America's Fiscal Future: Examining the Need for a Fiscal Commission

I want a big round for Jody when he comes in, OK? Big round of applause for Jody when he comes in.

Please hold applause.

Thanks for making sure everybody knows that I was three minutes late to gaveling in for this important uh hearing. Is this the right thing? All right, the hearing will come to order. Today's hearing will examine the need for a bipartisan fiscal commission. We will hear from a panel of expert witnesses, including former colleagues and dear friends who have been in the thick of these battles before, and we look forward to gleaning from their wisdom. Speaking of wisdom, I thought it would be appropriate because of the wise sayings engraved on these hallowed walls, Mister Crow, uh that we might uh pick a few of them out as guiding principles. Uh one of them says, or is translated, I can't say that I read Latin or Greek, uh maybe Pig Latin, I'm from Plainview. We can do that. Uh but one of them says, no one suffers punishment for their thoughts. Well there's a guiding principle today. We're gonna speak our minds. And we're gonna respect each other. And we're gonna have civil discourse and we're gonna put that on display for my fellow Texans and the rest of the country tuning in. The the other one is, think of your ancestors and your descendants. Well, nothing more appropriate uh in a discussion about the national debt than considering not only the cost to us here and now, we'll get into all of the costs playing out, even short of a debt crisis, But I think it is immoral for us to stand idly by and not intervene and change course. Lastly, uh, and this is my favorite, he preferred to be good rather than to seem good. Man, I tell you, if there's a Texas definition of a politician, it's a professional of a professional, uh, seem-gooder. And uh, but I'm confident that my colleagues who are here today, thirty plus days from a midterm election, talking about a difficult issue in many respects to discuss and debate uh are not those who seem but are good. And uh as de Tocqueville said, uh if we lose that goodness we lose our greatness. So um Another quick comment, it it is fitting that we gather here at Old Parkland in the debate chamber, room built for the vigorous but civil exchange of ideas where serious people can disagree challenge assumptions and hopefully emerge with greater understanding. There could hardly be a better setting, I hope you would agree with me, for a candid discussion about one of the most important and consequential challenges facing our country our national debt. Amen?

Amen.

Um. Before I begin, I want to uh I wanna wave informally some off committee members, but good friends of all of ours no doubt. Joining us today is my chairman of the powerful Ways and Means committee, Jason Smith from the show me state of Missouri. Representative Bruce Westerman, is he here today? Right there I just uh the glory of the Ways and Means gavel, Uh, he too is a chairman and part of leadership of the of the United States House, and I appreciate him being here. He was on the Budget Committee when I was a freshman. I learned a lot from him. But Bruce Westerman is from Arkansas and chairs the Energy and Natural Resources Committee. Uh, my Democrat colleague and friend, Ed Case from Hawaii, he gets the award for traveling the furthest distance.

Mm.

Uh, so we know you're committed, Mister Case. Um, my dear friend and fellow Texan, Beth Van Duyn of the Lone Star State, and Nathaniel Moran, also of the great state of Texas, and my friend and colleague, Mister Self, Keith Self of Texas. All waved on. I ask unanimous consent that these non-committee members be authorized to participate in the questioning of witnesses during today's hearing. Without objection, so ordered. I would now like to welcome our witnesses. They need no introduction, but um we'll start with the legendary leader and luminary in national public service, um my friend and the father of all of our friend, Jimmy Panetta, Mister Secretary Leon Panetta, fifty years in public service. And uh you said the only thing more challenging than uh addressing in a bipartisan way the national debt was raising Jimmy. Panetta. And um, uh b- um, we ad-lib a little i- in our hearings, don't we Jimmy? Just a little, he says. Uh, he served as Secretary of Defense, Director of the CIA during Obama, the Obama administration, and uh was President Clinton's Chief of Staff and the Director of the Office of Management and Budget. Um, he also had the distinguished honor of being the chair of the house budget committee, when it was a powerful committee. And uh we aim to uh raise um uh raise the standard for what we expect of our budget committee, not to be perfunctory, but be the folks that actually rally our fellow colleagues in the United States house to get our house, the people's house, fiscal affairs in order. Well former Senator Rob Portman from the great state of Ohio friend of ours, six terms as a man of the house, uh, and then served in the Senate. But he also, uh, has served, uh, for many years in various leadership roles, tw- twice, or at least in two leadership roles I know of, the US Trade Representative for President George W. Bush and also the Director of the Office of Management and Budget. He was, uh, integral as a leader on the super committee and we Uh, we hope to again glean some of your insights and seek your counsel on how we proceed with this bipartisan debt commission. Former Senator Joe Manchin, forty years in public service at in the great state of West Virginia and culminating with four, fourteen years, I believe, uh, as a US Senator. You were also the, uh, chair of the Energy and Natural Resources Committee in the Senate. Uh gentlemen, uh we know that you've spent a lot of uh blood, sweat and tears over these issues and we are uh supremely grateful that you would take time out of your busy schedules to be with us. Okay. I'm now going to move to yielding myself such time as I may consume for an opening statement. This is the most important conversation, as was mentioned earlier, that is going on today in these United States of America, I believe. Sometimes it takes getting outside of Washington, the Washington bubble, in order to have an honest and clear-eyed conversation. And that's what I expect to happen today. And if there was ever a moment to level with one another and engage in intellectual honesty with the American people about the existential threat of our national debt, it's now. Many of us remember how businessman from right here in Dallas, Texas, Ross Perot armed himself with uh charts and graphs and captured the attention of the American people, sounding the alarm on the mismanagement of our nation's finances. Consider this, our national debt at the time uh at that time in nineteen ninety-two was a mere four trillion dollars. The debt as a percentage of our economic output was sixty-two percent, half of what it is today. And and uh and we're now at a whopping gross national debt of forty trillion dollars. Just for perspective, it took our nation nearly two hundred years to accumulate the first one trillion dollars of debt. And today, we add a trillion dollars to the national debt every five months. The reasons to be concerned about the fiscal state of our nation are many. Our gross debt to GDP uh now surpasses that of World War Two when we were fighting Imperial Japan and Nazi Germany. Our annual deficit is just over two trillion dollars and is larger than all of the appropriated discretionary budget to say it another way, we're borrowing annually more than the operating budget, defense and non-defense of the United States of America. Our interest on the data consumes almost twenty cents of every dollar in revenue. That's three times the amount of interest expense from a decade ago. At over a trillion, our net interest expense expenses are now larger than we spend on all of national defense. And it's getting exponentially worse. Over the next ten years, deficits will go from two trillion dollars annually to three trillion dollars. Cumulative debt will go from forty trillion to sixty-four trillion, according to CBO. Interest on the debt will go from one trillion to two trillion dollars annual. These numbers are seemingly incomprehensible. But to fully appreciate the magnitude of this level of debt, every American household owes a three hundred thousand dollar share of the national debt. Even more concerning, if you are eighteen years of age and younger, or if you're born today in this great country of ours, your share of the debt is over a half a million dollars. And it will be a million dollars in just ten years. Compared to the median net worth of US households, which is less than two hundred thousand dollars. Suffice it to say this is completely and utterly unsustainable. And if our nation's leaders don't intervene, we will not only undermine our nation's economic strength and our national security, but America's global leadership and our children's future. How do we give ourselves a fighting chance to save our country from fiscal ruin? That's one of the fundamental questions we have to ask. We have to be brutally honest. That's That's the first part of the answer. Brutally honest about the fiscal state of our nation. We can all have opinions on how we should fix it, but the mathematic f- mathematical facts are not and should not be subject to debate. Both parties, wanna be clear, both parties have to accept and own their fair share of responsibility and stop blaming each other, take a deep breath, and recognize that the only way we're getting out of this is if we work together. to solve this massive problem. No amount of enacted tax increases by my colleagues, no amount of spending cuts that I've participated in most recently, or pro-growth policies that have collectively been enough to substantially stem the tide of our runaway mandatory spending. Is growth important to restoring our fiscal health? Absolutely. Should we control spending? across the board, discretionary, mandatory? Absolutely. Should we continue to root out waste and fraud where it exists? Without question. But if we ignore mandatory spending and if we avoid uh entitlement reform, we will fail to restore the fiscal health of our nation and preserve the American promise for future generations. And we, by the way, won't stop the crowding out of investment capital that we desperately need to grow the economy. We won't stop short-changing our national priorities, including nas- uh our defense. We won't stop the upward pressure of inflation and interest rates. We won't address the solvency and sustainability of our critical safety nets, like Social Security, Medicare. And we won't stem the tide of the one hundred and forty trillion dollars in unfunded liability avalanche that is coming at us over the next thirty years. So, here's my conclusion of the matter. No one party will unilaterally address the structural deficit that is driving our national debt. Ten years, Mr. Portman, I've been here. That's that's I am convinced, try as we may, talk, talk big like a Texan, but in terms of uh after after all the talking is done there's there's a lot less doing, it's going to require both parties to to take this on. We have to work together, Democrats and Republicans, we have to bring the American people along and we have to have an achievable and enforceable bipartisan plan. That's what I believe, as we discuss this, uh would be an effective strategy and we certainly are looking forward to ge- to your insights on that matter. Um, I'm pleased now to yield to my dear friend from California who's been to Lubbock, Texas. at a Texas Tech basketball game. Um and uh and he is now serving in this capacity as our Democrat ranking member our friend Scott Peters.

Thank you very much, Mister Arrington, uh for for doing this, I do really love coming to Texas um uh and you you're a very very good host so I really appreciate that very much. Um thanks also to my congressional colleagues for being here and to the witnesses for a testimony we're look looking forward to I do have to say um Mister Boyle who uh is our ranking member is on a plane, I believe right now will join us mid-committee. Uh, so I'm stepping in for him and happy to do that and I'll try to represent um, some of his his viewpoint. Uh, our national debt has now exceeded forty trillion dollars for the first time ever. We are borrowing nearly two trillion dollars every year just to pay our expenses and interest payments alone are about one trillion dollars annually. Interest has become the third biggest line item in our federal budget. It's more than we spend on defense. It's more than we spend on Medicaid. This is unsustainable. I think that's why we're all here. Um, I'm I'm pleased to co-chair the bipartisan fiscal forum here in Congress with my colleague, Congressman Bill Huizenga. We started that, uh, an effort, uh, with my, um, colleague, Mister Arrington, before he was budget chair. Uh, for three years we've been pushing for a bipartisan fisc- the bipartisan fiscal commission act to get our control, our debt under control. but it has never seen a floor vote, and that's the challenge here, is that these issues don't get to the floor for a vote. Our proposals would require an up and down vote um on the House floor and the Senate floor and uh really force us to deal with this, and I hope we get support for that idea uh from from you all, from the public, and from our committee. I just have to say um I don't dispute that um mandatory spending is a huge issue, we talked a lot about that in our previous meeting. I also um just I ag- agree with the chairman on the need to control spending on the discretionary and the mandatory side.

Mm.

Uh, what he didn't talk about was revenues. And I have to say that, um, you are a good host. You prepared a really good binder. The binder still has this trope in it that we have a, uh, spending problem, not a revenue problem. I assert we have a borrowing problem and that there's two sides to it. Sure, some of it is spending, but some of it is revenue. And, um, I would just say that The the Republicans um and I give a lot of credit to my friend, Mister Arrington, for being sincere about budget cutting. They've had the keys for um for two years. They've had the ability to make cuts. They've made a lot of cuts that have hurt Democrats um or that have have really um concerned Democrats a great deal, very aggressive. But spending today or the deficit, the spending today is higher than it was when Trump took office. Uh the also the unfortunate th thing about the um the um spending cuts is they were offset by the tax cuts that were provided at the same time. Reconciliation one point O added four point five trillion dollars in new debt. Reconciliation two point O added seventy billion dollars in new borrowing for interior immigration enforcement when the Department of Homeland Security already has more money than it knows what to do with. And now uh there's a projection that uh Republicans would work on a reconciliation three point O which would also add a hundred billion dollars of borrowing and maybe a four point O to find out the savings that we haven't seen in the first three. So I'm just gonna assert that if sp- if spending is the problem, um it would have been dealt with now by my my colleagues who are very sincere about cutting it. Uh Doge uh first claimed they wanted to cut spending by two trillion dollars. Uh they moved the goal post to one trillion. When Doge finally reported what had been saved taxpayers, the figure was two hundred forty billion. That's twelve percent of what they aim to cut. But federal auditors at their government accountability office and independent analysts have called out the credibility of those final assumptions and could verify only a hundred and ten billion dollars in cuts, just five percent of the original goal. And all the while the deficit has continued to grow. Um, and then there are other things we don't talk about that that are having a big effect, but there's a a war in Iran right now that's uh already cost the United States thirty-eight billion dollars. Whatever you think about that, I think Congress should have had a say in it. That's the role of Congress. Um, again, the res- response may be to raise military spending from close to one trillion dollars uh to one point five trillion dollars, again, more spending, more deficit. Um, I have to say two other things is we we we also have a tax gap. The difference right now over ten years between what's owed by taxpayers and what's paid by taxpayers, is at least seven hundred billion dollars, maybe as much as a trillion dollars. Um, you can't defund the IRS. Those are the meter maids. Those are the people who go out and enforce the law. And we have to have respect for the law. And this concerns me that Republicans, without raising taxes, aren't really working with us to enforce the tax law laws as written. And I, and I just wanna finally say, um, you can go on Instagram right now, and you can find all sorts of people who are making nice money driving Mercedes, bragging about how they're not paying taxes. Bragging about how they're not paying taxes. We know that now a lot of people who make a lot of money find ways to offset that and aren't paying taxes. And if you think that someone who gets a a W-two uh every year and has to pay taxes out of that isn't noticing that, um I think you're wrong. I think that counts for a lot of the anger that you see on both sides of the aisle, um, against folks who are wealthy and successful. So I think part of what we have to do in a bipartisan way is figure out how to deal with revenues, be realistic about collecting enough revenue to pay for what we're doing. And I think, again, um, this has been an issue on both sides of the aisle, but rep- but, you know, mister, mister chairman, in good faith, Republicans have really tried to make a good cut at at at at expenses, at spending. Um, but we didn't really get that far. And I think now we've gotta talk about revenue. So I say that because there's only a f- maybe to our discredit, not a not as ma- nearly as many Democrats here as are Republicans. It is Texas after all. Um, but um, I I just wanna make sure that people remember that this is a two-sided problem, uh, and we gotta deal with both sides. Um, once again, I really appreciate you doing this. I think um, this is a really important problem. It's gotta be dealt with in a bipartisan way. We think the commission is a is a good way to do it, and we think um the three percent target is something we ought to talk about today as well uh which would get the um debt growing slower than the economy um. I look forward to a wonderful discussion, our witnesses, and I yield back. Thank you.

