tv 2014 Economy Summit CSPAN March 22, 2014 10:50am-11:21am EDT
, he will show you how feisty and dangerous it is to be there. when we were in keynes college some years ago, dominique strauss-kahn was speaking at a conference. these protesters showed up with giant banners that they hung over. simon had a red bag. he was detained as a protester. mistakingly. >> yesterday want to correct the record. with that i want to thank the panel. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014] we will return to the discussion on the economy in a moment. first here's a look at tonight i'm time programming here on c-span. at 8:00 p.m. eastern, elena abouttalks to students her life and career. followed at 9:00 p.m. by actor
joseph phillips in the discussion of the possibles of conservatism. given a medal of honor ceremony with president obama, honoring world war ii, korean, and vietnam veterans. now more on the u.s. economy and budget with the budget office director. he was part of the all-day conference. this runs half an hour. >> it is true that for those of you that have the temerity to we aret with us all day, serving at our festive reception. i hope you can join us. i will keep referring to that. let me invite to the stage nancy cook was the policy correspondent for the national journal.
[applause] thanks so much for sticking around. i feel like these public appearances you make are somewhat rare. the cbo has been under a lot of fire. i think we'll have a lot to talk about. >> i'm glad to be here and to have you here. >> this whole event is about the economy. i wanted to start off with a broad question. five years since the start of the recession, are you surprised they where we are at this point in the economic recovery? >> yes. we have been surprised and disappointed by the pace of economic recovery. the people who were more ripe are the one to look at more carefully the experience of other countries and earlier point of the u.s. experience. crises of housing
and the financial system. ofy found that these sorts recoveries are very prolonged. in retrospect we put too much weight on not just the postwar experience. we understand this is a different sort of event. is a rapid monetary policy response. that would be enough to fit the economy fairly not in a v-shaped recovery but a fairly quick u-shaped recovery. we marked it down our projections for economic growth. that this point there is still considerable slack left
at economy and the labor market. we have been carefully watching the structural fact is that have slowed the economy. for dissipation is down considerably over the past several years. the of that was due to movie of the baby boomers into retirement. we also take a significant chunk of the decline. distance from the weak economy. be out think will permanently. economyl come back as strengthens. it will over the next four years return back essentially to full employment. from thethat will come healing of the underlying economic problems.
it will not be in place this year. we do think there are stronger reasons today to expect the economy to rebalance. we have been wrong before about that. we have learned that many other forecasters have learned just what a prolonged process it is to work out the excesses of the housing boom, to rebuild the financial system, to restore consumer and business confidence. changed the way you go about forecasting if you feel like you were a little bit wrong in the way that you view the economic recovery? successes and failures in our forecasting process. other ones. of
it is not that we are unaware of it. theink we missed judged underlying resilience of the u.s. economy. cents to be quite similar to those of the consensus of private forecaster. it is a little tricky to know that at times. has had ancy expiration of the tax cuts. i've forecasters are trying to guess what congress might do about the school policy. differencesr the are pretty close to the consensus. forecasting is very hard. we are always working to get better at the things we do. >> one thing i was really struck by the latest budget outlook, in february you predicted the unemployment rate is going to through 2018.%
it is going to be through an election year. what do you think that is going to mean for the labor market? >> by our estimates there are 6 million more people who would be working if the unemployment rate were back down to its pre-recession level in the labor participation rate was back up to the level it would be at without the cyclical weakness. those are 6 million jobs that our economy is short today. that has been economic costs. they are not producing. costs very large personal for the people and their families. a rate oflar we have long-term unemployment. for have been out of work half a year or more. it has been extraordinarily high.
comes down a little bit from how it was a few years ago. it is higher than it has been at any point except for the last few years. people who have been unemployed for a long time have greater personal hardships. if they had savings they worked through them. they find it more difficult to get back in the labor froorce. be a deterioration in skills. some of that seems to be just a stigma. and unfair stigma. it is a much lower chance of being hauled in for interviews. it is hard for people to get back into the labor force. we think a number of them will not.
the labor force had taken of disability insurance. they're likely to stay on that program or move into the social security retirement program. they are out of the labor force. consequences of having unemployment so high for so long are really profound and they will have a long shadow. the experience is unusual in the u.s. over the last 70 years. it is what has tended to happen in other economies. the latest work i am aware of will have these across the world over long time. they found in the average country, the sort of crisis has taken six or eight years to get back to the precrisis level of output per person.
the u.s. is now back to the precrisis output per person. it does not seem like much of an accomplishment in a an economy -- in an economy comfortable to growing. the costs are very high. thought whenour they agree to extend unemployment benefits? >> as you know, cbo does not make policy recommendations. that is very important because policy choices depend not just on the analysis of the consequences but how one weighs those consequences, what values one applies. there is something special about our values. it is of to our elected leaders to make the policy judgments. our job is to help congress understand the consequences. we have set a number of time that extending unemployment insurance benefits will provide a boost to the economy because that money will go to people who will be highly likely to spend it.
