–House Budget Chairman Says Key Trends Going ‘In Wrong Direction’
–Rep. Ryan: Must Tackle ‘Seemingly Relentless’ Growth in Spending
–Rep. Van Hollen: ‘Immediate’ Spending Cuts Would Hurt Job Growth
–CBO Chief Elmendorf: Repeats That U.S. Faces ‘Daunting’ Econ Problems

By John Shaw

WASHINGTON (MNI) – House Budget Committee Chairman Paul Ryan said
Thursday that “spending restraint” should take place before Congress
passes an increase in the statutory debt ceiling.

In remarks at the beginning of a hearing with Congressional Budget
Office director Doug Elmendorf on the CBO’s economic and budget outlook,
Ryan argued that pro-growth tax policies and tight controls on spending
are needed to revive the U.S. economy.

“One of the biggest threats to the economy is the rapid and
seemingly relentless growth of government spending and debt,” he said.

“Endless borrowing is not a strategy,” he said.

Treasury has said that the debt ceiling must be increased this
spring by the end of May.

Ryan said that Congress must act now on the deficit front to avoid
more draconian policies later.

“If we act soon, and if we act responsibly, we can gradually phase
in reforms to our major entitlement programs to save them from
bankruptcy,” Ryan said.

The House Budget chief said that tackling soaring health care costs
is “at the heart” of the nation’s fiscal problem.

Ryan said the nation’s fiscal policy is in disarray.

“Our baseline is going in the wrong direction,” he said. noting
that CBO expects a deficit in fiscal year 2011 to hit $1.5 trillion.

“We’ve got to get serious about this problem,” he said.

Ryan is pushing a $32 billion package of spending cuts to the FY’11
budget, but some House GOP conservatives say this goal is not
sufficiently ambitious.

The government is operating under a stop-gap FY’11 spending bill
that runs until March 4.

Rep. Chris Van Hollen, the ranking Republican on the House Budget
Committee, criticized House Republicans for their tight focus on
spending cuts.

“Immediate, deep cuts will not create a single job,” he said,
adding that the congressional focus should be on a “credible, long-term
deficit reduction plan.”

Elmendorf presented again the CBO’s updated budget and economic
report which was released last month.

The CBO said that it expects the current 2011 fiscal year budget
deficit to hit $1.48 trillion.

The CBO report says that its projections almost certainly
“understate” the severity of the nation’s fiscal outlook because it must
adhere to budget law that assumes that current spending and tax policies
will remain in place.

Assuming that current budget and tax policies continue, CBO sees
budget deficits falling to $1.1 trillion in FY’12, $704 billion in
FY’13, $533 billion in FY’14, $551 billion in FY’15 and $659 billion in
FY’16.

Looking further forward, the CBO sees deficits of $617 billion in
FY’17, $610 billion in FY’18, $696 billion in FY’19, $739 billion in
FY’20, and $763 billion in FY’21.

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
sees cumulative deficits of $6.971 trillion.

The CBO said that under this scenario, the public debt as a
percentage of GDP would grow to about 75% in 2015 and 77% in 2021.

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

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