Douglas Holtz-Eakin

When Douglas Holtz-Eakin was selected to head the nonpartisan Congressional Budget Office in 2003, some Democrats and independents were concerned. His previous job was serving as President Bush's chief economist.

At the time, The Washington Post said it was "a bit jittery" about the appointment.

But during his nearly three years heading the CBO, Holtz-Eakin has won a reputation for being fair and candid when discussing tough financial issues. In an e-mail, liberal columnist Mark Shields calls him "one of the most intellectually honest men in Washington."

Now Holtz-Eakin is leaving as Congress's top budget watchdog to head the Center for Geoeconomic Studies at the Council on Foreign Relations in Washington. When the move was announced, the Post editorialized, "We're sorry to see him go."

The outgoing CBO director met with reporters at a Monitor breakfast Thursday. In keeping with the CBO's nonpartisan role, he shied away from making his own policy prescriptions.

For example, earlier this week, Glenn Hubbard, the former chairman of President Bush's Council of Economic Advisers, told The Wall Street Journal, "The Medicare expansion without substantial reform of the system was unwise fiscal policy."

A reporter asked if Holtz-Eakin agreed with Hubbard, a longtime friend, regarding the Medicare prescription-drug program. Holtz-Eakin's response:

"The arithmetic is quite daunting at the moment. We simply cannot make the spending promises add up to the potential receipts, and indeed the spending promises threaten to outstrip even sensible increases in taxes in the United States.... The Medicare bill is expensive, it was expensive when it was passed.... The question is, is it worth it? And people will disagree on that. But it is hard for me, at least from a health policy perspective, to imagine a modern health program that doesn't include pharmaceuticals. They are an important part of therapy."

When pressed about not responding directly to Hubbard's remarks, Holtz-Eakin quipped, "It is bad to get fired in the last three weeks. It really looks bad."

Other questions and answers from the session follow:

On the level of federal taxation:

"It is always the second decision. The first one is how much are we going to spend. As I have said before, if you spend this much money, you can't borrow it all."

On the need to act on Social Security before all baby boomers hit age 55:

"I'm the problem [Holtz-Eakin is 47]...The reason I try to stress it and point my finger at myself is people are always asking, what is the triggering moment, when is it that you have to [fix] Social Security?.... I think the key is now... If you make the choice not to change benefits for those people over 55, every year you let another cohort of the baby boom get into that [group], you have taken a big chunk of the problem off the table. Because it is the baby boom retiring that drives the program north."

On whether congressional leaders really care about the budget deficit:

"I started in February 2003 and I got no sensation of concern over the budget... Nearly three years have gone by and you can't pretend anymore that this isn't a problem. And the leadership, regardless of party, regardless of which house of Congress, is cognizant of that. The mood is really different. That is hard to quantify but there is no question it is out there. That is point No. 1. Point No. 2, unlike eras in the past, we have not yet reached a consensus on how to address this."

On the alternative minimum tax, which was designed to catch wealthy individuals who paid no tax but which now is affecting the middle class:

"The alternative minimum tax, in my view, has always been an admission that the regular income tax is messed up. You have to go to this other thing instead of just fixing the regular income tax. What it has ended up is just a second tax system... You would like to put in place a single tax system which a PhD economist could understand. And the AMT is one of the hindrances in the path to doing that."

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