Congressional budget chief offers dim outlook on economic growth, jobs
{{#rendered}} {{/rendered}}Congressional Budget Office Director Doug Elmendorf on Wednesday projected that economic growth will slow by next year and unemployment will rise before that -- a forecast that Rep. Paul Ryan called ominous, grim and alarming.
Elmendorf laid out the latest projections on the economy and deficits before the House Budget Committee on Capitol Hill.
Ryan, R-Wis., who is chairman, raised alarm given projections that 2012 "will mark the fourth straight year of trillion-dollar deficits."
{{#rendered}} {{/rendered}}"Trillions more dollars will be added to debt in the years ahead, putting a chilling effect on jobs creation today and committing the next generation to a diminished future," he said.
Democratic Rep. Chris Van Hollen took a different approach, saying deficits and growth would have been worse without President Obama's stimulus plan. "The Recovery Act did serve its purpose. It's kind of like when you're walking up an escalator that's going down very quickly. If you take no action you will go down very fast," he said.
Yet future deficits depend in large part on how fast the economy grows, along with spending and revenues. And on that front, the CBO isn't offering a lot of encouragement.
{{#rendered}} {{/rendered}}"The pace of the recovery has been slow since the recession ended two and a half years ago," Elmendorf said. "And we project that it will continue to be slow for the next two years."
The CBO believes that economic growth will be only 2 percent this year -- and an anemic 1.1 percent next year.
The office says that will leave the unemployment rate at 8.9 percent at the end of this year, well above current the current rate of 8.5 percent, meaning the jobless rate would be increasing at election time.
{{#rendered}} {{/rendered}}That prompted this exchange between Rep. Tom McClintock, R-Calif., and the CBO director.
"Let me ask you, are there more people working today or fewer people working today than at the -- on inauguration day of 2009?" McClintock asked.
"I believe the answer to that," said Elmendorf, "is there are fewer people, congressman."
And in 2013, CBO estimates unemployment will be even higher -- at 9.2 percent.
{{#rendered}} {{/rendered}}Republicans have been wringing their hands about deficits for years, but one Democrat on Wednesday railed against those who focus only on cutting spending.
"Because there are people here that want to destroy the government, that it has no responsibility and it can't live up to the obligations," said Rep. Bill Pascrell, D-N.J.
Several Democrats asked about how much revenues would be increased by eliminating the Bush tax cuts in hopes of avoiding more spending cuts.
{{#rendered}} {{/rendered}}One of the factors that will expand future deficits is entitlements, such as Medicare, which will explode as the baby boomers retire.
Elmendorf explained that "the fundamental fiscal challenge during this decade and beyond remains the aging of the population and rising costs for health care. The number of people aged 65 or older will increase by one-third in the coming decade, substantially raising the costs of Social Security, Medicare and Medicaid."
In addition, he said, the new federal health care overhaul will significantly increase the number of non-elderly people receiving assistance through federal health care programs, such as Medicaid.
{{#rendered}} {{/rendered}}All of that is likely to balloon current levels of debt.
The CBO did project declining deficits under "current law."
But current law would end the Bush tax cuts for everyone, even those making less than $250,000 a year, which neither Congress nor the president supports.
{{#rendered}} {{/rendered}}It would also mean a cut of almost 30 percent to doctors who treat Medicare patients, which Congress has never let take effect.