{"id":405068,"date":"2010-03-08T11:11:28","date_gmt":"2010-03-08T16:11:28","guid":{"rendered":"http:\/\/blogs.wsj.com\/economics\/2010\/03\/08\/cbos-elmendorf-us-fiscal-policy-on-unsustainable-path\/"},"modified":"2010-03-08T11:11:28","modified_gmt":"2010-03-08T16:11:28","slug":"cbo%e2%80%99s-elmendorf-u-s-fiscal-policy-on-unsustainable-path","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/405068","title":{"rendered":"CBO\u2019s Elmendorf: U.S. Fiscal Policy on Unsustainable Path"},"content":{"rendered":"

The U.S. federal budget deficit is on a trajectory that poses \u0093significant economic risks\u0094 and will become unsustainable, Douglas Elmendorf<\/strong>, director of the Congressional Budget Office<\/strong>, said on Monday.<\/p>\n\n\n\n\n
\"\"<\/td>\n<\/tr>\n
CBO Director Douglas Elmendorf (Getty Images)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In a presentation delivered before the National Association for Business Economics<\/strong>, Mr. Elmendorf noted that the choices needed to address the medium and long-term budget deficit will be \u0093larger and more fundamental\u0094 than in the past.<\/p>\n

\u0093U.S. fiscal policy is on an unsustainable path that can\u0092t be resolved through minor tinkering,\u0094 he said. \u0093The problem posed by the federal budget deficit not at its current level but on this trajectory\u0085 poses a growing risk to the recovery.\u0094<\/p>\n

Mr. Elmendorf said that if current tax policy is extended — including the tax cuts enacted by President George W. Bush in 2001 and 2003 which look increasingly likely to be extended beyond their 2010 expiration — the deficit will swell from the $6 trillion baseline forecast by 2020 to just shy of $10 trillion.<\/p>\n

In addition, the debt held by the public with current tax policies extended would soar to 90% of GDP by 2020, Mr. Elmendorf said, making the U.S. public debt load one of the world\u0092s highest.<\/p>\n

\u0093The U.S. is entering unfamiliar territory in its level of public debt,\u0094 said Mr. Elmendorf. \u0093It will be larger over the next decade than it\u0092s been in half a century\u0085 and also unfamiliar by the standards of other developed countries.\u0094 The choice is not whether to change course from current policy, he noted, but \u0093how quickly and in what way.\u0094 President Barack Obama has already declared a spending freeze on discretionary, nonessential outlays, but that only amounts to roughly 17% of total spending. Much of the rest of federal spending is for entitlement programs including Social Security, Medicare and Medicaid, defense spending and interest payments on the federal debt.<\/p>\n

The size of U.S. entitlement programs has grown sharply since 1970, from 3.8% of GDP to 8.2% as of 2007, and is expected to hit 11.1% of GDP by 2020 thanks to an aging population of Baby Boomers and fewer workers in the system to help pay for their benefits.<\/p>\n

Mr. Elmendorf said one reason entitlements have grown over the last few decades without being accompanied by an obvious increase in taxes or reduction in government spending is because defense spending, which few Americans directly observe, has fallen by half during the same period of time, to 4% of GDP in 2007.<\/p>\n

That same pattern can’t be repeated in coming years, Mr. Elmendorf said. \u0093We\u0092ll have to pay for future growth in Social Security, Medicare and Medicaid through a visible increase in the tax burden, a visible reduction in other programs or a visible reduction in these [entitlement] programs themselves,\u0094 he said.<\/p>\n

<\/img><\/a>
\n<\/img><\/a><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The U.S. federal budget deficit is on a trajectory that poses \u0093significant economic risks\u0094 and will become unsustainable, Douglas Elmendorf, director of the Congressional Budget Office, said on Monday. CBO Director Douglas Elmendorf (Getty Images) In a presentation delivered before the National Association for Business Economics, Mr. Elmendorf noted that the choices needed to address […]<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-405068","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/405068","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/850"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=405068"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/405068\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=405068"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=405068"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=405068"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}