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unidentified
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on the network that doesn't take sides only on c-span c-span democracy unfiltered We're funded by these television companies and more, including Comcast. | |
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| We welcome now Douglas Holtz Aiken back to our desk. | ||
| He's, of course, the former head of the Congressional Budget Office, currently president of the American Action Forum. | ||
| And for folks who might not know, what is the American Action Forum? | ||
| What's your mission? | ||
| It's a center-right think tank in Washington, D.C. | ||
| We evaluate and try to understand the range of domestic and economic policies. | ||
| We don't do any social issues, international affairs. | ||
| Economic policy is very much a part of this budget bill that was passed out of the House Budget Committee last night. | ||
| The expectation, at least from the Speaker's office, is that it'll get a vote in the House this week. | ||
| Your 30,000-foot view of this bill, do you like it? | ||
| What are your concerns? | ||
| It's going to do one thing, and that is it's going to avoid a large tax increase in 2026 that would almost certainly lead to a downturn. | ||
| And that's his great virtue. | ||
| Past that, it's not outstanding tax policy. | ||
| It's not a real step forward on the fiscal problems, which we obviously know are really pressing given the downgrade on Friday. | ||
| So, you know, in terms of what's at stake here, it's an extension of the 2017 law, so that's more of the same. | ||
| It's not going to do much for the economy. | ||
| There are some provisions to improve business investment and research and development. | ||
| They are, I think, positives and modest. | ||
| And then there's a whole collection of promises the president made on the campaign trail, which in my view will have very little to do with economic growth and actually go the wrong direction from a tax policy point of view. | ||
| You know, the rule in tax policy is broaden the base, treat everything the same. | ||
| This part sort of pulls out special favors for overtime or tips or seniors. | ||
| So it's not another step in tax reform. | ||
| It's actually very different than the 2017 effort. | ||
| There was a caller in our first segment very concerned about the debt in this country. | ||
| We're at about $37 trillion approaching that. | ||
| What does this bill do for the trajectory of debt in this country? | ||
| It makes it modestly worse. | ||
| And that's a real disappointment. | ||
| I thought the gold standard would be do something which is budget neutral, pro-growth tax reform. | ||
| And if you do that, you would make some progress on the fiscal situation. | ||
| That was the gold standard. | ||
| At the other end of the spectrum, make it no worse. | ||
| This doesn't even do that. | ||
| So you can't be too excited about this from a budgetary point of view. | ||
| You talked about the Moody's downgrade. | ||
| Can you just explain what that is? | ||
| Moody's is one of three very important rating agencies where they look at a borrower and say, you are creditworthy, or you're going to pay back for sure. | ||
| There's some risk associated with you. | ||
| The first to downgrade the United States was Standard ⁇ Poor's in 2011. | ||
| They said, you're no longer AAA guaranteed to repay. | ||
| We have some concerns. | ||
| Those concerns were about the politics. | ||
| 2023, Fitch Ratings, the second group, did essentially the same thing. | ||
| Said, the U.S. is showing some inability to manage its finances. | ||
| Those are largely political disputes over debt ceiling increases or shutting the government. | ||
| We've been through these episodes. | ||
| This is very different and more, I think, troubling because what Moody said is you have a lot of debt and you have a lot of interest and you might not be able to pay it. | ||
| And for that reason, we're downgrading you from a surefire repay to a little bit of risk. | ||
| That's not a good development. | ||
| The Treasury Secretary, Scott Besent, was on Meet the Press yesterday, and he was asked about the Moody's downgrade. | ||
| I want to play his response and then get your response to that. | ||
| I think that Moody's is a lagging indicator. | ||
| I think that's what everyone thinks of credit agencies. | ||
| Larry Summers and I don't agree on everything, but he said that when they downgraded the U.S. in 2011. | ||
| So it's a lagging indicator. | ||
| And just like Sean Duffy said with our air traffic control system, we didn't get here in the past 100 days. | ||
