The nation’s fiscal path is “unsustainable,” and the problem “cannot be solved through minor tinkering,” the head of the Congressional Budget Office said Thursday morning.
Doug Elmendorf, best known for arbitrating the costs of various health care proposals, added his voice to a growing chorus of economic experts who predict dire consequences if political leaders don’t scale back spending, increase taxes or both — and soon.
Elmendorf noted a recent CBO report that pegged an increase in the public debt from $7.5 trillion at the end of 2009 to $20.3 trillion at the end of 2020 if President Barack Obama’s fiscal 2011 budget were to be implemented as written. As a percentage of gross domestic product, the debt would rise from 53 percent to 90 percent, CBO forecasted. The last time the percentage was that high was right after World War II.
Elmendorf’s remarks to reporters at a breakfast sponsored by the Christian Science Monitor echo the recent sentiments of a pair of Federal Reserve chiefs — the current head, Ben Bernanke, and former Chairman Paul Volcker.
Volcker said earlier this week that the U.S. should consider adopting a value-added tax, an idea he described as being less toxic than it has been in the past.
“If at the end of the day we need to raise taxes, we should raise taxes,” Volcker said.
On Wednesday, Bernanke said in a speech in Dallas that the government must cut entitlements or raise taxes.
“These choices are difficult, and it always seems easier to put them off — until the day they cannot be put off anymore,” Bernanke said.
There’s little apparent political appetite to do either.
While the president created a fiscal reform commission earlier this year, his budget calls for an extension of most of President George W. Bush’s 2001 and 2003 tax cuts and no major restructuring of the popular entitlement programs that constitute the lion’s share of the federal budget.
Elmendorf also defended his agency’s role in the health care debate, saying the back and forth between CBO and members of Congress over scoring different policy proposals is typical fare.
“I don’t think we were gamed,” Elmendorf said, describing the process on the health care law as “very similar” to that of other major pieces of legislation.
Friday, April 9, 2010
We're headed for big, big problems financially.
In a story from Politico, the head of the Congressional Budget Office says our current financial course is "unsustainable." In other words, we're headed for disaster if we continue on our current course. It seems as those we're on a financial Titanic. Only difference is we know what we're heading towards trouble but still aren't making any course corrections.