seniors then. so what our republican colleagues are proposing, less revenue as a% of gdp than we had back in the last time we balanced our budget. with a lot more seniors on medicare and social security. simple math tells you, you're either cutting social security and medicare or you're going to cult some tax breaks for wealthy people. now, let's talk about economic growth for a minute. director hall, you did an analysis about the economic growth impacts of immigration reform. you're familiar with that projecti projection? >> yes. >> and what that showed was, if we had adopted the comprehensive immigration reform legislation that came out of the senate a

few years ago, by the year -- within 10 years we would have -- we would see 3.3% more growth compared to what we would otherwise see in that year, is that what you would recall? >> i don't recall the number exactly. but i can find it. >> and 20 years out, you would see in that year 5.4% greater gdp than you would otherwise. in other words, 5.4% over what it would be in that year? >> the chairman was just talking about the additional revenue coming in from a .1% increase in economic growth. what these numbers showed, you get more than that 1.1% increase

in the economic growth. so that would also as the cbo told us help with the social security trust fund insolvency. there are lots of things we could be doing to address these issues. now, in terms of the tax code, i really hope our republican colleagues will work with us to get rid of these provisions that hr skewed to the folks at the top. because that will help reduce the deficit and end a system that right now allows those benefits to flow upwards rather than benefiting the broad population. i always enjoy the discussion that we have at these -- on

these reports, and i would just ask my colleagues to look at what the american people understand, that every equation has two sides. you have the spending side and the revenue side. and on the revenue side you have a system where folks at the very top have a tax system that disproportionately benefits them. and we need to change that if we're going to address some of these fundamental issues, as we invest in economic growth. i'm going to say i hope as we go through the budget process this year, we will not renege on the agreement that was reached just last november in this house of representatives of the united states senate. sequester caps are still very tight, to allow for greater investment in the economy and

help boost economic growth and invest in our kids education, invest in modernized structure. i hope we will not revisit that agreement, because we like to have a budget process that at least is predictable as possible for the american people in the economy. thank you, director hall. >> thank you. mr. okada from indiana, you're recognized for five minutes. >> hearing mr. van hollen's statement about the two sides reminds me of an old indiana saying, perhaps it's said elsewhere too. there is a revenue side and there is a spending side. let's look at that a little bit. isn't it true when you look at

the next 50 years, money that's actually come in, forget about your models and the scoring. the money coming in over the last 50 years has been about 17.4% of the economy. >> that's a long term average. and right now, we're collecting 18% of the economy and tax revenue. >> so the money is there. the revenue's there. as it has been over the last 50 years. so the problem isn't revenue, the problem is spending. now, conveniently, mr. van hollen is showing a chart that talks about tax expenditures. it's not accounting for the macro economic effect of lowering taxes. when people have money in their

pockets, they spend it more efficiently than government. they spend it to add value to the economy, is that correct? >> the evidence is, that there is a boost to growth with reducing -- >> so for this report that mr. van hollen raised today you didn't have a macro economic effect of that tax extenders yet, did you? >> no, we didn't. and that's in fact one of the mismatches that we have in this report. >> let's talk about the mismatch, and now that you have some more information, what will you expect in the first couple years? >> well, let me just put -- i would estimate the mismatch, the economic forecast we've updated, about a month, extra month of data, we have the new legislation in that. but it's not in our budget forecast. if it had been in our budget forecast we're probably talking

about 100 to # $00 billion in the budget deficit. >> for? >> over 10 years. so it's not a huge effect. and not all of that is the tax extenders, but some of it is. >> as you get more data, do you expect that number to increase or decrease? >> i don't know, we'll be making that prediction soon many. >> when people have more money in their pocket, they add value to the economy, correct? >> that's correct, we expect some macro economic boost. >> even democrats, many of mr. van hollen's democratic colleagues know this. 77 of them, approaching half of their conference voted for extending current law last november. and in fact on this committee, five of mr. van hollen's

democratic colleagues agreed with what you're saying about the economic benefit of extending current law so people have more money in the pocket. they know what to do with the money better than government does, especially when it's wasted on paying interest that we shouldn't be paying in the first place. >> dr. hall, you've been here about 10 months now or so? >> something like that. >> it seems shorter. >> we're just starting. let me quickly ask you about some internal practices and policies. what did you find when you got there, what have you been able to -- don't take this as any comment on your predecessor, what have you been able to improve, change or otherwise help us out with from inside your shop. >> a place that i believe runs very, very well. and runs independently and does very, very good work.

but i also got a lot of -- a fair amount of feedback from the hill that they wanted the cbo to be more trans parent in their work. that's one of the things we tried very hard to do is reshift our priorities a little bit to better document. and better explain our work. you know, two particular areas i think are challenging for us, is this -- beginning to estimate the macro economic effects of the dynamic scorings. we tried hard to be transparent on that, and then our health care estimates. we've done a lot of modelling on health care, and we have a lot more to go. we've added some things to our website to help explain what we're doing. >> looking forward to your work, sir. >> gentleman's time is expired. >> mr. yarmouth from kentucky is recognized. >> i want to pursue this

