If you’re looking for good news from the Congressional Budget Office’s annual summer update of its budget and economic outlook, which was released today, there’s always this: at least the CBO isn’t predicting that double-dip recession. According to the non-partisan agency that provides economic data to Congress, real GDP will increase by 2.3% this year and 2.7% next year. “That forecast reflects CBO’s expectation of continued strong growth in investment by businesses, moderate increases in spending by consumers, gains in net exports (exports minus imports), and the beginning of a recovery in new-home construction,” wrote CBO director Douglas Elmendorf in a blog post on the agency’s website.
Elmendorf, however, does add a disheartening caveat to these already thin growth projections. While these projections do account for spending reductions enacted by the controversial debt ceiling deal in early August, Elmendorf writes that the “forecast does not reflect any other developments since early July, including the recent swings in financial markets, weakness in certain economic indicators, and the annual revision to the national income and product accounts. Incorporating that news would have led CBO to temper its near-term forecast for economic growth.” Yup, yet another economic buzzkill.
And the unemployment projections, which already have President Obama’s opponents salivating, are even more depressing. The CBO is projecting an 8% or higher unemployment rate through fiscal 2014. In its January update, the CBO said unemployment would average 6.4% from 2013-2016. Now, the CBO is forecasting 7% unemployment during that period.
“The president’s policies were supposed to keep that from happening,” House Speaker John Boehner said in a press release. “Instead, they’ve added trillions to our debt at the expense of our children and put our nation’s credit rating in jeopardy. Where are the jobs?”
What Boehner fails to mention, of course, is that the CBO also pointed out that tax and spending cuts which Boehner and other Republicans championed are at least partially responsible for the grim employment picture. In his blog post, Elmendorf emphasizes that these projections take into account the extension of the Bush tax cuts, “discretionary spending declines over time in real terms, in accordance with caps established under the Budget Control Act,” and “additional deficit reduction totaling $1.2 trillion over the 2012-2021 period implemented under the Budget Control Act.”
And, Elmendorf writes, “if some of the changes specified in current law did not occur and current policies were continued instead, much larger deficits and much greater debt could result.” At the same time, however, “real GDP would be higher in the first few years of the projection period than in CBO’s baseline economic forecast. For example, CBO estimates that the size of real GDP in 2013 would be between 0.6 percent and 2.3 percent greater than projected under current law. Faster GDP growth would result in a lower unemployment rate.”
Congress is free to tout the benefits of government austerity. But for the Speaker of the House of Representatives to knock the President alone for the unemployment numbers in this report, while the head of the organization that produced it, an organization tasked with providing economic data to Congress, says that such austerity is costing Americans jobs – that’s the epitome of political hypocrisy.