| It's the Biden administration and the spending that we have seen over the past four years. | ||
| We inherited 6.7% deficit to GDP, the highest when we weren't in a recession, not in a war. | ||
| And we are determined to bring the spending down and grow the economy. | ||
| Fair enough, but under President Trump's first administration, he added $8 trillion to the nation's debt in his first term. | ||
|
unidentified
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So there's plenty of blame to go around. | |
| No, no, no, no. | ||
| But let's review. | ||
| We were in the rescue portion of COVID. | ||
| The Biden administration was in the recovery portion. | ||
| And Kristen, it would have been, if not for Senators Manchin and Cinema, who were no longer in the Democratic caucus, that it would have been $4 or $5 trillion more. | ||
| Scott Bassent, the Treasury Secretary, yesterday on Meet the Press, your thoughts on his view on the movies downgrade. | ||
| It's a little disappointing. | ||
| It has two answers. | ||
| Number one, don't pay attention to it. | ||
| It doesn't mean that much. | ||
| Number two, it's not our fault. | ||
| I'd like someone who is a little more serious to say, yeah, this is a problem, and we intend to do something about it. | ||
| That's what the country really needs. | ||
| The notion that it's a lagging indicator is just confusing to me. | ||
| A lagging indicator is something where the problem arrives and later you find out because the lagging indicator showed up. | ||
| Well, that means he's acknowledging we have a problem. | ||
| Why don't we use him about it? | ||
| Debt being a big part of that problem. | ||
| How much debt is too much debt? | ||
| Is there a moment when we will accumulate a certain amount of debt that will be a breaking point and we will all know it's too much debt? | ||
| The answer is yes. | ||
| At some point in our trajectory, which is just ever-increasing amounts of debt, even relative to the size of a growing economy, at some point, international creditors take a look at that and lose the confidence that you will repay either the interest or the principal in a timely fashion. | ||
| And as a result, they no longer extend you the credit. | ||
| Now, the trouble is, I don't know what that day that is. | ||
| You don't know what day that is. | ||
| No one knows what day that is. | ||
| But that's what I'm missing. | ||
| There have been lots of sovereign debt crises. | ||
| The most recent been Greece, Portugal, Argentina. | ||
| And they have this sort of troubling characteristic that it's usually something unrelated to the budget that triggers it, and then suddenly it's there. | ||
| And so, like Hemingway famously said, you go bankrupt very slowly and then all at once. | ||
| And that's a lot true for countries as well. | ||
| So I think the right way to think about it is having a sovereign debt crisis is failing. | ||
| That's all there is to it. | ||
| But not having one isn't great. | ||
| That's getting a D. | ||
| I think we can do better and get a D. Let's take this on. | ||
| And in fact, put our finances in order. | ||
| We did that in the 20th century by and large. | ||
| Average deficits 2.2% of GDP compared to over five in this century. | ||
| And we got better economic performance. | ||
| The standard of living doubled every 30 years, roughly. | ||
| Now it doubles every 56 years. | ||
| And you get the sense that people know that. | ||
| Like, I don't have the same opportunities my parents had. | ||
| Well, why don't we take care of our finances, plow that money into educating people, building factories, building software, all the things that make people more productive? | ||
| That's the right way to go. | ||
| There was a caller on Friday on this program who said, why don't we have balanced budgets anymore? | ||
| Why don't we have balanced budgets anymore? | ||
| We don't have balanced budgets anymore for two reasons. | ||
| And we did manage to balance the budget at the end of the 20th century. | ||
|
unidentified
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If you're old, that would be me. | |
| I recall that. | ||
| Two things have gone on in this century. | ||
| Number one, we don't clean up after crises. | ||
| You know, the 20th century had its crises. | ||
| World War II, it had recessions. | ||
| It had all the things we've faced. | ||
| We've had recessions, financial crises, pandemics. | ||
| That went way up. | ||
| That was true in the 20th century, but then it came back down. | ||
| And in this century, it hasn't. | ||
| It goes up, it stays up. | ||
| The spending goes up, it stays up. | ||
| We don't clean up after the emergency response. | ||
