Recap: Maya MacGuineas Testifies Before Senate Finance Subcommittee
On March 11, the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth held a hearing titled “The Fiscal Outlook: 2027-2036.” The hearing took place less than a month after the Congressional Budget Office (CBO) released its latest Budget and Economic Outlook report. Committee for a Responsible Federal Budget president Maya MacGuineas testified before the subcommittee. Her written testimony can be found here, and a video of the hearing is below.
Subcommittee Chairman Ron Johnson (R-WI) began the hearing by citing our nation’s growing debt, noting that both parties have failed to address the issue, and used a series of charts to illustrate our unsustainable fiscal trajectory. He also highlighted the 3% deficit-to-Gross Domestic Product (GDP) fiscal target, which has received broad, bipartisan support. Chairman Johnson ended his remarks by expressing his belief that the best way to address our debt would be to return to pre-pandemic levels of spending and simplify the tax code.
Subcommittee Ranking Member Tina Smith (D-MN) used her remarks to acknowledge the significant fiscal challenges we face and how our national debt raises costs for everyday Americans. She expressed concern about growing deficits in a time of high interest rates, stressed that our deficits have been worsened by tax cuts over the years, and discussed the need for lawmakers to come together to address our debt.
In addition to MacGuineas, the hearing also included CBO Director Phillip Swagel and Executive Director and Co-Founder of The Budget Lab at Yale, Martha Gimbel. Both witnesses discussed the need for Congress to address our growing debt and deficits. Several senators joined the hearing to speak with the witnesses, including Senators Bill Cassidy (R-LA), Peter Welch (D-VT), Elizabeth Warren (D-MA), Ron Wyden (D-OR), and Sheldon Whitehouse (D-RI).
The hearing featured notable moments of bipartisan agreement between lawmakers. For example, Chairman Johnson and Senator Smith both highlighted the various fiscal challenges we face and noted their desire to set out the facts of our fiscal health. Similarly, Chairman Johnson agreed with some of Senator Wyden’s comments that indexing of capital gains to inflation shouldn’t be done through executive authority and expressed his desire to work with Senator Wyden on tax issues.
MacGuineas’s remarks touched on four main areas:
1. Our Nation's Fiscal Trajectory: MacGuineas summarized the nation’s dire fiscal situation, pointing out that debt held by the public is currently roughly 100% of GDP. She went on to say that rising national debt is projected to reach 120% of GDP by 2036 and 175% after 30 years, potentially leading to a fiscal crisis.
2. The Drivers of the National Debt: MacGuineas explained that the federal government's substantial borrowing stems from a persistent gap between spending and revenue caused by tax cuts and spending increases that lack proper offsets, as well as rising interest costs. Revenues will continue to fall far short of outlays over the next decade and beyond.
3. Risks of Further Fiscal Deterioration: MacGuineas explained that CBO’s projections may ultimately underestimate the actual growth of the national debt. Under an alternative scenario in which tariff revenues struck down by the Supreme Court are not replaced, expiring tax cuts are permanently extended, and increased Affordable Care Act subsidies are reinstated permanently, the Committee for a Responsible Federal Budget estimates that debt could reach 131% of GDP by 2036, with deficits surpassing 8% of GDP.
4. The Path Forward: MacGuineas concluded her testimony by stressing that lawmakers should take immediate action to reduce deficits and stabilize the national debt. She described how lawmakers can move forward, including by agreeing to the principle of “No New Borrowing,” adopting a 3% of GDP deficit target, implementing Super PAYGO, addressing trust fund insolvency, and establishing a Break Glass Plan to prepare for an economic emergency.
In addition to MacGuineas, Chairman Johnson, Senator Smith, and other lawmakers who joined the hearing also expressed their concerns with the nation’s fiscal health. Senator Welch asked MacGuineas about our country’s ability to respond to unforeseen crises. She highlighted how the U.S. no longer has the fiscal flexibility to manage unexpected national security challenges or economic disruptions. Additionally, Senator Whitehouse asked whether CBO projects that the One Big Beautiful Bill Act will advance the insolvency date of the Medicare Hospital Insurance trust fund, which Director Swagel confirmed is true.
We appreciate Chairman Johnson and Ranking Member Smith for convening this hearing and look forward to working with lawmakers to improve our fiscal outlook.
