WASHINGTON - The Republican National Committee (RNC) held a press conference call today with former Director of the Congressional Budget Office (CBO) Douglas Holtz-Eakin to discuss Hillary Clinton’s outrageous $1.2 trillion spending spree with no plan to pay for it. Eakin's opening remarks can be found below.
“The occasion is that candidate Clinton has now proposed over a trillion dollars in new federal spending and I would like to make three basic points. The first, despite assertions to the contrary by her and her campaign, there are no specifics on tax increases or other spending decreases to offset these new proposals. And number two, taken at face value, this is dangerous if not reckless management of the federal budget and the U.S. economy. And three as Raj mentioned, given the politics on the Democratic side where the government is viewed as the solution to every problem, it is nearly inevitable that this total will rise before we hit November of 2016.
“Turning to the details it’s important to recognize that this takes place within the context of what is the inevitable legacy of President Obama. If you look at the Congressional Budget Office, my old shop’s, baseline projections for the federal budget these are the answer to the question: what would happen if we stayed on autopilot for the next ten years? We find that the current policies would generate 7 trillion dollars in new deficits and that despite all the chatter we’ve heard about improving federal deficit outlooks, the deficit reverses and begins to rise. By 2025 it is over a trillion dollars and of that trillion dollars, $755 billion of it is interest on previous borrowing. So in the next ten years, absent change, the U.S. will be borrowing largely to pay interest on previous borrowing. Not borrowing to build bridges, not borrowing to fund needed education programs, or national defense and security. It’s just borrowing to pay interest on previous borrowing. Mechanically, this is a death spiral if left unchecked that spiral will lead to a sovereign debt crisis and the only question is when, not if, that happens.
“This deficit and debt outlook occurs despite the fact that federal revenues rise to 18.3% of gross domestic product - so about 18.3 cents out of every national dollar goes in federal revenues. The average over the past 40 years has been 17.4, so, this is not an outlook that is starve for revenue but instead we right now and going forward have already a spending problem and that spending problem is concentrated in so-called mandatory spending programs. We have caps on annual defense and non-defense discretionary and it’s that explosion in mandatory spending that’s driving the red ink and endangering the U.S. economy. In that context, adding a trillion dollars in new spending is simply unwise if not reckless. The kids of things that Hillary Clinton is proposing: college affordability plans, expand health care plans, more funding for IDEA, the early childhood education plan. These are new entitlements, new mandatory spending programs in a context where those are already damaging the U.S. budget and the economy.
“To get a sense of the economic damage, remember that in the postwar period after 2007, GDP in the United States grew at a rate of about 3.2% per year adjusted for inflation. When you adjust it for population growth further, GDP per capita, a rough measure of the standard of living, doubled every 32 years. So, in one person’s working career you could imagine a family for the first time buying a home or sending a child to college or taking a family vacation or buying a boat - whatever was your version of the American Dream that was available in a working career. The CBO now estimates that the long run growth potential of the U.S. economy is down to 2.1%. That means, the American Dream now takes 58 years to achieve. It’s further out in the distance and can’t be achieved in a working career. If you add to the already dangerous fiscal outlook a trillion dollars in new spending, you’re going to accelerate the appetite of the federal government for needed investment dollars that can’t go into human skills or technologies or factories, you’re going to increase pressure on interest rates and tie the hands of the Federal Reserve in managing things in the short run and you’re going to further damage the U.S. economy.
“The net result is that these proposals are bad for the budget. They are certainly bad for an economy that needs to go the other direction and grow more rapidly. And the combination of leaving behind a more crippled economy and an enormous federal debt burden is a fundamental [inaudible] America and the next generation. For that reason I think it’s important to really focus on what these candidates will do to improve the outlook and not how they’re going to worsen it.”
Elections Hillary Clinton