Van Hollen Remarks at National Journal Debt Briefing
Washington, DC – Maryland Congressman Chris Van Hollen, Ranking Member of the House Budget Committee and member of the Joint Select Committee on Deficit Reduction, today delivered the keynote address at the National Journal/Atlantic poll release briefing on personal and government debt. Van Hollen’s speech and Q&A are below.
11:00 A.M. EDT
Thank you very much, Elizabeth, it’s wonderful to be here and I’m glad that votes cooperated. It’s a pleasure to be with all of you today to discuss the questions that are being discussed throughout the country – in small businesses, families, states – which are: How do we get our economy moving? How do we get people back to work? And how do we also put in place a plan to reduce our long-term deficit so that we can ensure long-term economic strength and prosperity? That’s the matter being discussed all over the country, and that is, of course, one of the questions that has been put to the so-called “supercommittee.”
I can say this about the twelve members of the supercommittee: I’m absolutely convinced that all twelve members are working hard to try and reach an agreement for the good of the country. Whether we are able to overcome some of the obstacles by the end of the day is still unclear. But everybody is working hard toward that goal and I think if you look at the poll that you are releasing today, it underscores the importance of us trying to get something done. Because if you look at public attitudes around the country there’s clearly a crisis of confidence with respect to the federal government and Washington. Your poll shows that 71% of Americans are not confident in the ability of the federal government to reduce the deficit, and even more have a negative view of the Congress. Those are sobering figures that nobody can be pleased with, whether you are a Republican or a Democrat, and it should provide everybody with desire and motivation to work together to get something done. I was talking to one of my Republican colleagues that other day and he said, “Boy a lot has changed in a year. You know, last summer we went home and everybody was mad at you guys, the Democrats. This summer we went home and they’re mad at all of us.” And I think it is incumbent upon the Congress to do what it can to try and bridge the differences for a common good. And I hope the Joint Committee can be part of changing those perceptions.
One way to do that, and one approach that could be taken, is the approach that has been taken by other bipartisan groups that have looked at exactly this kind of challenge recently. You’ve got Simpson-Bowles, you’ve got Rivlin-Domenici, you’ve got the Gang of Six, you’ve got all of these groups that have struggled with these issues, and in each case they came up with a framework as to how to address the problem. Ours, of course, is also a bipartisan group, so it is my view that we should look at those frameworks for how to approach this issue.
That doesn’t mean that we have to adopt every provision in each of those plans, obviously they come at it from different ways. But my argument would be that the overall structure that they have – recognizing that you have to take a balanced approach – is the way to go. Now, I just saw my good friend and advisor, Dr. Rivlin, on the way out. And let me just salute her first for her years of service and incredible contributions to our country in a variety of different capacities. And I think that if you look at recommendations of the Rivlin-Domenici commission it provides a really good framework for how this country should approach these issues. They said that we have to tackle two issues at the same time, and they are not contradictory in any way, in fact, they are mutually reinforcing. From a communications and message perspective it can be difficult to talk about them at the same time, but from a policy perspective they need to be done at the same time, and that is, one, take steps boost economic growth and jobs, and two, at the same time put in place a plan to reduce the deficit in the longer term. And that is a two-pronged strategy that would address the twin deficits that we face. We face a cyclical deficit caused by the very steep recession that we went through and continued stagnation in the economy. And then we have a long-term structural deficit that is caused by a combination of factors; one is inadequate revenues that are coming in a result of past policy decisions, and the second is rising future costs for health care and retirement programs, driven by the retiring of the baby boom generation, and ever-increasing health-care costs which continue to run well ahead of regular inflation in the economy. So, we’ve got those two challenges that we face, and I believe that whatever plan that the country comes up with should tackle both of those issues.
