Today the CBO announced two interesting reports.
The first was an explanation of the CBO’s decision to include Fannie Mae and Freddie Mac in its budget projections. Understandably, the CBO decided that because Fannie and Freddie were nationalized, all projected expenses and asset risks should be included on the federal government’s budget. Fannie and Freddie-related expenses added almost $400 billion to the projected budget for 2009-2019. The administration, however, thinks that the two GSEs should be kept off-budget, and the OMB’s policy is to add only the cash provided to prop up operations on the budget. That’s a much smaller number — only $160 billion over the same time frame.
The second was an analysis of possible future fiscal stimulus measures. Basically it provided guesses for which of the kinds of fiscal measures included in the recent House jobs bill would be most timely and cost efficient in reducing unemployment. The CBO’s findings make it seem like cutting the payroll tax in a number of ways is the best or among the best options:
In other words, CBO thinks that both reducing employers’ payroll taxes and reducing employees’ payroll taxes would have not only a good “bang for the buck,” but both measures could also be implemented earlier than other measures, such as infrastructure spending.