Senate hearing (117th Congress), THE PRESIDENT'S FISCAL YEAR 2022 BUDGET PROPOSAL
Summary
Senate Hearing 117-49 records the June 8, 2021 hearing of the Committee on the Budget on the President's fiscal year 2022 budget proposal, with Chairman Bernard Sanders presiding, Ranking Member Lindsey Graham and Shalanda D. Young, Acting Director and Deputy Director of the Office of Management and Budget, as the witness. Sanders says the country has lost over some 600,000 people to COVID and that about 85 percent of people received the $1,400 direct payment under the American Rescue Plan. Senator Kennedy asks Young for a letter supporting block grant disaster relief for southwest Louisiana after Hurricanes Laura and Delta, and Young says she is happy to do it in stronger terms.
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[Senate Hearing 117-49]
[From the U.S. Government Publishing Office]
S. Hrg. 117-49
THE PRESIDENT'S FISCAL YEAR 2022 BUDGET PROPOSAL
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON THE BUDGET
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
June 8, 2021
__________
Printed for the use of the Committee on the Budget
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PUBLISHING OFFICE
45-280 WASHINGTON : 2021
COMMITTEE ON THE BUDGET
BERNARD SANDERS, Vermont, Chairman
PATTY MURRAY, Washington LINDSEY O. GRAHAM, South Carolina
RON WYDEN, Oregon CHARLES E. GRASSLEY, Iowa
DEBBIE STABENOW, Michigan MIKE CRAPO, Idaho
SHELDON WHITEHOUSE, Rhode Island PATRICK TOOMEY, Pennsylvania
MARK R. WARNER, Virginia RON JOHNSON, Wisconsin
JEFF MERKLEY, Oregon MIKE BRAUN, Indiana
TIM KAINE, Virginia RICK SCOTT, Florida
CHRIS VAN HOLLEN, Maryland BEN SASSE, Nebraska
BEN RAY LUJAN, New Mexico MITT ROMNEY, Utah
ALEX PADILLA, California JOHN KENNEDY, Louisiana
KEVIN CRAMER, North Dakota
Warren Gunnels, Majority Staff Director
Nick Myers, Republican Staff Director
C O N T E N T S
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TUESDAY, JUNE 8, 2021
Page
STATEMENTS BY COMMITTEE MEMBERS
Chairman Bernard Sanders......................................... 1
Ranking Member Lindsey Graham.................................... 4
WITNESS
Statement of the Honorable Shalanda D. Young, Acting Director and
Deputy Director, Office of Management and Budget (OMB)......... 5
Prepared Statement of............................................ 35
Questions and Answers (Post-Hearing) from:
Ranking Member Lindsey Graham............................ 65
Senator Mike Braun....................................... 44
Senator Kevin Cramer..................................... 50
Senator Mike Crapo....................................... 56
Senator Charles E. Grassley.............................. 83
Senator Rick Scott....................................... 85
THE PRESIDENT'S FISCAL YEAR 2022 BUDGET PROPOSAL
----------
TUESDAY, JUNE 8, 2021
U.S. Senate,
Committee on the Budget,
Washington, D.C.
The Committee met, pursuant to notice, at 11:04 a.m., via
Webex and in Room SD-608, Dirksen Senate Office Building,
Honorable Bernard Sanders, Chairman of the Committee,
presiding.
Present: Senators Sanders, Murray, Stabenow, Whitehouse,
Kaine, Van Hollen, Lujan, Padilla, Graham, Grassley, Crapo,
Toomey, Johnson, Braun, Scott, Sasse, Romney, and Kennedy.
Staff Present: Warren Gunnels, Majority Staff Director;
Nick Myers, Republican Staff Director; Joshua Smith, Majority
Policy Director; and Becky Cole, Republican Policy Director.
OPENING STATEMENT OF CHAIRMAN BERNARD SANDERS
Chairman Sanders. Okay. Thank you all for being here and
Senators who are in attendance virtually. And let me thank
Shalanda Young, the Acting Director of OMB, for being with us.
And let me thank Senator Graham for his help as Ranking Member.
A Federal budget speaks to who we are as a Nation and where
we want to be in the future. And I think as everybody knows,
this last year has been one of the worst years in our lifetimes
for our country and, in fact, for the world. In the United
States, we have endured the worst public health crisis in 100
years. We have lost over some 600,000 people to COVID, and we
have also endured the worst economic collapse since the Great
Depression of the 1930s.
The very good news is I believe we are making significant
progress in fighting our way out of both of those disasters. In
terms of the pandemic, more and more Americans are being
vaccinated, and the death rate is going down significantly. In
my own State of Vermont, we are up to about 80 percent of our
people have been vaccinated, and that type of trend is going on
all over the country. Obviously, we still have an enormous
amount of work to do, but the good news is we are making
progress.
Economically, we are also moving forward in the right
direction. Millions of jobs have been created in the last few
months as the economy reopens all across America. And one of
the reasons, in my view, for our success has been the American
Rescue Plan (ARP) that the President signed into law in March.
The $1,400 direct payment that about 85 percent of our people
received was enormously helpful in easing the anxiety and the
pain and the distress that so many people were feeling. I do
not know if any of you had the opportunity to talk to people
who received those checks, but for a family of four, that was
just life-saving.
The American Rescue Plan in a major way has begun to cut
childhood poverty because of the $3,600 child tax credit that
we are providing to working families all across America.
During the pandemic, in my State, and I expect in all of
your States, there were long lines of people lining up for
emergency food. Hard to believe that is taking place in
America. It was. We are making progress in reducing hunger in
America.
We are expanding, as a result of the American Rescue Plan,
health care for people who need it. We are improving
educational opportunities. We are providing summer and after-
school programs for our kids.
The American Rescue Plan provided an extra $300 a week in
unemployment benefits to millions of workers who lost their
jobs through no fault of their own. And the American Rescue
Plan also is preventing millions of Americans from being thrown
out onto the streets because they could not afford their rent.
It is also preventing over a million workers and retirees
from seeing their pensions slashed by up to 60 percent. In
other words, that is a very significant piece of legislation
that came at a time when working families in this country
desperately needed help. But let us be clear. While we are
making progress in protecting working families, an enormous
amount of work remains before us.
In the richest country in the history of the world, the
working families of this country continue to struggle
economically with millions of our people continuing to live in
desperation. Sometimes inside the Beltway, we can forget that
reality. Literally speaking, three blocks from this building,
there are people sleeping in tents out on the street, and the
desperation exists from one end of this country to the other in
every one of our States.
Real wages, inflation accounted for wages in America, are
lower today than they were 48 years ago. Think about that. A
huge explosion in productivity, in technology, average American
worker in real wages making less than he or she did 48 years
ago. And, frighteningly--and the young people know this--the
younger generation stand an excellent chance, if we do not turn
it around, of having a lower standard of living than their
parents. In other words, we are moving in exactly the wrong
direction.
Today in America, over half of our people are living
paycheck to paycheck, and millions are trying to get by on 8,
9, 10 bucks an hour, which, in my view, is a starvation wage.
In terms of health care, we remain the only major country
on Earth not to guarantee health care to all people, and yet we
pay the highest prices in the world for health care. Ninety
million people are uninsured. One out of four people cannot
afford the cost of a prescription drug their doctor prescribes
because we pay the highest prices in the world for prescription
drugs.
Over half a million Americans are homeless today, and some
18 million households spend at least half of their incomes on
housing. How the hell do you survive when you are spending half
your income on housing?
Meanwhile, while working families struggle, the very
richest people in this country are doing unbelievably well. Two
people own more wealth than the bottom 40 percent of the
American Nation.
And let me be as clear as I can be. The decisions that we
make as a Congress will determine the very future of this
Nation. I am not just talking about the movement toward
authoritarianism and the attacks on democracy, which we are
seeing every day. We are determining whether or not we are
going to have an economy that works for all of us or just the
very wealthiest people in this country. And in my view, the
budget that President Biden has submitted to Congress
constitutes a significant, significant step forward for the
working families in this country. Now he has done his job; his
staff has done their job. They have given us an excellent
budget. It is our job to take that budget, to refine it, and to
make it a document that works for all of our people.
At a time when tens of millions of Americans continue to
struggle economically, the President's budget would create
millions of good-paying jobs--underline ``good-paying jobs''--
in this country by rebuilding our crumbling roads, bridges,
water systems, wastewater plants. We have talked about
infrastructure--Debbie, how many years have we talked about it?
Decades since we have been here. Infrastructure, Republicans
talk about it, Democrats talk about it. Every State in this
country has crumbling infrastructure. We have done nothing or
very little. Now is the time to put our people back to work
rebuilding our crumbling infrastructure.
We need to build millions of units of affordable housing.
We need to combat climate change. The scientists are very
clear. Every day that we delay is another day that we endanger
the well-being of our children and our grandchildren with more
droughts, more floods, more extreme weather disturbances. That
is the bad news.
The good news is that we can create millions of good-paying
jobs going forward in addressing climate change, and that is
certainly incorporated in the President's budget. The
President's budget extends the child tax credit for at least 5
years. No, in America, we should not have the highest rate of
childhood poverty of any major country on Earth. And this
budget takes us a good way forward in helping us to address
that.
This budget deals with the outrage that the pharmaceutical
industry owns the United States Congress--the Republican Party
and the Democratic Party. For too many years, their lobbyists,
their campaign contributions, have resulted in the fact that we
pay by far the highest prices in the world for prescription
drugs. The President's budget begins to tell the pharmaceutical
industry, yes, Medicare will negotiate prices. We can raise up
to $500 billion, which, among other things, we can use to
expand Medicare to cover dental, hearing, eyeglasses, and lower
the age of eligibility. Millions of younger workers want to get
into Medicare.
By enacting universal child care and pre-K legislation in
the President's budget, we can make sure that every child in
America, regardless of income or Zip code, gets a good start in
life. How absurd it is that we still, many of us, continue to
live in the 1950s here dad went to work and mom stayed home
with the kids. Well, you know what, folks? Mom is working, dad
is working, and the children of this country are entitled to
high-quality child care. That is what this President's budget
begins to address.
By passing paid family and medical leave, I believe we
remain the only major country on Earth--is that right, Ms.
Young?--that does not guarantee paid family and medical leave.
If a working mother has a baby today, she has got to go back to
work in a week from now. Really? Is that what a civilized
society is about? Only major country on Earth not to guarantee
paid family and medical leave. This budget begins to move us in
the right direction.
