The hearing of the Senate Budget committee. The hearing on Government Accountability offices annual report on the nations Fiscal Health. Today the Budget Committee will hear from congresss nonpartisan watch dog on the nations Fiscal Health and the importance of confronting our critical fiscal challenges. I welcome back mr. Dodaro who is our most usual and best witness providing information throughout the year thats extremely helpful to hitting off some of the future crisis that are going to happen if we dont Pay Attention. This hearing will kick off a series of hearings and discussions that i hope will help with Bipartisan Solutions we help build this year and for next years budget cycle. The next few years should be significant for the Budget Committee. The committee has been working hard to enact reforms that improve transparency and accountability in the budget process and help put us on a more sustainable fiscal path. And we introduced the budget reform act, and i emphasize that word bipartisan its the first time any reform bill has gotten out of this committee in a bipartisan way since 1990. We were successful in turning, if when were successful at turning this bill into a law, next congress would process the first budget cycle covered by its reforms. Next year, will also mark the first budget cycle in 10 years not constrained by the budget control acts, Discretionary Spending caps. And sequester. In the months ahead well begin to lay the groundwork to more regular budgeting through a series of discussions focused on our countrys horizon. With that in mind were meeting for an update on pressing threats to our fiscal stability. Im pleased to welcome back gene dodaro, comptroller. And gao is issuing the Fourth Annual update on the nations Fiscal Health. For several years this report warned that the federal government is on an unsustainable fiscal path. Unfortunately the budget outlook has grown even more dismal since last year report thanks to legislation enacted in 2019. Last year, gao predicted that debt is a percentage of Gross Domestic Product which compares the size of our debt to the size of our economy would surpass its historical high of 106 by 2038. Now, gao products well hit that grim milestone by 2034 if current laws dont change. The congressional budget office, recent budget outlook also shows the cost of legislation enacted since last june has taken on our already unsustainable fiscal situation. Due to this legislation, namely last Year Spending agreement, which cbo attributes 1 in 7 10 trillion spending increases in the years, i still have trouble with that word with riders that repeal to pay for the Affordable Care act, cbo says debt is a percentage of gdp will soar to 174 of gdp by 2049, a 30 percentage point increase from last year projection. Cbo warns that failing to confront our rising debt will mean a future of slower Economic Growth. Higher Interest Rates and risk of fiscal crisis. As the deficit grows and we borrow more, the interest money on the money we borrow will overtake all other spending. This should be a major red flag for everyone. What we spend on agriculture, transportation and Veterans Benefits and services all combined. By 2041 projecting the payments will be more than what we spend on medicare. By 2044, more than what we spend and Social Security. And 2049 exceed total Discretionary Spending. We have debates on what the Spending Priorities should be, but Interest Payment on our debt arent even debatable. We do not get to decide whether we want to spend that money on health care, defense, or retirement security. Its already committed. Its the most mandatory funding that we do. And if we stay on the path were on today, debt interest will become the largest category of federal spending. I mentioned this committee had advanced on a bipartisan vote the budget process reforms that senat senator whitehouse and i had, ap this includes reorienting the budget resolution to a twoyear cycle and incorporating the debt limit into the budget process in a way that would minimize the threat of default. Were also calling for integrating into the budget resolution longer term fiscal targets based on National Debt as a percentage of the overall economy, a debt to gdp slope that would emphasize our fiscal trajectory and help to get us on a more sustainable fiscal path. One thing we will certainly need as we confront the hard decisions ahead is reliable financial and performance data. Earlier this year, i introduced the cfo vision act with senator warner, grassly, johnson, purdue and langford and expect the comptroller general, out of a hearing we had with him last october on the cfo act. It proposes the responsibilities to enhance strategic Decision Making and strengthen deputy cfo authority to ensure continuity when vacancies occur. It also calls for revised planning requirements and metrics to help address longstanding challenges like better ink willing costs and Performance Measures and modernizing outdated legacy systems. I should mention that at gaos suggestion, we have put in a request to omb to give us a list of all federal programs. I havent got it yet. It seems to be some problem with the definition of what a federal program is. I think i can help with that if they would just give us a printout of all of the payments that go to any entity. If an entity is getting money from us, its one of our programs. This is my last year in the senate and its my sincere hope that we can take concrete steps toward a Sustainable Future before i leave, a turn to sensible