Hearings

Senator John Kerry

Opening Statement - Hearing on “The History and Drivers of our National Debt"

“We all agree that we’re facing an unsustainable financial future. Under CBO’s alternative fiscal scenario, debt will reach 82 percent of GDP by 2021, higher than any year since 1948.  We all agree we can’t let that happen.

“But to avoid that dismal scenario, we have to be clear-eyed about the way we got here and the forces keeping us on that dangerous trajectory. This road began now more than a decade ago. Economic meltdown, two wars, rounds of the largest tax cuts in history, and efforts to forestall larger economic collapse contributed. Demographic challenges loom large in the out years. It is more than just a “spending problem” narrowly defined, and we do the dialogue a disservice by oversimplifying it: both because if it was a mere spending issue, it’d be a lot easier to solve – but also because many tax expenditures are a form of spending in disguise.

"But while there may be partisan interpretations of how we got here, there is bi-partisan consensus not just about the urgency of action to dig us out of this mess, but about the approach it requires.  Three bipartisan groups looked at this problem in recent months – Rivlin/Domenci, Simpson/Bowles, and the so-called Gang of 6 – and they’ve all said that any real solution needs to be balanced with a mix of revenues and spending cuts and long term reforms.  

“We benefit from their guideposts, and we also benefit from the cautionary lessons of other countries. That means not fixating on austerity measures alone, particularly in the short term.. We’ve seen the damage they’ve caused across Europe, and we can’t put our own fragile economy in jeopardy by taking actions that will slow economic growth and decrease job creation. We need growth, not just revenue, and not just cuts. In a recent speech, IMF managing Director Lagarde warned Europe about “drastic upfront belt tightening” and recommended that the United States “strike the right balance between reducing public debt and sustaining the recovery—especially by making a serious dent in long-term unemployment” That’s the path we need to take – because any economist will tell you, creating jobs today helps reduce the deficit tomorrow.

“Last week, the Committee for a Responsible Budget, a bipartisan organization which includes some of our country’s leading experts on budget issues, including the co-chairs of the Fiscal Commission, recommended that this Committee “go big, go long, and go smart.

“Director Elmendorf’s testimony today helps solidify the reality that we need to “go big” and reach savings of more than $1.5 trillion to address long-term deficits.  We need to “go long” and address our long-term budget issues.  And most importantly of all we need to “go smart” and address the budget without preconceived dogmas or political agendas. So I look forward to delving more deeply into these issues today, and helping us shape recommendations for this Committee and this Congress to adopt.  

Thank you."