Aug 25, 2010

Congressional Budget Office and Economic Recovery Act in the News

Office of the Vice President
For Immediate Release

August 24, 2010

Statement by the Vice President on New CBO Report on Employment and Economic Impact of the Recovery Act

Vice President Joe Biden today issued the following statement on a new report from the Congressional Budget Office on the employment and economic impact of the American Recovery and Reinvestment Act:

“This new analysis from the nonpartisan Congressional Budget Office is further confirmation of what we’ve been hearing from leading economists, the nation’s governors and families across the country: the Recovery Act is working to rescue the economy from eight years of failed economic policy and rebuild it even stronger than before. When the CBO, Congress’s top watchdog and an institution widely-respected on both sides of the aisle, says that because of the Recovery Act as many as 3.3 million Americans are on the job today and the unemployment rate is as much as 1.8 percent lower, it’s impossible for even the most cynical, bent-on-rooting-for-failure critics to deny. So while Republicans in Congress – the same party that got us into this mess in the first place - may want to turn back the clock and drive us back into the same ditch we’re making our way out of, it’s now clearer than ever before that we can’t afford to go backward; we have to keep moving forward and build on measures like the Recovery Act that are creating jobs and making us competitive in the 21st century economy.”

According to the CBO report, “Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output from April 2010 through June 2010,” in the second quarter of 2010, the Recovery Act:
• Raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent,
• Lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points,
• Increased the number of people employed by between 1.4 million and 3.3 million


Aug. 24, 2010, 3:24 p.m. EDT
Stimulus plan boosted GDP by as much as 4.5%, says CBO
By Steve Goldstein, MarketWatch

WASHINGTON (MarketWatch) -- The oft-criticized stimulus plan boosted the economy in the second quarter by as much as 4.5%, the Congressional Budget Office said on Tuesday.

In a report published the same day as Minority Leader John Boehner's criticism of President Obama's economic policy, the CBO said the stimulus law boosted the economy by between 1.7% and 4.5%, lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points and increased the number of people employed by between 1.4 million and 3.3 million.

In practice, that means the stimulus plan is the main reason the U.S. economy grew during the second quarter. The Commerce Department estimates the economy grew 2.4% in the second quarter, a figure most economists expect to be sharply revised lower in a report due Friday.

The CBO said the impact from the stimulus law on output and employment, however, will gradually diminish during the second half of 2010 and beyond.

The CBO also upwardly raised the cost of the stimulus plan to $814 billion from $787 billion.

Study: US stimulus package may have averted second recession,stimulus-package-averted-recession.html

Washington - A massive government stimulus package approved last year may have helped the United States avert a double-dip recession in the second quarter, the non-partisan Congressional Budget Office (CBO) found on Tuesday.

The CBO said the controversial two-year stimulus, President Barack Obama's signature economic plan that was enacted in March 2009, raised US economic output anywhere from 1.7 per cent to 4.5 per cent between April and June of this year.

An initial government estimate last month said gross domestic output (GDP) slowed to 2.4 per cent in the second quarter. Economists predict that number could be lowered as much as one percentage point in a revised estimate due out on Friday.

The slowdown in growth has stoked fears among some economists that the United States could be headed for a double-dip recession. The world's largest economy began growing again in the summer of last year after experiencing the worst downturn in decades.

The US unemployment rate has remained at 9.5 per cent despite the return to growth. But the CBO said the stimulus package, estimated to cost 814 billion dollars, helped create between 1.4 million and 3.3 million jobs.

Conservative Republicans have sharply criticized Obama's stimulus package as a wasteful and unnecessary spending measure that added to an already skyrocketing budget deficit.

They point to the sputtering US economic recovery as evidence of the stimulus' failure. The Obama administration insists the situation would have been far worse without the package and has pushed for more spending measures to ease pressures on small businesses.
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