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Former CBO Director Douglas Holtz-Eakin on how the government’s debt impacts the economy?
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Rapidly ballooning debt and what's being done about it -- not being done about it.
Our national debt is more than sixteen trillion dollars right now in everywhere and in their mother knows that it is having serious consequences for our economy.
We got to fix this problem.
Doug Holtz Aiken is former director of the congressional budget.
He testified today before the joint economic committee and the dire need to reduce the debt.
And balance the budget great to have you back from the show dad.
Thank you anything's gonna come from this hearing today.
-- one can only hope that wake up call will be listened to.
You know that the -- -- -- -- legislation.
Were were in the beginning of the debate over budgets in the house and the senate.
Com and my biggest hope is that the White House will actually.
Get serious about this the president will take on some leadership and put out a budget.
This shows coming to balance like the house has -- isn't just -- political slogan like we see in the senate.
You know I can only hope that some people are persuaded by your math because you guys really got out there today and you did a quantitative analysis of why this is such a big problem and I don't think you can convince the president.
But maybe you can convince you know some of our congressmen and women around the edges one of the things that you put out -- that's really compelling is that when.
The ratio of debt to GDP exceeds 90%.
That you -- a full percentage point off GDP right.
-- -- -- This is this is the great burden of -- that it's not a hypothetical.
It's not something that.
We worry about what our children our children's children it's here -- now.
Countries with debt that's larger than 90% of their economy in our case it's -- and a 100% of our economy.
Pay growth penalty bankrupt penalty is about a percentage point a year.
And in this economy that means you know a million jobs here it means income for the average family -- giving up.
The raise they might otherwise happen so -- we need to address that there's no -- don't.
And what can -- about how does that really happened because when you listen to people on the other side of the debate right now they say.
The by virtue of the government spending this money that they are replacing demand that doesn't exist.
-- -- fueling the economy they're growing the economy they're creating jobs you're saying mathematically the opposite so where do you get that front.
It's it's just common sense so -- you we have a lot of debt and more of and it's in this growing rapidly and so you ask somebody is about.
Located business the United States or expand the business higher worker and you -- -- them okay what we're not gonna change your spending plans.
What do you see in the future won't.
They're really -- futures future number one is one where we do nothing we went straight into financial crisis like 2008 which drags down the economy.
And that's not a growth strategy.
Future number two is you don't change the spending which means you have to raise taxes to avoid a big debt crisis.
Well then you've got to raise the top partial tax -- to 92%.
In order to close the gap and there's no way that you're going to get a business to invest -- -- 90% tax rate so so it.
And high sensitivity -- tracks.
It well look.
Melissa open a business in a world with high taxes or disaster which would you -- no act.
-- US really.
What what some of the things that you heard from other people on the panel that -- persuasive and and when you looked out in the audience to be more people listening where they writing things down or was it.
An empty chamber where you had no one's really paying attention.
-- -- Here's the good news on the the panel consisted of Republicans Democrats.
Academics and former senator Judd Gregg again.
There isn't one person on the panel who did not say we have a problem and that problem is urgent it should be dealt with now.
We might disagree on the degree to which spending -- the top issue in taxes to deal with it.
But no one is they're saying hey.
Do nothing.
And and that's what makes the most nervous about the president's claim that our debts aren't a problem that we can just stabilize the deficit as a fraction of GDP and all of that is condemning us to a future of a persistent high -- why is that I don't share growth and that's exactly what -- says is all we need to do stabilize our debt we don't need to reduce it why do you believe that's not crack.
Because the debt is extremely high now as you point out stabilizing at a very high levels says that we are we're content with the growth penalty were content to grow slowly.
And -- intensely on the edge of a crisis it's like saying.
You know I'm not worried about driving off that cliff I'll drive along the edge of it with two wheels on two wheels off and will be fine.
I think it's too risky and we ought to be serious about faster growth in serious about the legacy -- next generation.
OK so of what are we have to do to really reduce the debt burden down the -- we do it through cutting spending do we have to reform entitlements mean do we have to raise taxes and -- at this time.
The number one thing to do is to fix the entitlement spending programs to ask ourselves the question.
How do we -- Medicare to look for the next Generation -- it's not gonna survive the way it is right now it's -- -- 300 billion dollars -- writing every year it's getting bigger.
With 101000 seniors every -- so how we fix that how we fix Medicaid.
And once -- decided -- our social safety net will look so that it doesn't bankrupt America.
And we put in a sensible national security strategy put in a sensible infrastructure strategy these are all -- real parts of growth.
At -- point.
We need to pay the bills into a tax reform that raises the revenue for a small efficient government that's the strategy and that's a strategy we heard across the board today.
Okay debt thanks for coming and we appreciate your time good luck to you you.
