$1.7 trillion in taxes he's already imposed during his presidency, and i can tell you that nothing good for individuals ever comes from $3.8 trillion in additional taxes. next spending explodes. the president wants to add $259 billion of new spending in the next fiscal year. and $2.4 trillion over the next ten years. that's a 65% increase. let's see, $2.1 trillion in higher taxes. $2.4 trillion in higher spending. that's still overspending. the president hides what he's doing when he talks about reducing the deficit. it sounds like the debt will go down. no, the deficit is the overspending that we do. did you ever hear of someone being able to buy something with the interest they saved? so, the interest payments

skyrocket, annual interest costs would nearly triple from $229 billion today to $785 billion in 2025. and i think that's at a pretty conservative interest rate. interest remains the fastest growing item in the budget but provides little in the way of benefit for our constituents. ever hear of anybody being able to spend the interest that they have to pay? at the end of this plan, annual interest costs would be larger than the president's proposed spending for national defense, medicaid, or the combined total of all nondefense agency spending. finally, the president's plan adds $8.5 trillion to the debt. over the next ten years, accumulative overspending would amount to $5.7 trillion in new debt, with the federal debt climbing to $26.3 trillion in 2025. based on projected population figures, this would mean every

man, woman and child in america would owe almost $76,000 in payments on president obama's debt. that's compared to $56,000 per person today. that's $20,000 per person more that everybody in america is going to owe. i mean, the child that's born today gets figured into that same -- that same cost. that same debt. altogether these were not the numbers i was looking for. i meant it when i said last week that we must confront spending. bring the debt to an end, and ultimately balance the budget. the president's proposal fails on all three elements of the mission. i'll listen to the administration make its case on why it's best to ignore balancing the budget. but with 24 states already agreeing that the solution is to gather together to write a balanced budget requirement into our constitution, and with more states thinking about it, this is a mission we don't dare duck. yes, 24 states have already passed a constitutional

convention to balance the budget. more than 10 others are in figures released friday demonstrate firmly that in the united states, more federal spending, more federal -- the latest quarterly gdp figures released friday, and i don't think gdp means much to the next of the nation, what they're interested in is how much we take in, how much we spend, and how much more debt that results in. the latest quarterly gdp figures released friday demonstrate firmly that in the united states, more federal spending, more federal overspending, called deficits, more interest costs, and more debt, do not yield a robust economy. our economy still bobs in the back water of too slow growth, while jobless rate edges down. and equity markets head up. the number of people who are

underemployed, and have abandoned looking for work continues to be too high. as senator sanders says, we have a deficit of employment. wages are stagnant, household wealth has collapsed. too many worry the american dream is no longer theirs and won't be theirs for their children and grandchildren. failure of our economy to recover is the president's record over the last six years. he's left too many americans behind. but in looking ahead families and individuals need a federal government with a fiscal plan that helps create the climate for good jobs and good wages. americans need to have confidence that there's work to be had, jobs to be found, and paychecks to be earned. most importantly, they need to know that a strong and successful future is theirs, again, all around the country. it's not too late for the president to join us in making the future brighter by submitting a new plan that doesn't mortgage our future to

pay for the present. if the president changes course, we can work together to ensure that americans have the strongest possible economy, so competition to hire employees drives up wages and benefits. so we have a solid economy. and an economy in government. i said the people don't understand the gdp. they do understand spending more than we take in. we maxed out our credit cards, we don't have a mortgage payment, maybe we should have a mortgage payment where we monthly pay down some of our debt and then use the interest we save to pay down even more. that's how people buy houses. i looked at the numbers on that. there's no possibility of that at the present time. we keep coming up with brilliant ideas for new ways to spend, to fill in gaps in gifts that we haven't been giving. we don't really take a look at what we already have and need to weed out things that don't wrk. -- work. we pretend everything we do is perfection. and with guilty conscience we

