“uncertainty about federal policy is diminishing household and business spending and that uncertainty covers a whole set of policies: It covers tax policy, it covers regulatory policy and it covers health policy.”

By Vicki Needham at The Hill

EXCERPTS:

New figures released Wednesday by the CBO show debt rising to 190 percent of the gross domestic product by 2035. Economists have warned that exceeding 90 percent of gross domestic product (GDP) is a prescription for a debt crisis.

“The current level of debt is reducing our output, our incomes relative to what would be the case if we had a lower level of debt, leaving aside the effects of this particular recession, which complicate that,” Elmendorf said Thursday.

“Over the longer period of this kind of analysis, higher levels of debt are more damaging.”

The CBO offered two forecasts, each showing fiscal deterioration in the next 25 years.

“Higher marginal tax rates do reduce economic activity to some extent by views of most economists,” he said.

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