The Fiscal State of the Nation

House Rules and Floor ProcedureHouse Budget · May 7, 2025 · 119th Congress
The House Budget Committee held this hearing, an annual "Fiscal State of the Nation" exercise, to review the federal government's debt, deficit, and interest-cost trajectory as Republicans worked on a reconciliation bill combining tax cuts and spending reductions. Begins at ▶ 0:16:36
Transcript
Highlights

Title

House Budget Committee examines rising national debt and reconciliation trade-offs

Purpose

The House Budget Committee held this hearing, an annual "Fiscal State of the Nation" exercise, to review the federal government's debt, deficit, and interest-cost trajectory as Republicans worked on a reconciliation bill combining tax cuts and spending reductions. Four economists testified — three chosen largely by the majority (Joshua Rauh, Paul Winfrey, Don Schneider) and one by the minority (Michael Lindon) — with sharp disagreement over whether tax cuts or spending growth is the primary driver of the debt, and over proposed Medicaid and SNAP cuts. Begins at▶ 0:16:36

Who spoke

• Chairman Jodey Arrington (R-TX)▶ 0:16:36: Opened by calling the fiscal trajectory "dire" and "rapidly declining"▶ 0:19:52, said both parties share blame but Republicans must "bend the curve" on mandatory spending▶ 0:22:46; later disputed Democrats' economic claims, citing $32,000 in mortgage savings from recent rate declines▶ 0:59:25 and defended TCJA distributional data▶ 0:56:53; closed with an extended appeal for spending cuts of $10 trillion+ to balance the budget▶ 3:41:32.

• Ranking Member Brendan Boyle (D-PA)▶ 0:25:42: Said the first-quarter GDP contracted 0.3%, calling it the first recession in his lifetime "entirely created by the policies of one president"▶ 0:27:53; blasted "current policy baseline" accounting as "a fraud," using a zero-calorie-brownie analogy▶ 0:30:49; submitted a CBO letter showing Medicaid per-capita caps and provider-tax changes could cause 1.5–3.9 million people to lose coverage▶ 1:02:15.

• Dr. Joshua Rauh, Hoover Institution/Stanford▶ 0:33:02: Testified interest payments already exceed the defense budget, consuming 18 cents of every federal revenue dollar, rising to 22–29% by 2035 under adverse rate scenarios▶ 0:33:31▶ 0:34:21; said California's 2013 tax hike lost 60% of projected revenue from behavioral responses▶ 0:36:09; urged permanent pro-growth tax provisions plus roughly $1 trillion in bipartisan-eligible spending cuts▶ 0:37:59.

• Dr. Paul Winfrey, Economic Policy Innovation Center▶ 0:38:57: Said gross debt is 123% of GDP, exceeding the WWII peak of 118%▶ 0:39:25, and that 76% of 2020–2023 federal spending was borrowed and 14% "printed"▶ 0:39:53; estimated the U.S. has about 60% of GDP ($18 trillion) in remaining "fiscal space" before a Greek-style crisis becomes more likely than a slow-growth scenario▶ 1:01:18▶ 1:01:46.

• Mr. Don Schneider, Piper Sandler▶ 0:43:44: Said the FY2024 deficit was 6.4% of GDP versus a historical ~0.5% norm for similar conditions, with a primary deficit 4.4 points larger than average — roughly equal to total Social Security spending▶ 0:44:40; warned investors are not "fooled by baseline games"▶ 0:46:31 and called the $1.5 trillion in proposed reconciliation cuts (0.4% of GDP) too small relative to the 6.4% deficit▶ 1:47:48.

• Mr. Michael Lindon, Washington Center for Equitable Growth▶ 0:49:13: Argued repeated tax cuts since 2001, not entitlement growth, are the "main culprit" for rising debt, noting close to half of all cumulative tax-cut benefits went to the richest 5%▶ 0:51:44; said the proposed budget would send 70% of benefits to the top 5% while 40% of Americans pay more▶ 0:53:52; repeatedly argued Medicaid/SNAP cuts to finance tax cuts are fiscally counterproductive▶ 2:27:34.