discussion of the tax expenditures and the impact on deficit deficits if i understand you correctly, you're saying if you were able to project additional growth due to the tax expenditures, that over ten years it would be 100 to $200 billion total is that right? >> probably a little less than that, it would be -- that would be a maximum. >> you still lost $800 billion worth of revenue? so essentially what the impact would be, instead of an 800 plus billion dollar, impact on the deficit. increase on the deficit, it would be something slightly less fan that, overall, there's no question that the tax expenditures are still the biggest contributor to the deficit over 10 years? >> yeah, from our change from

august, that's right one of the biggest factors we know ongoing is the cost of medicare and medica medicaid. i'm interested in what per capita growth rate you assumed over the 10-year period. do you >> if my memory is correct, what we've experienced in the last few years is about a 3% since the affordable care act was enacted, about a 3% growth rate per capita per year of medicare versus 7% before the affordable care act. i'm curious as to whether you project a continuation of a smaller growth rate per capita over the next ten years or whether you forecast some kind of change in that? >> i think we still expect to see it accelerate. in fact we expect the number of people getting medicaid and the

per person cost of health care to continue to rise. that's actually still a big part of our growing deficit is the rise in per person health care. >> but we are rising at a lower rate than before the affordable care act? >> that's right. >> what factors do you think will contribute to the increase in the per capita growth rate over that time? >> a lot of it is we've had a long history of growing per capita health care that's just been our experience so far. and there's no reason that i know of to think that that's going to slow down. >> well, let me just kind of speculate a little bit. what would it do to the -- you think it would do the deficit if we found a cure for alzheimer's? >> it would have an impact. >> and a cure for cancer. >> depends on the cost. >> if we figured out a way to either cure diabetes or manage it effectively. we're talking about hundreds of billions of dollars of cost

removed from the system, aren't we? >> right. >> per year. >> right. >> investment in medical research is something that offers great potential to combat our long term deficits as well as its human benefit? >> in fact, i think some federal spending does, in fact, investment can, in fact, increase the growth of the economy, not that it pays for itself but it does have an effect on growth. >> you made a statement a minute ago in response to a question on tax cuts, and tax cuts do have a positive benefit on the economy. in 2001 and 2003 there were substantial tax cuts put into place. was there an overall benefit to the economy of those tax cuts? >> yeah. you know, i don't offhand know what the research says. on anything like this it's very difficult to estimate because lots of other things are changing or happening. our reading of it is generally

that the evidence is that tax cuts do have some benefit for economic growth. you see it in our estimates. it's not a huge effect but it's there and the evidence is that it's there. >> one final point, we're talking about mr. van hollen talked about the lower tax rate paid by many of the highest income people in the country. i read a statistic the other day the 400 top earners in i guess this was 2014, that's a group that one estimate is owns more wealth than 50% of the united states population. those 400 earners paid an average tax rate of 16.6% and these are incomes that reach well into the hundreds and millions if not billions of dollars a year. so, that number certainly reinforces mr. van hollen's argument. thank you very much for your testimony. i yield back.

>> the gentleman's time has expired. mr. mcclintock, you are recognized for five minutes. >> mr. chairman, first i warn my friend to be very careful by suggesting the top 1% should pay its fair share. i just took a look at the numbers. top 1% earn 22% of all income in the country but they pay 38% of all income taxes. so, if you want them to pay their fair share you're advocating to cut their tax burden by a third and i don't think your friends in occupy wall street would appreciate that. what it said that the deficits have dramatically fallen since 2009. i'm reminded that obama added nearly a trillion dollars to the federal credit card that year for his stimulus programs, which nearly tripled the deficit. so the claim by his apologists here that the deficit has fallen dramatically since 2009 is a lot

like a shopkeeper who triples his prices and then announces he's going to have a half-off sale. i don't think that's a very compelling argument, either. we keep hearing that taxes are the antidote to deficit. aren't taxes and deficits the same thing? aren't deficits future taxes. you either tax now or you borrow now and tax in the future to redeem that borrowing, is that correct? >> i suppose that's one way of looking at it although one of the things we always try to point out is, you got taxes and you've got spending and you've got both. all those things will work. >> taxes and deficits are really two sides of the same coin. they are the only possible way that you can pay for spending. and it is spending, therefore, that is driving this fiscal crisis. you know, i note that this is

the only time in our history except for once other when we carried as much debt proportionately to the economy as we carry today and that was at the end of world war ii when we had exhausted our credit, exhausted our resources fighting the bloodiest war in human civilization. how did we get out of that deficit, out of that debt? >> i'm not a history of -- >> the economy grew? >> right. right. >> i think that period is instructive for us and i would appreciate it if you haven't taken a look at it take a look. my recollection is that fiscal year '45, president truman abolished the excess profits tax. in fiscal '46 he slashed the top income tax rate. in fiscal '46 he cut federal spending from $85 billion down to $30 billion in one year. he fired 10 million federal employees.

it was called war demobilization. they predicted 25% unemployment and a second great depression. instead we got the whole post-war economic boom. isn't the truman model the same model kennedy used and robbie reagan used in the 1980s and bill clinton used in the 1990s. we forget bill clinton cut spending by 4% of gkp, went after entitlement spending, ended well fire as we know it, approved the biggest capital gains tax cut in history and as a result was able to balance four budgets in a row and lead a period of profound economic expansion. isn't that the model we should look at to get ourselves out of this enormous hole we have dug?