try to do more. instead we should be doing better. we have over 250 programs that have been authorized. of those, 150 of them are no longer in authorization. but we continue to spend the money on them, even though we don't look at them to see what they do and how they operate and what they should be doing, and if they even ought to exist anymore. that means we've exceeded the time that we guaranteed we'd pay for them. last year we had to vote on 1100 billion dollars in spending. i prefer to say 1100 billion, i think it's more honest than $1.1 trillion. we spent $468 billion more than the $1100 billion. if you overspend what you can control by almost 50%, aren't we buying like it was a department store sale? colleagues, that's the sort of change that americans really believe in. senator sanders? >> mr. chairman, thank you very much. the good news is that our

country has made substantial economic progress in the last six years since president bush left office. instead of losing 800,000 jobs a month, as we were during the final months of the bush administration, we are now creating some 250,000 jobs a month and are seeing steady job growth over the last 58 months. instead of having a record-breaking $1.4 trillion deficit, as we did when president bush left office in january 2009, the federal deficit has been cut by more than two-thirds. six years ago, the world's financial system was on the verge of collapse. today, that is certainly not the case. while we can be proud of what we have accomplished in the last six years, one would be very wrong not to appreciate that there is also a lot of very bad news in our economy, especially for working families. most significantly the simple truth is, that the 40-year decline of the american middle

class continues. real unemployment is not 5.6%, it is 11.2%, if one includes people who have given up looking for work, or people who are working part-time when they want to work full-time. we do not talk about this issue, but youth unemployment today is close to 17% and african-american youth unemployment is over 30%. real medium family income has declined by nearly $5,000 since 1999. incredibly, and i ask my colleagues to listen to this despite huge increases in productivity, the median male worker, that man right in the middle of the economy, now earns $783 less than he did 42 years ago, after adjusting for inflation. the median female worker now makes $1300 less than she did in 2007.

shamefully we continue to have by far the highest rate of childhood poverty of any major country on earth. in the midst of this tragic decline of america's middle class, there is another reality. and this is the main point i want to make this morning. and that is that the wealthiest people, and the largest corporations, are doing phenomenally well. the result, united states today has more income and wealth inequality than at any time since the great depression. today, incredibly, the top 1% own almost as much wealth as the bottom 90%. let me repeat that. because i think what senator enzi was talking about has got to be put into the broad context. and that is the top one tenth of one percent today own almost as much wealth as the bottom 90%. today, one family, the walton family of walmart, owns more wealth than the bottom 40% of the american people, some 120

million americans. in terms of income, what we have seen in recent years is that virtually all new income is going to the top 1%. last year the 25 top hedge fund managers earned more income than 425,000 public school teachers. and that gap between the very, very rich, and everyone else grows wider. the fact of the matter is that over the past 40 years we have witnessed an enormous transfer of wealth from the middle class to the top 1%. in other words, we are witnessing the robin hood principle in reverse. we are taking from working people, the poor, and giving to the very, very wealthy. from 1985 to 2013 the share of the nation's wealth going to the middle class has gone down from 36% to less than 23%.

if the middle class had simply maintained the same share of our nation's wealth as it did 30 years ago, it would have 10.7 -- $10.7 trillion more in cumulative wealth than it does today. while the middle class continues to shrink, while millions of americans are working longer hours for low wages, while young people cannot afford to go to college, while children in america go hungry, we have seen since 2009 that the top 1% has experienced an $11.5 trillion increase in wealth. mr. chairman what we are talking about is not just a moral issue, it is an economic issue. 70% of our economy is based on consumer spending, and when working people do not have disposable income, when they're not out buying goods and products, we are not creating the jobs that we need. the debate that we are having this morning will have a

profound impact on the lives of the american people. many of my republican friends are in favor of cutting social security, cutting medicare cutting medicaid, cutting nutrition programs for kids while providing huge tax breaks for millionaires and billionaires. that is their idea of moving the economy forward. in my view, on the other hand, if we are serious about rebuilding the disappearing middle class, reducing income and wealth inequality, and strengthening social security, medicare and medicaid we need a budget that creates millions of jobs, raise wages, makes college affordable and demands that the wealthiest people start paying their fair share. in all of these matters, the president's budget begins to move us in the right direction. at a time when almost all of the income gains go to a top 1% and

