Van Hollen Statement on CBO Deficit Estimate

Statement

Maryland Congressman Chris Van Hollen, Ranking Member of the House Budget Committee and member of the Joint Select Committee on Deficit Reduction, today issued the following statement in response to the Congressional Budget Office's (CBO) estimate of the portion of the federal deficit that is due to the current underutilization of capital and labor resources in the economy. CBO's estimate is in response to a September 27th request from Van Hollen.

"I asked CBO to estimate the size of the deficit if the economy were at full employment, and CBO's response confirms that our weak economy is the major contributing factor, accounting for over one third of the projected deficit for fiscal year 2012. It's clear that the fastest and most effective ways to reduce the short term deficit is to put Americans back to work.

"In addition to the effects of the poor economy and emergency economic policies, the 2012 deficit also reflects hundreds of billions of dollars lost from tax loopholes and breaks that benefit the wealthiest Americans. In its letter, CBO estimates that the 2012 deficit will be 6.2 percent of GDP. The continuation of the 2001 and 2003 tax cuts accounts for about one third of that 2012 deficit. Any credible policy to reduce the deficit will clearly have to take a balanced approach that address revenue as well as spending."

The CBO letter is available here: http://www.cbo.gov/ftpdocs/124xx/doc12440/10-04-Portion_of_Deficit_Due_to_Cyclical_Weakness.pdf

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