Budget chief seeks wholesale reordering of government priorities

The director of the nonpartisan Congressional Budget Office laid out in stark terms the choices for the super-committee on deficit reduction: Only a wholesale reordering of government priorities will do.

Federal budget problems are so severe, said CBO Director Douglas W. Elmendorf, that the nation can no longer afford to continue the status quo of providing government services and a federal safety net for seniors as well as keeping taxes low. At least one of those will have to give.

“The federal budget is quickly heading into territory that is unfamiliar to the United States,” Elmendorf told the panel Tuesday. “Attaining a sustainable budget for the federal government will require the United States to deviate from the policies of the last 40 years.”

The second meeting of the panel made clear the difficulty of the path ahead as the six Republican and six Democratic lawmakers started their work — and showed their partisan stripes.

Both sides have held fast to familiar positions, with Republicans refusing to consider new taxes and Democrats resisting cuts to Medicare and other entitlement programs without new revenue as part of the deal.

Adding pressure on the panel, Elmendorf issued a new deadline: By early November, the CBO needs to see the panel’s recommendations on how to achieve $1.5 trillion in deficit reductions over the next 10 years if an assessment from his office is to arrive in time for a Nov. 23 committee vote.

A failure by the panel to produce an agreement would trigger automatic budget cuts in 2013, split between Defense and non-Defense spending, which both parties hope to avoid.

“It’s time for this committee to get real,” said member Rep. Chris Van Hollen (D-Md.).

While jobs are at the forefront of voters’ minds, the committee has not moved to take up President Obama’s jobs bill, and is unlikely to do so in the face of GOP opposition. Lawmakers on both sides seem to agree that economic growth will help mend the nation’s record deficits even as they strongly disagree on the best way to get Americans back to work.

“A government spending expansion here is going to do more harm than good,” said committee member Sen. Patrick J. Toomey (R-Pa.).

Elmendorf spent nearly three hours fielding questions and laying out budget realities. Retiring baby boomers and the rising costs of healthcare are driving the debt as Medicare, Medicaid and Social Security are projected to consume an ever-greater portion of the budget over the next decade.

With tax revenues at historic lows, largely because of the economic downturn, income is not sufficient to keep pace — and not expected to catch up to expenditures any time soon.

“One needs to either carve away at the functions of government,” Elmendorf told the panel, “or one needs to raise revenue.”

The timing of any proposed remedies, however, is key. Elmendorf followed the advice of many economists who have warned against abruptly cutting spending or dramatically raising taxes. Such moves could harm the struggling economy, he said.

Better to consider a mix of short-term efforts to boost the economy, even if they add to deficits, along with a long-term deficit reduction strategy, Elmendorf said — a position disputed by Republicans on the panel who want only cuts in spending.

Elmendorf also warned that as lawmakers take options off the table, they leave themselves with fewer tools to bring budgets into balance.

The committee on Tuesday also unveiled its website, https://www.deficitreduction.gov, where it is soliciting input on how best to resolve the nation’s budget problems.

lisa.mascaro@latimes.com