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Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

CBO Testifies to House and Senate Budget Committees

February 15, 2013—The House and Senate Budget Committees held hearings Feb. 12-13 to discuss the Congressional Budget Office’s (CBO) Budget and Economic Outlook for fiscal Years 2013–2023, which was released on Feb. 5. CBO Director Douglas Elmendorf, Ph.D., testified before both committees.

Opening the Feb. 12 Senate hearing, Budget Committee Chair Patty Murray (D-Wash.) said, “I think it’s fair to say that the report…delivered to us last week on the state of the budget and economy over the next 10 years is a mixed bag, as it contains some hopeful signs, but also highlights some real challenges for the nation.” She added, “Leaving the sequester in place would lead to massive, self-inflicted damage that would hurt middle class families, those already struggling in this economy, as well as our national security and future global competiveness.”

Ranking Member Jeff Sessions (R-Ala.) agreed with Sen. Murray that the CBO budget report shows that our economic state is “not a hopeless situation, but it’s a very dire situation.” He continued, “Our gross federal debt, after rising $6 trillion in the last four years, will rise another $9 trillion by 2022. CBO’s report also suggests that, from there, things only get worse outside the 10-year window.”

Dr. Elmendorf testified to the committee, “Deficits are projected to increase later in the coming decade… because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt. As a result, federal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade. By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path.”

Sen. Murray, focusing on the jobs and economy, asked Dr. Elmendorf “the sequester… both sides agree is harmful to the economy... Wouldn’t it be preferable to replace the sequester with a package that’s phased-in?” Dr. Elmendorf agreed that a phased-in approach would be better for the economy on the short term.

Dr. Elmendorf also commented on the projections of health care spending. He said that given CBO’s projection is 5 percent lower in 2012 than expected in 2010, CBO is working to try and understand the sources of the slowdown of health care spending.  CBO believes a portion can be attributed to structural changes in the health care system in the way health care is delivered. 

To open the Feb. 13 House hearing, Budget Committee Chair Paul Ryan (R-Wis.) said, “The CBO says our economy will grow by only 1.4 percent this year.  Unemployment will hover around 8 percent.  And we will add another trillion dollars to our debt… Farther down the road, things get worse.” Chairman Ryan added, “The President says we need a ‘balanced” approach to closing the deficit—by which he seems to mean one tax hike after another.  But the fact is, we can’t tax our way out of this problem.  We need to get serious about spending.”

Ranking Member Chris Van Hollen (D-Md.) countered the chair’s comments saying, “Over the long term, there’s no doubt we see rising deficits. And the challenge, as we’ve said before, is not whether we reduce those deficits, but, again, the magnitude of the reduction, the timing of the reduction, and how we do it. And as the President said last night, we support taking a balanced approach to that.” He added, “in the short term, that means dealing with the sequester.”

Chairman Ryan recognized the pressure that health care costs are putting on the federal budget and asked Dr. Elmendorf if CBO was equipped to analyze the long-term effects of his proposal of Medicare reform proposals of premium support.  Dr. Elmendorf assured the Chair that CBO is working to fill those “gaps” at CBO, but are still unable to project those savings.

Rep. Lloyd Doggett (D-Texas) responded to the chair’s comments on premium support to say the cost would not be reduced, but simply shifted from Medicare to the beneficiaries.

Contact:

Len Marquez
Director, Government Relations
Telephone: 202-862-6281
Email: lmarquez@aamc.org

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org