Members of the House Budget Committee on Tuesday sparred over how Congress can reverse the nation’s debt and stir economic progress over the next decade.
An annual report the Congressional Budget Office (CBO) unveiled Monday said by the end of 2015, debt is projected to reach the highest level since 1950.
In order to reverse rising debt, CBO recommended Congress make “significant changes” to tax and spending policies that would amount to higher taxes and less government spending.
“Really? We can erase all of this just by raising revenue?” asked Rep. Todd Rokita (R-Ind.), the vice chairman of the Budget panel, during its first hearing Tuesday.
“I think, yes, congressman, is the answer to your question,” CBO Director Doug Elmendorf responded.
Elmendorf reiterated findings from a CBO report last summer that said if lawmakers passed a $2 trillion deficit-reduction plan, the debt would equal 75 percent of gross domestic product (GDP) by 2039. If Congress, however, pushed through a $4 trillion deficit-reduction plan, CBO said the debt would reduce to 42 percent of GDP by that same year.
Obama is asking Congress to raise taxes on the wealthy and large financial institutions in order to provide tax breaks for the middle class.
House Budget Committee Chairman Tom Price (R-Ga.) slammed proposals for higher taxes and said spending is the problem.
“This is at the same time that the amount of revenue that will be coming in to the government will be above the historic average. In other words, this is not a revenue problem. It's a spending problem,” he said.
Rep. Chris Van Hollen (Md.), the committee’s ranking Democrat, said the economy recovered from the recession after the government didn’t follow the advice of Republicans and Europeans to “cut, cut, cut.”
“The reality is, as of today, since 2010, more jobs in the U.S. have been created in the U.S. than in Europe, Japan and all advanced economies combined. Good thing we pursued a different course,” he said.
CBO estimates the deficit will drop to $468 billion by the end of September and will continue to shrink within the next few years. By 2018, CBO projects the deficit will shoot up again, winding up at $1.1 trillion in 2025. The economy is expected to grow at a solid pace, but the rate of GDP growth will be much slower than growth during the 1980s and 1990s.
Rep. Marlin Stutzman (R-Ind.) said he doubts that more government spending and higher taxes are the appropriate solution to change the debt trajectory and spur economic growth.
People in the U.S., Stutzman said, are blaming Washington, D.C. and not their employers for the government taking money out of their paychecks.
“We continue to see Washington take more and more of it and that’s where they’re frustrated,” he said, whether it’s the gas tax, Social Security or President Obama’s new plan to pay for free community college.
Both Democrats and Republicans on the panel agreed U.S. workers are still not earning enough money because of wage stagnation.
Elmendorf told the committee that greater globalization — goods and services made overseas that are delivered cheaply to the U.S. — is one reason why income has not gone up.
“This is not a new problem,” said Van Hollen, who said he was looking forward to working with Price to boost wages.