By Mario Trujillo
The nation’s roughly $14 trillion worth of debt must be managed in the long-run, but Congress must avoid enacting short-term “Draconian” cuts in spending, said key members of both the House and Senate Budget Committees on Wednesday.
“We are talking about making relatively modest changes now that will pay big dividends as time passes,” Senate Budget Committee Chairman Kent Conrad (D-N.D.) said during a press conference. “In that way, time is our friend. But for time to be our friend, we have to use it. We have to make decisions.”
Conrad made his remarks the same day that the Congressional Budget Office released it’s fiscal analysis of the next 10 years. According to the nonpartisan CBO, the $1.4 trillion deficit in 2009 and the $1.3 trillion in 2010 were the largest percentages of the nation’s Gross Domestic Product since 1945.
CBO projects that that the yearly deficit will shrink throughout the next ten years, but those numbers are based on assumptions that the Bush-era tax cuts expire in 2012 and that Congress allows a sharp cut in Medicare payments to physicians to take effect at the end of this year. The projection also assumes that the nation’s economy continues to recover, resulting in gradual increases in annual GDP.
However, the report suggests that Congress and President Obama work together on cutting spending, as well as the thorny issue of raising taxes.
According to an analysis on CBO’s website, “If revenues stay close to their average share of GDP for the past 40 years, that rise in spending will lead to rapidly growing budget deficits and surging federal debt. “To prevent debt from becoming unsupportable, policymakers will have to substantially restrain the growth of spending, raise revenues significantly above their historical share of GDP, or pursue some combination of those two approaches.”
Conrad called President Obama’s proposal to freeze non-security discretionary spending for five years a start, but said Congress should be willing to look at non-discretionary items like Social Security, Medicare and Medicaid as well.
“Frankly,” Conrad said, “the domestic discretionary spending has not been the part of the federal budget that has been growing in relationship to the size of our economy over the last decade.”
Meanwhile, Rep. Chris Van Hollen (D-Md.), the top Democrat on the House Budget Committee, challenged Republicans to put forth a budget aimed at making a dent in the nation’s roughly $14 trillion debt level.
“Our Republican collegues share responsibility for government,” Van Hollen told reporters. “So let’s show by their actions with budget and appropriations how you put together a long-term plan to do it.”