For Immediate Release: July 27, 2010
Contact: Alan Barber, 202-293-5380 x115
The Congressional Budget Office (CBO) is generally trusted as an impartial agency without a political agenda. A new study from the Center for Economic and policy Research (CEPR), however, calls attention to a change in the most recent long-term budget projections that is a departure from CBO’s past methodology and results in stark differences in projections for the impact of deficits on economic growth.
“While there is no universal model to apply to these types of projections, it is unusual that the CBO would, without explanation, make a change that so significantly alters long term projections,” said Dean Baker, a Co-Director of CEPR and author of the report.
“Has CBO Joined the Push for Cutting Social Security,” notes that the CBO has changed its modeling of the impact of deficits and debt on private investment. The result is that the long-term budget projections for 2010 show far more crowding out of investment than the 2009 projections, leading deficits to have a substantially more negative impact on GNP growth. These growth projections have been accepted in the media and many policy discussions as reliable projections for the impact of deficits on growth.
At a time when Congress is poised to make significant decision on the future of the America’s most important social programs, it is essential that policymakers understand the unusual nature of these latest projections.The full study can be found here.