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.
Legislators from both chambers and parties will meet Thursday morning for a second conference committee meeting on the budget. A major breakthrough on raising revenue or reforming entitlements is not expected, however, after the first meeting passed with little notice.
The main event of the week will be the Senate Banking Committee’s Thursday morning confirmation hearing for the president’s Federal Reserve chairman nominee, Janet Yellen. Yellen, the Fed’s current vice chair, has been meeting with members of the committee over the past few weeks, and is expected to win approval from the panel and, ultimately, confirmation in the full Senate with relatively little difficulty, despite some Republicans’ threats to hold her confirmation up as leverage on unrelated issues. But in the meantime, she likely will have to answer some tough questions about her background at the Fed’s Board of Governors and at the San Francisco regional Fed bank from Republicans opposed to the Fed’s efforts to loosen monetary conditions.
The same committee will also hear from Richard Cordray, the head of the Consumer Financial Protection Bureau, on Tuesday morning. Cordray will deliver the agency’s semi-annual report to the senators.
Also happening Tuesday morning: Freshman Massachusetts senator and prominent financial regulation advocate Elizabeth Warren will speak at an event on Capitol Hill hosted by Americans for Financial Reform and the Roosevelt Institute on a new report about Wall Street.
On Wednesday night, outgoing Fed Chairman Ben Bernanke will hold a town hall with educators at the Board of Governors in Washington.
The Cato Institute has scheduled a day-long conference on the Fed, titled “Was the Fed a Good Idea?” on Thursday. The event will include House Financial Services Committee Chairman Jeb Hensarling and Joint Economic Committee Chairman Kevin Brady, both Texas Republicans, as well as Philadelphia Fed President Charles Plosser. All are critics of the Fed’s monetary stimulus programs.
The Washington Center for Equitable Growth, a new organization focusing on American inequality housed at the Center for American Progress, will open Friday morning. CAP officials including chairman and former Clinton chief of staff John Podesta and president Neera Tanden, White House economic adviser Jason Furman, and top economists will be on hand.
The Bureau of Economic Analysis will release international trade data for September on Thursday morning. The Fed will provide data on industrial production, which is expected to have slowed in October, on Friday.