Campbell to CBO Director: We're in a Budgetary Pickle
February 15, 2013
Washington, DC - In a House Budget Committee hearing on the Congressional Budget Office's Budget and Economic Outlook (Feb. 13), Congressman John Campbell questions CBO Director Douglas Elmendorf on the timing and methods necessary to balance the budget, the long term negative consequences of not implementing the Sequester cuts, and the fact that "loophole" closing proposals made by Democrats must include deductions every taxpayer uses if they are to make any noticeable impact on the deficit.
Excerpt from Rep. Campbell's line of questioning:
Campbell: One final thing on tax expenditures...I hate that term and I know you economists like it, but let's just call it tax deductions, credits, whatever. Are not the vast majority of those...if you look at home mortgage interest, charitable contribution, IRAs, 401ks, other retirement plans, and health care...isn't that where...I mean if you really wanted to make a big impact, you'd have to go into those things, would you not?
Elmendorf: Congressman, you're absolutely right. Those are the largest components. How big an impact one could make dealing with other pieces, we haven't quite assessed. But, in this nice chart we had last year, the single largest tax expenditure relates to health care. Principally, the exclusion of health insurance from taxable income. The second largest involves pensions, and the third largest involves mortgage interest.
CBO Director Elmendorf also concurred with Rep. Campbell's assessment that the U.S. cannot afford to ignore the budget deficit any longer, but must take slow and measured steps to balance the budget, spur economic growth, and jumpstart job creation in order to avoid being forced into massive, overnight fiscal contraction.