After hearing your comments, uh Scott, I regret saying that no one would suffer punishment for their thoughts, but thank you for your uh constructive uh and candid views. We're old buddies and we've been at this a while together, so I'm so grateful that uh By the way, when we passed this fiscal commission the first time out of the house, there were only a few Democrats. The party basically was saying, stand down. Jimmy Panetta, Scott Peters had the courage to step out and say,

Yes.

we're just gonna do the right thing. So, uh, thank you, Mister Peters, in the interest of time, if any other member has an opening statement, I ask that you submit it for the record. I'll hold the record open to the end of the day to accommodate those members who may not have prepared written statements. Once again, Well, we wanna thank our witnesses for their time today. Committee has received your written statements, and they'll be made part of the formal hearing record. You will have each five minutes to deliver your oral remarks, and we're gonna start with our highest ranking uh uh officer here today, Mister Secretary Panetta. Uh, you have five minutes.

Want me to start?

Yes, sir.

Thank you, and uh you've made my testimony part of the record, and I appreciate that. Um. I'd like to uh try and summarize uh my remarks as as much as I can because yeah a- as we all know there are lot of numbers here, there's a lot of statistics, uh there's a lot of concern about different parts of the crisis. Um but I what I wanna do is if I can to try to cut through that. uh and try to talk about some basic lessons that I think are important uh if you're gonna be able to achieve anything uh to deal with this. First of all, let me commend you, Mister Chairman, uh and uh the ranking member, but I'd also like to commend all of the members of this committee. I I uh, as you know, was a member of this budget committee, was chair of the budget committee, and I deeply respect uh those that are involved in the budget process. It's not easy. It's tough. But uh I really appreciate your dedication to trying to make uh the budget hopefully work again. So I commend you because I think it's very important to focus attention on what I think is probably the most serious fiscal crisis. since World War Two. I appear before you as co-chair of the committee for a responsible federal budget, along with Mitch Daniels, my co-chair, Tim Penny. But I also have a committee made up of a lot of budget experts from both sides, from both Republicans and Democrats. And the main message that we have in that committee is, for God's sakes, do something. Do something. You can't stall. You can't wait for magic answers. You can't wait for easy answers. This is gonna require some very tough decisions. But for goodness sakes, do something. Do something. Whether it's a commission, whether it's dealing with social security, whatever, you've got to do something. That's, that's the main message. And I appear before you as one of the few former members who, when I was elected to Congress in nineteen seventy-six, became a member of the Budget Committee. Uh, soon after the Budget Act passed in nineteen seventy-four. And I was proud to be part of the Budget Committee when the Budget Committee worked. Uh, both as a member and as chairman of the committee in the eighties and nineties. We passed and we enforced budget resolutions. For almost twenty four, twenty five years of the fifty-two year history of the Budget Act. We passed budget resolutions. Was it easy? Hell no, it's not easy. Did I have to spend a lot of ti- I spent a lot of time working with my ranking member, Bill Frenzel, from Minnesota. We worked together. We had conferences with the Senate that also passed budget resolutions. And we were able to adopt a conference, year in and year out. We did the job. We enforced the Budget Act. I was a participant in every budget summit during that period. Beginning with President Reagan, and then President Bush, when we came together, both Republicans and Democrats, members of the key committees, and met at Andrews Air Force Base for a number of weeks. Meeting to try to develop a deficit reduction package. Not easy. The Republicans didn't want to raise taxes, they didn't wanna cut defense, and the Democrats did not wanna cut spending, and they didn't wanna touch entitlements. Same problems. But there was a decision, because we were concerned that the deficit was increasing, and would probably go to six hundred billion dollars, That's what we were trying to avoid at that time. That there was a willingness of the president and the leadership to come together. And the deal, very frankly, was that the Democrats had to come up with two hundred and fifty billion in spending savings, largely out of entitlements. And if we were able to do that, the Republicans would put revenues on the table. That was the deal. Again, not easy. It's tough. Involved a lot of work. But in the end we passed a five hundred billion dollar deficit reduction package. When I was director of OMB for Bill Clinton, Bill Clinton decided to basically do the same kind of package. Five hundred billion in deficit reduction. two hundred and fifty billion in spending savings entitlements and two hundred and fifty billion in revenues, taxes. The combination of those two proposals, plus the agreement that we made with the leadership at the time, Speaker Gingrich and Bill Clinton made an agreement to that they would emphasize the goals that were contained in those agreements, and they did. And the result was we balanced the budget. We balanced the budget. We had a surplus. It was You know, to think about it, at the time when I thought we finally balanced the budget, I thought we're never gonna go into to deficit again. Politically, why would why would any party wanna go back into deficits? If you have a balanced budget. But the problem is that both parties ultimately decided that there were more important priorities. And that as a result, they would not focus on fiscal discipline. Let me just summarize. What I tell the students at the Panetta Institute is that in a democracy we govern either by leadership or by crisis. If leadership is there and willing to make the tough decisions that are involved in governing, you can avoid crisis. But if you're not willing to exercise that kind of leadership, then we will have crisis. We will govern by crisis. And we've been doing that too often in these last number of years. And so my main message to you is do something. Do something. And you've got the elements of it. Just very quickly, I think it's important to stop digging, set the fiscal goal of a three percent, uh of GDP target, and and you've pretty much agreed to do that. Agree on proposals to achieve that target, don't just have a target, and then not fill in the blanks. Do proposals to achieve that goal. It's a trillion dollars you're gonna need every year, it's tough, but that's th- if you're, if you wanna achieve that goal, that's what you have to do. And then lastly, encourage action that can provide some political cover for members. And that, I think, is a bipartisan fiscal commission that can at least provide some cover so that, you know, right now, you can't get together. The politics doesn't support it. But if in the very least you can pass a commission that gives you that spark, that back-up, so that you can move. I think that would be important.

I want uh if I

We have we have a crisis on our hands. We need leadership. The fact that you are here today tells me that you've decided that leadership is a better course than crisis. And I thank you for that.

I'm I thank the I thank the gentleman and just to be clear, if anybody goes over that five minutes I'm not gonna I'm gonna gavel you, but I will not gavel the Secretary of Defense. Um, I was texting I was texting Jimmy,

I'm sorry.

I said, hey will you gavel your dad, he said he said, hell no, you gavel, I'm not gonna you're the chairman. So um

You're a good buddy. You are, you're a good man.

Great words uh from a great leader, thank you uh, Mister Secretary. I'm gonna uh I'm gonna go to uh I'm gonna say the best for last, Mister Portman, uh but my Republican colleague, I'm gonna go to our our independent and friend from Westford, We got more, we got more. Jim McIntyre. We got more seniority than I got. Uh that's I I'm gonna I'm gonna save him. Um will we go back a little further than you guys?

I got you.

So um Mister Manchin, uh the floor is yours, five minutes.

Thank you Chairman Arrington and um Ranking Member Peters, I wanna thank all of you in the committee for doing this. And uh we've done it before a couple years ago and had a great meeting then, and I expect another great outcome today. You know when you think about where we are and how we got here, we've heard a lot of great comments this morning from all of you all. You all have history with It's something that we don't live our lives this way, but how do we expect to live the profession that we've chosen this way? I don't know. Uh, the Congressional Budget Act of nineteen seventy-fourth set a timeline for Congress to follow when it comes to the budget process. By April fifteenth of each year, Congress must pass, think of that word, must pass, uh, a budget resolution. And by September the thirtieth of each year, Congress must pass all twelve appropriations bills. Unfortunately, it's a time line without any teeth, and we spoke about that brief. There's no teeth whatsoever, and we pay no attention to it. On September thirtieth, nineteen ninety-six, Congress passed all twelve appropriations bill for the fiscal year of nineteen ninety-seven. We haven't done that in over fifty years. One time, fifty years. As the committee is likely aware, the national debt at the time was five point four trillion. Five point four trillion today, we spend that much and more in just one year. And the national debt exceeds forty trillion on August fifth, nineteen ninety seven. Congress and President Clinton enacted the Balanced Budget Act of ninety seven. I gave credit to Ross Perot of nineteen ninety two. If it wasn't for him raising it to that level, I don't think that would have ever happened. I really don't. Um and it was negotiated by a bipartisan way, then with White House Chief Erskine Bowles and John Casey on the House side. Um among other things, it set a it set a enforceable budget cap. For nineteen ninety eight through ni two thousand and two, what followed those bipartisan compromises were balanced budget and surpluses of more than five hundred and fifty billion dollars. Unfortunately, the United States has not posted a surplus since over twenty four years we've been in the red. None of us can survive, no business can survive, and most families can't survive with that type of irresponsible spending. There have been attempts to get back on track in twenty ten Simpson bowls, and I will say this, It was one person, President Obama did not wanna do it. He had the ability, he had he had the time and and the position to do it and didn't do it, because the votes were there, the votes were there. And you'll pay the consequences for that in history. Twenty-one percent of GDP and reduced debt to sixty-five percent of GDP by twenty twenty. Think of where we'd be today. Unfortunately, Congress refused to act for the political reasons and August twenty eleven Congress Tried again with the Budget Control Act of twenty eleven, which coupled a debt ceiling increase with a mandate for more than two trillion dollars in cuts. Unfortunately, Congress again refused to act for political reasons, blowing through those caps and spending another one point three trillion, more than we took in. Now it's too late for another warning. In twenty eleven, San Andreas downgraded us uh from our triple A rating to double A plus, and Fitches followed suit and Moody's is following suit also. Corporation's on the brink of its own downgrade and we're only a triple A rated country in the world that does not currently have a multi-year fiscal planning access process, I mean. We must reverse the catastrophic financial demise of our homemaking before it's too late. You know, when you speak to to citizens on the street, they all sit down when they get tough times. They work through it. They cut both spending and basically they try to figure out how more revenue can come in. They make adjustments and and it's expected. Anybody that's been a former governor does the same thing. balanced budget amendments, we have to sit down and make it happen. We met we meet once a month with our committees and then basically if it gets tight, it gets every other week you meet and then it gets every week, and you gotta make the tough tough choices. Um, I'm gonna finish up quicker uh with this, but I wanna say this. I had a wise old grandfather and and we called him Papa Joe. And Papa Joe was so wise, he's an little Italian immigrant, came here when he was a baby, nineteen hundred. uh fourth grade education and had a little grocery store and, and Papa just was very, very solid, very hard working. And so I asked him one time, I said, " Hey Papa, uh uh what's the difference between a Democrat and a Republican?" I was about ten, eleven years old, I had no idea, and he said, " Oh honey, there's not much difference." He says, " You put a pound money in the middle of the table, they'll both spend it all, but our Republican friends will feel bad about it." And then I said, uh I said, and then he gave me one other thing. He said, " Joe, I want you to remember one thing. Un- unmanaged debt will lead you to make cowardly decisions in your life. Unmanaged debt will lead you to make cowardly decisions. Ladies and gentlemen, we're making cowardly decisions. We're not considering our children and grandchildren. I look at my grandchildren right now, they don't have a chance to have a quality of life if we don't do something. And you know, if there's no term limits, and I I was always opposed to term limits, and I used to tell people I was against, and I was in a meeting one time and a little late in about but eighty years old, her name was Susie, she says, " Hey, Joe, just think about this." If we had term limits, maybe we'd get one good term out of you. You'd have the courage to do the right thing. Let's have the courage to do the right thing. Thank you all for taking time to be here today. Thank you.

Thank you, Mr. Manchin, and to my distinguished colleague from Ohio, uh we served together in the in the Bush administration and and always admired you. I'm glad you're here and the floor is yours, uh Senator Portman, uh five minutes.