| So we have a lot more debt out there. | ||
| We have to pay the interest on it. | ||
| We're going to pay a trillion dollars in interest this year. | ||
| The second thing that's gone on is just the entitlements. | ||
| We have Social Security and Medicare. | ||
| They are more than one half of all non-interest spending over the next 10 years. | ||
| They are driven by the demography. | ||
| And there's just a fundamental mismatch between the revenue, which grows here, and the entitlements, which grow much faster. | ||
| And that's continued throughout the 21st century. | ||
| And so we have a structural deficit plus emergencies. | ||
| It's added up poorly. | ||
| Douglas Holtz-Aiken is our guest. | ||
| He's currently the president of the American Action Forum, formerly of the CBO, the Congressional Budget Office, taking your phone calls with us for about the next 30, 35 minutes or so. | ||
| It's 202, 748, 8000 for Democrats to call in. | ||
| Republicans, 202748, 8001. | ||
| Independents, 202748, 8002. | ||
| As folks are calling in in this big bill that's made its way out of the budget committee last night, House floor vote this week. | ||
| Remind viewers what the role of the Congressional Budget Office is, what a scoring is, and how that works. | ||
| So a score is very simply: how much will this bill change money flowing into the Treasury over the next 10 years, money flowing out of the Treasury over the next 10 years? | ||
| What does it do to the deficit or in the old days surplus over the next 10 years? | ||
| That's the score. | ||
| And it shows it year by year, and it gets it for each provision in the bill. | ||
| It's a detailed accounting of the budgetary impact of the bill. | ||
| CBO's job is to score bills considered by Congress so they know what they're doing to federal finances. | ||
| In the process, they have to make some evaluations of how programs work, like how many people will take up a Medicaid provision and get health insurance or not. | ||
| And they do all of that based on the consensus in the research literature and in a completely nonpartisan fashion. | ||
| And so it's a phenomenal place. | ||
| Do you think those numbers, in a place where we get a whole lot of numbers and people saying this means this and no, this means this, are the CBO numbers the most trustworthy numbers when they come out on a big bill like this? | ||
| Yes. | ||
| That doesn't mean they're right. | ||
| Explain. | ||
| So an example, when I was CBO director back in 2003, we passed the Medicare Modernization Act, which created what is known as the Part D drug program for seniors. | ||
| It's an insurance product against the cost of outpatient prescription drugs for seniors. | ||
| There was no such insurance product out in nature anywhere at the time that bill was passed. | ||
| So the CBO had to imagine who would supply the insurance, who would supply the drugs at what price, how would the federal subsidy affect the purchase of the insurance and less the drugs? | ||
| And what would all this mean to the taxpayer? | ||
| It was an extraordinary complicated exercise. | ||
| And we got it wrong by about 25%. | ||
| But CBO is most important when Congress is doing something new about which there is the least evidence. | ||
| And so it's not that they're right, but they're going to try their very best to be just as equally likely to be too high as too low, put it in the middle of the range, and give you some notion of the scale of the enterprise that Congress is involved in. | ||
| And they did a good job on that. | ||
| Want to get into this bill that's going to be on the House floor a little bit more, but let me take some calls. | ||
| There are plenty waiting for you. | ||
| This is Katie in Silver Spring, Maryland. | ||
| Democrat, good morning. | ||
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unidentified
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Hi, good morning. | |
| I was curious. | ||
| We have our president who in his personal life had multiple bankruptcies and maybe that was kind of a strategic way to manage his finances and capitalize it. | ||
| I was wondering if maybe that perspective, how that translates or if it does translate into the administration's policies and representation of our debt, our standing in the world, and how we kind of move policy forward. | ||
| Thank you. | ||
| It's a really good question. | ||
| I get asked questions like this a lot, including, you know, why did the president levy these tariffs and why did he do X, Y, or Z? | ||
| And I don't know the answer to those questions. | ||
| I'm not qualified to guess at his state of mind. | ||
