Weve had in decades. Live at 9 p. M. Eastern on cspan and cspan. Org. Listen live on the free cspan radio app. The director of the Congressional Budget Office testified before a House Committee on the economic and budget forecast. Keith hall was question on wide range of issues relating to Economic Growth and the government. The hearing rant about two hours. The hearing will come to order. Welcome to the committee on the Budget Hearing on the Congressional Budget Office is budget and outlook. I want to thank everyone for being here this morning. We are holding the to discuss the Congressional Budget Offices budget and economic outlook, which gives us a 10 year projection of our spending, National Debt, and how the economy is going to perform over the next decade. The report forms the cornerstone of the work we do here at the house Budget Committee, and i want to thank everyone at cbo for all their hard work in producing this report. Id also like to welcome cbo director keith hall. Director hall, i appreciate you taking the time to testify today and i look forward to your insight as we discuss this report. The discussion we will have today is a serious one, because as cbo indicates, we face enormous fiscal and economic challenges. Deficits are beginning to rise again and Economic Growth continues to be subpar, legacies of the last administrations policies that encouraged more spending, more debt, and more government. These challenges have a real impact on every person in this country. The numbers were reviewing today affect the ability of every american to buy groceries, obtain a loan to start a small business, or get a good return on their retirement plan. We know this to be the case because cbos report is telling us what would happen if we kept president obamas policies in place. Without any changes to current law, the deficit would rise from 587 billion in fiscal year 2016 to 1. 4 trillion in fiscal year 2027. During that same period, our National Debt will jump to 30 trillion. To put that in human terms, thats 93,000 for every american. For a lot of folks, thats about what it costs to buy a home. Cbo tells us that this everincreasing debt spiral will hamper Economic Growth and consign the country to a lower standard of living. As a grandmother, i want my grandchildren to have every opportunity i did. But on our current path, the dream of a good job, owning a home, and sending their kids to college is becoming harder and harder. Much of this unsustainable fiscal path is driven by projected spending for medicare, medicaid, and Social Security over the next decade. But without reforms these programs are going to fail our seniors who have worked hard and paid into them their entire lives. To compound these problems, Economic Growth is set to average at a morbid 1. 9 over the coming decade, well below the historic average of just over 3 . Slow Economic Growth hurts our country in multiple ways, it means fewer jobs and less opportunity for americans, and it means smaller paychecks and less Financial Security for those americans who do have a job. In fact, more than 5 million americans are working parttime because they cant find a fulltime job. That means weve got welders, computer technicians, nurses, and people in all sorts of industries who want to contribute to our economy, but theyre being let down by the rules and regulations coming out of washington. The problem is particularly acute among men. One of the key symptoms of this subpar economic recovery has been the decline in the Labor Force Participation rate of those in their prime working age. And heres a story from a gentleman named chris back in my district in tennessee. He said he was laid off last year, and in his letter to me he said, i worked at this job for 7 years and im a hard worker and have never tried for any government assistance. Im positive ill have a job soon but ive been without a paycheck for months now. If i have to wait any more i will have no money for utilities or to support me, my wife, and 7 year old. Now its pretty clear that chris is exactly the type of worker that makes our economy the best in the world, and hes a good husband and father who just wants to take care of his family. Chris wants to make our country stronger, and its our job to help give him that opportunity. A job is so much more than a way to pay for rent and put gas in the car. A job helps us define ourselves. It gives people a sense of purpose, helps build strong communities, and can break cycles of poverty. When americans have a steady job, they know the dignity of work. Cbos report tells us what will happen if we do nothing, but that is certainly not the only choice we have. We can choose to get our fiscal house back under control. And we can choose to get our economy growing again so that it works for the men and women of this country. And here at the house Budget Committee, that is exactly what we intend to do. Director hall, again, thank you for being here. I look forward to your testimony and how it can help guide us in forming the best policies to hold the federal government accountable, grow the economy, and serve the American People. With that, i yield to the Ranking Member, mr. Yarmuth. Thank you, chairman black. And thank you, director hall, for a drink before today to outline cbs updated economic and budget