The report noted that if some of the changes specified in current law did not occur, and recent policies were continued, then much larger deficits—and a greater debt—would be the result. For instance, if cuts to Medicare's payment rates for physicians' services were prevented, then annual deficits from 2012 to 2021 would average 4.3% of the nation's gross domestic product, compared with the 1.8% outlined in the CBO's baseline projections.
Meanwhile, the CBO said it expects the pace of growth to “be restrained for several more years” because of the effects of overbuilding, the financial crisis and the recession. In addition, federal fiscal policy will provide decreasing support for the economy, which will also hold back economic growth in the next few years.
“Taking those factors into account, CBO projects that real GDP will increase at a modest pace, on average, through 2013—driven by continued strength in business investment, modest increases in consumer spending, and expansions in net exports and residential investment,” the report noted.
Sen. Charles Schumer (D-N.Y.) said in a statement that he found two productive trends in the report: reduced long-term deficits and gains in economic growth. But he was also quick to cite the latest CBO estimate in his criticism of Republican policies.
“This makes the case for immediate job measures to boost growth, and for ending tax breaks for millionaires in order to keep us on the path toward a balanced budget,” Schumer said in his statement. “It's clear from this report that the Republican approach to the economy is harmful to both growth and deficit reduction, and is holding back the recovery.”