Feb 11 2014
“The President said his stimulus bill, the Affordable Care Act, increased taxes and regulations, and more government spending would result in a strong [economic recovery]… Sadly, CBO’s report recognizes that the President’s 2010 health care law is a hammer blow to lower-income workers…
It is our duty to take principled, achievable steps that will benefit the most Americans, not just the fortunate few, and do so without increasing our debt, which is already well in the danger zone.”
WASHINGTON—U.S. Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee, delivered the following prepared remarks today at a hearing with Congressional Budget Office Director Douglas Elemendorf:
"Welcome, Director Elmendorf. I want to thank you and your Congressional Budget Office team for all the work you do to support the Congress.
CBO’s latest Budget and Economic Outlook is another sobering report on top of a number of sobering reports since the 2007–2009 recession.
Our nation’s policies after the recession ended in 2009 have not come close to producing the results President Obama promised. CBO and many other organizations (OMB and the Federal Reserve) have also made forecasts for economic growth that were far above what actually materialized.
CBO’s report today is a recognition that the economy has failed to lift off four years after the recession was declared over. Millions of Americans are hurting. This is not a healthy recovery.
The U.S. economy typically quickly reverts to the mean after a recession, but this time it has not. The President said his stimulus bill, the Affordable Care Act, increased taxes and regulations, and more government spending would result in a strong bounceback.
But, after President Obama signed the so-called “American Recovery and Reinvestment Act,” CBO estimated that real GDP would grow at 4.7 percent for each of the past two years. It did not. It grew at a paltry 1.9 percent last year, falling from an anemic 2.8 percent the year before. Only two years ago, after the Affordable Care Act was passed, CBO expected real growth this year, 2014, would be 4.6 percent. After these misses, CBO is now forecasting only 2.7 percent growth for this year. Ominously, the percentage of people participating in the economy—working or looking for work (the labor force participation rate)—has fallen to 1970s levels.
So the policies we have pursued to promote economic growth have not had the effect we hoped for. The growth that is needed to increase the number of Americans with jobs did not occur.
The “recovery” to date has seen corporate profits increase and the wealthy to see their investments grow, but working Americans—over half the population—have seen lower wages, more part-time jobs, and fewer full-time jobs. It is clear that growth at 2 percent is merely treading water: it must be sharply higher to increase the number of Americans working. Certainly, we have learned in this “recovery” that GDP can grow without real benefits for the working people in this country.
Sadly, CBO’s report recognizes that the President’s 2010 health care law is a hammer blow to lower-income workers. Despite concerns raised at the time that the Affordable Care Act would reduce work opportunities, CBO did not think that effect would be significant when the law was signed in March 2010.
CBO now estimates Obamacare will lead to Americans working fewer hours or dropping out, equivalent to 2.5 million productive Americans. In other words, four years after the health care law was enacted, and just as it is being implemented, CBO has now tripled its estimate of jobs that will be lost as a result of the law. That means that the average employed person’s wage loss will total $930 just 10 years from now. CBO has been criticized for this report, but the analysis just reflects what data is showing. Indeed, two-thirds of jobs created in 2013 were part-time. I look forward to receiving from CBO more information about how these conclusions were derived. We do know the compensation loss will fall more heavily on lower income Americans.
This is another example of policies that are actually hurting working Americans, not helping.
The end result is that CBO has reduced its estimate of the economy’s growth potential and the report finds the U.S. economy is not assumed to reach even that reduced potential over the next 10 years under current policies.
Let’s pause a minute to consider an important point as stated by the free-market oriented National Review. They declare, rightly I think, that we are a nation with an economy, not an economy with a nation. It is our duty to take principled, achievable steps that will benefit the most Americans, not just the fortunate few, and do so without increasing our debt, which is already well in the danger zone.
I hope that CBO’s report and today’s discussion can serve as a spring board for a more serious conversation about what is going on in the U.S. economy and the people who have not prospered in this economy. Spend, borrow, regulate, and tax has not worked as a jump start to prosperity. Expanding government has not produced prosperity. Stimulus programs and quantitative easing have done little good. Indeed, these actions, reality shows, have produced far weaker growth than was predicted and which have routinely occurred after recessions. Working Americans should focus less on promises and good intentions. They should focus on results."