when corporate profits are at an all-time high the president's effort to end egregious loopholes while providing tax breaks for working families is exactly the right thing to do. at a time when real unemployment is over 11% the idea of increasing substantially investment in our infrastructure, and creating hundreds of thousands of jobs is the right thing to do. at a time when 20% of our kids are living in poverty, the president's budget triples the child care tax credit to $3,000 per child, and makes an additional billion dollars investment in head start exactly the right thing to do. at a time when more americans are unable to go to college the president proposes the first two years of community college to be free. that is exactly the right thing to do. let me conclude, mr. chairman, by saying this, if we are serious about figuring out how

we're going to pay for what this country needs, we might want to take a hard look at why major corporation after major corporation in some years pays absolutely zero in taxes. from 2008 to 2013 general electric made nearly $34 billion in profit in the united states not only did it pay nothing in federal income taxes, it received a tax rebate of nearly $3 billion. and the list goes on and on and on. there's a lot to be done. our job is to protect the middle class. let's get to work doing that. >> thank you, senator sanders. our witness this morning is shaun donovan, the 40th director of the office of management and budget. prior to taking the role as head of omb director donovan served as president obama's first secretary of housing and urban development. director donovan has a long public service career, both in federal, and local roles including commissioner of the new york city department of housing preservation and

development, and as acting federal housing administration commissioner during the transition between president clinton and president bush. his private sector experience includes work at the community preservation corporation in new york city, and as a visiting scholar at new york university. director donovan holds both bachelor's and master's degrees in public administration and architecture from harvard. director donovan, as the architect of the administration's budget, we look forward to what you have to say. for the information of colleagues, director donovan will take about seven minutes for his opening testimony. director, please begin. >> chairman enzi, ranking member sanders, members of the committee, thank you for welcoming me here today to present the president's 2016 budget. to echo your comments, mr. chairman, when i met with so many of you over the summer, one of the key themes everyone echoed was that we needed to get our budget process back into regular order.

and i truly hope that this on-time budget that i'm presenting today is the first step toward that regular order. the budget comes on the heels of a breakthrough year for america and builds on our fiscal and economic progress, including the fastest job growth since the 1990s, and the fastest sustained period of deficit reduction in 60 years. the budget is a blueprint for the president's vision for middle-class economics in the 21st century. this means helping working families by making their paychecks go further, preparing americans to earn higher wages and making america the place where businesses decide to innovate, grow, and create good, high-paying jobs. the budget shows that we don't have to choose between investing in the middle class, and being fiscally responsible. first, because we cannot afford a return to mindless austerity the budget proposes to end sequestration, fully reversing it for domestic priorities in

2016, matched by equal dollar increases for defense. by replacing sequestration with a combination of smart spending cuts, program integrity measures, and commonsense loophole closures, the budget makes room for investments in our economy, and our national security. for example on the domestic side, where sequestration would cut r&d to its lowest level since 2002, adjusted for inflation, the budget supports cutting-edge research like precision medicine, efforts to combat antibiotic resistance and the brain initiative, which is helping to revolutionize our understanding of the human brain. likewise, rather than cutting inflation adjusted national security funding to the lowest level since 2006, the budget makes responsible investments to protect our national security, restoring readiness, and the investment in modernization needed to ensure america's

continued technological edge. i want to emphasize that every investment in the budget including both the discretionary investments made possible by reversing sequestration, and mandatory and tax changes are more than paid for through spending or tax reforms. for example the budget would provide new and expanded tax credits for middle class families and would more than pay for these investments by reforming capital gains taxation, and making it more costly for the biggest financial firms to finance their activities with excessive borrowing. it also uses one-time revenues from pro-growth business tax reform to pay for an ambitious six year surface transportation proposal that would give states and localities the certainty they need to invest in infrastructure that will spur innovation and accelerate job growth. meanwhile, the budget also achieves $1.8 trillion in deficit reduction, primarily by focusing on the key drivers of our budget challenges. health care cost growth. inadequate revenue levels in the face of an aging population. building on the historically slow rates of health care cost growth in recent years that have already significantly improved our fiscal outlook, the budget includes roughly $400 billion in

