WASHINGTON, Feb. 10 (UPI) -- The director of the U.S. Congressional Budget Office said Thursday that an economic recovery will not be enough to bring the federal budget back into balance.
"Even after the economy is fully recovered, a return to sustainable budget conditions will require significant changes in tax and spending policies," Director Douglas Elmendorf told the House Committee on the Budget.
The CBO projects the U.S. gross domestic product -- the broadest measure of economic output -- will increase "about 3 percent this year and again next year," Elmendorf said.
Critically, however, "we have a long way to go on the employment front," he said. In dollars and cents, "Payroll employment which declined by nearly $9 billion in the end of 2007 and early 2010 has recovered by just a shade over $1 million since then," he said.
Currently, the CBO predicts it will take until 2016 for the unemployment rate to drop to 5.25 percent, "close to our estimate of the natural rate," he said.
Elmendorf asked members of the panel to envision what would happen if the recently extended tax breaks and the current payment rates for physician services through Medicaid were made permanent.
If each of these policies were made permanent "deficits from 2012 through 2021 would average about 6 percent of GDP … rather than the 3.5 percent under current law," he said. "And cumulative deficits over the decade would total nearly $12 trillion," he said.
