Deficit hawks have long warned that unnecessary delays in
deficit reduction carry risks and high costs that will only make
the job harder down the road. A new study by the Congressional
Budget Office (CBO) underscores that point. It analyzes the
effects of waiting a decade – from 2015 to 2025 – to implement
policies that would stabilize the federal debt relative to the
economy. CBO says the higher debt resulting from such a delay
would: - Lower incomes by reducing the amount of savings devoted
to productive capital. - Increase interest payments by the
government, which would mean that larger tax increases or
spending cuts would eventually be necessary. - Make it more
difficult for policymakers to respond to financial crises,
recessions, wars or other unexpected problems. - Increase the
likelihood of another fiscal crisis. The Treasury Department and
the CBO also recently released deficit numbers for the first two
months of the 2011 fiscal year. Treasury put the deficit at $291
billion, only about $5.8 billion