to solve our nation's problems. in the meantime, we'll be here in the house continuing to work hard for the american people. >> next, i house committee on the long-term budget outlook. than more on that the president of the committee for a responsible budget. in a senate hearing. then, a senate hearing with sloan gibson. adams was the second adams to be elected to the white house. he was the second northerner to be elected to the white house, he was only one of two anti-slavery presidents to be elected to the white house. he was people he feared by the

.outh -- in binding the country together for infrastructure projects, through supporting on, he wasr and so deeply suspected by the southern states who saw that he wanted too much power for the federal government. life ofkaplan on the our sixth president, john quincy adams. >> congressional budget office or douglas elmendorf said changes are needed to sustain health programs such as medicare. his comments came during testimony before the house budget committee.

this is just over two hours. >> to make sure that every witness knows that it is against the law to provide false testimony to a committee of congress, we have begun this new committee. we are taking this step only because of a recently code guidance we're have been given by the department of justice. please just raise your right hand. or affirmemnly swear that the testimony you are about to give is the truth and nothing

but the truth? >> yes. >> do we have that over with? welcome to the hearing today. we are going to discuss cbo's long-term budget outlook. this is a very important piece of work that cbo does and we are happy to receive it again. just take the first line. the federal government records a largest budget deficits relative to the size of the economy since 1946, causing its debt to soar. says with deficits as big as the ones that cbo projects, the federal debt will be growing faster than gdp, a path that will be ultimately unsustainable. it pretty much says it right there. it is unsustainable. our national debt is already

bigger than our economy. yet, it will get even larger. our economy is too weak to create the jobs we need and yet it will get weaker. work, and yetfind there will be even less opportunity. we know what the problem is. spending keeps growing. our economy cannot keep up. the debt is waiting down working families. real spending will grow by 27%. we will be taking in plenty of taxes, and even greater share than the historical average, but that is not going to be enough. we will be spending more than we take in, a lot more. the reason that spending is growing so fast is that our safety net is broken. medicare and social security are going broke. unfundedcurity's liability stanza 25% higher than before. if we do nothing, we could have a debt crisis. if we did, the most vulnerable

are the ones who will be hurt the first and the worst. i understand some of my colleagues might not be all concerned about the government spending more money. we hear lots of rationalizations. here's what concerns everybody. if we spend all of our money on entitlements, we will have no money left for anything else. , spending oning social security, our major health care programs and just enough interest him and will take up almost all of the budget. total spending in ever thing else will fall to 7% of the economy by 2029. that will be the smallest share since the 1930's. here is another serious concern. our growing national debt could compromise our national security. if we don't take action now, we will have less to spend in our national defense and we will be

less prepared for future challenges. the answer is very simple. repair our safety net, cut wasteful spending, prepare for the future. don't raise taxes. the way i see it, we shouldn't force families to pay more for washington's problems. we shouldn't make hard-working taxpayers pay more for washington's mistakes and procrastination. hard-working taxpayers deserve more than that. we need to expand opportunity for everyone in this country. we need to start by getting this budget under control. i was going to filibuster for a while longer, but with that i would like to yields to the ranking member for his opening remarks. >> thank you, mr. chairman. i want to thank dr. elmendorf for appearing before this committee and for all the work you and your colleagues to at the congressional budget office. before we discuss a long-term budget outlook, i think it is

important to note the progress we have made so far on the deficit. hasecent years, congress acted to reduce projected ,eficits i over $3 trillion with more than three quarters of those reductions coming from spending cuts. deficits,n, actual not just projected deficits have fallen dramatically from one point $4 trillion in fiscal year 2009 2 less than 600 billion today. they are expected to continue shrinking as a share of the economy in the near future. but as the congressional budget office is long-term report makes clear, the debt will begin growing again in the long term. the question has never been whether we need to reduce the long-term deficits, the question has always been how we do it. as i look at the choices in this report, it is clear that the only rational way to tackle the long-term deficit is through the

balanced approach to president obama and congressional democrats have been proposing for years. cuts, butmbination of also cuts to special interest tax breaks and other tax expenditures. unfortunately, we do not have a partner when it comes to closing tax breaks and loopholes for the purpose of reducing the deficit. our republican colleagues continue to refuse to close a single tax break, including those that encourage american companies to move jobs and capital overseas in order to help reduce the deficit. in fact, this year, the house has already passed more than $500 billion in unpaid for tax more with $300 billion awaiting floor action. i don't think we have seen such an increase in the deficit in the space of 30 days in many decades. they have not paid for a single penny of those permanent tax othermeaning that

americans are going to have to shoulder the load in the future. by the way, mr. chairman, it violates the republicans own budget resolution. given our republican colleagues unwillingness to take a balanced approach to reduce a long-term deficit, we have to do what we can. we should all be focused on trying to grow jobs now and have jobs that pay living wages. we have made some progress on this issue. 288,000 jobs were added to the economy in june. we have seen 52 consecutive months of private sector job growth totaling 9.7 million new jobs. we have got to do more. that is why we have to invest more in our national infrastructure. we need to do a permanent fix to as mr. blumenauer and others have discussed, rather than the short-term band-aid approaches return not allow for investments and decisions. we have to boost the minimum

wage. it is a scandal that you can work 40 hours a week all year long and still have to raise a family in poverty in this country. we should pass comprehensive immigration and -- reform which the cbo has indicated will reduce our long-term deficits growth.t economic we need to conduct and you working on the short-term crisis. part of the reason is a fairly an inability of the congress to pass comprehensive immigration reform. i would note that we have seen some important good news. cbo's projected federal health-care spending in the year 2039 has actually fallen by nearly one fourth over the last gdp inars, from 10.5% of the 2009 projection 28% of gdp in the estimates before us today. this is not a time to reverse course on the important gains we have made in health care policy, including reducing per capita

health care costs. in conclusion, we should be working together to reduce the .eficit enough governing by crisis, enough threats that we will default on our national debt obligations, enough government shutdowns, but now let's focus on some really long-term solutions that not only boost jobs, but make sure those jobs provide families with a wage that can support them and allow people to have a lifestyle that meet the thesis of the american dream that is so important to everybody. i look forward to testimony. thank you, mr. chairman. thank you to all members of the committee. my colleagues and i are happy to be back with you today to talk about the cbo's new outlook for the budget in the long-term. is federal budget deficit shrinking this year to its smallest size since 2007,

roughly $500 billion in our estimate. federal spending will equal gdp, which is quite close to its average over the past 40 years. federal revenues will equal about 17.5 percent of gdp, which is quite close to their historical average. as a result, the deficit will also be close to its 40 year average of 3% of gdp. however, if current laws governing taxes and spending state generally the same, deficits will become notably the larger againably after several years. debt will start to rise more rapidly than gdp. because such debt is now larger relative to gdp than it any point in u.s. history except for a brief. around world war ii, further increases in the long term could he especially harmful. 25 years from now, in 2039, federal debt held by the public .ould exceed 100% of gdp

moreover, the upward path of debt relative to the size of the economy could not be sustained indefinitely. for this report, we have extrapolated our ten-year baseline projections of 200 -- 225 years. that extended baseline shows federal spending rising from the gdp to 26% inof 2039. that increase would occur because under current law, federal spending for social security and the government's major health programs, medicare, medicaid, the children's health insurance program and subsidies under the affordable care act would rise sharply. we project that such spending would represent 14% of gdp by 2039, twice the 7% average seen over the past 40 years. because of the combination of the aging of the population, growth in per capita spending on