>> economic growth is very important. and economic growth can help with this budget deficit problem. a couple of things. first we have a real strong head wind with an aging population. in fact, that's one of the real -- that's the main reason why our economic forecast drops down. >> i think that's all the more reason to have a thriving economy because of that aging population. let me just ask one more question. on the impact of taxes and deficits on the economy. those revenues if not taxed by the government either now or in the future through running deficit would either be spent or saved. those are the two options you have. you spend your money or save your money. if you spend your money you will be spending it on consumer purchases. two-thirds of economic growth depends on consumer spending or you'll be saving it. by saving it you invest it which means economic expansion. isn't that a much more logical model to use to get out of this

mess? >> well, again, certainly that's a way to help get out of this mess and that would be an important contributor in going forward if we can increase growth. >> gentleman's time has expired. gentleman from washington state is recognized for five minutes. >> thank you, mr. chairman. i'm pleased to be here at the annual sky is falling hearing. we've had these -- i've been on this committee since '93. and what's amazing is that the republican response to the sky is falling is to schedule less days in session than the state legislature in the state of washington. a part-time legislature is in session more than 111 days. if there was a real crisis, you guys would be here working on it. but you know this is all political rhetoric. now i've listened to this over and over again and i'm not going ask you, mr. hall, because i don't think there's a day when the united states will disappear.

even though we have all this doom and gloom that we hear about the debt, the debt, the debt, that's the mantra of the american enterprise institute that has been pushed in this place in the 28 years i've been here. one of the stupidest things that we talk about here is treating it like we're a family sitting around a kitchen table. and we've got to decide well, what do we have to cut if we're going to keep on doing. that is not the metaphor for the united states of america. we are not a family. we are a government that needs to deal with what people need and that means we make critical investments on behalf of the country. we would not build ports, we would not build roads, we would not do any of the critical investments in this country if we waited for the private sector to do it. if we just sat back and said

well, we're not going to build any more roads. let's wait for the private sector to decide we need more roads. that's why the national institutes of health would never have been created. if we had waited for the private sector to do it. now, what is really clear is that this debt thing is really to take away any money, any ability of the government to deal with the problems of ordinary people in this country. but the discretionary spending just keeps getting cut. we've got our kids in debt. the biggest debt crisis in this country is c.h.i.p. kids school debt. 1.7 trillion hanging over our kids. they can't buy houses. they can't buy cars. they can't do anything because they have this debt. and yet we perpetuate that system. now what is troublesome to me is

that i was here during the clinton years. and i saw us get to the point where we just about were at surplus. and wall street was petrified. if we don't have any debt, we don't have any federal debt what do we do. we can't let the government get out of debt. so george bush came in and he took care of it quite easily. he gave tax breaks and tax breaks and tax breaks and then started two stupid wars. one in afghanistan, and one in iraq that were absolutely no public benefit for this country. if you ask the average citizen what's the benefit we got out of the iraq war or out of the afghanistan war? there is none. and what mr. mcclintock talks about, yes, there was war demobilization after the second world war, and the first thing we did was we gave the bill of

rights to every veteran. anybody who served in europe or asia wound up going to college free. we invested in our young people. we're not invfted in our young people now. the national institutes of health, i know this one because i'm a doctor and i've been watching it for a long time. we used to fund 20% of the proposals made to the national institutes of health. we're down at 6%. young professionals in the health care fields today are going to europe. they are going to england. they're going to singapore. they are going all over the place because there's no research money in this country. and if we don't continue to fill the pipeline of investment, we are simply going to be in long term problems. it won't be because of debt.

it will be because we refuse to invest. like having a house and you see there's a little spot on the ceiling and think gee, there might be some rain damage. if you don't go up on the roof and fix it you're going to have the ceiling fall down and that's when the ceiling will actually fall down is when our lack of investment catches up with us. i yield back the balance of my time. >> the gentleman's time has expired. gentleman from georgia, mr. woodall, is recognized for five minutes. >> thank you. dr. hall, thank you for being here. since we have the benefit of your counsel, i thought i would ask you some questions with my time. thinking about the student loan issue that dr. mcgovern mentioned, if i'm also concerned about that and i want to reduce the number of student loans that are going out the door i'd rather be involved in grant programs, work study programs, co-op programs. if i reduce the number of student loans we're originating today, is cbo going to score

that as a net spending reduction or a net spending increase? >> it's going be a spending decrease, i believe if you reduce -- >> i looked at some proposals that are out there for how we might grapple with that. it looks like the way cbo scores it scores all the fees associated with originating that debt. doesn't score any of the risks associated with the failure of that debt and thus every time we try to curb the amount of student loans that go out the door in favor of another program it looks like we're reducing federal revenue as if issuing a student loan is a revenue stream for the government as opposed to a risk that the american taxpayer is taking on. >> i think what we do is we focus on the subsidy aspect of it and do try to take into account the risk, the market risk. >> it is those kind of anecdotal challenges folks back home,

doesn't make sense to folks. if you take on more risk that should be a larger cost to the government, fees associated with that don't impact. if i can bring up a cbo slide here on labor participation. a lot of what we do is driven by how cbo scores as opposed to my preference, which would be public policy. so i want to ask you to see where we could meld cbo scoring with good public policy. i look at the labor force participation rate. it looks like the same kind of anemic participation rates we had when the gentleman from georgia was president of the united states the great malaise of the late 1970s, but as i look at this cbo chart, we are going to call this relatively full employment. is that right? historically low unemployment rates. >> yeah. actually with respect to labor force participation i still think we're not -- we still have significant slack in the labor