health savings, which grow significantly over time, raising about $1 trillion in the second decade. the budget also raises about $640 billion in net revenue for deficit reduction from curbing inefficient high income tax expenditures. this year's budget again reflects the president's support for commonsense, comprehensive immigration reform, along the lines of the bipartisan senate passed bill. immigration reform would reduce deficits by almost $1 trillion over two decades, while strengthening social security, and growing the economy. as a result of these measures, the budget maintains deficits well below the 40-year historical average, during every year of the budget window. it meets the key test of fiscal sustainability, putting debt as a share of the economy on a downward path, showing investments in accelerating growth and a strong middle class are compatible with

strengthening the nation's finances. and to ensure that our country remains strong and prosperous both now and in the future, it makes smart investments to give every american the chance to contribute to and share in the benefits of growth. i look forward to working with congress and this committee in the coming months. thank you and i'd be glad to take your questions. >> wow. you didn't even come close to seven minutes. [inaudible] [laughter] we do appreciate that. now we'll turn to questions last week when cbo director elmendorf testified, he did a good job of simply answering the questions asked by senators so that members on both sides had more questions that they could ask and get answers. i hope you'll follow that model this morning, director, so that we can all have as much asked and answered as possible. i'll alternate recognition between republican and democratic senators following seniority for those who were here when the hearing was gavelled to order. after that i'll recognize members based on order of

arrival. if you're not here when your name is called i'll skip you and pencil you in at the end of the question list to be recognized after everyone who was in attendance has the opportunity to ask director donovan questions. with that, director, i'll begin with my first question. you testified that stabilizing the debt as a share of the economy and putting it on a declining path is a key test of fiscal sustainability. but debt still goes up every year in the president's budget in dollar terms and chose little movement as a share of the economy. and again, that's gdp, and i don't think people understand gdp. they do understand that we spend more than we take in. and even though we're getting record revenue, why is it a sufficient goal to merely tread

water on debt as a share of gdp? >> first of all, senator, i think if any family would look at it their finances are based on what they earn. all right, thank you. apologize. i think like any family in america, the key way they think about their finances is based on what they earn. and so gdp is really the measure of what this country earns. it's the size of our economy, and most economists on both sides of the aisle really think of looking at these numbers as a share of gdp, as the correct measures. the other point i would make is that as director elmendorf no doubt testified, under current projections, under current law over the next ten years debt as a share of gdp would grow substantially. in our baseline we show it growing to almost 81% of gdp. and so, with this $1.8 trillion of deficit reduction that our budget would achieve, we actually help to not just stabilize, but also begin to bring down the debt by the end

of the window. and that is a substantial difference from our current path. >> in looking at it, the president's budget never reaches balance. at its low point in 2017, the overspending is $463 billion. and that grows steadily from there, reaching $687 billion in 2025. to secure the middle class, and any hope for future generations, we need to pay down the debt and that's not possible with overspending this large. can we pay down the public debt? that is, have the dollar amount of debt outstanding be less than the amount in a year earlier without balancing the budget? >> again, senator, the key metric for fiscal sustainability that is not only the measure that we use in the administration, but that is, i think, widely accepted, is that deficits below 3% of gdp are critical for long-term sustainability. that's a measure that we met for

the first time this year, after record reductions in our deficits. over a two-thirds reduction since the president came in to office. and, that will keep us in every year of the budget window below the 40 year average for deficits that this country has faced. we think that key test of sustainability. >> ok. think that if you spend more than you take in that you made a mistake. but the analytical perspective's volume of the budget documents has an interesting table on page 32 entitled trends in federal debt held by the public. that table shows interest costs as a percent of total outlays will increase steadily under the president's budget. can this trend continue forever without compromising our ability to provide government services? >> i think what the long-term fiscal outlook chapter shows, in