Hearings to examine the fiscal outlook, 2027-2036.

This hearing of the subcommittee will come to order. I want to thank everybody first of all for attending. I was mentioning to ranking member and my colleagues here I was expecting lines around the the halls, you know, waiting to get in. But I truly appreciate you coming. I really want to thank the witnesses for all the time and effort you put into your testimony and you know time you're putting in here today. I certainly want to thank the ranking member of the subcommittee, Senator Smith and the ranking member of the full the chair and ranking member of the full committee, Chairman Crapo and Senator Wyden for and their staff for all the help in facilitating this what I consider a pretty important hearing. When I entered Congress our nation's total debt was $14.7 trillion and 96 percent of GDP. Soon it will hit and surpass $39 trillion and 124 percent of GDP. Within 10 years, it'll almost certainly exceed $60 trillion and 134 percent of GDP. Although both sides claim to be concerned about our dire fiscal situation, neither side. And let me emphasize that, neither side has demonstrated a genuine desire to seriously address it. Democrats insist the solution is simply making the rich pay their fair share. Yet, when they had the power to do so, they didn't. Republicans respond we don't have a revenue problem, we have a spending problem. Yet when we had the power to return spending to reasonable pre-pandemic levels, the one big beautiful bill simply did not meet the moment. When I arrived in Congress in 2011 America's debt and deficit was the topic of discussion. Now $24 trillion of added debt later, it's barely mentioned and most members of Congress, the administration, and the public seem content on continuing to whistle past the graveyard. Again, I want to thank our witnesses for their testimony that describes our growing fiscal situation in all its gory detail. I don't expect to find agreement on solutions here in at the hearing today. But we still haven't because we still haven't taken the first step in solving a problem, which is admit we have one. If we are ever willing to collectively take that first step, the next step is properly defining it. A financial problem lends itself to charts and graphs. I love them. And the the written testimony's chock full of some really good ones that I highly recommend that people study. I've been developing a few charts and graphs and I want to quick go through them. Everybody's got a copy in front of them. I'll go through this pretty quickly. This is the depressing debt chart. We passed the $5 trillion debt level in 1996, 10 trillion in 2008, 15 trillion in 2012, 25 trillion in 2020 and we'll probably pass 40 trillion this year. Pretty depressing outlook. As a percentage of GDP, yeah we were keeping it under 70 percent through from 1980 through about 2008 and then we hit basically 100 percent in 2012, over 120 percent in 2020 and again we're we're on a path to higher levels. Next. I know Treasury Secretary Bessent is pretty well and others economists have laid out deficits as a percentage of GDP a benchmark level about 3 percent. Since our last surplus, which was in 2001, which was $128 billion, we've only been under 3 percent of GDP with our deficits seven times in those 24 years. Otherwise we've been over that and this chart shows CBO's current baseline, which is based on 1.8 percent growth, which I think people might hopefully we do better than that. But at 1.8 percent growth we never really go below 6 percent. Even if you grow at 3 percent, you're still not getting down to a 3 percent level of GDP. You'd literally have to have 4 percent growth over the next decade for us to dip below 3 percent in the last three years of this decade. Deficits are composed of two parts, revenue and spending. I've had this chart now ever since I arrived in Congress in 2011 just to point out quite honestly the folly of trying to punish success. Going back 66 years, we've had top marginal tax rates as high as 91 percent, 70, 50, a low of 28 percent, 39.6 we're at 37 right now. And no matter how much we try and punish success, on average we collect about 17.1 percent of GDP. At some point in time we ought to realize that reality and start getting spending back in line with that. Next chart is spending, outlays. I think the most noteworthy thing here is you can see it grow dramatically from the year 2000 to 2019, the year before the pandemic where we spent $4.4 trillion and then the pandemic hit and spending exploded. But unlike for example World War II where prior to World War II spending was 11.7 percent of GDP, went up to I think over way over 40 percent during the war. With responsible leadership, we went back to 11.4 percent, actually lower than what we were. We didn't do that with the