–Reps. Ryan, Van Hollen: CBO Report Shows Need For Fiscal Action
–Leaders of House Budget Panel Say Other Party Backs European Austerity
–House Budget Committee Chairman Ryan: CBO Report Offers ‘Dire’ Warning
–Rep. Van Hollen: Must Take ‘Balanced Approach’ To Fixing Deficit

By John Shaw

WASHINGTON (MNI) – House Budget Committee Chairman Paul Ryan and
Rep. Chris Van Hollen, the ranking Democrat on the House Budget panel,
agreed Wednesday that the report issued this week Congressional Budget
Office should be viewed as a grim warning that the fiscal status quo
in the U.S. is not sustainable.

But in a hearing on the CBO report with Doug Elmendorf, the
director of the CBO, Ryan and Van Hollen offered very different
interpretations of the report.

“The report is sobering and the warnings are dire,” Ryan said,
adding that House Republicans support a “gradual, common-sense reforms
to lift the debt, strengthen core priorities, and spur job growth.”

“We still have a window of opportunity that will require us to come
together to solve this problem,” Ryan said, adding that entitlement
reforms, especially for health care programs, are essential.

“Cranking up tax rates that further stifle growth and harsh
disruptions to beneficiaries is what Europe is doing now. This does not
have to be our fate,” Ryan added.

Van Hollen agreed the CBO report offers a clear warning that
fiscal policies must be adjusted. He urged a “two track strategy” that
includes short-term stimulus and long-term deficit reduction.

He said long-term deficit reduction must be enacted through a
“balanced approach” with both spending savings and new revenues.

Van Hollen accused the GOP of trying to foist European-style
austerity on the U.S.

In his testimony, Elmendorf said the U.S.’s public debt has jumped
from 40% of GDP in 2008 to more than 70% of GDP by the end of this year.

He outlined two future fiscal scenarios: one which assumes
that current laws remain intact such as the expiration of the Bush era
tax cuts and across-the board-spending cuts; and a second that assumes
that some adjustments are made that more closely reflect the fiscal
policy that has been approved in recent years.

He said the first scenario, which would lead to higher revenues and
lower spending than the historic norm, public debt would fall to about
53% of GDP by 2037.

Elmendorf said the second scenario, which would result in much
lower revenues and higher spending than the first scenario, public debt
would approach 200% of GDP by 2037.

“The explosive path of federal debt under the alternative scenario
underscores the need for large and timely policy changes to put the
federal government on a sustainable fiscal course,” he said.

Elmendorf said the future pressures of an aging population and
rising health care costs will require a different approach to fiscal
policy.

“The aging of the U.S. population and the rising costs for health
care mean that the combination of budget policies that worked in the
past cannot be maintained in the future,” he said.

“To keep deficits and debt from climbing to unsustainable levels,
as they will if the current set of policies is continued, policymakers
will need to increase revenues substantially above historical levels as
a percentage of GDP, decrease spending significantly from projected
levels, or adopt some combination of those two approaches,” he added.

** MNI Washington Bureau: (202) 371-2121 **

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