health care and an expansion of federal health care programs. the government's net interest payments would also be larger relative to gdp in their past because themarily debt would be larger. in sharp contrast, spending for all of the benefits and services would be on track to make up a smaller percentage of gdp by 2024 than at any point in more than 70 years. thus, the increase in federal spending relative to the size of the economy would occur not because of general growth in the size of the federal government, but because of growth in just a few of the largest programs. alsoal revenues would increase relative to gdp under current law, but more slowly than federal spending. by 2039, revenues were equal 19.5% of gdp compared with the 17 point 5% today. that increase would reflect that gradual shifted income and asher tax brackets as well

the effects of expiring and new tax provisions and other factors. with a widening gap between spending and revenues, deficits would grow. an accumulation of deficits would push up federal debt. by2039, federal debt held the public would reach 106% of gdp without factoring in the harmful economic effects of that debt. 111 percent of gdp including those effects. beyond the next on a five years, the pressures caused by rising deficits and debt would become even greater. to put the federal budget on a sustainable path for the long-term, lawmakers and the public will have to accept significant changes. either reducing spending for large benefit oh grams below the projected levels, or letting underes rise more than current law, or some combination of those approaches. the size of such changes would depend on the amount of debt

that is considered appropriate. the timing of the changes that would be made. for example, you might set a goal of bringing debt backed down in 25 years to the average percentage of gdp seen during the past 40 years, which is 39%. on way to meet that particular goal would be to phase in deficit reduction subset deficits excluding interest payments were $4 trillion lower over the next decade and the amount of reduction in 2024 as a percentage of gdp was continued thereafter. naturally, if you in for lower debt or delay taking action, the ultimate policy changes would need to be larger. , then him for higher debt the required changes would be smaller. for a large number of scenarios you might consider. to be sure, a long-term projection is quite uncertain.

we examined how the projections would differ if we used different estimates. we found that the projections would differ quite a bit. nonetheless, the main implication of our projection applies very wisely -- for a wide range of values for those key factors. specifically, if current laws remained currently unchanged, federal debt would be at least as high and probably much higher for the five years from now. thank you. years from now. thank you. >> this year's report suggests that in order to address the shortfall in the trust fund, you'd have to either increase payroll taxes from 2.9% to 3.7% or cut medicare spending by about a fifth, immediately and permanently in order to bring it

back into balance for the next 25 years. do consider a program that requires this kind of correction sustainable? >> as you know, the growth of medicare and other programs is upward to -- is a key pressure on federal debt. when we talk about the unsustainability of the budget as a whole, we don't isolate part -- those particular programs, you need to be changes. -- >> cally >> 50% of spending came from private sources well 47% came from public sources. shows that health care spending is supposed to go from 16% of gdp to 22% of gdp at the end of the year. you expect the current 50-50 split to stay as it is? what you project will change or

if it is going to stay the same? >> have not quantified that. it would grow because of the aging of the population with more people over age 65. >> your project where the split comes down? >> we have not done the projection. >> i think that would be helpful. but screw social security. the things i'm concerned about is your projections of social security. the year before you said it was 1.9% of payroll. 8% ofear before that is 1.5 payroll. overyear it you say it is 4%. for someone who is 55 today, can they expect to see their benefit cut in 2030 when the trust fund

goes bankrupt? and how much, if so? right, it has increased considerably over the past three years. were done,else, when the trust fund ran out of money, payments -- we estimated it would be a cut of about one quarter in benefits. we have not done that. we're produce more detailed long-term projections for social security that would include that number. >> have you done the number? a lot of the pros look -- proposals we have had would exempt current and fishy areas and people nearing retirement. you were to exempt current beneficiaries from that across-the-board cut, what would

it mean to future beneficiaries? cut benefitsuld for those were not yet retired? >> it would not change that much . if you have to have a one quarter cut in total benefit payments, you would still need to that the payments of current beneficiaries. the pool of people you're distributing cuts to is a lot smaller than the existing pool. >> yes, exactly. you can't satisfy -- you get oft that date of 21 dash 2031 a 2032. >> that is amazing. interest rates. . about 50ns go down

basis points. i am curious to the rationale on that. you say that 10 year will be about 2.5%. last year you said 3%. i'm curious what is behind that projection. what if real interest rates rose? for theasked simulations many times. what if they go back to the historic average of 3.1? what would the historic outlook he then? why the downward revision of 50 basis points? >> we did a comprehensive re-examination of our interest rate projections. there's been a lot of discussion among people in the financial community about interest -- about where interest rates will go up to when they go back up. we assessed a number of factors. for example, slower growth of labor force, which reduces the

number of people who are coming to work with any piece of capital and reduces the productivity of the capital and pushes down interest rates. we look at the lower productivity growth we have slightly. a greater share of income going to high income people. and capitalving that pushes down interest rates. on the other side, there are factors -- the prominence of those is more federal debt. we also think there will be slightly less capital inflow from abroad. that will push up interest rates a little bit. sidese setbacks in both of the ledger, if you will. without unbalance -- we thought unbalance interest rates would be lower. we took down our projection of the rate we end up with by about half a percentage point.

if we put that back up, we did show in our report that if interest rates were half a percentage point higher, over the entire 25 years, we change the projection only beyond the to --10 years, the debt to gdp ratio would be 135% of gdp instead of the hundred 11%. >> i thought it was 106. >> it would go from 111 to 135. >> that is the biggest source of our pressure. the i spoke to people in bond trading business in the spring, their principal criticism of our forecast for the next 10 years was that we had interest rates looking too high in the second half of the decade relative to a number of

what they thought. there are a lot of participants trading 25 years out, so we can't draw on that directory -- directly. >> labor market participation is an issue we will have to get into. there are a lot of contributing and moving factors. that is an issue we will have to deal with here in great detail. i want to talk to you about generational accounting. withw you are familiar professor called a cough. ekoff. do you think it would be valuable, can cbo produce analysis that will give us a better idea about how this problem could affect current and future generations? are the only game in town that can give us a sense of what

our current policy trajectory looks like for the next generation. our goal here as policymakers is yes, not only to make a difference for the time being, for the here and now, but also to preserve a better future for the next generation. and to give us a better sense of the decisions we're making today and how they affect a next-generation, i would argue generational accounting is one of the best tools we can use. what is your reaction to that? andhis something you can do is this something you think is valuable? >> we think we can and should do more to illustrate for you how different ways of addressing the unsustainable current path would affect people in different generations. we did a report on this for years ago when we look at the cost of waiting to address the budget in balance in different ways -- and different ways of addressing it. we illustrated how a delay would affect people in particular and

would hurt people in later generations. since that point, we have spent a significant amount of time building up our model capacity for this sort of work. we have another report that will expand significantly in what you be presented to you for years ago. we will have another report done by the end of this year. we will respond to the feedback we get about different ways of quantifying these effects. i would mention to quick cautions. one is that the effect in different generations depends a lot on when you act and the way in which you act. but we will give you will be a set of results for a whole range of scenarios, which i think is important. the second caution is that these kinds of projections are uncertain, just like the projections we are giving you today are uncertain. we focus on 25 years. we get a sense of 75 years. we don't go beyond that.

we try to think of ways that make sure the results are not unduly depended on arbitrary assumptions on what will happen in the very distant future. >> thank you, mr. chairman. >> thank you for your testimony. we are talking about a long-term budget outlook and the deficit projections of the 10 year window mark and then 20 -- 22039. this is based on your current projections. you have not taken into account the more than $500 billion that house action would have added to the deficit over the last six weeks through unpaid for tax cuts, is that right? >> that is right. if this became current law, you over a projections ten-year window and the longer-term window would be worse than they are, am i right?

