By Brandon Moseley
Alabama Political Reporter
The Congressional Budget Office just issued its latest the latest CBO Budget and Economic Outlook report projecting that federal government spending and the national debt would continue to increase for years to come. Senator Jeff Sessions (R) from Alabama, the Ranking Member of the Senate Budget Committee, issued a press release commenting on the report. Sen. Sessions said that his committee’s estimates show that federal spending would be 53% higher than the CBO baseline estimate. Sen. Sessions say that the national debt will increase by $11.4 trillion over the next decade.
Senator Session said, “An honest analysis tells us that spending is set to increase by 53 percent over the next ten years, producing an estimated $11.4 trillion in new gross debt. This is dangerously unsustainable. On February 13th the president will face a crucial test, one that will define the character of his presidency: will he finally submit a budget that brings our stratospheric spending back down to earth? Or will he continue to grow the government and bring America tragically closer to ‘the most predictable economic crisis in its history.’?”
The CBO report predicts much slower debt increases because of predictions of dramatically higher tax rates. The report says that “much of the projected decline in the deficit occurs because, under current law, revenues are projected to shoot up by almost $800 billion, or more than 30 percent, between 2012 and 2014—from 16.3 percent of GDP in 2012 to 20.0 percent in 2014. That increase is mostly the result of of the recent or scheduled expirations of tax provisions, such as those initially enacted in 2001, 2003, and 2009 that lower income tax rates and those that limit the number of people subject to the alternative minimum tax (AMT).”
The CBO report expects high unemployment and a slow economic recovery “In part because of the dampening effect of the higher tax rates and curbs on spending scheduled to occur this year and next, CBO expects that the economy will continue to recover slowly, with real GDP growing by 2.0 percent this year and 1.1 percent next year (as measured by the change from the fourth quarter of the previous calendar year). CBO expects economic activity to quicken after 2013 but to remain below the economy’s potential until 2018.” In CBO’s forecast, the unemployment rate remains above 8 percent both this year and next, a consequence of continued weakness in demand for goods and services. As economic growth picks up after 2013, the unemployment rate will gradually decline to around 7 percent by the end of 2015, before dropping to near 5½ percent by the end of 2017.”
The CBO says that their economic forecast is assuming that the European Debt Crisis does not cross the Atlantic and plunge the American economy into a second recession. The report admits there is a possibility that, “A significant worsening of the banking and fiscal problems in Europe could spill over to U.S. financial markets and greatly weaken the economy here.”
The Democratic Party controlled U.S. Senate has not passed a budget in over 1000 days even though the Republican House passed the Ryan Budget in the Spring and sent it to the Senate.
To see Sessions statement:
To read the Congressional Budget Office Report on the Budget and Economic Outlook:
http://www.cbo.gov/doc.cfm?index=12699
