House Report 114-291 - DEBT MANAGEMENT AND FISCAL RESPONSIBILITY ACT OF 2015

[House Report 114-291]
[From the U.S. Government Publishing Office]

114th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 114-291

======================================================================

DEBT MANAGEMENT AND FISCAL RESPONSIBILITY ACT OF 2015

_______

October 7, 2015.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

_______

Mr. Ryan of Wisconsin, from the Committee on Ways and Means, submitted
the following

R E P O R T

together with

DISSENTING VIEWS

[To accompany H.R. 3442]

[Including cost estimate of the Congressional Budget Office]

The Committee on Ways and Means, to whom was referred the
bill (H.R. 3442) to provide further means of accountability of
the United States debt and promote fiscal responsibility,
having considered the same, report favorably thereon without
amendment and recommend that the bill do pass.

CONTENTS

Page
I. SUMMARY AND BACKGROUND...........................................2
A. Purpose and Summary................................. 2
B. Background and Need for Legislation................. 2
C. Legislative History................................. 3
II. EXPLANATION OF THE BILL..........................................4
A. DEBT MANAGEMENT AND FISCAL RESPONSIBILITY ACT OF
2015............................................... 4
III. VOTES OF THE COMMITTEE...........................................5
IV. BUDGET EFFECTS OF THE BILL.......................................5
A. Committee Estimate of Budgetary Effects............. 5
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 5
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 6
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......6
A. Committee Oversight Findings and Recommendations.... 6
B. Statement of General Performance Goals and
Objectives......................................... 7
C. Information Relating to Unfunded Mandates........... 7
D. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 7
E. Duplication of Federal Programs..................... 7
F. Disclosure of Directed Rule Makings................. 7
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............7
A. Text of Existing Law Amended or Repealed by the
Bill, as Reported.................................. 7
B. Changes in Existing Law Proposed by the Bill, as
Reported........................................... 8
VII. DISSENTING VIEWS................................................10

I. SUMMARY AND BACKGROUND

A. Purpose and Summary

The ``Debt Management and Fiscal Responsibility Act of
2015, H.R. 3442, as ordered reported by the Committee on Ways
and Means on September 10, 2015, requires the Secretary of the
Treasury (Treasury) to provide information on the debt, the
fiscal outlook, and the Administration's plans to address debt
and fiscal problems. More specifically, the bill requires the
Secretary to appear before the House Ways and Means Committee
and the Senate Finance Committee not more than 60 days and not
less than 21 days prior to any date on which the Treasury
Secretary anticipates that the nation will reach the debt
limit. Total debt subject to the limit, which includes Treasury
securities held by Federal trust funds and other accounts,
currently stands at $18.1 trillion. The legislation would
require the Treasury Secretary to present a Debt Report to
Congress regarding the state of the public debt, including its
composition and trajectory. The legislation would also require
the Treasury Secretary to present a Statement of Intent which
would contain a detailed explanation of proposals of the
President to reduce the public debt. Lastly, when applicable,
the Treasury Secretary would also present a progress report on
the implementation of the Statement of Intent.

B. Background and Need for Legislation

According to the Congressional Budget Office (CBO), ``the
long-term outlook for the federal budget has worsened
dramatically over the past several years, in the wake of the
2007-2009 recession and slow recovery.''\1\ When studying the
impact of debt on the economy, economists tend to look at a
subset of the total debt known as debt held by the public. Debt
held by the public is comprised almost entirely of marketable
debt and currently amounts to $13.1 trillion.
---------------------------------------------------------------------------
\1\Congressional Budget Office, ``The Long-Term Budget Outlook,''
June 16th 2015.
---------------------------------------------------------------------------
In 2008, debt held by the public stood at 39 percent of
GDP, close to its historical average, but has since risen to 74
percent and is on pace to rise to 107 percent in 2040. CBO also
states that if the trajectory of key variables changed (such as
interest rates, mortality rates, federal spending on health
care, and productivity growth), the debt to GDP ratio could
rise to 141 percent in 2040.\2\ CBO deems these trends to be
``unsustainable''.
---------------------------------------------------------------------------
\2\Congressional Budget Office, ``The Long-Term Budget Outlook,''
June 16th 2015.
---------------------------------------------------------------------------
The projected rise in the debt is driven by the rapid
growth in entitlement spending and the net interest payments to
service the growing debt. CBO summarizes the impact of
entitlements and interest payments on the fiscal outlook in its
latest long-term outlook by stating:

``Through-out the next decade, however, an aging
population, rising health care costs per person, and an
increasing number of recipients of exchange subsidies
and Medicaid benefits attributable to the Affordable
Care Act would push up spending for some of the largest
entitlement programs if current laws governing those
programs remained unchanged. Moreover, CBO expects
interest rates to rebound in coming years from their
current unusually low levels, raising the government's
interest payments on debt.''\3\

\3\Congressional Budget Office, ``The Long-Term Budget Outlook,''
June 16th 2015.

