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CBO: Obama Budget Hurts Economic Growth

From The Hill:

CBO estimates Obama’s 2013 budget plan would hit economic growth

By Erik Wasson – 04/20/12

The nonpartisan Congressional Budget Office said Friday that President Obama’s 2013 budget will hurt the economy in the long term, arguing the larger deficits it would produce would reduce the amount of capital available to businesses.

Who woke up the CBO? Why has it taken so long to figure this out?

After five years, the CBO says, the Obama proposals would reduce economic output by between 0.5 percent and 2.2 percent.

Which, given that our GDP is hovering around 2% means Obama’s proposals could put us back into a recession. (Not that we ever left.)

Larger deficits caused by the budget would cause the government to issue more bonds, sucking up private capital to finance its debts and thereby reducing the funds businesses could use to expand and hire, the CBO said. An increased tax on capital gains included in the president’s plan would also tend to reduce private capital, it says.

The hell you say! It’s almost as if somebody at the CBO has been taking a course in economics.

The 2013 Obama budget proposes continuing the Bush tax rates for the middle class and enacting elements of a short-term Jobs Act stimulus. In the near term, actions such as these could increase growth by as much as 1.4 percent, CBO says.

Because increasing taxes (on the rich) and wasting billions on "stimulus" slush funds has always worked in the past.

The new CBO report complements a March estimate that Obama’s budget would add $3.5 trillion to deficits over 10 years compared to current law. That report did not try to capture any effects on economic growth.

The White House, using a different baseline than CBO, has claimed its budget would reduce deficits by $3.2 trillion over 10 years.

Which just goes to show you how meaningless White House figures are.

Taking economic effects into account, Obama’s budget could add as much as $3.9 trillion in deficits by 2022, CBO estimates. Slower economic growth tends to increase deficits by reducing tax collection and increasing spending on items like unemployment insurance

The White House emphasized the baseline issue in its reaction to the report.

"CBO is using a current law baseline, which is not considered to be an accurate reflection of the fiscal picture," a senior official at the Office of Management and Budget said. The official emphasized that compared to a more realistic baseline, the Obama budget helps growth.

"In addition, under CBO’s estimates of what would happen if we continued business as usual, the economy would be worse off if we did not pursue the Administration’s economic growth and deficit reduction policies," the official said…

In other word, the White House is saying that their programs will grow the economy, even though they have not worked in the last three and a half years.

This article was posted by Steve Gilbert on Tuesday, April 24th, 2012. Comments are currently closed.

3 Responses to “CBO: Obama Budget Hurts Economic Growth”

  1. GetBackJack

    Thinking thinking …. what’s that quote on the definition of Insanity …?

  2. dasher

    GetBackJack – “voting Democrat” would be my answer. It really is amazing what this administration has done to the national economy. Here in Atlanta the traffic used to horrendous, really. Now and days, I can make the trip downtown in minutes due to the lack of cars on the streets. I took MARTA the other day (metro rail service) and there were so many empty parking spots I thought maybe it was a holiday of some sort. Sadly, it was not. Every part of me wants to say Obama is going to be a one term President, and yet every part of me is screaming in fear that he’ll stop at nothing to make his re-election happen. You think there was rampant voter fraud in ’08? That was just the warm-up.

    Dan

  3. Astravogel

    Looks to me that the CBO is starting to cover
    itself for the coming adminstration change.




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