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Hearing Of The Senate Committee On Budget - "Bipartisan Process Proposals For Long-Term Fiscal Stability"

Statement

By:
Date:
Location: Washington, DC

Thank you Chairman Conrad and Ranking Member Gregg for inviting me to testify before the
Committee today.
Speaking on such a panel of distinguished bipartisan, bicameral legislators, it's tempting to think
reform is inevitable. But we all know that's not true. We have many colleagues to convince.
I believe that the greatest threat to our nation's economic security is our long-term fiscal
imbalance. At the end of the 2008 fiscal year, the Treasury Department's "Financial Report of
the United States Government" reported the present value of our unfunded liabilities at $56
trillion, or almost four times the GDP of America.
2009's Financial Report will be released in about a month, and it's likely to report unfunded
liabilities over $60 trillion, having tripled in just a decade. That means for every day we delay
reform, we sink $11 billion deeper.
In my opinion, we have fiscal cancer, and it is metastasizing so quickly that, all too soon, no
surgery, chemotherapy, or radiation will be enough to save us. Albert Einstein is supposed to
have said that the most powerful force on earth is not nuclear power, but compound interest.
The President and Congress have acknowledged that the bulk of our budget problem is in health
care. That's why both the House and Senate reform proposals make an effort to reduce the
deficit now and in the future. Each contains what would be the largest nominal cut in mandatory
spending in the history of the United States -- $600 billion, or over $100 billion more than the
Balanced Budget Act of 1997. In addition to reducing our deficits through health reform,
however, we must also reduce the growth rate of health spending, i.e. lower or bend the cost
curve downward.
Although I am not satisfied that the House bill passed this weekend meets these goals, I know
that many of my Senate colleagues like you have worked to make fiscal responsibility a central
focus of the debate. I look forward to working with you all to ensure that, when the President
signs health reform into law, we will improve our short-term and long-term economic outlook.
As this committee knows, even fiscally-sound health reform will not be enough to bring
sustainability to the federal budget. Neither will a return to strong economic growth after the
current recession has passed. Our systemic deficit problem is the product of a decade of poor
fiscal policy and decades of mounting unfunded entitlements.
Put bluntly, the decision-making process in Congress has failed. So, how can we fix it? The best
course is more direct spending cuts, but we all know how likely those are. The second-best
solution is a top-level commission to force congressional action.
The proposal put forward in the last Congress by you, Senators Conrad and Gregg, impressed
Congressman Wolf and me so much that we introduced identical legislation on the same day. We
also introduced a modest variation of your proposal. H.R. 1557, the Cooper-Wolf SAFE
Commission Act, to create a bipartisan 16-member panel charged with putting America back on
track to fiscal strength.
The idea is for both chambers of Congress to use a fast-track process to prevent unnecessary
parliamentary delays, but with substitute amendments from both parties and the President. The
Commission would be made up of Members of Congress, outside experts, the Treasury Secretary
and the OMB Director. In order to ensure consensus, they would hold public hearings, and any
reported package would require support of a supermajority of the commission's membership.
The proposal put forward by Senators Voinovich and Lieberman is virtually identical to what
Frank and I have offered. The proposal put forward by Senator Feinstein is another worthy
approach to solve the same problem.
There are arguments for and against the details of the proposals before you today: having
unelected members of the commission, or whether amendments are appropriate, for instance.
These differences of opinion are largely tactical, but we share the same strategic vision.
Personally, I'm open-minded about the shape of the negotiating table. These details are far less
important than having a prompt mandate for action.
Traditionally, for Congress to undertake anything this extraordinary there must be some action-
forcing crisis. The crisis must be so obvious that even a blind partisan must admit action is
necessary.
As the Chairman has shown in his opening remarks, America's fiscal trajectory has not been
sustainable for many years. The financial markets -- and the Chinese -- have known this for a
long time. Even before the recent financial and economic crises, ratings agencies Standard &
Poor's and Moody's both issued projections that, without action to restore balance, United States
Treasury Securities would lose their AAA credit rating as soon as 2012 and 2017, and be "below
investment grade" in 15 to 25 years.
The Treasury bond is the anchor to global capital markets. If it is allowed to slip, global finance
could become untethered. The economic pain of the last year will seem like a sideshow in
comparison.

I am glad to announce that the vast majority of Blue Dog Coalition in the House of
Representatives has today endorsed H.R. 1557, the Cooper-Wolf SAFE Commission Act.
On behalf of my fellow Blue Dogs in the House, I tell the Senate Budget Committee today that
we stand ready to work with the members of this panel, the Chairman and Ranking Member of
this Committee, the leadership of both chambers, and the White House to work through any
differences on the details. We must move this legislation in order to achieve our common goal
of bringing sustainability to our nation's long-term fiscal outlook.
As the Nike slogan says, "Just do it."
Thank you, Mr. Chairman.


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