Daily Report for Executives provides in-depth coverage of unfolding legislative, regulatory, and judicial news from the nation’s capital, the states, and around the world. This daily news service...
Fiscal stimulus could boost short-term economic growth but changes in the supply of labor and other factors will be needed to increase the U.S. economy’s long-term growth rate, the director of the nonpartisan Congressional Budget Office told senators.
Testifying before the Senate Budget Committee Feb. 1 on the CBO’s recent budget outlook, Keith Hall said constraints on supply, not lack of demand, were major factors holding back the U.S. economy’s growth rate over the long term.
“If we’re talking about the short term, just basic stimulus, we could accelerate the elimination of the output gap over the next two years,” Hall said. “You could accelerate that.”
“But for having anything lasting, we need to worry about the supply-side of things,” he said, citing specifically labor supply, the stock of capital available and innovation.
Hall said over the next 10 years, labor growth is projected to grow at about 0.5 percent annually, while productivity is expected to increase at about 1.3 percent a year. Those two factors are seen by most economists as the driving forces behind long-term growth in gross domestic product.
“That adds up to about 1.8 percent GDP. That is our forecast for potential GDP. If you want to get potential GDP up, you’ve got to raise one of those two things, or both,” Hall said.
In his prepared testimony, Hall said again that the U.S. government would see debt rise to a level not seen since after World War II. “CBO projects that over the next decade, if current laws remained generally unchanged, budget deficits would eventually follow an upward trajectory—the result of strong growth in spending for retirement and health programs targeted to older people and rising interest payments on the government’s debt, accompanied by only modest growth in revenue collections,” he said.
However Hall, in response to a question from Senate Budgett Chairman Mike Enzi (R-Wyo.), said it was unclear what level of debt was dangerous. “It’s on an unsustainable path,” he said. “It’s hard to pick a number, however. In some respects, it’s like any other organization that puts up debt. It’s hard to say how much debt is too much.”
To contact the reporter on this story: Jonathan Nicholson in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)