This budget, the President's budget, begins to move us
forward in terms of providing progressive tax legislation that
finally asks the wealthy and large corporations to begin paying
their fair share of taxes so we can begin not only to raise the
revenue that we need, but to end the grotesque level of income
and wealth inequality that exists in America.
So here we are, folks. We have come to the worst year in
our lifetimes. We are making progress. But I would hope that
everybody recognizes that we still have a very long way to go.
I want to congratulate the President, Ms. Young, and the
administration for giving us the framework to move forward.
Now, they have done their job. Now we have got to take the
ball and run with it. We have got to refine that budget. It is
not a perfect budget. That is our job. That is what the
Congress does. So I look forward to working with my colleagues
in the Senate and the House and with the administration to make
this just an extraordinary piece of legislation that finally
addresses the needs of working families. Thank you.
Senator Graham.
OPENING STATEMENT OF SENATOR LINDSEY GRAHAM
Senator Graham. Thank you, Mr. Chairman. And to our
witness, welcome. I have a high respect and regard for you.
Your budget, like every other President's budget, is probably
not going to go very far, but that is just the way it is around
here.
Let me tell you why this budget probably will not go very
far. There are some things you can fix. This budget is not one
of them. What does this budget do? Over a 10-year period, it
increases $5 trillion in additional spending on top of what we
are already spending. Five trillion over 10 years. It raises
taxes to $3.6 trillion. What does that mean for everybody
working out there? This budget will come to your neighborhood
soon. There is just not enough 1-percenters to bear all the
load of this.
In terms of debt to gross domestic product (GDP), we will
be at 117 percent, the highest since World War II.
What does it do in terms of taxes? Twenty percent of GDP
will be taxes, the highest level in the history of the country.
And we are competing in a world where people are trying to be
more competitive. Businesses can go anywhere in the world to do
business, and I think a lot of them will be choosing another
spot other than the United States because we will drive them
offshore.
This tax-and-spend budget will break the back of our
economy and will destroy future generations' ability to achieve
the American dream that most of us have had a shot at, because
we will sink them with debt. We will have an economy with a tax
structure that very few businesses will look to America as the
place to locate.
Other than that, it is fine.
The real problem with the budget is on the defense side.
You know this gun-butter debate? There is enough butter in this
bill to call a heart attack for everybody in the world. This is
the most cholesterol-laden budget I have ever seen: a 16-
percent increase for nondefense spending; 1.7-percent increase
for defense spending. In a dangerous world, this budget
increases defense spending less than inflation, increases
nondefense spending by 16 percent. If you do not have a
television, you need to buy one. Look what is going on in the
world. The Iranians are marching toward a nuclear weapon, 60
percent enrichment. We have Russia riling the neighborhood it
lives in. In Afghanistan, we are about to withdraw, and ISIS
and, unfortunately, al Qaeda types are going to reemerge. We
have got North Korea threatening every day to expand their
nuclear program. The Chinese are up to no good on every front.
The incursions into friendly airspace by Russia and China are
at an all-time high. So our response is to basically neuter our
defense capabilities.
Mr. Chairman, how do you grow the Defense Department to
compete with the technologies being developed by Russia and
China if our defense spending is less than inflation? Their
spending is not less than inflation. So this budget, I think,
is blind to the world in which we live in in terms of military
threats. It has an approach to the role of the Federal
Government that will destroy free enterprise. It will create a
tax-and-spend policy in perpetuity. It will make it very hard
for the next generation of Americans to grow their own
business, start their own business, and raise their families
with some hope of acquiring wealth.
Seventy-one percent of all taxes in America are paid by
people that make over $500,000; 53 million Americans pay zero
Federal income tax. Where are we headed? This budget, in my
view, will destroy the ability to create new jobs in this
country, will create a debt burden on future generations that
would be devastating, and would at a time of great danger strip
America of being able to maintain a qualitative edge over those
who wish us harm.
This is a very ill conceived budget. It will get no support
on this side, and I hope working with Democrats and Republicans
we can find a way to have a budget that does not have a 16-
percent increase for nondefense and a 1.7 increase for defense
spending in this dangerous world in which we all live and that
we do not institutionalize tax rates and debt that are beyond
the ability of the American people to flourish and survive.
Thank you.
Chairman Sanders. Thank you, Senator Graham.
Shalanda D. Young is the Acting Director and Deputy
Director of the Office of Management and Budget, and we are
delighted that she is before us today. Ms. Young?
STATEMENT OF THE HONORABLE SHALANDA D. YOUNG, ACTING DIRECTOR
AND DEPUTY DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
Ms. Young. Thank you, Chairman Sanders, Ranking Member
Graham, and the rest of the distinguished members of the Budget
Committee. Thank you for the opportunity to be here today to
testify on the President Biden's fiscal year 2022 budget
request.
We released this budget at a moment in our country where we
are emerging from one of the most challenging periods in our
history. At least 63 percent of American adults have now
received one vaccine shot. The economy has added 2 million jobs
since the President took office. The unemployment rate has
dropped to 5.8 percent, the lowest since the start of the
pandemic. A very encouraging sign is the decline in the long-
term unemployed by 431,000 last month, as well as a decline in
those seeking initial claims of unemployment by about half of
what they were in January.
And yet we also know that it is not enough to simply go
back to the economy we had before the pandemic. Instead, we
must seize this moment to reimagine and rebuild a new American
economy that invests in the middle class and those trying to
break into the middle class.
The President's fiscal year 2022 budget details his agenda
for this year to help grow the economy, create good-paying
jobs, and power an equitable economic recovery. It includes the
two historic plans the President has put forth--the American
Jobs Plan and the American Families Plan--and reinvests in
education, research, public health, and other foundations of
our country's strength through the discretionary request. And
it does all of this while proposing tax reforms that will
improve our country's long-term fiscal health and lay the
foundation for shared prosperity in this country.
The budget starts with the American Jobs Plan--a once-in-a-
generation investment in America that will put millions of
people to work rebuilding our country: fixing highways,
rebuilding bridges, and upgrading our transit systems;
replacing all lead pipes and service lines into our homes;
investing in the infrastructure of our care economy and
creating new and better jobs for caregiving workers; and more.
The budget also includes the American Families Plan, a
historic investment to help families cover the basic expenses
that so many struggle with now, lower health insurance
premiums, and continue the historic reductions in child poverty
that began in the American Rescue Plan.
Alongside these investments, the budget also reiterates the
President's strong call to Congress during his Joint Session
address to make progress on health care by reducing the cost of
prescription drugs and expanding and improving health coverage.
Moreover, the budget details a robust set of discretionary
proposals to help reinvest in the foundations of our strength
and to begin reversing a decade of chronic underinvestment in
priorities like public health.
In total, the budget's discretionary investment would
restore nondefense appropriations to its historical average
share of the economy. Importantly, the budget makes all of
these investments in a way that is responsive to both near- and
medium-term economic landscape and longer-term fiscal outlook.
In the near term, the decades-long global trend of
declining interest rates gives us the fiscal space to make
necessary up-front investments. Under the budget's policies,
the real cost of Federal debt payments will remain below the
historical average through the coming decade, even as the
budget assumes that interest rates will rise from their current
lows, consistent with private sector forecasts. Over the long
run, when we face larger fiscal challenges and more uncertainty
about interest rates, the budget will reduce the deficit and
improve our Nation's finances. That is because its front-loaded
investments are more than paid for through the permanent tax
reforms that will ensure corporations and the wealthiest
Americans pay their fair share. The budget policies reduce
annual deficits beginning in 2030 and reduce deficits by over
$2 trillion in the subsequent decade, while the American Jobs
Plan and American Families Plan are fully offset within 15
years.
As a whole, the President's budget will improve our
Nation's long-term finances while making the growth-enhancing
investments we need right now.
Thank you for the opportunity to appear before the
Committee today, and I look forward to taking your questions.
[The prepared statement of Ms. Young appears on page 35]
Chairman Sanders. Thank you very much.
Ms. Young, let me start off with an issue that I have
worked on for a long time, as others have, and that is the high
cost of prescription drugs, the fact that the United States
through our Medicare program does not negotiate drug prices.
What does the President's budget do in terms of lowering drug
prices and demanding that we get fair prices from the
pharmaceutical industry?
Ms. Young. Senator Sanders, the budget makes clear that the
President expects action on this this year, that we expect a
bill from Congress that allows Medicare to negotiate drug
prices, that saves at least half a trillion dollars for the
American people through lowering of drug payments, which you
know is an extreme cost not only to beneficiaries but to
taxpayers through the Medicare program.
Chairman Sanders. To my mind, in the richest country on
Earth, it is hard to believe that millions of seniors do not
have teeth in their mouths, do not have the hearing aids that
they need, do not have the eyeglasses they need. What does the
President's budget propose in terms of expanding Medicare?
Ms. Young. Not only does the President want and expect
action this year, as he called for in the joint address, on
prescription drugs, he expects those savings and others to be
used to strengthen the Medicare and Medicaid programs with
plans to enhance dental, vision, and hearing aids through those
programs.
Chairman Sanders. Ms. Young, you may be aware that,
unbelievably, you know, I hear my Republican colleagues talk
about problems, and somehow they forget issues like we have the
highest rate of childhood poverty of almost any major country
on Earth while the very rich are richer. What does this bill
finally begin to do, the President's budget, in terms of
childhood poverty in America?
Ms. Young. One, it looks at the issues you brought up about
women in the job force and the need for child care for all
families that is affordable and equitable. So it invests
heavily in child care spending. It reinvests in Head Start.
Today the discretionary budget serves 95,000 fewer children
than it did 10 years ago. So it looks at a full picture to
allow families to educate their children in a way that is fair
to all families, no matter of income level.
Chairman Sanders. Why is that important--I mean, I am
asking you such an obvious question, but some apparently still
do not appreciate this. Why in today's economy is it important
that we have a strong child care and pre-K system?
Ms. Young. I am here before you as a woman. Families look
very different than they did 30 years ago. We need all the
tools available to allow women and fathers to enter the
workforce while not worrying about child care for their
families.
Chairman Sanders. The United States, I say to my
colleagues, used to be the best-educated country on Earth. If
my memory is correct, we used to have the highest percentage of
college graduates of any major country. That is no longer the
case. And Senator Graham mentioned that this is a very
competitive economy, world economy, and it certainly is. But
you know what? You are not going to succeed in a competitive
world economy unless we have the best-educated workforce in the
world.