budgeting would be a good start. I hope that members today will Pay Attention to the urgent message from congresss nonpart stand watch dog our current federal situation is unsustainable and we must act before its too late. I want to thank comptroller dodaro for being here again and again and for all the delightful information that he shares with us. When we followup on it we get results. I look forward to his testimony and i dont think that we have a Ranking Member statement today. I think might be preparation for a debate thats coming up. I dont know if senator grassley wanted to make any comments . Ill ask questions. Okay. So well move on to our witness who this morning as i mentioned was gene dodaro, ahead of the office and comptroller general of the united states. Mr. Doedodaro, he was acting comptroller general in 2008. Hes been with the gao more than 40 years, nine years as the chief operating officer, number two leadership position at the agency and prior to that headed gaos accounting and Management Division which specialized financial management, Computer Technology and budget issues. What a diverse background of information thats been extremely helpful and has been noted every time that you have testified. So with that, comptroller general, you can begin. Thank you very much, mr. Chairman. Senator grassley, senator braun, its a pleasure to be here today to discuss our latest report on the Fiscal Health of the federal government. Now as we convene this discussion today, our countrys con fronting a pandemic thats threatening the health, safety, and economic wellbeing of our citizens, our businesses and our economy. And i make that point because its relevant to our message today of why its important to put the federal government on a more longterm sustainable fiscal path. Because the federal government needs to have the bugetary flexibility to marshal resources to deal with emergency situations. Now, i am concerned, as our report talks about, that our debt to gdp ratio as of the end of last fiscal year, was 79 . Thats the highest its been since world war ii when we hit the historic high of 106 of debt to gdp ratio. And that also contrasts with the debt to gdp ratio since 1946 of only 46 . So were very heavily leveraged in debt at a time when we are going to be facing a steady annual deficit of a trillion dollars a year for as far as the high could see. This will mean that our debt to gdp ratio, absent any fiscal policy changes will hit the historic high of over 100 of gdp within 11 to 14 years and depending on the estimates that are made by gao, cbo, the Financial Report of the federal government issued by treasury and omb, they result in the same conclusion. More importantly than that is that that debt will continue to grow to 200, 300, 400, 500 percent of gdp. This is why we believe the current path is unsustainable. The Social Security program is already at 1 trillion. Medicare, medicaid is expected to hit a trillion dollars each by 2026. If you include state money for medicaid. And the interest on the debt will hit a trillion dollars by 2032. So right now, our total federal budget is 4. 5 trillion dollars. Those four programs or activities alone will be 4 trillion dollars relatively soon. So that will crowd out a lot of other opportunities for spending in vital areas ranging on defense to the whole planoply of discretionary programs through the country. So we need a plan to deal with this. I recognize that we need to deal with shortterm National Priorities and to make sure that we have strong Economic Growth, but we also need a plan to put us on a better path. I was very pleased, mr. Chairman, to see the bipartisan bill that was passed out of this committee that would set the debt to gdp targets and would also deal with another troublesome area that i pointed out in the past, which is to have a different approach to setting the debt limit. The debt limit approach right now, those who control the debt, it is dangerous in the fact that it can disrupt treasury securities if its not raised in time. The treasury Securities Market and increased interest cost of the federal government. So need a different approach. Your approach included in the bill is a good approach and we have suggested tying it to the budget resolution. Now, in addition to these fiscal policy decisions that need to be made. There are still many opportunities to save additional money. Weve pointed out in our report that this year, the amount of improper payments across the federal government jumped from 151 billion to 175 billion, largely driven by increase in medicaid in proper payments and i think that number will go up higher and im happy to talk about that later. Theres also opportunities to consolidate overlap, duplication, fragmenttation in the federal government, so far actions on our recommendations have saved 262 billion and we have outstanding recommendations that could save tens of billions of dollars more. So theres a lot that can be done to deal with this issue. I, again, in closing applaud the committee for taking action in this regard, both on the bipartisan budget reform bill as well as the cfo legislation. Id be happy to respond to questions, mr. Chairman. Thank you thank you and thank you for the documentation you provided. Senator grassley for questions. Ill take you up on that and i can go over the agricultural committee. Mr. Dodaro, your written testimony says the pension festivity guarantee corporation, small time Employer Trust fund is projected to be depleted by 2025. Im aware of that and