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The CBO Pushes For Ending Bush Tax Cuts

From the blog of director of the non-partisan (snort) Congressional Budget Office:

CBO Releases Its Annual Summer Update of the Budget and Economic Outlook

August 19th, 2010 by Douglas Elmendorf

CBO estimates, in its annual summer update of the budget and economic outlook, that the federal budget deficit for 2010 will exceed $1.3 trillion—$71 billion below last year’s total and $27 billion lower than the amount that CBO projected in March 2010 when it issued its previous estimate.

What exactly are these projections based on, given that the Democrat controlled Congress is refusing to pass a budget until after the elections in November? (Something they have never failed to do since 1974, which was only the result of a policy battle between Congress and then President Nixon.)

Relative to the size of the economy, this year’s deficit is expected to be the second largest shortfall in the past 65 years: At 9.1 percent of gross domestic product (GDP), it is exceeded only by last year’s deficit of 9.9 percent of GDP.

In other words, in the two years of the Golden Age of Obama we have had the worst two deficits since the end of WWII.  And what do we have to show for it?

As was the case last year, this year’s deficit is attributable in large part to a combination of weak revenues and elevated spending associated with the economic downturn and the policies implemented in response to it.

Which is to say, it is attributable to Mr. Obama’s ‘stimulus’ and all of the other baby ‘stimuluses’ that we have had since.

This report presents CBO’s updated budget and economic projections spanning the 2010–2020 period. Those projections reflect the assumption that current laws affecting the budget will remain unchanged—and thus the projections serve as a neutral benchmark that lawmakers can use to assess the potential effects of policy decisions.

As such, CBO assumes that tax reductions enacted earlier in this decade that are currently set to expire at the end of this year do so as scheduled; it also assumes that no new legislation aimed at keeping the alternative minimum tax (AMT) from affecting many more taxpayers is enacted. In addition, CBO assumes that the measures enacted in the past two years to provide fiscal stimulus to the weakened economy will expire as currently scheduled and that future annual appropriations will be kept constant in real (inflation-adjusted) terms.

Under those assumptions, the federal budget deficit would decline substantially over the next two years—to 4.2 percent of GDP in 2012—and, consequently, the budget would provide much less support to the economy than has been the case for the past two years

Translation: Congress has told the CBO to push for ending the Bush tax cuts and allowing the AMT to expand. They were also told to keep “annual appropriations” locked in at the current astronomically high rate.

Consequently, the CBO unabashedly claims that doing this will mean that “the federal budget deficit would decline substantially over the next two years.”

CBO projects that the economy will grow by only 2.0 percent from the fourth quarter of 2010 to the fourth quarter of 2011; even with faster growth in subsequent years, the unemployment rate will not fall to around 5 percent until 2014

Again, welcome to Mr. Obama’s ‘new normal.’

This article was posted by Steve on Thursday, August 19th, 2010. Comments are currently closed.

5 Responses to “The CBO Pushes For Ending Bush Tax Cuts”

  1. NoNeoCommies says:

    It is a shame that the CBO works like a computer.
    As I learned in my first programming class, GIGO (Garbage In, Garbage Out).
    Just like ‘surveys’, if the questions are written a certain way, the results are skewed the way you want.

    • proreason says:


      Essentially, the CBO is a computer that the criminals in congress program.

      They can get any answer they want by changing the inputs or if need be, the formulas. By doing it that way, the CBO can pretend to remain “objective” and “honorable”. Similarly, there must have been lots of “good accountants” working for Enron.

      At least we still have the Heritage Foundation, Cata Institute, and others…..for now.

  2. pianogirl88 says:

    Maybe it’s just me, but I think that logo looks like it’s giving us the finger…wouldn’t be the first time a government agency has done so.

  3. jackal40 says:

    Yet again another case of governmental corruption and incompetence. Just how can the CBO create a report on the 2010 budget when one hasn’t been passed yet. If we could get an adult in charge there, maybe they would say – “Sorry Congress, we can’t release a Budget Report until you pass a budget. B.T.W. you don’t get paid until you do.” or some such.

    I can just imagine what my creditors who say if I were to manage my money in this manner – whoops, it’s not Congresses money It’s Our F#cking Money.

  4. wardmama4 says:

    Where is a good treason trial (or 318 (Dems in Congress, WH & 4 libs on SC)) when you need it?

    Get Out Of (my) House!

    Repeal, Impeach, Restore

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