The Congressional Budget Office (CBO) is out today with a new set of projections for the U.S. economy—and the outlook isn’t pretty. With the so-called “fiscal cliff” of higher taxes and spending cuts looming at the beginning of 2013, the CBO is warning of the real chance of a renewed recession next year.
The nonpartisan CBO, in its semi-annual budget outlook, forecast that the economy would shrink 0.5% next year if lawmakers failed to avert the so-called fiscal cliff and allowed expiring tax cuts, mandatory spending reductions and other policy changes to take effect in January.
Previously, the agency projected that economic output would contract in the first half of next year, probably sending the nation into recession, but still manage to grow 0.5% for the year.
The new outlook says the unemployment rate would rise to 9.1% by the end of 2013, up from 8.2% forecast for the fourth quarter of this year. The latest actual jobless figure was 8.3% in July.
The best bet for addressing the fiscal challenges we face is to have smart, sensible reform of government spending—which includes reforms to Social Security, Medicare and Medicaid, the biggest offenders when it comes to runaway spending—combined with pro-growth tax policies that will allow the free market to thrive.
If nothing else, perhaps the CBO report will serve to refocus the campaign debate, which too often devolves into trivial disputes that we’ll all have forgotten in six months. It’s time to focus on the issues that matter most: getting our rampant spending ($1.1 trillion deficit this year) and debt (soon to top $16 trillion) under control. With the two parties gearing up for their respective national conventions in Tampa, Florida, and Charlotte, North Carolina, these issues deserve to be front and center.
Pete Hegseth is the CEO of Concerned Veterans for America and is the former executive director of Vets for Freedom. Pete is an infantry officer in the Army National Guard, and has served tours in Afghanistan, Iraq, and Guantanamo Bay.