Washington Update

Congressional Budget Office Reports on the Effects of the Sequester

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The nonpartisan Congressional Budget Office (CBO) has estimated that keeping the spending cuts from sequestration in place through FY14 would cost up to 1.6 million jobs. On the other hand, cancelling the cuts would yield between 300,000 to 1.6 million new jobs, with the most likely outcome being the addition of 900,000.

Rep. Chris Van Hollen (D-MD) requested the CBO report and said that the Democrats plan to make the report the center-piece of a major push to reverse the $109 billion in annual cuts that started on March 1, 2013. Also, the CBO notes in the report that cancelling the cuts would add to the federal debt. Democrats have been frustrated by their inability to build pressure on House Republicans to reverse the sequester. Democrats are drafting appropriation bills under the assumption sequestration is stopped. Therefore, the gap between the chambers on spending could lead to a government shutdown at the beginning of the new fiscal year.

The CBO report says spending would increase $14 billion in 2013 and by $90 billion in FY14 if the sequester cuts were cancelled. However, many Republicans are not accepting the CBO study.

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