CBO Forecast Confirms Economy on the Rebound But Deficits Continue
Last week the Congressional Budget Office (CBO) released its annual Budget and Economic Outlook, a report showing that our economy is starting to recover from the worst recession since the Great Depression, and that we must tackle the deep budget deficit and put our nation on a path to long-term fiscal sustainability.
CBO’s January 26th report confirms that Democratic actions taken over the last two years have helped the economy respond to the Great Recession that was in full swing at the end of the Bush Administration. The American Recovery and Reinvestment Act (Recovery Act) created between 1.3 and 3.5 million jobs in the fourth quarter of 2010 and lowered unemployment by between 0.7 and 1.9 percentage points. The Patient Protection and Affordable Care Act will contribute $230 billion to deficit reduction over the next ten years, and more than $1 trillion in the following ten years. These new laws and other actions are helping to create jobs, boost the middle class, and put the economy back on track. These short-term goals are precursors to fulfilling our long-term goal of reducing the federal budget deficit.
The Republican prescription for our economy has not worked in the past and will not work now. Their proposed solution – tax cuts for the wealthy matched with deep cuts in domestic spending – is counter-productive while the economy is still struggling, and may push us back into a recession. Tax cuts for the wealthy failed to stimulate the economy over the past ten years and only deepened the deficit; continuing these policies just promises more of the same. Federal spending cuts now will not only reduce needed services, they will also hurt the economy, slowing the creation of new jobs and supports for the middle class in the short term.