Having barely avoided falling off the fiscal cliff on January 1, we soon found ourselves sliding down a slippery slope toward a dark and gloomy abyss. The sequester was postponed for only two months, the debt ceiling was raised, but only until May, and we continue to hurtle toward the March 27 expiration of the FY13 continuing resolution (CR) with nary an appropriations bill in sight of passage. Some departments have already put hiring freezes in place and are planning furloughs if sequestration isn’t canceled, or at least delayed again.
Yesterday, however, brought a bit of good budget news, sort of. The nonpartisan Congressional Budget Office (CBO) projected that the FY13 deficit will fall below $1 trillion for the first time in five years, and is now estimated to come in at only $845 billion. CBO also projects that deficits will continue to fall through 2018, and will comprise less than three percent of GDP, a level that many economists believe to be manageable. The bad news? – the falling deficit projection is due in part to the January 1 tax increases, but also to the spending cuts that will occur as a result of the sequester. In addition, CBO projects that the tax increases and sequestration will result in a 1.25% fall in GDP, and the loss of 1.5 million jobs.
As seen in this morning’s Daily Awesome, the Government Affairs Institute will be exploring these and other issues critical to the federal departments and agencies at our New Congress course later this month.
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