Thank you, Mr. Chairman, and thank you to the witnesses for your testimony.
I co-chair the Blue Dog Coalition, a group of moderate Democrats who prioritize bipartisan cooperation, a strong national defense, and fiscal responsibility.
It may sound quaint or old-fashioned, but our coalition believes excessive deficits and debt pose a threat to our economy, our security, and our children’s future.
We believe that, as lawmakers, we must make a good-faith effort to get our fiscal house in order by bringing government revenues and expenditures into better alignment.
In times of economic stability and low unemployment, we should be trying to make our fiscal problem better. At minimum, we should be trying not to make it any worse.
As Mr. Furman and Larry Summers wrote in a recent essay, when you’re in a hole, one logical approach is to stop digging.
Consistent with this “do no harm” philosophy, Blue Dogs have generally insisted any new legislative measure that would increase the deficit should be paid for with spending cuts or revenue raisers. If something is truly worth doing, then it should be worth paying for.
Trust me: putting this philosophy into practice doesn’t always make us popular with our colleagues, and it requires us to cast some tough votes—which I would submit is what we were elected to do.
As Blue Dogs, we try to be equal opportunity critics. We call out those members of our own party who argue deficits and debt don’t really matter, and who suggest we can make fiscal policy without any semblance of fiscal constraint. If what these deficit dismissers are saying sounds too good to be true, that’s because it is.
At the same, time, Blue Dogs don’t hesitate to condemn Republican hypocrisy on this subject. The GOP skillfully talks the talk on fiscal responsibility, but rarely walks the walk when in power.
The TCJA is arguably the most egregious example of the gap between Republican rhetoric and action. I opposed this bill because it was unprincipled, hyper-partisan, and sloppy. But—above all—I opposed it because it was clear it would make our deficit and debt problem worse.
Two years out, the evidence has confirmed our fears. CBO just released its latest budget outlook, and the numbers show the fiscal state of our union is neither strong nor sound. Inadequate revenue collection caused in part by the TCJA is a major culprit.
Last fiscal year, the federal budget deficit was $984 billion dollars and is expected to exceed $1 trillion dollars this year—and every year for the next decade. Over the same period, federal debt held by the public is projected to rise from 78 percent to nearly 100 percent of GDP, which would be unprecedented in our history.
To manage the economic and security risks associated with large and rising deficits and debt, we need to take thoughtful bipartisan action on both the spending and revenue sides of the ledger—and the taxation of business income needs to be part of this debate.
Miss Huang: I’d like you to put yourself in my position for a moment.
My fellow Blue Dogs and I spend a lot of time trying to convince our House Democratic leaders that we, as a party, need to take fiscal responsibility and things like pay-as-you-go seriously.
By and large, they are receptive. They realize this matters, especially to future generations.
At the same time, they do sometimes question why we—as Democrats—should take the hard steps required to get our fiscal house in order, when it was the Republicans—with their undeserved public reputation for fiscal responsibility—who blew a gigantic hole in our budget with the TCJA. Professor: can you comment on how passage of the budget-busting tax law has made it so much harder, going forward, to reach bipartisan compromise when it comes to managing deficits and debt?
Mr. Furman: I’m probably more of a budget hawk than you, but you’re not someone who dismisses the need for some budgetary discipline. Can you articulate what the practical consequences could be if our country continues to add to the debt through spending increases and tax cuts?