Thank you, Chairman, uh I'm I'm glad Jimmy's here to see his dad in action and I'm glad Papa Joe's looking Uh he's he's proud of you. Um thank you for lettin' us be with you in this inspi inspirational forum. This is this is really cool. Um and uh it should inspire us all to do better. Um and thanks for putting the spotlight on this issue. I can remember Peter's thanks for what you've done in sticking your neck out uh on some tough issues. And Joe do you know how I feel about you, but uh to Chairman Errington and this committee that he has led, I said this, uh earlier to my uh former Senate colleague Ron Johnson, so I'm not just saying it to you, this is my favorite committee in the Congress because this committee has been willing to take some tough votes and report out some uh, you know, important legislation. I still love Ways and Means too, I'm was a member there as well, but but uh thank you for doing that. It's not over. I mean, you just got the ball rolling and now we gotta figure out how to get more support. Um I've been asked to speak about a fiscal commission, and I'm happy to do that. As noted, um, you know, I'm kinda like Doug Holteek and I've I've tried for thirty-five years to make a difference, uh, uh, and it's it's tough. I was the only V director, I was on this this committee, the Senate Budget Committee, I was on the Super Committee, which wasn't so super. Maybe talk about that later. Um, but my experience, uh, having seen this first-hand is that the flaws in the congressional budget and appropriations process combined with the inability of Congress just to address these issues, uh, it makes it necessary for us to do something extraordinary. And it's not just Congress, it's White Houses too. By the way, both parties in both cases. I think we have to try something radically different, like a fiscal commission. I think we have to do it in part because the American people need it. So it actually, to me, has to start with that, which is engaging the American people in this process, because right now they they they really don't feel part of it. Uh, they don't understand the impact it's having on them already, and they certainly don't understand what can happen in the future if we were to have crisis. So, uh, I believe a commission with members of Congress and outside experts that can pro- provide this process we urgently need is the best solution to a very complex and politically divisive issue. So, you guys have already been at this. Many of you have been involved in putting together proposals. Um, I appreciate uh Representative Peters, as I said a moment ago, and Huizenga for their leadership on the Fiscal Commission Act. A lot of you have co-sponsored that, I've noted. I appreciate uh Representatives Peters and Panetta for co-sponsoring the Budgeting for a Better America Act, which also includes includes the Fiscal Commission. And there's other legislation as well. Members of the committee are well aware of the challenges that we face, so I won't go into that in great detail, just to say what was once unthinkable is happening. You know, we just passed two milestones, forty trillion dollars, and then a hundred percent of GDP. We always said that was just that happened way back in World War Two, and immediately it was able to be changed cuz we didn't have those big defense spending numbers. Here we are again, and much more serious now, cuz we have the overhang of the entitlements, Medicare, Medicaid, Social Security, what that that we're not there then. So, well, we are in uncharted territory, aren't we? But the problem is not just the long-term issue of the possibility of a sovereign debt crisis or some other fiscal crisis. Uh, inflation concerns and rising treasury yields are already putting pressure on us, certainly on our borrowing costs. Recently, the ten year treasury note hit ten point O five percent, its highest yield since two thousand seven. We better be listening. The b the the the bond traders are saying something here, aren't they? And uh we don't want the vigilantes to come swooping in. It can happen really quickly, as was said by one of our uh earlier panels. As federal debt continues to rise, these higher e higher borrowing costs are increasingly expensive for government, of course, but also for the American people. So your constituents with their car loan payments, those interest rates are going up and up. Obviously mortgages uh I mean people can't afford a house for a lot of reasons, but that's one of the main ones. And it goes right back to this, if the ten years at five and mortgages are at seven or eight, uh people will continue not to be able to afford a house, uh credit card debt, uh small business borrowing costs, something we Republicans feel strongly about is helping small businesses. Boy, talk to them about their difficulty of borrowing right now. So it's already happening. It's already here. How do we explain that to people and do a better job of it? I hope these realities will test the limits of congressional partisanship. You know, we just can't remain paralyzed and put this burden on future generations. Commissions are an important tool for addressing these policy challenges um for a lot of reasons. One is that, again, we need to bring the American people along. Polling shows voters recognize the need for bipartisan action, by the way. There's a twenty twenty four Peterson Foundation survey that shows eight in ten voters, eighty percent of voters agree that the bipartisan fiscal commission is a good idea, which strengthens social security. That's a good start. But let's be honest, at the same time voters are not supportive of those specific reforms, are they? Pew Research, same thing, seventy-nine percent, this time of US adults, said social security benefits should not be reduced in any way. So this is the challenge we face as elected officials. Americans can recognize the need to address the fiscal problem broadly, but they will oppose individual changes that may be necessary to solve it, unless we bring them into this process so they understand the desperate need for it and how it can be done. Bipartisan ownership obviously is absolutely critical, can't happen without it, it's been said, though sometimes bipartisanship seems like it's on life support. Uh it's not. Um there's still a little heartbeat. Your recent legislative success uh when the House and Senate passed the twenty-first century Road to Housing Act is a example of that. That just happened. So it can still happen. Public support was there by the way. Eighty-nine percent of registered voters supported that bill. A commission can bring members of both parties into the process and require them to share responsibility for the difficult decisions, and that's really important. Rather than placing the political responsibility on reform for one party or the another a bipartisan commission can create broader ownership. Think of Ronald Reagan and Tip O'Neill. They sat down and they said, you know, uh we're gonna fix social security here uh because it's in crisis and your guys can't campaign on it and my guys won't campaign on it and they stuck to their word. And they got it done. Maybe a little harder to do that these days. But the point is, you can't just have one party do this. It has to be both parties. Congress will ultimately have to act on the Commission's recommendations, so of course you want Congress engaged. Outside experts are also valuable in my view, cuz they bring technical expertise and perspectives that may not be represented within Congress. But also they can offer and promote proposals that are needed, sensible proposals that are frankly difficult for those in elected positions to offer. So you want experts there to put out some of the some of the tougher proposals. You could have a sixteen member commission, for example, that has eight members of Congress and eight outside experts. There's all sorts of different configurations. Many of you have worked on this. I do think it's important that the presidential buy-in be there, that the president has the ability to appoint some members. Um so the role of this commission's gotta be to outline the fiscal situation we face. in clear and non-partisan ways. It's gotta bring the American people in, let them know how it affects them, and finally, the commission's gotta provide for a statutory expedited procedure and ultimately an upper-down vote.

Right, yeah.

And it can't be amended to death. So those are the basic rules. Um I'd love to talk about the s s super committee if there's interest in it, um but I really appreciate you all being here today and your willingness to step up on this issue once again. Thank you, Mr. Chairman.

I thank the gentlemen from Ohio, and now we will begin our question and answer session, and will yield uh five minutes to myself. Um Mister Manchin, um you talked about Papa Joe, uh and I you got me uh wondering uh what Papa Joe would say about how we enforce some of these great ideas. Um we're taught in business that incentives drive behavior, but the behavior of getting budgets done on time with responsible outcomes, even though it's on a piece of paper somewhere, the nineteen seventy-four Budget Act, it doesn't seem like, uh, it's rare that that ever happens in part or whole. So what would Papa John do, uh, to to right this ship? Papa Jo, I'm sorry. Papa Papa John, it's okay. I'm kinda hungry right now. Papa John, he's got, he's got, Papa John, he's got, he

Papa John, Papa John, he's got

I'm thinking of Papa John's, but I skipped lunch. he he can fix anything.

Uh, Papa was really something special, but I I learned a lot just by observing.

Hit your mike.

I learned a lot just by observing. Being I'm a little ten year, eleven year old kid working in the grocery store with him. I'll never forget that. My grandfather uh had so many wise sayings and everything and but he was the smartest man I've ever met and not having any form of education, but they people would come in and borrow money. Whoever, we lived in a coal mining camp, five hundred people if it was if uh on a good day. And they all say, " Hey, Pop, can I borrow five, can I borrow five?" And he said, " Sure, honey." Called everybody honey. Papa made basically what he would do is he said you made you perform. They said, " Pop, can I borrow five?" He said, " Sure. Here's a broom and a shovel, clean the parking lot and come back." And they said, " Pop, I'll be right back." He said, looked at me, he said, " Don't worry, Joany, about fifty percent take me up on it." He knew. He knew that there's there's a there's a reas- you know, everyone has respon responsibility. He wasn't gonna give them five up front and never gonna say, " Oh, Papa, I'll get that done." He was gonna reward them for performance. And I learned some valuable lessons there. My grandmother used to keep everybody and she had rules. Couldn't smoke, couldn't drink, and you had to work. So we grew up with those rules. And there's pretty good rules to to live by. We have become a a system, and I've told people in government, government's not your, it's n- it's not your provider. Government is designed in this democracy of ours to be the best partner you've ever had. But partnership's too wasteful. But also have the compassion. So they would learn by that, but you had to perform, and he would say, enough's enough, how much more you gonna throw on? You throwing the whole hay on? You gonna let the, you want that horse to founder on you? What you gonna do? You know, just common sense stuff. We're doing guys that's never been done before. And if you haven't put a term limit on yourself, don't worry if the people do just do the right thing. You'll go down in history as a hero to all of us. You really will.

Thank you. Mister Secretary, you and I had talked um a phone prior to uh this hearing and we reminisced a little bit on times past where and you mentioned a little bit about the summits, the bipartisan convening of thoughtful leaders trying to work together towards some bipartisan solution. You mentioned that you had the same problems, probably different magnitude in terms of order of magnitude, Uh, but you had the same problems and the same politics. But you did it. Um, I think about the culture of Congress. And when we think about and talk about the broken culture of Congress, the top of my list is the budget process and, uh, the lack of leadership there. And, um, the credit rating agencies all say the same thing. But one of the central uh themes of their criticism is an erosion of governance. So I think I'm saying the same thing. Could you encourage my colleagues up here, my friends who have been willing to lean into this, that if it happened before, it can happen again. But what is it gonna take for it to happen?

Yeah, that, I mean, that's the a fundamental issue because I I often say that I've s- in my fifty years of public service, I've seen Washington at its best and I've seen Washington at its worst. The good news is, I saw Washington work. I saw Washington work. People often ask me, out of the different jobs that I've had, Uh, which one did I like the best? And they're surprised by my answer. My answer is, I loved being in Congress when it worked. When Republicans and Democrats worked together, respected one another, focused on the issues, focused on solutions, and were able to arrive at bipartisan solutions. Now look, we had pretty good leadership at that time. And and it and it needs to be acknowledged because leadership provides cover for members. You know, we can't ask all of you to kinda walk out there on a cliff by yourself, uh and jump off the cliff. You gotta have a sense that there's a net there. And the leadership oftentimes provides that net. Look, We had Bob Dole. I had Pete Domenici. We had Howard Baker. We had George Mitchell. We had Tip O'Neill. We had Bob Michael. These were guys who were willing to stand up and say, we have a problem, we gotta deal with it, and it has to be done on a bipartisan basis. And so members, you know, who have to worry about going back home and and voting for taxes or voting for cuts on entitlements. The reality was there was political cover. The president of the United States, George Bush, stepped up. And said, we gotta do this. Bill Clinton stepped up and said, we have to do this. That provides cover. And it it is leadership. And so, what I what I think has to happen here, I mean, and look, leadership begins with you, all of you. What you're doing is leadership. What this committee is doing is leadership, by trying to say how do we deal with this. And I think sometimes your example of standing up and saying we're in a crisis, we've gotta deal with it, we recommend that we support a commission, or we recommend that we support an effort to try to deal with the trust funds problems that are going in solvent, uh or we we're stepped up and we've we've set a target of three percent of GDP, and we're gonna make damn sure that we stick to that target. Let me tell you, if you made that decision as a committee, you'll get the respect of others. You'll get the respect of the leadership. You'll get the respect of your constituents. And in the end, when you solve problems that affect the American people, there is nothing more rewarding in these jobs than the ability to do that. That's what these jobs are all about. It's not about money, it's not about power, it's not about the name on the door. It's about the ability to help improve people's lives.

Miss, thank you, Mister Secretary. I yield five minutes to my colleague from California, Mister Scott Peters.

Thank you. Um, thanks again for being here. When I talk to young people now in in the course of uh my job when I'm back home, I talk about three things. I talk about the cost of housing, which they demand I talk about. I ca- talk about climate change, which they expect I talk about. And I talk about the national debt. Because this is generational theft. And they should be outraged. They should be outraged that we are spending this money, we are borrowing money to pay our expenses, and running up interest costs that they'll have to pay for the stuff that we're doing for ourselves. Our generation is stealing money from the next generations. Um, it's a crime against young people. It is by the way also a crime against old people, because uh what what's gonna happen in social security right now um is under current law, I don't people most people don't know this, everyone in this room does, when revenues aren't sufficient to meet outlays, under current law there's across the board benefit cuts, which would now be about twenty-three percent I think, whether you're seventy-two or ninety-two, whether you're rich or poor, right? Um and I think the AARP is not really engaging on this. They think the government's just gonna stroke a check and make up the difference when those lines meet, but we don't have the money. We're not gonna have the money to write that check. And unless we get on this, we're not we're we're gonna see huge benefit cuts for everybody. I think we can do better than that. But back to the young folks, this is a constituency I think we need to get involved in this issue, because it's really their issue. Um, and I get a good reception from folks. They don't expect me to talk about that, but they get it. And I think public education is important, not because people are gonna applaud you for doing something hard. It's people get grumpy when you make change. And that's just what we're gonna have to face. But I think, Secretary, you're right, they appreciate that you did the the hard thing, cuz they know that's why they sent you. But it is also public education is important for letting people know why this is important and I just wonder maybe uh Sec- Sec- or Senator Portman maybe to you, what would you say to young people about exactly how this debt affects their prospects and their economic futures?

Uh Congressman Peters, that's a great question. And Uh everybody in this room probably has a different answer to it, but we've all got to think about it, because we've failed. We've failed to sort of allow people to see what the problem is in clear terms, um because there's a lot of partisanship around it, but also to explain to them why it should matter to them.

Right.

And when I talk to young people about it, yeah at the Portman Center we've got twenty five fellows, you know, and I meet with them periodically about these issues. We had a conference on this very topic, you know, a lot of the experts who were here were were were were there. And I talked about, you know, their their interest rates on their student loans. I mean you gotta get it right down to whatever, you know, they they really are concerned about. Some of them are trying to buy a car, some of them are trying to start a life, you know, find a c house, you know, they can afford. And so, I mean, it's not just interest rates, it's inflation, it's affecting the economy generally. I mean thi this is gonna if this crisis happens, our our economy goes into a tailspin. And so it's it's not just interest rates, but interest rates is is like now, it's happening.

Yeah.

And I think that's something to focus on. I'll say something else, which I'm hesitant to say, but I will. Um I've been working with a group that's done some survey work on this topic, you know, what do you say to people and how do you get through to people? Fear not hope.

Yeah, yeah.

They say, Rob, you're a big hope guy, that's great. But it's not gonna work. It's gotta be fear.

Yeah.

You gotta explain to people that they will lose something. Not just that we need to do this out of some aspirational goal for the good of the of the country. It's them and their families, their kids, you know, their parents, I mean, a a a and so hate to say it, maybe it's like negative advertising campaigning, not that any of you ever do that, uh but uh, you know, it works.

Yeah. Yeah.

And so we've got also we're using objective data put a little bit of fear into people that if something doesn't happen here it's gonna be a real problem for them.

Senator Manchin?

I would just say basically, how do you change the paradigm, the poem life? Responsibilities, no financial literacy whatsoever. The bar- half of them can't pass math, any type of math course. We're seeing that we're falling behind everywhere humanly possible. Does that role for the federal government to step in? Do we step back and just let it happen, deteriorate? I think basically I w- we've been I've been pushing for a one year national service. It's a poor person's gap year. A poor family can't afford a gap year. If they get in school, they gotta go. But you know, one year up front, pick 'em, just learn about your country. give something back, but we haven't done any of that stuff. Uh, we, student loans, student debt.

Yeah. Yeah.

Do you imagine student debt, you understand that most kids drop out in two years.

Right.

They have no idea that they have to pay it back, about crude interest, because they're they're sold a bill of goods. They say, well, your family income, you you get twelve thousand dollars a year.

Yeah.

They might only need four.

Right.

But there's no literacy, we're not doing anything. Should we be responsible for that?

And I'm gonna run out of time, I'll just say that

Yeah.

um right now we spend about six dollars on old folks

Well the kids can't function.

You already have to wait too long to buy a house, Yeah. start a business, start a family. I can. And thank you, I yield back.

