The Congressional Budget Office would be stepping out of bounds if it endorsed specific legislation or even hazy policy objectives. But it’s hard to read CBO chief Doug Elmendorf’s testimony to the joint deficit Super Committee Tuesday as anything other than a de facto endorsement of President Obama’s broad strategy to boost the economy: legislation that spends money to hire people and reduces payroll taxes in the near-term, and that reduces deficits by even greater amounts in the middle and end of the decade.
“If policymakers want to achieve both a short-term economic boost and long-term fiscal sustainability the combination of policies that would be most effective according to our analysis would be changes in taxes and spending that would widen the deficit today, but narrow it in the coming decade,” Elmendorf told the panel’s 12 Democrats and Republicans. “The combination of fiscal policies that would be most effective would be policies that cut taxes or increase spending in the near-term, but over the medium and longer-term move in the opposite direction.”This is a generalized version of precisely what President Obama is proposing — a $447 billion jobs bill that will increase spending on hiring programs, and reduce payroll taxes; accompanied by deficit reduction measures that take effect in 2013, to more than cover the cost of the jobs bill.
But Elmendorf went even further, under questioning he ranked various tax cuts by their stimulative impact, and payroll tax cuts, benefitting employers and employees topped the list.
Many Republicans are resistant to the idea of using the joint committee as a vehicle to pass or pay for Obama’s jobs bill, a significant chunk of which they oppose. But the legislation is written in such a way that — if it passes — it will count any extra savings that the committee finds toward the cost of its bill. And at a Tuesday press conference House Speaker John Boehner encouraged the committee to go well beyond its statutory requirement of finding $1.2 trillion in deficit reduction.
Combined with the fact that the White House is now signaling that President Obama would sign piecemeal elements of his jobs plan, it’s feasible that this could be a path to passing at least some additional expansionary policies this year.
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