So, first just to look at the deficit that’s caused by the unemployment in the country. If you look at CBO numbers they recently estimated that a little over one-third of the deficit is due to the lack of the economy exercising at its full potential – basically the unemployment rate. The faster that you can put people back to work, obviously the faster that you can reduce that part of the deficit. It’s common sense, because when people are out of work obviously there is less income flowing into the Treasury, and more funds are going out to pay for things like Medicaid, unemployment insurance, and other programs. So we have got to focus on that, in fact, CBO also estimated that for every one-tenth of one percent increase in the GDP, ten-year increase in the GDP, you can knock $310 billion off the ten-year deficit. So it’s incumbent upon the country to do something aggressively to tackle that issue, and that is why the Rivlin-Domenici commission proposed a very large payroll tax holiday, much bigger than the one that the President has proposed. If you look at the Rivlin-Domenici plan they had a very large payroll tax holiday, the idea being pretty straightforward. You’ve got a lot of people that are stretched, and if you can put some money into the pockets of working Americans right now they will be able to go out and spend a little bit more on goods and services, and for all of those small businesses that need customers, to get income, to hire more people, that is the important part of what would be a program that would help to put the country back to work. And that is just one element.
The President has other key elements in his plan – like the infrastructure investment plan. I’ll tell you; this is something that has shared bipartisan support in the past. It’s what I think is a no-brainer. Infrastructure investment has always been a public good – this is not a question of the federal government substituting for the private sector. You shouldn’t really have a big ideological argument on this front. You’ve got 14% unemployment in the construction industry, you’ve got all sorts of roads, bridges, and schools that need to be repaired, modernized, and even built. Put the two together, it makes common sense. We shouldn’t be doing what the House budget would do, which is cut infrastructure below last year’s level and throw more people out of work. The President has another number of elements in his plan to try and provide support to state and local governments to make sure that they don’t have to lay-off teachers and firefighters. If you look at unemployment rates in this country, as all of you know, you have seen more lay-offs in the public sector in the last year than you see in the private sector. In fact, the private sector, while growing very slowly, is still growing faster than the public sector where we are seeing job losses. So, those are some of the important parts of the President’s plan to put to put people back to work and address the cyclical part of the deficit.
Now, I know some people say, “OK, well, look we tried that kind of approach before.” Some will argue that it didn’t work – but the reality is that it did work. I understand the challenge of the public perception, and I will talk about that in a moment, but it did work. And that’s not me saying that, it’s the CBO saying it. The economy was in total free-fall and if you hadn’t had the Recovery Act you would not have been able to stabilize the economy in the time that we did. Now, should people be satisfied by a sluggish yet stable economy? Of course not, but it’s a whole lot better than the freefall that we were in. It’s kind of like when you are trying to run up an escalator that is moving down; if you don’t do anything, you will end up down much faster. But even when you take action it can feel like you are running in place and treading water. And so our job now is to get from the treading water spot into a place where we can further boost jobs. And that is why that is an essential piece – and as I said there is a direct link between that and addressing the short-term cyclical deficit.
In addition, if you look at the President’s Jobs Plan and if you ask the American people what they think of its elements, it has widespread support. A poll this week, the NBC/Wall Street Journal poll, showed Americans support the American Jobs Act 63% to 32% when it is explained to them. So we have got to get moving on that.
Another major difference between this round and what the President has laid out in the earlier round is he has put forth proposals to more than pay for his jobs bill. He has provisions to pay for it, but he has also now put on the table a longer term deficit reduction plan. So if you look at it in its totality, it not only would help put people back to work, but it actually does reduce the deficit over the ten year period. So, that’s combining these two pieces.
And now, let me talk a little bit about that second piece of the puzzle. Rivlin-Domenici addressed the first part. They said we needed some measures to help boost economic growth. But they also, of course, like Simpson-Bowles and the Gang of Six said “Well, you have got to tackle the second part.” And they all do it in a balanced way. What do we mean by “a balanced way”? Recognizing that you need to make some cuts, but that you also have to deal with the revenue side of the equation.