Uh thank the gentleman from California and yield five minutes to my friend Lloyd Smucker from the Keystone State. My tenth year in Congress and I don't think I've ever been part of a meeting or a gathering exactly like this. Just look around the room at at our witnesses, the experience that they have solving problems for the country, people all around the room who've been engaged on this issue for decades, in some cases understanding the importance of this. No, we can't hear anybody, it's further away. We have uh individuals here not even on budget committee, uh including chairman of other committees, chairman of the Ways and Means Committee. the uh Senate Chair of the Budget Committee. This is a group that has come together for one purpose, and that is to talk about uh solving the debt and putting the country on a better fiscal trajectory. Why now? I think uh Secretary Panetta, you're right, there's something different about this time. We're seeing the flashing warning signs uh coming from the bond market. We saw our Treasury, the secretary, do some very interesting things to try to put the bond market in a better pathway. Um, and we all know that we have a problem. There's been some discussion about whether it's a spending or revenue problem. I don't much care. It's a math problem. Mm-hmm. We take in five trillion and spend seven trillion. We make spending decisions and aren't willing to pay for them. And it's a demographics problem. People are living longer. We have less workers paying into our system as they're living longer, their medical expenses are more expensive, we're paying a lot more for uh health care at the same time. We can fix it, and I think to your um point again, Secretary Panetta, you said do something, I think this is the group that will. Um and I think the opportunity uh is here, uh and I'm confident that we're going to fix this. Um, because um, uh, uh, Americans are willing to step up, uh, to big challenges like this. We've done it many times in the past. After all, hundred and sixty years ago we were killing one another. We came through that. We can fix this. So we've gotta believe that we can fix it. And I think we can and I think we will, and I think we're gonna do this with this group in the very near future. You can't do it without public sentiment. I think it was Lincoln who said, public sentiment is everything. With public se- sentiment nothing can fail without it. Nothing can succeed. And it's amazing how quickly public sentiment shifts. You know, think about like data centers, how that's an AI is suddenly just over the past month, how the American conversation around that has changed. We need to be talking to the American people about this. And in fact, we're gonna need a lot of help from folks. I think we do need exactly what you just said uh Mister Portman uh Senator Portman. We do need a public media campaign that tells the American people what will happen if we don't fix this. I want Americans to be calling their members of Congress and saying why the heck aren't you doing something about the debt? Why are you putting my kids in this position for uh um we're we're putting them in a position where they don't have a chance if we let this if we let this fail. I believe um a fiscal commission is the best way to have that conversation with the American people. Uh, and then I believe it needs to be accompanied with a media campaign. And I've, I've said this before, but I believe that uh because of an experience that I've had in the state senate prior to serving here, uh I know m- many people believe commissions aren't successful and many aren't. Sometimes it's just you know you're you're signing something to a committee to get rid of it. But when it's engaging the people, then's when it works. We had a we had a fiscal commission or a a commission on education funding in Pennsylvania on an issue that had been um existed for like decades, never been able to get solved. Uh it actually spanned a Republic and Democrat administration, it was bipartisan, bicameral. Uh, the key to the commission was we went all around the state and held public hearings and talked to people about the problem. Everyone got engaged, from the teachers' unions to the school boards to school choice hooks, everyone started believing that this fiscal commission was going to be the avenue to f- solve the problem that they knew um existed, had seen for a long period of time. That's the kind of conversation we need to have uh with the fiscal commission. I t- um, you know, I tell everyone here, people have told me they would be willing, this issue's important enough

Mm-hmm.

that they'd be willing to take a vote and lose their job. I say that's the wrong way to frame it. If we do this right, if we tell the public what needs to happen here, they'll be thanking you for saving it and they'll be returning you to this job. So we have to think about this, I think, as as um it's a big problem, but we've gotta be talking to the American people about that. It'd be amazing how quickly sentiment could change if we really start being truthful with the American people. I know this group right here on a bipartisan basis, in fact we're already having some discussions, some of us in this uh group today, uh about what it is that we can agree on, how we can solve this. So I'm I'm confident we're gonna fix it. Uh and uh Because we're gonna have to. We can't get to that crisis. And so, uh, I think as, as you all said, I think a fiscal commission is a, is, I think we should do this, I think we should do it now, and I think we should have that conversation with the American people. Thank you.

Don't be a d- we'll just go straight to Jim.

No questions.

I'd I'd thank my Vice Chairman and uh what what a great wingman he's been uh over the last uh almost four years. on this committee and I'm I'm grateful for you.

Thanks.

And um with that let me uh uh uh let me go to uh Mister Panetta and let my ranking member catch his breath he's had some travel schedule challenges but we're glad you're here, welcome to Texas uh don't be surpri surprised if you start voting the right way here today right now in this in this very chamber um let's give you a break and let's let's go

Yeah let me let me first say uh especially to the

yeah go ahead.

impressive uh array of witnesses we have, um and incredible public servants with uh many decades combined, and I thank all three of you. And my apologies, uh I did what you should never do. I early this morning texted my s one staffer and my wife saying, boy things look great, it looks like I'm gonna get there with plenty of time. What could go wrong? And so for those of you who aren't aware, there's been a major ground stoppage. uh in East Co- Coast Airport uh in the United States today lasting several hours and I think it's still going on. So, I'm sorry to tell you, you may be affected. Um Fox News and others have been reporting on it and Secretary Guffey has had comments, but apparently there's been a major equipment failure affecting Philadelphia, Newark, all the New York airports. So I'm even lucky to be here as um

Yeah, right.

Our next panel will deal with the infrastructure issues with our airports and our FAA. We'll just uh confine ourselves this afternoon to this uh crisis in front of us.

Good morning.

So thank you, Mister Chairman, this historic and beautiful sight, and uh happy to yield to my good friend, Jimmy Panetta.

Jimmy?

Thank you. Thank you, Mister Chairman. Good to have you here, ranking member, thanks to the witnesses. Uh let me just say, uh uh Jody, let's obviously uh appreciate the fact that you have us here. This may be one of your last committees that you chair, uh I would like everybody here to know how much the way you conduct yourselves at hearings is appreciated by members of both sides of the aisle. Democrats The stability, the stability that Jody and Brendan show uh up there as leaders uh definitely transcends down and we appreciate that. Look forward to seeing your portrait. in the budget room. Now, speaking of portraits, um, I also wanna thank you for making this a a real-time hearing. What I mean by that is normally when I'm in the committee room, I have to stare at my dad's portrait. Now, I'm at a committee where he actually stares at me in real life, apparently. But, uh, I always appreciate the opportunity to see him, of course, as well as the other two, uh, witnesses that are here. Uh, Mister Chairman, this clearly is an important meeting, it really comes at a pinnacle moment. for our nation's fiscal future, when we are facing warning signs about our national debt and deficit, that should be absolutely impossible to ignore. And I think we'd all like to say it's an existential threat that should drive an immediate response, but I think the more appropriate analogy is that it feels like it's just kind of unnoticed termites eating away at the foundation, not just of our economy, but our democracy. We kind of live in a lifestyle of fast food, cigarettes, and no exercise, and we're getting by, but our current lifestyle is driving us to our downfall. We feel fine until we don't. So it's clearly got to the point that when we start to do something to reverse direction that we're in, it's gonna hurt. That first round, that first lap around the the track is gonna be painful. But until we take that first lap, we're headed to a very dangerous spile, a spiral. When it comes to our debt, we got a high debt, we have high interest rates, as we've heard throughout this day, but it's that spiral that will continue to drive up costs even more for everyone. Now, we're here today to talk about how we have ways, come up with ways to prevent that spiral. And as policymakers, as we've heard and yes, as we know, it is our job, it is our responsibility to figure out how we can do something. But I have to say it's kind of embarrassing when you have fixed ratings agency Now they recently gave the United States an AA plus rating that the Senator mentioned, out of a double triple A to D scale, but they put a huge asterisk on that, that could hurt our future ratings. One, they said it's marked deterioration. They, they, they, they say basically you gotta watch out because we have marked deterioration of our debt service costs, but two, there's an erosion in the coherence and credibility of our policy making in the United States, with our economic and fiscal policy. I hate that they said that, but I think we all understand why they said that. Based on the way the government has spent money in the last few administrations, without any restraints, without any new revenue, and without any concern for our national debt. And now, based on this administration's policies, the fiscal pressures are only increasing, with an An- Ar- Iran war that's disrupting our energy industry and hampering non-energy trade and a tariff war that is hampering trade globally and hurting Americans. These types of policies are making things less efficient, which not only drive up prices, they are threatening our economy. We realize that our debt could make each of those worse with far less fiscal space to respond to the emergencies. So hopefully the people in this room that are gonna be in congressional rooms next term we realize that we must stabilize our fiscal path forward. But to do that, we need clearly defined targets. We need bipartisan buy-in. and an approach that puts all options on the table. That is why I support a fiscal commission. Now, Senator Portman, you were part of the uh when it comes to uh reducing the last Simpson-Bowles commission. Some people call that a failure. I would not, but I'd love to get your take on if there are any lessons from Sim- Sim- Simpson-Bowles that we can apply to a fiscal commission.

Thank you, uh Congressman Panetta. Uh I was not on the commission, I was in the Senate when they reported back in,

Correct.

and um uh you know there were a few things that were obviously glaringly wrong with that commission. One was it wasn't statutory. So, you know, Congress talked about doing something, the President ended up doing it by executive order, it was then uh reported out, and the President, President Obama decided to oppose the recommendations of his own commission. kinda hard to get that moving forward. So um it did though sort of come to the Senate through some of the members, uh of Republican members who had voted for it, and uh we were not successful in in doing something massive. But I would think close to half, and there's some experts here that might disagree with me, I think close to half of the recommendations ended up getting through. They were almost all on the tax side, the revenue side, and on the discretionary spending side. Very little on the mandatory side got touched. Um but It was a good exercise, I think, to just raise the visibility of the issue. And to this day, Erskine Bowles is out there talking about it. Um and it also did end up, you know, out of desperation almost in order to meet some of the b the BCA caps and some of the sequestration that it it that it some of the provisions were used. Um it also had a super super majority. And I think that's a mistake. I think a super majority is fine. You should uh perhaps in your commission I think you have that one Democrat or one Republican has to be part of the majority. So it can't be all partisan. I think that's fine. But don't make it, you know, uh uh uh a super super ma majority,

No worries.

'cause it it was, you know, it was just impossible to reach that number, and they did not reach it. Um so tho those were the the lessons. I was also on the super committee, and I'm happy to talk about that too, it's why I think it failed, but um i i i again most of the recommendations there were la later reviewed, and a lot of them were adopted, just because again out of desperation to find some savings on the discretionary spending side primarily. Um, but we can do better, and we've got these lessons.

Great. Thank you, Senator. Thank you, Mr. Secretary. I yield back.

Thank the gentleman, uh, from California, and yield five minutes to our friend from the Hoosier State, Mr. Marlin Stutzman.

Uh, thank you, Mr. Chairman, and and thank you to all three of you. I respect your service to our country tremendously. Um, Mr. Panetta, I wanna say, first of all, I admire your co-chair, uh, former Governor Mitch Daniels from Indiana. one of the best governors that Indiana's had to get us back on track uh fiscally. And also I gotta say, you gotta be tremendously proud of your son. Him being here is not the bold action that I saw. Uh, what I saw yesterday was that he walked into the belly of the beast at Cowboy Stadium, with a maroon shirt on, that I was like, " That is boldness right there." Uh, but uh, we had a great time together. Um, and I want all three of you to comment on this. uh if you can um first of all i just wanna say you know proverbs twenty two seven says the borrower is a servant to the lender and that's what we have to realize as a country that we have too much debt but uh secretary Panetta you served as both budget chair and secretary of defense uh a fiscal commission would inevitably address defense spending alongside entitlement programs and taxes uh how should a commission navigate the tension between the fiscal restraint and national security requirements, given your perspective on both. And I'd like the others to comment on that if they would as well.

Let let me make the point, uh, as a former Secretary of Defense, that this size debt is impacting on our national security. Uh, we're living at a dangerous time. Uh, to think about engaging in conflict at a time when our fiscal situation is so dire, raises a lot of concerns. Uh, as a, as secretary, you have to surge quickly. If you're gonna face uh problems, you've gotta have the resources to do that. Um, at the same time, I don't take the attitude that there are not areas in the defense budget that can be tightened up. The procurement system in the defense budget is still a disaster. The cost overruns, the fact that it's prolonged over a long period of time, that costs tremendous amounts of dollars. And it needs to be tightened up. We we have we still have too much duplication in the Defense Department. That needs to be tightened up. So I don't, you know, we shouldn't take the attitude that because it it, look, defense is important, spending on defense is important, uh in order to protect our national security, particularly in the dangerous world that we're in. But it doesn't mean that you don't exercise some kind of fiscal discipline at the same time. Uh, and I felt that was important when I was secretary. I mean, Look, the Defense Department has not done an audit, for God's sakes.

Right.

As secretary, I I said we've gotta provide an audit, everybody else does an audit. But the Defense Department, which spends a trillion dollars in that, doesn't it do an audit? Give me a break. So, we can protect our defense spending, we can def protect, you know, what we need in order to be a first rate defense. But we also have to find ways to make sure that we're getting the best for our dollar, and that we are tightening up where necessary. And uh I I think that we can work our way through that kind of uh conflict.

Mm-hmm. Alright, Senator Manchin. Any any comments on that as well?

Well John McCain, I tried to get a audit done uh on defense. uh, Secretary could probably tell why they refused to do it. Uh, we did everything we could to punish them and couldn't do it enough to basically, because of the offense of our nation, to do it. So there was no meat to it.

Yeah.

But the bottom line is is that everyone should have a budget, uh, and an audit done before they re their budget is requested.

Yeah.

And all you do is basically the only thing that I wanna know about the budgets is this. Everyone spends like a drunken sailor the last year if they have money left over before they wanna return anything back cuz if they return it back, they'll get cut. I I proposed one time, I said, why can't we give them a part of the savings? If we return bu budget back, money back that you don't spend, you can use that discretionary for that committee, whatever you wanna do in that committee, as far as to to help it in in its oversight. Just some incentive. At least we'd get fifty percent savings to the public. Right now we get nothing.

Yeah.

So there's gotta be a change of how we do it, how we audit it and how we review it, and how we let them spend their money or not spend their money.

Yeah.

My time has expired before the record, Mister Chairman, I would support a commission. I think that we need some uh folks like this that would give us good recommendations.

I thank the gentleman from Indiana. And now uh the long awaited uh comments of my ranking member who's been a great partner in setting the right tone as Mister Panetta said. Uh we've passed fourteen, fifteen bipartisan bills to address the dysfunction of the budget process, believe it or not. Two have become of the law of the land. That doesn't happen without a good partner, especially in the minority, uh it takes a lot more uh to step up in that role. So thank you, the floor is yours, seven minutes.

