In what is sure to become a Democratic talking point when Congress reconvenes in September, the Congressional Budget Office on Tuesday said the U.S. economy could add as many as 1.4 million jobs if lawmakers lift federal spending caps for fiscal 2016 and 2017.
The new report by the nonpartisan agency was requested by 2016 Democratic presidential hopeful Sen. Bernie Sanders (I-VT), the ranking member on the Senate Budget Committee.
Raising the spending limits set by the 2011 Budget Control Act, which are set to return in October, would lead to economic growth, at least in the short-term.
“Fully eliminating the reductions would allow for an increase in appropriations of $90 billion in 2016 and $91 billion in 2017,” CBO Director Keith Hall wrote in a letter to Sanders.
CBO estimates that lifting the budget caps for 2016 could result in the full-time employment of anywhere between 200,000 and 800,000 more people. Meanwhile, reversing them in 2017 could add between 100,000 and 600,000 jobs.
The agency’s assessment isn’t entirely optimistic, though, as Hall warns that lifting the ceilings could lead to increased federal deficits in the future.
Democrats have long sought relief for both defense and non-defense spending caps but Republicans have refused to come to the negotiating table.
However, with must-pass spending bills tied up in both the House and the Senate and only a handful of legislative days left before the end of the fiscal year, observers believe it is increasingly likely that both sides of the aisle will come together and cut some kind of deal to lift the caps, at least temporarily, and avoid a government shutdown.
Speaking to reporters last week, Senate Majority Leader Mitch McConnell (R-KY) said flatly “we’re not doing government shutdowns.”
The CBO’s conclusions are likely to carry more heft with Senate Republicans, who installed Hall, a former member of President George W. Bush’s Council of Economic Advisers, to lead the agency earlier this year.
For his part, Sanders welcomed the report’s findings.
“These arbitrary sequestration caps have never made any sense, and now we see even more clearly the implications for our workers,” he said in a statement. “If Congress does not act to end sequestration, we’re looking at the loss of as many as 1.4 million jobs over the next two years.”
Sanders said lawmakers “must end sequestration now ahead of the end of the fiscal year and prevent a budget showdown that will help nobody.”
"It makes no sense to head towards a crisis when we have a clear path towards a better solution,” he said.