>> that is right. >> this budget committee went and filed something on the floor of this house, saying that house rules should make sure that no bills came to the floor that violated the budget resolution here. that budget resolution said there will be no unpaid for tax breaks, and yet we have seen an -- of unfundedx tax breaks. $500 billion to date. another $300 billion worth according to the joint tax committee coming through the ways and means committee. it is one thing to talk about what we're going to do to reduce the deficit, is another thing to do it. what we have seen in the house over the last six weeks is moving us in the wrong direction when it comes to reducing the deficit. on that point, we have heard the chairman say that the average revenues as a percent of gdp is 17.5%, is that roughly right?

>> yes. >> i know in your budget projections you say in the year 2024 number revenues will be 18.3% of gdp, and then much farther out for the reasons you stated it would be 19.4% of gdp. i would note that does not take into account the number of times we have actually balance our budget, is that right? >> that is right. >> if you look at the last four years we have balance our budget between 1998 in 1999, 2000 and -- 2000 and 2001, revenue will be higher. around the range we project we 2039, in fact, in the year 2000, revenue as a percent of gdp was 19.9%. i note in your report that on 20, you are anticipating

that the number of americans over 65 is expected to rise by more than one third, is that right? >> yes, within the next 10 years. >> i just hope our college will consider the fact, the last time we but -- we balance our budget, of gdp. were 19 .5% that was for that for you. four-year period. i hope our college will also recognize that the last time we balance our budget before that, before 1998, was 1969. when you talk about revenue as a percent of gdp having an average of 70.5, it is totally detached from what our colleagues argued is the priority, which is to have a reasonable fiscal picture

and reasonable deficit as a percent of gdp. democrats have seen that in order to reduce our budgets, we need to continue to make smart need to closelso some of these special interest tax breaks that the chairman mentioned that those tax breaks will put a greater load on american families. i would argue that eliminating some of the special interest tax breaks like those for hedge fund owners or those that actually reward companies that move jobs overseas would be good for american workers to get rid of those tax breaks and invest the savings right here at home. i want to turn briefly to health care. before do that, let me point out in the context of my earlier outt, on page 23, you break the contribution to the increased deficit as a result of

different components of the health care and social security picture, right? >> if i look at page 23 and that rocks, you point out that by the year 2039, 55% of the spending increase will be as a result of , in socialf america security and health care. that is right. >> you point out that 39% of those health care costs will be because we have more older americans. >> that is exactly right. the cost of the benefit to each individual is going up for a sharply because we will have many more people who will be eligible for these benefits because they are moving over the age of 62 or 65. >> the only way to address -- and these drivers on page 23 are the major drivers of long-term spending. >> yes, absolutely.

>> so our colleagues sometimes talk as if we are end -- if if we're adding these new spending programs. this is just the cost of providing more people with the same benefits. >> there providing the same benefits to a larger number of people. -- i we wanted to produce the cut benefits or you raise revenue to support existing levels for benefits, is that right? >> yes. a big driver of long-term deficits, we have seen some good news in the last five years. as i pointed out, and some of your earlier projections, the costs of health care in the year 2039 were over 10% of gdp, is that right? >> that sounds right. then't have the 2007 --

2009 number two with me. >> and now they're down to a little over eight or said of gdp, is that right? >> that is a huge savings. >> that is right. >> if we were to reverse some of the mechanisms we have put in place to have savings in that health care area, your deficit numbers would go up, with a not? >> yes, that is right. >> let me close on the question of immigration, because we have a crisis at the border and i think we need to deal with that in an immediate sense. it is partly a symptom in my view and the view of my democratic colleagues that it is a symptom of failure to pass comprehensive immigration reform . the congressional budget office has looked at how copperheads of immigration reform would reduce long-term deficits and increased long-term economic growth. >> yes we have. >> your projections of that increased economic growth and

reduce deficits are not part of this long-term outlook report, are they? >> no, because you're not in current law. >> just as your estimates reflected with the house did in for tax cuts,ding it would increase your deficit projections if you had embedded the senate passed bipartisan bill or the bill, the democratic proposal in the house that we asked cbo to look at, the deficits would be lower, with a not? >> yes, that is right. >> we talk about your earlier efforts to quantify both the economic growth benefits as well as the deficit reduction benefits of comprehensive immigration reform, the bills that we asked to look at? we studied most closely the senate legislation and the proposal you referred to is very similar. provided a brief or

description. for the senate passed a bill, we thought it would reduce deficits by a couple of hundred billion dollars over this decade. by a great deal more in the second decade from now. primarily because the legislation would increase the size of the u.s. population and the size of the u.s. labor force, we thought it would over iges.ush up average ways we did a complementary analysis with detail. over the long term, that proposal would increase the size of the u.s. economy and reduce federal borrowing. passede voted on and comprehensive immigration reform which a president says he was signed today, these numbers in this report would be much better. he would have lower deficits and higher growth.

if this report included the action the house is taken in the last six weeks in providing unpaid for tax breaks on a permanent basis, this report would look a lot worse. we hope everyone will join together in a bipartisan way to do the right thing for the country, reduce the deficit and boost economic growth. thank you, mr. chairman. you back to welcome the committee. i want to thank you and your group for the work that you have done on this long-term budget outlook. latch on to the comments made by the gentleman from maryland about the halcyon days when we balanced the budget and remind him that it was a republican house and a republican senate and the democratic resident that we could actually work with. he was interested in solving problems, like the one that we currently have. theso want to mention that go to spot for our friends on the other side tends to be

increasing in taxes. in your report, you state on page 6566 that you conclude the unbalanced higher marginal tax rates discourage economic growth. do stand by that? >> yes. >> we demis arguments about revenue and spending. to raise taxes or shall we decrease spending? about it inlk relationship to this long-term outlook. review for me if you will the projected increase in revenue that you have in your long-term outlook. weover the next 25 years, project that total federal revenues would rise for about 17.5% of gdp to about 19.5% of gdp under current law. is biggest component of that

that we have a progressive income tax in which the brackets are indexed for inflation. if real income growth outpaces well,ion which we sit income gets shifted up into higher tax brackets. the absolute number -- >> absolute amount coming in to the federal government and the percentage of gdp is increasing over this. of time? >> yes, absolutely. >> so we are taking in more inenue than ever before absolute numbers, correct? >> in dollar terms, yes. >> if that is the case, then we must be decreasing the growth in the debt, or were not? >> no. taking in more money, but we are not reducing the increase in the debt. help me understand that. >> federal spending is rising

more rapidly relative to gdp than federal revenues would rise our projections under current law. >> so i have this straight. money's going up, more being spent by hard-working taxpayers to washington dc, yet our debt continues to increase and you mentioned it was going to rise to 111% of gross domestic product? >> yes, that is our projection for 2039. the hundred 11% is a dangerous level, is that accurate? >> yes, we've been explicit in this report. we don't know of a particular tipping point. we think economic analysis can tell you what the particular level is that you can't go beyond, but there are dangers, the costs and risks rise in the long term as debt rises relative to the size of the economy. >> to me turn that to me turn that two solutions, because i am interested in the alternatives to the physical scenarios to

