dr. elmendorf. several times this morning, you and others said you got basically two options for addressing this long term debt and deficit problem. one is reducing costs in our retirement and health safety net programs and increasing revenues through taxation. it does seem to me that there is a third way that we are not talking about nearly enough today. that is growing the economy and actually reducing costs and improving the efficiency of that health care system that is 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 assumptions that would need to exist. you continue to assume in your projections that health care costs will rise at a rate faster than the economy will grow, correct? >> yes. that's right, congressman. >> i would suggest i think congress would be crazy to allow that to continue, to sit back as if it were powerless to address that. if we were able to give medicare a chance to negotiate for

dr. elmendorf, let me start with health care. this year's report suggests in order to address the shortfall in medicare is fun, you have to either increase payroll taxes from 2.2.9% to 3.7% or cut medicare spending by about one-fifth immediately and permanently in order to bring it back into balance for the next 25 years. >> right. >> do you think those are sustainable? >> those will be very large changes, mr. chairman, but imagine of the growth of medicare and other health care programs is the key driver, the key source of upward pressure on federal debt. we talked about the unsustainability for the budget as a whole, so we don't try to isolate a particular program but big changes are needed in some of these very large programs or taxes will have to go up. >> so we basically have is 50/50 split the twin health care spending and i think in 2012, 53% of total spending on health care came from private sources while 47% came from public sources. your report shows that health care spending is supposed to go from 16% of gdp today to 2

dr. elmendorf. let me start with healthcare. this year's report suggests that in order to address the short fall on medicare, you would have to increase payroll taxes or cut medicare spending by about a fifth immediately and permanently in order to bring it back into balance. >> for the next 25 years. >> right. >> do you consider this program sustainable? >> those would be very large changes and as you know the growth of medicare and other healthcare programs is the key driver, the key source of upward pressure on federal debt. but we talk about unsustainability of the budget as a whole so we don't try to isolate programs but big changes are needed in these programs or taxes will have to go up. >> so we basically have this 50/50 split between public and private healthcare spending. 53% of total spending on healthcare came from private sources while 47% came from public sources. your report shows that healthcare spending is supposed to go from 16% of gdp today to 22%. do you expect the current 50/50 split to stay as it is? what d

dr. elmendorf thank you for joining us again. i would like to shift gears just a minute and in the early part of my questioning to talk about the cbo cost estimate for h.r. 3230 having to do with the va health care issues that are facing the nation today. in your estimate, in a nutshell you said that it would -- not you but the cbo said it would cost $22 billion in fiscal 16 for h.r. 3230 and that if the bill was fully implemented i f. y. 16 it would be about $38 billion. the question that arises is that current cost today in the va were $37 billion how can we have the more than doubling in cost when we just have a slight potential increase of the number of people that it's used? i will break the question into two parts and again this is about h.r. 3230 and we'll talk about the senate bill next. for those that are currently enrolled in the veterans health care how does the cbo estimate the bill would affect health care utilization by veterans? >> congressman the detail provided is for the bill passed by the senate that adopted th

dr. doug elmendorf is the director of the nonpartisan congressional partisan office. without objection, your written statements have been made part of the record after your oral remarks. i believe all of you have testified before the committee before. you know the lighting systems. chairman, you are recognized for your testimony. >> thank you. >> could you pull the microphone a little closer to you? >> is that better? all right. chairman, ranking member and committee member, thank you for inviting me to testify before you as the committee considers a reauthorization and progress xm bank has made in supporting u.s. jobs through exports. since our last reauthorization just two short years ago, xms supported nearly half a million american jobs while generating nearly $2 billion from the taxpayers. we are committed to continuous improvement. when i testified before this committee last june, i committed to hire the chief risk officer before year end and we completed that on time. under his leadership, the enterprise risk committee assesses risk issues, reports and provides

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 prop

dr. elmendorf. >> thank you chairman ryan and ranking member van hollen. we are happy to be back today to talk about the outlook on the budget long-term. the federal budget deficit is shrinking as your to its smallest size since 2007 roughly $500 billion in our estimate. federal spending will equal about 20.5% of gdp which is quite close to its average over the past four years. federal revenues will equal about 17.5% 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 law governs taxes and spending stayed the same deficits will become notably larger after several years. debt held by the public would start to raise the debt more rapidly than gdp and because such debt is now larger relative to gdp than any point in u.s. history except for a brief period around world war ii further increases in the long-term could be especially harmful. 25 years from now and 2039 the federal debt held by the public would exceed 100% of gdp we project. the upward path of deb

dr. douglas elmendorf, you are surprised by the efficiencies we have already seen through the affordable care act. if we could rewind, you have dramatically reduced your projection for health care costs increased to to reforms put in place. if u.s. and we stand still, i understand your point, but if you assume we are determined to continue down this road is it fair to say that we could be seeing similar upside improvement ? >> pavilion and we have been surprised by the efficiency achieved that is why and our analysis will look at the scenario which health care costs grow much more slowly. >> i want to ask you generally and of the middle-class. as you know, democrats are concerned about the loss of middle class opportunity, the growing concentration of wealth and income disparity. what does this do to the economy over the next 45 years but if we do not address this and also if we do create middle class opportunity and address stagnant wages and if you could in your remaining time are there any assumptions about climate change in your projections? if not one out? >> those are easy question