Before the Congressional recess, Sen. Chuck Grassley (R-IA) questioned CBO Director Phillip Swagel on President Biden's spending during a Senate Budget Committee hearing.
Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:
https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript
Stay Connected
Forbes on Facebook: http://fb.com/forbes
Forbes Video on Twitter: http://www.twitter.com/forbes
Forbes Video on Instagram: http://instagram.com/forbes
More From Forbes: http://forbes.com
Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:
https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript
Stay Connected
Forbes on Facebook: http://fb.com/forbes
Forbes Video on Twitter: http://www.twitter.com/forbes
Forbes Video on Instagram: http://instagram.com/forbes
More From Forbes: http://forbes.com
Category
🗞
NewsTranscript
00:00Mr. Chairman, you referred to analysis claiming to compare Trump and Biden fiscal records.
00:11I've criticized both presidents for not doing enough to control spending and deficit, but
00:17I don't put much stock in a study of Biden's fiscal records that leaves out hundreds of
00:23billions of dollars on unlawful student loan giveaways or that stubbornly assumes Democrats
00:30Inflation Enhancing Reconciliation Act is going to reduce deficits despite all the evidence
00:37to the contrary.
00:38I'm glad that your party is willing to at least moving away from the delusional claim
00:46that President Biden's agenda has reduced the deficit, even if the foreign three-tenths
00:51trillion that they're now pointing to is a serious underestimate of how much Biden
00:59has added to the deficit.
01:03Mr. Schweigel, as I said earlier, I'm willing to consider putting certain tax breaks on
01:11the chopping block if it is part of a deal to rein in spending and deficits, but taxes
01:18on the so-called wealthy alone aren't enough to dig us out of the fiscal hole that we're
01:24in.
01:25Democrat proposals is to tax the rich either barely make a dent in the deficit or they're
01:32designed to sneakily tax a lot more than just the rich.
01:38So my question, has CBO analyzed any legislation or determined it would put and determined
01:46it would put the debt on a sustainable course just by increasing taxes on those over the
01:531% at the top 1%?
01:56No, CBO has not analyzed any legislation that would do that.
02:01If you were to stabilize the debt solely by increasing the tax rate on incomes above $400,000,
02:08how high would the rate have to be?
02:12You know, we haven't done the analysis of how high, but it would have to be a substantial
02:16increase on such a narrow base.
02:20And wouldn't the tax rate required have significant behavioral effect and serious negative consequences
02:28for the economy?
02:30Yes.
02:31A much higher tax rate like that would have macroeconomic feedbacks that would affect
02:36growth and job creation.
02:39Recently the Wall Street Journal published an essay discussing historical examples of
02:44fiscal mismanaging contributing to the downfall of once great powers throughout history.
02:52Historian Neil Ferguson noted how the general rule of history has been that, and I quote
02:58him, any great power that spends more on debt service than on defense will not stay great
03:07for a long time.
03:09Very long time.
03:10End of quote.
03:11According to CBO, we just crossed this fiscal Rubicon.
03:16The U.S. will spend more on interest than on defense this year and every year onward.
03:22In your view, do rising debt service costs pose a threat to economic stability?
03:30And what historical lessons can you inform our current fiscal situation?
03:35Yes.
03:37They do.
03:38And in a sense, that's the near term fiscal risk is the rising interest payments.
03:42Again, it's both higher interest rates and more debt leading to those higher interest
03:48payments.
03:49And that affects all the other choices that U.S. policymakers want.
03:53If you want more spending on something or tax relief on something, the rising interest
03:59payments crowd that out and then have effects on the private economy.
04:03That there's less, you know, fewer resources available for the private sector.
04:09Less private investment, job creation, and so on.
04:12The Constitution gives the power of the purse to Congress, but the current administration
04:17has used rules, regulations, and other executive actions to make major policy changes with
04:25unprecedented consequences for the federal budget.
04:29And all of this without a single vote of Congress.
04:33How have executive actions changed CBO's budget projections since the agency's February 2021
04:42baseline?
04:43Yes, sir.
04:44So, we track those, and those go into the baseline.
04:49I'll list a couple of the largest ones, the executive actions.
04:52And you mentioned student loans.
04:54That's a total of about $560 billion.
04:57So, more than half a trillion dollars in additional outlays so far.
05:03And there's sort of more court cases and more announcements, so that's as of, say, two weeks
05:08ago.
05:09So, that's one.
05:11The second is the thrifty food plan that redefined the basket used in the SNAP program.
05:18That along with higher food prices led to about $200 to $250 billion of higher costs.
05:25There are Medicaid executive actions to streamline enrollment.
05:31That was about $164 billion.
05:34There are others.
05:35The EPA's tailpipe rule will have costs as well, in a sense that interacts with the provisions
05:41in the Inflation Reduction Act that subsidize electric vehicles.
05:45The tailpipe rule will push consumers toward EVs.
05:49There's ACA regulations addressing the so-called family glitch, extending subsidies to DACA
05:56recipients, and more.
05:58I should mention that some of the administration's actions have reduced the deficit.
06:04They had a rule that changed the payments to Medicare Advantage plans, and that reduced
06:09the deficit.
06:10So, it's a bit of both, but as you said, it's mainly on the outlay side.