President Barack Obama’s proposed 2013 budget would damage the economy in the long run by creating big deficits that would shrink the amount of capital available to businesses, the nonpartisan Congressional Budget Office said Friday.
“CBO estimates that the President’s budgetary proposals would boost overall output initially but reduce it in later years,” the
CBO report said.
It said the plan would create larger deficits, causing the government to issue more bonds and thus eating up private capital to cover its debts. That would cut into the money available for businesses to expand and create more jobs, the CBO said.
It also said that an increased tax on capital gains in the president’s proposal would reduce private capital as well.
After five years, the report said, Obama’s budget would reduce economic output by between 0.5 percent and 2.2 percent.
The CBO analysis is a follow-up to a March report in which it projected that Obama’s proposals would add $3.5 trillion to deficits over 10 years compared to current law.
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