talk about and how it relates to what we have been working on. one of the alternative scenarios that you identify on page 70 in your report states that if there were $4 trillion lowering of the deficit over the next 10 years, gnp would increase in real terms for real individuals by about $4000 per person. debt held by the public would get down to the rate that is more attractive which is 42% rather than 111%. do stand by the numbers? >> yes. theou understand that budget we put forward would reduce it the deficit over the next 10 years by $5.1 trillion. if we are looking for a budget that solves problems and gets us to greater gnp, lower interest rates and lower debt, then the

republican budget is one that would accomplish that, would it not? >> we do not that he budget resolutions in great detail, but it fits the description i've seen of the republican budget. >> let me close by urging our colleagues to work with us on solutions to the challenge that we face instead of trying to identify the differences. thank you. >> there are two areas i would like to cover. follow-upld like to on another question regarding recent activities this congress has done. to talk aboutike offshore profits and inversions. clearly, there's not much we can do about an aging population and the spending increases we have. your things congress can do. we know congress does not especially do a lot lately. they have been passing these various bills that have passed

all $500 million worth of tax bills. already we will go on to the deficit we have not funded. there are another 300 billion standing out there as well in ways and means. how does this legislation worsen our long-term fiscal outlook both rectally and through negative economic feedback because of higher rates of government debt? >> if those bills were enacted into law and other changes were made to revenues are spending, then the larger deficits would over time crowd out private investment to some extent and would push the level of economic activity down below what it , just likewise be the deficits we project under current law, but a little more so. >> that means largest and cuts or tax increases to make up for the revenues? >> yes.

for any given target of federal debt that you and your colleagues would like to reached on the road, the bigger the hole you dig, the farther out you have to go. is a report just over a month ago that talk about american corporations telling the irs that the majority of their offshore profits were in 12 tax havens. specifically in bermuda, cayman islands and the british virgin islands, the amount of profits that they attributed to these 1600%ies is in some cases more than the gross domestic product of these countries. this is outright tax avoidance. i am a small business owner. small business owners pay their taxes legitimately, but some corporations take advantage of these tax havens a tax laws. specifically, the one that is getting of a lot -- a lot of attention lately is this inversion process. certain companies are

looking at this. some retail companies like walgreens are going down this road, which would be a whole new area we have not seen taking advantage of this practice. there's an estimate out there that just over five years we could lose $4 billion worth of tax revenue if they were to do this practice, which is something the average person -- it is not inversion, it is sub version of paying the taxes. type ofe worst possible tax avoidance. you have any idea what we lose potentially by inversion right now and how much we could be losing depending on how far this goes? for don't have a number that, congressman. we have done some work in that area and we are happy to point you to a copy of our report on the subject, but is is our colleagues who are more directly involved in helping you and your colleagues think about effects of changes in law on corporate

financial behavior and corporate legal reorganizations and so on. now, there's is a bill that shows about 19 billion. there are three different areas of how inversions are done. we are looking at one of the percent of business that is done somewhere trying to make it a more rational proposal. on his bill alone it is about 19 billion. if we are talking about having groups like walgreens, that will cost 4 billion just from one company. if nottart losing tens hundreds of billions of dollars of revenue because of a practice that i think is a subversion of our tax laws, that could have a negative effect on us in the future. >> that is right, congressman. it would be a very serious issue to wrestle with. a copy of that report? i yield back my time. mr. mcclintock.

point,ollow up on that as taxes rise, does tax avoidance activity go up or down? >> as tax rates rise, that usually encourages more avoidance activity because there's more to be gained by finding a way around paying a given tax rate. activity,reduce that one would have to inflict increasingly draconian enforcement mechanisms or reduce the tax rates, correct? >> i think one could change a system in a way that would reduce the capacity. >> for example, flattening the tax rate? >> lowering the tax rate would reduce tax avoidance. >> four years ago, the house passed a budget produced by this committee. it did not pass the senate, did

not become a law and did not govern our spending, but if that budget plan had been adopted four years ago, and have kept in place, how would that have changed your projections for today? where would we be today and where would you be advising us to go today? analyze resolutions as you're occurring, and i don't remember what was in that resolution from a few years ago. i can't speak to rectally to that. estimate itshe cbo effect at the time four years out? >> we don't estimate effective budget resolutions. >> if our spending and the --orms that were enacted in were called for in the budget had actually come to pass, where would we be today? would we have a larger deficit or smaller deficit? >> i just don't know the details of that resolution. i presume you would have a smaller deficit, but i just

don't know. we'll look at the policies and resolutions carefully and took them up. >> but you have projections in terms of how much revenue would be coming in, how much spending would be done, how much deficit there would be. what would your production be? >> we never had a projection under the budget resolution. i think the committees often draw on those estimates we have done. we don't tote up the resolution. we don't have those numbers. >> i wish you would go back to reports and get us the figures that you were giving to us at the time. i remember them being much smaller deficits. i remember our health care costs coming back under control. i remember a projection to a balanced budget within 10 years, which would be six years from now. you have no recollection of those reports? >> those projections were the committees projections. cbo does not do projections of budget resolutions.

we only do projections of bills that are being considered and protections under current law. the committee would draw on estimates we have done, but the assembly of them and the bottom line for budget resolution does not come from us. >> he only time we had as high a percentage of our gdp as debt was during world war ii. >> that's right. >> in fiscal year 1945 -- and by the way, we grew out of that, did we not? >> what happened right after world war ii was that budgets were more or less balanced for a. of two decades and then the economy came down rapidly. >> in 1945, harry truman abolished the excess profits tax. in 1946 he dramatically reduce the income tax rates. fromok federal spending $85 billion down to $30 billion in a single year.

he fired 10 million federal employees. it was called war demobilization. instead, we got the postwar economic boom. is that correct? >> yes, that sounds right to me. also/tax rates. reagan and clinton did the same thing with the same results. why would we not want to do that now? to cut taxess were rates now, we think that would provide a short-term boost, but if there weren't other changes , then the debt would be much larger. clintoninly, reagan and and truman cut spending as a percentage of gdp as well as cutting the tax rates. >> i think one needs to be careful in those comparisons to look at the cyclical state of the economy. part of what is happening now and what happened in the early

1980's was at the economy recovered from a recession. >> revenue spending and debt relevant to gdp growth in the past? studied congresses investigation of -- we summarize the evidence changes in labor income tax rates. it is from that review that we draw the parameters were using these estimates. >> i am pleased that you are helping my friend from california remember that you don't score resolutions. that was the committee's formulation. i also would think it would be interesting to compare what those rates were when we had that rapid deceleration post-world war ii. tax rates, the marginal rate was

