Senator Murray, Congressman Hensarling, and Members of the Committee, thank
you for the invitation to testify about the outlook for the economy and the budget
and about the Congressional Budget Office’s (CBO’s) analysis of the fiscal policy
choices facing this Committee and the Congress.

Summary

The federal government is confronting significant and fundamental budgetary challenges. If current policies are continued in coming years, the aging of the population and the rising cost of health care will boost federal spending, as a share of the economy, well above the amount of revenues that the federal government has collected in the past. As a result, putting the federal budget on a sustainable path will require significant changes in spending policies, tax policies, or both. The task of addressing those formidable challenges is complicated by the weakness of the economy and the large numbers of unemployed workers, empty houses, and underused factories and offices. Changes that might be made to federal spending or tax policies could have a substantial impact on the pace of economic recovery during the next few years as well as on the nation’s output and people’s income over the longer term.

Full Testimony