WASHINGTON — President Barack Obama’s top economists say the nation is on track to make economic progress over the next two years, but say it would do even better if Congress would enact the additional spending he proposed in his most recent budget. A divided Congress in an election year is not likely to heed that call.
In their annual report to the president, the Council of Economic Advisers says the nation’s economy would grow by 3.3 percent in 2014 and 3.5 percent in 2015 and that unemployment would drop to 6.4 percent in 2015 and 6 percent in 2016. February’s unemployment rate was 6.7 percent.
That forecast assumes that Congress would approve $56 billion in spending that is above the limits set in a bipartisan budget agreement earlier this year. But midterm elections are limiting action in Congress this year and Republicans, who control the House of Representatives, have already indicated little interest in most of Obama’s additional proposed spending.
In effect, Obama’s budget and the economic arguments behind it give Democrats a political platform for 2014. Republicans maintain the economy could be accelerating faster but has been hindered by Obama’s spending and taxing policies.
Even without the infusion of government money called for in Obama’s budget, the economy is likely to grow more than in 2013, according to most economists. The federal budget will not confront budget cuts as severe as in 2013 and economists believe that consumer spending has adjusted since a payroll tax cut expired more than a year ago, which effectively increased taxes on working Americans. Moreover, economists say increases in housing construction and greater business investments will give the economy a boost as well.
The non-partisan Congressional Budget Office predicts the economy will grow 2.7 percent in 2014, and Goldman Sachs forecast growth of 2.8 percent this year. The Federal Reserve in December projected growth between 2.8 and 3.2 percent in 2014. All those outlooks are based on existing policies, not on Obama’s budget proposals.
The White House report also says the United States and Germany are the only two of 12 major economies that were hit by the 2008 international financial crisis to have returned to pre-crisis economic output.
Obama, in an introduction to the report, says it shows that “after 5 years of grit and determined effort, the United States is better-positioned for the 21st century than any other nation on Earth.”
The economic report serves as the administration’s analysis of the president’s $3.9 trillion budget, which he unveiled last week.
The report notes that the economic projections were finalized in November and that some indicators have improved since then.
For instance, the report projects an unemployment rate of 6.9 percent for 2014, but has already dipped below that.
“An updated projection would forecast a continued decline in the unemployment rate over the course of the year,” the report states.
Republican Rep. Kevin Brady, the chairman of the Joint Economic Committee, said that compared to past economic recoveries, current growth has fallen far short. He said that compared to an average of recoveries since 1960, the U.S. economy should have created 5.5 million more jobs and $3,850 more in income per capital.
“The president’s policies of higher taxes, Obamacare, and new regulations are keeping businesses on Main Streets across America on the sidelines,” Brady said.