BREAK IN TRANSCRIPT
REP. JIM COOPER (D-TN): Thank you, Mr. Chairman.
First: two announcements.
I would invite any colleague who is alarmed by what Peter has told us to cosponsor the so-called Cooper-Wolf SAFE Commission Act, a bipartisan commission to present the next president with a plan for solving some of these problems so we can take action. The bill number is 3654. Invite your participation.
Also, on December 15th in just a few days, the U.S. Treasury Department will be issuing a financial report of the United States government -- the only audited numbers we face.
And the federal employees in the room may be interested to know that still, the -- when Peter says that the deficit is only slightly above 1 percent of GDP, you know, we should acknowledge that that doesn't include things like the retirement and health liabilities of our own federal employees. But the financial report, the document that's about to come out in a few days, does address those things -- situations that would be criminal violations if they occurred in the private sector, but we continue to allow this to go on at this level.
I'm glad, Mr. Chairman, you're having this hearing. To me, these are the most important issues we face because they determine all other issues. They determine all defense spending. They determine all health care spending. They determine the future of America.
And to me, the most important sentence that Peter used was when he said, "under any plausible scenario, our course is unsustainable." In Tennessee language, that would mean any -- you'd have to be a damn fool not to believe we're sinking fast here.
Now, Peter can't use such language. I can. But this is real stuff. And the chairman may call it apocalyptic. Peter said, "under any plausible scenario, our path is unsustainable."
So you use very erudite percentages of GDP, things like that. You're remaining true to your calling and your profession. That's great. Can you quantify some of this? What is 6.9 percent of GDP? How many billion dollars is that?
MR. ORSZAG: Today, given an economy of about 14 -- or $13 trillion, that would be north of $900 billion.
REP. COOPER: So close to $1 trillion, and this is a present value number, we'd have to have in the bank today earning interest to pay out the shortfall primarily in just a couple of health care programs?
MR. ORSZAG: Yes.
REP. COOPER: Okay.
You also point out in your excellent testimony the cost of delay. If we act in 2008, that's a lot cheaper than acting in a later year -- you used 2020. What is the cost of delay? What does each year of delay cost us?
MR. ORSZAG: Well, I could calibrate that in different ways. I guess delaying from 2020 to 2030 increases the reduction in spending by 5 percentage points. So each year of delay there, roughly speaking, is another half a percent of reduction that's required.
There are lots of ways of calibrating these. I mean --
REP. COOPER: But it's on the order of -- if it's a half percent of GDP, today that would be on the --
MR. ORSZAG: Well, that's spending. That's not GDP.
REP. COOPER: Okay. But hundreds of billions of dollars of cost per year of delay.
MR. ORSZAG: There's no question that each year of delay significantly adds to the cost of acting.
REP. COOPER: And total congressional discretionary spending for this year will be what, 900-and-something billion dollars?
MR. ORSZAG: Something like that.
REP. COOPER: So just the cost of delay will be a big percentage of the total work of Congress every year -- just the cost of delay.
I'd like to explore with you too, it seems to me that a lot of my colleagues don't realize that if you use the ship analogy, it's not whether we hit the iceberg. We already have. The only question is how fast the ship is sinking. And I think that we're not noticing some things.
For example, the Medicare SGR fix. We patch that year in, year out. But the U.S. Treasury Department has estimated a real fix for that would cost $5 trillion. That's a big number. AMT fix -- we fix it, patch it year in, year out. A real fix for that is in the trillions.
So we're not noticing the genuine cost of these problems. We're just patching it year in, year out, limping along, trying to get by, hoping people don't really notice.
That, to me, is deliberate blindness. And I see, Mr. Chairman, my time is running out. I hope we can have time for a second round of questions.
I thank you, Mr. Chairman.
BREAK IN TRANSCRIPT