Eakinomics – Mandatory Spending Crowding Out the Rest (+video)

Photo Credit: Washington Examiner American Action Forum President Douglas Holtz-Eakin is pushing back against complacency over deficits this week and calling for renewed attention to the problem of the United States’ long-term debt.

AAF, a right-leaning Washington think tank, is promoting videos of Holtz-Eakin, a former director of the Congressional Budget Office, drawing attention to the danger of rising long-term debt and calling on the federal government to cut spending, specifically mandatory spending — outlays on programs such as Social Security, Medicare and Medicaid.

The deficit for fiscal 2013 was the lowest since before President Obama took office at $680 billion, down from a high of $1.4 trillion in 2009. The broad-based sequestration spending cuts and the tax increases on high incomes that went into effect earlier in the year accounted for much of the reduction in the size of the government’s shortfall.

At $680 billion, the 2013 deficit was 4.1 percent of the country’s economic output. The Congressional Budget Office projects the deficit to keep falling, reaching 2 percent of gross domestic product by 2015. But over the longer term, as aging Baby Boomers enter retirement and draw on programs like Social Security and Medicare, deficits are expected to rise again, until the debt exceeds 100 percent of GDP in 2038.

By trying to refocus the debate on lowering the debt, Holtz-Eakin is taking on economic heavyweights like Larry Summers, Obama’s former top economic adviser, who argued in a recent Financial Times op-ed that addressing the debt should not be a priority right now.

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