CBO Projects Sluggish Recovery Through 2013
Expect more-of-the-same when it comes to the performance of the US economy for the next two years—with slow economic growth and unemployment rates remaining over eight percent.
At the beginning of each year, the Congressional Budget Office releases baseline budget projections for the next 10 years—providing a benchmark for measuring the impact of potential policy changes. According to the latest release of The Budget and Economic Outlook, economic output is expected to remain “below its potential until 2018.”
In addition to the baseline, the CBO also considers an ‘Alternative Fiscal Scenario’ that accounts for the anticipated continuation of certain tax policies that would otherwise expire, as well as other policy assumptions, including (according to the CBO website):
- Expiring tax provisions (other than the payroll tax reduction) are extended [under current law, those expirations will boost individual income taxes in a variety of ways by amounts totaling $3.8 trillion from 2013 through 2022];
- The AMT is indexed for inflation after 2011 [under current law, its parameters are fixed, and the number of taxpayers affected by the AMT will jump from 4 million in calendar year 2011 to 30 million in 2012];
- Medicare’s payment rates for physicians’ services are held constant at their current level [under current law, those rates are scheduled to drop by 27 percent this March and more in later years]; and
- The automatic spending reductions required by the Budget Control Act do not take effect [under current law, they will impose reductions totaling about $109 billion a year starting in January 2013].