Providers, giving you a front row seat to democracy. Congressional Budget Office director philip slagle released the Economic Outlook report for the next 10 years and talks about growth projection, the deficit, tax revenues and the impact of undocumented immigration on the economy. This is about 40 minutes. Net interest costs are a major part of the deficit. Initially, net interest costs were similar to the amount of Discretionary Spending for defense and nondefense activities. By the end of the period 1. 6 trillion dollars, interest outlays are roughly 1. 5 times larger than either defense or nondefense spending. Also boosted deficits are two underlying trends, the aging of the population and growth in federal Health Spending per beneficiary. Those trends put upward pressure on mandatory spending. Measured in relation to economic output, federal debt held by the public rises to 99 in 2024 to 116 in 2034. Surpassing its historical peak. Then the debt ratio continues to rise, reaching 172 by 2054. From 2024 to 2033, the deficit is about 7 smaller than we projected last year. Primarily as a result of the fiscal responsibly act of 2023 and the subsequent continuing resolution. Together, those laws produce the Discretionary Spending. Reduce the growth of Discretionary Spending. Legislative changes reduce it over the next 10 years. In our projections, the deficit is also smaller than it was last year because economic output is greater, partly as a result of more people working. The labor force in 2033 is larger by 5. 2 million people, also because of higher debt immigration. That in turn leads to additional tax revenue. As a result of those changes in the labor force, we estimate that 2033 to 2034, gdp will be greater and revenues will be greater by about 1 trillion than they would be otherwise. We are continuing to assess the implications of immigration and revenue spending. We are still analyzing legislation considered in the senate. Two key factors partially offset that deficit reduction relative to last years projections. Net interest costs rises as part of the Interest Rate and cost of Energy Related tax provisions are much higher than the staff of joint committee originally projected. This includes market developments and actions taken by the administration to implement the tax provisions. Turning to our Economic Projections, the u. S. Economy grew faster in 2023 than 2022. Even as inflation slowed. Economic growth is projected to slow in 2024 amidst increased unemployment and lower inflation. Cbo expects the fed to respond by reducing Interest Rates starting in the middle of the calendar year. In our projections, Economic Growth rebounded to 2025 and then moderates in later years. Since february of 2023, the agency has lowered the projections of Economic Growth and inflation by 2024. Cbo expects Interest Rates to be higher than projected last year. After 2027, the current forecast for Economic Growth is generally similar to our previous projections. Let me stop. I am happy to take questions. I would be grateful if you could just say your name and organization when you ask a question. [indiscernible] the deficits would be down about 1. 4 trillion because of fra . It is offset by a range of other things, the tentacles such technicals such as for the tax provision for the 2020 reconciliation legislation. That leads to a higher deficit or range of changes in each direction. A full discussion in Chapter Three of the report starts on page 76. It goes through all the gory details. I am tcja focused. I noticed 2017 was mentioned about 20 times in the report. There are references that come down to tcg expiring. [indiscernible] that is correct. You can see those effects and revenue figures. 2025 to 2026, the revenue share of gdp goes up. That is attributable to the expiration of the personal site for versions the personal site provisions in the 2017 act. David lauder with reuters. The Clean Energy Tax credit adjustments. You have a 428 billion figure which includes i think the epa new estimates of gas tax revenue from epa changes. Could you break out what the Inflation Reduction Act part of this is . How much are those estimates higher than what jcp came out with . I am flipping pages. Youll see on page 86, it is almost two full pages that goes through the details. Box 3. 1. The challenge here is that it is a new baseline, as compared to the baseline of which the 2022 act was estimated against. Originally with jct. Two baselines go because the baseline was estimated with the 22. That is a whole other change. Makes it a bit difficult to have an apples to apples comparison. But i can discuss some of the key components. The biggest one is the epa rule. Its been proposed that would take effect with the 2027 model year. In our baseline, that is in its half strength. That is the normal procedure for a rule that has been proposed but not yet finalized. That would do two main things for the budget. One Main Driving Force that would shift both producers and consumers more heavily toward electric vehicles and that would affect the cost of the tax credits for electric vehicles and that would affect the excess tax for fuel. That is the biggest single piece. What was the figure . There was 150 something billion . On the ev side, theres a lot going on. We will see if John Mcclellan might jump in as well. On the ev side, the other thing that happened is the treasure implementation of the ev tax credit was different than what they expected and was embodied in the original cost estimate. Then that has to do with some of the leasing provisions. The limitations for the tax credit applied in legislation for an individual buying a vehicle. The Treasury Limited thataway. Leasing those limitations did not apply. It is just a market development. The Battery Industry and the wind and Solar Industry have expanded