there are consequences of extending unemployment insurance benefits. there would be people who would look for work less vigorously than they would otherwise. we have laid out the consequences of that and offer the congress and number of times menus of possible ways of providing some fiscal stimulus to the economy. >> i want to talk about the politics of the cbo. the agency has come under fire recently. with two reports you put out, one was on the effect of the minimum wage, which the white house aggressively came after. and then the affordable care act. what sort of pushback have you gotten from officials and congressional democrats over
these reports that did not necessarily buttress a lot of the political conversation in the crosswalk to have. -- conversation democrats want to have. >> we don't get private pushback from the administration does i have no private conversation with anybody in the administration. i think that is appropriate. we don't really get private pushback from members of the congress when they are unhappy about us. lots of different ways. the essence of cbo is to do an analysis without carrying who will be made happy or unhappy about the results. it just isn't a factor in what we do. congress is paying us to do objective analysis, to do analysis that draws on the best thinking in the analytic
community and among practitioners, whoever we can consult for information to do our budgets and analysis. we get favorable attention from some and unfavorable from others. that just comes with the territory. shortly after i started my job, five years ago, i was taken to lunch by a former director of the cbo. everyone has their stories to tell. i wondered whether i should go back to the office and just get on the metro and go home again. the stories are really something. it is the essence of what my predecessors did and what i did. most importantly is what everybody at cbo does.
everybody comes to cbo knowing that this is a place where we will do really high-quality objective work, where our own value of judgments and policy situations are, do not enter the situation. in the entire organization in the culture of the place, it is all most 40 years old. when we've really some studies and they get some attention, sometimes they get less, people are happy or unhappy. people will call to testify, send tweets, or write letters. that's ok, that's their role. our role is to work on the analysis for the next project. >> do you ever worry about cbo's
ability to maintain a nonpartisan environment or its mission in such a partisan environment moving forward? >> don't be worried about the ability to do objective work. that is so ingrained in the organization and the people there. i worry about the perception of our objectivity. i think in an environment that is as highly partisan is washington is, especially now, things can be viewed through partisan lenses. they can be viewed as suggesting. we can talk about why we estimate the effects of this proposal and not that proposal. why did you write it this way and not that way? why did you really sits on this day of the week and not that day of the week? -- why did you release it on this day of the week and not that day of the week? we are doing it in a way that demonstrates objectivity. i don't worry about the analysis
being objective, i worry about the analysis being right. the topics are very complicated. our energies are devoted to trying to take the best available evidence from published research, from conversations with petitioners, from people running state governments and administering federal rules, and trying to combine all that knowledge to produce the most accurate estimates we can. we have a terrifically talented and dedicated set people. >> i want to talk about the budget wars that consumes washington and a lot of my life, your life, for about two years. what was your reaction to the budget compromise that democratic senator patty murray and republican congress meant paul ryan came up with in december? do you think that was adequate in tackling the issues everyone
has been fighting about for two years? >> when i testify to the budget conference committee in november, i said near the end of the testimony that given the budget challenges we face, the big steps are better than small steps and the small steps are better than no steps. and i added no steps are better than backward steps. have to be careful. [laughter] the agreement that chairman murray and chairman ryan came to that was endorsed by the congress was the appropriations bill. they were small steps toward better budget policy, not endorsing the particular actions that were included. but getting a company of people to agree on something that allows the government to be funded and move ahead was very constructive. the fundamental fiscal
challenges that we face remain. the fundamental fiscal challenges come from growth in spending for social security and a major health care programs. the government as a whole is not getting bigger relative to the size of the economy. in our projections under current law, all federal spending apart from that for social security and major health programs will be a smaller share of gdp by 2020. social security will be more expensive relative to gdp. that comes from the aging of the population. there'll be one third more people receiving social security benefits a decade from now than there are today. coming partly from rising health care costs per person, not as rapid and increase but still
rapid enough to push up health care spending. the third coming from expansion to subsidize health insurance for lower income americans. with those three factors at work , that handful of a large program is becoming more expensive. we have a choice as a society to scale back our programs. or we can raise tax avenue to above its historical average to pay for these programs. or to cut back on spending even more sharply than we already are, even more sharply than the lowest gdp in seven years. we haven't decided at the society how we are going to -- what we are going to do. some combination of those three choices will be needed.