| It's certainly the case that his track record, both in his first time in office and now again as president, is not one that indicates he's serious about taking on the fiscal situation. | ||
| If you're serious about that, you should be serious about taking on reforms to strengthen and preserve Social Security and Medicare. | ||
| Those are the two big numbers. | ||
| In the process, you have to reduce the amount of spending on them. | ||
| But he flatly took them off the table. | ||
| And so that says we're not going to try to deal with it. | ||
| Is there enough fraud, waste, and abuse in those programs? | ||
|
unidentified
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No. | |
| So then how do you... | ||
| You have to change the programs. | ||
| The programs were designed for the 1930s and 1960s, respectively. | ||
| They aren't programs that are going to survive in the 21st century. | ||
| They don't match our demography or anything like that. | ||
| I mean, things change a lot. | ||
| I mean, again, Part D program is much more recent. | ||
| That was in 2003. | ||
| It's now only 20 years later. | ||
| In 2003, the major job was to have an insurance product that covered people's statins. | ||
| Now we're keeping people alive on very expensive oncology drugs for years. | ||
| It's a completely different world, and the program has to reflect that. | ||
| So what's a fair way to modify, which means reduce benefits? | ||
| Who does that impact? | ||
| What do you think, if you were the one that was being asked, design this bill, what would you do? | ||
| I wouldn't. | ||
| I would let the American people decide. | ||
| And I'm serious about that. | ||
| So here's the situation. | ||
| And it's the reason I'm hopeful, despite everything that, you know, I've lived a life of disappointment. | ||
| I do budgets. | ||
| So Social Security's trust fund will go bankrupt in eight years, which means they will not have the legal authority to pay full benefits. | ||
| And there will be an across-the-board cut of 21% if Congress does nothing. | ||
| Now, I don't think you or I believe Congress is going to decide and let people take a 21% cut in retirement. | ||
| They shouldn't. | ||
| But that means that if you're 55 and think about retiring in 10 years, there's going to be a Social Security reform. | ||
| There has to be, and you don't know what your benefit's going to be. | ||
| That's a terrible way to run a pension program. | ||
| And I think every year that we get closer to that, people are going to start to realize, hey, what's the deal? | ||
| How are you going to extend the life of this program so I can make my plans and I can retire? | ||
| And Congress owes them that answer. | ||
| And instead of going to a town hall and saying, I want to reform Social Security and ending up working at the tasty freeze, they're going to go to the town hall and say, we need to reform Social Security so that you know what the deal is. | ||
| And they'll say, thank you, go do it. | ||
| And then there will be a huge fight over the details of that. | ||
| So at some point, you don't think it becomes a hot potato that gets passed. | ||
| There's no longer a liability to want to fix it. | ||
| You have to fix it. | ||
| And that's a good thing. | ||
| And our representative actually will be engaged in fixing it. | ||
| And there will be a vigorous debate over the best way. | ||
| And so I don't think any single sort of analyst like I is going to have the right solution. | ||
| But we've had many commissions. | ||
| They all do a collection of things that are very similar. | ||
| They, number one, they raise the cap on taxable earnings so that we collect more revenue. | ||
| They change the award of initial benefits so that very affluent people get less of their lifetime earnings than they do now. | ||
| We might even consider not giving the most affluent any at all. | ||
| I mean, Social Security is an insurance policy against the event that you outlive your resources. | ||
| And I can name a handful of people I don't think are going to outlive the resources. | ||
| So maybe they don't get Social Security. | ||
| Then you have to figure out where to draw the line. | ||
| But that's just a more aggressive means testing. | ||
| It's already mean tested some. | ||
| And you can do some flipping of the dials on how you index things for inflation and things like that. | ||
| You can make some real progress on making the program fit the 21st century and last longer. | ||
| Fort Lauderdale. | ||
| Tom, Independent, good morning. | ||
| You're on with Douglas Holtz Aiken. | ||
|
unidentified
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Good morning. | |
| Good morning. | ||
