The Week Just Past: CBO’s Gloomy Economic Portrait
(via email from my former rep):
“While today’s headlines focus on the good news that the unemployment rate dipped to 8.3 percent in January, you may not have seen the Congressional Budget Office (CBO) report this week that predicted the budget deficit will remain over $1 trillion this year and the national unemployment rate will actually rise to 8.9 percent by the end of year and to 9.2 percent in 2013. Both of these forecasts are much dimmer than those in CBO's last report in August.
“You can read more on the deficit projections below, but the number that jumped out of the CBO’s annual Budget and Economic Outlook related to the staggering amount of money the government will soon be taking out of our economy in the form of higher taxes, fees and penalties! CBO projects that the federal government’s ‘take’ will increase by more than 30 percent between 2012 and 2014!
“The reason: ‘recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.’
“From just 2012 to 2014, the increase in federal tax and other revenues from $2.523 trillion to $3.313 trillion equals $790 billion—or 31.3 percent!
“Historically, federal revenues have averaged “about 18 percent of our Gross Domestic Product (output of our economy). It’s been that way for the past 40 years. So, in the next two years federal tax revenues will rise from a level that is below the modern historical average to a level that is well above it.
“As a percentage of size of our entire economy, federal tax revenues were 15.4 percent in fiscal 2011, and will be 16.3 percent in 2012, 18.8 percent in 2013, and 20.0 percent in fiscal 2014.
“Let’s be clear: if the federal government takes these revenues, they will not be available in the ‘real economy’ where job creators and entrepreneurs are trying to invest and expand their businesses.
“Here’s the frightening takeaway from CBO’s report: if the government takes 30 percent more revenues out of an economy that is already running dangerously high budget deficits, you have a recipe for a downward economic spiral very similar to struggling European nations!
“I recognize that this CBO calculation is just a ‘snapshot’ of America’s economic and fiscal condition today. But it should serve as yet another warning that no nation can spend, tax, bail out, or borrow its way back to prosperity.
“We must change course. It’s time for Washington to tighten its belt, just as so many New Jersey families and small businesses have tightened theirs.
“And with a projected $1 trillion deficit and a $15 trillion national debt, there is much belt-tightening required!
Rodney Frelinghuysen
If you think education is expensive, try ignorance.
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B.] The average length of unemployment has increased dramatically since even the recovery started. Back in June 2009, “only” 29 percent of the unemployed had been unemployed longer than six months.