Ex-White House economists issue debt warning

WASHINGTON (AFP) – Ten former White House economists on Thursday called for US politicians of all stripes to get serious about tackling the country’s spiraling debt, warning of a looming crisis “that could dwarf 2008.”

The bipartisan group — ten former chairs of the White House Council of Economic Advisers — said Washington’s spats over short-term budget cuts were distracting from “a more dire problem”, the long-term deficit.

“(It) is a severe threat that calls for serious and prompt attention,” they warned, in the open letter published by the Washington politics journal Politico.

“Divided government is no excuse for inaction,” signatories, including President Barack Obama’s former top economic adviser, Christina Romer said.

“While the actual deficit is likely to shrink over the next few years as the economy continues to recover, the aging of the baby-boom generation and rapidly rising health care costs are likely to create a large and growing gap between spending and revenues,” they said.

“These deficits will take a toll on private investment and economic growth. At some point, bond markets are likely to turn on the United States — leading to a crisis that could dwarf 2008.”

The signatories included economic policy luminaries like Martin Baily and Laura Tyson, both heads of the council under the Democratic Bill Clinton administration, and Edward Lazear and Gregory Mankiw, who held the same job during the Republican government of George W. Bush.

They called for the White House and Congress to begin weighing proposals by the bipartisan National Commission on Fiscal Responsibility and Reform, who issued its report in January.

Those included the hot-button issues of cutting long-term health care and social security benefits, eliminating popular personal and corporate tax breaks, and some other tax increases.

“To be sure, we don’t all support every proposal here,” they wrote.

“Yet we all strongly support prompt consideration of the commission’s proposals. The unsustainable long-run budget outlook is a growing threat to our well-being. Further stalemate and inaction would be irresponsible.”

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