Whitehouse Calls Out Republican Hypocrisy on Deficit Reduction
“When you are willing to engage seriously with this problem, let me know,” said the Budget Chairman
Washington, D.C.—Today, Senator Sheldon Whitehouse (D-RI), Chairman of the Senate Budget Committee, released a letter calling out Congressional Republicans for their hypocrisy when it comes to deficit reduction. The letter, responding to a letter dated December 5, 2023, from Ranking Member Grassley and Republican members of the Budget Committee, highlights Republicans’ support for budget-busting tax cuts for the wealthy, their lack of proposals to address Medicare’s and Social Security’s impending insolvencies, and their inattention to the economic risks from climate change.
Ensuring the wealthy pay their fair share is essential to bringing down the federal deficit and national debt. Yet Republicans have repeatedly voted to defund Internal Revenue Service tax enforcement, hamstringing the agency’s ability to go after wealthy tax cheats and increasing the deficit.
“Republicans exploded deficits with partisan tax cuts that overwhelmingly benefitted the wealthy, as the Committee heard in our hearing May 17—one of several hearings we’ve held on debt and deficits. If not for the Bush tax cuts, their extensions, and then the Trump tax cuts, the U.S. debt-to-GDP ratio would be declining indefinitely,” wrote Chairman Whitehouse.
Exogenous shocks to the economy have created significant costs for the federal government. Indeed, the combined cost to the federal budget of the Great Recession and the COVID-19 pandemic was $10 trillion, nearly 40 percent of our national debt. Appearing before the Committee, central bankers, energy experts, economists, insurance executives, political leaders, doctors, and other experts have testified to the increased budgetary costs and economy-wide risks from climate change.
“The next fiscal emergencies will be climate-related, and similarly disastrous for the federal budget, with cascading economy-wide ‘systemic risks.’ We have already seen economic disruptions beginning … We presented testimony from leading bankers, insurance CEOs, top corporate advisory firms, mortgage lenders, and scientists about these risks; you responded mostly with mockery, climate denial, and fringe witnesses on the fossil fuel payroll,” the Chairman continued.
While the United States continues to spend more on health care as a percentage of GDP than any other peer OECD country, the average life expectancy in this country is lower. Life expectancy in the United States is on par with that of Estonia despite spending nearly double on health care as a percentage of GDP. Furthermore, health care expenditures are projected to continue increasing, and the Centers for Medicare and Medicaid Services actuary estimated that health spending will grow to 20 percent of GDP by 2031.
“There are ways to reduce health care costs—with zero benefit cuts—by improving the efficiency and the incentives in our health care system. If we get this right, we can improve people’s health and quality of care while also reducing health care costs. I am eager to work with you on this as well, but so far have received neither serious engagement on my earnest proposals nor counterproposals of any kind,” the Chairman continued.
At hearings on Medicare and Social Security solvency, the Committee heard findings from the Social Security and Medicare actuaries that Senator Whitehouse’s Medicare and Social Security Fair Share Act would indefinitely extend the solvency of both programs without raising taxes on those making under $400,000 per year. There have been no Republican counterproposals introduced to shore up those programs.
“I urge you to produce proposals in these areas, and I will be happy to help you score them so that we can assess what works for the American people and addresses the federal budget. Until then, I think it is entirely appropriate for the Budget Committee to keep warning of the current and future drivers of our nation’s fiscal imbalance: repeated, unfunded tax cuts for the wealthy and large corporations, inefficiencies in our health care delivery systems, failure to address the coming cash crunch in Social Security and Medicare, and cascading economic meltdowns originating in the climate crisis,” Chairman Whitehouse concluded.
The full text of the letter is below and available here.
Dear Ranking Member Grassley and Republican members of the Budget Committee:
Thank you for your letter dated December 5. I agree that, all else equal, a smaller federal deficit and a national debt that is stable or shrinking as a size of the economy would be economically advisable. How we get there is the question.
Republicans exploded deficits with partisan tax cuts that overwhelmingly benefitted the wealthy, as the Committee heard in our hearing May 17—one of several hearings we’ve held on debt and deficits. If not for the Bush tax cuts, their extensions, and then the Trump tax cuts, the U.S. debt-to-GDP ratio would be declining indefinitely. At that same hearing, every witness testified that tax cuts balloon deficits and do not pay for themselves, contrary to claims made by the Trump administration about its 2017 law.
House Republicans have pursued magical thinking, with CBO pointing out that their balanced budget proposal is mathematically impossible without cuts to Social Security, Medicare, defense, or veterans’ programs. That wild notion would zero out all other federal spending and still not completely eliminate the deficit. Even were it not mathematically impossible, it would seem ill-advised to eliminate Medicaid, nutrition assistance, our civil aviation system, our national parks, customs and border security, Head Start, the Food and Drug Administration, federal law enforcement and prisons, and other government programs upon which modern society depends. In its recent failed budget, the Republican House Budget Committee could not explain where 60 percent of its nearly $10 trillion in spending cuts would come from.
As I look at what drove our deficit, I see trillions in unfunded tax cuts for the wealthy, trillions in spending on emergencies, and trillions in health care expenses—some related to an older population needing more services. Looking ahead, the drivers of deficits will be the Social Security and Medicare cash flow crunch, the next round of emergencies associated with climate change, and continued Republican obstruction over making needed reforms to our tax code.
At our hearings on Social Security and Medicare solvency on July 12 and September 27, we heard that CBO predicts that Social Security and Medicare will make up more than half of federal spending growth over the next decade. At those same hearings, we heard both the Social Security and Medicare actuaries estimate that my Medicare and Social Security Fair Share Act would indefinitely extend the solvency of both programs without raising taxes on those making under $400,000. As I said at the time, I invite a Republican counterproposal to shore up those programs.
The combined cost to the federal budget of the Great Recession and the COVID-19 pandemic was $10 trillion, nearly 40 percent of our national debt. The next fiscal emergencies will be climate-related, and similarly disastrous for the federal budget, with cascading economy-wide “systemic risks.” We have already seen economic disruptions beginning in states like California, Louisiana, and Florida, where insurers are pulling out or going broke due to climate risks. Homeownership usually requires a mortgage, and a mortgage is not possible without insurance; so un-insurability can crash property values. We presented testimony from leading bankers, insurance CEOs, top corporate advisory firms, mortgage lenders, and scientists about these risks; you responded mostly with mockery, climate denial, and fringe witnesses on the fossil fuel payroll.
As we all know, the tax system is corrupted by special interests, and million-dollar earners can pay lower tax rates than plumbers and firefighters. Some billion-dollar corporations pay no income taxes at all. When you are willing to engage seriously with this problem, let me know. There is a revenue side to the deficit problem, and we can correct injustices at the same time.
Finally, health care costs are driving deficits. There are ways to reduce health care costs—with zero benefit cuts—by improving the efficiency and the incentives in our health care system. If we get this right, we can improve people’s health and quality of care while also reducing health care costs. I am eager to work with you on this as well, but so far have received neither serious engagement on my earnest proposals nor counterproposals of any kind. We are working with CBO to improve its scoring of health care reforms, but updated methodologies will only matter if we can first come to an agreement over what must be done.
I urge you to produce proposals in these areas, and I will be happy to help you score them so that we can assess what works for the American people and address the federal budget. Until then, I think it is entirely appropriate for the Budget Committee to keep warning of the current and future drivers of our nation’s fiscal imbalance: repeated, unfunded tax cuts for the wealthy and large corporations, inefficiencies in our health care delivery systems, failure to address the coming cash crunch in Social Security and Medicare, and cascading economic meltdowns originating in the climate crisis.
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