91%. there was massive investment in infrastructure. the government under president thenhower instituted interstate highway system. i would like to come back to that in a moment. , thising that struck me week i think you revised the medicare trust fund life expectancy increase five years from what you had in february? lexis is a part a. we think it will last about five years longer than we said in february. >> i think that is an illustration. you make the point that these things ebb and flow. you do the best you can implementing based on new information. colleague from maryland pointed out that my republican friends in ways and means are proposing somewhere in the

neighborhood of $800 billion of arended tax benefits that going to have the effect of substantially increasing the deficit. you didn't have that information available to you. >> it is not in law, we would not put it in this report, congressman. >> i appreciate the notion of tax avoidance and compliance. i notice my friends in the republican appropriations committee are proposing to slash further tax enforcement for the irs. would that unbalanced balance increase or decrease the deficit over time if we can't enforce our tax laws? proposale look at this , we concluded that reductions in funding for enforcement would reduce revenues by more than the savings from cutting the number of virus people. if you devoted more resources to

enforcement, you would reap extra revenues that would probably outweigh the cost of the extra enforcement. >> so slashing your accounts receivable reduces revenue and will increase the deficit. >> the proposal we have looked at in the past, i don't know the details of this opposable. and somek the irony should say hypocrisy of professing concern about the long-term deficit while increasing it to tax policies and making it harder to collect the taxes that are due and owing -- and by the way, it is the middle class person with the w-2 that is not going to be able to evade taxes, it is people with more complex forms, more money, more businesses, more that they can just forget or whatever. it around.e to turn i share my friend the chairman's concern about employment opportunities and growing the

economy. reportyou an economic which enbridge ask unanimous consent to put in the record from standard & poor's rating services that talks about the impact of infrastructure investment. here that 1.3 billion-dollar investment in real terms in 2015 would likely .dd 29,000 jobs it would add $2 billion in real economic growth and reduce the milliondeficit by $200 for that year. i know you haven't examined this in detail, and i didn't want to ambush you, but is this sort of finding consistent with what cbo has done in the past in looking at the benefit of infrastructure investment? >> yes. we have looked at different

methods used to stimulate economic activity. we have identified increases in infrastructure investment as something that would add to economic activity and jobs in the future and could pay longer-term dividends in terms of facilitating the flow of commerce in the country. , if thet want to say republican budget which has no new federal projects in the next inmonths and a 30% reduction federal infrastructure spending over the next 10 years, would that potentially depress economic growth? >> less infrastructure investment would hold on economic growth in the long term. that's one of the factors we wait in the report. you have not studied that particular resolution. >> thank you for joining us.

i would like to shift gears just a minute. i would like to talk about the cbo cost estimate for hr 3230 having to do with the v.a. health care issues that are facing the nation today. in your estimate, in a nutshell, you said -- the ceos -- the cbo said it would cost $22 billion for hr 3230. if the bill was fully implemented, it would be about 38 billion dollars. the question that arises is, if current costs today in the v.a. were about $37 million, how could we have a doubling of cost only just have a slight potential increase in the number of people that would be used? hr 3230.bout we will talk about the senate bill next. for those that are currently

enrolled in veterans health care, how does the cbo estimate the bill will be affected by veterans? >> the adopted the house number . the key is that in surprise to some people is that for the veterans enrolled, they get only 1/3 of the care in the v.a. system. they get 2/3 other ways. this will enable veterans who couldn't get into a facility to get the care through their current doctors outside the v.a. paid for by the v.a. and because they have the lowest co-payments there's the financial incentive to have more of the health care. they're already getting to the doctor. but have v.a. pay so they save

on their co-payments. so we think there will be an increase in terms of share of the spending. they were going about having 1/3 to having 55%. and then there are also some new people who don't get health care at all. who started to get -- >> but they're a much smaller part of the question. but what's the empirical evidence to jump from that 30% report too, 55% -- so almost double. how does a c.e.o. think of that number? did you have any swag, what? help me out here? >> there are -- we have empirical evidence of what people end up making out of pocket in the v.a. and there's a body of evidence of how people respond and their

decision on where to get the care in this case how to get the pay for the care. but i'm not aware of evidence about the opportunities for veterans enrolled in a v.a. health care. this is a new approach, really. so there's a great deal of uncertainty. i wouldn't pretend otherwise. but there is evidence in general to how people respond. we don't really know -- we don't have an actual fact. i don't know if we can rely upon this. >> we don't have evidence close to this particular question. >> second fart of my question is what's the impact of the utilization of the health care but who are not currently enrolled in v.a. health care. > congressman, i think 15 to 20% of those who are not

do lled would choose to that. as you know we're working with the c.b.o. to try to get the numbers. it's hard for many of us to think that it's credible when we're really not talking about a very big expansion in the population. for the record, running out of time. one of the things that came out earlier was the impact of immigration reform and i think your language was increase the size of the labor force. the difference between the labor force participation today and the labor force participation rate expressed in a number of workers is about

4.7 million workers. what's the impact on g.d.p. if we had those americans to work? thank you very much. i yield back. >> thank you very much. mr. sh raider. , shrader. >> how have your projections changed since the affordable health care act has been in play? >> in the 2014 long term projections we've reduced a projection federal health care spending in 2039 by 1.5%. d that's a substantial reduction. i don't have a comparison over the long-term from before 2010.

essentially, the affordable care act raised the federal ealth care spending. everyone has observed a great slowing in federal health care cost and in private health care cost as well. and we have tried to understand the sources of that. but we think it's been appropriate to substantially reduced the federal health care spending by more than $1 trillion and in the not so distant future. >> what did you say the affordable health care act is the reason why it's not down or is it totally explained because we have a reception. that's the consensus view.

the affordable care act did some specific things to slow ale care spending. -- health care spending. the national slowdown in health care costs beyond his direct pieces, we don't know. >> and the affordable care act does reduce the care in deficit. >> how much will discretionary spending -- we're doing appropriations process right now. lots of reductions in our discretionary spending. you give the reduction in the large outlying years. what role -- or what substantial role will be cutting our expression nair spending especially that on

page 23? >> well, it's an under curn law. will be smaller shares of the economy by the end of the decade. in more than 50 years which is as far back as the data recorded that way. and those cuts -- depends on how congress tries to meet that cap or the appropriation cap. but also we would be devoting a smaller chair in our resources to a very large collection of federal services. if, for example, if the federal investment stayed the same share it has been historically. then it too would be falling to the small g.d.p. -- an that would be the slow economic growth we think. they all crint.

we think the economic growth and reduction would slow growth. >> very gofment -- good. your discussion on the aging of america. i think the point was made by the ranking member that we need to remember that a lot of our problems was the social safety net programs are very, very real. they're not the result of utlandish spendings. it's a fact of aging. could you reiterate those figures, how much of it is back of our aging. >> yes, before -- the growth and spending on those programs is a share of g.d.p. over the next 25 years 55% will just age the population. another quarter that we do to faster grow health care costs

per beneficiary. >> mr. chairman, i guess i would like to get to it at some point in time. we might entertain an actual law. house resolution that we could get job so that we could heard ourselves. >> thank you. i would encourage the gentleman to look at his black bill. and with that, there's a way. >> thank you, plch, thank you for being here today. i haven't had to go back to your report. want to go back to the questioning. and i know that all the folks in this room know that the house budget depro-posed that we would have a regular but the top places are gone.

boast of those tax breaks and thoys loopholes would be in. this is the person who would follow recommendations. it would also follow the president's own physical committee's recommendation. and the tax code on one that would have a broad day and have two distrgses and marshall rate. what is the economic impact of a tax code that -- a tax quode high marshall rate. complexbility and di torsions. what -- in your estimation -- >> as a general manager moving from our current tax code a tax code that had a broader base or lower base. how much it was striking the

he economy was expected to but the general matter, yeah, we held the animal that a lower base would encourage more work, more saving long term regular active to the current tax code. >> so if an economy expanded, what would be the effects of the revenue on that? >> so that would increase .evenue we would offer to do this and the micro nick effects of tax reforms that they considered doing it. -- didn't con clues with a

conclusion with that. we do the macro analysis. we released the straight budgetary effect but we have almost completed and we're into omething else. we can do that from analysis. can't end this conversation without applauding the ways and means committee of which i say that shamefully and also proudly that i'm a member of that ways and means committee that we do have copies throughout for people to look at. if we could get good conversation going partisanly and the president would come onboard. i do think you will see change in the economy as you and all the folks have talked about this and said. >> i don't have much time left but i am going to send -- ask

you to give me some ideas on his. i have not read through it. i would like to know the economic impact those changes of the delays that are not going to put penalties in place and what will that mean for a long term if they were to be sustained or even short term. the difference was what the projection would from all of those changes that have occurred. so i would like to have some information on that. and if you could point me to something in your report that would be great with you as well. >> this report does not touch on that. this report takes our current law projecttory.

