Feb 12 2014
ICYMI: Chairman Murray Holds Senate Budget Committee Hearing on The Budget and Economic Outlook for Fiscal Years 2014-2024
Yesterday, Chairman Murray and the Senate Budget Committee held a hearing with Congressional Budget Office Director Dr. Douglas Elmendorf on the Congressional Budget Office’s Budget and Economic Outlook for Fiscal Years 2014-2024
Chairman Murray called for investments in broad-based growth, in addition to fair and responsible deficit reduction.
At the hearing, Murray highlighted that while many in Congress have focused on reducing the budget deficit, it has left deeper deficit in areas including infrastructure, education, job training and innovation. Murray discussed the need to tackle long term-budget challenges fairly and responsibly, while also addressing these job-creating priorities. “In recent years, many in Congress have had almost a singular focus on reducing the budget deficit. While important, that has left us with deeper deficits in other areas. Our roads and bridges are crumbling. We aren’t making the investments we need in education and job training. While other nations are investing in innovation, research, and development, we’ve scaled them back. We have a serious jobs deficit and a serious opportunity deficit. And we would be doing families today, and the next generation, a great disservice if we let these deficits continue to grow. Addressing these deficits isn’t just the right thing to do. It’s also good economics, and it’s good for the budget.”
“…we need to put in place a credible plan that reduces spending responsibly, that raises revenue by closing wasteful and egregious tax loopholes and that invests in, and grows our economy today and pays dividends for generations to come. But to do that, we have to build on the bipartisan foundation we built with our two-year budget deal,” Murray said at the hearing.
Murray discussed CBO’s findings on the Affordable Care Act and explained how expanded access to health care benefits all Americans.
“For too long in this country, leaving a job also meant leaving behind your health coverage. In 2008, Harvard University conducted a study that found 11 million workers wanted to change jobs, but felt locked in to their current job, simply to keep their insurance. One of those workers is named Christine Lange from my home state of Washington. A year ago, Christine dreamed of quitting her job to start a small business. But her family relied on the health insurance she received through her employer. The Affordable Care Act changed that. In January, she retired from her old job and now plans to launch her own business later this year. By expanding access to health care, more people will have the opportunity to retire early. More entrepreneurs will have the chance to start a new business, without giving up access to health care. And CBO’s report makes it clear that the Affordable Care Act is good for parents. That’s because it will give more parents the choice to stay home and raise a family and the choice to reduce hours to take care of an aging parent or family member.”
Read Chairman Murray’s full opening statement here
Watch Chairman Murray's opening statement here
Murray asked CBO Director Elmendorf to explain how increased accessibility and affordability to health care due to the Affordable Care Act helps workers and prevents people from being locked into jobs due to health insurance concerns.
“…the subsidized health insurance coverage that will be provided under the Affordable Care Act -through both the expansion of Medicaid and through the initiation of tax credits to be provided for insurance, bought through insurance exchanges- those subsidies make the people who receive them better off by providing health insurance coverage at reduced cost to them. Some of them will respond to being better off by not working or working less,” explained Elmendorf.
“As you noted, the health insurance system as it existed prior to the Affordable Care Act also distorted people’s labor market behavior relative to some ideal system in which health insurance was not related to work, and in particular, there has been a substantial amount of research showing that people who had jobs and had particular health problems or concerns about the risks of health problems would then be unwilling to leave those jobs to take other jobs they may be more productive in if they thought they would lose their health insurance. That’s the phenomenon known as job lock and that is a phenomenon that under the Affordable Care Act wouldn’t be there because people would be able to obtain health insurance through exchanges and possibly obtain subsidies for health insurance coverage,” Elmendorf said.
Murray also questioned Elmendorf on the importance of taking measures to make sure the economy is strong, in order to help reduce the deficit.
“Any actions that the Congress can take to boost economic growth can have a very powerful effect on the future budget outlook. There are no plausible changes in economic growth that would make the long term budget pressures go away. When we did our long term budget outlook last Fall, we looked at a range of alternatives, possible growth rates of the economy, interest rates, healthcare costs, and so on, and the fundamental problem will remain, but the magnitude of the problems, the extent of the changes that will be needed in tax policy or spending policy or both, would be smaller if the economy were to grow more rapidly,” Elmendorf said.
Read Director Elmendorf’s full testimony here.
Democratic members of the Committee echoed Murray’s statements in calling for fair and responsible deficit reduction, while also investing in economic growth.
Senator Debbie Stabenow (D-MI) explained that while addressing the long term deficit is important, continued investments are critical to creating jobs and staying competitive in the global economy: “So when we’re looking at a global economy competing with China, with those around the world investing like crazy to lower their cost of college, to build their countries, to invest in clean energy and so on, we in America are actually going in the opposite direction. And I want to underscore that when you’ve talked about economic growth mitigating some of the other factors, obviously we care about long term deficits, obviously we want to continue to stay on a path to fiscal responsibility, but certainly growing would do an awful lot, creating jobs would do an awful lot to mitigate that.”
Senator Sheldon Whitehouse (D-RI) called on Republicans to also look at closing egregious tax breaks for the wealthiest Americans when reducing the deficit, not just harmful cuts to investments that middle class families depend on: “I hear my colleagues on the other side talk about the debt and the deficit and say how, you know, to use words that were used today, ‘this is a problem that needs to be fixed’. And the enthusiasm and the passion and the militancy with which our colleagues on the other side pursue the debt and the deficit problem I think is commendable. What concerns me is that that passion and that militancy and that determination evaporate as soon as you are talking about benefits that go out to wealthy folks and to corporations through the tax code. We are, I think, more than happy to work to reduce our debt and deficit, but it is impossible for me to look at adding to the cuts that we’ve applied to middle income families and to investments like infrastructure and scientific exploration and innovation, and at the same time be protecting the right of a hedge fund billionaire to pay a lower tax rate than a brick mason in Rhode Island. And my test of when our colleagues are going to be actually serious about the debt and the deficit is when it’s no longer less important than protecting carried interest for hedge fund billionaires.”
Senator Tim Kaine (D-VA) pushed back against Republican criticism that the Affordable Care Act is dis-incentivizing work, saying that the real issue is tax expenditures: “The federal government has been dis-incentivizing work for a long time through tax policy… We used to tax investment income at a rate significantly higher than salary and wages, then they reached a rough equivalence, and now we decide to tax work much heavier than we tax investment income. So if we’re going to look at what dis-incentivizes work, we need to tackle the tax expenditure issue.”
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