At the second meeting of the budget conference committee Wednesday, Senator Coons questioned Congressional Budget Office Director Douglas Elmendorf about the impact of Congress’ current spending decisions on the nation’s economic competitiveness and the long-term unemployed.
“You've testified before that not all cuts are the same, and that there are some ways in which we are cutting that are hurting our long-term competitiveness,” Senator Coons said. “That short-term cuts in things like education, or infrastructure, or research and development produce longer-term reductions in our capacity, and that we should be prioritizing things that will accelerate growth – that we should not be simply trying to get through this difficult fiscal time in a way that focuses on austerity; that we should also be investing in a way that sustains growth.”
When asked about policies that could accelerate growth and help the long-term unemployed, Director Elmendorf said, “Of all non-defense discretionary spending, half represents investment of some sort. About 20 percent of non-defense discretionary spending is investment in physical capital, such as highways, another 15 percent goes for education and training, and about 10 percent goes for R&D, such as health research. Over all, we think those investments help to build a stronger economy in the future and cutbacks in those investments would reduce output and income in the future.”
The problem of long-term unemployment, Elmendorf noted, also “has important economic effects over time… It poses a very large risk of there being some set of people who will not find their way back to work at all or will not find their way to the productive sort of work that they were in before they lost their jobs.”
Elmendorf said the CBO has “reviewed the evidence on a large number of different ways of trying to help people get back into the labor force,” a number of which “have been successful on a small scale and have not been tried on a large scale.” Elmendorf pledged to work with Senator Coons on developing policies that help the long-term unemployed get back to work.
Watch the entire exchange: