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Former CBO Director Douglas Holtz-Eakin on the government spending $8 billion less than the CBO originally estimated and the potential impact of the f...
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This is on the huge deficit and trying to get the budget under control and report from the Congressional Budget Office.
Shows Republicans made a deal last month to spend eight billion dollars more than they thought necessary in 2013.
The budget -- in July resulted in Democrats and Republicans coming together to avoid a government shutdown now after a ton of wrangling both sides agreed.
To spend one point 47.
Of one point 047 trillion in 2012 that was the continuing resolution.
It was based on CBO data but now the CBO says.
The numbers were off so what -- this -- the Republicans have agreed to spend more than they might have thought necessary.
That's the question how does that CBO make a mistake like this in the first place we're gonna ask.
Douglas Holtz Aiken former CBO budget director and president of American action forum sir thank you for joining us.
Explain -- -- how -- how do you make a mistake like that an eight billion bucks.
-- it's a projection.
Are we aren't done with 2122012.
Spending -- and Wu won't close the books on -- until September 30 so them they're making their best guess.
As to how will end up the fiscal year.
You'd be surprised and agency can shovel money out the door pretty quickly -- it's close the end of the year.
And missing by eight billion dollars and would be hardly surprising in my view.
I would hope to make that kind of mistake -- projections for my future salaries and employers let me ask you this that'll work on that yes it does this mean that that's eight billion dollars that the government saves in could be used to do something else to do they have to spend it.
Are they don't have to spend it it could sit in an account unused for years and years in which case ultimately.
-- sleep that money out not to make it available for spending.
I think the key here is to recognize that out when we are in situations like we are now where we don't actually have budgets that the senate has not passed the budget in three years.
You don't give agencies clear direction on what they should and should not do.
They're trying to guess all the time what -- -- -- be struck for six months three months whatever might be an -- very hard for both the agencies actually do what they should do.
Sometimes they do they shouldn't do and makes it very hard for some like -- -- -- -- forgot what will actually happen.
-- -- -- hints of Ben Bernanke pointing the finger congress to -- the fiscal cliff let let me ask you about that because the CBO put out a report not too long ago.
If we go off the fiscal cliff all kinds of disaster will happen could they be wrong.
I think they're dead right on this when the fiscal cliff is 440 billion dollars in higher taxes.
200 billion dollars in spending cuts a few raise taxes by 440 billion dollars I guarantee this economy will -- into recession and indeed.
I believe we're starting to see the effects of the fiscal -- already.
And they will magnify through the fall imagine Adam if -- dividend investor and you see -- marginal -- went from fifteen to 45%.
That's got a scare investors gonna hurt the market performance it's gonna have he backs on the business community.
And -- nearest you know gold growing and one half of 1% but -- -- -- goes wrong is is really danger.
Says so help me just figure all of this out because sometimes my eyes glaze over fiscal cliff vs the eight billion dollar miss projection from CBO either totally two separate issues we're discussing.
The NM the eight billion dollar issue is what's the starting point for spending by the congress in the next year.
On the fiscal -- is if congress and the and the administration don't do their job.
And avoid a massive tax hike and avoid a a punitive.
Across the board cut in defense spending what will happen in the economy there's no reason why the latter should happen.
Right now it is in the interest reverend just simply avoid that.
Right Douglas Holtz -- can thank you for joining us haven't.
