Van Hollen: GOP Bills Are Misleading and Could Be Very Dangerous to Our Economy

Washington, DC – Today Maryland Congressman Chris Van Hollen, Ranking Member of the House Budget Committee, delivered an opening statement at the House Budget Committee Hearing on the Broken Budget Process: Legislative Proposals. Below are his remarks as prepared for delivery:

Thank you, Mr. Chairman.  I welcome the opportunity to explore ways that we might be able to improve the budget process. I do hope that the Senate will take up the bill that we passed over here, on a bipartisan basis, with respected to expedited rescission and the legislative line item veto.  

We all agree that we have a budget challenge, and a deficit and debt challenge – especially over the long term. And we agree that we need to fix it.  But I think that we also agree that the fundamental problem is not the existing budget process rules – and no bill that simply changes the budget process rules is going to solve the underlying issue.  There is no substitute for making the tough policy decisions to reduce the deficit in a balanced, credible way. And once the President and the Congress develop a consensus on the policies of a budget agreement, then the policy process reforms can be an effective tool in enforcing its implementation – at least at the margins.  But first you need to deal with the fundamental policy questions. 

Over the last two years, many serious bipartisan groups have met to examine ways to put our budget back on the path towards balance.  Each one of these groups has agreed that we need to take a balanced approach toward deficit reduction that involves a combination of spending cuts and revenues generated by eliminating tax breaks that are unproductive, in many cases, in the economy.  Unfortunately, our Republican colleagues continue to oppose that balanced approach. Again, 98 percent of our Republican colleagues in the House have signed a pledge that says that they will not close a single corporate tax loophole for the purpose of deficit reduction, and they won’t ask people making more than $1 million a year to contribute one penny more for the purpose of deficit reduction. That of course leaves only very deep cuts in spending that hit everybody else rather than a balanced approach that asks for shared responsibility.  In an era of divided government, we need to be able to make the difficult compromises necessary to get the job done. Unfortunately, in some parts of this House, compromise has become a dirty word.

Today’s hearing is designed to examine a number of bills put forth by our Republican Committee colleagues.  Two of them deal with different forms of spending caps. Effectively, what these bills do is try and enshrine into law the House Republican budget, the unbalanced approach to the budget with all of the requirements that it would make in terms of cuts – ending the Medicare guarantee, and other very deep cuts in important national investments. Interestingly, if you actually passed the bills that have been introduced, the current FY2013 budget put forward by our Republican colleagues would fail to comply with the spending caps. The bills would require automatic sequester cuts of over $70 billion to the proposed FY2013 Republican budget.

Moreover, and I think this is an issue that every Member should focus on, the effect of these bills would be to take any future economic downturn and risk turning it into a full-fledged recession or depression. And we will get into a couple of examples of how it would do exactly that, and I am very interested in our witnesses’ views on that. Because you have to anticipate these kinds of events, and the bills do not – they take a very rigid approach.

As Mr. Holtz-Eakin observed in his testimony when he was head of the CBO, speaking about an earlier Deficit Control Act, “the targets set under the Deficit Control Act, both the original ones and the revised ones, were unrealistic in the light of the prevailing economic conditions. For that reason and others, actual deficits remained above the targets during the years that the law was in effect.” And it is likely that if we don’t make the underlying policy decisions – then that is the likely result here.

As Peter Orszag pointed out in his Bloomberg column, all these things are are a super version of SGR. We thought we were going to solve rising health care costs by putting into effect SGR cuts. Every year Congress, on a bipartisan basis, has found a way around it. Doing a super-sized version of SGR is not a way to resolve our budget challenges.

And finally, Mr. Chairman, I just want to say a word about the Speaker’s version of the mother of all sequesters – his threat that the United States would not meet its financial obligations. That, of course, would have the effect of immediate, deeper across-the-board cuts – but it would do so in a way that would devastate the economy. And even talking about the United States, for the first time in its history, not meeting its obligations is a reckless approach to economic policy and jobs.

So, that is a sequester on steroids, and these others are versions of that, and none of them meets the test of making tough policy decisions.

I will end with this, Mr. Chairman, these bills in their current form are either very dangerous to our economy if they were actually to be put into effect and followed because of the fact that they would make worse any economic downturn. Or, at best, they’re misleading because they create a sense that the Congress has done something. People go home and they say to their constituents, hey, we passed a cap on spending, don’t worry about it, knowing full well that the spending targets won’t be met. I don’t know which of those consequences is worse, although I would hate to see another full-fledged economic downturn compounded by the mindless sequesters in these bills.

Thank you, Mr. Chairman.