Given this outlook of historically high and rising debt, it
is critical that Congress and the Administration to publicly
discuss the drivers of our debt, its composition, trajectory,
and how the United States will meet its debt obligations in the
future. All of these factors should help to facilitate policies
which improve the outlook for our nation's fiscal health. While
House Republicans have managed to pass balanced budgets several
years in a row, the Administration continues to propose budgets
that never balance. This stark difference in priorities calls
for a new communications framework surrounding the debt limit,
one in which the Treasury Secretary presents to Congress the
President's proposals to reduce the debt as well as the effects
of unchecked borrowing.

C. Legislative History

Background

The ``Debt Management and Fiscal Responsibility Act of
2015, H.R. 3442, was introduced on September 8, 2015, and was
referred to the Committee on Ways and Means.

Committee hearings

The debt limit has been discussed on February 3, 2015 at a
``Hearing on the President's Fiscal Year 2016 Budget,'' which
featured Secretary Jack Lew. In addition, the committee held
two hearings during the 113th Congress dedicated to the issue.
The committee held a January 22, 2013 ``Hearing on the Debt
Limit,'' which examined the Congress's borrowing power and
operation of the debt limit. Additionally, the Oversight
Subcommittee held an April 10, 2013 hearing, ``Examining the
Government's Ability to Continue Operations When at the
Statutory Debt Limit,'' which examined the government's ability
to prioritize its obligations and continue operations should
the U.S. Treasury reach its statutory debt limit and exhaust
extraordinary measures.

Committee action

The Committee on Ways and Means marked up H.R. 3442, the
Debt Management and Fiscal Responsibility Act, on September 10,
2015, and ordered the bill favorably reported (with a quorum
being present).

II. EXPLANATION OF THE BILL

A. Debt Management and Fiscal Responsibility Act of 2015

PRESENT LAW

Several data sources and reports issued by Treasury, the
Office of Management and Budget (OMB), CBO, and the Government
Accountability Office (GAO), among others, contain information
about the composition of the nation's debt and its
unsustainable trajectory. However, there is no established
framework that links such information, explicitly as it
pertains to the debt limit, with a dedicated communication to
Congress concerning the administration's plans to improve our
fiscal outlook and to provide progress reports of actions
taken.

REASONS FOR CHANGE

The practice of raising the statutory debt limit without
consideration of that which is driving the nation's debt and
plans to reduce it is untenable. H.R. 3442 aims to establish a
new debt limit communication framework that enhances
accountability, reduces disruptive risk, and returns the focus
to finding debt reduction solutions. The legislation requires
the administration to appear before Congress prior to each
potential debt limit increase and provide testimony and
detailed reports on: the national debt and its key drivers;
explicit short-, medium-, and long-term debt reduction
proposals; and progress on debt reduction. This framework will
increase transparency and reduce the uncertainty which often
surrounds debt limit impasses.

EXPLANATION OF PROVISIONS

Section 1 contains the short title of the bill. Subsection
2(a) requires that the Secretary of the Treasury appear before
the House Ways and Means Committee and the Senate Finance
Committee not more than 60 days and not less than 21 days prior
to any date on which the Treasury Secretary anticipates that
the nation will reach the debt limit. Subsection 2(b) specifies
the information the Treasury Secretary must present, which
includes the following:
--a Debt Report to Congress on the state of the national
debt, including its composition and trajectory, as well as the
Administration's plans to meet debt obligations in the event
that Congress agrees to raise the debt limit.
--a Statement of Intent on how the Administration proposes
to reduce the debt and the debt to GDP ratio. Additionally, the
statement would address the impacts of the increased limit on
factors such as our reserve currency status and the
sustainability of entitlements.
--a Progress Report on the implementation of the Statement
of Intent proposals by the Administration to reduce U.S. debt
levels at subsequent appearances.

Subsection 2(c), states that when applicable, the Treasury
Secretary shall present a progress report on the implementation
of the Statement of Intent.

EFFECTIVE DATE

The provision becomes effective upon enactment.

