For Immediate Release
Alan Barber, (202) 293-5380 x115
CBO Changes Methodology for 2010 Long-Term Budget Projection
WASHINGTON - 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 report can be found here.
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.