The Congressional Budget Office says in a to Rep. Chris Van Hollen (D-Md.) that cancelling sequestration for fiscal year 2014 would increase the country’s gross domestic product by 0.7 percent.
Unemployment in the U.S. will increase by 300,000 to 1.6 million in fiscal 2014 if the automatic budget cuts remain in place, CBO said Thursday.
CBO also says the real GDP could increase between 0.2 percent and 1.2 percent in the third quarter of calendar year 2014, when the fiscal year ends.
“Canceling the automatic spending reductions effective August 1 would increase outlays relative to those under current law by $14 billion in fiscal year 2013 and by $90 billion in fiscal year 2014,” the letter says.
CBO concluded its letter by saying that cancelling sequestration would lead to greater federal debt and increase the risk of a fiscal crisis.