>> what we can't do readily and we tried to explain this, answer the question of the record from a hearing on the senate side. we can't go back and say what effect the affordable care act will have relative to preaffordable care act law. we have no baseline. our estimates were designed to say what would be the change of law and that doesn't have that law in it. there have been four years of changes and so on. but based on that act, we don't have a projection of to it. the one exception to that statement is for the coverage traditions because those are

just getting started now. the baseline for the last four years the data doesn't have that in them. with that piece is a start and in building those provisions in but for everything else -- the other short medicaid positions. we just -- we have a baseline that includes all those positions as they're unfolding. we can't go back and do an analysis i used to wait. provide see if we can more information that's helpful to you. you have two options to address this long-term. one is reducing costs in our

retirement and safety net programs and the other one is increase in revenue taxation. it does seem to me that there's a way that we're calling the right way. and actually reducing theer efficiency of that health care system that's so central to some of those projections so i just want to ask you and i know you can't give me specific numbers because there are all sorts of asempingses. you can't to assume in your projection thack will help world. i would suggest that cold wong allow that and if we are able to get medicare a chance to negotiation for better drug prices if we get a hole of the ramp and fraud, for example.

healthier i mean there are all sorts of things we can and should be doing. so address that. below the rate of growth. what does that do for your projection. i think you're right. there are important tons an obviously private health care providers are trying to push the health care sector. if you would find ways that would produce substantial statements throughout the projections. and that be good. . but i would say that in medicare for example. ot sitting here but by which it exceeds growth and g.d.p. very low over the common

decades. they've put it into law. and it would be hard. >> a little bit translates to big numbers. scombr that can make a big difference in the numbers. right. and it doesn't have to be a conversation about soft balls. about making health care more position. it certainly can be whether you can go make enough progress there to avoid the other conversation, we're very doubtful, but every part elped. the gap is really quite large and heed to make tremendous progress. we are not the improvements but the question is are there provisions that will put you into law beyond.

and the work of people in the health care system. >> well, you're surprised by theer fexes of the scene. if we could rewind to 2008 and what you might have been projecting. here we are, you dramatically reduced your projection for health care cost. due to some reform we put in place. if you assume we're determined to control this road i mean, it's not fair to say that we could be chasing similar upside numbers. because of the affordable care act other animals don't know. we've been surprised and we could be surprised on the outside. we can look -- and helped me grow much more slowly. i want to ask you generally about the middle-class as you know democrats are very concerned about the lobster

middle-class opportunity for growing what does this do to the economy over the next 25 years? if we don't address this, create some middle-class opportunity and then sfecked you could in your aminding time. why not? a middle-class relationship. but this should billion this meeting is there for a friend. for everyone individual this can tax played because they pay tax.er payroll it matters for the cost of federal benefits for him. i think what you're more

interested is in is the economic issues. we have seen them now for a very few decades and a whitening of the conditions of your kind. . nd i think that it has consequences and that we ddie: not dry to quantity fide directly. >> there's no specific due it. thank you. because o ask a lot of we have all these other members we're trying to come. to .> i miss duh, mr. chairman. i want to call your attention to page three and also page 13 and beyond. exes is that i'm calling your attention to address some

degree the consequences of staying on this pass that we refer to as unsustainable. i want forgive you an opportunity -- i only had a cursory review of this. it's more than i need to know. but i am a czyz man and here i am and disappointed. i've been servicing for three and a half years. in the business factors they're known look at your liddi ray show. and no, where you are. i'm going to tell you with an struggling to re articulate the real impact of our failure to address our physical situation is it does remind me, a little bit, if you will kind of luke -- i don't

think you're doing this intentionally what's going to happen on a practical level. f we stay on this pound. i'm going to give you an opportunity to unpack that. >> congressman? we try to quanfy the effects of the fiscal path we're on. so in all g.d.p. and chapter six which you may not get through. is this a and in chapter six we talk about the effects -- we want to qualify the effects and current path and scenarios on real g.m. bnd. -- and we report that under current law one income per ? rson would be 76,000

1529. ecify you can get to $300,000. >> as time goes on, the severity of the impact on the hard working american family is going to increase. and i think that each and every report that you present to us, i hope they're going to get us some point. of him i'm not an alarmist but realist. and republicans. let me pivot for a moment here. i hear the calls are a. but it's nice to see him the three and a half and what i

thinkability is the affordable care act. so if there are anything in your regulation of three and a half years or so. it locked like a balanced approach on the reforming the mandatory spending side. trillion. s $1.8 are doll lar ey for daler. just do mandatory -- which is, you know, bansed approaches means nothing left. you're right. here has not been sub. congress has agreed on limits it does hit them a little bit. and about 800 $

bill on the fiscal guilt. you were supposed to follow current law. . what he did was to extent a break. i'm not sure. i understand your fi yea san so we do have 1 bnt of trillioning dollars coming at me. we haven't had any commensurate equal reduction and mantory spending. i think for being here and i provide the reports that you eeded and i yield back the field. thank you. >> thank you, plch. chairman. k you, mr. and we're back. i have some e as i

thoughts here. we've had the lowest temperature since 2008. have the fewest amount of federal employees in nine years. correct. . the report that came out last week ed in the sweash. that's is when they're six. to thode who are talking about the gaps. and you said it -- is not a major problem. when you say general growth, i take that knee and everything s working again. did general moller picked right now. it's not a major problem right snow. if we were co catch anything

else in the future sthains growth the general growth we have under control. that's not my word. then we have to look at the entitlements to make further cuts, correct. that's why most -- let's focus on at this point changes in the mandatory program. i like the way you hit me. and to link the amount of revenue,how s of much revenue is the government bringing in and how much would be cumbered in time. and that seems to be out in your latest report. now. i side from the decrease in spending federal health programs. ot a whole lot as changed.

