New CBO Report on Long-term Deficits: Sobering News

Congressional Budget Office Director Douglas Holtz-Eakin gave a harrowing talk Thursday at the New America Foundation in which he gave a sneak preview of the findings from CBO's new report, The Long-Term Budget Outlook. You can see the whole thing on MP3 here at the NAF website.

As Holtz-Eakin himself points out, there's nothing new or novel in this report. The nation's fiscal future looks about as bleak now as it did the last time they released this biennial report. But there are a couple of exchanges that I think are worth listening to for the sheer drama of it.

First, here's Holtz-Eakin channelling the spirit of John Lennon in his bottom-line summary of the report's main finding, at about 4:45 of the MP3 file:

Imagine a world in which there was no Katrina, no Rita, no costs of the Gulf Coast cleanup or annual events of that type. Imagine a world in which there was no necessity to spend funds in Iraq and Afghanistan or elsewhere in the globe, fighting a war on terrorism. Imagine a world in which it was possible to meet all our nonsecurity needs, in highways and education and welfare, without earmarks and without pork barrel and which allowed us to keep such spending flat and not go up at all. Imagine that world also included tax increases as all the laws the Congress has passed in the last several years sunset. Imagine in that world there was no economic slack– the economy always performed at absolutely top notch perfect levels.
In that world, our Congress would face deficits as far as the eye could see and have enormous fiscal challenges.

Later, at 45:45 in the MP3 file, a CQ reporter asks Holtz-Eakin to respond to the supply-side argument that economic growth will help keep our deficits and debt in check:

CQ: For people who think current tax cuts or future tax cuts can create more economic growth ,what level of economic growth would we need annually to grow ourselves out of this problem?
Holtz-Eakin: It’s not possible. Don’t even think about it. [long pause] You can’t grow your way out of this problem, it’s just too big.

Dramatic stuff...