market. that number should be quite a bit higher. >> that's exactly what i want to ask you. tell me what kind of policies can come out of congress signed by the president tomorrow cbo would begin to move that chart instead of the downward glide path on an upward glide path. give me some examples of policies that would come out of congress that would cause cbo to raise its projections of labor force participation. >> let me just say that part of what's going to happen is if the economy continues or begins to grow a bit quicker and eliminate the slack, we are going to get some of that back. but there are things that impact labor force participation. it's in our estimates. things that affect what we gall marginal tax on work. so there are tax policies that affect people's willingness to work. the aca probably affects the incentives to work. there's a few things like that, that will affect our forecast of

labor force participation. >> aca affects the incentives to work positively in that it encourages me to go to work? >> it's the opposite. the aca discourages people from going to work. because there's an increased penalty for increasing work in the aca. >> reducing tax rates on work could drive up my labor force participation rate. eliminating the disincentives that are within the affordable care act for work would drive up my labor force participation rate. and all things being equal if i drive up our labor force participation rate we already heard about what happens with economic growth, how that impacts deficit, if i drive up my labor force participation rate i expect what in terms of economic growth longer term? >> we expect stronger growth. expect -- any time you have a larger labor force, more participation you'll increase growth, increase revenues, that's going to have an impact on the budget. i want to say, you can't

exaggerate this too much because we had some real demographics here. labor force participation right now is about 3.5 percentage points lower now than at the start of the recession. a lot of that is aging population. >> now, my understanding is we have the healthiest aging population we ever had in the history of this country. why would me getting older requires me to leave the workforce? >> it doesn't. the current baby boomer group in some respects creating records. people will still retire and that is a large group of people and we still expect that to be big drag on labor force participation as time goes on. >> mr. chairman, i hope this is common ground we work together on and i yield back. >> gentleman from wisconsin is recognized for five minutes. >> thank you, mr. chairman. thank you, dr. hall. i want to go back to the tax extenders, i think we know the deficit has gone down by two-thirds since this president

took office but the blip going back up occurred because of what we did with the omnibus bill in december of which $800 billion roughly is the tax extenders. i heard the chair talk it's important allowing the american people to keep more of their money and i heard money in the pockets will boost the economy something i'm going to respectfully remind him of when we talk about the minimum wage. if we ever get a chance to. i do think that's a valid point. when i look at those tax extenders,úí'ú; me through thi in a very basic way so i can explain to people back home. i'm looking at a list of extenders that i have and i'm going to give you two scenarios. family of four upper 30s, early 40s. one parent is a school peacher the other one is a plumber. one is making $35,000 a year, the other $45,000 a year. they have two children. $80,000 family income. the other one is 68-year-old widow.

limited social security, limited savings. 0% increase this year in social security. help me as i go through these very quickly and tell me if it's likely that that family of four, that single widow will be eligible. bonus depreciation. it's unlikely either one of those would be eligible for bonus depreciation tax break, correct? >> i believe that's correct. >> research tax credit, i support research tax credit but unlikely either of these two will benefit directly? >> that's correct. >> active finance exception i really doubt that overseas profits probably not dealing with that, correct? >> yes. >> depreciation for smaller businesses doesn't sound like the widow has the smaller business or that school teacher or person working for a plumbing firm does. wouldn't qualify either? >> probably not. >> controlled foreign corporations break. again -- >> right.

-- unlikely? >> right. >> biodiesel tax credit? >> correct. >> depreciation of leasehold restaurant equipment. >> same. >> so i've gone through over i think three quarters -- i'm going to argue the tax credit for energy-efficient homes. they may not take advantage of but they could, right? that could be money in their pockets. renewable energy production credit. >> production credit, yes. >> probably not the production credit. what else do we have. work opportunity tax credit? potentially? >> potentially. >> there's a really thin gray line to be found on this graph. we found a really thin pink line. i'm getting up to about 10% of them. deductible treatments for mortgage insurance. when i look at this and the other provisions if i add them all together i'm at less than a quarter. i don't know what's in that other provision category. do you know roughly what percent

would be eligible? >> i don't. >> i guess the bottom line i'm saying if we're going to talk about increasing the deficit and talking about putting money in people's pockets, what we did with those tax extenders didn't put money in the pocket of the average constituent i have or any of our average constituents. it might have benefited some very narrow groups of people and some corporations. and then i look at your slide you handed out on major changes and projected revenues from 2016 to 2026. in two of your four categories, rising income is a factor why you're changing projections. i would argue the very activities we're doing in this congress isn't benefiting real people to put money in their pocket so that they can boost the economy but we're benefiting the very narrow small amount of people and that that average widow and that average family that school teacher and plumber really aren't seeing that benefit as we have expanded that

deficit and they are not getting that economic direct benefit. is that fair to say on those numbers that we went through? >> from what we discussed it sounds like it. we haven't done a distributional analysis of anything like that. i don't want to be -- >> it's pretty fair their foreign investment stuff, not taking advantage of those tax credits as we discussed. i think that's an important point because i think, again, there's a real difference in that, really quickly if i can in 25 seconds left. simpson-bowles. we accomplished about 70% of the simpson-bowles cuts if that had been enacted but only a third of the revenue side of it. in fact as of today we would be at 130% where we would have been on cuts but not dealt with the revenue side. is that something you can kind of confirm roughly in the ballpark on that. >> i can get back with you. i don't know enough about it. >> mr. chairman, that's something that's worth this committee taking a look at. for people who did propose that and supported that we certainly