>>s the. >> it's not for lack of training. i'm a mem of the ways and committee. 14 spral bills. they would make various as permanent. that's close to 833. none of this has been fade for. unlike the jarmes prefer this ear predenting for tax reform. neutral over 10 hosts not a single farm of that has been . re said than that extreme ff base entwine is that all of the big facts expire or stayed, correct? >> yes, that's right.

jeff: so you're total deficit projection of 7.6 million on were and hit 20-24. this does not increase that 800 for 25. an that would have been added to this deficit. they may choose to make permanent. >> id dit not inclues any of hose arms. complete i unpaid for. can you tell us a little bit about what kind of impact that policy choice would half on our deficits and nick growth over he 40 year period. >> those provisions were enact

into law and nothing else was changed. and the largest debt was leave to further reduction in the futurings in. fits to the number. he apeed to have -- you lower the projections with g.d.p. and 203039 by four%. i understand part of that is dues to the -- you told her bout expectations. >> you you explain your reasons for the lower projection of economic growth. so you got it. that change remain the same in what we kaled the freeway. it was a combination of dada whether they need to grow. they call us to bling the

address it. >> thank you. >> mr. chairman. i would like to follow you understandly. if you could please compare the 2007 of the economy, the reception. and compare to the end after the reception in the 1980's both in the time of recovery and at the rate of the ecovery. it has been slow post world war ii u.s. experience. and we and others have concluded that most of that flow we're slow paced reflects the nature of the housing bubble or financeable crisis hat led to this reception.

of that slow pace. you're singing it rather pauley nteresting it. and this has contributed to the slow grow. you just indicated to my has gue that there's a been in here and laughed. what are some of the policy differences. i may have contributed to this. >> we haven't tried to quantify the policy directly. people who looked at the experience of other countries that have gone through financial crises that went through have generally found slow recoveries. and we think that the initial actions by the to boost spending and cut taxes to the federal reserve to provide stim

louse to low interest rates. we think they were just not enough to overcome the other orces. >> the uncertainty from washington, they have capital. they want to expand. they want to hire. they want to grow, you know, grow their business. but because of the policies coming out of here and floating the unaffordable act action. that has caused them to hold on to that capital and to not grow and expand. so has that been taken into account? >>er we think that's a factor. hey've been in an effort

including panel list to try to qualify for that. that quantify cationss really, really hard. >> very good. 'm a men of the armed services . is with the rn rising debt. could you explain and ex-pond on your concern. >> think the issue congresswoman is simply as you and your colleagues look for yea ways one of the things you might pu purr on is federal pending for defense. we don't know how much money could do. also if the debt is high and there's international crisis

develops, having so much would mage it more difficult for us to then take the actions that you would like to take under those circumstances. >> i agree. it's a very, very dangerous world that we live in this right now. a if the current pro-jebs continue, we will have the smallest army before world war ii. he smallest marine, before 911 . i don't think you want to go there. i think we need to do this with a thin tire budget. and i reasht your ratings and that it was concern. i yield back. >> we wrote a report a year or so ago just how much the structure would need be cut for iscretionary spending.

we're trying to provide information for you as you make those decisions. >> thank you mr. president, thank you bam. i want to return to immigration which is the second because we talked about social security and the long-term prospects for social security. when your did your knowledge of the. and you're going to impact that proposal on his daughters specifically. >> i might be wrong. well, would you -- do you -- hat i'd do to be the case. you would have younger people would be contributing to younger problem. for the long-term, at least international terms of she'll

be there very position on the social execute front. >> i did break out the increased revenues the rest of it, i don't think we put that together and there's not much change over the common decade because of immigration reform. i don't think we put those pieces together. >> african-american, i've raised my concerns about how the me thodology is drinking it. combined with our pego restrictions are prevent us from doing thing. one of the margaret things is at i'm interesting now because i know there's strong by support from those. i'm a member of the committee.

, but two are necessary to be able to take advantage of things which saved the federal government,. the gi's.derstand and the cbs and o.m. be have a different pro-speck ir. i whether bra dill has a chance to view it. so we >> i'm trying not to eat and we are working hard ourselves right now on doing another -- that's on this edition of "for the congress and trying to explain more. you are one of the large numbers of members who are not saturday fide as one prern. -- i me go suck on

can't know the saving worsed. they go to the people are in stead. . so that the issues try to come up . we tried i but we can't give you information about the lorpe term. there's a pro sen usual but about and it's made a commitment to him now. are he full cost those ategories not because of rain. don't get put together very radley. t will be up to you. >> we do have a number of opportunities that the -- we need to find a way to

beautiful. thank you very mufment how does cbs score or evaluate better reserved now until nasa. but they said they're going to unwind and normally is certain ow that's going to happen. it affects our receive nution because as you know he's been and they help med take the federal reserve receipts in the last or the 10th year as we share the g.d.b. going forward. i should face this way. you hold that district better.

we will present them with what they'll be changing a size and and then you have yoddy amount split that about what we were -- and the i fecks evenues they're so she's defending her irreports. download depordwa that the expectations of how much we will pay. are not enough. actual change what that would be? could that mean that we need a fitting in changes. witching over the budget as a. and we are single year without

an interest payment. how does that change without new updated numbers? >> in this report we do not change anything in the first 10 years as a designed criterion. but only think of projections beyond that. but this this update you're understood visiting all of our projections for the economy and the bunny. we will be specific about some new estimate. i thought we could be ex-sbli sit about our projection in ominal dollars at some point you release the. used the term exhaustion rate and the trust fund would be exhausted in fiscal year 2017. has that date changed from previous estimate sfs

>>, no it has not. we don't change anything in the 10-year window in this report. >> page 104 and 105. define here as what people call disability insurance program. they estimate that the people who qualify for disability benefits on average of 1.56 year, year in a and a half sbmplet table 8-1 we did a disability rate to kind of walk me through those two numbers there.

1.2 is the rate of mortality. this is the rate at which people will be -- i think people wander overtime. thabbed is the same 58.6 number. and this projection is -- the ability is a little higher han the rate predicted by the social security trustees. that's a change that we made last year. this is the same projection we made last year. it was different and it should be higher than what the trustities were using. thank you. have a good night. >> thank you, plu cardenas. >> thank you, mr. champlete >> i'm. christian-ono row dill jouse in trying to be as straight orward in your answers as i am

-- when it comes to raising the debt limit what may be the mits if we fail to raise the debt limit? > we think the failure poses very significant risk. we haven't actually done that before the country, we have not let that debt limit last for any period of time. but if it were to happen, then that could be very large and negative ramifications for the financial system and for the u.s. economy and maybe the global economy. >> when you say "maybe the global economy" is it because we're connected and because we're the largest economy on the la set? >> the -- both companies are very interconnected and we play a similar goal because they're

viewed as such an asset. if they were call into doubt be trusting would nd costly for u.s. treasury in borrowing. >> when it comes to health care, you already spoke about -- somebody asked you question about the projections. in 2009, the c.b.o. estimated that spending for medicare and in al would reach 10.5% the year 2049. will reach about 8% in 2039 that looks like it's a 24% increase -- decrease, i'm

sorry. spending is expected to increase in today's level. nd raising health costs were beneficiary. > if the outlook is much impressed. unfortunately, i don't i have a 2009 projection with me. and certainly relative lows, it gives a good deal. we've seen slow growth now in federal hale care spending and for a number of years. there are structural changes going on and we've taken some f those onboard. that's a significant reduction in health care -- house projections. and what were the main factors in this report? why did it come out that way? >> the projections are a little blow than they within last

year. factors here are primarily the data that have come in. both to the federal government programs and within those programs in part a of medicare and part b and part c and part k. we look ourselves very close to what happened. other analysises said look violence would happen. and the conclusion is that a weak economy probably plays some roll in the national health care spending slowdown but there's much more than that in the country. we don't think that weak economy played a much role at all. there are other structural changes and we when talk to people in the hale care system, they're clearly working very hard to make their options more efficient than they've been? the question for everyone is weather they can keep -- keep that going, whether they will

