Wednesday, June 6, 2012

CBO Testimony

The CBO Testimony before Congress today atsted:

First, it is not possible both to keep taxes at their historical average share of gross domestic product (GDP) and to keep the laws unchanged for Social Security, Medicare, and Medicaid.

Second, keeping federal deficits and debt no larger than what we project under current law would involve difficult policy trade-offs.

To be sure, the Congress might not enact those changes in law, or it might choose to allow more debt than would occur under current law or to reduce debt more quickly relative to GDP than would occur under current law. There are many possible combinations of policies that Congress might pursue depending on its policy goals, and CBO will make neither recommendations nor predictions about them. The point is simply that the path of debt under current law would still leave debt at a historically high level relative to GDP, and even achieving that path would require very large changes in current policies.

 Clearly the issue of Medicare costs must be addressed.