pandemic. We went from $4.4 trillion to $6.5 trillion and never looked back. This year we'll spend about $7.4 trillion which is 67 percent higher than 2019. There is absolutely no justification for that whatsoever. Another way to look at this is average deficits per four-year presidential term. And you look back to what I only wish we were at levels we were at today under George Bush. He averaged about $250 billion per year. That's when $100 billion seemed like a lot of money and we were all crapping about that. Then President Obama came in first term $1.27 trillion average deficit. Tea Party, I sprang from the Tea Party. We came in and we restrained spending. There was actually public pressure, we concentrated on it. That dropped to $550 billion per year average deficits. Then Trump came in, had to work with the other side, $810 billion average deficits. Then the pandemic hit and a spending blowout, $3.1 trillion. It's been averaging $1.9 trillion basically ever since. And according to the CBO in the next 10 years, this is the most recent numbers, we'll incur $24.4 trillion of deficits over the next 10 years. That's an average of $2.4 trillion per year and of course it grows over those 10 years. Next chart. This shows annual deficits. And the main point in this chart is when you go back to the CBO projection prior to the pandemic, CBO was projecting the next 10 years from 2037 to 2035, we'd have about a $17.4 trillion deficit versus now the estimate is $24 trillion. $7 trillion higher. Okay. Now, quick point. Yes, the one big beautiful bill scored at about $4 trillion. Most of that was preventing a massive automatic tax increase, which again I will point out when the Democrats had the exact same opportunity to use reconciliation, they could have increased taxes, they could have increased taxes on the wealthy, they didn't. So I consider the it's a bipartisan agreement we didn't want to increase taxes. We understand how economically harmful that is. So that's that point. Let's next couple charts. This shows again the four-year average deficits if you have 3 percent growth. Notice it doesn't bend the deficit curve down. Flattens it out a little bit, doesn't bend it down. Go to the next chart. This is 4 percent growth. Now we're finally bending the deficit curve down. We're not even close to balance by the end of the decade. We're still at $1.4 trillion. Here's here's my solution that I recommended starting with a column in the Wall Street Journal January 1st of last year. Go back to a pre-pandemic level spending. I chose three different options. Bill Clinton in 1998, Barack Obama 2014, President Trump 2019. You take their actual total outlays, you exempt Social Security, Medicare and interest. You spend what you need to spend. But all the other outlays, you apply reasonable control, increase in inflation and population. If we were to do that, go back to Clinton in 98, we'd be spending $5.9 trillion this year. And that's $1.5 trillion less. That's a $15 trillion savings over 10 years. If you go back to Obama 2014, if if Clinton's too aggressive for you, go back to Obama. It'd be $6.6 trillion. That's $800 billion less than we're going to spend this year. That's $8 trillion over 10 years. Just go back to prior to the pandemic under Trump, $6.9 trillion that'd save us a half a trillion in one year, 5 trillion over 10. Again, that's the solution. I'm not saying you you take every one, but you use those as baselines as an evaluation for getting back to a reasonable pre-pandemic level of spending. It's entirely possible. There's no justification to go from 4.4 to 7.4 trillion. So as I said earlier, I don't expect to find agreement on solutions but let me describe what I believe are two primary our two primary initiatives should be. First, return to reasonable pre-pandemic level spending. I've given three different options. We should look seriously at doing that. And by the way, I am working with OMB. We passed $100 million of funding for a line-by-line, program-by-program review. We've already purchased AI system, we're hiring people to do that kind of forensic analysis. That's underway. That's basically another three-year project. Second thing is we have to simplify and rationalize our tax code. It is simply too complex, costs at least $400 billion to comply with. It's also totally irrational. Instead of treating all income the same, we arbitrarily treat it differently hoping to create different various economic incentives. In our quest to create economic incentives, I think we've probably created at least as many uneconomical, harmful disincentives. So I truly believe reducing spending and deficits combined with creating a simple and rational tax system would be the most growth-inducing solution and action we could take. With that turned over to ranking member Smith.