Transcripts For CSPAN2 CBO 20240705 : vimarsana.com

Recognized as one of the best internet providers. We are just getting started. Building 100,000 miles of new infrastructure to reach those that need it most. Charter communication support cspan as a Public Service along with these other providers giving you a front row seat to democracy. Congressional budget officer releasing the budget and Economic Outlook report for the next 10 years. He talks about gross projections , deficit, tax revenues and the impact of undocumented migration on the u. S. Budget and economy. This is about 40 minutes. Thank you, everyone. Thank you for joining us in person at the congressional budget office. I will talk first about the federal budget and then discuss the economy. The projections we released today 1. 6 million in 2024 to 2. 6 trillion in 2034. Measured in relation to the economic output deficits are about 50 larger than their historical average over the past 50 years. The growth is equal to three quarters of the increase in the deficit from 20242034. Initially it is similar to the amount of Discretionary Spending defense and nondefense activities. By the end of the period, at 1. 6 trillion interests roughly one and a half times larger than either defense or nondefense spending. Also boosting deficits are two underlying trends. The aging of the population and federal Health Spending per beneficiary. Those trends put upward pressure on the mandatoryry spending. Measured in relation to economic output, federal debt held by the public rises from 99 in 2024 to 116 in 2034. The debt ratio continues to rise reaching 172 by 2054. From 20242033, the deficit is 7 smaller thanar we projected last year. As a result of the fiscal responsibility it is a subsequent resolution. The changes reducing deficits by 2. 6 million the deficit is smaller than it was last year. Partly as a result of more people working. The labor force in 2033 is larger by 5. 2 Million People. Mostly because of higher net immigration. More workers mean more output leads to additional tax revenue. As a resultng of those changes n the labor force, we estimate from 20232034, gdp will be greater by 7 trillion in revenues will be greater by about 1 trillion then they would have been otherwise. We are continuing to assess the implications of immigration for revenues and spending. In particular we are still analyzing the legislation that has been considered in the senate. Two key factors offset the deficit reduction relative to last years reductions. The first is net interest costs rise as a result of higher Interest Rates. Second, the cost of Energy Related tax revisions are much higher than the staff on taxation originally projected. Those costs reflect new emission standards, market developments and actions taken by the administration to implement the tax revisions. Turning to our Economic Projections, the u. S. Economy grew faster in 2023 than it did in 2022 even as inflation slowed Economic Growth is projected to slow in 2024 amidst increase unemployment and lower inflation the Federal Reserve responding by reducing Interest Rates starting in the middle of the calendar year. In ourgr projections Economic Growth rebounded in 2025 and it moderates in later years. Since february of 2023 when they published the last full Economic Forecast, the agency has lowered its projections Economic Growth and inflation measured by the pce price index for 2024. It also expects Interest Rates to be higher from 2024 to 2027 and a projected last year. The current and previous Economic Forecast for Economic Growth generally similar to our previous projections. I am happy to take questions. I am happy to take your news organization. 1 trillion like that. That is the biggest contributor and reducing deficits. Offset by a range of other things. The tax provisions that leads to a higher deficit and then there is a range of changes in each direction. And then there is a full discussion in Chapter Three of the report. It starts with the figure three one on page 76 and goes through all the category details i noticed 2017 was mentioned in the report. It was two references that they expire. It goes down and revenues go up. That is correct. You can see those effects in our revenue figures. From 20252026, the revenue share goes up. That is a trivial mainly to the expiration of the provision. Good to see you again. 428 billion figure. New estimates ofas gas tax revee from the epa revenues. How much are those estimates higher than what jcp came out with when that bill was passed . Sure. I am flipping pages. You will see on page 86 a report as box 381. There are almost two full pages that go through some of the details. The challenge here is that it is baseline. Compared to the baseline on which the 2022 act was estimated against. Recently by jc t. Two baselines ago just because the baseline was estimated on the 22. That is a whole set of changes. Apples too apples comparison. But i can discuss some of the key components. The biggest single one was the epa rule. It would take affect with the 2027 model year. An hour baseline, that is have strengths. It is our normal procedure for rule but not yet finalized. That would do two main things. Trying to shift producers and consumers more heavily towards electric vehicles. The costs for electric vehicles. That would affect the excise tax elfor fuel. That is the biggest single piece i will keep going and then circle back to the figures in my head. On the ev side, the other thing that happens the ev tax credit was different what they had expectedha. Some of the leasing provisions where the limitations, the tax credit applied in the legislation for an individual buying vehicle. In a way someone leads to that those limitations did not apply. It is a greater use of the eb tax credit. Market development. The Battery Industry and the Solar Industry expanding more than was in bondage in the original. I know you had asked about some of the numbers, without be helpful as well . Im just trying to back out. I dont know if its possible to back out the epa part from the Inflation Reduction Act are. Do you want to go through some of those . The aggregate costs are related to the 224 billion of that. About two thirds of that is on the revenue side and one on the revenue