haven't affected that part of the ledger and what we did last december certainly didn't affect it either. >> gentleman's time has expired. we will hear from the gentleman from ohio for five minutes. >> it's interesting, i was here, my first time on the budget committee was 2011 when i first got elected, and i kind of heard some of the same discussion so it's interesting to hear the same discussion. what really is interesting is that we use so much as one of the presidential candidates said, we use washingtonese down here. we talk in washington dialect, tax expenditures, american people don't know that if they're watching this, most of them would say i don't know what everybody's talking about. tax expenditure, tax credits, we talked about some of those issues. we indicated that's one of our big issues. we also said we're not in a debt crisis yet. last time i sat in this chair the debt is now up 29%. i think, dr. hall, you've said

that it could increase as much as $8 trillion or $10 trillion over the next ten years, is that correct? >> that's right. almost 10 trillion. >> that's another 40, 50%. if we're not in a debt crisis i'm not sure what we're in. when it comes to tax expenditure, we keep talking about these things that we made permanent. doctor, i'm not sure if you can answer this. some of these same tax credits were around in 2006 and 2003. they were just extended for two-year periods, is that correct? >> that's right. >> when they were extended for two-year periods we didn't count them as being added to the deficit but we made them permanent, cbo counts them as being added to the deficit, right? >> that's right. when we look at tax provisions that have an expiration date we assume they will not be extended. so when they are extended it becomes a budget change. >> some of these credits have

been around for 25 years. would you think if they are around for 25 years they're pretty much permanent, even though they're not? they seem to be permanent in the system. >> right. we do it that way in a sense because the budget committees told us to do it. >> i understand that. >> i get your point. >> i was thinking back in 2006 even when the other side, the democrats had the opportunity and when they were extending them did they pay for them then? did they talk about paying for them then? are you aware? >> i don't know. >> i don't think they did. that's what's kind of interesting here. we continue to extend them for two-year periods and not talk about paying for them. that's why we shouldn't be talking about them as the issue today. because republicans and democrats know most of these credits are good credit. some credits were named off. he forgot about the unearned income tax credit. child tax credit. american opportunity tax credit was extended. helps pay individuals going to college. these are all good programs that i think would actually, i mean there was one individual that

said we're in a debt crisis because our kids' school debt. that's a credit that would help. we have to get away from this washingtonese and have to start talking about the issues. i was a businessman for 28 years. i always looked at budgets and said how do i grow my revenues. doesn't mean add prices to my product. how i do grow my revenues. if i have expenses growing, how do i slow that growth down. so my question for you, how confident are you, because i do believe the way we get out of this debt crisis is growing the economy and how confident are you in your most recent growth projections because i think that's a real key. >> this is always our best, our best projection. it's very hard to project the economy but one aspect of this, i think, is clearly going to happen and this is the aging population, the main reason this drop in labor force participation as baby boomers retire, main reason we're looking at a decline in growth

to around 2%. and that's going to be really hard to deal with. also, productivity has been very disappointing through this whole business cycle and one of the big risks i think going forward will that productivity return. we don't know what's caused the lack of productivity. that will make a big difference. but still, growth will help but we're so far behind it's hard to imagine that just growth is going to fix this deficit and debt problem. >> that leads me to my next question. would you agree that spending is really driving the projected increase of the deficit rather than the lack of revenue especially since this last year we had record revenues. if i was back in my business and had record revenues i would be having a celebration. but then i would look at expenses. saying we got to do something. would you agree expenditures are causing this deficit? >> the big growth in deficit is from social security and

spending on major health care programs. those are the two big ticket items that are creating this problem going forward. >> one last question. is this ever-rising debt level a share of the economy sustainable? >> it's not. what's tricky about it is it's getting to a very, very high level. trajectory is all wrong. i can't tell you exactly what's too much. >> thank you, dr. hall. i yield back. >> gentleman's time has expired. gentle lady from michigan is recognized for five minutes. >> thank you, mr. chairman. i'm not talking as well. i had major surgery on my mouth this morning and my experience in the dental chair is probably more pleasant than yours at the budget committee. one of my top priorities in congress is ensuring we have a strong manufacturing base in this country and that we continue to design and build the best cars in the world right here in the united states. we have seen this year, we know that the auto industry was in

dire straits in 2009 but thanks and i do believe to the federal investments that occurred in our manufacturing base the auto industry is back and is as strong as ever. this year we added nearly -- we've added nearly 650,000 jobs since mid-2009. including more than 100,000 jobs in 2015. last year auto sales hit a record high of 17.4 million units in 2015. this means that the u.s. car and truck production has more than doubled since 2009. we hit record levels. we've seen the benefits of that in michigan where the unemployment rate has fallen two thirds since 2009 and is down to 5.1%. but i know we can't take that for granted. we have to ensure that our manufacturers have the resources they need to succeed and they are competing on a level playing field. autonomous and connected vehicle technology represents the future of auto industry worldwide and