Well thank you, uh and it has been over these last almost four years now, uh a complete pleasure uh working working with you Jody as I know your your time is is drawing short. Um and this is uh I think kick-starting this effort is is quite the legacy piece because I know how passionate you are about it. Uh and it's also again uh remarkable to be in such a a historic venue. Um I think it's helpful before we get into the ways to solve this problem to take a step back and say okay, how did we get here? Not for name-calling purposes or a food fight, but if we're going to solve the problem, it's at least helpful to have a baseline of just how exactly we got into this. If you go back over a quarter century ago, say the year two thousand, you had four consecutive years of a balanced budget. Now you have a situation in which we've taken a little over five trillion in revenue and we spend about seven trillion dollars, a shortfall of almost two trillion dollars or or one point eight to be more precise. And of course our national debt uh de-accumulation of all of those deficits has just surpassed the forty trillion mark. There were three major things that happened the last twenty-five years to put us so deep in the red ink. The first were the tax cuts. Uh, I really wish that tax cuts entirely paid for themselves. Who wouldn't want that? We could have a tax rate of zero point zero zero zero zero one percent, and none of us would have to worry. Unfortunately, that's not the case. And so the two thousand one and two thousand three Bush tax cuts, their partial uh extension and made permanent, the twenty seventeen TCJA, and that's not including what was just passed last year by Congress, because this data's only through twenty twenty three, that added a total exceeding ten trillion dollars to our national debt in that time. And that doesn't include the full cost, of course, because that doesn't include the cost of servicing the debt that it helped add to. The second major cause, the wars in Iran uh or excuse me, Iraq and Afghanistan. They were mostly financed through borrowing, whether you agreed with the decision to go to the uh into those countries or not. That's actually besides the point. The reality is we didn't pay for it. That added somewhere between four and six trillion dollars to our national debt, with additional cost continuing to grow through veterans' care, and again, interest on the money borrowed to finance those wars. And then finally, the COVID-19 pandemic response. Congressional Budget Office shows that the pandemic-related legislation uh that began in twenty twenty under President Trump and a Democratic House and a Republican Senate, so this was indeed bi bipartisan. In fact, some of the bills we passed uh were actually unanimous, if you recall in those early days of twenty twenty, and then through twenty twenty one under President Biden, that added more than five trillion dollars to uh in federal deficits. So that is what has brought us there. There hasn't just been one reason, it's been the accumulation of many things. We're here now, and the idea that we're gonna solve this problem uh entirely on one side of the ledger is is probably uh just not accurate. Now, the question is then, how do we go about solving the problem? Well first I should back up. I think there are some people who still have their head in the sand that this is even a problem whatsoever. I'm here to say from the Democratic side of the aisle with quite different views from my Republican colleagues, uh unlike what Vice President Cheney once said, that deficits don't matter, no, deficits these size do absolutely matter. And our national debt is, as Secretary Panetta said, a major problem, including a national security problem. And I really worry that if we were to face an event like what we faced in the fall of two thousand eight, with the Great Recession, my goodness, we would have limited tools to respond and wouldn't be able to to respond in the fulsome way that we did in O eight and O nine to save our economy. So given that, The question is then, what is the best process? And I know there are many who are quite sincere, like the chair and and members on both sides of the aisle about this idea of the commission. We had a hearing uh earlier this year, and I just wanted to to quote from this, um our past Budget Committee Chair John Yarmuth, who would have liked to have been here today but he's at home uh observing Yom Kippur, uh he had said at that hearing quote, "The course of action is not a mystery." You neither cut spending uh or you either cut spending or raise revenues or both. Doing that is Congress's job and not a commission or task force. Further, my fellow Budget Committee member, uh I'm not sure he's here today, but Tom McClintock, and now I'm not often in the habit of of quoting Tom McClintock, but I will here today because he largely agreed with uh with former Chair Yarmouth. He said quote, " The ultimate bipartisan commission in this nation is called the Congress. And the Congress, as imperfect as it is, is where these decisions must be made. Passing the buck is simply not the answer. The buck stops here. And I have to admit, I I'm more inclined to agree with with both of those gentlemen. I am more of a commission skeptic. Uh, the fact that the previous ones have failed. I also fear that as sincere as the the folks are gathered here today, I do fear there are others who would vote for a commission as a way of saying, oh look, I'm pretending to do something about this, now I can just push this off and ignore it. So, given all of that, please explain to me what I'm missing then, why you think a commission would be best, and perhaps how it should be tailored, I know some of you addressed this already, but what would be um some lessons learned so we avoid the failures of the past? Go ahead.

You know, you you've gotta you've gotta ask yourselves where are you now, politically, in terms of your ability to do what needs to be done? And the reality is that you're in gridlock. you're paralyzed. It's the politics of our time. And so, the question is, do you remain paralyzed? Or do you try to move something that says on a bipartisan basis, we need to address this issue. And what that will do is I think it will provide at least a degree of cover for the members, so that ultimately w- if a commission does come to an agreement, then the members can step up, uh and do what needs to be done in order to deal with the deficit. So, it's a it's a starting point, it's not an end point, it's a starting point. And that's why I think it's worth considering, because I don't think that frankly the politics of this moment is gonna change overnight.

It's okay. I just go.

Well, I remember, well, I I was there during that hearing, I remember talking to John before and after about it. And um he he wasn't adamant, I wouldn't say. I mean he just kind of said, w why would it make any difference? Um I don't know about Representative McClintock, but I I think that this is a an opportunity to educate the American people that's gonna be very hard to do in the normal process, number one. To me that's the most important thing. So the first thing the commission does is it lays out the facts. You know, forget what you see on the internet or what people say, you know, conspiracy theories about what happened with this debt and deficit or the t you know, lay it out in a way that Republicans and Democrats can agree. And I think that's not too hard. And then bring the American people in. You know, have hearings around the country like this. in Texas and in your district and elsewhere that say, here's this problem, you know, are are you gonna join us because your kids and grandkids shoot you at the stake here. And I would even say as I've talked about a lot, it's affecting you right now. So I think that you're not gonna get that unless you do a commission. And then finally, providing cover, I totally agree with what Secretary Panetta said. Um there is a degree of cover there. Um uh and then finally, ultimately Congress gets to decide. Congress gets to establish it, Congress gets to vote yes or no. Uh, so it's not like you're taking it away from Congress.

Very quickly I'll say this. The way you two conduct a meeting is exemplary, okay, and I had the same ha I had the same relationship with Senator John Barrasso, in in in the Energy Committee. Bruce has, Bruce and I have worked very close together. This is a rarity. Unless we can adopt rules in the House and the Senate, that it's a bit ethical violation if we campaign against a sitting colleague, If we give money against a sitting colleague, should be a severe ethical violation, until we can change the behavior, you're not my enemy, you're my friend. I am not gonna campaign against you, I'm not giving somebody money out of my pack, just because you're on the other side of the aisle. That used to be an unwritten rule up until early two thousand. It changed and went to hell in a handbasket after two thousand. But it's gonna take rules that we can adopt in both the House and the Senate, to conduct ourselves in a much more civil way. And it should be a severe ethical violation, if we basically uh don't do that. To me that would change the whole atmosphere of getting things done in Congress. We don't live there anymore, we don't have meals together anymore, we don't know each other's spouses or children, nothing. And the House and the Senate don't even know each other. A few of you, I've been very fortunate to get to know you and be friends with you, but we don't cross over that much, cuz we're not there enough. It's gotta change.

I thank the gentlemen and now yield to our conference. Vice Chairman and friend from Utah, Mister Blake Moore.

Thank you, Chairman. I really, as you know, appreciate this this chance when we passed the fiscal commission and and committee last Congress. It was uh it was a it was a journal entry moment. I just used my newsletter. I don't write in a journal, but I'm pretty much gonna use that and um and I'm hopeful that we can continue that, that, that, that uh motivation. I I wanna share something before I jump into my My uh question here is, r- Stanley Drunkenmiller recently wrote a pretty un- pretty pretty important piece in the Wall Street Journal and here's an excerpt from it. "During the debt ceiling fight in twenty in twenty eleven, I said a brief technical delay in payments would be terrible." Remember that debt ceiling time comes, it would be terrible. "But less terrible than another decade of can kicking without reform." I won't add it, I I won't say a decade. That was twenty eleven. So we've now had fifteen years of can kicking without reform. And that's my fundamental premise, is that we need a catalyst to be able to make some reform. Congress needs it. I wish we could say it. I I agree with Mister McClintock. I agree with Ranking Member Boyle. It is our job. But as I've watched in my five and a half years, and been watching from the sidelines prior to that, we need a catalyst. It's unfortunate, but it's true. And I I I believe the fiscal commission would provide that catalyst. Let me ask a couple questions. Um, there's two things that were actually said that I think actually emphasize the point point better than anything. First was the that we were joking about the infrastructure along the East Coast and then across our country. We spend so much money on interest alone. we can't even invest in our infrastructure, and that's a sad reality. And then uh Director Panetta, which I think is his most important title, we won't go there though, but Director Panetta said, uh the he mentioned a budget summit, well we're having a debt summit, when he he had budget summits back in the day, we now we're we're resigned to having a debt summit. And there's something really important about that, where we are right now. Um Director, I have two books up in my office. Uh, uh there's lots of books, but two that I for sure have read is yours, Worthy Fights, and John Kasich's book as well, Two Paths. Both of you tell, it's a, they're great books, they're g- they're very, very important, but they both tell a unique time from your perspective and from Kasich, Chairman of the Budget Committee's perspective when you actually balance the budget. And it wasn't easy. It was very, very difficult. You were in the White House, he was uh in Congress leading this effort. But you both talked about doing something very, very difficult, and I just wanna ask you one simple question. What was your motivation to do something and accomplish something that you knew was gonna be difficult?

Look I I believe that the reason you're elected to public office is to govern. It's not to spend your time just protecting your seat. It's to govern. That's what people want in an elected official, is somebody who co- goes back to Washington and solves the problems of the country. And I felt, as a member of Congress, that if I could, in some way, be able to make sure that the deficit did not get it out of control. And make some of the tough decisions, that and and these were tough decisions. I mean I I think I think we have to be honest here. It we're having this this forum. But the reality is, if this forum accomplishes what I think you wanna accomplish, then every one of you will face a tough decision. Because you're gonna have to vote on whether or not you reform entitlement programs. Whether you reform Medicare and Medicaid. Whether you're willing to raise taxes. Those are damn tough votes. But the members at the time, when the package was presented to them, five hundred billion in deficit reduction, the president supported it, the leadership supported it, and it was bipartisan. And I felt for the first time, because look, prior to those summits, we had done a lot of talking as well, and not a hell of a lot of action. But that summit was a moment, to the credit of President Bush, where we came together, sat down together, negotiated together, and basically as a group held hands and made the tough decision. Wasn't just me, it was others as well. And that's what worked.

Thank you. Please, Mr. Portman.

Just one quick note because we're here in in Texas.

Sorry.

Um, George HW Bush, um, showed a lot of courage. And uh, I was his director of legislative affairs at the time. I was sitting in the back of the room, uh he was sitting at the table, and um, uh uh the Andrews Air Force Base summit was really tough. Newt Gingrich turned on the president, you may remember. And he said something uh one day in the cabinet room to a bunch of Republicans, including Republicans from Texas. He said, " Look, we gotta do this." By the way, we're talking about two hundred and fifty billion dollars, you know,

Did what? Okay.

compared to today, oh my gosh. But his secretary of treasury came to him and said, " This could affect markets, you know, we have to do something about this." And and he was just committed to it. But he said, " Look, if you wanna campaign against me, if you wanna call me, and I'll use the word SOB instead of what he said, do that. Fight me." But we gotta get this done. And uh he showed courage. And my view is that partly because of Republicans, uh one in particular, Patrick Buchanan, and partly because of Democrats, George Mitchell, he lost his re-election because of it

Mm-hmm.

in nineteen ninety two. But it's that kind of leadership, you know, to answer some of the earlier questions, what what does it take to get one of these things going? I mean you gotta have gotta have Biden, and he provided it.

And you know I'll just publicly as a as a as a close here just publicly say, I've s I've I've seen Director Panetta, thank you for those comments, um, Senator. I've seen your son, others peters on this committee make really difficult decisions and and willing to do it. And I think we've got a lot more opportunity to say and to publicly say I think we wanna thank Sylvie for Sylvia for you know training both of you. Thank you.

I thank Mister Moore and yield to the gentleman from Hawaii, Mister Ed Case, for five minutes.

Thank you Mister Chair and first of all to the Chair and to the Budget Committee, thank you so much for letting me uh join you uh on this critical uh hearing. Um I um in an earlier chapter of my congressional career. I served on the House Budget Committee starting in two thousand and five. The debt then was seven point nine trillion dollars and the deficit to GDP was sixty-one percent and here we are twenty-one years later. Um, I think we've uh beat into the ground here already today that we have a major crisis on our hands. Um, frankly that's a good thing that we all know it at this point, since uh uh some of our colleagues and much of the rest of the country is still in a little bit of denial on that. very angry about it. What we have to do is get to a solution. Um, we can debate uh over uh Congress's uh responsibility and ultimately is our it is our responsibility uh, but we're not doing the job and my view is that we cannot do the job without some help. Uh, and that's what the physical commission allows, so with with with respect to my uh ranking member who I in uh intend to convince otherwise over the le next uh couple of months, Um, I think we need a fiscal commission. I think Mister Moore put it right. Uh, we need a catalyst here. Uh, fiscal commission is the way to go. We are not yielding our responsibility. We need to vote on this. We're not giving the responsibility to the commission. Um, I think it's important to say that, uh, there are a number of different efforts going on in Congress and outside Congress with a lot of great partners including those that are in the room here today. Uh, we of course have the action and the focus of this budget committee, which I really, really appreciate. Uh, Mister Peter spoke of our bipartisan fiscal forum, which has been active. Also our problem solvers caucus, the house problem solvers caucus, a group of over forty of us, uh bipartisan, has endorsed a bipartisan uh physical stability framework, including a physical con commission. Uh, we have bills in the hopper that are bipartisan. We are working right now uh among ourselves to get those bills. into shape so that we can introduce them immediately upon the next congress and get going from the get-go on this. So that's a background to getting into some of the details on those bills, which I would like to crunch some of the details with you. And I I I just would like to really make this a speed a speed uh uh question um uh situation here. I'm just gonna run some of these details. Uh we've had these discussions inside of our various groups, inside, outside, and some combination, but we've gotta get these bills in shape to introduce. So, Um, uh, detail number one, issue number one, target, we, I think we would all agree, correct me if I'm wrong, that we need some specific target. It can't just be solve the budget. It can't just be balance the budget. We have used uh, debt to GDP. We have used deficit to GDP. I think the consensus that we've arrived at is uh, deficit to GDP, three percent deficit to GDP. Is there any question about that? Anyb- any of you disagree with that?

Uh, people who don't, I think that's practical.

Well you You can speak about all these things, but you unless you have a shot clock, You put a fiscal commission together with the shot clock, privileges on the floor, so you can basically guarantee me as a voting public constituent

Yep.

that I'm gonna see you vote on something, I'm gonna make sure you're gonna be held accountable.

Yep.

If you put that on the uh uh out there t you know, and I would say this to all of you, how many are you talking about, the death of the nation? How many are you campaigning on that? Is it an issue? Are you using it? Talking about it? You bringing it up to f you know, you're not hearing anything.

Well yes, the answer is yes,

Yeah.

but I I with respect, Senator, I'm just trying to get uh a question about whether on the right track in terms of our goal.

Oh yeah.

What are what's our target? What are we shooting at? Deficit to GDP that's okay with everybody? Three percent?

Yeah.

Okay.

