CBO Director holds mirror up to Congress

As the Congressional Budget Committee meets to address the economy they may want to start by looking in the mirror. Jesse Russell reports:

The Congressional budget conference committee heard comments from Congressional Budget Director Douglas Elmendorf on Wednesday who said the drag on the economy was in part due to the extreme fiscal tightening.

[Elmendorf]: It is the most abrupt fiscal tightening since the second World War. Although that tightening has had the beneficial effect of slowing the accumulation of debt our analysis indicates it has also slowed economic growth during the past few years.

Elmendorf said the slowing of the benefits of the stimulus package is an additional factor:

[Elmendorf]: The positive short term impact of the spending increases and the tax cuts in the 2009 recovery act has been fading for three years. other stimulus measures have expired.

The director predicted that continued uncertainty and showdowns over the economy would create strong headwinds to any efforts at economic recovery.

[Elmendorf]: Uncertainty about fiscal policy has been unusually high owing to the surge in debt and the stark disagreements about tax and spending policies, disagreements that have led repeatedly to delay enactments of appropriation bills, worries about default of federal debt, and showdowns over other budget issues.

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