WASHINGTON, Sept. 13 (UPI) -- Be mindful of the fragile U.S. economy when reviewing deficit reduction measures, the Congressional Budget Office director warned a congressional panel Tuesday.
CBO head Doug Elmsdorf told the Joint Select Committee on Deficit Reduction, the bipartisan, bicameral panel tasked with finding $1.5 trillion in budget savings over the next decade, that the deficit must get worse before it gets better to avoid slowing the economy further, The Hill reported.
"If policymakers wanted to achieve both a short-term economic boost and medium- and long-term fiscal sustainability," Elmendorf said, the "most effective" policy would be "changes in taxes and spending that would widen the deficit now but narrow it later in the decade."
The approach would work best if policy changes in the future "were sufficiently specific and widely supported" so that individuals and businesses "believed that the future fiscal restraint would truly take effect," he said.
Elmendorf also told lawmakers his office lowered its forecast for economic growth to about 1.5 percent this year from the agency's August estimate of 2.3 percent, The Hill said.
Deviations from policies in place for the past 40 years must be made to attain a sustainable budget, he said.
"Raise federal revenues significantly above their average share of [gross domestic product]; make major changes to the sorts of benefits provided for Americans when they become older; or substantially reduce the role of the rest of the federal government relative to the size of the economy," were some suggestions Elmendorf gave the panel.