outlook. Longterm outlook remains troubling of course. We are a few away from an increase in federal deficits and debt driven by the increased healthcare and retirement cost of an older population. Your report outlines our circumstances as a new Administration Takes office. Total deficits over 10 years are essentially the same picture projected in august that you reject this years deficit to be lower than last years and mixtures to be lower still. And as you report says the economy is currently on solid ground. Thats a much better starting point than president obama faced eight years ago. President obama inherited an economy in free fall. The country was in the midst of the deepest recession in generations losing nearly 800,00800,000 jobs per month. In its january 2009 outlook, cbo was projecting a deficit of more than 1 trillion and the economy was projected to shrink by 2. 2 . That turned out to be optimistic. In contrast President Trump is inheriting a healthy economy. The economy has added 15. 8 million private sector jobs since 2010. The Unemployment Rate is less than half its 2090 and the budget deficit has fallen by more than 800 billion and nearly 2 3 reduction of the show 800 billion and nearly twothirds reduction of the show of the economy. This years cbo report projects the economy will grow at a 2. 3 rate. Job creation will also grow at a steady rate and the deficit will shrink over the next two years. What a difference eight years makes. President obamas economic agenda is also paying dividends on many other fronts. Tens of millions now have the Economic Security that comes with having Health Coverage and thereby being free from fears of an accident or illness and eat them into bankruptcy. Stock market has tripled in value, the Auto Industry has recovered from a near death experience, manufacturing is added jobs for the First Time Since the 1990s and wages have begun to grow at a healthy pace. The financial industry is better capitalized and more secure with stronger protections for consumers. We have dramatically reduce our dependence on foreign oil and increase our production of renewable energy. Housing prices have largely recovered and millions of homeowners are no longer underwater on their mortgages. I could go on and on and i probably should because i know my colleagues on the other side of the outlook present an alternative reality. Im dealing in facts and factors of this congress and the new Trump Administration by getting ready to take our country down a far different path. Republican leadership is moving to repeal the Affordable Care act with no plan to replace it. 32 Million People will lose Health Coverage, premiums will double and we will return to the days when Insurance Companies decide who lives and who dies. Hous. House republicans are plang deep tax cuts and a rollback of financial protections. Recent republican president s have tried this approach. Each time it resulted in skyrocketing deficits, a recession and a financial crisis, the most recent of which brought our country to the brink of total collapse. I was briefed by paulson ever naked in 2008. I know how close our nation came to having the light schema. The American People cannot afford for us to make the same mistakes again. Finally i want to raise the issue of immigration. Its been heartwrenching to see the Immediate Impact of the president s executive order during the past week. It is discouraging that the first immigration action of this white house separated families compelled by the innocent and will fail to make our nation safer by every logical measure. That being said i was a member of the gang of eight in 2013, four democrats and four republicans. We drafted comprehensive Immigration Reform legislation that we were confident at the bipartisan votes to pass the house. The only thing missing was the political will of Republican Leadership to bring it to the floor. Beyond addressing humanitarian and security needs, cbo has repeatedly told us comprehensive Immigration Reform would mean a larger economy and a smaller budget deficit. It is my hope that my colleagues across the aisle will recognize these factors and enact the Immigration Reform with a desperately need. We cant solve the challenges face as a nation whether its immigration, healthcare, the economy or passing the congressional budget out acknowledging and continue on that path. Return to where we were and abandon all the progress weve made would be devastating not just for American Families today but generations to come. With that, director hall, i look forward to your testimony and i yield back. In the interest of time if any of the members at Opening Statement to ask you to submit them for the record. I would like now to recognize the director of the cbo, doctor keith hall. Thank you again for your time today and giving has received your written statement and it will be made part of the formal hearing record. You have five minutes to deliver your oral remarks. You may begin when youre ready. Thank you. Chairman black, Ranking Member yarmuth and members of the committee, thank you for inviting me to testify about the Congressional Budget Offices most recent analysis of the outlook for the budget and for the economy. I would discuss a few highlights of updated budget and Economic Projections which were released last week pick after my brief remarks i will be happy to take your questions. The Economic Forecast that underlies cbos budget projections indicate that in real terms Gross Domestic Product will expand at an average annual pace of 2. 