they've got both the potential to save lives and to reduce fuel consumption. i want to make sure like many of us, i think all of us, that that technology is developed here in the u.s. the president's budget will include $4 billion proposal to accelerate the development and adoption of automated vehicle technologies through real world pilot projects. i believe that this is exactly the type of investment we need to stay on the cutting edge, to ensure we keep the jobs here and that that's going to impact the economy. as you might imagine, i've got a site or two in michigan that will run that i think are good sites. director hall, what is the outlook for federal spending on investments like the president's proposal on autonomous vehicle research and all things being equal, are we likely to see fewer jobs and lower levels of economic growth if we fail to have adequate levels of investments in these priorities? >> well, one of the things that's actually particularly

difficult for us is understanding the role of federal investment in economic growth. obviously, there's impact of it. it's understanding how much of an impact it has on growth and therefore on revenues. it's difficult and the timing of that is difficult. we are in fact doing a fair amount of work on it. we should be producing something pretty soon, talking about it and we continue to work on it so i can't -- it's hard for us to deal with that aspect of the budget, the investment side on the impact on the deficit. >> when you come out with it i will be very interested in it. we won't debate it here. i know you know what the impact would have been on this country in 2009 if the auto industry had collapsed i want to continue on the issue of jobs. we have seen a significant reduction from 5.7% in january 2015 to 5% in december.

do you believe there's enough slack in the labor markets to allow for further reduction in unemployment? >> we in fact forecast that. we in fact that the unemployment rate is going down to 4.5%. what's tricky about that is part of that forecast is we are seeing people jump from entirely out of the labor force into employment so what's still lagging behind even as the unemployment rate goes down, labor force participation is still too low. so that's not a good judge of slack in the labor market. slack in the labor market will be gone when labor force participation gets back up, a bit from where it is now, and actually the unemployment rate is likely to go back up a little bit from 4.5% once that happens. >> i have more questions but i don't have time. i will do one more. i hope we are going to get a chance to talk to you about some of these because i think it's really critical even in terms of your projections on what's happening to the economy and

jobs overseas. wages have remained relatively flat throughout the recovery. do you -- you know, the auto industry for the last eight years, they have this new contract, that is going to impact that. do you anticipate the rate of wage increases for most of the work force will return to historic levels? i think one of the problems right now, most americans are insecure and not feeling real wage increase. what's your prediction on this? >> i do think, we do think wage growth will resume. the big challenge probably for the next couple years is there is still significant slack in the labor market. we are probably 2.5 million people short of jobs right now, still. so i think certainly once that slack goes away, we will get back to more traditional wage growth. then i think the challenge becomes do we get productivity back to support that over the longer time period. >> the gentle lady's time's expired. gentleman from ohio is recognized for five minutes.

>> thank you, mr. chairman. first of all, let me say to my clae colleagues on the budget committee, i'm very honored to be joining you. i think establishing and implementing a balanced budget is a necessity and a responsibility of our institution and i think we owe it to the american people to do that. i remember not too long ago the imperative that we were given from the former joint chiefs of staff chairman, admiral mike mullen, when he said that the biggest threat to our national security is our national debt and given that the oath that we swore when we took office, each of us and the president, to support and defend the constitution, national defense is our paramount priority.

thereby, the national debt should be our number one priority as well. i want to go back, mr. hall or dr. hall, and thanks again for being here, i want to go back to something that mr. renacci said talking about how we talk in washingtonese. i want to give the american people an opportunity to hear from the kind of language that they hear on main street every day, some of the talk. you have indicated in your testimony that revenues between now and 2026 are going to remain relatively stable compared to the past. am i saying that correctly? >> yeah, that's right. they are growing but at the same pace as gdp. so it will be flat. >> so pretty much stable. i want to get, for the record, one more time because i want to make sure i understood what you said, then the increasing deficits and the mounting debt is by and large an issue with

spending. that's the real problem that we have to deal with, correct? >> the driving force is two particular things in the spending. the mandatory spending, social security and health care. >> okay. well, you know, the national debt has increased by nearly $8.3 trillion since president obama took office, and as a percentage of gdp, the total debt including intra-government debt, the social security trust fund stands at about 104% of gdp. can such an irresponsible spending path, fiscal path, eventually invite a debt crisis here in the u.s. mirroring the types of crises we have seen in some european countries in recent years? >> well, that's certainly part of our message is that over the next ten years, we could see debt go from 74% of gdp to 86%, then eventually to 155% over 30 years which is a really high

number, so that's really the concern. at some point along this trajectory, we are going to get people starting to be unsure about investing in u.s. securities and demanding a higher interest rate. then we have issues with financial markets. >> we are going down a slippery slope. >> we are. >> okay. can you give me some idea, any new numbers about how much debt per person does each american owe today? you got any number on that? >> yeah, i don't offhand, no. i would have -- we would have to do a little math. it wouldn't be hard math. >> can you get that? >> absolutely. >> if the congress were to enact a deficit reduction plan that could halt the expected rise in the debt levels, would this be a net benefit for the economy over the long run? >> i think it would. i think part of our forecasting here is the macro economic drag from having the debt grow.

