Although some employers will choose not to hire additional workers, or will reduce hours, the budget office said that does not appear to be the main factor.
“The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor,” the report said.
The health care analysis is layered with complexity. The job losses are measured in “full-time-equivalent workers,” which means more people are actually affected than, say, the 2 million full-time-equivalent jobs lost in 2017. It could take several part-time workers or people deciding to reduce their hours to produce the wage loss of one full-time equivalent.
The report also contains an important caveat, that the estimate of job losses is “subject to substantial uncertainty” and could be larger or smaller than predicted. There now are more than 130 million jobs in the economy.
Meanwhile, the broad federal deficit projection shows another yearly improvement. Obama inherited an economy in crisis and the first deficits ever to exceed $1 trillion. The 2009 total, swelled by the costs of the Wall Street bailout, hit a record $1.4 trillion, while the deficits of 2010 and 2011 each registered $1.3 trillion.
The agency sees the deficit sliding to $478 billion next year before beginning a steady rise years through 2024 that would bring the annual imbalance back above $1 trillion. Overall, it forecasts deficits totaling $7.3 trillion over the coming decade, about $1 trillion more than previously estimated.
“CBO expects that economic growth will diminish to a pace that is well below the average seen over the past several decades,” the report said, citing an aging population and a decrease in the rate of growth in the labor force.
Tuesday’s report comes as Obama and Republicans in Congress are taking a respite in the budget wars that have periodically consumed Washington since Republicans took control of the House in 2011. The declining deficit numbers mean they could feel even less urgency to act now.
A December budget agreement and last month’s follow-up spending bill could buy peace through November’s midterm elections. Republicans also appear to be taking a less confrontational approach to legislation needed this month to increase the government’s borrowing limit to avoid defaulting on its obligations.