U.S. Senator Gordon Smith (R-or) Holds a Hearing On the Public Debt
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U.S. Senator Gordon Smith (R-or) Holds a Hearing On the Public Debt
U.S. SENATE FINANCE COMMITTEE: SUBCOMMITTEE ON LONG-TERM GROWTH AND DEBT REDUCTION HOLDS A HEARING ON PUBLIC DEBT
SEPTEMBER 28, 2006SPEAKERS: U.S. SENATOR GORDON SMITH (R-OR) CHAIRMAN U.S. SENATOR CHARLES E. GRASSLEY (R-IA)U.S. SENATOR JOHN KERRY (D-MA) RANKING MEMBER U.S. SENATOR MAX BAUCUS (D-MT) EX OFFICIOU.S. SENATOR JEFF BINGAMAN (D-NM)WITNESSES: ROBERT BIXBY, EXECUTIVE DIRECTOR, THE CONCORD COALITIONPETER ORSZAG, SENIOR FELLOW AND DEPUTY DIRECTOR OF ECONOMIC STUDIES, THE BROOKINGS INSTITUTIONCHRIS EDWARDS, DIRECTOR OF TAX POLICY STUDIES, CATO INSTITUTEFORMER U.S. REPRESENTATIVE CHARLES STENHOLM (D-TX)[*] SMITH: Welcome, ladies and gentlemen. We appreciate your presence here today. We call to order the U.S. Senate Subcommittee on Long-Term Growth and Debt Reduction. This is the Committee on Finance. Our topic is America's public debt, how do we keep it from rising. I've found these hearings over the last little while always instructive, and help me to produce some good legislation and good ideas that, hopefully, will add to our answering this question.We're here today to discuss a topic of growing concern in America, how to solve our budget deficit problem in light of our government's long-term fiscal challenges. We have a balanced panel of experts with us today with differing views and backgrounds, and I look forward to this constructive dialogue on how best to address this looming fiscal crisis. We recently received good news about this year's budget deficit. CBO now expects the 2006 deficit to total 260 billion. This is $58 billion in decline from last year's deficit, and 112 billion lower than CBO's March estimates. The primary reason for this decline is increased tax revenues. Receipts from individual income and payroll taxes are projected to increase this year by 172 billion.Furthermore, receipts from corporate income taxes are expected to grow strongly for the third consecutive year. These numbers once again demonstrate the success, I believe, of the president's tax cuts but, by the end of 2006, we will have put back 1.2 trillion into American's pockets. This has resulted in a strengthened economy and increased tax revenues. The economy has created more than 1.7 million jobs over the last 12 months, and more than 5.7 million jobs since August of 2003. In addition, over the first half of this year, our economy grew at a 4.2 percent annual rate. This is faster than any other major industrialized nation. However, despite recent improvements, our nation faces a long- term fiscal -- I would describe it as a structural challenge. We're about to experience a dramatic demographic shift as the baby boom generation begins to retire. The aging of our population, combined with rapidly rising health care costs, is likely to create an ever- growing demand for resources to finance federal spending for mandatory programs, such as Social Security, Medicare and Medicaid.These programs, however, I think we all recognize have had an enormously positive effect on so many Americans' lives, but we need to face the reality that they simply cannot be sustained in their current form for the long-term. Reforming our entitlement programs will become increasingly critical, and must be done in a thoughtful manner so as not to hurt or harm those Americans who rely most upon these benefits. These reforms may require some politically difficult decision...See the full content of this document
