Former CBO Director Calls GOP Budget 'A Very Sensible Approach'

By Nicholas Ballasy | April 26, 2011 | 6:48 PM EDT

( – Former Congressional Budget Office (CBO) director Doug Holtz-Eakin told that the House Republicans’ proposed budget for the fiscal year 2012 is “a very sensible approach.” asked Holtz-Eakin if he supports the GOP Medicare reform proposal in their FY2012 budget to provide individuals with vouchers for the purchase of private health insurance starting in 2022.

“I think the House passed budget is a very sensible approach. It’s not perfect but it does in fact do the two things we need,” he told at the Capitol on Tuesday after a panel discussion sponsored by The Heartland Institute and American Action Forum about state pensions affect on the financial crisis.

“It reduces the threat of debt, indeed eliminates federal debt by 2050 and it changes the structure of entitlement programs so that they will be around for the next generation and I think any one who doesn’t like that plan has an obligation to meet both of those objectives in a different way,” he said.

The GOP’s proposal, which cuts $5.8 trillion in government spending over the next decade, would also end taxpayer support of Fannie Mae and Freddie Mac and provide no funding for the implementation of the health care reform law passed by Congress last March.

Holtz-Eakin also said a social security fix is needed in the current budget debate.

“What’s missing from this debate is fixing social security which is in many ways the easiest. Lots of proposals have been made by people from both sides of the aisle. It’s well understood territory,” he said.

“It’s begging for a fix and it doesn’t have any impact on the economy immediately so this is all about fixing our future and they ought to do it quickly.”

Debt commission Chairman Erskine Bowles has said that America faces “the most predictable economic crisis in history” and that it could strike within two years. asked Holtz-Eakin if he agrees with that assessment.

“No one knows when international capital markets lose faith and what event will trigger it but we should pretend we have no time and fix the problem as fast as possible,” he responded.

“Certainly the scale of the debt that we’ve run up is already past the safety line, 90 percent of gross debt relative to GDP is usually where economic growth slows down and financial crisis become more probable so we’re there and going forward, we know that the ultimate solution has to be reforming entitlement programs so we both preserve them for the next generation and don’t bleed red ink in the process.”