And when the CBO director Doug Elmendorf testified before the Joint Committee, the testimony could not have been more clear. And he kind of laid out those two pieces. He made the point that if we stuck with current law instead of current policy we would actually have four trillion in more revenue coming into the federal treasury and the deficit would be at a relatively, at least over this short-medium term, sustainable place. In other words, what he was actually saying to members of Congress is if you actually just packed up your bags and went home, we would actually be able to reduce the deficit considerably compared to where we are in current policy. And that is just a reality.
Now as you look ahead, you clearly have this rising challenge of costs that will result from the retiring baby boom population. And it is not just the demographic piece. It is also the fact that not only do you have more people in, for example the Medicare program, but you continue to have this rapidly increasing rate in health care costs. Those two things combined obviously create an unsustainable situation that needs to be addressed. So you know, my view is we have got to tackle all these issues, we have got do it in a balanced way, as other bipartisan groups have done, and you can look at the revenue part through the lens of tax reform. Simpson-Bowles and others have put a lot of ideas on the table that would reduce, over time, the value of tax expenditure, deductions, and other things. And on the health care side you have to look at ways to reward the value of care and the quality of care versus the volume or quantity of care. Steps in that direction were taken as part of the Affordable Care Act and Dr. Rivlin, whenever she testifies to the Budget Committee, reminds everyone that there are lots of important provisions in there that do not happen tomorrow or next week but will take place over a period of time. But we can expand upon this and there are a number of ideas that can be looked at to try and further address those issues.
So let me end there, by just saying that I think that the country needs that two-pronged strategy that was laid out in Rivlin-Domenici. One, focus on America getting back to work, which obviously helps families who are burdened all over this country and also helps address the cyclical deficit. And second, put in place today, a plan to reduce the long term deficit. We can do that in a balanced way. And that is the conversation that is happening in this country. That is obviously the challenge that has been put forth for the Joint Committee. And it will obviously be a conversation that takes place over the next 18 months in this country. I want to thank all of you who are here who contributed ideas as part of that debate and I look forward to continuing that conversation. For somebody who represents a district not far from the nation’s capital it is always humbling because not only do I get a lot of letters, e-mail, and all sorts of communication, but they do not tend to be those just one-liners. They tend to be multiple page memos, usually written by people who have been directly involved with one of the issues that we are grappling with. So you quickly recognize the limits of your own knowledge and it can be tough but it is challenging and it is a great Congressional district to represent. Any of you who are currently constituents, thank you for your input over the years. Thank you all for what you’re doing and I’m happy to answer any questions you might have.
Q: Terry Savage, Chicago Sun Times. You said that you are working hard to reach an agreement, so that whether you are able to do so is uncertain, what would you make the odds?
Van Hollen: I really can’t handicap the odds at this time. What I can say is the members of the committee up and down are working hard. It remains our goal to try and reach an agreement. There are many of us, and I think you can see this from the statements that have been made at some of the hearings, that do see this as a unique opportunity to tackle some of these big challenges that we face. Certainly in the colloquial parlance it’s the “Go Big” idea and I still think that that is in the realm of the possible. But I don’t want to underestimate the challenges facing the committee. And I think this is a moment to say one thing about how you have to reach agreements. First you look for common ground. I mean, first you look for areas where the differences are not so much between parties. Maybe it makes sense to address some issues in that people can come together. But you cannot begin to seriously address the challenge without also making compromises. And compromises require give and take. And they require difficult choices. Finding common ground, that can take some time, but it is not necessarily tough. Making compromises is the tough part and that’s what members of the committee have to be prepared to do.
Q: Good morning Congressman, I’m Allison Johnson and I thank you very much for your service. Could you please comment on Senator Kay Bailey Hutchison’s op-ed yesterday in the Washington Examiner about her suggestions to reform Social Security? They were a bit of both committees, both the Domenici and the Simpson, ideas. A little bit of a conglomeration. Could you give any feedback from Capitol Hill on her suggestions? Raising the age of the Social Security, other things that she outlined.
