The Budget Committees primary task each year is to develop an outline of the budget for Congress to follow. We convene this conference to accomplish that task.
Over the last eight years, we have witnessed an enormous reversal in our budget. We have seen a ten-year surplus of $5.6 trillion dissipate, disappear, and devolve into massive deficits. In the meanwhile, our economy has been overtaken by the worst set-backs since the 1930s.
By CBOs reckoning, the federal government will run an unprecedented deficit this year: $1.845 trillion. Two-thirds of that deficit derives from tax and spending policies left over from the Bush Administration. Much of this years deficit derives from costly actions like the Troubled Asset Relief Program, the consolidation of Fannie Mae and Freddie Mac into the federal budget, and the American Recovery and Reinvestment Act. The good news is, these actions are not likely to recur, if we can stabilize the economy.
In that regard, the President has recognized that we have two deficits. The second deficit is an economy running at $1 trillion below its potential, which is 7 percent below what it would at full employment. To move our economy closer to capacity, the President and Congress have launched $787 billion in tax cuts and spending increases. In its Analysis of the Presidents Budget, the Congressional Budget Office says, ...the adoption of the American Recovery and Reinvestment Act and very aggressive actions by the Federal Reserve and Treasury will help end the recession this fall.
Lets hope that CBO is right, because it is all but impossible to balance the budget when the economy is in recession. But we have to contain it due to a stark reality: the deficit this year will be 12 percent of GDP. Our economy cannot sustain deficits of that magnitude.
Recognizing that, President Obama has sent us a plan to cut the deficit by two-thirds that is, using OMBs estimates, paring the deficit down to $533 billion by 2013 from $1.752 trillion for this year. Thats an enormous reduction, $1.2 trillion over four years. But that reduction is credible because of the extraordinary costs that swell this years deficit, which are likely to be non-recurring. Some economists would say that its also sustainable because the deficit would be 3 percent of GDP in 2013, roughly the rate of growth. But few of us would say the job will be finished when the deficit drops to $533 billion.
We agree that we must face up to the long-term liabilities hanging over our country and by that I mean the out-year deficits as well as our long-run liabilities to Social Security and Medicare. The budget process is an annual process, and since we revisit the budget every year, we can take steps to correct its course, which we surely will do with deficits of todays gravity looming over us. While the House and Senate have both passed five-year budgets, we are mindful of the following five years, and we will be making corrections to see that the deficit stays on a downward trajectory. We basically believe that those mid-course corrections can best be made when we have emerged from recession and have a better view of the economy that bounces back.
Both the House and Senate budget resolutions share strong similarities. Both advance the four priorities laid out by the President building up our economy by investing in education, energy, and health care, and at the same time, cutting the deficit by half or more over the next four years. Like the Presidents budget resolution, both the House and the Senate resolutions provide for middle-income tax relief. I am confident that the conference agreement will also advance these priorities.
Two of the major differences in the House and Senate budgets are reconciliation and non-defense discretionary funding. On non-defense appropriations, I feel confident that we will be able to find middle ground between the House and Senate. On reconciliation, I am hopeful that the conferees will agree to instructions for health care and education while moving the reporting date later than in the House-passed resolution. Reconciliation instructions would not preclude the committees of jurisdiction from moving legislation in these policy areas under traditional procedures but they would provide fall-back to ensure that these policy initiatives can move through the Congress if negotiations come to an impasse.
All in all, the House and Senate have passed resolutions that are broadly similar, and I believe that we can come to agreement on a conference measure that embodies the principles and priorities in both resolutions and in the Presidents budget.
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7:56Ranking Member Van Hollen Speaks on the House F...by HouseBudgetCmteDem2 views
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