'Breathing room' ahead on US budget deficit, says CBO Chief
The federal budget deficit will shrink for the next several years, giving US 'some breathing room,' says CBO Director Douglas Elmendorf. A chief obstacle to deficit reduction? The public actually likes the benefits it gets, he says.
The budget deficit today:
"Deficits are falling rapidly and that does give us some breathing room.... It would be a mistake to take that as a sort of 'all clear' signal."
Why timing is key on budget cuts:
"The negative short-term effects of raising taxes or cutting spending ... are particularly acute [now], where the Federal Reserve has pushed interest rates down to zero, because now the [Fed] can't really adjust to offset [congressional action]."
Obstacles to deficit reduction:
"I am not sure that members of the public understand the nature of the challenge. There are many people ... who don't like federal spending in the abstract ... but who actually put great value on the benefits they receive."
Whether the nation's budget problems can be solved:
"I am not a pessimist. These problems are solvable. The choices are hard, but we are a country with tremendous resources...."
The effect of a potential budget-related government shutdown:
"The possibility of a shutdown is a factor making the government less efficient."
"Defunding the administration of the act but leaving in place the features of permanent law that expand Medicaid eligibility ... you have essentially a conflict in the instructions to federal administrators."