Projecting slow growth and high unemployment over the next six years, the Congressional Budget Office released its updated report Wednesday that paints a dire economic picture for the foreseeable future. The nonpartisan agency forecasts the country’s jobless rate will remain above 8 percent until 2014 and economic growth will be 2.7 percent next year. President Obama’s critics pointed out that the projection breaks a promise by the administration, which said the stimulus package would reduce unemployment.
And while the budget deficit will remain at about $1.3 trillion this year, the CBO highlights the debt ceiling bill Obama signed on August 2 will reduce the deficit over the next two years.
The problem with the semi-annual report is that it makes a number of assumptions, such as a divided Congress being able to cut government spending and raise revenue.
From The Daily Caller:
The CBO is required to assume that Congress will continue existing law — meaning that it will not extend the tax cuts signed by President George Bush in 2003 and President Barrack Obama in 2011, won’t extend the alternative minimum tax, and will cut fees paid to Medicare doctors according to the timeline of current law.
However, the federal government has also committed to spend future funds on numerous discretionary programs and entitlement programs, such as Medicare.
The gap between those commitments and likely tax revenue is $211 trillion, partly because of the post-retirement expectations of 78 million baby boomers, according to Boston University professor, Laurence Kotlikoff, who worked on the White House’s Council of Economic Advisers for President Ronald Reagan. To close that huge gap, Kotlikoff said, federal government spending should be cut by 40 percent, or taxes should be raised by roughly 65 percent, he told NPR on August 6.
Given the lack of confidence the American people have in Congress and lawmakers recent debate about the debt ceiling, this usually logical step is considered a tall order by political observers.