• Rep. Ralph Norman (R-SC)▶ 1:08:50: Cited Treasury findings of $334 million in improper payments and $2.2 million in unrendered genetic-testing billing to CMS▶ 1:09:09; asked Winfrey to describe consequences of hitting the debt "wall"▶ 1:10:00.

• Rep. Lloyd Doggett (D-TX)▶ 1:13:41: Called the debt the "number one threat" per Speaker Johnson, blamed tariffs for economic harm, and said Doge has identified zero fraud cases for prosecution▶ 1:17:21.

• Rep. Tom McClintock (R-CA)▶ 1:19:15: Warned that opposing TCJA extension amounts to the "largest tax increase in American history," costing a $75,000 family $1,500/year▶ 1:20:40; asked Winfrey about revenue vs. inflation-and-population growth figures▶ 1:23:01.

• Rep. Scott Peters (D-CA)▶ 1:25:11: Argued Republicans "wrote" the scheduled tax increases into the 2017 law themselves▶ 1:25:34; said "it is not the spending, it is the borrowing" driving the debt-to-GDP rise▶ 1:29:12.

• Rep. Chip Roy (R-TX)▶ 1:30:53: Walked Winfrey through a Q&A establishing debt would still hit $56 trillion in 10 years even under the House budget▶ 1:32:10, and that Medicaid gives states $9 for every $1 spent on able-bodied expansion adults versus $1.33 for the "vulnerable" population▶ 1:34:32.

• Rep. Jimmy Panetta (D-CA)▶ 1:36:24: Cited Yale Budget Lab estimates that the reconciliation bill could add $6.9 trillion to the debt and raise mortgage costs $600–$1,240/year▶ 1:37:32▶ 1:37:59.

• Rep. Lloyd Smucker (R-PA)▶ 1:41:39: Noted spending has averaged 21.1% of GDP over 30 years versus revenue's 17–18%, calling that the core imbalance▶ 1:44:30; sparred with Lindon over TCJA's distributional effect▶ 1:46:20.

• Rep. Bonnie Watson Coleman (D-NJ)▶ 1:48:31: Said Partnership for Public Service estimates DOGE actions will cost $135 billion this fiscal year rather than save money▶ 1:50:08, and that laying off 22,000 IRS employees could cost $8.5 billion in lost 2026 revenue▶ 1:51:16.

• Rep. Blake Moore (R-UT)▶ 1:55:49: Said Congress votes on only about 25–30% of the federal budget annually and promoted the "Comprehensive Congressional Budget Act" to force votes on mandatory programs▶ 1:56:35▶ 1:59:12.

• Rep. Becca Balint (D-VT)▶ 2:01:43: Cited a 37% approval rating for Trump's economic policy per Ipsos/Reuters and said the S&P 500 lost $6.5 trillion in value since February▶ 2:02:11▶ 2:03:01.

• Rep. Mark Alford / Chairman himself continued▶ 2:07:05: Argued a family in Kansas would face a $2,200 tax increase without a TCJA extension▶ 2:08:23.

• Rep. Emily Randall (Job Hall introduced as "Washington")▶ 2:12:51: Compared TCJA's average $60,300 benefit for the top 1% to $660 for the middle 20%▶ 2:14:11.

• Rep. Andy Ogles/Addison McDowell (R-NC)▶ 2:31:35: Cited $36.2 trillion debt and over $1 trillion in annual interest exceeding defense, veterans, and border security combined▶ 2:32:02; pressed Lindon with yes/no questions on tax policy▶ 2:34:42.

• Rep. Josh Brecheen (R-OK)▶ 2:43:21: Quoted Thomas Jefferson on public debt and asked Winfrey to explain the Greek debt crisis parallel▶ 2:47:33.

• Rep. Gabe Amo (D-RI)▶ 2:49:17: Argued the reconciliation plan adds $14 trillion to the debt while cutting Medicaid by $880 billion and SNAP by $230 billion▶ 2:50:11.

• Rep. Tim Moore (R-NC)▶ 2:55:03: Described North Carolina's Medicaid reform from fee-for-service to outcomes-based payment as a bipartisan model▶ 2:56:00; asked Schneider about investment impacts of continued debt growth▶ 2:58:45.