by more than the original tax credit. Thats an expansion in cost of the other provisions. I know you would ask about some of the numbers. Would that be helpful . Im trying to back out. The epa part from the Inflation Reduction Act part john, do you want to go through . Aggregate costs [indiscernible] about two thirds of that are on the revenue side. The others on the spending side. Revenue includes the taxes but also the digital corporate taxes from the claiming of the credit. We consider all of the factors at once. We have difficulty disentangling what portion is the fact because the reg, what would have happened because the market is moving. We dont separately identify the portion of regulation or how technology is moving. As a whole, it is 224 billion of the budget. Its appropriate to think of the single biggest factor pushing this forward more rapidly than im has abated three wesley more rapidly than anticipated was this issuance of this regulation. That is a separate piece. [indiscernible] that gets you to 428 billion . [indiscernible] thinking about how many evs would be sold in each year . Claiming of the credit, the reconciliation act, the fuel efficiency but it is difficult for us to disentangle how much that changes due to the epa regulation versus how many things have changed in the economy in the last year plus. Some of this is on the revenue side. Some is the outlay side. Additional complication. [indiscernible] two followups on that. The order of magnitude, roughly, the clean Energy Credits are double the original estimate. [indiscernible] fair characterization [indiscernible] one way to think about this [indiscernible] you would anticipate the expenditures are [indiscernible] [indiscernible] between now and february [indiscernible] there would be another adjustment that would increase the deficit versus say in a year , the next administration might come in and undo that rule [indiscernible] hopefully everyone got that. If you didnt, we can go through it again but but that could show up in different ways. If there was different legislation tomorrow to undo that rule, savings would be the half. Its only halfway in the baseline. Half the costs are in the baseline so nixing it would be saving equal to half the cost. If it is finalized, then there is legislation to repeal it, that would have full savings. [indiscernible] are there other regulations [indiscernible] where you are using that convention . [indiscernible] i cant think of others. [indiscernible] for the most part most treasury regs are implementing the law there. They themselves dont have an impact on the baseline. The reaction to those regulations, the epa, is in its nature somewhat different than the other implementation regulations. [indiscernible] good. [indiscernible] can you talk about the net interest costs . [indiscernible] im not sure i understand. We had this pump in Interest Rates that had an impact and now they have come back down. It doesnt look like after we fished through that that you are projecting in the long run the Interest Rates will be different. I guess what im saying is the term premium, all this chatter. It had gone up and now back down. [indiscernible] you dont seem to say that episode will lead us to conclude that in the future so that premiums will be more elevated then we might have thought before this episode. Does that make sense . I got it. If anything is unclear, we can come back to it. We do have higher rates in the forecast embodied in these projections than we did in the previous budget projections, of the impact on big interest outlays. You can think of that as two thirds resulting from the higher rates. There is a lengthy footnote in the report that goes from the two thirds, the one third. We can find it. If you look at our economic chapter, chapter two, hopefully that is very handy for everyone by the numbers document. You can see we do not get paid by the click for this. I hope everyone including our viewers on cspan will download it and look at it. It is a very handy document. You can see we do have higher rates. The profile is at the beginning of this year. The 10 year at four point two and rises over the course of the year. As of early today, it was around 4. 1. The beginning of our budget update in december it is not exactly perfect but seems pretty good for the interest right now. We have two things going on. Part of it is a modest increase in the term premium over the near term horizon. Even as the fed projections have paused Interest Rate hikes, the short end of the curve, starts to lower the fed funds rate around the middle of the year. The first rate cut in our forecast was in may. We hit a total of three of them this year. Even shortterm rates are coming down and we have longterm rates going up modestly over 2024 and 2025. It is partly the term premium and then partly more debt driving rates up and then inflation continues to moderate back down to the fed target. Then we see the longterm rate coming down. You are right. To go back to the question you asked, you are right, our longterm rate is still pretty moderate. Right right. We havent really changed that in lieu of what happened. That is right, the longterm view. That is a fair way of putting it. Thank you. Yeah. Financial times. I was just intrigued by the immigration and how much was contributed to your projection. To what degree is this pentup supply if you like . Postpandemic jump that will continue into the future years, the projections. Also, you touched on the immigration bill going through the senate. You will be researching that. What would be a welldesigned immigration bill from a fiscal perspective . Very good. Let me take those in turn. In chapter two of the report, there is a long box on the impact of immigration on the economy and then from the budget. As claire said, it is a salient impact in