Douglas Holtz-Eakin, former CBO director under the Bush administration, appeared on Varney & Co. this morning.
Varney asked him about the effect of high gas prices on the economy.
In the first quarter, “I see 1.5% (GDP) at best. It might pick up a little bit in the second quarter if we get some moderation, but we don’t have anything that looks like a robust recovery and I expect the next unemployment report to be down from the 240-odd thousand jobs that we’ve seen to under 200,000.”
As for the CBO now pegging the cost of Obamacare in the next ten years to go from the original estimate of 960 billion to 1.7 trillion, Holtz-Eakin commented “There really are two big things going on here. Time has passed. With each year that goes by we lose some zeroes up front…each ten years includes more full years and that price tag looks more real.
“The second thing is a big estimation error. At the time Obamacare was passed, the CBO expected the unemployment numbers to come down relatively quickly. It’s not so there are many more people out there who do not have employment insurance who will show up to take the subsidized insurance and that price tag is much bigger.”
Varney asked him to comment on whether Obamacare will bankrupt the country.
“I think it’s an extraordinarily bad decision at a key moment in our nation’s history. We’re already at a point where our debt is larger than our economy; countries that get in that position typically grow more slowly – about a percentage point slower per year – that’s a million jobs. And we already had big problems in Medicare and Medicaid that cause that debt to get even bigger.
“Take a country that is already in bad shape and projected to get in worse shape, and then add a new entitlement of this size and it’s just a devastatingly bad decision.”
On the Ryan plan and the budget, he said “We have big problems. Doing nothing is a recipe for disaster and the Senate has not seen to pass a budget in three years, the president’s budgets don’t address the fundamental problems, tax reform and entitlement reform, so we have one plan on the table and that’s out of the House.
“With debt above the size of the economy, we’re already in the danger zone. This is when the probability of a sovereign debt crisis gets elevated.”