• Rep. Morgan McGarvey (D-KY)▶ 3:00:15: Said the reconciliation math combines $7 trillion in tax cuts with only $1.5 trillion in spending cuts, and described a constituent, 10-year-old June, who relies on Medicaid home care▶ 3:01:09▶ 3:03:35.

• Rep. Brandon Gill (R-TX)▶ 3:05:26: Asked Winfrey about repealing the Inflation Reduction Act, estimated at $700–800 billion in savings over 10 years▶ 3:06:50.

• Rep. Stacey Plaskett (D-VI)▶ 3:10:19: Cited $230 billion in proposed SNAP cuts and $330 billion in student aid cuts, and described constituents relying on food pantries▶ 3:11:57▶ 3:12:50.

• Rep. Erin Houchin/Rudy Yakym area member ("Mr. Tudsman")▶ 3:16:54: Recounted Winfrey's account of a 2018 Pentagon budget negotiation as an example of agency overspending pressure▶ 3:18:14.

• Rep. Ilhan Omar (D-MN)▶ 3:22:28: Questioned Lindon and Winfrey on the proposed $1 trillion defense budget alongside a 23% cut to non-defense discretionary spending▶ 2:22:58▶ 3:23:43; noted the highest-paid health-insurance CEO's revenue comes almost entirely from Medicaid managed care▶ 3:26:00; closed by disputing Trump's trade claims about Canada▶ 3:53:17.

• Rep. Chuck Edwards (R-NC)▶ 3:30:25: Pressed Rauh on how rising interest rates could push mortgage rates to "10 to 15%," similar to the 1970s–80s, if debt trends continue▶ 3:35:27.

Key moments

• Rauh: interest payments could consume 96 cents of every non–Social Security revenue dollar by 2055 if rates rise gradually and spending isn't cut▶ 0:35:14.

• Winfrey: net interest is projected to nearly triple from $952 billion this September to $2.9 trillion annually by 2045▶ 0:40:23.

• Boyle submitted a same-day CBO letter finding Medicaid per-capita caps could cause 1.5 million more uninsured and blocking provider taxes could cause 3.9 million more uninsured▶ 1:02:15▶ 1:02:45.

• Schneider: the $1.5 trillion in reconciliation spending cuts amount to just 0.4% of GDP against a 6.4%-of-GDP deficit▶ 1:47:48.

• Chip Roy–Winfrey exchange established Medicaid gives states $9 per $1 spent on able-bodied expansion adults versus $1.33 per $1 for the traditionally "vulnerable" population▶ 1:34:32▶ 1:34:59.

• Lindon: if the 2001–2017 tax cuts had never been enacted, debt-to-GDP would be declining today despite baby-boomer retirement costs▶ 0:50:29▶ 2:51:59.

• Watson Coleman cited a Partnership for Public Service estimate that DOGE actions will cost $135 billion rather than save the claimed $165 billion this fiscal year▶ 1:50:08.

• Winfrey recounted a 2018 anecdote in which the Pentagon initially said it needed $610 billion, but after defense-industry lobbying pushed for $643 billion, illustrating outside pressure for higher spending▶ 3:18:39▶ 3:19:54.

• Arrington and Omar found rare agreement that the Pentagon, which has never passed an audit, should face scrutiny before further budget increases▶ 3:28:12▶ 3:29:27.

• Rauh testified that a 1-point rise in the effective interest rate on federal debt could push mortgage rates to 10–15%, last seen in the 1970s–80s▶ 3:35:27.

Metadata

CommitteeHouse Budget
Chamber / CongressHouse · 119th Congress
DateMay 7, 2025
TypeHearing
Witnesses
Mr. Michael Linden — Senior Policy Fellow, Washington Center for Equitable Growth
Dr. Joshua Rauh — Senior Fellow, Hoover Institution, Stanford University
Dr. Paul Winfree — President and CEO, Economic Policy Innovation Center
Mr. Don Schneider — Deputy Head of U.S. Policy, Piper Sandler
Videoyoutube
Transcript499 caption blocks · 36,127 words · 3:55:07 runtime
EventCongress.gov 118199