What does the President's budget do in terms of improving,
allowing working families to get the higher education that
right now they cannot afford?
Ms. Young. This budget would allow 2-year community
colleges to be free for Americans, which we think is the
appropriate thing to do. As the President has said over and
over, we developed an education system decades ago that said 12
years was the right amount of years. We need to relook at that,
and I think if we look at now what the educational requirements
are for most jobs, that does not make sense anymore.
Chairman Sanders. That is an area, by the way, we are going
to maybe expand a little bit on the President's ideas. I think
we can go beyond community colleges, making them available to
working families.
My last question is while some of my colleagues may not
appreciate it, the scientists are pretty clear that climate
change is an existential threat to this planet, and not only
the United States but China and India and countries all over
the world are going to have to work extremely aggressively to
transform our energy system and in the process create millions
of good-paying jobs.
Ms. Young, what does the President's budget do in terms of
finally getting us to move forward aggressively on climate
change?
Ms. Young. The discretionary budget invests $36 billion to
combat climate change, an increase of $14 billion, Senator
Sanders. Also at agencies you would not typically think of, but
all agencies are being impacted by climate change, including
the Department of Defense, including the Small Business
Administration. We have to look at this government-wide, and
that is what this budget is doing. In addition, that is in
addition to the billions of investments in climate change we
are putting forth as part of the Jobs Plan.
Chairman Sanders. All right. My last question is there are
communities all over this country, often communities of color,
that have been ignored for many, many years. What does the
President's budget do in terms of improving life in those
communities?
Ms. Young. Sir, you will see an increased amount--we just
talked about climate change--in the environmental justice
space. This is an area we have put out an Executive order
requiring all agencies, as they implement, as they think about
the budget, as they think about programs, the Government should
work for all people no matter their race, gender, and make sure
we are providing equitable service to all Americans. So it goes
beyond the budget and asks agencies to relook at everything we
are doing to make sure we are reaching all Americans.
Chairman Sanders. Ms. Young, thank you very much.
Senator Graham?
Senator Graham. Thank you. Thank you very much for the job
you do, and we will try to work together here.
Do you agree we need to fund the Government this year?
Ms. Young. Absolutely.
Senator Graham. Do you agree we need some top line sooner
rather than later?
Ms. Young. We have some for you here to consider.
Senator Graham. Yeah, some that would work. If we say no to
this, is that the end of the discussion?
Ms. Young. Senator Graham, the budget has always been the
beginning of a process.
Senator Graham. Right. So you know that we are going to say
no, and I think a lot of Democrats will be uneasy with some of
the priorities in this budget, or the lack of priorities in
terms of defense. So I just want to encourage you, let us try
to pass a budget--I mean, no, excuse me, fund the Government
through the appropriations process. We can do it. Do you agree
that continuing resolutions are a bad way to run the military--
--
Ms. Young. Absolutely.
Senator Graham. --and everything else?
Ms. Young. Everything else.
Senator Graham. Okay. So the reason I want to beat you up
on the budget is because I like you, and I am trying to get to
where we are all going to be. We are going to be here fairly
soon as appropriators trying to find a way to pass a budget
that our colleagues can support. So I think Ms. Young is
uniquely qualified to help us get there.
So when do you think we should have these discussions about
a top line we could all agree upon?
Ms. Young. Senator Graham, I know the House Appropriations
Committee will start its work soon. I am hoping the Senate
Appropriations Committee follows suit. And I think both bodies
have to work their will, starting with where the President
would like to see both go.
Senator Graham. Okay.
Ms. Young. But both have a history of putting Member
interest where Members of both bodies can come together. It has
to be a bipartisan process.
Senator Graham. Okay. Good. The sooner that process can
start, the better, as far as I am concerned.
A bunch of States are basically canceling the Federal
unemployment benefit for their State because they believe it
hinders the ability to hire people back as the economy
reemerges from the COVID pandemic. Do you understand that
logic? And what is your view of that?
Ms. Young. Well, one, I would like to state the way we do
unemployment, the Governors have the right to make those calls.
But I would also like to point out the jobs report we saw last
week, before any of these payments were pulled back, we saw
what I think is tremendous growth in the jobs market. We added
559,000 jobs. We are down to the lowest unemployment level
since before the pandemic.
So we will see the results of what those Governors have
done, but we are also seeing a big return of the economy before
that $300 was pulled.
Senator Graham. Well, their belief is that the enhanced
unemployment benefit is deterring people from reentering into
the workforce. There are a lot of jobs out there that are
unfilled and will never be filled until you change the benefit
structure.
Does that logic make sense to you given where we are at in
our economy?
Ms. Young. I understand the logic, but I have also not met
Americans who would prefer not to work. There is a dignity to
work in this country that most Americans----
Senator Graham. Well, I have got a lot of people in my
family that are not working because they are getting--I will
show you some in my family. So the bottom line is I think there
are people out there--they are not bad people, but they are not
going to work for $15 an hour if they make $23 unemployed. That
does not make you a bad person. If you are working for $15 an
hour, that makes you almost a chump. So I do not buy that at
all. I think there is a real problem we have created here to
incentivize people not to work because simply they make more
money. I am not blaming them. I am blaming us. But our
employers and our economy need some help out there.
Finally, on the defense side, how do you see the world
right now in terms of threats that the United States and our
allies face? Is it small, large, medium?
Ms. Young. Well, I am not, you know, a national security
expert. It is clear the world remains a complex place with a
lot of dangerous players. But you being the State Foreign
Operations Subcommittee Ranking Member on Appropriations, I
think you have to look at this budget--I know we have gotten
into the habit of looking at defense versus nondefense. But the
investments in diplomacy, I think General Mattis said it best,
a reduction there means he has to buy more bullets. So what you
see when you do not see the defense numbers where you want them
is a reinvestment in our diplomacy, making sure that this
complex environment, this complex world we live in is not all
handled militarily.
Senator Graham. I could not agree with you more, and I will
end on this, Mr. Chairman. The President's budget I think ups
the Foreign Operations Subcommittee to, I think, $62 billion.
That is still less than 1 percent. Count me in for more
spending on soft power. It does make sense. But it is by no
means a substitute for having a robust military with a
qualitative advantage over the enemies of this Nation and our
allies. And I can say one thing without any hesitation. This
budget is a disaster for the American military over time. This
budget will entice bad actors to be more bold. And this budget
sends absolutely the wrong signal in a dangerous world. While I
appreciate more developmental aid spending, we are not going to
defend America through developmental spending. Our adversaries
are growing in capability. This budget does not allow us to
stay ahead.
Thank you.
Chairman Sanders. Thank you, Senator Graham.
Senator Stabenow.
Senator Stabenow. Well, thank you very much, Mr. Chairman.
And, Ms. Young, welcome again.
I first want to start, because I am sure we are going to
hear from Republican colleagues, now that we have a Democratic
President, about how deficits will destroy the country, which
is always happening under a Democratic President but not under
a Republican President. So just in the time that I have been
here, just for the record for folks listening, I came into the
U.S. House in 1997 and President Clinton, a Democrat, balanced
the budget for the first time in 30 years. I was proud to be
able to do that.
I came into the Senate, President Bush, two tax cuts geared
to the wealthiest Americans, wars not paid for, huge deficits,
nobody said anything about the deficits. We went into a
financial crisis at the end of his term.
President Obama comes in, right-sizes the Government, the
financial crisis, suddenly deficits matter again, they are
horrible and will ruin the country. By the end of his term,
deficits are coming down.
President Trump comes in, deficits really do not matter,
everything gets exploded in terms of the deficits. Republican
colleagues do not say anything.
But now we have President Biden and deficits matter again.
So I think we ought to just say, as we hear this going forward,
understand where it is coming from.
I want to thank you for a budget that reflects the needs
and values of the people of Michigan. I want to thank you for
supporting the Great Lakes. It is the first time in 5 years I
have not had to come to the Budget Committee and talk about how
eliminating the Great Lakes Restoration Initiative would be a
bad thing for protecting the Great Lakes. So thank you for
investing in that as well.
I wondered if you could speak a little bit more about
closing the tax gap, which I think is so important. President
Biden has proposed a significant investment in the IRS' ability
to enforce the tax laws on the books. I think everybody in my
State thinks that is a good idea, and if they are required to
pay their taxes, that everybody should be required to pay their
taxes. And it is pretty simple. People should pay what they
owe. Every year there are hundreds of billions of dollars in
taxes that are owed that are not paid. In fact, in the Finance
Committee, I was really amazed to hear the former IRS
Commissioner say he thinks it is $2 trillion in unpaid taxes.
And when you look at it, it is unreported income; it is income
hidden because of complex business arrangements and so on, and
compounded by staffing cuts over the years that have made it
harder to do complex tax-consuming audits. And the result is
that low-income taxpayers with a simple tax filing get audited;
billionaires with complicated finances have a much better
chance of not being audited. So when we are looking at roads
and bridges and education and health care and Department of
Defense and all the things that we need to fund, these are big
numbers.
So I wondered if you would talk more about the role that
revenue from closing the tax gap plays in funding the critical
investments that I am sure everybody will be talking about this
morning.
Ms. Young. Senator Stabenow, we do pay a lot of attention
on the spending side, with pointing out the President's
proposal is completely offset through tax reform. Also, before
you even get to tax reform, through asking those who are
supposed to pay a certain amount of tax, to pay that. The IRS
has been woefully underfunded for decades, the last decade even
more thanks to the Budget Control Act. So we are saying--you
said $2 trillion. We are tracking closer to $1 trillion. That
is what people owe under these tax laws with no changes. So we
do think we need robust investments in the IRS to make sure
that regular Americans are not paying their fair share while
those under our current laws are getting away without paying
anything into the system close to what they owe, and then we
have to skimp on these investments in infrastructure and child
care.
Senator Stabenow. Thank you very much. Well, on behalf of
the people of Michigan, we need to get that done. People want
to make sure our tax system and enforcement is fair.
One other question. I have many I would love to talk to you
about, but I want to talk to you more about what we have talked
about privately in terms of a really important piece of health
care, which is behavioral health, health care above the neck,
mental health, substance abuse services and so on. We have had
dramatically positive things happening through new certified
community behavioral health clinics. Senator Roy Blunt and I,
Republican and Democratic colleagues together, pushing forward
on a new way to provide quality services in the community that
keep people out of the jail and instead they are getting help,
out of the emergency room, out of homeless shelters, getting
help.
