Dear Director Lew:
Last week, the president delivered an address to a Joint Session of Congress announcing a second economic stimulus package. News reports have stated the total cost of the proposal nears $450 billion. The president assured us that every penny of it would be paid for.
Following the president’s address, White House Press Secretary Jay Carney declared that “the president will submit a bill early next week, the American Jobs Act, which will specify how he proposes paying for the American Jobs Act.” Meanwhile, the president urged on Monday: “No delays. I’m sending this bill to Congress today, and they ought to pass it immediately.”
When we received a copy of the legislation yesterday, we were expecting the Office of Management and Budget—which enjoys a five hundred person staff—to provide a precise and detailed estimate of the fiscal impact of the president’s proposal. But no such information was provided.
This is not satisfactory.
Perhaps even more troubling, however, is that despite the emphatic promise that we would learn yesterday how the bill would be offset, this information is missing too.
Given the depth of the economic crisis we now face—slow growth, high debt and chronic unemployment—the lack of fiscal detail that has been provided to Congress is both disappointing and irresponsible.
The president is asking America to borrow half a trillion dollars for a second stimulus package—one that exchanges a short term infusion of federal cash in exchange for a potentially permanent increase in taxes and debt.
OMB must provide to the Congress and the American people, at a minimum, the basic information that demonstrates in detail, as promised, how this bill will be funded. This information should be provided without delay. Specifically:
–A table showing the expected budgetary impact, by specific policy, of the legislation on an annual basis for fiscal years 2011 through 2021 (the period covered by the president’s most recent budget submission).
– A schedule showing the added interest that the federal government would have to pay on an annual basis and the resulting change in the federal debt (because it is unlikely that the specific offsets contained in the legislation would equal the effect on the budget of the specific proposals intended to encourage economic growth).
–A table illustrating projected changes to the deficit for each of the next ten fiscal years as a result of this legislation. (The bill would presumably create a sudden increase in near-term borrowing, but the offsets are stretched out over a decade. The debt limit agreement saves $7 billion in budget authority for next year’s annual appropriations; this bill, regardless of the offsets, would wipe those savings out.)
We may have raised our legal debt limit but we have breached our economic debt limit. America’s $14.5 trillion gross debt is now 100 percent of GDP. A prominent study from economists Rogoff and Reinhart—praised by Treasury Secretary Geithner as “excellent”—shows that when a nation’s gross debt reaches 90 percent of GDP they lose, on average, a percentage point or more in GDP growth each year. Our debt is depressing growth to unexpected levels and destroying jobs today.
When the president submitted his budget in February you declared: “our budget will get us, over the next several years, to the point where we can look the American people in the eye and say we’re not adding to the debt anymore.” In reality, the budget would have increased our debt by $13 trillion. Rhetoric alone will be insufficient during this time of crisis. We need numbers. And they should be provided at once.
Very truly yours,