our Economic Projections and then our budget projections. We had the statements, the labor forces larger by the end of the 10 year window. Sorry. Everyone is flipping on page 50 and 51. It is box 21. You can see that one up and up on the screen is from page 51, showing the change in the labor force from what we had last year and reflected mainly on the net immigration. Couple things. One is the effect on the economy and budget. That Economic Impact is the largest impact of the increased labor force. More people, more workers. Larger economy. And then from there, it has budgetary effects. Immigration has many effects. Social effects, security effects. Things like that. And of course we are focused on economic and budgetary effects. Thats what ill speak to. Im not saying those are the only effects. I recognize the others. In some sense, some of the biggest fiscal effects might be on those levels of government. State and local government around the country would have fiscal effects and then effects on Discretionary Spending since much of that activity is federal government. This response to the immigration surge is Discretionary Spending. We dont project that out. On the revenue side, the calculation we did is that those additional workers would raise the amount of gdp by 7 trillion and that would correspond to roughly 1 trillion additional revenue. Im sorry. I think the next piece of the question was the projection of the surge. Going through 2026. We had it starting in 22. The data. It is very difficult to now, difficult to know, sitting here today how long this lasts, how long this immigration surge lasts westmark we dont know. This is the key source of uncertainty in our projections. We have a going through 2026 and then tapering back down and going roughly to our presurge rate of population growth. It is something we would follow. See what happens over the next several years to the surge. If there were a change in legislation, we would have to do models as well. I think i answered the questions i remember. I apologize. Its a big theme at the moment, immigration legislation. What would a welldesigned immigration bill look like from a fiscal perspective . It is a challenging question for cbo because we steer clear of the normative answer to the congress. From the founding of the agency we are on our 49th year. We provide the budget and Economic Analysis but not tell them, this is welldesigned or not. I apologize with that preface. Some of the analysis we are doing i think we will answer the question. First you see embodied in our work the number of people but also we look at the composition of recent immigrants. Its difficult to know who the people are coming across the border now but we do have information on who were the recent immigrants and what are their ages, what are their skills and so on, so we have used the information to model the economic and budgetary impacts. That is how we came to the conclusion about the change in the labor force. Seeing a disproportionate share of immigrants that are of working age. 16 to age 54. Prime age. That is one and then we look at education. Composition of workers. We have taken that and said what kind of skills do they bring . What does that mean for innovation for the founding of new businesses . What does it mean for initial wages . And productivity in the u. S. . There is a discussion that initially they will go into sectors of the economy of relatively low productivity but over time their skills rise and they would shift some of that. There is this effect in lowering average would on wind in lowering average productivity would unwind and in turn would translate to wages. That is the kind of analysis we are doing to come back and to connect your question what is discussed in the senate now, it changes the composition of immigrants. The cbo would be in position to provide that. [indiscernible] you take account of the revenue affect . Growth is faster and [indiscernible] you dont take account [indiscernible] the Discretionary Spending, we obviously state and local is different [indiscernible] we know state and local is there. That is outside our purview. Discretionary spending. We know it is there and the surge in immigration has an effect on Discretionary Spending for future years. The cbo just projects Discretionary Spending in an in a mechanical way. That is set by statute. It could be if the surge continues then policymakers might devote Additional Resources and we wouldnt have that in projections. And then on the mandatory side, we would analyze that as well, many of the immigrants coming in received Work Authorization as someone who comes in with parole would receive Work Authorization generally around six months or so. Then they could fit in to the Social Security system and contribute. Eventually they would retire and receive benefits. The benefits side of that would be outside the window. Generally. For someone not close to retirement. We would have the revenue up front. [indiscernible] the assumption is most people get work permits. [indiscernible] this is not legal immigration. They end up getting work permits [indiscernible] it is a mix because someone who comes in with parole becomes eligible for Work Authorization within a year. Generally the six month mark. Some people come in not through parole but through some other channel and it just depends on the specifics. Thats a discussion also, a demographic report we released in january a discussion of immigration. We would track the different channels. For example, this is a term of art that the Border Patrol uses. A got away. Someone comes in is not in contact with u. S. Authorities. They would generally not receive Work Authorization until that gets adjudicated. Then there would be a differential effect on mandatory spending. [indiscernible] we would look at people like that