The budget includes a $125 million increase in startup
funds, but does not address the need to make these clinics
fully available and funded across the country. So I wonder if
you could speak to some of the successes of this approach in
community clinics. And will you work with Senator Blunt,
myself, and other colleagues to make sure that we can put in
place the legislation necessary to provide these services
across the country?
Chairman Sanders. Briefly.
Ms. Young. Senator Stabenow, as I said privately, of
course, we will work with you to make sure we get the right mix
and are servicing people the best way when it comes to
behavioral and mental health. So we will absolutely work with
you.
Senator Stabenow. Thank you.
Chairman Sanders. Thank you.
Senator Grassley.
Senator Grassley. Yeah, I want to--I do not have an easel,
so I want to show you a 50-year history of taxes and taxes
coming into the Federal Treasury just to show you that your
wish of getting more revenue from higher tax rates just does
not pay off.
The blue line is a 50-year history of tax rates up and
down. The red line is the actual revenue that actually comes
in, which tells me that the history over 50 years is that the
taxpayers in this country have decided they are only going to
give us in Washington so much money, averaging about 17.4
percent of gross national product.
Now, you want to raise that about 20 percent to an average
of about 19.9, I believe. It just is not going to happen.
People are going to decide that they are going to take leisure
instead of working for the Government. They have decided that
this is the amount of money that is going to come in.
And so taking this into consideration, how do you think you
are going to fund, with the tax rates you get, you are
suggesting that money is going to come in, but it does not come
in.
Ms. Young. Senator Grassley, one, I think I need some of
the visual aid that Senator Sanders talked about earlier, but
from what I can see of the lines, I think not all but partly
can be explained by what I just talked to Senator Stabenow
about. We need to make sure that we have an IRS, a Government
that is collecting what the tax law says we should be
collecting. And some people absolutely do not pay what they are
supposed to pay--not because they are staying home, but because
they have found loopholes that we are beginning to close in
this budget.
So, you know, I think it is troubling, the line you have
shown, and we are trying to do something about that to make
sure people are paying what the tax law says they are supposed
to pay, and it is usually the very wealthy who find loopholes
that we need to close.
Senator Grassley. On another matter, the President's budget
tries to justify unprecedented levels of spending and debt by
assuming interest rates will remain historically low. Recently,
Secretary Yellen is quoted as saying interest rates have been
``too low now for a decade'' and that we should welcome higher
rates. But if interest rates do increase, that could be
catastrophic given escalating debt under the President's
budget.
As Brian Riedl of the Manhattan Institute recently
highlighted in testimony before the House Financial Services
Committee, interest rates that are only 1 percentage point
higher than Congressional Budget Office (CBO) currently
projects would add $30 trillion of interest costs over the next
three decades.
Given Secretary Yellen recognizes the potential of higher
interest rates, doesn't proposing a budget that results in
public debt reaching 117 percent of GDP by 2031 and continues
to rise thereafter risk leading us down the path that we have
seen in other countries--Greece is an example. I suppose Italy
would be another example--towards a debt crisis?
Ms. Young. Senator Grassley, one, I would like to point out
what we tried to do is present a reasonable budget that was
honest about our assumptions. So we do actually include a rise
in interest rates over time in this budget. When it was
developed, it was absolutely in line with where market
forecasters are. Even with that, we show a deficit savings of
$2 trillion in the subsequent decade from this budget. We also
see some rise in interest that are month-to-month, temporary,
but we also see our long-term indicators showing us it will not
be a long-term issue, and we remain a historically low point,
which is a good thing because our real debt service payments
remain low by historical standards.
So we do account for rising interest, and we do still show
$2 trillion in deficit savings with the budget proposals, with
the offsets and tax reforms we have talked about today.
Senator Grassley. Since the end of World War II and prior
to the pandemic, spending as a percent of GDP exceeded 24
percent of GDP in only one year. That was 2009 at the height of
the financial crisis when spending reached 24.4 percent of GDP.
That was in 2009.
Under the President's budget, spending as a percent of GDP
would average 24.5 percent for the next decade. It seems to me
that the administration is taking the concept of ``never
letting a crisis go to waste'' to a whole new level. How does
the administration justify permanent spending levels that once
were reserved only for periods of world wars or economic
crises?
Ms. Young. Senator Grassley, what we see, one, our
proposals here are fully offset. You may not agree on the
offsets, but we took the responsible route of providing
offsets. We also know that the changing demographics in this
country means that we spend more, but we think it is important
to make sure our seniors know we have a commitment to those
social safety net programs like Social Security, so you will
not find cuts to those programs here. But our changing
demographics have as much to do with the GDP numbers, as you
have mentioned, as the proposals here. But to ensure that we do
not create more of a fiscal problem down the road, we do
believe these policies should be offset by reforming the Tax
Code so it is more fair to all Americans.
Senator Grassley. Thank you, Mr. Chairman.
Chairman Sanders. Thank you, Senator Grassley.
Senator Kaine.
Senator Kaine. Thank you, Mr. Chair. Thanks, Ms. Young.
I want to talk about budget honesty. I appreciate this
about the budget in a couple of ways. Your spending proposals
are offset with proposed revenue increases. That is good. You
do not propose a defense number but then have a President who
wants to take money out of the Pentagon to use for nonmilitary
projects like a wall. President Trump took about $12 billion
out of the Pentagon to use for the wall, so while the top line
for defense may only go up a little, actually if you count in
the fact that President Biden is not going to raid the defense
budget for nonmilitary emergencies, it is actually a larger
increase in defense spending within the Pentagon.
And let us get to this: You use fairly conservative revenue
forecasts, so you have projected trillions of dollars of
deficit savings over the two decades using conservative revenue
forecasts. Now, as I read the budget, what it suggests to me is
this: We are still in the middle of a once-in-a-century public
health crisis that has killed 600,000 people and ravaged the
economy. We are seeing some signs of growth. That is good. But
we are not out of the woods yet.
And so you include conservative revenue projections, and
maybe the most recent evidence would suggest that the growth
will actually be stronger. Wouldn't you agree with me that one
of the best ways to deal with debt and deficit is to have
strong economic growth?
Ms. Young. Absolutely, and the growth numbers we have for
this upcoming year is 5 percent in the budget. We developed
those economic assumptions in February. Clearly, our vaccine
program has outperformed our greatest thoughts on what it
would, and it has allowed the economy to grow. Organisation for
Economic Co-operation and Development (OECD) and other
forecasters now estimate that our growth will be more like 6.5
percent. So there are very conservative estimates here. Even
with those, we show deficit reductions, and there is proof
through market forecasters and others that we are doing better
than even this budget----
Senator Kaine. And when the time is right, you can come
back to Congress--if you feel like you need to adjust the
revenue projections, you can come back to us, and we might even
see the anti-deficit effect that you testified earlier being
even stronger because of the potential for robust growth.
Ms. Young. And we are required to do something called a
``midsession review,'' and I certainly do not want to get ahead
of myself. But given where the market is and market forecasts,
I expect we would see much stronger growth.
Senator Kaine. On the theory that economic growth is the
best anti-deficit strategy, I also want to point out analyses
for the last decade have always indicated that comprehensive
immigration reform is something that you can do that will
significantly increase economic growth without really adding a
penny to the deficit. And it would be my hope that we would
grapple with that. If we are interested in fiscal
responsibility, comprehensive immigration reform is one of the
most important things we could do.
I am right, am I not, that President Biden is not proposing
to raid the Pentagon budget to take money out of it for
nondefense emergencies? Am I correct in that?
Ms. Young. You are correct, absolutely correct in that.
Senator Kaine. Over the course of about a year, in the
calendar year--it straddled two fiscal years--President Trump
took $12 billion out of the Pentagon budget, and so the top-
line numbers that Ranking Member Graham showed actually were
sort of artificial. Those were indeed top lines that did not
reflect what was actually spent by the previous administration,
because they spirited monies away.
Senator Graham also talked about the notion that the
discretionary budget was increasing at a significant percent.
The money on diplomacy is in the discretionary budget, but it
is important to the national defense, correct?
Ms. Young. Right.
Senator Kaine. The Department of Energy, which is over our
nuclear arsenal, is really important to national defense, but
that is in the discretionary budget, isn't it?
Ms. Young. That is right.
Senator Kaine. Department of Homeland Security (DHS) is in
the discretionary budget, very important for national security.
Isn't that correct?
Ms. Young. Exactly.
Senator Kaine. The Department of Justice, Drug Enforcement
Administration, there are so many parts of the discretionary
budget that are critical to national defense that just simply
looking at defense versus nondefense and saying one is
benefiting and the other is not is sort of artificial and not
particularly accurate, isn't it?
Ms. Young. It is a completely artificial split.
Senator Kaine. The last thing I want to ask you is in the
past administration we often saw efforts, I thought, to really
go after Federal employees by limiting cost-of-living
increases, by undercutting retirement benefits. Tell me about
what this budget does for our Federal employees.
Ms. Young. So, one, it provides an adequate cost-of-living
increase of 2.7 percent----
Senator Kaine. And that is parity for both defense and
nondefense employees, correct?
Ms. Young. It makes no sense that someone sitting next to
someone in a uniform would not have parity, that a Central
Intelligence Agency (CIA) intelligence officer----
Senator Kaine. Or a Coast Guard officer serving on the Navy
ship, they would get different pay increases, that makes no
sense, does it?
Ms. Young. It does not.
Senator Kaine. So parity, that is strong.
Ms. Young. We do parity in this budget. The President is
very clear. The Government works for the people, and we have to
have a strong civil service, rebuild that service. Just at OMB,
we have seen the reduction in staff over the last 10 years. It
has significant impacts on what we are able to do for the
American people, and we have every intention to turn that
around.
Senator Kaine. Thank you, Ms. Young.
Thanks, Mr. Chair.
Chairman Sanders. Thank you, Senator Kaine.
Senator Johnson.
Senator Johnson. Thank you, Mr. Chairman. Ms. Young,
welcome.
Real quick, how much, approximately, is left unspent from
the close to $6 trillion of COVID relief that the Congress has
passed over the last 18 months?
Ms. Young. Senator Johnson, you know ARP was just passed,
so a significant amount of that remains unobligated. But I can
get that for the Committee.
Senator Johnson. Well, the reason I ask is when we passed
the $1.9 trillion, in air quotes, COVID relief package, there
was about $1 trillion left unspent of the previous $4 trillion
we spent in 2020. According to the numbers I saw from CBO,
about $700 billion of the COVID relief package, the $1.9
trillion partisan package, is not even going to be spent until
2022 to 2028. Is that correct?
