U.S. Rep. Allyson Schwartz delivered the following statement today at the House Budget Committee hearing on the Congressional Budget Office (CBO) and its long-term budget outlook with CBO Director Douglas Elmendorf.
"The federal budget is a statement of our priorities and our values as a nation. It's about three things: 1. Being fiscally responsible and reducing our deficit, 2. Meeting our obligations to our seniors, our families and our future, and 3. Making targeted investments to grow our economy.
"To put our country back on strong financial footing, we need a balanced approach that includes spending cuts from every aspect of the budget, smart investments to ensure our economic competitiveness, and fair tax reform that will increase revenue. We need more than just political rhetoric and strict ideology. Everything must be on the table and compromise is critical.
"Democrats are committed to deficit reduction. CBO's fiscal outlook reinforces the need for action. The question is not if we reduce the deficit, because we must, it is how.
"We need to reduce the deficit, reach primary balance and begin to repay our debt. And we must do so in a way that does not endanger our current fragile economic recovery. The consequences of inaction are clear: higher levels of debt, higher interest payments on that debt, drastic tax increases, severe reductions in spending, and economic stagnation or worse.
"CBO forecasts a surge in public debt this year that will rise to 69 percent of GDP by the end of fiscal 2011. This short-term deficit was made worse by the deep economic recession and our necessary response to it, as well as reduced revenues from the Bush tax cuts and increased costs from two unfinanced wars and unpaid-for spending in Medicare Part D.
"In the long-term, the deficit is made worse by a dramatic change in demographics in this country. Our population is aging with 50 million more Americans over 65 years in the next decade. And the ratio of workers to retirees is moving from 3:1 to 2:1 in the next 40 years, meaning fewer wage earners to carry the cost of retirees. Debt is projected by CBO to rise to 84 percent or as much as 187 percent by GDP by 2035.
"This is simply unsustainable.
"A long-term balanced deficit reduction plan is absolutely necessary. The President's Fiscal Commission (Erskine-Simpson) and the Bipartisan Policy Center (Domenici-Rivlin) strongly acknowledge the need for both cutting spending and raising revenue. The Democrats proposed budget for fiscal 2012 tackles the deficit responsibly with both spending cuts and revenue increases.
"These cuts include: reductions from elimination of duplicative spending, fraud and waste; streamlining government to make it more efficient; eliminating or reducing programs that don't work while protecting those that are vital to our nation; implementing health care reform to save $1.2 trillion in health costs over 20 years; increasing revenue by ending tax cuts for the wealthiest Americans, saving $800 billion over years; and ending corporate tax breaks that bring in billions more.
"The Democratic budget makes smart, strategic investments in education, innovation, infrastructure, and research and development--which will strengthen our economic competitiveness and promote private sector job growth and expand our economy.
"This is a balanced, fair and responsible approach and it is a clear contrast to the Republican budget.
"The Republican budget takes a sledgehammer to non-defense discretionary spending with careless cuts that don't acknowledge the impact on Americans or our recovering economy. It jeopardizes food safety and highway expansion; undermines education and scientific research; and reduces our best hopes for future prosperity.
"Second, the Republican budget ignores defense spending. It is imperative that we meet our commitment to our troops, our military preparedeness, and our security as a nation, but the growth in DOD spending has got to be taken into account. It is after all 20 percent of our spending.
"In the years between FY08 and FY12 we will spend more on defense than any period in the last 60 years. This includes the Reagan Cold War build-up in the 1980s and the Vietnam and Korea Wars. As we ask other government agencies to become more efficient, so must the Department of Defense.
"Third, the Republican budget undermines our promise to America's seniors. We will not reduce costs by turning Medicare into a voucher program; it will simply shift that burden on to our seniors. The fact is the Republican plan will actually increase the cost of seniors' health care. And that increase will be borne by individual seniors. CBO estimates that the Republican plan will cost a 65-year-old an additional $6,000 in out-of-pocket costs. By 2030, it could be as high as $12,000.
"Also, if Republicans continue their assault on health care reform, the cost burden for seniors will only increase, while coverage and benefits decrease. Going back on the promise we have made to our seniors and disabled Americans is wrong. It is not only morally reprehensible, it is fiscally irresponsible.
"Finally, fifth, our Republican colleagues refuse to address the need to raise revenue, which is essential to balancing our nation's budget. Just as we cut unnecessary federal spending, we must also cut special tax provisions that add to our deficit. Tax expenditures add over $1 trillion dollars to our deficit annually. Yet, Republicans continue to protect tax breaks that benefit a few.
"For example, the "Big Five" made $1 trillion in profits the past 10 years, and they are on pace for 2011 to be their most profitable year yet. Yet, they continue to receive billions of dollars in tax breaks every year, even as the price of gas rises. This should stop and save taxpayers billions. Or $6 billion in tax earmarks for ethanol. We should, as the Senate did, vote to end these tax expenditures.
"And we cannot afford another 10 years of deficit-financed Bush tax cuts and expect our fiscal outlook to change for the better. Revenues must be a part of the solution, plain and simple.
"We need sensible, responsible and strategic solutions to our nation's budget challenges.
"It is clear the House Republican budget takes a one-sided approach.
"We need a balanced approach that meets our commitments as a nation, is fiscally responsible, and will strengthen our economy in the short and long term."