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Congressional Budget Office

Congressional Budget Office. The Economic Outlook and Fiscal Policy Choices Testimony before the Committee on the Budget United States Senate September 28, 2010. Douglas W. Elmendorf Director. Labor Force Participation and Unemployment Rates. Percent.

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Congressional Budget Office

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  1. Congressional Budget Office The Economic Outlook and Fiscal Policy Choices Testimony before the Committee on the Budget United States Senate September 28, 2010 Douglas W. Elmendorf Director

  2. Labor Force Participation and Unemployment Rates Percent

  3. History and Projection of the Unemployment Rate Percent

  4. Policy Options • Policymakers cannot reverse all of the effects of the housing and credit boom, the subsequent bust and financial crisis, and the deep recession. However, in CBO’s judgment, there are both monetary and fiscal policy options that, if applied at a sufficient scale, would increase output and employment during the next few years. • Those same fiscal policy options would increase federal debt, which is currently larger relative to the size of the economy than it has been in more than 50 years—and is headed higher. • If policymakers wanted to achieve both stimulus and sustainability, a combination of policies would be required: changes in taxes and spending that would widen the deficit now but reduce it relative to baseline projections after a few years.

  5. Cumulative Effects of Policy Options on Employment in 2010 and 2011, Range of Low to High Estimates Note: Assumes enactment early in 2010.

  6. Effects of Four Tax Policy Options on Real GNP in 2011 and 2012, Range of Low to High Estimates

  7. Effects of Four Tax Policy Options on Real GNP in 2020

  8. Rising Burden of Federal Debt Held by the Public Percentage of GDP

  9. Additional Slides

  10. Unemployment Rate, for Men and for Women, 1980 to 2010 Percent

  11. Unemployment Rate by State, August 2010

  12. Effects of Policy Options on Output and Employment in 2010 to 2015, Assuming Enactment in Early 2010

  13. Effect of Four Tax Policy Options on Federal Revenues and Marginal Tax Rates, 2011, 2012, and 2020

  14. Effect of Four Tax Policy Options on Macroeconomic Outcomes in 2011 and 2012

  15. Effects of Four Tax Policy Options on Real GNP in 2020 and the Long Term

  16. Long-Term Unemployment Rate Percent Note: The long-term unemployment rate is the percentage of people in the labor force who have been unemployed for longer than 26 weeks.

  17. Projected Federal Revenue and Spending in 2020 With Tax Cuts Extended and AMT Indexed Current Law (Baseline)

  18. Shares of Federal Spending Projected for 2020 in CBO’s August Baseline “Other Health Programs” includes: Health insurance subsidies, exchanges, and related spending; Department of Defense Medicare-Eligible Retiree Health Care Fund (including TRICARE for Life); Children’s Health Insurance Program, and other programs.

  19. Share of Federal Revenues Projected for 2020 in CBO’s August Baseline

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