So we're we're

Um number two, and and Senator Portman, you raised this, a composition of the um, physical commission itself, because um we we've had a good solid debate inside um our circles about whether the president the administration should be a participant. Now some of our bills uh do not include the president it's a legislative commission so it's a legislature telling the legislature what the legislature should do uh the other perspective is no, the administration has to be a part of this, they're they're part of the government uh uh and um uh uh I think senator Portman, you made that comment that the administration has to be a part of it is there is there a question there should we have the administration on the commission itself?

You talking about again are you asking should they have

Representatives of the president appointed by the president.

rep should they put share a point? They shouldn't have the majority. That's for they didn't want a point but sure.

No, that's that's that's well of course this is Congress, you know, we're not gonna give them the majority. But some of the some of the if the some of the the bills

I I think I think it makes sense, I think it makes sense to have somebody from the administration

OK.

uh as part of it. Um because even though Look i i it's tough, it's a long shot. But if you if you have somebody like the Treasury Secretary or somebody who, you know, has has a reputation for being able to deal with ekin economic issues, and that individual's at the table, it makes it much tougher for the president to say to hell with it.

OK. My time is up, so I'm just gonna leave.

I I I did notice in one of the commissions that you're supporting that the president gets a I think it's four appointments but two have to be from one party and two the other party uh that was kinda clever in other words, it's a presidential appointment but it's it's

Yes.

If you had if you had a Republican House and Senate and presidency over the next two years you wouldn't want it to be so skewed uh on the Republican side, you want it to be fifty fifty, I think. So that would that would enable you to

Not four,

Correct.

but four, they had four members.

Uh

In in the commission, this commission.

You all have four members to the present? You're saying your bill says that f the president gets four choices?

Well our uh the per well I'm on a couple of bills,

Oh.

but basically they say the presidents get six out of eighteen. So not Not uh uh not of the and if you we could get into the weeds on this and my time is up,

Yeah.

but um you always worry about the president and the majority party

What was the take depends on?

tag teaming each other, but you gotta take a risk somewhere. Anyway, that's as much time as I have, happy to continue the conversation, but just wanna get to the weeds, get to the solution, get the bill introduced. Thank you.

I think the gentlemen couldn't agree more. Getting the incentives right here, having the right contours, learning from, you know, uh past commissions. uh, Mister Kay, so that we can launch this with the greatest opportunity for success. Uh, that those are good questions and very important tactical questions. Um, I'm gonna yield now to the gentleman from Kansas, Mister Ron Estes, also the Chairman of the Social Security Subcommittee.

Well, thank you, Mister Chairman, and uh, more and more of my fellow Kansans are talking about how the debt is a top concern of theirs, and becoming bigger and bigger. You know, last month, of course, our debt crossed over forty trillion dollars. The last time we had a committee hearing talking about uh a fiscal commission was November of twenty twenty three. So in less than three years, uh we've gone from thirty three trillion dollars at that point in time and added another seven trillion dollars to the debt which is uh uh horrible. It's not sustainable, no business, no family can operate that way. Before I talk a lot about some of my activities that I wanna cover is Also, let's we we need to focus on how do we go forward from here. Uh, I mean, we can talk about what's happened in the past, uh, a- and and whether it's a spending or or or tax issue. And I know there are studies out there that said that if none of the major spending programs have been done since twenty twen two thousand one to two thousand twenty-three our our debt to G GDP would still be about sixty in the sixties percent and if none of the tax major tax increases had happened our debt to GDP would still be in about sixty percent. So it's a combination of a lot of things, but we we've gotta move forward from where we are. Um, you know, just in in fact looking at interest, we're paying a thousand, or we're paying a trillion dollars this year in interest, which is uh up and we've already talked about how that's starting to impact things as national security and other things. You know, and uh recently social security now is uh uh trust funds expiring in twenty uh, twenty thirty two. So that's an issue that we're gonna have to face as well. Uh, a- and it would be one of those crises where, uh, uh, recipients would be facing a, somewhere between twenty three, twenty five percent cut in, in their, uh, in their payments and retirement system. Uh, talking about some things at work, you know, after we passed the, the big beautiful bill, the working family tax cuts, uh, you know, in terms of focusing on how do we, how do we keep the economy going and and keep uh uh tax revenue at a uh improved area. One of the things that came out of the projections from CBO in February um that we've actually seen that we've exceeded now with tax revenue we're about seventy five billion dollars ahead of what the projections were so that was really the whole intention of getting this pro-growth activity with the with the tax increases or the the tax cuts through through TCGA or uh through the working family tax cuts. Um, but the the focus we have to go forward now is how do we, how do we make sure that we have tax revenue coming in, if it's gonna stay at eighteen percent of GDP we wanna hire GDP, we've also gotta address spending uh through that. Secretary or Director, whichever, whichever we wanna use here in terms of the title, one of the things that you've talked about on the different commissions Simpson, Bowles and others, um, h what was the, what was the emphasis on tripping the trigger. You know, we've talked today about us being more engaged, that there's a maybe we're in a more critical mass, but something was the silver bullet that said, let's have the commission and let's move forward, let's address the issue uh back then. What do we need to do today to find that that silver bullet, to at least get the the ball rolling so that we can have something to vote on?

That's uh, you know, that That's a good question, because it it what you've gotta think of is ultimately not just where you think you wanna go, but how do you get there? Uh and I I think that if members were to say we've got to do something about Uh, because social security, I think, is something

This hearing is in our social security has nothing to do with the death

the American

The gentleman will suspend.

of four and a half trillion dollars in tax made by the billionaire social security on the law,

The committee's not in order.

and not contributing to the death. This is a commission to cut social security.

The committee is not in order.

This is a media model that we're trying to follow.

I ask that the designated law enforcement present in the room, present in the room, take the necessary steps to restore order.

not social security,

so that the committee can proceed with this business.

not the debt, not the security,

Yeah, I think so.

has not contributed to the debt, co- social security cannot contribute to the debt, is hearing is a farce, you know you're contributing to the debt, taxing not millionaires, you know you're giving five hours of commission, you got five hours of business mind.

He needs money back. He needs money back. Yeah, you He needs money back. He needs money back. Sorry for that.

That's

I said we got out of the Washington bunker.

Su- it's okay, I'm I'm used to it.

But some apparently Some pierced that bubble and and and brought some Washington drama. See if there's anybody else who wants to say something, Jamie, Yeah, yeah, every yeah, exactly. see if anybody else

But But I I I do think that because Social Security is in trouble,

Continue.

and in five to six years could result in a twenty two percent cut in benefits, that if there were a bipartisan group that were willing to move forward and address that issue, that I think the fact that that there was a bipartisan effort to deal with a trust fund problem, uh, and you were able to get something passed and hopefully signed by the president, I think that would be an important step to your ability then to address other issues that are gonna be important. But you need to, you need to take that first step. That's, I mean I I think that's really what we're trying to do here, is to say where can you go to take that first step? And yeah, you could do it with a commission, you could do it with social security, you could do it with Medicare, um but you've gotta be able to put it together and get it done. That's the key right now.

Yep, yep, so.

Yes, Senator Portman.

Ron, you asked about Simpson Bowles and and how it got started. Remember uh during the great recession and the financial crisis, there was an explosion of debt deficits. And um, you know, as I said earlier, compared to now, it didn't it doesn't seem that bad, but at the time we were really concerned. People thought we needed to do something. So I I I think that was the impetus. Much like today, that should be the impetus, that you know we see this spiraling debt and deficit, we see more needs on the defense side, Um, you know, we see uh an aging population, um that uh social security in trouble, so I I think we're in a similar situation that we should we should move to address

You

Well, like uh the spiral in d deficit.

Very quickly, you are on the campaign trail, so you know what's going on, you're hearing it from your constituents. If they th if they could see that basically this unmanaged debt that we have, this crippling debt that we all have on us is basically a cause for inflation and basically a cause for high food prices, gasoline prices, utility prices, interest rates and everything else, it really is contributing to everything that they're upset about right now, that you all have to go out and defend. They're talking about everywhere you go.

Mm.

Who they gonna blame? It's Republicans' fault, Democrats' fault? It's everybody's fault. And it's more our fault if we don't do something. You're in that position now, but if the I just think if if a voting public understands, this crippling debt, uh you're paying for it. If you don't like what's going on, you're paying for it. And that's what's happening. So if you're not demanding that, from the person that's asking you for their vote, and find somebody that does understand the urgency of the of the change that's needed. So God bless you all, but man, I tell you, it's it's a tough one. It's a tough one.

Yeah, you're right, seeing it in the cost of a loan when you borrow a car or or or or a

Everything. They're they're effective,

house or grocery store or anything,

everything, houses, cars, grocery.

yeah.

Yeah. Basically, yeah.

Well, thank you all for being here. This we appreciate your help in in being engaged in this and I yield back, Mr. Chairman.

I thank the gentleman from Kansas and now yield to the gentleman from Georgia, Mister.

Thank you, Mister Chairman, for holding this important hearing, and I really hope that this begins a genuine shift toward fiscal responsibility, because I have seen too many times in Congress um where fiscal responsibility is not taken seriously, as our national gross debt barrels toward past forty trillion dollars, Washington is long overdue for fiscal discipline. Washington's spending spree is no longer just irresponsible in my opinion, it's dangerous, and it must end as immediately as possible. And I think many aspects of that have been highlighted, but to put this in perspective, this year the federal government expects to spend about or, excuse me, expects to receive about five point six trillion dollars in revenue, but plans to spend seven point four, that's a about a one point eight trillion dollar deficit. More than one trillion dollars will go to interest payments, and that is triple what they were in twenty twenty one, just five years ago. Think about what kind of a path that would be. And yet that interest payment funds no services, it funds no investment, no private business could operate this way, and yet this is the current path of the federal government. High deficits and debts will spiral inflation out of control, increase borrowing costs, suppress wages, and it affects everyday hard-working Americans. Further, global markets will not finance US deficits indefinitely, and if confidence in our ability to repay erodes, we risk a sovereign debt crisis here in the US, which could trigger a global financial system collapse, not seen since the Great Depression. And that is why we need to establish a fiscal commission, and I'm all for it, to help Congress confront the challenges of America's impending national debt crisis. For too long both sides of the aisle, and I mean both sides, have failed to ad- meaningfully, meaningfully address this crisis. This is the thing. You know, when when when members make a vote and what they do is they think they will never have to pay the price or experience the never the negative impact of the decision that they make they're not gonna change. There will be no change whatsoever. until we actually realize that there will be a negative impact, and we will feel it. It won't be five, ten, fifteen, twenty years down the road, all right, it will be very soon. Then I think, and only then, I think, will will people actually change. Um the time for action I think is now. We need to immediately reassure the global markets that America is serious about addressing this crisis. A bipartisan fiscal commission can produce a blueprint. to meaningfully reduce the deficit that can be considered in both chambers of Congress, under expedited procedures, and importantly, skip the filibuster in the Senate. So. Secretary Panetta, uh you've talked a little bit about this, but what are the consequences of a sovereign debt crisis on our federal programs, especially our national security, since as Secretary of Defense uh you held that position for quite a while. What are your thoughts on that?

our The reality is that our military strength is dependent on our economic strength.

Mm-hmm.

There're two pillars to our national security strength. One is the military, But the other is the economy. And if the economy is not doing well, or we're running the size debt that we are now And by the way, I think I think there's a real possibility of a debt spiral

Mm-hmm.

that's gonna go on, because the d as the debt increases, it increases interest rates.

Mm-hmm.

As interest rates increase, it increases the debt. And we're caught in that spiral right now. And if that situation continues, it's going to impact on resources for defense as well as for other areas,

Mm-hmm.

because it's being eaten up by interest payments. Uh, and regardless of what your priority is, The resources are not gonna be there. Uh, I remember saying to President Bush, uh, when he was asking about this. I said, " You know, Mister President, I don't know whatever your priority is as President, but the reality is if we run the size deficits that we're worried about, you're not gonna have resources."

Uh-huh.

Whether it's education, whether it's defense, or whatever. And so, I see that as a concern in national defense rights. now, because I think in a very dangerous world, where we need to be able to deploy and search quickly, it makes it very difficult for defense to search if there is, if we're running these size deficits.

Well thank you, and and I've got one more quick question, I know I'm kind of over a little bit, but um Senator Manchin, just to ask you um If the American people actually understood in concrete terms what the effect of this spiraling debt cr um uh that we have what it actually does with interest rates if you know in any other way that it uh directly affects their life, do you think it would make a difference?

Oh.

I think if they knew how we don't do not perform,

Uh-huh.

that we don't do what they have to do,

Mm-hmm.

balance their budgets, live within their means, make tough decisions, if they knew that we don't do any of that, that we pass it down and blame it on somebody else, and if somebody else is a fault or somebody else's administration or one political party over the other if they knew exactly what we don't do that they have to do, I think, oh, they would hold us nails to the cross. They should.

Thank you. Now yield.

I think the gentleman now Yield to the gentleman from Texas, Mister Brandon Gil, for five minutes.

Thank you, Mister Chairman, and thank you uh for your leadership both on this committee and in the rest of the conference. Um I think it's fair to say there's not enough people in Washington who have both brains and backbone and you've got both, so certainly really appreciate that and sincerely mean it.

Uh-huh.

Um and I'd like to thank the witnesses for being here as well and and for taking the time. Um Secretary Panetta Uh just to to begin with you, could I would love to hear you further elucidate some of the the national security implications of of a high debt load. I know you you touched on that um just a second ago, but wou but would love to hear more from you.

I think I think there are, I mean there are several things that I I wanted to mention. A high debt makes it very tough to plan strategically. And right now, in a very dangerous world, we've gotta plan our ability to respond to any one of those flashpoints. Whether it's Russia, whether it's China, whether it's North Korea, whether it's Iran, or whether it's terrorism. Uh And m my concern is that how do we have, a a and I worry about this particularly now with the war in Iran, as to whether or not we are going to be able to respond to a crisis elsewhere effectively. Uh, and that depends again on money, it depends on resources, it depends on capability. Secondly,

Yeah.

I think

Well, nothing there.

Yeah.

in order to deter our enemies, they've gotta be convinced that we have our fiscal act in order. If they think our fiscal situation is deteriorating, and it's undermining our ability to be able to support a strong defense, then we're not gonna be as as able to deter our enemies. They're gonna sense weakness. Thirdly, as I said, you have to surge in war time. If we're going to if we go to war, we've gotta have the capability to surge quickly. And,

Yes.

you know, right now we've we obviously we have committed a lot of forces in Iran. If China decides to go into Taiwan, we would have to surge, uh depending on our position, we would have to surge forces there. It's not gonna be easy to do. There's no carrier there now. So, we're paying a price

Yep.

for for the the the lack of resources.

