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CBO: ‘Great deal of the pain’ of downturn still to come
Congress' official scorekeeper said Tuesday that the United States will continue to see slow economic growth for the next several years as job openings and a lack of demand for goods and services continue to block a speedier rebound.
"A great deal of the pain of this downturn lies in front of us still," Douglas W. Elmendorf, director of the Congressional Budget Office, told reporters as he laid out a daunting list of challenges on both the budget and the economy.
He said output in the U.S. economy is about 5 percent below what it could otherwise be if labor and capital were both at their potential peaks, and said that even at the end of this decade the recession's effects will linger.
And Mr. Elmendorf added that the government's fiscal situation fundamentally has changed and lawmakers need to come to grips with the fact that they cannot continue to have lower taxes, ever-increasing federal spending on the elderly and health care, and still fund defense, education and the rest of government priorities at the same levels.
"We cannot repeat the budget past," Mr. Elmendorf said at a breakfast hosted by the Christian Science Monitor. "We cannot have revenues as the same share of GDP, and have the same sort of programs for older Americans, and run the rest of the government in the same way."
Congress uses the CBO's calculations to write a budget and determine spending policies, and the nonpartisan agency's estimates can mean success or failure for legislation. During the health care debate, the CBO's cost estimates were heatedly debated, and this year the agency's projections for the House budget drew fire from Republicans.
The budget office also has been charged with reviewing the effects of the 2009 stimulus package, and its analysis says that the spending did help, though maybe not as much as the Obama administration projected when it said the Recovery Act would be responsible for 3.5 million jobs.
According to the CBO, the extra stimulus spending supported between 1.4 million and 3.6 million jobs at its peak. But the low-end figure is just as likely as the top-end figure, meaning that it's just as likely the administration hit less than half its target.
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