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How Extending Certain Unemployment Benefits Would Affect Output and Employment in 2014 1 (December 3, 2013)

handle is hein.congrec/cbo11388 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 December 3, 2013 Honorable Chris Van Hollen Ranking Member Committee on the Budget U.S. House of Representatives Washington, DC 20515 Re: How Extending Certain Unemployment Benefits Would Affect Output and Employment in 2014 Dear Congressman: This letter responds to your request for an analysis of how extending the emergency unemployment compensation (EUC) program and other related expiring provisions would affect U.S. economic output and employment in 2014. Under current law, the EUC program, certain temporary provisions of the extended benefits program, and other related provisions are scheduled to expire on December 31, 2013. The Congressional Budget Office (CBO) has analyzed a proposal under which those expiring provisions would be extended through December 2014. That proposal has the same specifications as H.R. 3546, the Emergency Unemployment Compensation Act of 2013, as introduced on November 20, 2013. CBO estimates that the proposal would increase outlays relative to those under current law by nearly $26 billion-by about $19 billion in fiscal year 2014 and by $6.5 billion in fiscal year 2015. The net increase in deficits over the 2014-2023 period would amount to about $25 billion because the proposal would also boost revenues by $0.5 billion over that period.' CBO estimates that extending emergency unemployment benefits would raise gross domestic product (GDP) and employment in 2014 relative to what would occur under current law. Recipients of the additional benefits would increase their spending on consumer goods and services. That increase in aggregate demand would encourage businesses to boost production and hire more workers than they otherwise would, particularly given the expected slack in the capital and labor 'See Congressional Budget Office, cost estimate for H.R. 3546, the Emergency Unemployment Compensation Extension Act of 2013 (December 3, 2013), wwcogvpblc:o .498 www.cbo.gov

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