Budget official says tough choices are ahead

  • Article by: ADAM BELZ , Star Tribune
  • Updated: February 20, 2014 - 8:31 PM

Tax hikes or cuts in benefits will be necessary, said the director of the nonpartisan Congressional Budget Office.

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Douglas Elmendorf, director of the Congressional Budget Office, spoke in Minneapolis Thursday. File photo from a congressional hearing in Washington earlier this month.

Photo: Andrew Harrer, Bloomberg

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Doug Elmendorf wants the American people to start making tough decisions about how the government spends money.

Thanks to growing spending, primarily on older citizens, the nation’s already massive debt is on an unsustainable course, the director of the Congressional Budget Office (CBO) said Thursday in Minneapolis.

“The nation has not made the fundamental choices about the federal budget that it needs to make,” he told the Economic Club of Minnesota. “Sometimes we talk about the lawmakers not making choices, but more fundamentally we as citizens have not made these choices. And because these choices have not been made, the federal debt remains on an unsustainable path.”

The man in charge of providing nonpartisan budget and policy analyses to Congress has taken heat recently after his office released two reports that give ammunition to those who oppose both President Obama’s health care reform and an increase in the federal minimum wage, but Elmendorf focused his presentation on the nation’s long-term budget problems.

National spending will grow in coming decades almost exclusively in three areas, he said: Social Security payments, health care spending and interest payments on the nation’s debt. Eliminating a chunk of that spending, and thus cutting the deficit and eventually paying down the national debt, will require either substantial cuts to benefits for older Americans or significant tax increases, or some combination of the two.

That’s because all other types of government spending are expected to decline as a percentage of the nation’s economic output over the next decade.

“So the growth of government spending is not growth of the government writ large,” Elmendorf said. “Most of the government will be smaller relative to the size of the economy than it has been in the past.”

Bills will pile up because the population is getting older, and because of the eventual rise in interest rates that will make it more costly to service the nation’s $16 trillion debt.

About 33 percent more Americans will collect Social Security in 10 years than do today, Elmendorf said. By 2024, 60 percent of federal health care spending will go to Americans ages 65 and older. Another fifth will go toward the blind and disabled. Another fifth will go to everyone else.

Adam Belz • 612-673-4405 Twitter: @adambelz

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