Last night in an interview on ABC News with George Stephanopoulos, President Obama said that his goal for the budget was to “grow the economy” and “put people back to work.” House Republicans hope that this is truly the case, as the American Action Forum is out with a new study this morning which indicates that a balanced budget leads to debt reduction and consequently more rapid GDP development, increased incomes and job growth. Below is President Obama’s quote, as well as a few excerpts from the study.
President Obama: “My goal is not to chase a balanced budget just for the sake of balance. my goal is how do we grow the economy, put people back to work.”
American Action Forum: The Economic Benefits of Balancing the Federal Budget
“To start, the commitment to balance the budget drives the gross federal debt as a share of the economy south from 107 percent of GDP in 2014 to 79 percent of GDP in 2023. Achieving these savings and reducing the debt to levels below those projected under current law will avert the economic harm observed to occur with high levels of indebtedness.”
“As the budget balances and the debt is reduced, the more rapid GDP growth would lead incomes to rise more rapidly.”
“The House Budget Committee resolution will be analyzed from many dimensions. Among the most important is that its commitment to balance the budget would carry significant benefits on GDP growth, job creation, and income growth.”