turned current incentives provided by that. is what we ate 1990 found in spending growth. but then it came back up again and we don't know at this point how persistent that slowdown will be. our mass projection will be and that's why we've taken federal health care spending by a lot. and as you note even now 25 years. >> but you can change the affordable care act. we don't know how big a role that would have played. >> i yield back. >> thank you, chairman. welcome back. >> congressman. >> it's always a learning experience to learn from you. i appreciate you staying back. i want to pick up on where he

was going earlier and what is indicated here on page five about the idea that's to solve the problems. we all know too well -- you have to do a combination perhaps of raising revenue and decreasing spending/costs. but the wording here on page five indicates that we could aise money,, decreased spending or do a combination of the both. threerly, i understand how he can decrease but he makes reduced costs to get them off. but i'm i'm under the impression that we can't increase revenue. am i reading this correctly or incorrectly? >> yeah, they're raising

revenue is an option. raising revenue solely as a drokse this. and reported on the next you'll be raised enough to have the mauricio get the. be the same as today? >> yes,. how much would that look like. the e and i think if congress were to act in 2015 and were to make the same change relative to the g.d.p. e need the next fip cal -- and that would require an increase in receive ny or cutting spending. an 250 bill lon -- increase of $75,000 last year.

that number grew with g.d.p. >> that was low five going forward. ight now we'll go to 1.2% of not by people in this business to do this kind of seasonal sys. spending and or revenue that we've required each and every year achieve some target at the own of the year. it's quite high by circle standards. 1.2% of change. do you remember the historic -- and that would be 4.16. raw flurms a problem -- >> that whoa bulled about $460

million. so an increased of 4:49. it would be more than five trillion. and we're that. in spending or. is that a pretty large am any tute. yes. to do it solely in any way. the nted to that down with average percentage of t.d.p. 25 years ago it would be to reduce your stending. an increase without 14%. those are not overwhemming but changes. you are spending more revenue and that accounts for the next 20 years -- i would send you back -- i really been trying to

study our counting methods here and congress with the eye of more transition especially with regard to other and they've been similarly using the flurel base instead of the bash cased party. what did did he use to cbs user. he faces the county or omething else. we offer projections that takes e budget the way the counselor and we follow them as well. in the estimate of the social security trust fund it is in

the trust fund. those are assessments that we do on that basis because that's the -- thank you. >> thank you, plch by apologize for coming in after your prepared remarks over in the financial services committee with a hearing with the federal row serve chair yell lone. there are there are a numbers to ask with no opportunity for the chair to answer. in this case it might not agree with some of the implications. and curtsy of you being able to take that that -- and my colleagues have handled this. i appreciate it with these questions. i've been trying to figure out c.b.o. and they've been there for a year and a half. but i do understand that the

analysis you provide operates on a clear asthaurpgs none of the decisions that we make spending or revenues operate within the confines of what some call their -- spending, beyond tefect on our current policy, protects, beyond the implications for annual current balance. i'm really ooh. n in an ad unpaid for taxes, senators that some how corporate with increasing in revenue or reduction. spending will have implicationings . this may be -- something you may have been first make. you wounden be. this type of spending through

. e tax code >> so you're right. the effects of to in particular with the long-termer term. buck would presumeingly cut them in half. and not upset and it would lead to -- and presumably this is where i think we get into a real con none dream. >> low tax cut would have an impact on not only the immediate effect of the ability but in our ability to -- to invest in thoys long-term investment that could have the exposed so if in fact, for suton's reduction

pell grants and other forms of support for higher. blows up our ability to fully und on -- what would you think the likelihood would be. -- for that policy decision. >> i'm getting more leery of the welcome i feel free. don't let them affect your fiscal -- the channels are the amount of federal debt and change in marginal rate. about people's so it did very >> i quantity quanfy those things. the highway trust fun. how would youer ralvate that? >> we think that if -- it was said in s a couple of months

ago. that if the where i limit federal spending for highways. under current law, the reduction would probably have significant negativity consequences for the condition and per foreman mans of the nation's highway and mass intrasfruckchur. in addition -- infrastructure. if addition the federal spending would drop economic growth during the next few years relative >> have you offered any recent discussion or commentary on the effect of extension of federal unemployment benefits and the effect that that has long term on demand for federal services and what the long term budgetary effects of that decision might be? >> we have not looked to my knowledge at the longer term effects of extending unemployment insurance benefits. e have done some analysis of

shorter term effects. and we have found that extensions of higher benefits that were in place last year would be good in the short term for economic output and for jobs. >> thank you very much. i appreciate it. going to follow the same line of questioning of course because our long term budget aspects are significantly challenging giving current rates of expenditures and population shifts and the graying of america as you will. and i am clear that the roll of this can he -- i appreciate that leadership by the chairman, find the most balanced approach to resolving to the highest degree possible a path forward so that we are doing our jobs here with your

expertise. and i appreciate that some of my colleagues have highlighted that we need a long term investment strategy. we're going to look at the long term projected problems we ought to have a long term investment strategy. and i agree. in the "washington post" i think it was an article february 28 eeb titled cbo's rigid scoring is holding u.s. government back in long term programs. i would agree with that article. that things like the federal highway system wouldn't get the right kind of score and we know that spurs economic growth that research at nih, clearly today has identified in that budget is some of those great break throughs giving us a return on those investments on both medicine and technology that they cost money on the front end of that federal balance sheet. similarly changes in health policy that make the system

more efficient and address funds more integrated coordinated models of care often carry as core when we know their investments that would yield to cost savings in the future. so i would like you to talk a little bit about how you score these kind of health care proposals insurance companies in particular have developed a fairly sophisticated series of tools to attract health care costs. ?o you rely on data >> my colleagues and i share very much your concern about the longer term effects about the policies congress is considering and we have in the last few years done a number of things to try to give you and your colleagues more information about those longer term effects and that includes our work on the affordable care act our work on immigration

reform our work on the federal budget as evidenced by this report so we are very interested because you are and because many other people are on the longer term effects. the challenge for us and i would respectfully disagree about our work. the challenge is to be able to quantify those effects in a reliable way. so in our analysis we draw on the research literature. we draw on data from actuaries. >> but you don't hire or employ any of those kinds particularly on the health care side those kinds of experts given that comments about the aca and related health care costs that that's an area we really have to clearly understand short-term long-term impacts. >> so we have ongoing contracts with outside actuaries. we have a panel of health advisers and we invite health experts in to talk with us about work they're doing and about specific work we're

doing. one example. we did a very detailed analysis in raising the cigarette tax on the federal budget over 75 years and we looked at the way in which changes in the tax would affect smoking behavior today and affect people's health conditions and longevity. >> i appreciate very much your taking that. that's a great example. can you show me other examples about how you're using that now in preventative scoring and related scoring particularly on the health care side of things. >> so we can do that sort of analysis in other areas and we are currently doing work on the effects of changes of policies regarding obesity. but that is a good example the benefits to health are often quite positive. the effects on the federal bument in the long term may or may not be positive in the way that our estimates are missing. so eeths not always the case that prevention saves mup later. it's almost always the case

it's good for people. there are certain sorts of tests where the medical profession is pulling back on their recommendations because they think those tests are not fair -- >> i would ar that we are doing all of one and none of the other. i really don't see dynamic scoring at all in that area. i would really encourage you to keep looking at that. otherwise we can't do our job. >> thank you very much. thank you for your indulgence. the hearing is adjourned. >> thank you.