Continued from page 1

“This is one of the perverse incentives in this terrible law. It actually encourages able-bodied people to not work,” said Sen. John Barrasso, Wyoming Republican. “We should be doing all that we can to increase labor force participation. The health care law actually pushes it in the opposite direction.”

Deficit progress

Taking the budget as a whole, the CBO said Congress has made substantial headway on cutting spending and raising taxes, which will reduce the deficit to $514 billion this year and $478 billion in 2015.

But it will rise by 2016 and steadily grow to more than $1 trillion in 2022.

The CBO report said the economy isn’t rebounding as fast as is typical after a recession and that poor growth means less revenue for the Treasury. That means the cumulative deficit over the next decade will be $1 trillion more than projected last year.

National debt, which is the accumulation of annual deficits, is at its highest level since the aftermath of World War II. The CBO said debt held by the public will represent 80 percent of gross domestic product by 2024, the end of the budget window.

The report will give ammunition to those who argued that tax increases or spending cuts should have been delayed while the government pursued more economic stimulus over the past few years.

But the CBO suggested that the problems are more structural, given the aging U.S. population and women’s participation in the labor force.

The report said the labor market for the rest of this decade will recover more slowly than analysts predicted last year.

The analysts said that at the deepest part of the recession, GDP was 7.5 percent below the economy’s potential output. By the end of 2013, just half of that gap had been closed, meaning the economy still has plenty of room to improve.

“With output growing so slowly, payrolls have increased slowly as well — and the slack in the labor market that can be seen in the elevated unemployment rate and part of the reduction in the rate of labor force participation mirrors the gap between actual and potential GDP,” the CBO study said.