side of the budget. Both productions and excise taxes but also changes to both taindividual and corporate taxe. We consider all the factors at once. What portion is the fact that the cpa they will promote the adoption more quickly than otherwise. The purchases versus what wouldve happened because the market is moving. We dont identify the portion or the pieces due to the technology that is moving in this industry. The tweaks to the implementation as a whole, 224 billion. I think it is appropriate to take a single look. Pushing us forward. It previously was the issuance of this spirit. The manufacturing credit side a separate piece. Getting you to the 428 million. How many evs y will be full each year. It is creating the credit that was expanded. The affiliation act. How that will slowly versus the other things in the economy over the past year. Some of this is on the revenue side. It is an additional complication its gmac the order of magnitude the Clean Energy Credit doubled roughly. Different characterization. Thinking about this as a tax expenditure. Anticipating the tax expenditures from now. The proposed rule. Am i understanding that right . There will be another adjustment that would increase the year. The next administration coming in. The opposite effect. That would show up. Hopefully everyoneot got that weird that could show up in different ways. For example, legislation. Tomorrow to undo that rule. The savings would be the half. Only half the costs are in the baseline so mixing it would have savings equal to the cost. Then there is legislation to appeal it. One last thing. Arere there other regulations that are significant enough for the budget proposed. [inaudible] a treasury for the nature of implementing the law. In and of themselves having a double impact on the baseline. The market reactions that we cant come forward, the epa in this nature ranks somewhat different than the other implementation. Can you tell us a little bit about the cost. The driving source behind that we had this bump up in Interest Rates. Now Interest Rates have come back down a bit. Sort ofpr projecting on the long run and it will be different. I am guessing what im saying is that there is all this chatter. If youod dont think to say that that will lead us to conclude the future that will be more elevated before this episode. Does that make sense . Everyone has a. If anything is unclear, we will come back to it. What we did in our previous budget projection. The increase in the net interest , you can think of it as two thirds resulting from the higher rates and one third resulting from the larger amount of debt. There is a lengthy footnote in the report that goes through their calculation. You know, we could find it. If you look at our economic chapter, very handy for everyone by the numbers document, you can see we do not get paid by the click furthest. I hope everyoneon including our viewers on cspan will downloaded and look at it. You can see that we do have higher rate. We have the 10 year 42. And then it rises to the course of the year. Earlier today it was around four one. The forecast we made back in the beginning of december at the budget update, not exactly perfect but it seems pretty good therefore the Interest Rate right now. We have essentially two things going on. Part of it is the near term horizon. So, you know, even as the fed in our projections has paused with its Interest Rate hikes, the Short Interest curve around the middle of the year. We have longerterm rates going up modestly still over 24 and 25 currently the term premium. Partly just more debt. The inflation continues to moderate down to the target. She the longterm rate continue to calm down. You are right, though, our long term rate is still pretty moderate. You have not really changed that in lieu of what happened basically. Thats right. Thank you. The emigration and how much they grhave contributed to your projection. To what degree is this pent up supply, if youd like. It will continue into the future years. And also, touching on the immigration through the senate. Just ahead of any publication of any fines. What would be a well designed immigration bill from a fiscal perspective . Okay. Let me take those in turn. In chapter two of the report, there is a long box of the impact of the emigration on the economy and then from the budget from there to the budget. It is an impact in our Economic Projections and then from the budget projections. As i have said for 5. 2 Million People by the end of the 10 year window. It is flipping on 50 and 51. You can see the chart that i put up on the screen showing the change in the labor force from what we had last year in reflecting mainly on net immigration. There are a couple things. The largest impact of the increased labor force. More people, more workers. More economy. It has budgetary effects. Immigration has many setbacks. Social effects, security effects , you know, many things that. They are more focused on the economic budgetary effects. That is what i will speak to you i am not saying those are the only effects. I recognize all of the other effects. Some of the biggest physical effects may be on the other levels of government. The state and local government, around the country would have physical effects. There would be effects of Discretionary Spending. The activity of federal government that responds to the immigrationra search is Discretionary Spending. We dont project that out. On the revenue side, the calculation we did is those additional workers would raise the amount in additional revenue i think the next piece of the question, sometimes the projection going through 2026. We had it starting in 2022. It is very difficult to know sitting here today how long this will last. We dont know. It is a key source of uncertainty in our projection. We have this urge going through 26 and then tapering back down and going roughlyly to our pre surge rate of population growth. It is something that we will just follow. Seeing what happens over the next several years to the surgeon immigration. If there was a change in legislation, we would look to model that as well. I think i answered the questions , if i remember. I apologize if i did not answer everything. Immigration t legislation. A well designed