as we continue to do work we present to congress a volume of options for reducing deficits. there are lots of ways to proceed but they tend to be unpleasant one way or another. we have not decided how much of that unpleasantness to inflict. >> everyone on the hill is exhausted by the budget wars. american budget -- the annual deficit really dropped. when do people need to start worrying about these questions of government spending you just brought up? >> we have been saying in the five years i have been at cbo, the deficits would be particularly high for a while and then decline. they would decline because the
economy recovers, even more slowly, we also have a deficit decline the cause congress passed legislation in 2009 to provide stimulus to the economy. our projections have shown for it while that deficit would come down from the roughly 10% gdp in 2009 to something in the two percent to three percent range, which we still project to happen this year and next year. deficits start to rise again because of these underlying factors, which are happening. those underlying factors will show through very clearly. the current level of the deficit is roughly the average episode
of the gdp we have had over the last 40 years. the challenge is not the deficit in the short term, it is the deficit rising to capture that. in particular, a very high level of debt is now 70% of gdp. that is way above word was for most of the postwar. it can slow the accumulation of capital and growth of wages and incomes. with the high level of debt and growing deficits, the reason why action today would be beneficial is because we want to make changes in programs for retirees or changes in the tax
code. it is better to make those with a warning. one wants to set changes in motion early, even if the full effect will be felt for many years. >> we're going to take some questions from the audience. there are people with microphones. if you just want to raise your hands -- we have a question over there. go ahead. >> good morning. my name is tom with marconi pacific. we are a technological consulting firm. i have a question about technological driven deflation, and i'm wondering if cbo has done any work in that area, looking at the effects of the internet, driverless cars, machine to machine technology, sort of the next generation and how that is going to impact employment or unemployment. and if you could connect that to the last panel with the lack of
economic results as a that of economic -- of economic growth as a result of family -- >> we have not looked very carefully at the questions you have raised. we have a limited number of things we can tackle. our projection of growth and productivity is close to the average of the last couple of decades. we are not looking for any particular pick up or slow down. there are cases people have made about why there may be at particular close-up or slow down. we think in terms of wages that there will be some return of wage growth as the labor market tightens the next several years.
as you know the share of national income going workers has been on a gradual downward trend. it has fallen quite remarkably since the boom. we think that will take up to some extent but not go back to what it was in the past. we have federal reserve targets -- >> i think we have another question right here. >> good morning. there are two issues that come to mind. the fact we keep hearing entitlement when it comes to social security. and people who paid and that while they were working.
how do you address that as an entitlement when americans have done this? and how do you focus on tax policy when americans incomes are going down and we continue to subsidize exxon mobil. >> one of the options we offered congress in the fall for the deficit is to change the tax treatment of companies that are extracting resources, like exxon mobil. that is one of the possible ways of moving forward. on social security generally don't use the word "entitlement." it has different connotations to different people. a lot of people have paid social security taxes on the expectation they will respond. the argument that people have come to expect certain things and are counting on certain things to be there for them is
exactly the point i mentioned about how one wants to change those programs and then giving people a lot of warning about how those changes are coming, it would be especially important. >> one quick question i want to ask you, your term is up in january 2015. you have been a valiant soldier for a while now. you have in in this job for a while. are you interested in serving another term or what else would you be interested in doing? >> i love my job. i have had a chance to work on some interesting questions with some terrific colleagues. >> that is not answering the question. >> i know. [laughter] and i am focused on what we are doing in 2014. i have no plans beyond the
beginning of 2015, when my term expires, and i am making no plans and we will have to see what happens when we get there. >> thank you so much. >> thank you very much. [applause] >> a big round of applause for doug elmendorf. the question i would ask job -- ask doug is does your job suck? it must be a complicated thing when you are trying to tell the truth to both sides who do not want to hear it. you don't have to answer that -- >> i love my job. >> great, so that is tweetable. another round of applause. thank you, doug. guest: we will turn to capitol hill now. when they return monday, they will be dealing with issues
-- uding aid to ukraine and guest: the map of the world literally changed since congress went on their weeklong recess. the new bipartisan ukraine sanctions bill attempts to get house and senate on the same page. he is joining us here at c-span. what is ahead when congress returns on monday in terms of the ukraine legislation? >> the house in the senate are going to try to get on the same page. formally annexed crimea. the two chambers have different approaches to bills that would both levy sanctions on russian officials they feel are responsible for the violence and that would assure ukraine gets loan guarantees and direct economic assistance. >> step back for a second. the house has already passed a guarantee $1ld
billion in loan guarantees and yet a new bill was introduced friday as we do this interview. how is this bill that the house will take up any different from what they passed? move thingsto closer between the chambers. talks about different types of aid through different u.s. agencies and european bank reconstruction. what is essentially happening is that the senate bill, which the chamber will take a boat to proceed on, also has restructuring of aid to the international monetary fund that could help ukraine. andblicans in the chamber house republicans disagree. they think that's extraneous provision to be done another time. they are backing a narrower version. the house foreign affairs chairman and his ranking member rolled up this bill today that could provide a point of compromise. >>