Ms. Young. Yeah, I think it is appropriate to make sure we
roll these programs out in a responsible way.
Senator Johnson. But that is not COVID relief. That is
something else.
Ms. Young. It absolutely is COVID relief--COVID relief can
take time to get out to ensure that some long-term inequities
that will last past the pandemic are dealt with.
Senator Johnson. Well, I hope COVID is over before 2028.
Can you get me that number, though? I would like to know as of
today, you know, how much of the $6 trillion of COVID relief
remains unspent.
Ms. Young. We will make sure all the members on the
Committee have that data.
Senator Johnson. Just real quick, because you were talking
about equity and taxes, right now the top 1 percent make about
21 percent of the income, and they pay 40 percent of the income
tax. The top 10 percent make about 48 percent of the income,
and they pay 71 percent of income tax. And, by the way, the top
1 percent will always make, you know, a larger share of income
because that is the definition of 1 percent and the definition
of 10 percent.
What do you think would be more equitable? Again, top 1
percent, 20 percent of income, they pay 40 percent of tax; top
10 percent, they make 48 percent of income, pay 71 percent of
the income tax. What do you think would be more equitable? What
should those percentages be?
Ms. Young. Senator Johnson, the question I have is they are
paying--the percentages, let us take your numbers are fact.
That does not mean that they are paying a fair share compared
to what regular Americans----
Senator Johnson. So, again, if you are making--let us
concentrate on the top 10 percent. If you are making almost 50
percent of the income, what percentage of the income tax should
you pay?
Ms. Young. What we are suggesting is the wealthiest
Americans go back to paying what they paid before the tax cuts
of the last administration. So we are moving those tax rates
back to 39.6 percent.
Senator Johnson. What do you think is the maximum amount
any American should pay out of a dollar of income to the
Federal Government, recognizing certain States take 10 percent
or even more? But what should be the max amount an American
should pay for every dollar of income should contribute to the
Federal Government? What should that percent be?
Ms. Young. So we have a tax plan. What it says is no one
that makes under $400,000 should pay more than they pay now, so
we have a commitment not to raise those taxes. But what we are
saying is those that make more than $400,000 should pay----
Senator Johnson. What is that percent? I mean, what do you
think--so what is the percent that an American will pay out of
a dollar of income?
Ms. Young. Senator Johnson, overall we think the right tax
rate is 39.6 percent for the top----
Senator Johnson. So about 40 percent, okay. Senator
Stabenow was talking about the glory years of budget surplus,
which, trust me, I wish we were back there in the late Clinton
years. The reason we got there is, first of all, an extremely
strong economy through the 1990s, and I would argue that it was
set up by what Ronald Reagan did in terms of supply side
economics and setting up the conditions for business
investment. So revenue actually did grow in 2000 to 20 percent
of GDP, but that was short-lived, because Senator Grassley is
right, long term, no matter what the top marginal tax rate, we
get about 17.4 percent. That is kind of what the American
people in the end say that is about all we are going to pay,
and they figure out some way to avoid paying the high top
marginal tax rate. But the reason we had the surplus is because
spending was 18.5, 18, 17.7, 17.7 percent of GDP during those 4
years.
Now, historically it has gone up during recessions, like in
the early 1980s to about 22.9. The first 4 years of President
Obama--again, he came into office in the recession--it was 24
to about 22 percent. The last 4 years it was about 20.8
percent. The President's budget is calling across the board for
24.5 percent of spending of GDP. Don't you think that is way
too much?
Ms. Young. So, one, I will point out that those times that
Senator Stabenow and you mentioned, the top tax rate was 39.6
percent, so we are trying to go back to those levels. So, you
know, we talk about spending as a problem. One thing we think
we should do is change the tax rates to make sure we do go back
to fair rates at a time of a strong economy. And we do not
think people are paying their fair share. We have seen that in
the data. We have had a tax cut that did not do what we claimed
it would do. So we are trying to go back and make sure that the
top earners and corporations do something to make sure we can
spend on infrastructure.
Senator Johnson. A final point. What I was pointing out,
those outlays are going from averaging about 20 percent over
the last 4 years of Obama to 24.5 percent. That is a massive
amount of spending increase when we have, let us face it, a
very strong economy, 5.8 percent unemployment. When I went to
college, that was almost considered full employment. In my
State it is 3.8 percent. I just do not get all this spending
when we are $28 trillion in debt.
Thank you, Mr. Chairman.
Chairman Sanders. Thank you.
Senator Toomey should be available on video.
Senator Toomey. I am. Thank you, Mr. Chairman.
My first point I would make is our distinguished witness I
think misspoke, suggesting that she would like to go back to
the wealthy paying the share of the tax burden they paid prior
to the Tax Cuts and Jobs Act (TCJA). If we went to that, then
the wealthy would pay a lower percentage of all the taxes that
are paid, because when we did the tax reform of 2017, the TCJA,
we shifted the tax burden from middle income people to higher-
income people. We made the Tax Code more progressive than it
was prior to the TCJA. So unless I am mistaken, I think the
administration's position is they want wealthier people to pay
even more, not less, of the tax burden. So I just want to make
that clear.
So this budget that we have before us, of course, massive
increase in nondefense discretionary spending, almost 17
percent. That is on top of the $1.9 trillion of partisan
spending that was signed into law in March. The Biden proposal
never returns spending to pre-pandemic levels as a percentage
of our economy. For 50 years, average spending has been about
20 percent of GDP, just a little more than that. Under the
President's budget, spending remains at about 25 percent of
GDP. So it is a massive 25-percent increase in Government
spending as a percentage of the economy, which would be a huge
distortion and misallocation of resources.
To pay for part of these spending hikes, we have got huge
tax increases. The President is proposing we increase the
corporate rate, we double global intangible low-taxed income
(GILTI), we eliminate the foreign-derived intangible income,
which is a way to encourage taxes paid in the U.S. instead of
overseas, raise individual income tax rates, eliminate the
stepped-up--it goes on and on, all kinds of tax increases of
all sorts. And one of the ironies of this was that prior--I
wish we could all agree on certain facts that are indisputable,
and one of them is that prior to the hit of the pandemic, prior
to that, we had the best economy in 50 years. And that is if
you measure it by objective metrics. We were at full
employment. We had more job openings than there were people
looking for jobs. We had a record-low poverty rate. We had an
all-time record-low unemployment for African Americans, for
Hispanic Americans. Wages were growing, and not only were wages
growing, but they were growing fastest for the lowest-income
people. So we were actively witnessing a narrowing of the
income gap.
I would have thought that there could be bipartisan
agreement that those are good things, because I think those are
very good things. And, therefore, I think it would be good to
try to get back to that. But that is not where we go here.
Instead, we go on this massive spending and tax hike binge that
would make it probably impossible to ever get back to the best
economy of the last 50 years, which we had a year and a half
ago.
Now, along the way, because of the Government having shut
down the economy, for understandable reasons even if not always
best in hindsight, in 2020 Congress passed five bills, $4
trillion, then the Democrats insisted on another almost $2
trillion. It was clear already that the economy was roaring
back. COVID was already receding dramatically. We had
discovered by then--or before then that States had an all-time
record year for tax revenue in 2020. State and local
governments combined set an all-time record. Separate and apart
from that, we had sent them $500 billion. And then the
administration says we have to send them another $350 billion,
of course. That is just unbelievable, the spending, everywhere
you look.
California is a great example. Here we go. In California,
they announced that this fiscal year they run a $75.7 billion
surplus. That is just their surplus. They are going to get
another $42 billion from the Federal Government, so they do not
know what to do with all this money. They are going to send
checks out.
So here is one thing that I have suggested, that since
there is bipartisan agreement on physical infrastructure
spending, why not spend some of this money that has been
approved but it has not gone out the door? I think our witness
testified that much of it could not possibly have been spent
yet. I agree with that. But I have a concern, and my concern is
how much detailed information we have about what is actually
available to be repurposed.
So if the administration is really proud of the
achievements of the American Rescue Plan and presumably
confident that the American people would support this massive
spending blowout even though the economy was recovering and
COVID was receding, my question is: Why haven't you provided
the reports and the drawdown reports, right down to account
level detail, reports that, by the way, the Trump
administration did provide, to Members of Congress and staff so
that we can see exactly how much has been spent and how much is
yet to be spent? Acting Director Young, could you explain to me
why we have not been able to get that information from you?
Chairman Sanders. In 25 seconds or less.
Ms. Young. Yes, Senator Toomey, I think I told Senator
Johnson I am happy to provide that information. I also
understand the relitigation of ARP, but I will remind everyone
that in March, close to 55,000 Americans were still contracting
COVID every day, and 11 million people----
Senator Toomey. All right. I am out of time, but, really,
you should be posting this information. It should be available
in as close to real time as possible. We should not have to
wait for a hearing to ask you to provide the information about
how quickly money is being spent.
Chairman Sanders. Thank you.
Senator Van Hollen.
Senator Van Hollen. Thank you, Mr. Chairman. And thank you,
Madam Director, for your leadership.
Just on the ARP, as we know, actually there are some funds
that have already been exhausted. I think the restaurant fund
that had been set up and others have been oversubscribed.
Monies that went to local and State governments were not
intended to be out the door and spent right away. I know many
of my local governments are putting together good plans to make
sure those monies are very well spent.
Thank you for the budget request that was submitted by the
Biden administration. I want to talk about education funding
for one moment, because I appreciate the proposed increases in
some fundamental education programs.
What we have seen over years when both Democrats and
Republicans have been in the majority is chronic underfunding
of our Federal education funds. Last year Title I was
underfunded by $29 billion, just in one year, and Individuals
with Disabilities Education Act (IDEA) was underfunded by $23
billion. So that is the gap between what Congress authorized
and said was necessary from a policy perspective to provide our
kids with quality education compared to what we actually
delivered.
In fact, I have introduced legislation--it has been my
first bill every year in Congress. I am glad to see a budget
now that is proposing some of the increases contained in that
bill.
I am also pleased to see the focus on community schools,
because we want our teachers to be focused on teaching. But we
all know that many kids come into the classroom with lots of
other challenges and issues, and so community schools are the
right model.
So can you just talk a little bit about the increases? You
have got a $20 billion increase in Title I, equity grants; $2.6
billion in IDEA, which has had bipartisan support; $443 million
in full-service community schools. Can you just talk about how
this supports an opportunity agenda for the country?
