Presidential Advisers: Slash Spending Now — Or New Meltdown Will 'Dwarf' 2008

America’s gaping budget deficit could lead to a crisis that would “dwarf” the meltdown of 2008 — and to get the country out of its fiscal mess, the government must slash spending substantially, according to 10 former members of the President’s Council of Economic Advisers. The economic experts — former chairmen and chairwomen of the council serving both Republican and Democratic administrations — issued the warning in an open letter published by Politico. They say recommendations by budget watchdogs Erskine Bowles and Alan Simpson, arguing that the long-run federal budget deficit will pose a serious threat to the economy, need much more attention from both political parties. Bowles and Simpson co-chaired the White House’s deficit-reduction commission in 2010. "There are many issues on which we don’t agree. Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention," the authors write in the letter addressed to Congress and President Barack Obama. "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 healthcare costs are likely to create a large and growing gap between spending and revenues. These deficits will take a toll on private investment and economic growth." Lenders, the authors point out, will run out of patience with Washington's spending spree: "At some point, bond markets are likely to turn on the United States — leading to a crisis that could dwarf 2008." More here