–Two Budget Groups Say Ten Year Deficits More Likely To Exceed $12T
–Budget Groups Chide GOP, Obama For Focus on Discretionary Spending
–Budget Groups Say Tax and Entitlement Reform Most Important

By John Shaw

WASHINGTON (MNI) – As Congressional Budget Office director Doug
Elemndorf testifies Thursday about his agency’s new report on the
nation’s economic and budgetary challenges, two leading budget groups
have said that America’s fiscal outlook is far worse than the CBO’s
official forecast.

In separate reports, both the Committee for a Responsible Federal
Budget and the Concord Coalition say that CBO had to adhere to budget
law which requires assuming that current spending and tax policy will
continue.

Using these rules, the CBO report said the current 2011 fiscal year
budget deficit will reach $1.48 trillion before beginning a steady
decline over the next several years.

For the FY’12 through FY’16 period, the CBO sees cumulative
deficits of $3.547 trillion and for the FY’12 through FY’21 period it
estimates cumulative deficits to be $6.971 trillion.

But Elmendorf repeated Thursday before the Senate Budget Committee
that under a more plausible scenario, the U.S.’s cumulative deficits
over the next decade could hit $12 trillion — not $6 trillion.

Both budget watchdog groups agree with this assertion and argue
that more realistic spending and revenue assumptions show a budget
deficit outlook of remarkable gravity for the U.S.

The Concord Coalition said that a “more realistic assessment of the
federal government’s fiscal path,” shows cumulative 10 year deficits of
more than $13.5 trillion, with the deficit never falling below $1
trillion and debt held by the public rising from 74% of GDP to 104% of
GDP.

This assumption is based on extending the Bush era tax cuts,
adjusting the alternative minimum tax along the lines Congress has done
for several years and offering a more realistic projection of Medicare
physician payments based on recent policy actions.

The Center for a Responsible Federal Budget also said the CBO’s
official deficit estimates are not realistic.

“Though the debt path outlined in CBO’s baseline is troublesome, it
is wildly optimistic,” it says.

Both budget groups challenge the heavy focus that both President
Obama and congressional Republicans have placed on freezing or reducing
discretionary spending.

“Elected officials in both parties should drop the pretense that
cuts in domestic discretionary spending or a more robust economic
recovery can do all the hard work of deficit reduction in the coming
decade,” the Concord Coalition said.

“Democrats and Republicans have set out competing visions for the
role and size of government, but they have been united in avoiding a
realistic assessment of how the numbers add up. The new CBO report
dispels the notion that there are politically easy options for dealing
with our fiscal challenges,” it added.

The Concord Coalition report offered its recommendation on the
areas in which deficit reduction efforts should focus. “Entitlement and
tax reform should come first, followed by defense and then discretionary
spending,” it said.

The Center for a Responsible Federal Budget urged Obama to submit
as part of his Feb. 14 budget a “detailed proposal to bring the debt
down” and urged Congress and the White House to “work together to solve
these problems.”

The budget group also urged policymakers to assemble a broad
deficit reduction effort.

“We need a comprehensive plan to reduce and control all parts of
the discretionary budget, bring federal health care spending in check,
put Social Security on a sustainable path, and reform the tax code in a
way that encourages growth and raises revenue at the same time,” it
said.

** Market News International Washington Bureau: (202) 371-2121 **

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