immigration bill from a fiscal perspective if. You know, it is a challenging question for cbo because we steer clear of the normative answer too the congress. This is confounding to the agency because on our 49th year we provideon the Budget Economic analysis but not tell them this is welldesigned and not well designed. I will show you Something Else that we have done. I apologize with my preface. Some of what we have done and are doing will answer the question. First you will see it embodied in our work. We have also looked at the composition of recentt immigrans it is very difficult to know with precision for the people and coming across the border now but we do have information on who were the recent immigrants and whatar are their ages, what are their skills and so on. We have used that information to model the economic and budget impacts. That, in part, is how we came to the conclusion there would be this change to the labor force. Seeing the disproportionate share of immigrants that were of working age. Sixteen up to age 54. That is one. And then we look at the education composition of the workers and we have taken that and said, okay, what kind of skills do they bring and what does it mean for innovation for entrepreneurship in the founding of new businesses and what does it mean for their wages and what does it mean for productivity in the u. S. You see in the boxes there is a discussion that the immigrants would go into the economy with a relatively low productivity but tover time their skills rise. They would shift and some of that would lower productivity and we would get the opposite. In turn it would translate to wages. That is the kind of analysis that we are doing. Coming back and connecting your question if the congress has immigration legislation. What is being discussed in the senate now or Something Else that changes the composition of immigrants. They would be in position to provide that economic and budgetary analysis. May i follow up on that . You do kind of take a revenue effect. Because i can go throut again. That is outside of our purview. The Discretionary Spending, we know it is there. The surge in immigration has an effect on Discretionary Spending. The cbo just projects Discretionary Spending in an in a mechanical way. It could be that if the search continues, policy needs to vote on additional discretionary resources and then on the mandatory side, we mandatory side we would analyze that as well. They received Work Authorizations and someone comes in with parole would receive authorization generally around six months or so after and then there would be benefits outside the window but we would have the revenue fund. [inaudible] its a mix because someone that comes in for parole becomes eligible for Work Authorization within a year generally six months, the six month mark so then sometimes in the labor force et cetera. As someone who comes in not through parole but some other channel it depends on the specifics and that is a discussion also in the demographic report that we released in january the discussion of immigration so we track the different channels. Someone with u. S. Authority generally would not receive Work Authorization. Then there would be a different impact on the mandatory spending. We would look at people like that and understand many of them would work just without authorization we need to look at the different revenue affects. Theres the revenue effect on state and local but the federal impact is lower. Is there any way to gauge the percentage that are in the search and what percentage are illegal . We have a breakdown that goes through the different, this is in the demographic report. That is the breakdown between the different categories. Not in the business of commenting on specific legislative proposals this is why we want to create a Fiscal Commission in the funding package so do we comment on the trajectory any comments on that and the efficacy of creating something as opposed to striking other options. It seems to me the first message of the projections of the are daunting. And if i flipped to the next one of course the debt is rising and it doesnt get better after the end of the 30 year window. So thats familiar. On the other hand, it is a little bit less than it was last year and then the fiscal responsibility act of 2023 and a subsequent continuing resolutions that implemented that. So its not enough to solve the problem to remove the fiscal danger, but its enough to be meaningful and show up so thats what i think about it now. In terms of the fiscal, we work with the budget committees in the house and senate and of course it is considering that legislation so wherever the Congress Goes we would support that and theyve done that in the past. We have to get that for you, the analysis when it comes the right time for that story we will find that and get it for you to illustrate but we would never told the congress to do this or do that. It could be the 2022 deficit. And then the last thing and i will stop and go back to rich. We do the deficit report every two years and then we went to do another one this year so that would be helpful. [inaudible] with claims that were found, how much is out there . I will say a word and then go back to john. We dont have the realtime information on the backlog of claims, so thats the challenge. We increase and at the the projection was created effectively in november and the information we had but we had no idea what was sitting on the piece of paper and irs. But they anticipated Going Forward there would be strict scrutiny and as a result, a smaller share of that would be paid. In the recent joint committee estimates theres more recent information. How successful at evaluating the claims. Thank you very much. We are here to be helpful so if you have questions in the future please let us know and we will come back to you. And i ou a photo so whenever you are ready. Everybody in person also. The most important issue is immigration. I think homelessness is an issue that needs to be addressed. We invite you to share your voice by going to cspan. Org campaign 2024. Record a 32nd video telling us your issue and why. Voices 2024. Be a part of the conversation. Venezuelan Opposition Leader and president ial candidate spoke about the