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blog post
January 31, 2012
Economy
CBO regularly assesses the state of the economy and the impact on the economy of proposed changes in federal spending and taxes. Analysts prepare economic projections that underlie CBO’s projections for the federal budget and cost estimates for proposed legislation; study major aspects of the economy such as trends in productivity and long-term unemployment; and examine the economic impact of changes in the nation’s tax system or reforms to federal programs.
monthly archive
- May 2013 (2)
- April 2013 (14)
- March 2013 (22)
- February 2013 (10)
- January 2013 (11)
- December 2012 (4)
- November 2012 (10)
- October 2012 (4)
- September 2012 (6)
- August 2012 (5)
- July 2012 (11)
- June 2012 (8)
Full Text
- document
Additional Data
- data underlying figures
- Alternative Minimum Tax
- Automatic Stabilizers
- budget projections
- economic baseline projections
- expiring tax provisions
- historical budget data
- key assumptions in projecting potential gdp
- tax receipts
Supplemental Material
- print-friendly charts from the outlook
- slides from press briefing
- CBO Releases the Budget and Economic Outlook: Fiscal Years 2012 to 2022
- Glossary
- blog post
Baseline Projections for Mandatory Spending Programs
- Child Nutrition Programs—January 2012 Baseline
- Child Support Collections—January 2012 Baseline
- Child Support Enforcement—January 2012 Baseline
- Foster Care and Adoption Assistance—January 2012 Baseline
- Military Retirement—January 2012 Baseline
- Pension Benefit Guaranty Corporation—January 2012 Baseline
- Social Security Disability Insurance—January 2012 Baseline
- Social Security Old-Age and Survivors Insurance—January 2012 Baseline
- Social Security Trust Funds—January 2012 Baseline
- Supplemental Nutrition Assistance Program—January 2012 Baseline
- Supplemental Security Income—January 2012 Baseline
- Temporary Assistance for Needy Families—January 2012 Baseline
- Unemployment Compensation—January 2012 Baseline
monthly archive
- May 2013 (2)
- April 2013 (14)
- March 2013 (22)
- February 2013 (10)
- January 2013 (11)
- December 2012 (4)
- November 2012 (10)
- October 2012 (4)
- September 2012 (6)
- August 2012 (5)
- July 2012 (11)
- June 2012 (8)
Policies for Increasing Economic Growth and Employment in 2012 and 2013
Highlights
The Economic Outlook
CBO expects that, in 2012 under current law,
- The unemployment rate will remain close to 9 percent and
- GDP growth will be about 2½ percent, with the level of GDP remaining well below its potential.
Fiscal Policy Options for Increasing Economic Growth and Employment in 2012 and 2013
One criterion for evaluating fiscal policy options is the impact on the economy per dollar of budgetary cost. Based on that measure of cost-effectiveness:
Higher-impact policies
- Reduce the incremental cost to businesses of adding employees or
- Are targeted toward people who would be most likely to spend additional income.
Lower-impact policies
- Primarily affect businesses’ cash flow but have little impact on their incentives to hire or invest.
Reductions in taxes and increases in government spending would produce short-term economic benefits—but without offsetting actions to reverse the accumulation of government debt, future output and future incomes would tend to be lower than they otherwise would have been.
If policymakers wanted to boost the economy in the near term while seeking to achieve long-term fiscal sustainability, a combination of policies would be required: changes in taxes and spending that would widen the deficit now but reduce it later in the decade.
Other Types of Policy Options for Increasing Economic Growth and Employment in 2012 and 2013
CBO examined an illustrative set of potential changes in regulatory policies and other kinds of legislative actions (other than changes in fiscal policy) related to energy and the environment, the financial and health care sectors, and international trade.
CBO concludes:
- Some changes in policies that CBO considered would probably raise output and employment during the next few years; other changes would probably lower output and employment.
- The economic effects of those specific changes would probably be too small or would occur too slowly to significantly affect overall output or employment in the next two years.
monthly archive
- May 2013 (2)
- April 2013 (14)
- March 2013 (22)
- February 2013 (10)
- January 2013 (11)
- December 2012 (4)
- November 2012 (10)
- October 2012 (4)
- September 2012 (6)
- August 2012 (5)
- July 2012 (11)
- June 2012 (8)