Entries in CBO (6)


Congressional Budget Office Describes Consequences of 'Fiscal Cliff'

Comstock Images/Thinkstock(WASHINGTON) -- Now that all the confetti has been cleaned up, the harsh reality of dealing with the so-called "fiscal cliff" looms for President Obama and Congress over the next seven weeks.

Expiring tax cuts, deep automatic spending reductions and the growing deficit have combined for a perfect storm that could send the U.S. plummeting into another recession by early 2013 and add trillions to the national debt, according to the non-partisan Congressional Budget Office.

On Thursday, the CBO got more specific about what inaction will mean for the country.  For instance, the unemployment rate would jump from its current 7.9 percent to 9.1 percent by this time next year.

Keeping the tax breaks, the CBO said, should create about 1.8 million jobs in 2013.  The White House and Democrats say that shouldn't include the nation's wealthiest taxpayers, contending that 1.6 million jobs would still be added to the economy if the breaks are extended for the other 98 percent of Americans.

The CBO predicts that if tax breaks for all are extended along with fixing the Minimum Tax, halting the automatic spending cuts and extending expiring payroll tax cut and unemployment benefits, the gross domestic product would rise three percentage points by the end of next year.

Of course, there's a catch and it's big one.  Avoiding the entire fiscal cliff will mean adding to the annual deficit -- currently around $1 trillion -- by $503 billion in 2013 and $682 billion in 2014.

Copyright 2012 ABC News Radio


White House: CBO Report Shows ‘Urgent Need’ for Congressional Action

Comstock/Thinkstock(WASHINGTON) -- The White House is pointing the finger at Republicans in Congress after the Congressional Budget Office warned that the looming “fiscal cliff” could push the economy into recession.

Wednesday’s report “reinforces the urgent need” for House Republicans to extend the Bush-era tax cuts for the middle class, the White House said in a written statement from press secretary Jay Carney.  “Instead of doing the right thing, Republicans in Washington have chosen to double down on the same failed policies that led to the economic crisis in the first place.  They’re willing to hold the middle class hostage unless we also give massive new tax cuts to millionaires and billionaires – tax cuts we can’t afford that would do nothing to strengthen the economy.”

The administration is also calling on lawmakers to “act right now” to replace the impending spending cuts with balanced deficit reduction.  The CBO report found that the combination of tax increases, set to take effect in January, and spending cuts, part of the compromise budget measure agreed to last year after lawmakers failed to reach a deficit-reduction plan, would result in higher unemployment if Congress does not act.

In a statement, the Romney campaign said the report is an indictment of the president’s economic policies “that have resulted in overspending, increasing debt, and a growing financial burden on the next generation.”

Copyright 2012 ABC News Radio


‘Fiscal Cliff’ Looms for US Economy, CBO Warns

ABC News(WASHINGTON) -- Allowing Bush-era tax cuts to expire coupled with a scheduled round of automatic spending cuts would probably throw the U.S. economy into a tailspin. That’s the dire warning from a new Congressional Budget Office report that says the economy would contract by 1.3 percent in the first half 2013, pushing off a "fiscal cliff” on Jan. 1.

That’s when a higher tax rate would kick in if the Bush-era tax cuts aren’t extended and more than $100 billion in automatic cuts in domestic spending for agencies such as the Pentagon are kept in place.

Though lawmakers are expected to head off a shift in the government’s financial situation later this year or in early 2013, the CBO says if nothing is done it would likely push the US economy into recession and wring hundreds of billions of dollars from the budget deficit. That would “represent an additional drag on the weak economic expansion,” the CBO says.

The CBO is a nonpartisan agency of Congress that produces economic analysis and estimates of the cost of legislation.

Last summer’s debt and budget agreement imposed almost $1 trillion in cuts to agency budgets over the coming decade and required automatic cuts of another $1 trillion or so.

The CBO study comes as Congress is gridlocked over spending and taxes in advance of the fall elections. The White House and top Democrats are refusing to act on the expiring tax cuts and automatic spending cuts unless Republicans show greater flexibility on raising taxes.

If no deal is reached, the CBO projects that the economy would shrink by 1.3 percent in the first half of 2013, which would meet the definition of a recession, which is when the economy shrinks for two consecutive quarters.