| I wanted to ask about these Medicare cuts. | ||
| The Republicans in Chiproy want to make sick people work to get tax cuts to people like Charles Koch, and the Democrats can't make a point of this. | ||
| What's wrong with these Republicans? | ||
| And the second question I have is a tangent. | ||
| All these Doge press release, are any of these legislations and cost cuts going to be legalized in this new bill? | ||
| So two good questions. | ||
| First, these are Medicaid cuts that they're proposing. | ||
| That's the low-income health care program. | ||
| And I don't think anyone is proposing that people who are sick be forced to work. | ||
| They would have work requirements for those who are able and have no dependents. | ||
| That's the basic framework. | ||
| That's, in my view, not really a budgetary issue. | ||
| That's a philosophy issue that says you should be willing to work in exchange for the assistance of your fellow Americans. | ||
| And we've had this debate several times, and we'll have it again. | ||
| But I don't think there's any real budgetary savings in the work requirements. | ||
| That's a slightly different issue. | ||
| As for the Doge cuts, this is quietly a very big deal. | ||
| There are two kinds of things that the Doge has done. | ||
| One, it has reduced federal employment, and the listeners should know that's not a serious budgetary activity. | ||
| We spend maybe $400 billion on compensation for civilian workers in the federal government. | ||
| We ran a deficit of $1.8 trillion last year. | ||
| We're not going to solve the deficit problems by changing the footprint of the federal government. | ||
| The second thing they've done is simply not spend some money. | ||
| That's called an impoundment. | ||
| Congress has said, has authorized the spending. | ||
| They're not spending it. | ||
| A long time ago, 1974, President Nixon did this. | ||
| They took him to court. | ||
| And that actually spawned the creation of the Congressional Budget Office, which I ran, the budget committees in both House and Senate, the budget process. | ||
| And now it is against the law to simply impound money. | ||
| Instead, a president can say, I don't want to spend this money, notify Congress, and Congress has 45 days to agree, in which case the money comes back. | ||
| It's called a rescission, or disagree, in which case the money goes out. | ||
| I fully expect that the money that Doge is just sitting on will end up as part of a court case that will test the legality of that 74 law. | ||
| And if the courts uphold its legality, that money has to go out. | ||
| And all of those proclaimed savings will have turned out to be ephemeral. | ||
| They haven't really cut anything. | ||
| We have several viewers who tweet about this program every day and have a conversation as they do it. | ||
| Michael Langweiser is one of them. | ||
| He sends this question to you. | ||
| How much will taxes increase if the 2017 tax reform is not made permanent? | ||
| And will or could that help the budget deficit? | ||
| So they would go up by about $425 billion next year. | ||
| So that would help the budget deficit by $425 billion. | ||
| There's no question about that. | ||
| My concern is that abruptly that's going to generate enough headwinds to knock the economy sideways or in its weakened state into a recession. | ||
| And one thing that does not ever improve federal finances is a recession. | ||
| I mean, we have automatic stabilizers that spend more and collect less taxes in recessions. | ||
| We also have Congresses that typically turn right around and do a big tax cut or do a big spending program to counter the recession. | ||
| I don't think we've done a very good job on that front, but those are reflexes I've seen, so I don't think we should root for a recession. | ||
| By the way, I should note, we've been talking about this budget bill that made it out of committee last night. | ||
| For viewers who want to watch it, the House Rules Committee just announced their meeting to consider the bill. | ||
| And this is the rules vote, the package that gets put together for the final floor vote. | ||
| And that's going to take place Wednesday. | ||
|
unidentified
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We're going to lead this here and take you live to Capitol Hill, where the U.S. House is about to gavel in for general speeches. | |
| Live coverage of the House is here on C-SPAN. | ||
| The House will be in order. | ||
| The Chair lays before the House a communications from the Speaker. | ||
| The Speaker's Rooms, Washington, D.C., May 19th, 2025. | ||
| I hereby appoint the Honorable Young Kim to act as Speaker Pro Tempore on this day. |