President Obama claims his proposed budget will reduce the deficit by over $3 trillion in ten years. The Congressional Budget Office disagrees, estimating that his budget will actually increase deficits by $3.5 trillion. The CBO also says that his plan would also impede economic growth and will reduce economic output by up to 2.2%.
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.
After five years, the CBO says, the Obama proposals would reduce economic output by between 0.5 percent and 2.2 percent.
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 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.
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. (Read More)
Seeing that the CBO is made up of government bureaucrats, no doubt his budget would actually be much worse. But that’s okay with O, seeing that he’s more interested in what he refers to as fairness. As if wrecking the economy is fair.