III. VOTES OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of H.R. 3442, the Debt Management and Fiscal
Responsibility Act of 2015, on September 10, 2015.
The bill, H.R. 3442 was ordered favorably reported by a
roll call vote of 22 yeas to 14 nays (with a quorum being
present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Ryan......................... X ....... ......... Mr. Levin.......... ....... X .........
Mr. Johnson...................... X ....... ......... Mr. Rangel......... ....... X .........
Mr. Brady........................ X ....... ......... Mr. McDermott...... ....... X .........
Mr. Nunes........................ ....... ....... ......... Mr. Lewis.......... ....... X .........
Mr. Tiberi....................... X ....... ......... Mr. Neal........... ....... X .........
Mr. Reichert..................... X ....... ......... Mr. Becerra........ ....... ....... .........
Mr. Boustany..................... X ....... ......... Mr. Doggett........ ....... X .........
Mr. Roskam....................... X ....... ......... Mr. Thompson....... ....... X .........
Mr. Price........................ X ....... ......... Mr. Larson......... ....... X .........
Mr. Buchanan..................... X ....... ......... Mr. Blumenauer..... ....... X .........
Mr. Smith (NE)................... X ....... ......... Mr. Kind........... ....... X .........
Ms. Jenkins...................... X ....... ......... Mr. Pascrell....... ....... X .........
Mr. Paulsen...................... X ....... ......... Mr. Crowley........ ....... X .........
Mr. Marchant..................... X ....... ......... Mr. Davis.......... ....... X .........
Ms. Black........................ X ....... ......... Ms. Sanchez........ ....... X .........
Mr. Reed......................... X ....... .........
Mr. Young........................ X ....... .........
Mr. Kelly........................ X ....... .........
Mr. Renacci...................... X ....... .........
Mr. Meehan....................... X ....... .........
Ms. Noem......................... X ....... .........
Mr. Holding...................... X ....... .........
Mr. Smith (MO)................... X ....... .........
Mr. Dold......................... ....... ....... .........
----------------------------------------------------------------------------------------------------------------

IV. BUDGET EFFECTS OF THE BILL

A. Committee Estimate of Budgetary Effects

In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 3442, as
reported. The Committee agrees with the estimate prepared by
the Congressional Budget Office (CBO), which is included below.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority

In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee states further that the bill involves no new or
increased tax expenditures.

C. Cost Estimate Prepared by the Congressional Budget Office

In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.

U.S. Congress,
Congressional Budget Office,
Washington, DC, September 18, 2015.
Hon. Paul Ryan,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3442, the Debt
Management and Fiscal Responsibility Act of 2015.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Keith Hall,
Director.
Enclosure.

H.R. 3442--Debt Management and Fiscal Responsibility Act of 2015

H.R. 3442 would require the Secretary of the Treasury to
appear before the House Committee on Ways and Means and the
Senate Committee on Finance not more than sixty days and not
less than twenty-one days before the Secretary anticipates that
borrowing by the Treasury will reach the legal debt limit.
Under the bill, the Secretary would present a report on the
status of the national debt, plans to reduce the debt, the
effect of increasing the debt limit, and progress made to
reduce the debt. Finally, the bill would require that report to
be available to the public on the website of the Department of
the Treasury.
CBO estimates that implementing H.R. 3442 would cost less
than $500,000 over the 2016-2020 period; such spending would be
subject to the availability appropriated funds. The department
already undertakes much of the work required for such a report.
Because enacting the bill would not affect direct spending or
revenues, pay-as-you go procedures do not apply.
H.R. 3442 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Matthew
Pickford. The estimate was approved by H. Samuel Papenfuss,
Deputy Assistant Director for Budget Analysis.

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

A. Committee Oversight Findings and Recommendations

With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was as a result of the
Committee's review of the provisions of H.R. 3442 that the
Committee concluded that it is appropriate to report the bill,
as amended, favorably to the House of Representatives with the
recommendation that the bill do pass.

B. Statement of General Performance Goals and Objectives

With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.

C. Information Relating to Unfunded Mandates

This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.

D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits

With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.

E. Duplication of Federal Programs

In compliance with Sec. 3(g)(2) of H. Res. 5 (114th
Congress), the Committee states that no provision of the bill
establishes or reauthorizes: (1) a program of the Federal
Government known to be duplicative of another Federal program;
(2) a program included in any report from the Government
Accountability Office to Congress pursuant to section 21 of
Public Law 111-139; or (3) a program related to a program
identified in the most recent Catalog of Federal Domestic
Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).

F. Disclosure of Directed Rule Makings

In compliance with Sec. 3(i) of H. Res. 5 (114th Congress),
the following statement is made concerning directed rule
makings: The Committee estimates that the bill requires no
directed rule makings within the meaning of such section.

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

A. Text of Existing Law Amended or Repealed by the Bill, as Reported

With respect to clause 3(e)(1)(A) of rule XIII of the Rules
of the House of Representatives, the bill, as reported,
includes no provisions proposing to repeal or amend an existing
statute or part thereof.

B. Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):

TITLE 31, UNITED STATES CODE

* * * * * * *
SUBTITLE III--FINANCIAL MANAGEMENT

* * * * * * *

CHAPTER 31--PUBLIC DEBT

SUBCHAPTER I--BORROWING AUTHORITY

Sec.
3101. Public debt limit.
* * * * * * *

SUBCHAPTER II--ADMINISTRATIVE

* * * * * * *
3131. Report before reaching debt limit.

* * * * * * *

SUBCHAPTER II--ADMINISTRATIVE

* * * * * * *

Sec. 3131. Report before reaching debt limit

(a) In General.--Not more than sixty days and not less than
twenty-one days prior to any date on which the Secretary of the
Treasury anticipates the public debt will reach the limit
specified under section 3101, as modified by section 3101A, the
Secretary shall appear before the Committee on Ways and Means
of the House of Representatives and the Committee on Finance of
the Senate, to submit the information described under
subsection (b).
(b) Information Required to Be Presented.--In an appearance
described under subsection (a), the Secretary shall submit the
following:
(1) Debt report.--A report on the state of the public
debt, including--
(A) the historical levels of the debt,
current amount and composition of the debt, and
future projections of the debt;
(B) the drivers and composition of future
debt; and
(C) how, if the debt limit is raised, the
United States will meet debt obligations,
including principal and interest.
(2) Statement of intent.--A detailed explanation of--
(A) proposals of the President to reduce the
public debt in the short term (the current and
following fiscal year), medium term
(approximately three to five fiscal years), and
long term (approximately ten fiscal years), and
proposals of the President to adjust the debt-
to-gross domestic product ratio;
(B) the impact an increased debt limit will
have on future Government spending, debt
service, and the position of the United States
dollar as the international reserve currency;
and
(C) projections of fiscal health and
sustainability of major direct-spending
entitlement programs (including Social
Security, Medicare, and Medicaid).
(3) Progress report.--
(A) In general.--A detailed report on the
progress of implementing all proposals of the
President described under subparagraph (A) of
paragraph (2).
(B) Exception.--The report described under
this paragraph shall only be submitted if a
Secretary has already appeared at least once
pursuant to this section during any term of
office for a particular President.
(c) Public Access to Information.--The Secretary of the
Treasury shall place on the homepage of the Department of the
Treasury a link to a webpage that shall serve as a repository
of information made available to the public for at least 6
months following the date of release of the relevant
information, including:
(1) The debt report submitted under subsection
(b)(1).
(2) The detailed explanation submitted under
subsection (b)(2).
(3) The progress report submitted under subsection
(b)(3).
(4) Such other information as the Secretary
reasonably believes is necessary or helpful to the
public in understanding the statutory debt limit,
Government debt, and the reports and explanations
described under paragraphs (1), (2), and (3).

* * * * * * *

VII. DISSENTING VIEWS

The Democratic Members of the Committee believe this bill's
new statutory requirements for the Treasury Department are
unnecessary and duplicate information Congress already
receives. The Secretary of the Treasury regularly corresponds
with our Committee about the debt limit, providing regular
updates about the status of our ability to meet our obligations
and the measures Treasury is taking, and appears before us
regularly. The President's proposals to reduce the deficit and
the debt, using a combination of spending cuts and revenue
increases, have been clearly outlined in the budget submission
each year, and Administration officials regularly make
themselves available to discuss them.
Further, if the Treasury Department were to generate a new
report on the debt limit for the Secretary to discuss with us,
it should focus on the most pressing issue--the catastrophic
consequences of a default on our obligations. Nowhere in H.R.
3442 does it even mention having Treasury provide Congress with
estimates of the number of Americans who will be harmed if
Congress fails to responsibly raise the debt limit.
If Congress fails to raise the debt limit, Treasury may not
be able to pay benefits to veterans who served our country
loyally and well. We may not be able to pay doctors and
hospitals who cared for Medicare patients. We may not be able
to pay salaries to our troops, even those currently in harm's
way. We may not be able to pay Pell Grants to students who need
them to go to college. We may not be able to pay grants
promised to researchers searching for cures to cancer and other
terrible diseases. All these expenditures have already been
authorized by Congress, but we know that if we don't act on the
debt limit, we can't pay them all. We need Treasury's guidance
to understand which Americans might pay the price first.
The report envisioned by this bill also excludes any
Treasury analysis of the catastrophic economic consequences of
default that many outside experts have warned about.
The information outlined above might be useful to Congress.
The report envisioned by the bill would simply be repetitive
and distracting from the real issue.
Sincerely,
Sander Levin.
Charles B. Rangel.
Jim McDermott.
John Lewis.
Richard E. Neal.
Xavier Becerra.
Lloyd Doggett.
Mike Thompson.
John B. Larson.
Earl Blumenauer.
Ron Kind.
Bill Pascrell, Jr.
Joseph Crowley.
Danny K. Davis.
Linda T. Sanchez.

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