The non-partisan Congressional Budget Office said Friday that President Obama’s 2013 budget will likely reduce growth in the long-term as larger deficits reduce capital available to businesses.
After the next five years, CBO says the Obama proposals will likely reduce economic output by between 0.5 percent and 2.2 percent.
Larger deficits caused by the budget would mean the government issues more bonds, sucking up more private capital to finance its debts, and thereby reducing the funds businesses could use to expand and hire, CBO says. An increased tax on capital gains included in the budget would also tend to reduce private capital, it says.
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