that is a drag on growth. that is something that's not trivial. >> what would that mean to the american people? let's talk to them in terms that mean something to them around the dining room table. if we were to enact a deficit reduction plan that would actually halt the expected rise in the deficit and we see an improvement in the economy, what kind of opportunities are we talking about for the american people? what does that mean? >> well, first, of course, they have to deal with how the debt is eliminated. either you have to either have tax changes, you have to have spending changes -- >> spending being the biggest part of the problem. that's where we should focus our attention, right? >> well, our notion is that you can do it, it's up to you to decide how to do it, how to fix the problem. you can do it with taxes, you can do it with spending or you can do it with both. >> one final quick question. i'm sorry to interrupt you. you said in your testimony the unemployment rate is expected to drop from 5% to 4.5%. what's the real unemployment

rate with roughly a third of our population out of work, quit looking for work, dropped out of the work force, low labor participation rate, what is the real unemployment rate? >> that's a good question. actually, we can do a little calculation for you because i think -- i think if we assume that the labor force was at its potential, not its current lower level, we would have probably higher unemployment rate. >> can you get that back to us? >> sure can. >> mr. chairman, i yield back. >> the gentleman from new jersey is recognized for five minutes. >> mr. chairman, thank you for being here. i want to go back to our comrades mentioned former presidents who responded differently, quote unquote, to economic problems. one of the presidents that was mentioned was president kennedy,

who cut spending. we forget at the time that president kennedy was in office, what the tax rate was when he was the president. over 90%. so when you take things out of context, you would think that we are at the apocalypse. let's call this apocalypse two. i want to start with a question, mr. hall, if you will. payroll taxes, which as you know fund social security, are expected to decline in 2019. that's the projections. and thereafter. chiefly because as wages and salaries grow more quickly for high earners, a greater share of income will be above the maximum earnings subject to social

security. so would you say that the increase in income inequality directly threatens social security solvency and further contributes to the deficit briefly? >> sure. i don't want to guess about how it -- if it threatens its solvency but you're absolutely right, the maximum on social security taxes does in fact reduce the revenues for social security. that does have an impact. it's an important part of our forecast. we do anticipate increase in income inequality going forward will have that impact. >> will raising the payroll tax threshold, let's say to $400,000, as the social security act -- the social security 2100 act does, would it extend the

solvency of social security and meaningfully reduce the deficit? >> i'm sure it would extend the solvency, extend the time period. i don't know offhand exactly how much of an impact it would have. we might have done that or i could get back with you on exactly what that would look like. >> i would like to hear from you. also, when is the last time we raised that threshold? >> that, i don't know. i don't know. we can get back with you on that as well. i don't know that one. >> long time ago. look, we're in 2016. we have heard the doomsday predictions, the budget deficit is the smallest it's been in seven years. by the way, in the charts we saw up there, we saw 2012 when the gdp was over 3.1. i never heard anybody on the other side, i never heard one

person on the other side give credit where credit was due. because this president can't do any good. he's never recognized, anyway. i believe he's done a lot of good. i've disagreed with him on many things. so now, all we hear from is the apocalypse. i'm not exaggerating, i don't think i'm using hyperbole at all. discretionary spending, funding for everything from medical research to investments and education, by 2019, will reach its lowest levels since 1940. that's astonishing. i would argue there are many important investments you are not making, mr. yarmouth pointed

some out that will cost us in the future. cost increases moving forward will be exclusively from mandatory programs as you pointed out, mr. hall, social security and medicare. the increases are mostly due to an aging population. the demographics are there. how do we tackle these fundamental issues? one thing we started to do in the affordable care act which extended the life of the trust fund, of medicare. that was a good thing. 12 years. 12 years. when you do away with the affordable care act, there are a lot of things that we are going to be doing away with. so whether you have a republican president next year, a democratic president, we need to think of what those consequences are. i yield back. >> thank you. gentleman's time has expired. gentleman from virginia is recognized for five minutes. >> thank you, mr. chairman. can we get up the outlays by type of spending graph if

possible? thank you guys very much. dr. hall, thank you for being with us today. i just want to respond a little bit to the politics of jfk and all these kind of things. if you look at the graph in our pack on total revenues and outlays, go back to the '60s and see that average revenues have been about 18% over the long run on average. so you can change the top marginal rates quite a bit or whatever but there seems to be a long run historical inability to raise revenues above that 18%, 19%, and i think that's probably just due to political economy. there's an upper bound on what the american people -- are you familiar with anything in literature that gets at that? there just seems if you have that much data over that long of a span, what's the political economy behind that line? >> yeah, i don't know the literature offhand. we can look into it if you like. >> that would be good. because what i'm about ready to get at is a coming train wreck. so the bipartisan squabbling

doesn't do any good. it's a spending problem, a revenue problem. the revenues aren't going to go too much higher than that. when you talk about the spending, what i want to get is this part of the spending. here's the train wreck. we're not really having a debate about discretionary spending. we are having a debate about that line right there, mandatory going straight up through the roof. if you don't solve that, you got a fundamental problem. then we can deal with the equity considerations to van hollen was mentioning the top 1% or whatever going to wall street fat cats. we can deal with political economy analysis of that, too. can you give us the numbers, give him the most generous assumptions you can and what the savings would be if we get rid of all those tax expenditures, but then also look at the political economy and look at the donations to the democrats and the republicans in wall street. i think you will find they're 50/50. the reluctance if we're being honest, if you do the political economy, you guys can talk about income distribution, whatever, but you guys got half the fat cats, we got half the fat cats.

