The March 11 Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth hearing on "The Fiscal Outlook: 2027–2036" included bipartisan agreement among members and witnesses that the nation's long-term fiscal situation need to be addressed, some trading of blame for what caused high levels of deficit and debt, and a persistent lack of consensus over how to overcome the situation.

The debate did veer into tax policy, as Full Committee Ranking Member Ron Wyden (D-OR) questioned the potential for the Trump administration to act by executive order to index capital gains for inflation. Subcommittee Chair Ron Johnson (R-WI) said he would be in favor of indexing gains for inflation but taxing gain at ordinary income rates. He also said he doesn't believe capital gains indexing could be done by executive action.

In an opening statement, Chairman Johnson called for a return to pre-pandemic spending levels, as he did in the run-up to the "One Big Beautiful Bill Act" (OBBBA). "When I entered Congress, our nation's total debt was $14.7 trillion and 96% of GDP. Soon it will hit and surpass $39 trillion and 124% of GDP. Within 10 years it will almost certainly exceed $60 trillion and 134% of GDP," he said at the hearing. "Although both sides claim to be concerned about our dire fiscal situation, neither side has demonstrated a genuine desire to seriously address it."

Subcommittee Ranking Member Tina Smith (D-MN) spoke about the shared sense of concern about the nation's fiscal situation. "CBO's latest 10-year Budget outlook paints a grim picture: our national debt is ballooning at an unsustainable rate. Regardless of your party or where you fall on political spectrum, we can all agree on this."

Witnesses:

• Phillip Swagel, Director, Congressional Budget Office, said, as has long been the case, that higher outlays are a result of greater spending on Social Security and Medicare as the older population grows.
• Maya MacGuineas, President, Committee for a Responsible Federal Budget, said lawmakers should commit to 'No New Borrowing' and work together to lower health care costs, citing bipartisan ideas like adopting site-neutral payments in Medicare, reducing Medicare Advantage overpayments, and limiting Medicaid financing schemes.
• Martha Gimbel, Executive Director and Co-Founder, The Budget Lab at Yale, said the only countries that currently have government gross debt to GDP higher than the United States are Japan, Singapore, Sudan, Bahrain, Greece, Italy, and the Maldives; and that CBO projections reflect current law (not current policy), meaning OBBBA provisions such as no tax on tips, no tax on overtime, and a larger senior deduction would increase deficits by $725 billion 2025–2034 if extended.

The hearing followed the CBO February 11 "Budget and Economic Outlook: 2026 to 2036," which said debt held by the public will rise from 101% of GDP in 2026 to 120% in 2036, surpassing its previous high of 106% of GDP in 1946. Senators John Curtis (R-UT) and Angus King (I-ME) have just introduced the Fiscal Commission Act, to create a bipartisan, bicameral fiscal commission tasked with finding legislative solutions to stabilize spending and decrease the national debt.

Testimony and member statements from the hearing are available here.

Additional information is available in the attached WCEY Alert.