Ms. Young. One, I would point out that 90 percent of the
children in this country go to public school, so the investment
here is absolutely necessary. I think you have pointed out
there has been historically bipartisan support for many of--
this education budget: $20 billion increase for Title I
schools, IDEA, as you pointed out. We think you also have to
look at our preschool investments so we get children in early
childhood. As we have seen, kindergarten is too late. You have
missed the boat if you wait until kindergarten. So we are
trying to make sure that children, especially those at risk,
have access to quality education as young as we can find them.
And I think this budget is transformational as a first step,
but we certainly hope Congress takes this and runs.
Senator Van Hollen. I agree with you, and I want to ask you
also about the issue of long-term unemployment. You have $4
billion in here to create subsidized job programs for short
periods of time to help the long-term unemployed get back on
their feet. We had over, you know, about 1.5 million long-term
unemployed even before the pandemic hit. We are well over 4
million. Even as we come out of the pandemic, I am very nervous
that many people are going to be unable to find work and
looking for a very long time.
So this is not a radical idea. I remember back in 2010
during the economic meltdown, you know, no less a flaming
liberal than Governor Haley Barbour at the time thought that
this was a really important program, and I do think that to
address the chronic issues of long-term unemployment, not just,
you know, after a pandemic or after a meltdown like we saw in
2008, we have that ability--for people who are looking for
work, they want to support their family, they are out there,
that is by definition they are looking--to help them with a leg
up. Can you talk briefly about that?
Ms. Young. Yeah, while we see some indicators that we are
doing better here, over 400,000 removed from the rolls of the
long-term unemployed, but the long-term unemployed, because it
has historically been difficult to find jobs, and they are the
most likely to be left behind as the economy takes that out.
There are always inequities in our economy. That is why you see
the Jobs and Families Plan. It is not just a recovery from
COVID. It is to make sure we take this opportunity to build an
economy that is fair for all Americans, and that program you
have highlighted absolutely targets a community that would
absolutely be left behind, stay on the rolls of the unemployed.
We need targeted investments for that community and others to
make sure there is fairness in our economic system.
Senator Van Hollen. Thank you.
Thank you, Mr. Chairman.
Chairman Sanders. Thank you.
Senator Braun.
Senator Braun. Thank you, Mr. Chairman.
Before I get into the general discussion that Senator
Toomey and Senator Johnson had a moment ago, something has been
conspicuously absent from the discussion of raising revenues,
and that would be the qualified tax deduction for small
businesses that was put in place in 2017. It in effect took
small business rates from 40 percent down to 30, 39.6 to 29.6.
Is that something you believe, even though it is due to sunset
in 2025, should remain there? Or do you believe when that was
differentiated in the ordinary rate between individuals and
small business income, that ought to be something that stays in
place? I would love to hear your answer and be on record of
where you would like to go there.
Ms. Young. Senator Braun, not surprisingly, I will point
out that there are a lot of things we did not speak to with
TCJA expirations in 2025. We believe we have between now and
then to deal with some of those expiring provisions. That is
one of them, so I am not going to get ahead of where we might--
--
Senator Braun. Do you have an opinion on that in terms of
has it been beneficial in terms of driving the economy pre-
COVID?
Ms. Young. One, I think we need to see where Congress ends
up with the tax proposals we have to date to see where we end
up for a 2025 budget. I am not going to get ahead of that.
Senator Braun. So as a Main Street entrepreneur, I will
tell you--and I have been doing it 37 years prior to becoming a
Senator--that was clearly the biggest driver when you look at
corporate income taxes going from 35 to 21, I believe that that
particular tax adjustment was behind why we were creating
record revenues pre-COVID. Keep that in mind.
When it comes to this discussion of having any chance to
pay for the additional spending, which correctly was pointed
out averages about 20 percent of our GDP, now 24, even with all
of the tax increases proposed, you still will be adding to the
structural deficit. Implicit in all of this, and I think, to be
honest with the American public, is that we choose to borrow
this from our kids and our grandkids. Do you think that is
healthy public policy to spend in that fashion when we are
really asking future generations to pay for it? Because since I
have been here, anything that is done defers something to 6 to
10 years down the road, spends like crazy in the present. We do
not do offsets, which means we are willing to borrow from our
kids and grandkids. Do you buy that as good policy long term?
Ms. Young. Senator Braun, I buy that there are puts and
takes in every decision in life, and we better do something
about our infrastructure, our education, our systemic
unfairness in the tax system, or we do risk future generations
being worse off.
Senator Braun. So I will take that as a declaration that
you are willing to borrow from future generations on end to get
these policy proposals across.
I would point out that that does not work anywhere else--in
any State government, it does not work in any entity that has
got the rigor of competition in the private sector, and it is a
very poor example of what we do at a place that so many people
look to, so many businesses do. And I think it sets us up as a
bad business partner for any of the good policy that we choose
to pursue, whether it is infrastructure, education, any of the
things that people look to the Federal Government maybe to do
more of. This ends up with a series of crises down the road,
maybe starting with completely depleting the Medicare Trust
Fund here in a little over 5 years; Social Security, the other
driver of our structural deficits along with Medicaid. All
might be, you know, good policy that we have kind of woven into
our fabric. That is all at risk as well.
So I think that as long as we are on this pathway, we need
to be honest about it, and to also acknowledge that we were at
the sweet spot of maybe what Government should do pre-COVID
based upon especially that incentive built into making the
productive economy healthy with that qualified income tax
deduction for small businesses.
I do not think you can paint this in any other way other
than it ends up with a calamity, and even though it feels good
in the short run that we are spending money on so many things
all of us are interested in, but it is derelict to the American
public to do it when we are borrowing every penny of it,
because let us face it, raising taxes, that is not near as
certain as spending the money at the tune of creating these $1
trillion to $1.5 trillion deficits and the debt that it adds in
the future. I think that is part of what journey you are on.
Ms. Young. Thank you, Senator. I see we are out of time,
but I will just point out that we absolutely agree, you should
pay for your proposals, and that is what we do here. And I get
there are disagreements, but we have put forward a set of
proposals that would pay for the spending.
Senator Braun. Thank you.
Chairman Sanders. Thank you.
Senator Murray.
Senator Murray. Mr. Chairman, thank you. Acting Director
Young, welcome. Good to see you today.
I was really pleased to see President Biden's budget lay
out a plan to make our economy actually work for working
families and not just those at the very top. I think we all
know that the budget is really a reflection of our values and
our priorities, and this budget really pushes forward strong
investments in our workers, in our families, in our kids that
are going to help our communities succeed in our present and in
the future.
So my question for you today is, with everything we have
learned during this pandemic, coupled with the erosion in wages
and living standards that lower- and middle-class families have
experienced over the last actually 40 years plus, why are the
investments included in the American Families Plan critical to
make sure all our workers and families can share in the
economic recovery? And what is the economic case for taking
these very decisive actions now?
Ms. Young. Thank you, Senator Murray. We have talked about
this, touched on this a little, but I would like to make clear
we are recovering. The economy is roaring back. What the Jobs
Plan and Families Plan are intended to do is take this
opportunity to make sure we do better than we were pre-
pandemic: those without college educations, that they have
good-paying jobs; that we fundamentally give everyone in this
country an opportunity; that we admit that there are inequities
in the system before the pandemic that the pandemic
highlighted; that we do better with our opportunity here.
So, you know, we are recovering from COVID. We think ARP
gave us a leg up given where we are in vaccines. But we have an
opportunity here to make sure everyone can take part in the
American dream, maybe in a way that they were not able to do
before the pandemic. So we have been talking about
infrastructure for a long time. The President has talked about
Infrastructure Week since he was a Member of this distinguished
body. He would like to stop talking about it and do something
about it, and I think most Americans feel the same way, and we
would like the chance to put forward a proposal while asking
the wealthiest Americans, while asking big corporations to pay
their fair share.
Senator Murray. Well, thank you, and I think we need both
the American Jobs Plan and the American Families Plan if we
want to build back a fairer and a stronger economy on the other
side of this pandemic.
So before I close, I just wanted to raise two issues of
critical importance to my home State of Washington, and that is
the cleanup of the Hanford nuclear site and efforts to restore
the salmon runs in the Pacific Northwest. It was really good to
see this administration move away from the harmful cuts that
have been proposed within the environmental management account
at the Department of Energy, and I want you to know I look
forward to continuing to work in close partnership with you to
make sure the Hanford mission is on a cost-effective trajectory
without compromising the cleanup.
And on salmon recovery, I was really pleased to see an
increase in funding for the National Oceanic and Atmospheric
Administration (NOAA) and continued funding for the Pacific
Coastal Salmon Recovery Fund. On that issue as well, I look
forward to working with you closely and the administration to
save salmon in the Pacific Northwest. And I am really committed
to continuing and expanding funding for direct recovery
projects, including habitat restoration, hatchery
infrastructure, culvert repair and replacement, as well as some
of the other investments that will really contribute towards
species recovery like clean water infrastructure and more clean
energy capacity and storage solutions.
So I really appreciate you're looking at that and look
forward to working with you on all of that.
Ms. Young. And just like Senator Stabenow talked about the
Great Lakes, you know, we are proud of the work the Puget Sound
has done for cleanup, and we know how important salmon is in
the Pacific Northwest, including the tribes. So we look forward
to being a partner there.
Senator Murray. Thank you very much.
Thank you, Mr. Chairman.
Chairman Sanders. Thank you.
Senator Scott.
Senator Scott. Thank you, Chairman. Thank you, Ms. Young,
for being here.
What do you think our Federal receipts will be in this
fiscal year 2022?
Ms. Young. Senator, let me see if the team has the exact
number.
Senator Scott. I think it is estimated to be a little less
than $3.5 trillion, and then for next year, I think your budget
suggests that we are going to get $4.1 trillion. Does that
sound right?
Ms. Young. Well, I have it as a percent of GDP, so that
would not equal up to yours. But, historically, post-war
average, 17.2 percent of GDP are receipts, and our 10-year
average is 19.3.
Senator Scott. So if you look at the way I think about it,
you are going to go from about a little less than $3.5 trillion
to over $4.1 trillion. I think that is about a 17-percent
increase in receipts in 1 year. Do you think we have ever done
that, a 17-percent increase in Federal receipts? I have never
seen it.
Ms. Young. Well, if we take the investments we have offered
for IRS and others to make sure we collect what the Federal
Government has asked of people, what the tax law says, that is
our hope to increase it by that much.
Senator Scott. I have never seen the Federal Government be
able to increase its receipts by 17 percent in 1 year. And so I
think what you said, when Senator Braun asked you, your belief
is that we ought to do everything we can to live within our
budget and pay for things. So let us assume that the Senate
does not pass all these tax increases. What would you do? How
would you deal with your budget then?
Ms. Young. Senator Scott, I can make a lot of predictions,
but my guess is that if the Senate does not pass the offsets,
the spending is also in danger. So we would have to see the
full package that the Senate and House would move on.
Senator Scott. So right now we are getting close to $30
trillion total debt. I think public debt is over $24 trillion,
which is bigger than our GDP, right?
Ms. Young. Yes.
Senator Scott. So if you look at that now, if you look at--
I think the 10-year average for Treasury is over 5 percent. So
your projection after this year, we are going to see, I guess--
it looks like people are talking about a 6-percent increase,
but after that it would be 2 percent or less per year of GDP
growth.
Ms. Young. Yeah, and I talked to Senator Kaine about we
have seen growth since these budget estimates were assumed, so
you should expect some update of that through our midsession
review.
Senator Scott. So how do we ever balance the budget if we
already have our Federal debt in excess of our GDP, our GDP is
going to grow at around 2 percent, and realistically we are not
going to have low interest rates forever? As a matter of fact,
we have been at a historical low, so if you look at history,
things go to above actually historical averages. So how would
we ever pay--how do we ever get a balanced budget? And if we do
not, how is that going to impact our poorest families with
inflation?
Ms. Young. Senator Scott, there are a lot of assumptions in
there, in that scenario I would question, including the
interest rates. We are not seeing long-term indicators that
show we are going back to the 1970s with interest rates. So we
do think we have the fiscal space to make these investments,
but we also do believe that you have to put forth a proposal to
pay for these investments over time, which is why we have done
that. So we are reducing the deficit. But as you know, we have
an aging society, which is part of the structural growth in
spending we are not addressing, because we do not think we
should be cutting Social Security or Medicare at this time. And
if the choice is between that and asking the wealthiest to pay
more, that is what we need to do.
Senator Scott. So we know that the Medicare Trust Fund and
the Social Security Trust Fund are not--they are clearly
depleting. So what did you do in the budget with regard to
them?
Ms. Young. So the budget--actually, I am glad you brought
this up--suggests that we would switch to the general fund to
pay for those programs so benefits would not be cut. So we do
still have to deal with larger structural offsets, how you pay
for that, how you grow the economy. But we would assume that
those benefits would be paid for out of the general fund if the
trust funds do run out of money.
Senator Scott. So when you think about getting a return on
investment, so you said we are going to make these investments,
then we are going to get a return, how do you see that we get a
return when you look at the numbers we never get to a balanced
budget?
Ms. Young. A balanced budget is certainly one goal, a goal
you speak to. I think another goal is to make sure that we are
flattening the curve and debt as a percentage of GDP does not
grow. But we also do really care about and most economists tell
us it is a better indicator to look at what we are paying on
real debt service, and we do think those payments will remain
low. But we also think we need to grow the economy, which these
investments would do.
Senator Scott. Thank you.
Chairman Sanders. Thank you.
Senator Padilla.
Senator Padilla. Thank you, Mr. Chair.
Ms. Young, first I just wanted to share a few comments
similar to what several of my colleagues have already shared,
just in thanking you for the 2022 budget, which as crafted I
have no doubt will accelerate our recovery from the COVID-19
pandemic and, more importantly, as you pointed out, help us
build a more equitable and prosperous economy for all
Americans. I believe the President is rightfully rejecting the
failed theory of trickle-down economics and instead making
strategic investments to help families enter and stay in the
middle class. So, with all due respect to some of my
colleagues' new-found concern about deficits and debt, I know
that this proposal meets this moment to rebuild our Nation's
infrastructure, combat climate change, create millions of good-
paying jobs, reduce income and wealth inequality, expand access
to child care, redress systemic inequities, and so much more.
So I look forward to working with you and the other members of
this Committee and others to advance this bold vision to
deliver the equitable investments that the American people so
direly need.
I do have a couple questions, a couple in the category of
wildfires--I am from California--and another in regards to
housing.
First, wildfires. California's most recent wildfire season
was the worst on record, with more than 4.2 million acres
burned. And we know that without bold action to combat climate
change and to improve the resiliency of high-risk areas, we
will continue to see more severe and frequent wildfires. It is
important to recognize that 50 percent of forestland in
California is owned by the Federal Government, so wildfire
management in California is indeed a Federal issue.
Unfortunately, we have seen decades of underinvestment by
the Federal Government, so I am pleased to see that the U.S.
Forest Service's budget request proposed a $400 million climate
funding allocation to accelerate the restoration of degraded
forests and rangelands. In total, the U.S. Forest Services
proposes an increase of $170 million for wildfire management
and $80 million for its Wildfire Suppression Operations Fund.
Director Young, a simple yes-no question: Will you commit
to working with Congress and the Department of Agriculture to
ensure that the Forest Service's Region V receives the
additional staffing and resources it needs to address the
hazardous fuels backlog and reduce risk in California?
Ms. Young. Yes, sir.
Senator Padilla. All right. Next, I want to call your
attention specifically to ongoing delays in transferring
critical wildfire air tankers from the Air Force to CAL FIRE
for fire suppression efforts. The Air Force was directed in the
2019 National Defense Authorization Act to modify seven Coast
Guard HC-130H aircraft with state-of-the-art wildfire
suppression equipment and transfer them to California for use
by CAL FIRE. Delays in transferring these seven air tankers are
especially troubling because of the crucial role that air
assets play in fighting California wildfires. So given the
severe wildfire season anticipated now and in the foreseeable
future, will you commit to working with my office to expedite
the congressionally mandated retrofit and transfer of these
aircraft?
Ms. Young. We will call those agencies and work with you to
see where we are.
Senator Padilla. Thank you so much. And in my final minute,
I want to get to the issue of affordable housing and
homelessness. As our Nation begins to recover from the COVID-19
pandemic and the American Rescue Plan continues to deliver
critical relief in our communities, our longstanding affordable
housing and homelessness crises are returning to the forefront.
California needs to build an estimated 3.5 million new homes to
meet the demand for new housing. And that is just California.
According to a recent analysis by the Center on Budget and
Policy Priorities, more than 1.8 million California renters
have not been able to catch up on their rent as of mid-May. And
the lack of affordable housing and rising rents are pushing
more and more people into homelessness. There are now more than
160,000 individuals experiencing homelessness in California, so
the need to make significant long-term investments sort of
speaks for itself.
I am pleased that the Department of Housing and Urban
Development's budget incorporates the President's American Jobs
Plan and calls for investing $147 billion to bolster the
Nation's housing infrastructure while creating jobs.
Director Young, will you commit to ensuring that the
administration continues to push for essential investments in
affordable housing as you work in advancing the infrastructure
package?
Ms. Young. Yes, Senator, and I am also pleased that we have
a significant voucher increase in the discretionary budget.
Senator Padilla. Yes, which has also been very, very
helpful. Thank you for your leadership and your work.
Ms. Young. Thank you.
Senator Padilla. I look forward to working with you.
Thank you, Mr. Chair.
Chairman Sanders. Thank you.
Senator Romney.
Senator Romney. Thank you, Mr. Chairman.
Ms. Young, you said a moment ago that the 2017 tax cut did
not do what it claimed it would do. I would note that prior to
COVID, I believe the economy was at a record level of growth
and record levels of low unemployment for minorities and for
the entire population. So I would think--I was not here in 2017
and did not vote for that tax plan, but I think those who did
would say actually it was doing what it said it would do. COVID
came, and I do not believe the tax cut was related to COVID.
Of course, we recognize that every country, every major
developed country in the world has a capital gains tax rate
lower than ordinary income rate, and the reason they do that, I
presume, is because they want to encourage individuals and
entities to make risky investments because starting a business,
for instance, is a risky thing to do or investing in basic
research is a risky thing to do. And so rather than having
people just put their money in the bank and earning interest,
they want them to do things that, if you will, create new
businesses and new jobs.
The President's plan suggests that we are not going to have
a lower tax rate for capital gains. Do you believe there is a
relationship between growth and capital gains tax rates?
Ms. Young. Senator Romney, clearly we have maybe a
difference of opinion on capital gains. We are trying to ensure
that what you pay based on your labor, your work, is taxed the
same as your investment income, which a lot of Americans do not
have the opportunity to have. So is there inherent unfairness
that I would pay more taxes based on the work that I do every
day and those who might be the wealthiest pay half that in some
instances because of the investment income they get? We clearly
think so, and we think those things should be more equal.
Senator Romney. So you think that unlike every other
developed country in the world, we should have the same tax
rate--or, actually, a higher tax rate for investment in risky
startup businesses and so forth than we do for ordinary income?
Ms. Young. I think some of the things you heard Senator
Padilla talk about and some of the inherent issues we had as an
economy before COVID----
Senator Romney. I think that is a yes or no. Does that mean
you believe that, in fact, there should be a higher tax rate on
capital gains than ordinary income?
Ms. Young. We do. We think it should be taxed----
Senator Romney. Okay, okay.
Ms. Young. --close to labor.
Senator Romney. I would note that I think--do you not
believe that the capital gains tax rates relate to growth? You
said that the best way to get at the deficit we have is high
growth. But if we have the highest capital gains tax rates in
the world, do you think that might depress growth?
Ms. Young. We think the middle class is an avenue to
growth, and this would allow us to put more income--or
resources into infrastructure and into education rather than
allow the wealthy to pay in some instances half or even less
than half of working Americans.
Senator Romney. Well, do not forget that the top 10 percent
earners in America are paying 71 percent of the income tax. Is
that not their fair share? You keep saying they should pay
their fair share, they should pay their fair share. What is the
fair share that should be paid by the top 10 percent of
Americans? If 71 percent is too low, will you say what share it
should be?
Ms. Young. Senator Romney, I think you have to look at what
they are making compared to what they are paying, and I think
most Americans would find it objectionable given the percentage
they are paying of their income. Big Chief Executive Officers
(CEO) now make close to 300 times----
Senator Romney. Well, as noted, 53 percent of Americans pay
no income tax at all. Should that number get higher? Should
there be a higher percent that pays no income tax at all?
Ms. Young. We have to compare that to what they make
compared to the top 1 percent and what they are making.
