Sen. Snowe: ‘Absolutely’ Cut Spending $6 Trillion to Balance Federal Budget
January 28, 2010Sen. Olympia Snowe (R-Maine) said she "absolutely" supports cutting federal spending to counter-balance the $6 trillion in new debt projected by the Congressional Budget Office (CBO).
In a recent report, the CBO indicated that if current federal tax and spending laws are maintained, the U.S. Treasury will need to borrow an additional $6 trillion between 2011 and 2020 to cover expected federal spending.
When asked by CNSNews.com whether she supported cutting spending $6 trillion to counter the projected deficit totals, Snowe said, “You have to have a plan to reduce the federal debt and be on the trend to reduce it and hopefully eliminate it.”
When asked again whether she specifically supported cutting $6 trillion, Snowe said, "Absolutely, yes."
Snowe spoke with CNSNews.com at the U.S. Capitol on Tuesday, the day the CBO released its budget and economic outlook.
The estimate that the government will borrow an additional $6 trillion from 2011-2020 is based on the assumption that the tax cuts enacted under President Bush in 2001 and 2003 will be allowed to expire, thus raising income tax rates and that Congress will not enact temporary fixes—as it has in the past—to stop the Alternative Minimum Tax from hitting the incomes of middle-class Americans.
Further, the large increase in debt will result in significantly high interest payments on what is owed, the CBO projections show.
“With such a large increase in debt, plus an expected increase in interest rates as the economic recovery strengthens, interest payments on the debt are poised to skyrocket,” said the CBO.
“The government’s annual spending on net interest will more than triple between 2010 and 2020 in nominal terms, from $207 billion to $723 billion, and will more than double as a share of GDP, from 1.4 percent to 3.2 percent,” reads the report.
The CBO also noted that the deficit in 2009 “was the largest as a share of GDP since the end of World War II, and the deficit expected for 2010 would be the second largest.”
In 2008, the last year of the Bush administration, the federal deficit was $459 billion. In the first year of the Obama administration, “the budget deficit surged to $1.4 trillion in 2009, the largest shortfall on record in dollar terms and nearly $1 trillion greater than the deficit recorded the previous year,” reported the CBO.