As prepared for delivery during today’s hearing:
Good morning and welcome to the House Budget Committee’s hearing on the Congressional Budget Office’s Budget and Economic Outlook for 2018-2028.
In the congressional budget process, we often refer to this annual report as the “baseline” because it provides a benchmark when considering the effects of policy options and determining funding levels.
That being said, receipt of the baseline each year means that the process of writing the budget resolution in this committee can begin in earnest.
While CBO’s report is typically published earlier in the calendar year, we knew that this year’s would be delayed in order to adjust for the recently enacted tax reform law.
However, regardless of when it is released and updated each year, CBO’s baseline is important because it sheds light on our nation’s current fiscal challenges and guides us in mapping out a sustainable path for the future.
Assuming the continuation of current law, CBO’s baseline offers projections of federal spending, revenue, surpluses or deficits, and debt.
CBO’s baseline also includes a forecast of key economic indicators as well as detailed budget estimates for specific programs and categories of spending.
The baseline paints a picture of the potential fiscal future, but it does not have to dictate the future.
However, the baseline should encourage Congress to heed warnings of what could be ahead and respond with solutions.
Without question, we have our work cut out for us in order to confront the nation’s growing debt.
It is sobering that mandatory spending, including interest on the federal debt, continues to be the greatest driver of our debt. It is growing at an unsustainable pace.
While it is discouraging, this trend is not a surprise.
For years, House Republicans have called for real action to reform and strengthen mandatory programs upon which many Americans depend.
If we do nothing, these programs will eventually fail for those relying on them today and may not exist for those who hope to depend on them in the future.
The longer we wait to address these problems, the more difficult the solutions become.
Despite the many challenges, CBO’s baseline does show where we are getting it right.
Take, for example, tax reform. It’s working.
In fact, CBO expects that employment will rise, wages and income levels will increase, and potential output will grow as a direct result of tax reform.
CBO also expects that tax reform will lead to greater business investment in the economy and the creation of approximately 1.1 million new jobs over the next 11 years.
Another sign that recently-enacted policies are boosting the economy, CBO projects that unemployment will continue declining in the next few years. This is good news for our country.
As part of its analysis, CBO included an in-depth discussion on its handling of tax reform, comparing its estimates against nine other organizations.
While it is certainly not unusual for CBO to compare its projections for overall economic forecasts, this is the first time the baseline has used detailed comparisons to explain conclusions about the economic effects of a specific piece of legislation.
After concerns that were brought up about transparency in our oversight hearings with CBO earlier this spring, I applaud the agency for using that feedback and providing more context regarding assumptions.
During today’s hearing, we welcome CBO’s Director, Dr. Keith Hall.
Thanks for being with us today, Dr. Hall. Your insight about CBO’s projections and expectations for the economy will help us understand the fiscal challenges we face as we write a responsible and balanced budget.
While CBO’s projections are daunting, the current track does not have to dictate what the future will be. We can and, frankly, we must make the responsible choices to secure a prosperous nation for generations to come.
Thank you, and with that, I yield to the Ranking Member, Mr. Yarmuth.