Senator Romney. Well, you know what the numbers are in
terms of the top 10 percent earn 40 percent of the income and
are paying 71 percent of the taxes. And so should they be
paying 80 percent of the taxes? Eighty-five? Ninety?
Ms. Young. I think we have to look at what they are paying
compared to what they make, which is--I know it is hard to
believe, but they are not paying the same percentage as
workers.
Senator Romney. Well, they are--when you say they are not
paying the same percentage as workers, 53 percent of Americans
pay zero, pay no income tax at all. So if 53 percent of
Americans are not paying any tax, how is it those top 10
percent are paying a higher share? So I would note that it
would be helpful to understand exactly where you think we ought
to go to reach a fair share.
Let me ask one more thing, and this is just simple math. I
guess my time is almost up. That is, you are proposing that the
capital gains tax be applied at death, the so-called tax run-up
at death, tax adjustment at death is eliminated and they should
pay a capital gains tax. Help me with this. Let us say an
individual who died, let us say her $1 million exemption was
being used elsewhere, and so she went from an asset that she
bought for dollars is now worth $1 million. I just want to do
the math here. So she would then pay the capital gains tax of
43.4 percent on that $1 million, as I understand it, which
would be $434,000, and then she would also pay--when I say
``she,'' her estate would also pay an inheritance tax on the $1
million, which would be $400,000. So in total she would pay--
her estate would pay $834,000 on a $1 million gain or some 83
percent. Does that--that does not seem like a fair share to me.
That seems confiscatory. Have I missed the math somehow in
that?
Ms. Young. I would say if you look at it in maybe more
round numbers, if I want to leave a $5 million house to a
child, $2.5 million remains tax free. So there is, as you point
out, a $1 million exemption per individual.
Senator Romney. I understand, and so I am talking about an
individual that has multiple assets. But it is saying that once
that $1 million has been used up, that at that point the 83
percent tax rate is a fair share, not confiscatory.
Ms. Young. I mean, you have to look at the exemption, which
is $1 million.
Chairman Sanders. Senator Whitehouse I believe is with us
on video.
Senator Whitehouse. I am with you, Chairman. Thank you very
much.
Hello, Director Young. How are you?
Ms. Young. Hi, Senator.
Senator Whitehouse. I wanted to talk with you a little bit
about climate risk. As you will recall, at your confirmation
hearing we talked about the economic risks of climate change
and the almost amazing array of very serious warnings coming
out of banks, economists, insurance companies, Freddie Mac, all
sorts of sovereign and central banks. And since then, Swiss Re,
the humongous reinsurer, has put out a report in which it
concluded that if we did not successfully mitigate carbon
pollution, global GDP would be 18 percent lower in 2050 than it
otherwise would be. Eighteen percent lower than it otherwise
would be. That is essentially one in every five dollars coming
out of the global economy.
And I would note that there is no basis to believe that the
trajectory between now and 2050, as we got to 18 percent less
GDP, would be gentle. In fact, there is every reason to believe
that at some point in that period the transition or transitions
would be abrupt and would be sudden and would provide economic
shock to the system.
What I would like you to do is to comment a little bit on
when you hear about an 18-percent loss of GDP, what kind of
human and economic casualties does that cause? And what do
those scenarios look like if you add in the element of
suddenness, of abruptness, of shock? I mean, it is bad enough
if we went on a smooth trajectory to have 18 percent less GDP
in the world than we otherwise would have. But if it all
happens in a calamitous shock, that obviously worsens things
considerably. So if you could reflect on those and give me your
thoughts, I would appreciate it.
Ms. Young. Thank you, Senator Whitehouse. The President has
stated many times the belief that climate change is an
existential threat from our national defense. To look at what
we are spending now on disaster relief, I am from South
Louisiana. The money we have to invest to make sure that our
coastline does not continue to slip into the Gulf of Mexico--I
see Senator Kennedy here, so I am reluctant to talk about our
home State. But----
Senator Whitehouse. If I could interrupt for one second,
Ms. Young, I think the quotation from the New Orleans newspaper
from the scientists about this was really simple with regard to
South Louisiana. If I recall correctly, it was, ``We are
screwed.'' So I sympathize. But go ahead and answer the
question.
Ms. Young. So what we have not done in this budget but I
think others have in academia is see what the economic effects
would be for climate change. Look, the few investments we are
making here and the impact it has on the top line is nothing
compared to if we allow this--you know, one State we see what
the fiscal hit would be and the economy could not continue if
we allowed climate change to continue in that manner along the
coast. So there is no doubt to me that this spending is
necessary to see if we can even catch up to what we have
unfortunately allowed to happen around the world with regard to
climate change. And we see it as not a partisan issue. It is
certainly one that has attracted partisan rancor. But I think
anyone who lives along the coast can see not only the human
impact but the economic impact it has on those who live there,
who work there, and it cannot continue.
Senator Whitehouse. And for the record, there is not nor
ever has been serious dispute about the basic elements of this
in the scientific community. The dispute was manufactured by
the oil and gas industry and its front groups in order to
create political space for itself.
A last quick question. Has America ever seen revenues at a
similar share of our economy to what President Biden is
proposing? And if so, how was the economy doing back then? And
how was the budget doing back then?
Ms. Young. Senator Whitehouse, I think the important thing
is when everyone, you know, talks about debt, and we absolutely
have to look at debt as a share of GDP, but it would be unfair
to not look at the revenue side of the ledger to make sure that
we are not falsely restricting ourselves to make investment in
climate, in infrastructure, and make sure--we do see a role for
the wealthiest Americans. We do see a tax rate where they are
paying less than working Americans as a percentage of what they
bring in, we do see the use of loopholes and offshoring that
keep us from investing in areas that both parties agree on.
Senator Whitehouse. At the macro level, when we last saw
revenues at around 20 percent of GDP, we had a booming economy
and budget surplus, correct?
Chairman Sanders. Okay, Sheldon. All right. Thank you.
Senator Kennedy.
Senator Kennedy. Thank you, Mr. Chairman.
Madam Director, how are you?
Ms. Young. Good.
Senator Kennedy. I am going to fuss a little bit. But I am
not fussing at you. I am one of your big fans. But I suspect
you can get the White House on the phone quicker than I can. If
I make it to heaven, the first question, or at least one of the
first questions I am going to ask is: Why do bad things happen
to good people? But they do. And as Americans, when that does
happen, we help each other. That is why we spend about $1
trillion a year helping American citizens who are less
fortunate.
Some bad things happened to good people in southwest
Louisiana, as you know. We were hit by Hurricane Laura and
Hurricane Delta in a very short period of time, and if you go
even today, a year after they hit, it still looks like a
fantastic impression of hell. We have asked President Biden for
block grant disaster relief, and in the Senate, as you know--
the House can move on its own, but in the Senate, we have to
have a request from the White House. We do not have to. It is
more custom than statute. But many of my Democratic colleagues,
when I lobby them on getting some assistance, they say, ``Well,
what is the White House's position?'' And I do not blame them.
If the shoe were on the other foot, that is what I would ask.
We cannot get an answer from President Biden about our
request. We have begged, we have pleaded, we have cajoled. I
talked directly with the President when he honored us by coming
to our State and New Orleans. Let me choose my words carefully
here. I want to be candid, but I do not want to be ugly. Look,
I understand politics. I get that. And I am not saying that the
President's decision is based on politics. But we live in a
political world. And I understand that President Biden did not
carry Louisiana in the last election. I am not saying that is
dispositive of his decision or lack thereof. But a lot of
people who really stuck their necks out for President Biden are
very supportive of this request. Governor John Bel Edwards in
my State, who happens to be a Democrat, he supported President
Biden enthusiastically. My colleague Congressman Cedric
Richmond supported President Biden enthusiastically. They went
way out on a limb for him. And they deserve and the people of
Louisiana deserve an answer.
Now, obviously, I hope the answer from the President is
yes. But we deserve an answer, and I cannot get one. Can you
help me?
Ms. Young. Senator Kennedy, I am going to give you an
answer, and we absolutely for every Democratic Senator,
Republican Senator, we want to see aid move to Louisiana and
every other State. I believe the last time--which I worked on
the congressional side, the last disaster declaration or
disaster package that moved through Congress took care of the
front half of 2019 storms. We do not earmark disaster storms.
There is no room for politics in disaster response period.
Senator Kennedy. Agreed, agreed.
Ms. Young. Absolutely. So we need to do something for those
storms from the second half of 2019 and 2020 up to date. So not
a disagreement on strategy, but, you know, I worked on the Hill
for a long time, moved disaster bills. We did not get a
disaster supplemental request from an administration. But let
me put clearly on the record we support moving aid for
Louisiana and every other State that has been hit by a
declaration since the last time we passed a supplemental.
Senator Kennedy. Could you ask the President to send us a
letter to that----
Ms. Young. I believe he asked me to respond, and you may--
--
Senator Kennedy. Yes, ma'am, and I got your letter. No
disrespect, but it did not say that.
Ms. Young. The President asked me to call the mayor of Lake
Charles, which I did, and we had a great conversation, Baton
Rouge, my home city----
Senator Kennedy. Could you send me a letter--or let the
President send it--however you want to do it--that says
categorically, unequivocally, unconditionally, ``I support the
block grant disaster relief for southwest Louisiana with
respect to Hurricanes Laura and Delta''?
Ms. Young. I thought we did that, but I am happy----
Senator Kennedy. No, ma'am.
Ms. Young. --to do it in more stronger terms.
Senator Kennedy. Would you?
Ms. Young. Yeah, we absolutely----
Senator Kennedy. Do you want me to draft the letter for
you?
Ms. Young. No.
[Laughter.]
Ms. Young. Help is needed, Senator, and we are there with
you.
Senator Kennedy. Thank you, Madam Director. Thank you so
much.
Thank you, Mr. Chairman.
Chairman Sanders. Thank you.
Let me thank Ms. Young. It has been a long morning, and
thank you very much for being with us today. Her full written
statement will be included in the record.
As information for all Senators, questions for the record
are due by 12 o'clock noon tomorrow with signed hard copies
delivered to the Committee clerk in Dirksen 624. Emailed copies
will also be accepted. Under our rules, Ms. Young will have 7
days from receipt of our questions to respond with answers.
With no further business before the Committee, this hearing
is adjourned.
Ms. Young. Thank you, Mr. Chairman.
[Whereupon, at 12:50 p.m., the Committee was adjourned.]
ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
[Prepared statement and responses to written questions
submitted for the record follow:]
Prepared Statement of Ms. Shalanda D. Young
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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