1 over the next two years, if current laws remain generally unchanged. After rising last year at an annual rate of 1. 8 . We expect that growth to boost employment virtually eliminate the remaining slack in the economy and drop the Unemployment Rate to 4. 4 by the Fourth Quarter of 2018. Further ahead according to cbos projections come gdp will expand at an average annual rate of 1. 9 over the second half of the coming decade. That growth rate represents a significant slowdown on the average of the 1980s, 1990s and early 2000s. Mainly because of the Slower Growth projected for the nations supply of labor which largely results from ongoing retirement of baby boomers and the relative stability in the Labor Force Participation rate among working women. As slack diminishes over the next two years we expect the rate of inflation to rise to the Federal Reserve school of 2 and to stay there on average. We also anticipate the Federal Reserve will steadily raise the target for federal funds and that Interest Rates over the next few years will be significantly higher than they are now. Cbo is current Economic Projections differ a bit from those published in august 2015. The agency expects gdp in 2016 to be modestly lower than projected last summer it also expects lower Interest Rates in the next five years of projects a high rate of Labor Force Participation throughout the next decade than projected in august. In fiscal year 2016 for the First Time Since 2009 the federal budget deficit increased in relation to gdp. Cbo projects over the next 10 years if current laws remain generally unchanged budget deficits will eventually follow an upward trajectory. The results are three main trends. First, strong growth and spending for retirement and Health Care Programs targeted to older people, especially Social Security and medicare. Second, rising Interest Payments on the governments debt and third, modest growth in revenue collections. By the end of that. The achingly deficits would drive up debt held by the public from its already high level. Moreover, three decades from now if current laws remain in place, that debt would be nearly twice as high relative to gdp as it is at this year and would reach a higher percentage than any previously recorded. Such high and rising debt would have serious negative consequences for the budget in the nation including an increased risk of a fiscal crisis. Our estimate of the deficit for 2017 is well within her august estimate primarily because we now expect lower mandatory spending. The current projection of the curative deficit for the 20172026. Its about the same as with published in august. Im often as specific about projection for medicaid and federal subsidies for Health Insurance purchased in the marketplaces established by the Affordable Care act. By cbos estimates an average of 12 Million People under the age of 65 will have Health Insurance in any given month in 2017 as result of expansion of medicaid under the aca. In addition cbo and the staff joint committee on taxation estimate that this year 9 Million People per month on average will receive subsidies for nongroup coverage purchased through the marketplaces. An additional 1 million are projected to be covered by unsubsidized insurance purchased through the marketplaces. We estimate 27 Million People under th the age of 65 will be uninsured on average in 2017. Cbo and gct currently estimate and 2017 federal spending for people made eligible for medicaid covered by the aca will be 70 billion, and that net federal subsidies for coverage opting to the mark places will be 45 billion. For the entire 10 year period 20182027, if current current laws remain in place costs would total 1. 9 trillion. It is important to note cbo baseline is not intend to be a forecast of what will happen rather, its meant to write an neutral benchmark of policy makers can use to assess the potential effects of policy decisions. Cbo is budget and Economic Projections predicate on the assumption that the laws of the currently governing federal taxes and spending generally remain in place of entire projection period. Even if that occurred there are no changes in those laws, before the end of it. It would still not be possible to predict the budget or economic outcomes precisely because many of the factors are uncertain. Our goal is to construct budget and Economic Projections that fall in the middle of the distribution of possible outcomes given both fiscal policy embodied in current law and availability of economic and other data. I would now be happy to answer your questions. Thank you, mr. Hall. Now we will begin the question and answer session. If i could ask the staff to bring up figure one for my first question. Mr. Hall, cbo forecast has been trending sharply downward in the recent years and roughly five years ago cbo was expecting real gdp growth to average around see over the tenyear budget horizon. Close to that longterm average growth rate that weve seen her in the u. S. , that figure has been dropping consistently and in this latest forecast it down to just 1. 9 . So