CBO: Obama jobs bill reduces budget deficit

The Congressional Budget Office on Friday confirmed that President Obama’s jobs bill would be fully paid for over ten years and also gave its seal of approval to Senate Democrats’ version that includes a surtax on millionaires.

The CBO said that the original Obama stimulus bill would involve $447 billion in tax cuts and new spending—the same estimate given by the administration. It said the bill would raise $450 billion over ten years. The result is a $3 billion decrease in deficits over ten years.

{mosads}The Senate Democrats’ bill, which replaces Obama’s taxes on the upper middle class with a 5.6 percent surtax on those with annual incomes above $1 million, raises $453 billion over ten years and reduces deficits by $6 billion. The tax kicks in in 2013. 

Senate Majority Leader Harry Reid’s office highlighted that the CBO affirmed 60 percent of the stimulus comes in the form of tax cuts rather than spending and that most of the tax relief is for workers. 

CBO also said that the bill “could have a noticeable impact on economic growth and employment in the next few years.” CBO under its own rules is prevented from factoring in increased unemployment, and the possible increased tax revenue that could result into its cost estimate.

The CBO did say that the original bill would increase the short term budget deficit in 2012 by $288 billion. The fact was seized upon by the office of Senate Minority Leader Mitch McConnell (R-Ky.). 

The GOP says the Obama package is a permanent tax increase in exchange for temporary stimulus that is unlikely to reduce 9.1 percent unemployment.

This story was updated at 5:05 p.m.