CBO: Obama Jobs Bill will increase the budget deficit

This afternoon CBO released a cost estimate for S. 1549, the American Jobs Act of 2011, as introduced by Senator Majority Leader Harry Reid on September 13, 2011. That legislation corresponds to the plan put forth by President Obama. We also released a cost estimate for S. 1660, the American Jobs Act of 2011, as introduced by Senator Reid on October 5, 2011. Senator Reid’s alternative bill, S. 1660, includes the same tax cuts and spending increases as S. 1549, but it offsets the budgetary impact of those provisions in a different way, as described below. Those estimates represent joint work by CBO and the staff of the Joint Committee on Taxation (JCT).

CBO anticipates that enacting either bill could have a noticeable impact on economic growth and employment in the next few years. Following long-standing Congressional budget procedures, however, the estimates released today do not address the potential budgetary effects of such changes in the economic outlook.

What Is The Impact of the Bills on the Federal Deficit?

CBO estimates that enacting the President’s plan would increase the budget deficit by $288 billion in 2012 and decrease deficits by $3 billion over the 2012-2021 period. That estimated deficit reduction of $3 billion over the coming decade is the net effect of $447 billion in additional spending and tax cuts and $450 billion in additional tax revenue from the offsets specified in the bill.

CBO estimates that enacting Senator Reid’s alternative bill would increase the budget deficit by $285 billion in 2012 and decrease deficits by $6 billion over the 2012-2021 period. That estimated deficit reduction of $6 billion over the coming decade is the net effect of $447 billion in additional spending and tax cuts and $453 billion in additional tax revenue from the offset specified in the bill.

What Tax Cuts Would Be Provided Under the Bills?

Both bills would reduce payroll taxes for employees and employers. Both bills would also provide businesses with accelerated deductions for the costs of certain investments. CBO and JCT estimate that these provisions in both bills would reduce revenues by an estimated $271 billion over the 2012-2021 period.

Read more at  Director’s Blog » Blog Archive » Estimated Budgetary Impact of Two Versions of the American Jobs Act.

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