“Such a contraction in output in the first half of 2013 would probably be judged to be a recession,” CBO said.

Copyright 2012 ABC News Radio


CBO Calls for Major Steps to Slash Federal Deficit

Stephen Chernin/Getty Images(WASHINGTON) -- The U.S. is running a deficit this year of $1.3 trillion, the third largest on record.  But, as the nonpartisan Congressional Budget Office said Wednesday, things could get markedly better if those much-disputed 2001 Bush-era tax cuts are allowed to expire.

According to the CBO, the tax breaks should end along with the payroll tax reduction, federal emergency unemployment benefits and reduced Medicare payment rates to physicians.

If that all happens, the CBO says projected deficits would be trimmed by $3.3 trillion over the next decade, provided that the debt-reduction agreement signed earlier this month also comes into play.

All this is a best-case scenario.  While President Obama wants tax breaks for the rich and corporations to expire by the end of 2012, Republicans are fighting him at every turn, charging him with hurting the job creators and fueling class warfare.

Copyright 2011 ABC News Radio


Working on Jobs Plan, President Obama Speaks to Amex, GE CEOs

SAUL LOEB/AFP/Getty Images(WASHINGTON) -- On a day that the Congressional Budget Office predicted slow economic growth, and an unemployment rate still over 8 percent by the end of next year, the White House says President Obama continues to work on his new jobs plan during his Martha’s Vineyard vacation. And the president is taking some advice.

On Wednesday, Obama talked to his friend and GE CEO Jeffrey Immelt and American Express CEO Ken Chenault, who both serve on the president’s jobs council. Some of their ideas included finding ways to increase the number of college educated engineers, and putting construction workers to work retrofitting old buildings to make them more energy efficient.

Stimulus may be a dirty word in Washington, but it will be part of the president’s new jobs plan.

“We're going to have some additional ideas that should have some bipartisan support,” principal deputy press secretary Josh Earnest told the traveling White House Press corps in Martha’s Vineyard. But that’s exactly what the White House has said for months now, only to have Republicans refuse to play ball.

“And the president's articulated his frustration about that.  He's pointed out that the American people voted for divided government, but they didn't vote for dysfunctional government,” Earnest said.

The president was briefed Wednesday by Brian Deese of his economic team. Earnest says that team is still working on the nuts and bolts of the plan.

The White House says the president’s plan will have “aspects that will be new” including efforts to cut more than the $1.5 trillion the Congressional “Super-Committee” has been tasked with cutting. The speech is still planned for “shortly after” Labor Day.

Copyright 2011 ABC News Radio


CBO Projects Record Deficit 

Photo Courtesy - Getty Images(WASHINGTON) -- The non-partisan Congressional Budget Office predicted Wednesday this year’s federal budget deficit will come in at $1.5 trillion, a new record. 

“For 2011, the Congressional Budget Office projects that if current laws remain unchanged, the federal budget will show a deficit of close to $1.5 trillion, or 9.8 percent of GDP,” the CBO said in a new report.

Senate Budget Committee chairman Kent Conrad called the projections a “wake-up call to the nation.”

“CBO’s report should be another wake-up call to the nation,” Conrad said in a paper statement. “In the near-term, due to passage of the tax extension package and the slow pace of the economic recovery, CBO is now expecting to see deficits of more than $1 trillion a year continuing through at least 2012. And as disturbing as those near-term deficits are, the long-term outlook is even worse. It is the deteriorating long-term outlook that is the biggest threat to the country’s economic security.”

“The fiscal challenge confronting us is enormous,” Conrad said. “To solve this problem, it will require real compromise and a great deal of political will. We need everyone at the table. And we need to have both sides, Democrats and Republicans, willing to move off their fixed positions and find common ground. We can’t continue to put this off. We need to reach an agreement this year. The President’s Fiscal Commission provided a model for a bipartisan way forward. Now it is up to the Administration and members on both sides of the aisle in Congress to come together to finish the job.”

On the jobs front, CBO projected that the unemployment rate will fall to 9.2 percent in the fourth quarter of 2011 and 8.2 percent in the fourth quarter of 2012.

Copyright 2011 ABC News Radio

ABC News Radio