The Congressional Budget Office on Wednesday forecast that the U.S. economy will grow by just 1.5 percent in 2014, undermined by a poor performance during the first three months of the year. The new assessment was considerably more pessimistic than the Obama administration's, which predicted last month that the economy would expand by 2.6 percent this year even though it contracted by an annual rate of 2.1 percent in the first quarter...Even with the [Q2] rebound, economists have lowered their outlook for the entire year, given the weak start. Economists at JPMorgan Chase are forecasting that the economy will grow by 1.9 percent this year, when measured from the fourth quarter, down from 3.1 percent in 2013.
The Congressional Budget Office released another report on the nation’s debt and deficit picture today, and the short version goes something like this: We’ve made some short-term progress in reducing annual deficits, but the long-term debt picture is still quite bleak. It’s the calm before the storm more than a sign that all is well...even as annual deficits have declined, total federal debt levels have remained high. And they are expected to rise to unprecedented levels in the years to come. By the end of this fiscal year, the CBO says, federal debt held by the public will equal 74 percent of GDP, double its 2007 level...The higher the debt levels, the bigger the problems for the nation, especially when debt levels are this high. As the CBO notes (and has said repeatedly in previous reports), higher debt means higher federal spending on interest to maintain the debt, lower economic growth rates, less flexibility for policymakers in all matters, and an increased risk of a fiscal crisis. Basically, debt costs money to carry, and robs the nation of other options: the more a nation owes, and the more it spends on debt, the fewer choices it has to do other things, which creates a kind of precarious state in which really big problems—like a fiscal crisis—are more likely, and harder to deal with when they do occur. It’s a fiscal feedback loop, and it’s threatening to drag us down.
Guy Benson is Townhall.com's Political Editor. Follow him on Twitter @guypbenson. He is co-authors with Mary Katharine Ham for their new book End of Discussion: How the Left's Outrage Industry Shuts Down Debate, Manipulates Voters, and Makes America Less Free (and Fun).
Author Photo credit: Jensen Sutta Photography
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