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CBO Forecast: There's Good News And Bad News

Congressional Budget Office Director Douglas Elmendorf is reflected on a tabletop as he speaks about the office's annual Budget and Economic Outlook during an October 2013 news conference in Washington. A CBO study released Thursday projects a slight increase in the 2014 budget deficit.
Jacquelyn Martin
/
AP
Congressional Budget Office Director Douglas Elmendorf is reflected on a tabletop as he speaks about the office's annual Budget and Economic Outlook during an October 2013 news conference in Washington. A CBO study released Thursday projects a slight increase in the 2014 budget deficit.

The nonpartisan Congressional Budget Office is giving both Republican and Democratic partisans fresh fodder for the talking points they've already staked out on the economy.

The country's gross domestic product, according to its new report, will grow at just 1.5 percent this year — proof, say Republicans, that President Obama and Senate Democrats have been unable to bring the country out of recession.

At the same time, the per patient spending in Medicare actually decreased in the past year, a phenomenon CBO Director Douglas Elmendorf called "striking" — proof, say Democrats, that the cost-control measures in the Affordable Care Act are working, despite the GOP-led House's attempts to repeal the law.

Thursday's report is one of CBO's periodic forecasts about the federal budget and the economy. The group created a stir in February, when it projected that Obamacare would shrink the labor force because people would no longer feel compelled to work for an employer solely for access to health insurance.

Nothing quite as dramatic emerges from the new report, but it does contain a number of interesting tidbits.

Among those useful to Republicans:

  • This year's budget deficit will be $506 billion — $14 billion larger than it predicted this spring — thanks to a weaker-than-expected economy.
  • The labor market continues to be "slack," with an elevated unemployment rate and a decreased percentage of employees participating in the workforce.
  • Medicaid spending is up 15 percent over last year, largely because the expansion of that program to cover more poor people was also part of the ACA.
  • And among the nuggets Democrats can use:

  • The economy, which rebounded in the second quarter of this year after shrinking in the first quarter, should grow at a moderate 3 percent pace for the next couple of years.
  • Inflation should remain below 2 percent a year through the next decade.
  • The federal deficit, as a share of the economy, is under 3 percent — its lowest level since the financial crisis began — and should remain below 3 percent for the next four years.
  • Thursday's report does point out that, as a matter of policy, the CBO assumes existing law remains existing law when it develops its forecasts — even a law that is likely to change before the end of the year, like a package of tax breaks known as the "extenders."

    Congress is almost certain to pass the dozens of large and small provisions benefiting businesses and individuals before its term expires in January, and when it does so, it will add about $100 billion a year to the deficit.

    As these breaks are supported by both parties, neither party is likely to dwell on their cost.

    Copyright 2021 NPR. To see more, visit https://www.npr.org.

    Shirish Dáte is an editor on NPR's Washington Desk and the author of Jeb: America's Next Bush, based on his coverage of the Florida governor as Tallahassee bureau chief for the Palm Beach Post.
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