i think that's just being honest. if i'm wrong -- >> not quite. >> that's fair. let's look at it. i just don't want to be searching after false answers. because i think the true answer is right there. i have been teaching it for 20 years or whatever. the debt's $19 trillion, that's a serious deal, but nothing in comparison to this thing, the mandatory spending right now and the unfunded liabilities are $100 trillion right now. $127 trillion on the bottom of the debt clock, two years ago for some reason went to $100 trillion. what's that mean, that's the amount we're not going to be able to pay for medicare, social security, et cetera. that's not going to be a financial crisis. that's just going to be a reduction in those programs going forward to the next generation. medicare and social security are both insolvent around 2032. both programs insolvent. the next generation won't get what current are getting. and the basic take-away, what's the $100 trillion mean, that's the biggest number, the economic

textbooks, it means in 11 years, there won't be any federal revenues or another way of saying ith i is all federal revenues will only go to pay for mandatory programs and interest on the debt. another way of saying that is there won't be a dollar left for the military, education, transportation, all of running government in 11 years. that cbo, the main graph, and it's related to this graph. so dr. hall, i'm just going to run, these are easy softballs. i want to run through the logic to kind of put this out there. how do you interpret this graph? as mandatory and discretionary? >> well, obviously, obviously the issue is the mandatory spending and you know, a lot of what seems to be happening is it's crowding out discretionary spending and it's part of the problem going forward. >> right. annually, appropriated discretionary spending is declining fiscal burden on tax payers, net interest on auto pilot, mandatory spending are

increasing. in other words, the part of the budget we control through appropriations in this committee is getting smaller, is that correct? >> yes. >> that's correct. can congress do anything directly to reduce net interest costs or is that kind of off on the side? >> you have to reduce the debt. >> right. so that's nothing we can do on the net interest costs. auto pilot direct mandatory spending programs are clearly what we have to deal with. dr. hall, does cbo provide estimates of how various policy options could reduce the deficit? >> we do. we have a nice document on that. >> right. so we can all take a peek at some of that. among -- this is of interest this year with the budget debate we're having, among those policy estimates, just focusing on auto pilot spending programs, how many different combinations would you say could save roughly $30 billion in relatively short order? >> i don't -- i don't know offhand. >> but do you -- maybe we can just ask you to see if you can

find us any bundling of those. because that's kind of the number in play. >> the gentleman's time has expired. the gentle lady from wisconsin is recognized for five minutes. >> thank you, mr. chairman. can you leave that chart up there, please? thank you, mr. chairman, mr. ranking member, colleagues. good morning. just a question for the gentleman and i will yield to him to answer. outlays by type of spending. does this include the spending through the tax expenditures? >> the tax expenditures, that's on the discretionary side. >> would you agree with that, dr. hall? >> no. they are not really in there. >> right. that's what i thought. this chart doesn't make any sense to me. okay. thank you. can you put the chart up with -- that i asked you to put up? okay. i agree with my republican colleagues on a number of things. we really do need to get away

from the sort of washingtonian speak and speak plain old english that everybody understands. the tax breaks that we all voted for on november 15th, it's spending, people. it's spending. you can say we're putting monies back into our constituents' pockets, you can say whatever you want to say. it's spending. and as you look at this chart, you will see that tax breaks, we all depend on, some of us, i'm going to claim my mortgage deduction, all of the things that we have spent tax breaks to oil companies, all of that, exceeds the spending that we do on medicare and medicaid. and so when we hear the republican mantra that revenue is not the problem, it's a problem with spending, i guess i can agree with that. i guess we are in agreement on that. spending is the problem.

so what i would like to ask you, dr. hall, is something about your testimony on page four. you talked about discretionary spending is projected to drop from 6.5% of gdp this year to 5.2% in 2026, a smaller percentage than in any year since 1962. so we start talking about cutting spending, you know, they always say we need to cut discretionary spending, you know, head start and you know, other kind of programs, you know, where's the greatest opportunity to cut spending? i mean, is there more money in like head start, wick, than there is in these tax expenditures? we can't cut to the bone. where are our opportunities to cut? >> well, the document i referred

to, we do have policy options document that gives you some idea of what possible tools you have cutting spending, raising taxes, et cetera that will help with the deficit. >> correct. because you agree with my assessment that tax cuts are spending. >> well, i don't really have an opinion on that. >> i'm not asking for your opinion. i'm asking you to tell me, when we provide tax cuts, that that is spending from the treasury. >> no, it's -- >> we are denying ourselves revenue. >> okay. that's true. >> the same as if we sent out a check to the head start program. that would be spending. we are denying the treasury those monies that we would use for something else if we were funding head start. so it's the same sort of process. let me ask you something else before my time expires, dr. hall. this committee is poised to use

a process, budget reconciliation, to cut the mandatory spending such as s.n.a.p. and medicaid and we have had kind of discussions on voucherizing medicare and so on. do you agree that things like s.n.a.p., for example, actually increase growth of our economy? that actually, it is, you know, it's penny wise and pound foolish to, you know, food stamps are only used in counter cyclical times and if we cut food stamps, we are actually cutting revenue? >> well, i don't know in terms of whether they sort of pay for themselves in any way. i don't know if they help growth. but you're right that they are