CBO Release: Automatic Reductions in Government Spending — aka Sequestration


“Automatic Reductions in Government Spending — aka Sequestration”

Today, the Congressional Budget Office (CBO) released an article after receiving “many questions in recent days about the budgetary and economic implications of the automatic reductions in government spending that are scheduled to occur under current law (in technical terms, a sequestration).” The article addresses the most common questions regarding sequestration, incorporating information from the most recent CBO economic and budget projections.

In the article titled, “Automatic Reductions in Government Spending — aka Sequestration,” the following questions are addressed:

  • How Will Budgetary Developments in 2013 Affect Economic Growth This Year?
  • How Are Changes in Tax and Spending Policies Contributing to That Outcome?
  • How Big Are the Automatic Spending Reductions in 2013 and 2014?
  • Why Does CBO Expect the Sequestration to Reduce Outlays by Just $42 Billion in Fiscal Year 2013 Even Though the Automatic Budget Cuts Total $85 Billion This Year?
  • How Does CBO Estimate the Economic Effects of Changes in Fiscal Policy?

From the article: “CBO expects that reducing the amount of fiscal tightening this year would strengthen the economy in the short term, the resulting increase in federal borrowing would weaken the economy in the longer term unless other changes in spending or tax policy were made to offset that additional borrowing.”

To view the article click here.

Article formerly posted at https://www.hsdl.org/blog/newpost/view/s_4734