Aug 24, 2011
The Congressional Budget Office released its updated Budget and Economic Outlook today, confirming that the federal government remains on a dangerous fiscal course that will continue to restrain economic growth.
We are in a spending-driven debt crisis that threatens to burden future generations with the higher taxation and reduced prosperity.
When President Obama and Congressional Democrats’ controlled Washington, they embarked on an unprecedented spending spree that has hobbled the economic recovery, reduced investment, and destroyed American jobs.
House Republicans are committed to preventing Democrats’ from taking the nation further down an unsustainable path that will lead to a lower standard of living for generations to come.
CBO’s Updated Outlook by the Numbers
Fiscal year 2011 will mark the third straight year with deficits in excess of $1 trillion.
This year’s shortfall will represent 8.5 percent of GDP, the third largest deficit in the past 65 years (exceeded only by the deficits of the preceding two years).
Outlays will amount to 23.8 percent of GDP, well above their 40-year average of 20.8 percent.
Debt Held by the Public:
To pay for President Obama’s spending spree, debt held by the public will continue to increase over the next ten years, consuming roughly three quarters of the economy in 2013.
CBO set its economic forecast more than six weeks ago, well before the recent run of negative economic indicators and discussion of a possible double dip recession.
However, their economic outlook still shows sluggish growth with GDP expected to increase by 2.4 percent this year and 2.6 percent in 2012.
Slow economic growth will not generate enough job creation to bring the unemployment level below 8 percent until 2014. President Obama’s economic advisors promised that unemployment would not exceed this level if the stimulus was passed in February 2009.
Effects of the Budget Control Act of 2011
CBO’s updated outlook also demonstrates the positive impacts of the recently passed Budget Control Act, which will reduce spending by $2.1 billion over the next decade, noting:
“That estimate of deficits over the next 10 years is considerably lower than the $6.7 trillion that the agency projected in March. About two-thirds of that reduction stems from the effects of enacting the Budget Control Act, which set caps on future discretionary spending and created a process for adopting additional deficit reduction measures; the remainder is the result of changes in the economic outlook and technical revisions to CBO’s projections.”