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Bush's 2005 Budget Plan To Have Little Effect On Economic Growth, Says CBO

by Leroy Baker, Tax-News.com, New York

10 March 2004

A report by the Congressional Budget Office has predicted that the tax cuts put forward in President Bush's latest budget plan will have a relatively minor impact on economic growth in the coming decade.

According to the report, the CBO, a non-partisan arm of Congress, calculates that the proposals contained in the President's 2005 fiscal budget will likely affect economic growth by less than one-half of one percentage point in terms of gross domestic product.

The CBO bases its conclusion on the fact that taken as a percentage of the value of the overall economy (estimated at $12 trillion) the $1.24 trillion tax cuts, when combined with proposed spending cuts, represent a relatively small proportion.

Meanwhile, in the short term, the CBO analysis forecasts that the 2005 budget plan could even result in periods of negative growth between 2005 and 2009, due to the offsetting effects of some of the proposals in the budget.

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