and understand that many of them would work just without authorization. Look at the different revenue effect of that. There is an effect on state and local spending. School and sales taxes but the federal income taxes are lower. Is there a way to gauge the percentage of illegals that are in the surge . What percentage are illegal . We have a breakdown in the chapter. Sorry, this is in the demographic report from january. It has a breakdown of different categories. In our projections. Thats the input to this. I didnt bring it with me but that has the breakdown. Caitlin with politico. You are not in the business of commenting on specific legislative proposals. Republicans have taken these figures and said this is why we want to create a Fiscal Commission. A fy 24 government package. Can you comment on the trajectory of the debt and deficits and may be the efficacy of creating Something Like a Fiscal Commission as opposed to other actions . Id be glad. Seems to me that the first message the projection is a familiar one. The fiscal trajectory is daunting, and you can see in the deficit chart behind me as i flipped to the next one with the debt the ratio is rising and does not get better after a 30 year window. Thats familiar. On the other hand, it is a little bit less bad than it was in our projections last year. That is the effect of the physical responsible of the act of 2023 and the subsequent continuing resolutions that implemented that. It is not enough to solve the problem, to remove the fiscal danger but it was enough to be meaningful and show up. That is the way i think of the situation now. In terms of Fiscal Commission, cbo would support that and if they would work through the Budget Committees. The Budget Committee is considering legislation. Wherever congress goes, we would support that. We will have to get that for you. The picture of the binder of cbo analysis from past Fiscal Commissions. [laughter] when it comes to the right time for that story, we will get it for you to illustrate. That is what we would do. It could be that our 2020 2022 deficit report might be helpful for congress as policymakers consider options. Last thing and then i will go to rich. We do that deficit options report every two years. We would do another one at the end of this year. Hopefully that would be helpful to policymakers. [indiscernible] how much you think is less than that, both claims filed [indiscernible] january 31. How much is out there . I will say a word and then we can go to john. It is a really difficult issue. We dont have the realtime information on the backlog of claims and if any claims are withdrawn during the time when the irs halted processing. That is a challenge. Maybe john i should turn to you if we have numbers . We increased our projections of the deficit as we anticipate under current law [indiscernible] those projections were created effectively in november. At that point we knew there was a moratorium but we had no idea what was on those pieces of paper at irs we had no idea what the future claims would be. Irs anticipated Going Forward there would be stricter scrutiny of claims Going Forward. As a result, whether the pipeline is a smaller share. [indiscernible] work is reflected in the recent estimate [indiscernible] has more Information Available that probably reflects, its hard to say. Anticipated there are more things in the pipeline in then we knew in november. Still some certainty on how successful the irs will be in evaluating which claims [indiscernible] great. Other . No . Good. Thank you. We are here to be helpful. If you have further questions, let us know and we will come back to you. Caitlin, iou a photo whenever you are ready for it. [laughter] its a pleasure. Nice to see everyone in person also. Thanks so much. Today, watch 2024 campaign trail, a weekly round of Campaign Coverage providing a onestop shop to discover where candidates are traveling and what they are saying to voters, along with firsthand accounts from reporters, updated numbers and campaign ads. Watch campaign trail today at 7 00 eastern on cspan, online at www. Cspan. Org or on cspan now. Cspan, your unfiltered view of politics. American history tv, saturdays on cspan2, exploring the people and events that tell the american story. We continue with a series, free to choose, with Milton Friedman and Rose Friedman in 1980. Created equal looks at equality in america. 8 p. M. Eastern on lectures in history, lindsay camp on the individuals and events that shaped american and Global Public health systems. Then the presidency, a look at 200ears of the munro doctrine and why it defines James Monroes legacy. Then, Historic Campaign speeches, including from john edwards, 2008, ahead of the Nevada Democratic caucuses, followed by mitt romneys speech to supporters following the caucuses. Exploring the american story, American History tv, saturday on cspan2,inthe full schedule on your pr guide or watch online anytime at www. Cspan. Org history. The uptodate d test in publishing with book tv, about books, with current Nonfiction Book releases, plus bestseller lists, Industry News and trends through insider interviews. Find it on cspan now or wherever you get your podcasts. And more including comcast. Do you think this is just a Community Center . Its more. Comcast is partnering with one thousand Community Centers to create wifi left so students fromow income families get the tools that they needed to be ready for anything. Comcast supports cspan as a Public Service along with these other Television Providers giving you a front r seat to democracy. Maryland democratic governor wes moore highlighted state accomplishments and his annual state of the state address. From the Capitol Building in annapolis, this is about 45 minutes. Madame speaker, mr. President , madame lieutenant governor, members of t g