CBO to debt committee: Cutting now could hurt, recommends supporting economy today, restraint later. [View All]

[jefferson_dem]

CBO to debt committee: Cutting now could hurt

By Jeanne Sahadi @CNNMoney September 13, 2011

NEW YORK (CNNMoney) -- Cutting spending and raising taxes now could put a drag on the economy.

That was the message Congressional Budget Office Director Douglas Elmendorf delivered Tuesday to the new congressional debt committee, which is in week two of its hurry-up assignment to propose ways to slash deficits.

The good news? There are fiscally responsible ways to spur the economy while simultaneously bringing down long-term deficits, Elmendorf told the 12-member panel.

The "most effective" budget approach, he said, "would be changes in taxes and spending that would widen the deficit today but narrow it later in the decade."

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Thus, he said, "there is no inherent contradiction between using fiscal policy to support the economy today ... and imposing fiscal restraint several years from now when output and employment will probably be close to their potential."

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http://money.cnn.com/2011/09/13/news/economy/debt_committee/index.htm