CBO tells it like it isCBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.
UPDATE: one commentor reminds us that the CBO also estimates a short run increase in GDP:
CBO estimates that the Senate legislation would raise output by between 1.4 percent and 4.1 percent by the fourth quarter of 2009; by between 1.2 percent and 3.6 percent by the fourth quarter of 2010; and by between 0.4 percent and 1.2 percent by the fourth quarter of 2011.
UDATE: The bigger long run risk is that
Chinese and Japanese stop buying our bonds. When that happens, we will likely monetize the debt. Its not as if this hasn't happened before:
...in the late 1970s, when the Fed's deficit financing sent the CPI up to an annual rate of almost 15%. That confounded the Keynesian theorists who believed then, as now, that federal spending "stimulus" would restore economic health.
For anyone more interested in the actual report than a misleading snippet from a hack newspaper, here is a helpful link:
ReplyDeletehttp://cboblog.cbo.gov/?p=205
"CBO estimates that the Senate legislation would raise output by between 1.4 percent and 4.1 percent by the fourth quarter of 2009; by between 1.2 percent and 3.6 percent by the fourth quarter of 2010; and by between 0.4 percent and 1.2 percent by the fourth quarter of 2011."
Yeah, GDP is reduced by 0.1-0.3% by 2019, but there are larger boosts in 2009-2011. Call me crazy, but that sounds like a short term economic stimulus to me. So, Democrats need to be more realistic about the long-term costs. Now can Republicans stop pretending that there won't be any positive effects in the short-term? Or are you content to ignore the first half of the report you yourself approvingly referenced?