So did CBO Director Doug Elmendorf make any headway convincing Super Committee Republicans that a). the economy needs a short term boost of near term spending and tax cuts, and b). that the country shouldn’t dive headlong, and unnecessarily, into austerity?
If Dave Camp is any indication, the answer is no.
The Michigan Republican, and chair of the House Ways and Means Committee said he disagreed with Elmendorf’s cautionary testimony.
“I think that one of the things we have to keep in mind is what we’re charged with and the amount of debt reduction this represents in terms of our entire debt and how significant that is,” Camp said. “As I said in my questioning of him, it’s about three percent of outlays that we’re looking at. It’s about one percent of our GDP over the next decade. So I don’t think that triggers the kinds of dynamics he was testifying to in other areas.”
Camp’s back of the envelope math during Tuesday’s hearing was based on the notion that the Super Committee will reduce deficits by one percent of this year’s GDP every year for 10 years.
However, as noted here, IMF economists recently warned that an austerity package of precisely that size will significantly increase unemployment and reduce wages. That’s why Sen. Jeff Merkley (D-OR) is starting a drumroll to require the panel to ask CBO to estimate the jobs impact of any of their proposals.
The idea there is to make it difficult to pass deficit reduction legislation without pairing it with some near-term pro-growth spending and tax cuts. But that would mean an even larger medium term consolidation plan. And Camp says that’s not looking very likely.
Finding more than $1.5 trillion in savings, he said is “going to be a very challenging thing to do. If in fact we get there then I think you can maybe look and see what above and beyond that you can do. But at this point I don’t see us surpassing that requirement yet.”
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