Uh, how do you think about the tension between national security expense um and our current deadload, in other words, i i it's very difficult to uh defend uh uh uh a bankrupt country at the same time, um we've we've got serious national security needs.

Yeah, no, it It sends a message of weakness to the world. I mean people look at our fiscal situation, they look at a forty trillion dollar debt, they look at the interest payments that are eating us up alive, and what they see is an America that is not able to m- t- to discipline itself, to discipline itself. Uh fiscal discipline is never easy. It I it was not easy when I was on the budget committee, it sure as hell wasn't easy when I was director of OMB. Because I had to stare at the president in the face and say, mister president, you can't do it. We don't have the resources to do what you wanna do. You've gotta be able to have that kind of discipline. Uh there was a a question related to how we got into this this trouble.

Mm-hmm.

When we passed the budget agreements, and when we passed uh the Bush budget and then the Clinton budget, tied to that was enforcement by the committee. By the budget committee. The budget committee had We had caps on spending, we had points of order to stop caps from being exceeded. We had pay-go.

Mm-hmm.

Pay-go was a requirement not just for spending, but for taxes as well. And we had to enforce that. So somebody who wanted, had a bright idea, wanted to go to the floor, I had a point of order against that, unless they had a way to pay for it. That's called enforcement. Whatever you you ultimately agree to, you're gonna have to be aware that you are going to have to enforce what is in that package. Because if you don't have that discipline, then it'll go to hell very quickly.

Thank you, Mister Secretary. My time's expired.

I thank the gentleman and yield to the Speaker, you all didn't know we had the Speaker of the House, it's just the North Carolina House with us here today, formerly and now member of the Budget Committee. Mister Tim Moore, five minutes.

Well, I found that that job as Speaker, if it's like airline miles they don't transfer, so I can tell you that.

Well

Well, it's good to be with you, Mister Chairman, and uh thank this uh wonderful panel of witnesses today for for the information. You know, as I travel around I think part of what the three of you have touched on is what is as well as several folks here, and that is making sure that folks back home in our districts understand how important this is. And so when I go and I talk to folks and I say, would you realize we're spending over a trillion dollars a year in interest, that's more than we than we fund our military, you can you can see the eyes get wide and the and the and the jaws drop. And that should just be the exclamation point. I asked a question in an earlier hearing about, you know, how much this may impact the average family, for example the debt, uh what we're dealing with with inflation, which is all tied to that, to the average American and their home and their their mortgage every month, and uh I won't call him out but he gave me some information, little over five hundred dollars a month, that for the average household that they're paying more in interest on a house payment because of this. So it's a real problem, and I and Mister Chairman I appreciate you and I appreciate the folks who made this trip here today to to drive this point home. But even beyond that in terms of what it's doing domestically, with what we've seen the debt, we we have to take into account what this means for us on the international stage, what that means in terms of the geopolitical influence of the United States, uh these borrowing costs and so forth. And and I would tell you that maintaining our our uh Secretary Panetti, you you mentioned this, it's not just military, but it's also economic. And the core of that is the fact that the US dollar is the basis of so much trade. I believe roughly fifty-seven percent of global trade is based upon the US dollar. So let me just ask you this, what factors would you say, if you had to list a few, are the most important to preserving that international confidence in the dollar?

Well, the most

The most important thing is to pay our bills.

Yep.

Amen.

Uh the world, the world is out there, you know, interested in buying our debt. Uh China has what, six hundred billion dollars worth of our debt. we get increasingly vulnerable to those that are going to purchase our debt, because they have leverage uh over what we're doing. I mean, imagine if China basically decided to suddenly start getting rid of the of the uh the debt that they hold. and the signal that that would send to others. So, it it's incredibly important that we recognize that our ability to be fiscally disciplined sends a message to the world about our credibility. And whether or not others w have confidence in our dollar and confidence in our economy. And right now that's shaky.

And and to that point, I think China has actually started withdrawing some of its purchase, although we have recently passed the dollar back stable coins as we get into the digital asset space. And I curious if you had a chance to look at that, and I'll open up to all three of you, in terms of how you how you think that's gonna play in terms of maintaining the dominance of the dollar as the international currency. Senator?

Right.

Tim, uh uh um, I think it could it could help uh in the short term. I think the long term question though is just the fiscal condition and the deterioration. And the the the sense with regard to the bond market, you know, is the full faith and credit really there? You know, at some point you're gonna monetize this debt on us, which was talked about in the previous panel. So I think that's sort of the fundamental issue that has to be addressed. Um a buy-back of some percentage of our bonds that we're able to uh af afford to do is is, you know, not just a drop in the bucket, it's just not gonna get it

How many how many countries think that we're financially stable?

Um

With all all the with the tariffs what we're doing, and we're bragging about the tariffs, how much money is coming in, we don't see reducing the debt whatsoever, punishment, retaliation, revengeful. I mean, how many, USAID, we cut that out. How much uh health care uh, you know, we've we've provided health care for the whole world. We're not doing any of those things yet to build goodwill up. And we're thinking they're gonna come to our aid? Why would anyone be upset they're not coming? Why would you come if someone kicked the living crap out of you, and then says, oh, I need you now? You know, the bottom line is, we're the leader of the world and Being a, I've always said this, being a superpower is more than just having a super economy, having a super military. You have to have super compassion for the underprivileged of the world and helping them a little bit to come on. We don't have anybody standing with us right now, and they might be re looking at that as a weakness that we have because of the financial condition we're in.

Well, I'll tell you this, it seems to this member that there's a severe spending problem that folks internationally know what that a lot of folks in Washington know what it is, it's time that we actually do something about it.

Yeah.

That I yield back to them.

They're not receiving their r- pro profits from it or that sort of thing. They're not getting proceeds.

Exactly. Thank you. Yield back.

I thank the gentleman now yield to uh my friend and the chair of Ways and Means, uh Jason Smith for five minutes.

Thank you, Chairman Arrington, for holding this. Thanks for allowing us the opportunity to wave on. Um as I have been sitting here, I've been thinking we probably should put in a statute that the chair and ranking member should be from way the Ways and Means committee, since Um, we have such a great history there. Um, and uh, super proud of the work that both of you are doing. Um, you know, a lot of the discussion that we're talking about, whether it's to do a commission or not to do a commission, we all know we have an issue. Um, we have a huge, huge burden on our country. And it's because our fiscal house is completely out of whack. And it didn't just happen just in the last It didn't happen in the last ten years. It didn't just happen in the last fifty. And so, um, the responsibility before us is just to do the job. We're elected members of Congress. We really don't need a commission to tell us to do our job. We just need to do it. We could do it right now, if we just came together. And it's not easy. It's not easy to come together as Republicans and Democrats. Um, I know as being chair of the Ways and Means Committee, I strive to get some bipartisan pieces of legislation, and some we're successful on, and some we just can't find a way. But you don't give up, and I think that's the key before us. No one here wants to see um Medicare or social security insolvency, because that would affect every person who we represent. they would get benefit cuts of what, twenty-four percent, twenty-five percent? We can't allow that to happen. And so it's our responsibility to do it. We do it by working together. Um, and I know that people in this room room can do that. Um, but I do wanna hit on a couple points that I've heard in some of the discussion today. Um, for the past two decades, revenues as a share of our economy um have remained roughly the same right at seventeen percent. That chart was up in the round table a little bit earlier as well. In fact, the passage of the two thousand seventeen Trump tax cuts, um we actually saw several years of record revenues. We cut taxes, but revenues went up. I think that's quite important. However, what we have also seen is the share of the economy in spending has skyrocketed. Typically, if you look at over the if you exclude the last five years, the spending towards GDP is roughly twenty percent. Seventeen percent revenue has been consistent for almost fifty years. However, spending just in the last five years has jumped up to an average of twenty-five percent of GDP. It used to be twenty percent, which was still not balanced. And so, I would argue that we do have a spending problem. Because revenue has been consistent for fifty years at seventeen percent of GDP. But our spending sure hasn't been. And those are just stats and data points that are real. I'm not making them up. Anyone can use chatGPT or Claude, whatever you want to. to check it. It's very, very accurate. And so I would love, Mister Portman, Senator Portman, thank you, first off, this is an amazing panel, um, amazing panel, and we appreciate all of you being here, um, in showing the need for our country. Mister Panetta, I do wanna say we are grateful to have your son, um, on the Ways and Means committees, an incredible individual, and he is a prime example of what bipartisanship can be. And I think that that's extremely important. And the same way with you, Mister Manchin, um you've showed a record of bipartisanship um in your public service. So I appreciate that. But Mister Portman, how um how would you like respond to what I said in regards to the seventeen percent um revenues towards GDP and now the twenty-five percent of spending towards

Well, first, Jeremy Smith, it's a it's exactly right, and you make a great point. Um Second though, and this won't surprise you, um you're not gonna get there unless revenue's on the table. And I think that's one of the lessons of the super committee, not everything was on the table, in terms of Democrats in my view, the House leadership at the time, they weren't willing to look at entitlements. Um uh uh I would say the House Republicans at the time weren't particularly interested in looking at revenue. The process had come out of the Senate, which was one of the problems, there was no buy-in from House members. Uh I think I think that was part of the issue, but part of the issue was, I mean you sat through hours and hours and hours of this, as there was just this this adamant decision that they weren't going to move on either of those. So you couldn't make any progress. So, you know, I don't disagree with with with your numbers or the conclusions you you draw from that. But I think as a practical matter, you're gonna have to put everything on the table, and then fight like heck for your position. But at the end of the day, figure out a way to come together. That common ground has to be found or we're all sunk, right? Uh, what you will hear from your Democrat colleagues, and I'll let them say it themselves, is that we got a lot more people who are uh, you know, in Medicare and Social Security now, and we have a aging population, and therefore the tax base we had before doesn't cover the the obligations that that that that we have. So, but we have to be careful. I mean, one of the things that uh you and I have talked about a lot about this in the context of the twenty seventeen tax bill, and and your latest work on on the on the bill which I strongly supported. Growth is a big part of this. We can't grow our way out of this solely. That's that I mean the numbers just don't work. Be great if they did. But it can help a lot. So we have to be really careful on the tax side that we're not putting in place new tax provisions that cause economic harm at a time when what we're trying to do, is grow the economy more. And you're right, there are a lot of things uh in the big beautiful bill that actually help to stimulate economic growth, and we'll be begin to see that more. Expensing is an example. Some of the international provisions that actually increase revenues coming in. So, you need to be careful about it, just like on defense spending, as Dr. Panetta uh has said wisely, we gotta be smart in terms of how we spend that defense money. We gotta be smart in terms of how we deal with the revenue side, but it's gotta be on the table in my view.

I thank uh again my chairman for showing up today. Uh, I know you're very busy, and it's a big deal to have you here. Um, w- we have another chairman, a dear friend, as I said, my freshman term, by the way, uh, the nominal savings to balance in ten years when, uh, I was a freshman there on the budget committee in twenty seventeen, uh, it was five trillion dollars, today it's closer to twenty trillion. That's how quick this thing is, uh, running away with us. Chairman Westerman, five minutes. The gentleman from Arkansas.

Thank you, Chairman Arrington, for allowing me to participate today. Thank you to the witnesses for being here. I just wanna say I have friends that say we have a spending problem, have friends that say we have an income problem, and I agree with my friends. And I wanna pose my questions looking at it like an income statement. We got income and expenses and first on the expense side, if we wanna cut spending, you know, I did a quick search, health care, all of the all the programs together is two point seven one trillion, that's way over thirty percent of what we spent in twenty twenty five social security one point five eight trillion twenty two and a half percent interest on the debt a trillion just over fourteen percent and the military point nine trillion just under thirteen percent you add those up that's eighty eight percent of seven trillion dollars there's not any of those programs that are easy uh to cut so my cra question on the spending side and in regards to a commission Do we need a commission because Congress isn't smart enough to solve the problem? Congress doesn't have the courage to solve the problem? A combination of both or something else?

I'm going to basically give you a statement that was given to me, sent to my friend, who Maia McGinnis is uh is uh my she's going to be able to speak later, but she put it very very distinct. She says a commission will build expertise and trust, and understanding of the other side's values and an opportunity for public education and political cover. A little bit of everything. It's well said.

That covers education and and courage.

Thank you, Mike. Pardon?

That covers education and courage.

Yeah, yes.

Yep.

Absolutely. It just we're we're just in perilous times. Something has to be done. And I don't know how you're gonna hit the wall.

I g-

between that and the debt and everything coming to us at one time, you know, and bond markets, it could be something more than what we can maybe handle or digest. That's

Yeah, I I agree. So let's let's look at the income side of it.

Let me let me just add let me add to that.

O okay, let's end it there.

Um Look I think there would be nothing better than if a group of elected members on the budget committee were willing to sit down and develop a comprehensive approach to deficit reduction. That would be great. But I also understand the politics of the time. And you know how difficult it is to try to bring members together when the p the politics of both sides would basically stab you in the back. I mean that's reality. But that doesn't mean that you walk away from the problem, and that's why a commission in the very least would be able to have some degree of independence and capability to address these issues and say what needs to be done. Look, I've I've worked with entitlement programs. Entitlement programs need to be reformed. We reformed entitlement programs when we did the budget uh that passed in the in the nineties. We looked at we looked at different entitlements. We improved their administration. We didn't cut benefits. We improved their administration. And we had savings. you know, two hundred and fifty billion in savings. That's tough to do now, 'cause you you got a lot of guns pointed at you.

Right. So if I can

So you but you need to have a commission that can look at that as well as revenues

I'm I'm for

and be able to make that revenue.

for anything to address both sides of the of the income statement. On the on the revenue side, the expense side is hard, but I think the revenue side might be little easier. And I I wanna use one example. So, coming from the Natural Resources Committee. USGS in Commerce does a report every year that shows that we had a hundred and forty billion dollars of mined material when it got processed it was worth a trillion dollars, and it was worth four trillion dollars to the GDP, a hundred and forty billion dollars.

Mm.

We're heavily dependent on foreign countries just for mined material. The point here is, as the chairman said, seventeen, seventeen and a half percent of our GDP goes to revenue so you add a trillion dollars that's a hundred and seventy five billion dollars of revenue um senator Manchin we worked on this permitting reform building things in America again how can that help us on the revenue side

oh my goodness

yeah

you you know just just that alone can give us the growth that we're gonna need and basically the revenue is gonna help us tremendously doesn't f- solve all the problems but without determination we can get something done Bruce, I don't need to tell you right now that the people, and I'll give you a perfect example. In West Virginia we had a mountain valley pipeline. That mountain valley pipeline was estimated to cost three point two, three point two billion dollars. By the time it went through the court system in four years, it jumped to eight point six billion dollars. We got it done, but who's gonna pay that bill that's passed on to the consumer? These are the things that's killing us. And we cannot meet the needs of this country. We cannot meet the energy to me- uh, needs that we have. We cannot make the infrastructure that we have, the grid system can't handle what we have, and we ha- we're all relying on data centers and everything else. And unless you have basically a determination you can get something done, go to them, buy it, the money basically is going to be there and the interest rates are not going to continue to balloon on you because you can't get through the permitting process. So I think it's a probably the greatest challenge we have as far as in our country, being able to compete on a level it needs to compete on. and work our way out of this mess. It's part of it, but it's one of the biggest challenges you have. I pray to God you guys are close to getting it done.

