(CNSNews.com) – Congressional Budget Office Director Douglas Elmendorf said that unless Congress gets the federal budget under control, stimulus spending policies will be a “drag” on the economy in the future as the government struggles to pay the increased debt.
“If cuts in taxes or boosts in spending that stimulate the economy in the short run are not offset by some later tightening of fiscal policy, then the extra debt that is accumulated will be a drag in the long run,” Elmendorf told the Senate Budget Committee on Tuesday.
Elmendorf said in his prepared testimony that if the government does not get a handle on its debt, then it could face serious problems in the future.
“[F]ederal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade. By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path, CBO projects,” he said in prepared testimony on Tuesday.
“Such high and rising debt would have serious negative consequences,” said Elmendorf. “When interest rates rose to more normal levels, federal spending on interest payments would increase substantially. Moreover, because federal borrowing reduces national saving, the capital stock would be smaller and total wages would be lower than they would be if the debt was reduced.”