You're watching...
Diana Furchtgott-Roth, Manhattan Institute senior fellow, on why the Obama Administration and the CBO have differing figures for the 2013 budget.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Guest says there's not a surprise starting now as Diana perched at -- senior fellow at the Manhattan institute.
Diana thanks much for joining us I mean when these -- -- came out.
It it's frustrating -- when you immediately see two sides look at the same period.
And say totally different things one is just Fuzzy -- for example the White House says.
The budget reduces the deficit by 3.2 trillion dollars over ten years the CDO which is supposed to be neutral says it adds three point nine trillion over the same time period so exact opposite results how I mean it's math.
Why are -- numbers different.
Well well it it is it is very very frustrating and the one thing we know is the government spending is continuing to increase.
But he is why they get different numbers so that something called the baseline in the baseline is what CDO -- the White House project is going to happen.
In the absence of any change in policy.
Now the Congressional Budget Office has to use the current -- a baseline which means that the bush tax cuts X.
In January done in January 20 -- teen.
On generate -- so all of a sudden more revenue stats coming in so the deficit kinda goes down bite sell.
So CBO has a baseline of four point seven trillion in deficits over ten years.
The White House uses a different baseline -- assume that congress we'll come back.
And extend all all some of these tax cuts so that looking at what's called a current policy baseline.
So that baseline deficit okay is eight point seven over ten years it's high -- so when they say seven taxes are gonna be cot he comes from a high at baseline.
And that's why they get more deficit reduction numbers but -- -- RS this is a bit too because of the two different.
Bass lines they have different revenue they have different economic models because of quotes.
If for the bush tax cuts expire I would gonna get a big drop in GDP growth.
So they have -- -- growth at the Congressional Budget Office whereas the White House has -- to grow -- -- -- -- who do you think it's -- -- the testaments.
Well I think both of them under estimate the effects of the deficit I think what gonna have a sizable deficit.
Probably more than either of them before costing right now.
Both of them -- -- testing for example but -- -- spending is cut by 500 billion.
And that money is going to the new health candle most of us know that the government is not gonna cut Medicare spending they're just going to add more.
So we need to take a serious look at entitlement reform.
Without reform of social security and and that it can't we're gonna have high the deficits and I think either of them a project.
See you think it's even worse than the CB OK's CBO chief Doug Alvin dark is a huge risk isn't -- coming out of putting this report out that really.
Flies right that is what the president and the White House has said.
He is being very very courageous.
He is appointed by congrats.
He's really taking a courageous step.
Especially in light of what he had to do with the Health Care Reform law school learning that.
As reducing the deficit whereas he knew that it was really gonna increase the deficit.
Because -- of what was put in the law.
Under the health reform act was not going to come to -- he stated that that he was still required to say that the health candle.
Would reduce the deficit even though he knew it wasn't gonna do that say yes he's being very courageous in calling it how it is.
There are specific things you know the people's air paring growth under the Obama plan an -- I don't know if the eight tell me if you think it's right around.
That issuing so many bonds you know in order to -- this kind of deficit is impairing private companies and private people's ability to borrow and also reason attacking tax.
You know brings in her takes money off the table that could be invest elsewhere do you think that's really cutting into growth or do you think that's propaganda.
No I think it really is going to cut into growth when the government takes in more.
And invested on its own -- that does cut into growth when the got when the government raises tax rates than what that does is.
Is it has disincentives to individuals investment.
And company's investment.
So these are going to have dramatic effects on -- growth we already have the highest corporate tax rate in the -- Capital is no -- And it will go web attacks is -- lowest again we need to take a serious look about taxes to discuss where it's rewarded the most Dana for Scott thanks so much for joining us we appreciate it.
Great to.