were working on legislation to try to help that out along with other aspects of multiemployer. So after 2025, if nothings done, bbg premiums wont be enough to pay benefits to the insolvent plans and so alexander and i, jurisdiction over some of this, are trying to work on that. There are other proposals as well and i think everyone recognizes that the longer we wait the worse the problem becomes. I wonder if you could comment on the need for action to shore up the multiemployer Pension System and whether you think that should would be prudent to continue to delay action . Senator grassley, i think its one of the most urgent issues facing the congress. Ive been concerned about the multiemployer plan for a number of years. I wrote a special message to the congress about this back in 2014, Congress Took some action at that time, but it wasnt sufficient enough to deal with the longer term problem. If congress does not act, theres about 11 Million People that are insured in the multiplayer pension plan and once it goes insolvent, the only benefits the government will be able to pay is 2,000 a year, if that, to those people for a pension. Hardly adequate. So, the government will fail these individuals if it does not act. I encourage you to continue your efforts and your colleagues to act on this issue. Also, the Single Employer Program while its in a current surplus situation has tremendous exposure over the longterm as well. There are about 168 billion dollars of potential losses to that program as well. But the multiemployer plan is the most urgent and i would enurge can swift action on the part of the congress to allay concerns by these americans that would be affected. I want to go to entitlements. Your agency, cbo and others have been telling us for a long time about Social Security and Health Care Entitlements and our interest issues on the debt are unsustainable and in order to do that we have to reduce deficits and debt. Social security will exhaust by 2034 and well be paying a heck of a lot less in Social Security benefits if we dont do something about that. So i want to get to health care spending. I have a bill with senator wyden to reduce Health Care Costs and we cant allow them to go faster than the economy grows. If we are serious about reducing our debt, my question to you is, dont we have to control the growth in federal spending on health care and entitlements . Absolutely. Congress needs to do that. The Fastest Growing costs in the federal government are Health Care Costs on interest on the debt. The health care cost, as you point out, senator, are growing faster than the economy and are projected to continue to do so in the future. So, there has to be some changes. By 2026, there will only be enough money in the Medicare Hospital Trust Fund to pay 89 cents on the dollar of benefits so thats right around the corner, that would affect millions of americans that rely on the Medicare Hospital Trust Fund costs. And put enormous pressure on the federal government. The suggestions that you make are good ones. We have other open recommendations and in addition to bringing down drug costs, for example, if you your payment by the federal government under medicare depends for hospital or not for doctor visits depends where you go, what place you get it. If you go to a Doctors Office affiliated with a hospital medicare pays you more money than if you visited that same doctor in a private practice location. If you equalize those benefits youd save billions of dollars in that area. So we have a number of open recommendations and i will provide them to this committee for the record and provide them to your staff as well, but you absolutely have to control Health Care Costs. And thats the most complicated part of this whole equation. If you dont control Health Care Costs, you really dont have much of a prayer of reducing the federal governments deficit and debt issues. Thank you. And thank you for your courtesy. Thank you. Well let you go to the ag meeting now that you just came from judiciary. Senator brown. Thank you, mr. Chairman. So ive been here a little over a year and probably the First Committee meeting that vividly stuck in my mind is when you were here roughly a year ago and of course, you said basically everything then that youre telling us now and i guess what amazes me most about this place is how we seem to shrug it off like its never going to have impact in the present. Health care costs, undoubtedly are the driver. I took it on in my own company 13 years ago and there are solutions. Mostly the reason were not making headway on Health Care Costs is ive never seen an industry more dug in and stubborn in want to go maintain the status quo. When you have 80 u. S. Senators that come up with some idea how to fix your business, that is like the 2 by 4 across the head and nobody is paying any attention, from pharma, to hospitals, the whole gamut, practitioners as well. Then youve got the Health Insurance industry which is kind of like the darth vader out there that keeps everything behind closed doors, does not embrace any of the elements of most free markets, which would be no barriers to entry, full transparency, robust competition and an engaged consumer. We have none of that. So chairman grassley probably of any of the committees has been most aggressive and this is all mild stuff weve been trying to get done in health, education, labor and pensions, im on that committee. We still have not settled Surprise Medical Bills. Thats got to be the easiest, lowest hanging fruit you