CBO's Elmendorf: More Financial Misery Around Corner

Much of the misery from the economic downturn still lies ahead for the American public, says Douglas Elmendorf, director of the Congressional Budget Office. Elmendorf also warned during remarks at a Christian Science Monitor breakfast that a potential default on the debt would be “a dangerous gamble,” USA Today reported.

Douglas Elmendorf: Deficit-reduction plans must be "specific and concrete."

"A great deal of the pain of this downturn lies in front of us still," Elmendorf said, explaining that the anguish would be in the form of continuing high unemployment, low investment, and weak economic output.

Elmendorf added that continuing economic risks such as the high number of foreclosures, Europe’s debt crisis, and high oil prices could cause a "financial contagion."

Any deficit-reduction plans from either the White House or Congress must be “specific and concrete,” to reassure financial markets, Elmendorf said. Nonetheless, the economy could improve quickly if households and businesses start spending, he said.

President Barack Obama’s proposed debt cap and other measures put forth to cut the debt if Congress and the White House cannot agree on budget cuts would “not a substitute for the actual policy decisions," he said.