I thank the gentleman from Arkansas on yield, to the gentlelady from Texas, our friend, Beth Van Duin, for five minutes.

Thank thank you and appreciate, Chairman uh, Mister Chairman, for allowing me to be here today and signing on. I'm looking over, I had three pages uh that my staff has uh prepared for me before they heard all the other comments. You know, we've already checked it. You know, we we have crossed our national debts, crossed the forty trillion dollar mark. We're on track for another two trillion this year. Uh, we're spending over a th- a trillion dollars a year just on servicing our debt, which is not going to anything else that we really need it to be going to. This is problems been going on for fifty years, yeti yeti yeti, we've heard this. One of the things that we haven't heard is the elephant in the room, which is we really do have four branches of government. We know it. We've got the bureaucrats, call it the deep state that you like, and trying to get accountability of that fourth branch has proven to be almost anybody in this room and in Congress to be able to handle. Part of the problem is where do we start? We all know that we're spending too much. Where do we start? I'd like to think that we could do it on the low hanging fruit, that we could all in this room, all in Congress agree that we don't wanna waste money, that we don't wanna have fraud, we don't wanna abuse it. There's so much of that happening right now in the bureaucracy. We don't know how to write legislation that cannot be manipulated, perverted, and abused. And I see you smile. 'cause you know exactly what I'm talking about, that can't be manipulated or or abused or perverted by agencies. So how can we, with exp all the experience in that is at this table, how can we start writing legislation that will actually hold the agencies accountable, that will systematically force them every year to review their budgets, to turn in where they are wasting it, and to give us great ideas of how to hold the layers from adding up and adding up and adding up. And I'm gonna I'm gonna start with with with you, Senator.

Um, having been OMB director, spent a lot of time on that issue, and and uh it's always frustrating cuz you sorta think you make progress, and you end up going going back a couple steps. Let me make a general point, and and Congresswoman, I I I really believe this in my heart, and it kinda goes to to Chairman Westerman's question as well. If you have one of these fiscal commissions, They're gonna be looking under every rock. For revenue, for cutting spending, for ways to be more efficient, it'll be like doge on steroids in a way, um but in a thoughtful way, you know, with bipartisan support. I mean, uh ultimately this has to be signed off in a bipartisan way, but there's there's we got a huge challenge here. And i if it can't be solved by one committee or another or I'm a, as you know, a big permitting champion, but it can't be just permitting, it's gotta be a broad issue here. And I think that issue that you raise, which is how do you insure that, you know, what Congress passes being actually implemented in a more efficient way, and that we're not seeing the the mispayments, the overpayments, you know, the the issues that um, you know, all of us know exist and we all try to get at it periodically, I think that's gonna be very much, you know, part of the discussion. And that's gonna be very much part of, I would guess, any recommendation that those of you who are gonna serve on this commission if there is a commission actually it's gonna be looking for.

I mean I would hope so.

Cuz it's not gonna be easy.

I would hope so. I mean the the uh the last panel talked about one of the things that we could do is increase the technological advances, right? Update our computer systems. The problem with that is I was at HUD when we tried to do it just a little bit. All of a sudden there's massive increases in requests for budget, because if you're gonna do that you're gonna have to you know train the staff. We have to hire people to be able to train. We're gonna have to buy new equipment or and it gets to the point where it's almost as if they are preventing us from moving forward. We could have put instead of wasting I don't know how much in lease space, because we have paper documents, we wanna get them digitized, all of a sudden that's a massive bu increase in budget request. Well we could, you know, say okay instead of having the two floors that we're we're that we're renting and spending lease amounts on every month, let's cut back on that and pay for it.

So,

We don't do that.

Congressman,

Let me let me tell you an interesting

this this this first form I've been in in a long time where AI has not been mentioned, and um I can m mention it just quickly,

Yeah.

Right.

AI. I mean that's that's an opportunity for

But

Increased productivity efficiency.

It is.

Let me let me tell you uh an interesting story. Uh when uh we were doing the Clinton budget uh Bill Clinton had been governor in Arkansas. And he had basically sat down and walked through his entire budgets a as governor. And so at the federal level now we're trying to come up with uh five hundred billion in deficit reduction. We literally walked through every program. As OMB director, I p I b I b I basically had to brief him on every program, asking the question, is it working or isn't it working? Is there too much bureaucracy? Is it not doing the job that it's supposed to be doing? And for those programs that we thought there was waste, we basically achieved savings. There's got, there's got to be that process. Because frankly, we don't gain by simply throwing money at the problem. We gain if we do it efficiently and effectively and have, you know, a government that actually delivers what's promised.

And I agree with you a hundred percent. The problem is, when you say, you know, we looked at all the programs, the problem is now we have gotten so big, nobody in in government can tell you how many programs we have. They can't tell you how many agencies really that we have. I've asked the question, I can't get a straight answer, because it's gotten so out of control, the growth. And again, I think in looking at having a third party audit with somebody who actually is looking, is saying where is all this money going, how is it being spent, who's getting paid for it, is the way to go, because internally we are not policing ourselves. Did you have anything to add, Senator, before we

No, just I think I think the commission would have an opportunity to look at some of that

Pardon me?

and to come up with some of those processes um you know going forward, but even to to look at ways for efficiency and productivity.

All right. Thank you very much. I yield back.

I thank the gentlelady and yield to the gentleman from the great state of Texas. Mister Chairman. Uh preserve, protect, and defend the constitutional laws of the United States. That is the oath we took. That is our fiduciary duty to our constituents and to the American people, no question about that.

I tell my staff all the time, if we do that correctly, the natural outflow is to increase liberty and abundancy of life for our constituents. That is my goal in Congress is to do that. But what I know is, debt constrains liberty, and constrained liberty mutes the ability to have an abundancy of life. That is no good for anybody. I'm not a member of the Budget Committee, I'm a member of the Ways and Means Committee, but I want you guys to know and the public to know that there are people outside of the budget committee that are committed to finding this bipartisan solution and making this happen fiscal commission, I think is a big part of it. I want my constituents to know that I fully support a fiscal commission, a bipartisan fiscal commission because these are the hard problems that re- re- uh require serious individuals that wanna put politics aside and actually get down to good policy, no question about that. And I agree with my friends uh that have stated here today it is both a revenue and a spending issue I think we need to we need to deal on both sides of that ledger, I appreciated uh Chairman Westerman bringing that up. When I talk about spending back home, this is uh one of the hard hard uh conversations we have to have with our constituents and I would urge my colleagues to have these hard conversations now, because when I talk about this issue, immediately all of my constituents will say, when are you gonna constrain When are you gonna rein in spending? And my r- retort generally is, when are you gonna allow me to do that? Because the moment somebody says, you need to stop so much government spending in Washington DC, normally it's followed up with, but don't cut the spending coming to me. And the moment that we become selfish in this as constituents, as colleagues, as members of Congress, we can no longer seriously solve and address the problem. We have to be selfless in the moment to say we understand that politics and policy uh both play a role in Washington DC but we've gotta set the politics aside and get down to the serious business of the policy with. With that intro I wanna ask you guys this, uh couple of questions, one is we've talked about the fiscal commission but what are the biggest landmines, I'm gonna start with you Senator Portman, what what's the biggest landmines that you would say to this group and others in Congress interested in doing this that you would say you've gotta stay away from these landmines when you set it up structurally so that it doesn't fail.

Well, making it statutory, which is, you know, your job uh and your opportunity, and then not allowing it to be amended to death in the Senate. And uh Senator Johnson can agree with me I think on this, it would be very hard to get it through the Senate if there was an open amendment process. Uh there should be some amendments probably and some discussion of course, but you you gotta protect the entirety of it. In other words, that balance you're gonna hafta hafta reach. Second to me would be um, you know, be sure there's buy-in. Otherwise it's a waste of time. It's a waste of time. And I saw this in in my view, this is my own personal view in the in the super committee, there's gotta be buy-in. And that means from the president, that means from the leadership of the congress, that means the people who are on the commission, if they're just there to make a point um about some, you know, their point of view rather than a r a result. Uh, it's a waste of time. So that'd be the other thing. J just let's be sure that we have the right people involved and that you have the right, they have the right to support from your leadership.

Secretary Secretary Panetta, what landmines?

Yeah, one You know, um, one of one of the successful commissions dealt with BRAC. Um, and and it's an interesting issue to talk about because The reason BRAC came about is because members did not have the courage to step up, uh, and be able to support reducing, uh, military bases that were not needed. So, the BRAC commission was enacted, uh, in the Congress. And the BRAC commission had three different chapters, but in every one of them, the vote had to be up or down on the whole package. And it worked. It worked. BRAC worked. Um, I I happen to have represented a Fort Ord military reservation in my district. Fort Ord got bragged. I don't like it. But on the other hand, it would It was part of what needed to be done in order to discipline the budget. Um, so BRAC I think is a is a good example to keep in mind, uh in developing this uh commission that uh will focus on the deficit.

Mister Chairman, thank you for this important hearing. We cannot fail in this task. Liberty and abundancy of life awaits if we succeed. Thank you, I yield back.

Well said, Mister Moran. I'd like to submit uh for the record before we close here the bipartisan policy center action, a statement from the honorable Dave Walker, who we heard from earlier, uh Joshua Roud, George P. Schultz, fellow in economics at the Hoover Institution, and Orman, family professor of finance at the Stanford University Graduate School of Business. Just a ranking member.

Yes, and I would like uh quite uh quite a pile here, so I'll go through them as quickly as possible. Ask unanimous consent to submit the following in the directorate a statement for the director from the AARP. a letter from AFSCME, a letter from the AFL-CIO, a statement from the staff of the Greensca uh Greenspan Commission, a statement for the record from the Alliance for Retired Americans, a letter from Strengthen Social Security Coalition, a letter from Social Security Works, a letter from Generations United, and finally a statement from the National Committee to Preserve Social Security and Medicare. You forgot the first one.

Without objections.

Excuse me, I thought that I said a in case I didn't, also a statement for the record from the AARP.

With with with with it doesn't hurt to say that one twice.

I did, yeah. It's all right.

Without objection, so ordered.

Thank you, yeah.

Um. Mr. Secretary, Mr. Senator, for your wealth of experience and your wise counsel to this committee, those off committee, all who uh are passionate and committed to do something uh to right this ship uh before it hits the sand. And uh we are all on behalf of my colleagues um indebted and grateful for your for your time uh and your guidance. So thank you so much. Um we have a lot of patient and attentive uh friends of mine in the audience uh from uh right here in Dallas in the DFW area. Um, I think we're gonna break bread later on and continue this conversation, but uh I I hope it was uh a good use of your time and interesting and and uh we all hope it's going to be productive in the in the end. Um, I wanna thank my colleagues, again couldn't be more proud to to serve alongside of you and uh to be in this uh foxhole for such a time as this and and by the grace of God. Um, uh, I pray that our generation of leaders that are here before you are not the first to fail to hand the the this country better than we found it. Uh, the jury's still out. Um, but every generation had their national debt, had their major threats and challenges, and it took sacrifice. At the end of the day, it just took that uh patriotic love of country over love for self and for our own personal political interest. At the end of the day, isn't that why we all sign up for this? Isn't that what we wanna do is just like be there charging like uh William Wallace and Braveheart you know to save the country, something real and meaningful, because those things that are real and meaningful actually, they cost you something. Cuz as that sign that's uh, and emblazoned on uh the wall here somewhere, you can, you can either practice seeming to be good or you can just be good. And uh, our country deserves us to be good in this moment. And I believe these guys uh, w- will be the ones to pull it off. Um, and uh, to our host and, and friend and, and great patriot um, Harlan Crow and, and his family, um, hey, what a stately setting for such an important and consequential uh issue. And uh in fact this thing went went so well today, Harlan, I think we're gonna have uh I may move to have every budget uh committee hearing here in Texas. Uh but yeah, yeah, amen. That

Mister, Mister Chairman, if I could also acknowledge

Well Yes, sir.

that I I was not alone in coming here. I had the support of somebody who basically provided the intelligence I needed in order to be able to make the presentation. So I wanna thank Jimmy for his help.

Listen, listen, we've heard Jimmy's, uh, for, I have, ten years. Uh, w- w- the, uh, that eloquence and that insight could not have come from your son with all due respect. I, we love him. We love him. And we're gonna continue to work and strive with him. But, uh, no, sir, uh, no, we love Jimmy. Uh, look, Um, great to end with a little bit of levity here with such a an issue of gravity, um, and that's that's that's good. Um, I need to also say I don't do this enough, but uh I rarely do it, which is a flaw, a leadership flaw of mine. Katie, Evan, and a host of budget staff took the show on the road and doing a hearing, as you all know, is no small feat to pull off, but when you uh pick up the tent and move it from Washington here to Texas has something else. Uh, I would appreciate if you'd join me in uh showing some

Thank you.

With that, the committee stands adjourned. Ladies and gentlemen, hold on, I got a a ranking member with uh with uh a couple minutes of comments real quick and then we'll adjourn.

Well I first, let's hear for our Chairman Jody Arrington. Jody Arrington, thank you. All right. Second, I I echo what we said about staff both on the majority a- and the minority side, and I think that this should be the first of a number of budget committee hearings

Yes.

that we take on the road to show the American public the substantive work that we do uh in this committee. Uh, next I I do have to say for the record as a Congressman from Philadelphia and a lifelong Eagles fan I do object to Dallas being the permanent home of the Budget Committee, with all due respect. Now finally, I I'll just say this. There are two kinds of members uh of Congress, and you might think I mean Democrats and Republicans, and sure that's accurate, but that's not what I mean. The two kinds of members of Congress are the legislators and the performance artists. Nothing we said or did today is gonna go viral. Nothing is going to um be a ratings winner. And yet it matters. I'm here because I wanna be a legislator, and I wanna be a good legislator. That's the kind of thing and the kind of culture I feel over the last three and a half years that we've been able to build. And I know that that will continue into the next term. This is a real problem that will not be solved by performance art or having something that goes viral on TikTok. And it will take substantive members on both sides of the aisle. And when I think of the kind of examples about which I'm speaking, I think of the witnesses we had here today. Thank you. With that, I yield.

Well said. Meeting's adjourned.