Van Hollen: Right, well I did not see the piece in the Washington Examiner, but let me just comment on the general question of tackling Social Security. First, I think that there are lots of us that would look and welcome, look for and welcome the opportunity to try and strengthen Social Security as we move forward. We need to do that for its own sake. We should not do it as a mechanism to try and free up revenue for other areas of the budget. We need to look at that issue sort of on its own merits. And as you know, Social Security is currently fully solvent. Meaning it can pay 100 percent on the dollar up to the year 2037. Beyond that if nothing was done you would see about 76 cents on the dollar paid out. So we need to tackle that issue. And the sooner the better. And then the question becomes of course, how? And if we’re looking at strengthening Social Security on its own, I think it has to be done by you know looking at all the different pieces. And there are number of proposals out there. I don’t want to get into a lot of detail right now other than to say that it’s something that again, focused on its own merits I think we should be willing to take a look at. But not, and I’m going to stress, not as part of trying to you know balance the budget on the back of Social Security beneficiaries.
Q: My question is with regard to data gathering. How are you all ensuring that information you’re getting is A) as updated as possible B) non-partisan and C) it represents some of the important stakeholders to the equation here: the consumers, the financial sector, the technology sector, etc.?
Van Hollen: Well on the first question, one of the enemies of the committee here is time. It’s a very short time frame to try and tackle a lot of issues. And part of the challenge is to get groups independent non-partisan groups like the Congressional Budget Office and the Joint Tax Committee to be able to score different proposals that are out there. In other words, tell you what impact they’ll have on the deficit both in terms of the cutting components and revenue raising when you ask those kinds of questions. And so that is going to be a real challenge. And one of the things those two organizations have said is you know it’s important that you guys get at least pretty good agreement by the very beginning of November because it will take time to flush some of these things out. I give you just one example; it’s nothing to do with the Committee, but just in terms of getting this kind of number crunching done. If you look for example at the tax reform proposals under Simpson-Bowles, they estimate a large number of available tax expenditures that could be converted into lower rates. In fact, there are a whole lot of interactions between those tax expenditures and you know the feedback we get is that you don’t have as much as they estimated to convert to lower rates even if you wanted to go in that direction. I’m not talking about the committee here. I’m just talking about people who were pursuing various ideas and trying to get the kind of information and numbers that you’re talking about. On the second part, every member at that table, of course is a representative not only of their constituency, but a member of the United States Congress. We have, obviously, information that we receive from all sources, just like every member of Congress on every voter issue has. And we also have lots of our fellow members that represent all parts of the country who are participating in the process through passing along ideas. In fact, we just had passed yesterday the deadline for a lot of the committees and members to contribute their ideas to the Joint Committee. And we got a good bunch of them. You know not all of the committees participated in that, but a good number did.
Q: It’s been reported recently in DCInsider.com that the members of the supercommittee have something like 121 fund raisers scheduled between the start of September and the November 23rd deadline date. Given that members of Congress now have two constituencies, including these committees, the members of the supercommittee, that is their voters who want more spending and the rich people who finance their campaigns, almost none of whom are voters of their districts because they live elsewhere. Isn’t that, doesn’t that almost guarantee that we would get in the situation that we are in that the supercommittee will fail?
Van Hollen: Two points. First of all, I’m a big believer in campaign finance reform. That’s a whole other issue, important issue, becoming even more important as a result of the Supreme Court decision that essentially gave corporations the same rights as individuals. I can’t speak for everybody, but what I did was say I’m just going to go ahead with previously scheduled events. And I think, every member of Congress will disclose all their contributions and people will have an opportunity to look at those contributions and determine whether or not they should be nervous about the process. One of the benefits of our system is that at the end of the day all that information is public so voters can reach the best decision. But I can just say that I believe that all twelve members of the committee are absolutely focused on doing the best job they can for the broad array of the American people. And we may have different ideas about how to approach that challenge, but I do not question anyone’s purpose in achieving that goal. Thank you very much.