Alice Rivlin, former head of the Office of Management and Budget, said the nation needed to make cuts in major entitlement programs such as Medicare, but at the same time the tax needed adjustments to bring in more revenues.
"There's no mystery about what we ought to do. We just need to get on with it," Rivlin said on CNN's "State of the Union."
Rivlin cautioned that drastic steps in either direction carried significant risk. "If you just slash the spending right now or if you raise taxes right now, (it would be a) very bad thing to do as the economy is beginning to strengthen."
Rivlin and Douglas Holtz-Eakin, former director of the Congressional Budget Office, both agreed Congress needed to approve an increase in the U.S. debt ceiling. They told CNN a default on U.S. debt would trigger a domino effect that would result in devastating increases in the interest rates consumers pay on loans, mortgages and credit cards.
"Everything you touch is going to get more expensive, and not just for a day or two, permanently," Holtz-Eakin said. "We will have been labeled a bad borrower and it will cost the nation as a whole."